11th Circuit Upholds Rights of Medicare Advantage ‘Downstream Actors’ to File Suit under the Medicare Secondary Payer Act

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Calling it a “straightforward inquiry,” the US Court of Appeals for the 11th Circuit recently opted to expand access to the Medicare Secondary Payer Act (the MSP Act) private right of recovery to Medicare Advantage “downstream actors.” 
 

The decision, MSP Recovery Claims, Series LLC v. ACE Am. Ins. Co., 974 F.3d 1305, 1308 (11th Cir. 2020), addressed the question of whether parties “downstream” from Medicare Advantage Organizations (MAOs) can sue other payers, typically automotive, liability, and property insurance companies, under the MSP Act for double damages.

Recently, federal courts have recognized that MAOs have the legal right under the MSP Act to sue primary payers when the MAO is forced to make conditional payments to cover medical services that should have been paid by a primary payer. In the MSP Recovery litigation, the 11th Circuit was asked whether MAO “downstream actors” – parties who contract with MAOs and other downstream entities, such as MAO administrative service providers, independent physicians associations (IPAs), and revenue recovery firms — have the same right as the MAOs to pursue private litigation against proper primary payers under the MSP Act. The 11th Circuit answered that the MSP Act does in fact provide downstream actors with the right to pursue such claims in federal court.

The Court reasoned that the MSP Act does not limit who may bring suit, so long as that person or entity “have borne the cost of a conditional payment and thus have suffered damages.” It determined when MAO downstream actors bear the cost of medical services that should be reimbursed by other primary payers, it undermines Congress’s intent “to curb skyrocketing health costs” and “preserve the fiscal integrity of the Medicare system” as well as the Medicare Advantage program. The Court was persuaded, in part, by an amicus curie brief filed by the Department of Health and Human Services (HHS), where HHS argued for broad standing to pursue MSP Act litigation under the statute:

Any downstream actor that has actually suffered an injury because it provided or paid for care from its own coffers and was harmed by a primary plan's failure to provide reimbursement should be able to access the private right of action.

Consequently, MAO downstream actors – and their proper assignees (such as revenue recovery companies) – now have the right to pursue MSP Act litigation against primary payers (typically insurers) who refuse to reimburse them for medical costs incurred, when the downstream actors are entitled to such payments.

Since the 11th Circuit denied en banc review of the decision on November 9, 2020, the defendant insurance companies must either fight the suit on the merits in federal district court or appeal the 11th Circuit’s decision to the US Supreme Court. We’ll continue to monitor this case as it develops.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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