11th Circuit Court Deciphers the “Notoriously Complex” Medicare Secondary Payer Act; Determines the Applicable Statute of Limitations for the Double Damages Private Cause of Action to be 4 Years
In a recently released decision out of the 11th Circuit Court of Appeals titled MSPA Claims 1, LLC v. Tower Hill Prime Ins. Co., 2022 U.S. App. LEXIS 22162 (August 10, 2022), the 11th Circuit was faced with the difficult task of determining the correct statute of limitations period for Medicare Advantage Plans (MAPs) to pursue double damages under the Medicare Secondary Payer Act’s Private Cause of Action. Unlike the government’s cause of action—which contains a three-year statute of limitations, the 11th Circuit found that the private cause of action does not specify a limitations period. As explained further below, the 11th Circuit noted, “that's where the rubber meets the road” in this case. Because MSPA Claims 1 sued under the private cause of action, it was not clear what the applicable limitations period is or, consequently, whether its claim was timely filed.
Before understanding this decision and what it means/implicates for litigation based upon the MSP private cause of action, it will be helpful to understand the facts and procedural history of this case. MSPA Claims 1 LLC, which is the assignee of a now-defunct MAP, sued Tower Hill Prime Insurance Company under the double damages MSP Private Cause of Action to recover conditional payments made by the MAP. Previously, the district court had granted Tower Hill's motion for summary judgment because it determined that MSPA Claims 1's suit was untimely. MSPA Claims appealed.
In 2012, D.L. was attacked by her neighbor's dog. At the time, D.L. was a Medicare MAP beneficiary enrolled in a Medicare Advantage Program that was administered by Florida Healthcare Plus, which is a now-defunct MAP. As a result of D.L.'s injuries, Florida Healthcare paid her medical providers $8,146.09. D.L.'s neighbor held a liability-insurance policy with Tower Hill. Tower Hill entered into a settlement agreement with D.L. in 2012, agreeing to pay her $25,000.00 in exchange for releasing it from liability. Tower Hill reported the settlement to the Centers for Medicare and Medicaid Services (CMS), but it did not reimburse Florida Healthcare.
MSPA Claims 1 is Florida Healthcare's assignee and, therefore, holds the right to any claim that Florida Healthcare might have against Tower Hill to recover the payments made for D.L.'s medical expenses. In 2015, MSPA Claims 1 learned of the possibility of a claim against Tower Hill and it issued a Notice of Lien letter demanding payment "[i]f Medical Payment or other applicable insurance coverage exists." Tower Hill responded, advising MSPA Claims 1 that the claim "was settled on 6/22/12." That was the first time MSPA Claims 1 had been directly informed of the settlement. MSPA Claims 1 issued a second demand letter in 2018, but Tower Hill never reimbursed it for any payments. MSPA Claims 1 filed the lawsuit that underlies this appeal on August 17, 2018.
MSPA Claims 1 asserted that Tower Hill caused it (and other similarly situated entities) financial harm when Tower Hill, as a primary payer, failed to pay statutorily required reimbursements. MSPA Claims 1 alleged a claim under the Medicare Secondary Payer Act's private cause of action, see 42 U.S.C. § 1395y(b)(3)(A), and for breach of contract.
On Tower Hill's motion, the district court dismissed MSPA Claims 1's breach-of contract count for failure to state a claim. Following the partial dismissal, the parties submitted dueling summary-judgment motions on MSPA Claims 1's secondary payer claim. Tower Hill asserted that it was entitled to summary judgment because MSPA Claims 1's lawsuit was filed "over six years after CMS received notice of this claim" in 2012 and was therefore "barred by the three-year statute of limitations" found in the government cause of action, whose limitations period it contended applied to this suit. Although it agreed that the limitations period from the government cause of action applied, MSPA Claims 1 argued that the three-year limitations period begins to run only when "a party is notified of a settlement"—which it insisted occurred, at the earliest, in 2015. Accordingly, it contended that it had filed its suit "within the three-year notice-based statute of limitations."
MSPA Claims 1 and Tower Hill both similarly contended that the district court erred when it borrowed and applied Florida's general statute of limitations. Moreover, both parties took the position that 42 U.S.C. § 1395y(b)(2)(B)(iii)—the government cause of action—provides the applicable limitations period. However, they diverged narrowly (but significantly) on when that period began to run. MSPA Claims 1 believes that the limitations period did not commence until it received notice of its claim in 2015 and, therefore, that its suit was timely filed in 2018.Tower Hill asserted that the limitations period started in 2012, either (1) when it entered into the settlement agreement with D.L., or (2) when it reported the settlement to CMS and, therefore, that MSPA Claims 1's suit is time-barred.
The 11th Circuit Court instead determined that 28 U.S.C. § 1658(a)'s catch-all limitations period applies to the MSP private cause of action, in that MSPA Claims 1's "civil action" in this case "aris[es] under an Act of Congress enacted after" December 1, 1990. This regulation provides that "[e]xcept as otherwise provided by law, a civil action arising under an act of Congress enacted after" December 1, 1990 "may not be commenced later than 4 years after the cause of action accrues."
After reviewing the parties’ supplemental briefs and hearing oral argument, the 11th Circuit reasoned that § 1658(a) provides the applicable limitations period for the MSP private cause of action and that, under that statute, MSPA Claims 1's cause of action accrued in 2012 when MSPA Claims 1's assignor, Florida Healthcare, paid D.L.'s medical bills and became entitled to reimbursement through the Medicare Secondary Payer Act. Because that was more than four years before MSPA Claims 1 filed suit in 2018, its suit is not timely under 28 U.S.C. § 1658(a). Accordingly, MSPA Claims 1's suit is untimely, and the 11th Circuit affirmed the district court's order granting summary judgment for Tower Hill.
Commentary:
Key take-aways from this decision:
1) While this decision technically is only precedent in the 11th Circuit (covering Alabama, Georgia, and Florida), it is likely that we will see other Circuit Courts adopt the 11th Circuit’s line of thinking that the MSP private cause of action statute of limitations is 4 years under 28 U.S.C. § 1658(a) since the MSP does not have an explicit statute of limitations for this type of action. The government’s cause of action under the MSP is 3 years; thus, private MAP plans have an additional year (4 years) to file suit.
2) The 11th Circuit noted that the cause of action accrued in this case when the MAP began to pay for the Medicare beneficiary’s medical bills. This is also different from the government’s cause of action which accrues upon notification to CMS of the settlement, judgment, award, or other payment.
3) Thus, MAPs (or their assignors) conceivably have more time to file suit than traditional Medicare does for conditional payment recovery.
4) As many of our readers are aware, over the last decade, MAPs and their assignors have been increasingly filing hundreds of lawsuits against primary insurance payers under the MSP private cause of action. Additionally, since December 11, 2021, the PAID Act went into effect allowing primary payers to learn of enrollment in MAPs, thus, if the primary payer chooses, they may reach out to the MAP to proactively resolve conditional payments.
5) Not utilizing the PAID Act enrollment data and/or not resolving MAP conditional payments may result in unnecessary double damages litigation by the MAP and/or their assignor such as MSP Claims/MSP Recovery.
Contact me for a copy of this decision, or to learn more about Sanderson Firm's Medicare Advantage Plan (MAP) & Part D Enrollment Verification Service to assist in your MAP/Part D conditional payment resolution at heather@sandersoncomp.com.
