Navigating Statute of Limitations in Medicare Advantage Plan Private Cause of Action Claims

Written by: Neha Pellegrino, Esq., MSCC

The double damages private cause of action arising under the Medicare Secondary Payer Act (MSP Act) was promulgated in an effort to reduce instances where primary insurance payers fail to reimburse Medicare conditional payments. The proposed effect of a double damages penalty was intended to encourage parties to bring actions that enforce Medicare's conditional payment recovery rights. Numerous Federal courts across the country, both at the Circuit and District level, have ruled that the MSP Act, specifically the private cause of action provision allowing for double damages, applies not only to traditional Medicare but also to Medicare Advantage Plans (MAPs). Thus, much case law has established that MAPs may sue insurers for double damages in connection with their conditional payment recovery claims.

We continue to observe MAPs filing numerous lawsuits against primary insurance payers across the country. A recent case out of the First Circuit in Massachusetts, MSP Recovery Claims Series 44, LLC v. Bunker Hill Ins. Co., 2023 U.S. Dist. LEXIS 127840 (July 25, 2023) was no different. However, in Bunker Hill, a defense was raised that persists to gain ground.

Factual Overview:

The defendants, Bunker Hill Insurance Company, and Plymouth Rock Home Assurance Corporation (“Bunker Hill”) contended the claim was time-barred. With that, the First Circuit was forced to determine what statute of limitations would apply to a claim brought under the MSP Act’s private cause of action, and then determine whether that statute of limitations would bar this claim.

The MSP Act is currently silent as to a limitations period for private causes of action, see 42 U.S.C. § 1395y(b)(3)(A), although there is a three-year statute of limitations for actions brought by the government, see 42 U.S.C. § 1395y(b)(2)(B)(iii). With no explicit statute of limitations and no controlling authority, the First Circuit in Bunker Hill, as many courts do, looked to other suitable sources as standard.

The case honed as precedent was one that Sanderson Firm recently blogged about last summer when the Eleventh Circuit found the applicable statute of limitations for a private cause of action to be four years, MSPA Claims 1, LLC v. Tower Hill Prime Ins. Co., 2022 U.S. App. LEXIS 22162 (August 10, 2022). The Court in Tower Hill determined there is a specific, applicable statutory period provided by Congress, and applied 28 U.S.C. § 1658 which states,

“except 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" (emphasis added)

The Eleventh Circuit in Tower Hill interpreted that 28 U.S.C. § 1658’s provision would apply to a private cause of action brought by a Medicare Advantage Plan. The First Circuit concurred with that determination. Thus, the Court in Bunker Hill held that MAPs abide by a four-year limitation to their claims.

Nevertheless, while the courts in Tower Hill and Bunker Hill agreed that a four-year statute of limitations is appropriate, the Courts diverged on determining when a cause of action accrues. In Tower Hill, the Court held that the clock starts running when the MAP pays the beneficiary’s medical fees, thus becoming entitled to reimbursement through the MSP Act. The Court in Bunker Hill disagreed, alluding that the MAP would have no reason to know it was entitled to any reimbursement nor that it had a claim against a responsible primary payer at that time.

Under the government’s cause of action, notice of the settlement commences the claim. Likewise, the Court in Bunker Hill held that the statute of limitations starts running when the primary payer reports their claim to Medicare and the information becomes discoverable.

Sanderson Firm Commentary:

Generally, the MSP Act has been described as “among the most completely impenetrable texts within human experience,” and Bunker Hill furthers the complexity of this elaborate statutory scheme. See Cooper Univ. Hosp. v. Sebelius, 636 F.3d 44, 45 (3 Cir. 2010). Bunker Hill is currently the second ruling where a court has applied 28 U.S.C. § 1658 to find that MAPs have a four-year statute of limitations to seek conditional payment recovery. However, Bunker Hill adds that the statute of limitations period accrues when the primary payer reports the claim to Medicare.

With courts applying various statute of limitations and accrual timelines, there is no clear statute of limitations that primary insurance plans can rely upon where a private cause of action by a MAP might be lodged. Unless a revision to the MSP Act is made, and Congress notes a specific statute of limitations and accrual timeline in the private cause of action (42 U.S.C. § 1395y(b)(3)(A)), it is very likely that courts across the country will continue to reach varying conclusions on private conditional payment recovery actions. If your organization has any questions about the Bunker Hill decision or any other conditional payment recovery inquiries, please contact us.