The Eleventh Circuit just made it easier to sue insurance companies that fail to protect Medicare’s interest as a secondary payer. See MSPA Claims 1, LLC v. Kingsway Amigo Ins. Co., No. 18-14980, 2020 WL 728625 (11th Cir. Feb. 13, 2020). By law, Medicare is a secondary payer. That means Medicare does not pay for medical bills if somebody else is responsible for the bill. This is an important requirement for insurance companies. For example: Driver A runs a red light and strikes the car operated by Driver B. Driver B is a Medicare beneficiary. Driver B goes to the hospital and Medicare pays for the hospital bills. But, Driver A (and his/her insurance company) are responsible for the injuries. Because Medicare is a secondary payer, it is entitled to recover its payments from Driver A’s insurance.
Over the last decade or more, Medicare has become increasingly assertive in recovering its payments. As a result, many insurance companies take active measures to protect Medicare’s interest. In almost any type of case (including employment disputes), those companies will take active steps to ensure that Medicare has not paid medical bills and will not be required to pay medical bills related to the dispute in the future. Or, if Medicare has paid bills, the insurance company ensures that Medicare is repaid.
Some insurance companies are not as diligent as others, however. For example, in MSPA Claims, Kingsway Amigo Insurance settled a car-wreck claim with a Medicare beneficiary for $6,667, but failed to consider that Medicare had paid $21,965 in medical bills. MSPA Claims sued Kingsway Amigo on behalf of Medicare. But, Kingsway Amigo was able to convince a federal judge that the lawsuit should be dismissed because of the following provision of the Medicare Secondary Payer Act:
Notwithstanding any other time limits that may exist for filing a claim under an employer group health plan, the United States may seek to recover conditional payments in accordance with this subparagraph where the request for payment is submitted to the entity required or responsible under this subsection to pay with respect to the item or service (or any portion thereof) under a primary plan within the 3-year period beginning on the date on which the item or service was furnished.
42 U.S.C. 1395y(b)(2)(B)(vi).
According to Kingsway Amigo, that provision required Medicare to notify Kingsway Amigo of its payments within three years of making those payments. Because Medicare failed to do so, Kingway Amigo argued that it could not be sued under the Medicare Secondary Payer Act.
On appeal, the Eleventh Circuit rejected that argument. At this point, I will note that MSPA Claims contains a lot of legalese, and the author of the opinion, Judge Newsom, does a fantastic job of making the decision understandable. In short, he found that the three-year requirement of the Act “doesn’t operate as any sort of prerequisite — for anyone. Rather than imposing a strict requirement, the provision simply allows Medicare to overcome any time limits prescribed by an employer’s group health plan that might otherwise prevent it from requesting reimbursement. Put simply, the claims-filing provision is a ‘get to’ not a ‘have to.'” MSPA Claims, 2020 WL 728625 at * 6. In other words, Medicare is not barred from suing an insurance company simply because it failed to notify that insurance company of claims within three years of making payments.
The MSPA Claims decision simply reinforces that insurance companies and their lawyers need to ensure that Medicare has not made any payments to a claimant/plaintiff before settling a claim. If an insurance company fails to protect Medicare’s interest, at least one defense has now been rejected by the Eleventh Circuit.