Hartford Casualty Insurance Company is the target of a new complaint recently filed in the United States District Court, Western District of Washington (Seattle) by Humana Health Plan. Humana, as a Medicare Advantage Plan (MAP) is seeking a declaratory judgment as to Hartford’s obligation to reimburse conditional payments made by Humana, as well as a private cause of action pursuant to 42 USC 1395y(b)(3)(A) for the recovery of double damages for the alleged failure to reimburse Humana. The complaint can be found here.

The facts of the complaint are as follows: The Medicare beneficiary (Enrollee) was injured in a car accident. As the other driver in the collision was uninsured, the enrollee’s UIM benefits were triggered under Humana’s policy. Enrollee received medical treatment related to the collision which was paid for by Humana totaling at least $161,853.14 in conditional payments. On February 19, 2015 Humana sent Hartford a written notice of its right to recovery of the conditional payments pursuant to the Medicare Secondary Payer Act (MSP). In or around December 2015, Hartford entered into a settlement with Enrollee. Enrollee was responsible for reimbursing Humana within 60 days of the Hartford’s payment of the settlement amount; however, Enrollee did not reimburse Humana.

Even though Hartford had already paid Enrollee the settlement funds, Humana alleges that the Hartford remained responsible to ensure that Humana was reimbursed pursuant to 42 CFR 411.24(i)(1). On March 1, 2017, Humana again contacted Hartford reminding Hartford of its obligation to reimburse Humana. Further, the correspondence contended that Humana would not commence litigation against Hartford if Hartford was willing to reimburse the conditional payments that Humana had made.  Humana contends that Hartford never responded to its correspondence/request for payments nor issued payment to Humana for the amount owed.

Commentary: If Humana ultimately prevails and Hartford appeals to the Ninth Circuit Court of Appeals, precedent may be set determining that MAPs have the same recovery rights as traditional Medicare (a right to double damages for failure to reimburse MAP conditional payments within 60 days of issuance of the settlement check) in the largest Circuit in the United States encompassing the following jurisdictions: Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington. These states would be added to the growing list of the 3rd and 11th Circuits from the In Re Avandia and Western Heritage litigation which has now established this double damages private cause of action right for MAPs in the states of: Pennsylvania, Delaware, New Jersey, Alabama, Georgia and Florida.

Recall that previously the issue of a MAP’s ability to bring a double damages private cause of action was brought to the Ninth Circuit Court of Appeals in Parra v. PacifiCare of Arizona back in 2012, wherein the MAP was unsuccessful in its double damages pursuit and simply awarded a contractual right of recovery.  The Parra court determined that double damages was not available, because the carrier had already interpleaded the funds to the Court, and at that point had no control over such funds. The MAP had a remedy by exercising its recovery directly against the beneficiary from that fund.

However, this complaint filed by Humana may establish MSP double damages if the allegations that Hartford ignored Humana’s request for reimbursement holds true. Thus far, Circuit Courts and District Courts nationwide tend to be favoring MAPs having the same rights to recovery as Medicare. Further, the circumstances and legalities behind this complaint are quite simple: Hartford was on notice of Humana’s claim for recovery and did not respond/reimburse.  Despite Hartford already having paid Enrollee, Humana purport to have a solid legal basis to pursue recovery from Hartford pursuant to 42 CFR 411.24(i)(1).

Key takeaways:

-Humana and other MAPs are filing nationwide litigation seeking to set precedent for MAPs to establish the right to a double damages private cause of action under the MSP for failure to reimburse conditional payments. A MAP’s private cause of action for double damages is ripe within 60 days of issuance of the settlement check. It will not be long until MAPs establish precedent in Circuits nationwide to bring a double damages private cause of action for failure to reimburse conditional payments.

-It does not matter if the primary plan has already paid the Medicare beneficiary the settlement amount; all parties to the settlement have a duty to ensure the MAP is reimbursed. Further, the MAP has a right to pursue an action to any party to the settlement, which not only includes primary plans, but also providers and plaintiff attorneys. Recall in our last blog that Humana has also filed many of these suits recently against plaintiff attorneys.

-The envelope is being pushed aggressively by MAPs such that now is the time to put a plan into place to ensure that all workers’ compensation, no-fault and liability settlements with Medicare beneficiaries consider possible MAP conditional payments prior to settlement. It is estimated that approximately 1/3 of all Medicare beneficiaries are enrolled in a MAP and that number is expected to rise over the next few years. Therefore, with growing enrollment of enrollment of MAPs and more aggressive litigation by MAPs to establish their recovery rights, it is growing increasingly important to verify MAP enrollment with Medicare beneficiaries and ensure any MAP liens are timely reimbursed.

 

 

 


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