Exploring Conditional Payment Litigation

Legal Scales

by P. Czuprynski

On 7/12/2023, IMPAXX continued its knowledge series on Medicare Secondary Payer Compliance. In our latest session, Lights, Camera, Action: Exploring Conditional Payment Litigation, we discussed recent federal court decisions associated with Medicare Advantage conditional payments and enforcement of collection.

Medicare Advantage Organizations (MAOs) have experienced favorable decisions associated with the right to seek reimbursement under the Medicare Secondary Payer Act and double damages. See In Re Avandia Marketing, 685 F.3d 353 (3d Cir. 2012) and Humana Med. Plan, Inc. v. W. Heritage Ins. Co., 832 F.3d 1229 (11 Cir. 2016).

While these decisions may seem scary, it is important to note that Medicare Advantage plans have also been recently restricted in their ability to obtain reimbursement.

MSP Recovery Claims v. United Auto Insurance

For example, in MSP Recovery Claims, Series LLC v. United Auto Ins. Co., 60 F.4th 1314 (11 Cir. 2023), the same circuit court that awarded doubled damages in Western Heritage determined that the Medicare Secondary Payer Act does not preempt Florida statute Fla. Stat. § 627.736(10)(a), which requires a demand and 30-day cure period before an auto insurer can be sued.

Further, the court held that the MSP Act did not preempt a policy provision requiring medical expenses to be claimed within one year of their occurrence and dismissed the MAO’s suit for reimbursement.

MSPA Claims v. Tower Hill Prime Insurance

We also revisited a classic from 2021/2022, MSPA Claims 1, LLC v. Tower Hill Prime Ins. Co, 43 F. 4th 1259 (11th Cir.) and district court decision 2021 U.S. Dist. LEXIS 54143 (N.D. Fla. 2021). In the Tower Hill suit, the district court was unsure whether the three-year statute of limitations applied the private cause of actions for MAOs. The Eleventh Circuit found that the four-year statute of limitations under federal statute 28 U.S.C. 1658(a) applied. The Eleventh Circuit also found that under this statute, the timeframe begins when the right to reimbursement accrues.

In the Tower Hill matter, this meant that the MAO’s right to reimbursement accrued when the medical payments were made by the MAO and there was a settlement associated with the claim. The settlement in Tower Hill was in 2012 and MAO’s suit for reimbursement was after this timeframe. Therefore, the Eleventh Circuit dismissed the MAO’s suit for reimbursement.

The Tower Hill decision also means there are different standards for determining if the statute of limitations has expired under the three-year versus the four-year standard.

Under the three-year statute of limitations argument, a major question appears to be when did the MAO receive notice of the of the settlement, judgement, award, or other primary payment? Or was the MAO on constructive notice?

However, under the four-year statute, the question appears to be when did the right to reimbursement accrue? Under the four-year statute, notice to the plan is not a paramount factor in determining if timeframe has expired.

Tower Hill’s significance seems to be appreciated by the MAOs seeking reimbursement, because it appears in later cases that MAOs are willing to stipulate that a three-year statute of limitations applies to their reimbursement claims.

This type of stipulation may benefit MAOs, and carrier/self-insureds subject to suit by MAOs should carefully consider which statute of limitations may be applicable to their claim.

Monitoring News and Ongoing Decisions

IMPAXX will continue to provide updates regarding MAO’s reimbursement rights and litigation. While these cases provide insights regarding defenses or disputes on conditional payments, it is important to recognize that using PAID Act information from Medicare’s query process prior to settlement can help identify potential MAOs and resolve those liens before litigation is needed.

If you would like a link to the complimentary recorded webinar, have any questions, or wish to discuss how the IMPAXX team can review your options for resolving Medicare Liens, please contact us at [email protected].