Medicare Advantage & Part D Payments Might Have You Seeing Double

Medicare Advantage Plans (MAPs), also known as Medicare Part C, are private insurance plans that provide for a Medicare beneficiary’s Part A and Part B benefits. Beneficiaries can choose to enroll in an MAP rather than traditional Medicare. There also are Medicare drug plans (Part D) that provide for a beneficiary’s prescription drugs.

MAPs and Part D plans have recovery rights for conditional payments under the Medicare Secondary Payer Act (MSP). While case law across the country is scattered on what degree of recovery rights MAPs have for conditional payments, it is clear that, at the very least, they have rights to recover the conditional payments they have made, like any other medical lien. In some jurisdictions, they have the right to recover double damages for conditional payments under the MSP private cause of action.

Recently, MAPs and Part D plans have litigated this issue vigorously. Therefore, all parties settling with a Medicare beneficiary should take extra precautions during the settlement process. It is imperative to consider these two plans when resolving a workers’ compensation, no-fault, or liability claim with a Medicare beneficiary.

When claims involve Medicare beneficiaries, parties should take steps to identify all health care plans involved through discovery. This information is critical for those jurisdictions that currently recognize an MSP private cause of action, double-damages claim. For those jurisdictions that do not, it is best to err on the side of caution, as the information is still relevant, and the settlement documents should clearly state how the liens will be addressed.

In the case of In Re: Avandia Marketing, Sales Practices & Products Liability Litigation, the U.S. Court of Appeals for the 3rd Circuit is the only appellate court to date that has established the private cause of action against primary plans (insurance carriers and self-insurers) that handle workers’ compensation and liability cases. The 3rd Circuit includes Delaware, New Jersey, and Pennsylvania. For these jurisdictions, the best practice is to identify the Medicare Advantage and prescription drug plans for the claimant immediately and have a strategy in place to address the liens and reimbursement obligations at the time of settlement. Since workers’ compensation insurers and self-insurers in these jurisdictions can be subject presently to double damages, it might make sense to notify the court immediately of this concern and how it should be addressed. Additional care must be spent in these jurisdictions because the liability is strict.

While In Re: Avandia is the only current circuit court of appeal decision, it certainly won’t be the last. A case to watch is the matter of Humana v. Western Heritage Insurance Company. This case involves an insurance carrier that settled a liability matter and learned after settlement that the claimant was a Medicare beneficiary. In an effort to mitigate its risk, the carrier attempted to add conditions to the release. The plaintiff’s attorney resisted, and the state court required Western Heritage to pay the funds, allowing the claimant and his attorney to deal with Medicare issues. Regrettably, the claim involved an MAP, and as the matter progressed with regard to the lien, Humana did not get a favorable ruling on its lien and filed an appeal. It also filed a lawsuit against Western Heritage in the U.S. District Court for the Southern District of Florida requesting the full value.

Despite the pending appeal, the district court awarded Humana double damages because Western Heritage was required (in its interpretation of the Medicare Secondary Payer law) to pay Humana when the case settled. Western Heritage appealed, and the appeal is presently pending. Oral arguments were held in April 2016, with a decision expected sometime late summer or early fall. Should the court rule for Western Heritage, it will create a split in the circuit courts. A ruling for Humana would more than likely result in widespread application across the country.

Additionally, in a recent opinion out of the U.S. District Court for the Eastern District of Virginia, Humana Insurance Company v. Paris Blank LLP, Paris Blank, a law firm representing a Medicare beneficiary, was sued by Humana for the attorney’s failure to reimburse it for conditional payments. While this litigation is far from finalized, it demonstrates the aggressive nature of MAPs in pursuing these recoveries. Furthermore, it shows that MAPs are setting their sights not only on primary payers and insurance carriers, but also on attorneys.

The key takeaway here is that all parties to a settlement with a Medicare beneficiary should be aware and address Medicare Advantage and Part D conditional payments or risk the threat of being subject to double damages.