Private Medicare Plans Barred from Pursuing Beneficiaries for Conditional Payment Recovery
Written by: Brendon De Souza, Esq.
Featured in the National Medicare Secondary Payer Network (MSPN), available here: mspnetwork.org
The Medicare Secondary Payer Act (codified under 42 U.S.C. § 1395y(b)) provides two distinct causes of action for recovery of unpaid Medicare conditional payment debts: the first—42 U.S.C. § 1395y(b)(2)(B)(iii)—may be used by the federal government to pursue an action for double the amount of medical expenses paid by traditional Medicare, and the second—42 USC §1395(y)(b)(3)(A)—may be used by a private individual or organization to pursue an action for double the amount of medical expenses paid by a private Medicare plan.
It is well-established that the federal government may not only use its cause of action to seek conditional payment recovery directly from any primary payer, but it may also use its cause of action to seek conditional payment recovery from any party who receives a primary payment, including a beneficiary (42 CFR § 411.24(e) and (g)). However, on February 13, 2024, a Massachusetts federal court determined that a Medicare Advantage Plan (“MAP”) using the private cause of action could only seek recovery from a primary payer and cannot seek conditional payment recovery against beneficiaries, their attorneys, or other non-primary payers. Meador v. United States, No. 22-cv-40024-DJC, 2024 U.S. Dist. LEXIS 24796 (D. Mass. Feb. 13, 2024).
Factual Overview
The decedent, Paula Meador, was prescribed lithium carbonate by Dr. Kim Houde, a government employee, to treat her bipolar disorder. On March 6, 2019, Ms. Meador was diagnosed with acute lithium toxicity, and United Health Group, LLC, a Medicare Advantage Plan, paid a portion of Ms. Meador’s medical expenses related to her bipolar disorder treatment. Due to elevated levels of lithium in her bloodstream, Ms. Meador passed away on June 15, 2019.
Plaintiffs Kenneth Meador and Thomas Meador filed a lawsuit against the federal government claiming wrongful death and loss of consortium. United Health Group, LLC and its subrogation agent, Optum, asserted a conditional payment lien against the Meadors for medical expenses paid for Ms. Meador’s bipolar treatment between the period of Ms. Meador’s diagnosis and her death. The plaintiffs sought an order from the United States District Court for the District of Massachusetts (“Court”) to invalidate United Health Group, LLC’s lien, and the ultimately Court agreed.
Sanderson Firm Commentary
Historically, there has been a general consensus in the Medicare Secondary Payer community that private Medicare plans (e.g., Medicare Advantage Plans and Medicare Prescription Drug Plans) enjoy the same conditional payment recovery rights as traditional Medicare; not only with respect to double damage recovery, but also with respect to the entities and individuals that the private
plans may pursue recovery against. This position is supported by federal case law and federal regulation. In re Avandia Marketing, Sales Practices and Product Liability Litigation, 685 F.3d 353 (3d Cir. 2012); Humana Med. Plan Inc. v. W. Heritage Ins. Co., 832 F.3d 1229 (11th Cir. 2016); 42 CFR § 422.108 (stating “[t]he MA organization will exercise the same rights to recover from a primary plan, entity, or individual that the Secretary exercises under the MSP regulations”).
The Meador court now joins a growing number of other courts finding that private Medicare plans are barred from using the private cause of action against beneficiaries. See Aetna Life Ins. Co. v. Guerrera, 300 F. Supp. 3d 367, 372-374 (D. Conn. 2018); Parra v. PacifiCare of Ariz., Inc., 715 F.3d 1146, 1154-55 (9th Cir. 2013); MSPA Claims 1, LLC v. Halifax Health, Inc., 295 F. Supp. 3d 1335, 1340 (M.D. Fla. 2018).
Even notwithstanding this case law which supports MAPs pursuing conditional payment recoveries against primary payer insurance plans rather than Medicare beneficiaries, we have experienced that typically the MAP seeks to recover from the primary insurance plan rather than the Medicare beneficiary. Unlike traditional Medicare which typically names the Medicare beneficiary as the debtor post-settlement, MAPs tend to seek recovery from the primary insurance plans instead, which makes sense since primary payers have “deeper pockets” as compared to beneficiaries. The Meador decision further incentivizes a continuation of this practice.
As a best practice, Sanderson Firm continues to recommend proactive identification and resolution of MAP conditional payments pre-settlement in order to avoid potential double-damages litigation or recovery efforts post-settlement by the MAP. Identification of MAP beneficiaries and a potential conditional payment lien is the first step, and the next step is to dispute any unrelated inappropriate payment liens alleged. We also continue to advise that primary payers agree to handle conditional payments as part of their settlement agreement, especially in the case of MAP liens which are likely to end up at the primary payers “door” no matter what is written in the settlement agreement.
If your organization is seeking assistance on MAP lien resolution, please contact us. Sanderson Firm has a 99% success rate and an average 55% lien reduction in disputing MAP conditional payments on behalf of our clients. We will continue to monitor this case law as it develops throughout the country, but primary-payer insurance plans should be aware of potential increased recovery efforts from private Medicare plans.
If you have any questions about this developing case law or would like to engage Sanderson Firm for our full suite of Medicare conditional payment services, please contact us.
