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 11th 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 11th 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. 

  1. Carefully consider the proposed indemnity/hold harmless language in settlement documents dealing with the Medicare issues and liens in general. Look back to The Lien Project blogs on this issue for practical insights [Here]. A liability carrier being pursued as a primary payer after a case claim has been paid is likely going to tender the matter to the plaintiff based on the indemnity/hold harmless provision in the settlement documents. If sued they will do so by way of a cross-complaint against the plaintiff/claimant. 
  2. To ensure that all SPA issues are resolved, personal injury firms will now need to contact not just CMS and the MAO, but also all “down-stream actors”, or face the potential of a provider group asserting a SPA claim – through an aggressive recovery entity who obtained an assignment of the underlying SPA rights – perhaps long after the settlement funds are disbursed and the file closed.
          The Lien Project can help you and your firm deal with these issues effectively and efficiently. Too often we are called for a “Clean Up on Aisle Muck Up”. While we stand ready to get our hands dirty, we prefer to start early - before a case resolves - when we can most effectively work to reduce the claimed liens and help to guard your firm against future risk.
The Lien Project is here to help. Trial lawyer to trial lawyer.