Medicare Secondary Payer – A Lot Less Boring Now

We've previously written several posts (not recently) on Medicare secondary payer ("MSP") issues - which we characterized as "boring." The recent MSP decision, Humana Insurance Co. v. Paris Blank LLP, 2016 WL 2745297, 187 F. Supp.3d 676 (E.D. Va. 2016), is a lot less boring. That's because of the defendant - a plaintiff-side law firm.

And the law firm lost.

What's going on? To start with, in addition to the government itself, certain private entities, "Medicare Advantage Organizations" ("MAO") (abbreviations are ubiquitous in this area) are allowed to bring suits to recover as MSPs (that was what one of our earlier posts was about). The MSP statute is quite broad as to who can be legally liable for not ensuring that Medicare is treated as a secondary payer:

any or all entities that are or were required or responsible (directly, as an insurer or self-insurer, as a third-party administrator, as an employer that sponsors or contributes to a group health plan, or large group health plan, or otherwise) to make payment with respect to the same item or service (or any portion thereof) under a primary plan.

42 U.S.C. §1395y(b)(2)(A)(iii). Recovery in an amount double the actual Medicare outlay is available in litigated cases. Id.

In our neck of the woods (PA & NJ, anyway), a MAO's ability to sue as if it were the government is already established. In re Avandia Marketing, Sales Practices, & Products Liability Litigation, 685 F.3d 353 (3d Cir. 2012). (We note that our CA blogger would view this issue differently, see Parra v. PacifiCare of Arizona, Inc., 715 F.3d 1146, 1154 (9th Cir. 2013)). So the fact that Humana held that an MAO had standing to sue, 2016 WL 2745297, at *4, would not have resulted in this post.

What interests us is the holding that a lawyer and his law firm - thankfully, a plaintiff law firm − can be an "entity" "responsible (directly . . . or otherwise)" for making a MSP payment. The allegations in Humana were not kind to the defendants. They represented a plaintiff in an auto accident. Supposedly, they received a one settlement check made out jointly to it and the plaintiff MAO, but "ultimately deposited the check without [the MAO's] endorsement." Id. at *2. Allegedly, certain other settlement checks "from several insurance companies" were also received and deposited, without joint the joint payor issue. Id. All told, the settlements totaled $475,600. Id.

The MAO sued for unreimbursed medical costs (called "conditional...