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Sixth Circuit District Court holds Medicare Advantage Organizations have a Private Right of Action Under 42 U.S.C. § 1395y(b)(3)(A)

April 13, 2022 · Medicare Insights Team

Case: MSP Recovery Claims, Series LLC et al., v. Nationwide Mutual Insurance Company, et al. (S.D. Ohio Mar. 28, 2022)  https://www.govinfo.gov/content/pkg/USCOURTS-ohsd-2_21-cv-01901/pdf/USCOURTS-ohsd-2_21-cv-01901-0.pdf

On March 28, 2022, a Sixth District Court (Southern District of Ohio Eastern Division) issued an Opinion and Order holding that Medicare Advantage Organizations (MAOs) have a private right of action for double damages under 42 U.S.C. § 1395y(b)(3)(A). For the above referenced Nationwide case, theCourt held MAOs may use a private cause of action against primary payers who allegedly fail to reimburse conditional payments to the MAO. The holding in this case joins several other Sixth District Courts with similar findings.¹

While the Sixth Circuit Court of Appeals has not yet made any decisions on this subject, this Opinion and Order shows a pattern of holdings at the District Court level to for MAOs right of private cause of action. To date, the Third and Eleventh Circuit Court of Appeals are the only appellate level courts that have found MAOs have a private right of action against primary payers.

MSP Recovery Claims is an entity that brought a private cause of action on behalf of various MAOs against 24 insurance companies for reimbursement under the MSP Act.  In this case, the Plaintiffs alleged Defendants, as primary payers, failed to reimburse the secondary-payer MAOs for medical expenses from automobile injuries and other accidents. Defendants moved to dismiss the Plaintiff’s complaint, which the Court denied in part. The Court indicated it relied on the reasoning of the other courts in the Sixth District in holding:

“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.²  Accordingly, this Court holds that § 1395y(b)(3)(A) grants MAOs a private right of action.”

The Court in the Nationwide case also notably held that the MAO did not have to first make a claim for reimbursement to the primary payer before making a conditional payment. In other words, the MAO can file a lawsuit without first making a claim for reimbursement from the primary payer. 

Analysis

There have been a number of private causes of action filed by entities like MSA Recovery Claims, Series LLC on behalf of MAOs. These lawsuits show that insurers that fail to address possible conditional payments of Medicare Advantage plans (MAPs) or Part D plans (PDPs) may be presented with a similar private cause of action as the Defendant in Nationwide. While the Third and Eleventh Circuit Courts are the only Circuit Courts that have found a private cause of action for MAOs, the trend is clear that courts are recognizing private cause of actions on behalf of MAOs. The exposure is double damages and the cost of litigation.

The Provide Accurate Information Directly (PAID) Act, 42 U.S.C. §1395y(b)(8)(G), which went into effect December of 2021, has made it easier for insurers to identify MAP and PDP interests and potentially avoid these private causes of action. The PAID Act requires CMS to provide Responsible Reporting Entities (RREs) with the contact information for any MAP or PDP the Medicare beneficiary has been enrolled in for the past three years.

The Optum Advantage

As a leader in MSP compliance, Optum is able to complete conditional payment verifications with MAP and PDP plans, helping our clients mitigate the risk of a private cause of action. Last year alone, we were able to help our clients mitigate over $50 million in unrelated costs and Treasury Offsets.

If you have additional question regarding this topic or Medicare Secondary Payer compliance, please contact Optum MSP Compliance Counsel, Michael Flower, at michael.flower@optum.com or (813) 627-2406. 

Contact an Optum representative for complete conditional payment verification or other services or at 1-833-4U-OPTUM (1-833-486-7886) Option 5 for Settlement Solutions

Stay tuned to Optum for updates on all aspects of Medicare Secondary Payer compliance, including issues pertaining to WCMSAs. Please follow our Medicare Insights blog or visit our website at workcompauto.optum.com

¹ (See, e. g., MSP Recovery Claims, Series LLC v. Grange Ins. Co., No. 5:19CV00219, 2019 WL6770729, at *23 (N. D. Ohio Dec. 12, 2019); Progressive Corp., 2019 WL5448356 at *8; MSP Recovery Claims v. Auto Club Ins. Ass'n, No. 21-11606, 2021 WL 5234501, at *2 (E. D. Mich. Nov. 10, 2021); see a/so MSPA Claims 1, LLC v. Tenet Fla., Inc., 918 F.3d 1312, 1317 (11th Cir. 2019) (Thapar, J.) 
² 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).

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