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Rafael Gonzalez, Esq. President, Flagship Services Group

On March 2, 2018, the United States District Court for the Middle District of Florida, Orlando Division, published its opinion on MSPA Claims 1, LLC v. Halifax Health, Inc., in which the court found that a private right of action under the Medicare Secondary Payer Act, 42 U.S.C. §1395y(b) et seq. (MSP Act), which provides for double damages in the event of untimely reimbursement of Medicare payments in certain circumstances, is unavailable against providers of medical services. Based on such ruling, the court dismissed with prejudice claims that had been raised under the MSP Act against Halifax Hospital Medical Center, a public hospital based in Daytona Beach, Fla.

 

Background

MSPA Claims 1, LLC v. Halifax Health, Inc., is one of many lawsuits filed by MSPA Claims 1 LLC (MSPA) against various entities, seeking to certify a class of all Florida Medicare Advantage Organizations (MAOs) and recover double damages for alleged untimely reimbursement for medical payments. The case, however, is unusual insofar as MSPA targeted a provider of medical services, in this case a hospital, as opposed to the primary payers or insurance companies usually named as defendants in such suits.

In the complaint, MSPA alleges to be the remote assignee of a now-defunct MAO, Florida Healthcare Plus Inc. (FHCP). The complaint alleges that a Medicare Advantage enrollee of FHCP was involved in a motor vehicle accident and, as a result, received treatment at Halifax Hospital Medical Center (which was erroneously named in the plaintiff’s complaint as Halifax Health Inc.). In addition to being covered by a Medicare Advantage plan administered by FHCP, the enrollee had $10,000 in uninsured motorist coverage. The uninsured motorist policy was primary and the MAO’s obligations were secondary, with respect to the medical services provided by Halifax.

After the uninsured motorist insurer paid its full $10,000 policy limits to Halifax, Halifax billed FHCP for the balance, by way of an invoice that reflected the $10,000 already received from the other insurer. FHCP, however, erroneously failed to offset the $10,000 already paid by the uninsured motorist insurer, and rendered payment to Halifax in the full amount of the covered charges, resulting in a $10,000 overpayment to Halifax. The plaintiff’s complaint alleges that Halifax failed to reimburse the full $10,000 overpayment within 60 days of FHCP’s payment. As a result, MSPA, as the alleged assignee of FHCP, brought suit in Florida state court in Miami, seeking to certify a class and recover double damages for each medical claim covered by the MSP Act that was not reimbursed within 60 days of a secondary payment by FHCP.

 

Change of Venue

Halifax had the case removed from state court in Miami, then successfully had it transferred from the U.S. District Court for the Southern District of Florida, Miami Division to the U.S. District Court for the Middle District of Florida, Orlando Division. Halifax then obtained a stay of the case in the Middle District pending the District Court’s ruling on Halifax’s motion to dismiss the lawsuit. In its motion to dismiss, Halifax argued, among other things, that the MSP Act’s private right of action does not provide a remedy against providers of medical services.

 

Halifax Argues It Is Not A Primary Payer

In pertinent part, the MSP Act’s private right of action provides that ”there is established a private cause of action for damages (which shall be in an amount double the amount otherwise provided) in the case of a primary plan which fails to provide for primary payment (or appropriate reimbursement) in accordance with paragraphs (1) and (2)(A). 42 U.S.C. §1395y(b)(3)(A). Halifax argued that MSPA had not sued a primary plan, and it was not alleged anywhere in the complaint that a primary plan failed to make primary payment. Indeed, the only primary plan identified in the complaint, the uninsured motorist insurer, paid its full $10,000 limit before FHCP made its erroneous overpayment.

 

Court Agrees With Halifax, Dismisses Claim

Following extensive briefing, the District Court entered an order agreeing with Halifax’s interpretation of the MSP Act’s private right of action, ruling “the issue here is not FHCP’s right to reimbursement; the issue is whether FHCP’s assignee can pursue that right via the MSP Act’s private right of action. By its terms, that right of action only applies to primary plans. MSPA offers no argument as to why it should also apply to entities, such as Halifax, that receive payment from primary plans. Count I will therefore be dismissed.”

In light of this ruling, the District Court did not reach Halifax’s alternative argument that the payment at issue in the case was not a “conditional payment” by an MAO under the MSP Act and was, instead, an erroneous overpayment made after payment of the primary insurer such that the remedies in the MSP Act did not apply.

 

Conclusion

 

In a matter of first impression, the U.S. District Court for the Middle District of Florida has ruled that a private right of action under the Medicare Secondary Payer Act, which provides for double damages in the event of no reimbursement or untimely reimbursement of Medicare payments in certain circumstances, is unavailable against providers of medical services, as such entities are not primary payers as defined by the MSP Act.

 

About Rafael Gonzalez

Rafael Gonzalez, Esq. is President of Flagship Services Group. He has over 30 years of experience in the auto, liability, no-fault, and work comp industries. He is one of the country’s top experts on Medicare and Medicaid compliance, serving insurers, self-insureds, and third party administrators. He speaks and writes on mandatory insurer reporting, conditional payment resolution, set aside allocations, and professional administration, as well as the interplay and effect of these processes and systems and the Affordable Care Act throughout the country. Rafael blogs on these topics at Medicare Compliance for P&C Insurers at www.flagshipservicesgroup.com/blog. He is very active on LinkedIn, Twitter, Instagram, and Facebook. He can be reached at rgonzalez@flagshipsgi.com or 813.967.7598.

 

Rafael Gonzalez, Esq

 

About Medicare Conditional Payments

42 CFR Section 411.21 indicates that Medicare conditional payments are payments made by Medicare for medical treatment where a primary payer (insurer or self-insurer) has or may have an obligation to make such payment. Primary payers must reimburse Medicare for conditional payments it has made. 42 USC Section 1395y indicates that primary payers include group health providers, workers’ compensation, liability and no-fault insurers and self-insured entities, as well as physicians, attorneys, hospitals, or clinics that receive payment from a primary payer must make reimbursement.

42 USC Section 1395y also indicates responsibility as a primary payer arises even if liability for the medical expense is contested. Such a responsibility can be demonstrated by entry of a judgment or by payment conditioned on a release or waiver of payment, even if liability is denied. 42 CFR Section 411.24 indicates Medicare has a direct right of action against all primary payers responsible for making payment. And, Medicare has a direct right of action against any person or entity that received a primary payment, including the Medicare beneficiary, medical provider, physician, attorney, state agency or private insurer.

 

About Medicare Advantage and Prescription Drug Plans Reimbursement

42 CFR Section 422.108(f) provides MAPs with the same rights of recovery that the Secretary of HHS has under the MSP regulations in subparts B through D of part 411 of 42 CFR. Additionally, the same MSP regulations at 42 CFR Section 422.108 are extended to PDPs at 42 CFR Section 423.462. Therefore, PDPs have the same MSP recovery rights as MAPs, which have the same recovery rights as HHS. This includes, as recent federal appellate and district court decisions have indicated, the ability to pursue double damages through MSP private cause of action pursuant to 42 USC Section 1395y(b)(3) should the primary payer deny the MAP or PDP reimbursement of any due conditional payments.

 

About Medicaid Third Party Liability Liens

42 USC Section 1396a mandates that all reasonable measures to ascertain legal liability for Medicaid payments and reimbursement of same be taken. The state or agency administering a Medicaid plan must take all reasonable measures to ascertain the legal liability of third parties to pay for care and services paid by Medicaid. Federal law also provides that in any case where such a legal liability is found to exist after medical assistance has been made available on behalf of the individual, the state or local agency must seek reimbursement for such assistance to the extent of such legal liability. 42 U.S.C. Section 1396a(a)(25).

 

About Flagship Services Group

Flagship Services Group is the premier Medicare and Medicaid compliance services provider to the property & casualty insurance industry. Our focus and expertise has been the Medicare and Medicaid compliance needs of P&C self-insureds, insurance companies, and third party administrators. We specialize in P&C mandatory reporting, conditional payment resolution, and set aside allocations. Whether auto, liability, no-fault, or work comp claims, we have assembled the expertise, experience and resources to deliver unparalleled MSP compliance and cost savings results to the P&C industry. To find out more about Flagship, our folks, and our customized solutions, please visit us at www.flagshipservicesgroup.com. To speak with us about any of our P&C MSP compliance products and services, you may also contact us at 888.444.4125 or info@flagshipsgi.com.

 

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