MSP Recovery LLC, a law firm out of Miami, Florida has been initiating class action litigation country-wide as assignees on behalf of Medicare Advantage Plans (MAPs) alleging that various primary payers have failed to reimburse MAP conditional payments allegedly giving rise to a Private Cause of Action under the Medicare Secondary Payer Act (MSP), specifically located at 42 USC §1395y(b)(3)(A).

In a decision just issued out of the Third Circuit Court of Appeals, Ocean Harbor Cas. Ins. v. Claims, 2018 Fla. App. LEXIS 13569 (September 26, 2018), the Court found that the trial court erred in certifying the class of Florida MAPs. Because MSP Recovery asserts that Ocean Harbor was responsible as a primary plan not due to pre-existing settlements, but simply due to the entry of no-fault insurance contracts under Florida’s no-fault statutes, this would involve a series of mini-trials which would need to be assessed on a case by case basis, and accordingly class certification was not appropriate.

Franco Signor LLC notes that there are a few interesting discussions in this 3rd Circuit decision which primary plans should take away, particularly if the primary plan is currently subject to litigation by MSP Recovery involving no-fault claims:

–  MSP Recovery (or Medicare Advantage Plans) recovery rights are not automatic without “demonstrated responsibility.” The MSP does not eliminate the terms and conditions of an underlying state No-Fault law or supersede an existing state insurance policy. Here, MSP Recovery has attempted to show “demonstrated responsibility” under the MSP by “the other means” language of the MSP (since there is no settlement, judgment or award). Demonstrated responsibility by other means must be demonstrated under the state’s no-fault laws and the actual no-fault policy and must be proven on a case-by-case basis.

–  What is also interesting about this decision is the discussion of whether Ocean Harbor failed to exhaust administrative remedies. MSP Recovery claims that it made an “organization determination” that Ocean Harbor owed the conditional payments and it could have challenged these payments pursuant to 42 CFR § 422.566. The court noted that there is nothing in the regulations that provides a federal administrative remedy for a primary plan like Ocean Harbor to challenge such an “organization determination.” The regulation cited by MSP Recovery only applies to claims by an enrollee (MAP beneficiary) against the MAP. While the SMART Act did finally afford primary plans with formal appeal rights, this appeals process only applies to conditional payments made under traditional Medicare Parts A and B. Accordingly, there is no method for primary plans to administratively contest an allegation by MSP Recovery/MAPs that it was responsible to make a particular payment.

This decision reinforces the current conundrum facing primary plans in MAP private cause of action double damages litigation. Medicare Advantage Plans desire the benefits of acting like traditional Medicare in seeking the ability to sue and recover double damages for unreimbursed conditional payments.

But, MAPs cannot have the benefits of acting like Medicare without carrying the burdens and providing due process to primary plans. MAPs need to afford primary plans with a formal appeal process if they want to act like Medicare.

And even more importantly, primary plans need a reliable source to determine whether their claimants are enrolled in a MAP. Currently, Medicare only returns traditional Medicare enrollment to primary plans.