Gina Cox No Comments

Lawyers reviewing case documentsMedicare Secondary Payer (MSP) compliance has become an integral part of claims handling for both the injured plaintiff and his/her counsel, as well as the corporate defendant, its insurer, and its counsel. Litigants today must pay close attention and stay informed about plaintiff’s entitlement to Medicare, and whether Medicare makes any conditional payments related to the pending or settled claim. In addition, litigants today must know whether the plaintiff is enrolled in a Medicare Advantage Plan (MAP) or Prescription Drug Plan (PDP), and whether such plans make any conditional payments related to the pending or settled claim. Not knowing this will create havoc on your claim, your settlement, your practice, and your business.

Humana Insurance Company v. Randy Pelham/Pelham Law Firm

Case in point is an August 18, 2017 matter in which Humana Insurance Company (Humana) filed a complaint against Randy Pelham, individually, and The Pelham Law Firm (Pelham) in the United States District Court for the Northern District of Florida in Tallahassee, Florida. The case stems from an accident on June 9, 2016, in which the Plaintiff (Enrollee) was a passenger in a vehicle that was involved in a serious collision. At the time of the collision, Enrollee was eligible for Medicare and had elected Medicare Part C coverage through Humana.

Enrollee received Medicare benefits for the injuries he sustained in the collision. Specifically, Humana expended $13,388.02 in conditional payments on Medicare claims submitted on behalf of Enrollee for medical services rendered as a result of the collision.

Enrollee retained attorney Pelham to represent his interests. Pelham assisted Enrollee reach a settlement of the claim. The “Settlement Statement” between Enrollee and Defendants was executed on August 22, 2016. As a result, Progressive Insurance Company, Defendant’s insurer, issued a check payable to Enrollee and Pelham and/or the Pelham Firm in the amount of $250,000, settling all claims resulting from the June 9, 2016 accident.

After learning that Enrollee may have been injured in a car accident, and that Enrollee was represented by Pelham, Humana attempted to contact Pelham to put them on notice of Humana’s lien. On September 8, 2016, Humana mailed and faxed letters to Pelham putting them on notice of Humana’s lien; seeking information from Pelham; and asking Pelham to acknowledge that they would not disburse funds without satisfying Humana’s lien. On that same date, Humana also placed a call to Pelham seeking to discuss the matter.

The following day, on September 9, 2016, Pelham faxed Humana a letter stating that the case had resolved and that the funds had already been disbursed. On September 16, 2016, Pelham faxed Humana another letter attaching a copy of a letter he received from Medicare’s COBR Contractor. That letter stated that there were no Part A or B liens. As a result, Pelham’s letter informed Humana that he considered the matter closed.

Counsel for Humana sent Pelham a letter on February 17, 2017 that advised him of his non-delegable duty to ensure that Humana is appropriately reimbursed for its conditional payments on behalf of Enrollee. That letter informed Pelham that he could personally be sued for double damages under the controlling law, if he refused Humana’s reimbursement request. Pelham responded to Humana on March 4, 2017 in an email message, refusing to honor Humana’s request for reimbursement, informing Humana that it could contact Enrollee directly should it wish to discuss the matter any further.

Humana did not receive any reimbursement for the conditional payments it made on behalf of Enrollee. As a result, on August 18, 2017, Humana filed a complaint against Pelham seeking double damages, or $26,776.04 from Pelham.

Current Law

The law on this issue has been clear since December 1980, when Congress determined that, in the event of a bodily injury such as an automobile accident, liability and no-fault insurance policies are to provide the primary source of recovery, with Medicare to be the secondary source of recovery. 42 U.S.C. Section 1395y(b)(2).

Part C of the Medicare Act expressly incorporates the MSP law into the Medicare Advantage program; authorizing a MAP to charge a primary plan or an individual that has been paid by a primary plan pursuant to the MSP law at 42 USC Section 1395y(b)(2). 42 U.S.C. Section 1395w- 22(a)(4). Therefore, when a MAP makes a payment for medical services that are the responsibility of a primary plan under the MSP law, those payments are conditional, and are reimbursable, as MAPs have the same rights to recover from a primary plan, entity or individual, that the Secretary of HHS exercises under the MSP regulations. 42 C.F.R. Section 422.108(f).

Recent case law has also concluded that a MAP that has advanced Medicare benefits has standing to bring an MSP private cause of action for double damages. Humana Med. Plan, Inc. v. Western Heritage Ins. Co., 832 F.3d 1229 (11th Cir. 2016); In re Avandia Mktg., 685 F.3d 353 (3d Cir. 2012); Cariten Health Plan, Inc. v. Mid-Century Ins. Co., 2015 U.S. Dist. LEXIS 126887, at *14 (E.D. Tenn. Sep. 1, 2015); Collins v. Wellcare Healthcare Plans, Inc., 73 F. Supp. 3d 653, 665 (E.D. La. 2014); Humana Ins. Co. v. Farmers Tex. Cnty. Mut. Ins. Co., 95 F. Supp. 3d 983, 986 (W.D. Tex. 2014).

In addition, numerous courts have held that an attorney who receives a tort settlement or other primary payment on behalf of a Medicare beneficiary is an entity that receives payment from a primary plan under the MSP law and may be sued personally in an action to recover conditional payments. Humana Insurance Co. v. Paris Blank LLP, 187 F. Supp. 3d 676 (E.D. Va. 2016); United States v. Harris, 2009 U.S. Dist. LEXIS 23956 (N.D. W. Va. 2009) aff’d, 2009 U.S. App. LEXIS 23394 (4th Cir. Oct. 23, 2009); United States v. Weinberg, 2002 U.S. Dist. LEXIS 12289 (E.D. Pa. 2002); Denekas v. Shalala, 943 F. Supp. 1073, 1080 (S.D. Iowa 1996); US. v. Sosnowski, 822 F. Supp. 570, 573 (W.D. Wis. 1993).

Humana Insurance Co. v. Paris Blank LLP and Keith Marcus

Humana has been down this road before. The courts have heard all the arguments. We have seen this play out. We know how this scenario ends. Double damages!

On October 11, 2013, Enrollee suffered injuries as a passenger in a motor vehicle accident. As a result, Humana made conditional payments in the amount of $191,612.09 on Enrollee’s behalf to cover medical expenses. Enrollee engaged Keith Marcus (Attorney) and Paris Blank, LLP (Law Firm) (collectively Defendants) to represent him. As a result of a lawsuit initiated by Defendants, Enrollee received payments from several insurance companies totaling approximately $475,600.

On January 15, 2015, Humana communicated to Enrollee that he owed Humana $191,612.09 in reimbursements for the conditional payments it made for Enrollee’s medical expenses related to the settled motor vehicle claim. The communication sought payment within sixty (60) days and included information regarding the request of a waiver or the filing of an appeal. Attorney sent a request for waiver to Humana on Enrollee’s behalf. The request contained correspondence between Attorney and CMS showing that Enrollee did not owe any conditional payments or had any obligations under Medicare Part A and Part B.

On April 23, 2015, Humana denied Enrollee’s request for waiver. Having not received any reimbursement for the conditional payments, Humana sought reimbursement of the $191,612.09 conditional payments it made related to treatment associated with the settled motor vehicle claim directly from Attorney and Law Firm. Because Defendants denied reimbursement, Humana also sought double that amount pursuant to MSP private cause of action double damages provision.

On May 10, 2016, the United States District Court for the Eastern District of Virginia, Richmond Division, published its opinion finding that based on the Medicare Secondary Payer Act, its private cause of action provision, CMS’ regulations and policy memos, and case law analysis allowing Medicare Advantage Organizations to seek double damages just like government, Humana was allowed to seek reimbursement of any conditional payments it paid regarding Enrolle’s treatment related to the settled motor vehicle claim. The court makes it clear that the plain language of the MSP Act fails to limit the parties against whom suit may be maintained, and CMS has promulgated regulations identifying attorneys as an entity from which recovery may be sought under the MSP law by the Secretary. 42 CFR Section 411.24(g). Therefore, the Court concluded Humana could recover the conditional payments it made related to the claim.


If there are any doubts that reimbursement of conditional payments is a big deal, this case should be a reminder to everyone involved in a settlement, judgment, award, or payment, or who may have simply accepted ongoing responsibility for future medical care in a claim, that whether a Medicare beneficiary, or their attorney and law firm, a corporate defendant, or their insurer, an employer, or their carrier, a self-insured, or their third party administrator, reimbursement of conditional payments to Medicare or to a Medicare Advantage Plan, or to a Prescription Drug Plan, or Medicaid is serious business.

Whether dealing with Medicare’s Coordination of Benefits Recovery Center, the Commercial Repayment Center, an Advantage Plan, or a Prescription Drug Plan, a state Medicaid agency, or an approved state Medicaid managed care organization, Flagship Services Group can help with every aspect of conditional payments resolution. From investigating whether conditional payments have been made, to reviewing each payment to determine whether they are related to the underlying claim, to disputing and appealing such payments, to dealing with US Treasury, our team of attorneys, claims specialists, and clinical experts can help you navigate the process to timely and cost-effectively resolve reimbursement of conditional payments.

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 Liens

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 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).

The 2013 Strengthening Medicaid Third Party Liability Act, effective October 1, 2017, allows state Medicaid agencies or the insurers/managed care organizations contracted with to provide such benefits to seek reimbursement from any responsible third party of all payments made from the entirety of settlement, judgment, award funds, not just a portion thereof.

About Flagship Services Group

Flagship Services Group is the premier Medicare 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 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

About Rafael Gonzalez

Rafael Gonzalez, Esq. is President of Flagship Services Group. He speaks and writes on mandatory insurer reporting, conditional payment resolution, set aside allocations, CMS approval, and MSA and SNT 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 He is very active on LinkedIn, Twitter, Instagram, and Facebook. He can be reached at or 813.967.7598.

Leave a Reply

Your email address will not be published. Required fields are marked *