- MSP Private Action Allowed to Advance Prior to Resolution of Underlying Obligation
- November 17, 2014
- Law Firm: Fineman Krekstein Harris P.C. - Philadelphia Office
In Nawas v. State Farm Mut. Auto. Ins. Co., 2014 U.S. Dist. LEXIS 128365 (E.D.Mich. 2014), the Eastern District of Michigan allowed Plaintiff to recover double damages under the Medicare Secondary Payer Act prior to a judicial determination that the insurer was obligated to pay the claim.
The case arose from a claim for no-fault insurance benefits following a motor vehicle accident. Plaintiff alleged his insurer refused to pay his medical bills following the accident, and as a result Medicare was forced to step in and conditionally pay his medical bills until Defendant’s responsibility could be determined. Prior to judicial resolution of the underlying claim, Plaintiff brought a private action under the MSP Act seeking double recovery for the insurer’s failure to promptly pay his medical bills. Defendant moved for dismissal, arguing Plaintiff’s claim was premature, because a claim under the Medicare Secondary Payer Act cannot be pursued until the insurer’s obligation to pay the underlying no-fault insurance claim has been established by a judicial determination or settlement.
The court reviewed two cases, Geer v. Amex Assurance Co., 2010 U.S. Dist. LEXIS 66834 (E.D.Mich. 2010), in which the Court embraced Defendant’s position in the insurance context, and Glover v. Liggett Group, Inc., 459 F.3d 1304 (11th Cir. 2006), which provided the reasoning for the Greer holding. Nonetheless, the Court disregarded the Greer holding, and instead adopted the contrary holding of the Sixth Circuit in Bio-Medical Applications v. Central States, 656 F.3d 277 (6th Cir. 2011), in which the Sixth Circuit held the “demonstrated responsibility” language of the MSP Act does not prohibit or delay direct actions against insurance companies by policy holders. Instead, under Bio-Medical, the Sixth Circuit determined the “demonstrated responsibility” only delayed actions against tortfeasors, because under an insurance contract, the insurer assumes the responsibility of paying for enumerated expenses. Thus, the Court found this Sixth Circuit precedent binding, particularly given another more recent holding in Michigan Spine & Brain Surgeons, PLLC v. State Farm Mut. Auto. Ins. Co., 758 F.3d 787 (6th Cir. 2014), in which a similar MSP Act private action was allowed to proceed prior to determination of the underlying claim. Insurers should be aware of these holdings so that they can make informed decisions based on the case law in the jurisdiction where a claim is filed.