Sixth Circuit District Court Recognizes Medicare Advantage Organizations’ Rights to Private Cause of Action

On March 28, 2022, a Sixth (6th) Circuit District Court issued an opinion which held that the Medicare Secondary Payer (“MSP”) Act’s private cause of action, 42 USC §1395(y)(b)(3)(A), may be wielded by Medicare Advantage Organizations (MAOs) to pursue double-damage recoveries against primary payers who fail to reimburse the MAO conditional payments. MSP Recovery Claims, Series LLC v. Nationwide Mut. Ins. Co., LEXIS 55717 (S.D. Ohio Mar. 28, 2022).

Although the Sixth Circuit Court of Appeals has not yet addressed this issue directly, this new Nationwide District court decision (as well as other Sixth Circuit District Court decisions — MSP Recovery Claims, Series LLC v. Grange Ins. Co., 2019 WL 6770729 (N.D. Ohio Dec. 12, 2019); MSP Recovery Claims, Series LLC. v. Progressive Corp., 2019 WL 5448356 (N.D. Ohio Sept. 17, 2019)) signal that the Sixth Circuit Court of Appeals may soon join the Third (3rd) and Eleventh (11th) Circuit Court of Appeals in recognizing an MAO’s (or assignee of an MAO) rights to exercise the double damages private cause of action against primary payers.

Factual Overview

MSP Recovery Claims, Series LLC and MSP Recovery Claims Series 44, LLC (“Plaintiffs”), on behalf of various MAOs, filed a class action lawsuit against twenty-four (24) insurance companies (“Defendants”) for failing to reimburse the MAOs for medical costs that Defendants were obligated to pay as primary payers under the MSP Act. Plaintiffs’ Complaint provided nineteen specific examples of such claims, and Plaintiffs also attached exhibits which purportedly listed thousands of other claims where Defendants may have failed to reimburse conditional payments made by MAO assignors.

Ruling

Defendants argued that Plaintiffs’ claims should be dismissed, in part, because MAOs (and by extension, their assignors) do not have a private right of action under 42 USC §1395(y)(b)(3)(A). In the decision, the Nationwide court curiously noted that “the Sixth Circuit has yet to decide this issue.” This appears to be an inaccurate statement (unless the court meant that the Sixth Circuit Court of Appeals has not yet decided this issue) given that various Sixth Circuit District Courts (as reference above) have ruled on this issue before in favor of MAOs. Ultimately, the Nationwide court concluded that the plain text of the private cause of action is “broad and ambiguous,” and it found prior Third and Eleventh Circuit decisions persuasive:

This Court similarly finds the plain text to be broad and unambiguous and believes that the Sixth Circuit will take an expansive view of § 1395y(b)(3)(A), as it did in Michigan Spine, and allow MAOs to assert a private cause of action. Michigan Spine & Brain Surgeons, PLLC v. State Farm Mut. Auto. Ins. Co., 758 F.3d 787, 793 (6th Cir. 2014) (allowing medical service providers to bring claims against non-group health plans). Accordingly, this Court holds that § 1395y(b)(3)(A) grants MAOs a private right of action.

Sanderson Firm Commentary

Currently, the Third and Eleventh Circuit Court of Appeals are the only federal appellate courts that recognize an MAO’s right to exercise the private cause of action. In re Avandia Marketing, Sales Practices and Products Liability Litigation, 685 F.3d 353, 357 (3rd Cir. 2012); Humana Medical Plan, Inc. v. Western Heritage Insurance Co., 832 F.3d 1229 (11th Cir. 2016). However, as this decision indicates, and as MAOs and their assignors continue to become more aggressive in filing double damages lawsuits against primary plans, we may soon see more circuits adopt rulings favoring MAOs. Given the recent Nationwide ruling, the Sixth Circuit Court of Appeals is now poised with substantive precedence to adopt the Third and Eleventh Circuit Court of Appeals’ position. For those handling workers’ compensation, general liability and no-fault claims in jurisdictions that fall within the 6th Circuit (Kentucky, Michigan, Idaho and Tennessee), we recommend that parties exercise extreme caution in settling claims with Medicare beneficiaries. To the extent that a primary plan is aware of a Medicare beneficiary’s enrollment in an MAO, any conditional payments should be addressed timely, so as to avoid a double damages lawsuit as occurred here.

Thus, in light of the ongoing flurry of MAO double-damage lawsuits nationwide, we recommend that primary plans timely and adequately address any known or potential Medicare Advantage lien recovery claims.

Sanderson Firm offers a full suite of Medicare conditional payment services, to include verification, dispute, and resolution of MAO conditional payments. If you have any questions regarding this case or Sanderson Firm’s Medicare Advantage conditional payment resolution services, please contact us.