More Webs in Alabama: District Court Quotes Scott, Dismisses MSPA Claim

A recent determination against Infinity Property and Casualty Group emerging from a federal district court in Alabama demonstrates that while so many MSPA private cause of action claims pose similar legal shortcomings, the courts have no shortage of colorful ways to dismiss them.

Quoting the famous words of Sir Walter Scott, the Opinion opens with “Oh! what a tangled web we weave / When first we practice to deceive!” Dismissing with prejudice MSPA Claims I, LLC’s latest efforts, the U.S. District Court for the Northern District of Alabama, Southern Division determined on March 19 that subject matter jurisdiction did not exist, thwarting its attempt to “catch a lucrative class action lawsuit under the Medicare Secondary Payer statue.” MSPA v Infinity Prop & Casualty Group, 2019 U.S. Dist. LEXIS 43620 (2019).

In this case, two separate automobile accidents occurred in which Infinity was the insurance carrier. Medicare beneficiary D.W was enrolled in Part C through Florida Healthcare Plus, Inc. and Medicare beneficiary B.G. was enrolled in Part C through Simply Healthcare Plans, Inc., both of which Plaintiff alleged assigned to it rights under the Medicare Secondary Payer laws to recover medical payments Infinity failed to reimburse.

With regard to D.W., Infinity disputed MSPA’s allegations on the grounds that Infinity had no obligation to pay the FHCP bill of $140.47 as it properly paid all of D.W.’s medical bills with additional medical coverage still available. FHCP assigned its recovery rights to La Ley Recovery Systems in 2014. According to the agreement. La Ley could not assign those rights to a third party without the approval of FHCP’s (or the Florida Department of Financial Services later through receivership).

La Ley attempted to reassign these rights to MSPA in 2015 without approval. While approval was later granted at the time of settlement on June 1, 2016, the court decided the assignments were valid but that FHCP never had standing to bring a claim under the MSP in the first place and FHCP never suffered an injury in fact.

With regard to B.G., the medical coverage with Infinity exhausted. InterAmerican Medical Center Group, LLC served as Simply’s Management Service Organization (MSO). In a tapestry of alleged assignments, Plaintiff claimed Simply contractually assigned recovery rights to InterAmerican, which were in turn assigned to MSP Recovery, LLC, and as “the final strand in its web…” MSP Recovery assigned those rights to Plaintiff.

The Court dismissed the allegations on the grounds that the statute affords recovery rights to MOAs but there is no clear indication that MSOs have these statutory rights.

The Court pointed out “fatal” defects in Plaintiff’s web of assignments, ultimately granting Defendant’s motion for summary judgment due to lack of standing.

Elsewhere on the very same day, the 11th Circuit Court of Appeals was busy exterminating another MSPA private cause of action claim. Somehow on the same page with the Alabama court in both legal and literary senses, the 11th Circuit Court wove the web theme into its dismissal. See MSP Recovery Gets Caught in the Tangled Web of the Medicare Secondary Payer Act.

Given the growing body of dismissals, it should be interesting to see how future courts rule on such actions going forward. To discuss this case or other Medicare Secondary Payer matters, please contact Gordon & Rees Medicare Compliance Group.

MSP Recovery Gets Caught in the Tangled Web of the Medicare Secondary Payer Act

In the recent case of MSPA Claims 1, LLC v. Tenet Fla., Inc. the Eleventh Circuit Court of Appeals affirmed the holding of the district court, dismissing a case for recovery of payments under the private cause of action of the Medicare Secondary Payer Act (MSP Act). While aspects of the MSP Act can be very convoluted and confusing, especially with regard to the private cause of action for recovery of primary payments, the court here begins its opinion by stating “Luckily, we do not need to venture very far into its tangled web here. The provision at issue in this case is clear, and clearly bars plaintiff’s claim.” See MSPA Claims 1, LLC v. Tenet Fla., Inc. 2019 U.S. App. LEXIS 7833.

The court here spends little time examining the makeup and history of the MSP Act; however, reminds us that while the Act has created a private cause of action that permits the government to sue when it is not properly reimbursed by a primary payer, it also provides for a private cause of action for private plaintiffs to recover double damages. The intent of this private cause of action is to encourage private parties to enforce Medicare’s right of recovery against primary payers in the courts. See generally MSPA Claims 1, LLC v. Tenet Fla., Inc. 2019 U.S. App. LEXIS 7833. Various courts have held this private cause of action to extend to Medicare Advantage Organizations (MAOs).

While a detailed rehashing of the facts of this case is not important to understanding the outcome, a brief background will help outline the issue here. In short, one of Florida Healthcare Plus’s (an MAO) enrollees was involved in a car accident and received medical care at St. Mary’s Medical Center. St. Mary’s billed both the enrollee’s primary plan- Allstate, as well as FHCP. FHCP assigned its right of recovery to the Plaintiff in this case MSPA Claims 1, LLC, through a series of assignments. St. Mary’s later reimbursed FHCP in full- $286. However, MSPA Claims brought suit against ST. Mary’s and its parent company Tenet Florida, Inc. for the delayed $286 reimbursement.

The court here determined that FHCP did suffer an injury-in-fact and that MSPA Claims has standing to bring the case and therefore the case was properly in court; however, in order to survive dismissal, the claim must still be plausible. The court reiterates that the MSP Act’s private cause of action is only available in the case in which a primary plan fails to reimburse Medicare, or in this case an MAO. Here, MSPA Claims has sued a medical service provider and not a primary plan. The court reasoned that given the fact that MSPA Claims has not sued a primary plan, its claim is not plausible on its face, and therefore the dismissal based on failure to state a claim issued by the lower court is affirmed.

This dismissal provides another instance of MSP Recovery, LLC getting caught in the tangled web that is the Medicare Secondary Payer Act. The amount in controversy here hints that the purpose of bringing this case was to attempt to gain a favorable decision and to begin to carve a path through the case law to further recovery by MAOs under this provision of the MSP Act. While the private cause of action at issue here is a dangerous one given the double damages provision, this case makes it clear that there is still work to be done in order to weave through this tangled web.

United States Sues Plaintiff Attorney, Medicare Beneficiary, and the Insurer for Conditional Payments in the Middle District of Pennsylvania

On February 26, 2019, the Middle District of Pennsylvania addressed a summary judgment motion brought by the United States against parties to a liability claim that involved a Medicare beneficiary and outstanding conditional payment liens.

The relevant background of the case is that a Medicare beneficiary (Beneficiary) was mistakenly given a medication from a pharmacy which resulted in a sixty-six day hospital stay. During this stay, the Beneficiary incurred nearly $100,000 in treatment bills. As the Beneficiary’s insurer, Medicare paid these bills, of which $84,353 was found to be related to the administration of the mistaken medication. The Beneficiary then filed a lawsuit against the pharmacy and medical care center, represented by Richard Angino of Angino Law Firm (“the Angino Defendants”). During settlement of the claim, the Angino Defendants requested the amount of charges that were paid by Medicare for the associated injury. The Centers for Medicare & Medicaid Services (CMS) reported back that $1,212 was paid. This was the amount that was ultimately relied upon at settlement.
As is the procedure, upon notification of settlement, CMS issued a demand of $84,353.00, but reduced it to $53,295.00, accounting for attorney’s fees. CMS also notified the Angino Defendants and the Beneficiary this amount was due in sixty (60) days. This amount was never paid.

CMS then filed a lawsuit under the Medicare Secondary Payer Act, 42 U.S.C § 1395(b)(2)(B) that as a matter of law it was entitled to $84,35.00 plus interest. A motion for summary judgement was filed by the defense. During this time, the Beneficiary passed away and in a separate action, the Beneficiary’s estate challenged the $84,353.00 and asserted that CMS was only due the $53,295.00. However, the lower court found that it did not have jurisdiction. Thus, the Plaintiff argued that Defendants lost their challenge and therefore owe the full $84,353.00. Defendants rebutted this argument on the grounds that although they cannot appeal the lower amount, they can challenge the $84,353.00. Additionally, Defendants claim questions of fact exist as to who would be responsible for payment of any potential excess owed.

Of note, the Defendants set aside the $53,295.000 and attempted to settle the conditional payments. However, CMS pursued litigation and increased the amount owed. As such, the Court agreed that a question of fact existed as to whether or not the Plaintiff had to pursue litigation to collect the amount due and justify raising the amount due. Plaintiff countered that the law provides that where Medicare “must file suit” to recover on the lien, they need not deduct attorney’s fees from the lien amount. 42 C.F.R. § 411.37(e). The Court responded that “at least with the facts which we are presented with, that whether or not the plaintiff had to pursue litigation is a question of fact.” (United States v. Angino, 2019 U.S. Dist. LEXIS 30499 (February 26, 2019).

As such, the Court found genuine issues of material fact and the summary judgement motion denied.

Practioner’s Note: This case is a reminder of the trouble parties can get into when not properly addressing the conditional payment liens associated with a liability claim. Remembering Shapiro v. Secretary of Department of Health & Human Services, 2017 U.S. Dist. LEXIS 42278 (March 23, 2017), the 2017 case mirrors the fact pattern at hand, in that the Beneficiary cannot rely upon the interim lien amount and Medicare is entitled to the final conditional payment amount issue after settlement of a claim.

Interestingly, this case has yet to determine who ultimately will be responsible for any excess payments over the $53,295.00. Also worth note, the Beneficiary’s estate, the Beneficiary’s attorney, and the Carrier were all parties to this action. This particular question could potentially have been avoided if only proper settlement language would have been included clarifying which party would be responsible for any overage. This is yet another prompt that settlement language continues to be an important piece to the settlement puzzle.

The Gordon & Rees Medicare Compliance Group will continue to monitor this case and bring you updates as they become available. Please contact me at (412) 588-2283 or rmaldonado@grsm.com should you wish to discuss this or any other Medicare Secondary Payer matters.