Synergy Blog

No Time Limits on Medicare Advantage Plans Private Cause of Action for Double Damages

March 2, 2020

The 11th Circuit Court of Appeals weighed in on the question of whether the Medicare statute, which provides a three-year timeline to the government to request repayment, applies to a private entity providing Medicare benefits (Medicare Advantage plans). The Court’s answer is that the claims filing provision does not bar a claim and that the timeline is not a precondition to filing suit.

Basic primer on Medicare. When Medicare pays for accident-related treatment, it is entitled to be paid by the primary payor. Its payment is made as a conditional payment, conditioned on repayment when other funds become available. In the case of an accident, that could be medical payments coverage, bodily injury coverage or an uninsured/underinsured coverage. If Medicare seeks reimbursement and is denied, the United States can sue the primary plan to recover its payment. If the cause of action is successful, Medicare can be awarded double damages.

Section 1395y(b)(2)(B)(iii) contains a three-year statute of limitations that requires the government to sue within three years of the date that Medicare receives notice of a primary payer’s responsibility to pay.

(iii) Action by United States

…  An action may not be brought by the United States under this clause with respect to payment owed unless the complaint is filed not later than 3 years after the date of the receipt of notice of a settlement, judgment, award, or other payment made pursuant to paragraph (8) relating to such payment owed.

(vi) Claims-filing period

Notwithstanding any other time limits that may exist for filing a claim under an employer group health plan, the United States may seek to recover conditional payments in accordance with this subparagraph where the request for payment is submitted to the entity required or responsible under this subsection to pay with respect to the item or service (or any portion thereof) under a primary plan within the 3-year period beginning on the date on which the item or service was furnished.

A few sections down lies § 1395y(b)(3)(A), which provides a private cause of action available to Medicare beneficiaries and other private entities if a primary plan fails to provide primary payment or reimbursement. This section does not contain a statute of limitations.

(A) Private cause of action

There is established a private cause of action for damages (which shall be in an amount double the amount otherwise provided) in the case of a primary plan which fails to provide for primary payment (or appropriate reimbursement) in accordance with paragraphs (1) and (2)(A).

This is where the Medicare Advantage plan enters. In 1997, Congress enacted Medicare Part C or “Medicare Advantage” program (also known as MAP, Med A, MA, MAO). These plans are administered by private insurance companies that provide Medicare benefits for fixed fees from the Center for Medicare and Medicaid Services. 42 U.S.C. § 1395w-22(a)(4) states that a Medicare Advantage plan may charge a primary plan when a payment “is made secondary pursuant to section 1395y(b)(2).” This established that Medicare Advantage plans can sue under the MSPA to recover from primary plans if they do not pay. These plans must use the MSPA’s private cause of action versus the government cause of action.

In the MSPA Claims v. Kingsway Amigo, 2020 U.S. App. LEXIS 4554 (February 13, 2020), the Court found that there is nothing within the statutory language or structure to suggest the Medicare Advantage plan must comply with the claims filing provision as a prerequisite to seeking reimbursement. The decision starts with a warning as the second sentence of the opinion acknowledges that the case “turns on a careful examination of the often-convoluted rules governing the federal Medicare program.” The court painstakingly reviews the statutory structure of the Medicare statute even with a little levity; the opinion states “Okay, time for a deep breath and a summary.”

The Court found that the dependent “notwithstanding” clause and the permissive term “may” in the actual text of the MSP claims filing provision means that Medicare Advantage plans are not required to bring suit as a prerequisite in the 3-year period. Specifically stating, “[w]ords in a statute must be interpreted according to their ordinary meaning and “may” cannot, by any rendering, mean “must.” The Court finds that when a statute uses the word “may,” it “implies that what follows is a permissive rule and that it does not create a separate bar that private Medicare Advantage plans must overcome in order to sue.

The importance of this decision can’t be overstated.  With no statute of limitations, the private cause of action provisions that MAO’s have been using so aggressively to recover are even more powerful.  Insurers are becoming increasingly more fearful of failure to repay MAOs and this can lead to delays in resolution of a settlement when there are potential Medicare conditional payment or advantage plan liens.  In addition, personal injury lawyers can be the targets of these types of private causes of action as well which in turn gives trial lawyers another thing to worry about when it comes to lien resolution.  Because of these sorts of issues, now more than ever, insurers may want to directly pay MAO liens back directly and demand indemnification.

To avoid these types of scenarios and alleviate concerns, work with Synergy as your partner in bringing to resolution all liens asserted by Medicare Advantage plans, Medicare supplement plans and traditional Medicare outside of litigation. We also offer lien reduction services for many other lien types including ERISA, FEHBA, Military, Disability and Medicaid.

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