11th Circuit Affirms Double Damages for Medicare Advantage Organizations
Humana Medical Plan, Inc. v. Western Heritage Ins. Co.: The Medicare Secondary Payer scheme applies to Medicare Advantage Organizations, who may sue for double damages when a primary payer fails to make payment or reimbursement.
On August 8, 2016, the Eleventh Circuit Court of Appeals issued its opinion in Humana Medical Plan, Inc. v. Western Heritage Ins. Co. [No. 15-11436], — F.3d — (11th Cir. 2016), wherein Western had appealed the district court’s order entering summary judgment in favor of Humana for double damages pursuant to the Medicare Secondary Payer Act private cause of action, 42 U.S.C. § 1395y(b)(3)(A), and declaratory judgment for reimbursement to Humana for Medicare benefits paid by Humana on behalf of its Medicare Advantage plan enrollee. The Eleventh Circuit decided as a matter of first impression whether the Medicare Secondary Payer private cause of action permits a Medicare Advantage Organization to sue a primary payer that refuses to reimburse the Medicare Advantage Organization for a secondary payment.
NOTE: The Third Circuit has previously ruled on the same issue and held that Medicare Advantage Organizations may sue a primary payer under the Medicare Secondary Payer Act private cause of action. See In re Avandia Mktg., Sales Practices & Prods. Liab. Lit., 685 F.3d 353, 367 (3d Cir. 2012).
How does a Medicare Advantage Organization fit within the Medicare Secondary Payer scheme?
The Eleventh Circuit’s primary consideration was how a Medicare Advantage Organization (“MAO”) fits within the Medicare Secondary Payer (“MSP”) scheme, under 42 U.S.C. § 1395y(b)(3)(A). Western proposed the idea that the MSP does not govern MAOs at all and that the MAO right-to-charge provision instead governs when and whether an MAO is a secondary payer; Western further argued that because an MAO derives secondary payer status from the MAO right-to-charge provision rather than the MSP, an MAO may not sue under the MSP private cause of action.
Interpreting the plain language of the statute, 42 U.S.C. § 1395y(b)(3)(A)
The Eleventh Circuit determined that Western’s argument was contrary to the plain language of the statute, because:
- 42 U.S.C. § 1395y(b)(2)(A) refers unambiguously to all Medicare payments, to include both traditional Medicare and Medicare Advantage plans, and
- The MAO right-to-charge provision refers parenthetically to circumstances under which MAO payments are made secondary under 42 U.S.C. § 1395y(b)(2).
Therefore, the Eleventh Circuit determined that a plain reading of 42 U.S.C. § 1395y(b)(2)(A) and the MAO right-to-charge provision revealed that MAO payments are made secondary to primary payments pursuant to the MSP, and not (as Western argued) the MAO right-to-charge provision. Subsequently, under 42 U.S.C. § 1395y(b)(3)(A), an MAO is permitted to sue a primary plan that fails or refuses to reimburse an MAO’s secondary payment and is entitled to an award of double damages.
Summary judgment in favor of a plaintiff under the MSP private cause of action is appropriate when there is no genuine issue of material fact as to: (1) the defendant’s status as a primary plan; (2) the defendant’s failure to provide for primary payment or appropriate reimbursement; and (3) the amount of damages.
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