Key MSP Legal Cases

MARC’S INVOLVEMENT IN MSP LEGAL CASES

SUPREME_COURTSince its founding in 2008, the Medicare Advocacy Recovery Coalition (MARC) has always understood that it would need to advocate for Medicare Secondary Payer (MSP) reform on three fronts — before Congress, before federal agencies, and before the courts. In keeping true to its agenda, the Coalition has strategically engaged in important test cases to help form the legal background against which the MSP laws are implemented.  For example, in 2011 MARC assisted in the representation of a Medicare beneficiary, Vernon Hadden, in his appeals to the United States Court of Appeals for the Sixth Circuit regarding the Government’s aggressive efforts to collect secondary payment recoveries from his settlement following a traumatic auto accident.  The Coalition supported Mr. Hadden in his appeal up to the Supreme Court.  Similarly, the Coalition has supported Glaxo Smith Kline as an Amicus before the Supreme Court in GSK’s petition for certiorari seeking review of a Third Circuit decision. The Coalition remains committed to engagement in important legal cases to ensure that courts are informed about the MSP process and that beneficiaries, the Trust Fund, and all stakeholders in the MSP process are fairly treated under law.

CURRENT CASES IMPACTING MSP

Humana v. Western Heritage Insurance Company

Humana v. Western Heritage Insurance Co., recently decided by the federal district court for the Southern District of Florida, Humana v. W. Heritage Ins. Co., 2015 US Dist. LEXIS 31875 (March 16, 2015), poses a serious threat to the viability of the Medicare Secondary Payer process and the ability of insurers and self-insured entities to settle cases with Medicare beneficiaries who ever received care from a Medicare Advantage Plan.

Case Description:    Humana, in yet another test case, sued Western Heritage Insurance for recovery of double damages related to Medicare Advantage (Part C) MSP obligations under its indemnity obligations to a defendant (Hampton’s West) who was sued by a beneficiary (Mary Reale) that was in Humana’s Part C Plan. The case, decided in Humana’s favor by the District Court, followed the same theory advanced by Humana in its recent Third Circuit case (Humana v. GSK, 685 F.3d 353 (3rd Cir. 2011)) — that as a Medicare Advantage Plan it is entitled to the same MSP benefits as the federal government, which include bringing cases in federal court and recovering double damages. In fact, notwithstanding that the beneficiary specifically represented to Western Heritage that she was not in a Medicare Advantage Plan, the court still awarded Humana double damages. The decision puts at risk any settlement with a Medicare beneficiary who received care from an MAO in Florida or around the country – settling parties are now targets of lawsuits seeking double damages (making settlements a triple liability – once to the beneficiary and twice to the Medicare Advantage Plan) under the Florida Court’s interpretation of the MSP law. Western Heritage filed a Notice of Appeal of the case with the United States Court of Appeals for the Eleventh Circuit. This will be the Eleventh Circuit’s first opportunity to consider the issue, and address the conflict between the Sixth and Ninth Circuits, which to date have rejected these double damages MAO claims, and the Third Circuit, which has supported the MAO’s right to bring a federal action for double damages.

Why is this Case so Detrimental to the Secondary Payer Community?   If the Florida District Court decision is allowed to stand, insurers, self-insureds, and Third Party Administrators will be unable to settle lawsuits with Medicare beneficiaries who, for even a short period of time, were enrolled in Medicare Advantage Plans. Moreover, even if a beneficiary represents that they were not enrolled in MA Plans (which was the case in Western Heritage), settling parties will have no assurance of finality to their settlements, and MA Plans will still be able to assert claims years after the fact. The case will result in beneficiaries losing the ability to settle, which in turn will ensure that Plans themselves end up paying more for care and losing any possibility of subrogation.

MARC Legal Advocacy:  MARC will lead the industry effort to educate the Eleventh Circuit on the issue and urge the Court of Appeals to reject the ability of Medicare Advantage Plans to bring actions in federal Court for double damages. Get Involved:  We urge all stakeholders in the secondary payer community to join the Coalition in this effort, and contribute and participate in the legal advocacy efforts. For further information, please contact Susan Murdock (susan@murdockinc.com/703.830.9192).

Case Reference Documents:
Humana v. Western Heritage One-Pager
Human v. Western Heritage Case