• Eleventh Circuit Court of Appeals Requires a Liability Insurance Carrier to Pay TWICE After It Grants a Medicare Advantage Plan a Cause of Action
  • September 21, 2016 | Author: James E. Pocius
  • Law Firm: Marshall Dennehey Warner Coleman & Goggin, P.C. - Moosic Office
  • In a case that will have far reaching effects across the country, the Eleventh Circuit Court of Appeals granted Humana Medical Plan, Inc. a private cause of action to collect as a Medicare Advantage Plan.

    In the underlying lawsuit, the plaintiff, Mary Reale, suffered a slip and fall and was injured at Hamptons West Condominiums in Florida in 2009. Humana paid $19,155.41 in medicals. Humana was a Medicare Advantage Plan.

    The case settled on April 20, 2010 for $115,000. In the release, the parties indicated there was no Medicare lien or right to subrogation, and Reale agreed to indemnify the defendants against Medicare or other liens or rights to subrogation.

    No one paid Humana at the time of settlement. Therefore, Humana sued the releasees and their attorney in the Southern District Federal Court. There was a motion to dismiss the action for lack of subject matter, and Humana voluntarily dismissed the action. The Reales' attorney then filed a state action to determine the interests of Humana. Applying Florida law, the court indicated Humana was entitled to $3,685.03. Humana appealed, and the Florida Third District Court of Appeal reversed for lack of subject jurisdiction and indicated that this was a federal issue. Thus, Humana never recovered from the plaintiff or plaintiffs' attorney.

    After this failure, Humana sued Western Heritage Insurance Company in federal court (Humana Medical Plan, Inc. v. Western Heritage Insurance Com) alleging a private cause of action under the Medicare law. The Eleventh Circuit Court of Appeals granted Humana's action and stated that Humana does have a private cause of action, citing the case of Avandia, which was decided in the Third Circuit some years ago. Under the private cause of action, the law requires that damages shall be in an amount double the amount otherwise provided. Thus, the insurance carrier was required to pay double the amount owed.

    In summary, the insurance company paid triple for the medical damages owed to Humana. It made one payment to the plaintiff and then a double amount to Humana at the end of the litigation.

    What does this mean for those of us handling workers' compensation and liability cases?

    In both workers' compensation and liability cases, Medicare Advantage Plans now have a private cause of action in most states. Further, in the Third Circuit and the Eleventh Circuit, both Courts of Appeal indicated that payment should be made within 60 days of the date of settlement in a liability case. There was no mention of workers' compensation, but that payment also may be triggered within 60 days of the date of settlement, just as a conditional payment would be payable to Medicare. Past practice suggests that we could allow a plaintiff's attorney or claimant's attorney to repay Medicare. I do not believe that analysis holds up at the present time. Therefore, this author would make the following recommendations:
    1. In any workers' compensation or liability case, we must find out as early as possible, through discovery, whether the claimant is in a Medicare Advantage Plan or is a Medicare recipient.
    2. If the claimant is a Medicare recipient or a Medicare Advantage Plan participant, we must find out the amount of conditional payments for Medicare and the amount demanded by the Medicare Advantage Plan.
    3. If we have this information early enough, we can contest causality on any conditional payment or demand by a Medicare Advantage Plan. This would be done through the normal administrative process established.
    4. When the case resolves, it is now incumbent upon the employer/insurer/defendant liability insurer to pay the Medicare Advantage Plan within 60 days of the date of settlement. Otherwise, a private cause of action could be instituted, which will result in a double recovery for the Medicare Advantage Plan, plus interest.
    In summary, settlement language of indemnification does not provide protection against Medicare conditional payments or a Medicare Advantage Plan demand.