ELEVENTH CIRCUIT DENIES REHEARING OF DECISION ALLOWING DOWNSTREAM PROVIDERS TO SUE UNDER MEDICARE SECONDARY PAYER ACT

The Eleventh Circuit has denied a petition for the full Court to re-hear its previous decision allowing assignees of downstream Medicare Advantage groups to sue primary insurers under the Medicare Secondary Payer Act (“the Act”).

The Act provides that in order to reduce costs to the Medicare program, in situations where a Medicare beneficiary has other insurance coverage, Medicare is the secondary payer.  The Act also provides that Medicare can make conditional payments to medical providers who have treated Medicare beneficiaries and can seek double damages from primary insurers that have failed to pay.  This can happen, for example, when an automobile insurer whose policies cover medical costs or a workers’ compensation plan fails to pay a beneficiary’s cost of treatment.

Previous cases in the Eleventh Circuit and elsewhere had extended the Act to cover Medicare Advantage plans, which are plans offered by private health insurers as an alternative to original Medicare.  The government pays Medicare Advantage plans a capitated amount per member per month and Medicare Advantage plans pay for their beneficiaries’ covered medical care.  Medicare Advantage plans, in turn, frequently contract with “downstream” physician organizations or other groups, who contract with providers to provide medical care to Medicare Advantage beneficiaries.

The case before the Eleventh Circuit was originally brought by collection agencies that had assignments from some of these downstream Medicare Advantage groups to recover amounts owed to these groups by primary insurers. The issue before the Court was whether downstream Medicare Advantage groups who had made conditional payments to providers are entitled to sue primary insurers under the Act’s private right of action.

In a September 4, 2020 decision, the Court ruled that these downstream actors were entitled to sue and to recover double damages under the Act.  In reaching its decision, the Court reviewed precedent that had extended the Act’s private right of action to beneficiaries and to medical providers.  The Court reasoned that the Act’s private right of action:

which has been interpreted to apply to plaintiffs with a connection to a conditional  payment, is easily read to cover downstream actors who have borne the cost of a  conditional payment and thus have suffered damages.  Furthermore, allowing  downstream actors who have directly paid beneficiaries’ medical bills or reimbursed an  MAO [Medicare Advantage organization] to recoup damages would plainly benefit the Medicare Advantage system.  It would enable downstream actors to avoid costs that, under the Medicare Secondary Payer Act, should be borne by primary payers, not actors within the Medicare Advantage system. 

The Court’s earlier opinion also deferred to the Department of Health and Human Services’ “well-reasoned and considered interpretation” of the Act expressed in its amicus brief.  That brief had argued that any downstream actor that has “actually suffered an injury because it provided or paid for care from its own coffers and was harmed by a primary plan’s failure to provide reimbursement” should be entitled to use the Act’s private right of action.

The primary insurers had moved for rehearing en banc, which the Eleventh Circuit denied per curium.

The case is MSP Recovery Claims v. Ace American Insurance CO. et al., case numbers 18-12139, 8-12149, and 18-13312 in the United States Court of Appeals for the Eleventh Circuit.  The Court’s September 4, 2020 opinion is linked here.