MAOs' NEW Strategy for Secondary Payer Lawsuits

             With over 34% of all CMS beneficiaries nationally opting to join Medicare Advantage Organizations [“MAOs”] for their Medicare benefits, whether and how the MAOs can pursue liens under the Secondary Payer Act continues to evolve.
            The recent opinion of the 11^th Circuit in MSP Recovery v. Ace [Here] is a good illustration of the strides the MAOs continue to make and why personal injury firms need to effectively deal with all corresponding issues. Otherwise, PI firms subject themselves and their clients to downstream risks and liabilities.
            MSP Recovery Claims is a private company that takes assignments from MAOs of their lien rights under the Secondary Payer Act (“SPA”) and pursues liability carriers for conditional payment liens. In a series of actions venued in Florida, MSP Recovery Claims initially ran into issues with the validity of their contractual assignments, both as to whether “downstream actor assignors” could seek to enforce the private right of action for double damages under the SPA and because of defects in some of the assignment agreements. 
            After several pleading rounds, the 11^th Circuit has sided with MSP and validated their right to pursue the SPA private right of action as assignor. 
            The decision expands the scope of the private right of action in important ways. First, it includes as proper plaintiffs, both the MAOs and “downstream actors”, such as practice groups that contract with a MAO to cover the costs of care to beneficiaries on a capitated basis. This will allow MAOs to pass their SPA rights through to the practice groups during their contract negotiations, with a resulting shift in the inherent costs of pursuing lien recoveries. 
            Second, the opinion confirms in pursuing a private right of action for double the “lien”, there is no “pre-suit notice requirement”. Although a primary payer must have knowledge that they owed a primary payment before a party can claim double damages under the SPA, this can be construed from their business practices and policies. Because all liability carriers have mandatory reporting requirements as to claims and payments to CMS beneficiaries, a claim that a carrier did not have at least constructive knowledge of its responsibility as a primary payer is not going to fly. 
            The “Ace” decision is even more concerning when considered alongside the decision in the MSPA Claims v. Kingsway Amigo, [Statute of Limitations on CMS Lien Recovery Action Under Secondary Payer Act] holding that private rights of action under the SPA by MAOs are not subject to the SPA three-year statute of limitations in 42 USC § 1395y(b)(2)(B)(vi) -- so you have a long-tail risk after a case has resolved. 

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