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Ohio court rules that Medicare Advantage Plans can sue insurers for “double damages” under the MSP

By Mark Popolizio  |  December 17, 2019

The United States District Court for the Northern District of Ohio is the latest court to weigh-in regarding the ongoing issues and questions concerning the applicability of the Medicare Secondary Payer (MSP) statute’s private cause of action (PCA) provision[1] concerning Medicare Advantage Plans (MAPs).

Specifically, in MSP Recovery Claims, Series LLC v. Phoenix Insurance Company, 2019 WL 6770981 (N.D. Ohio, December 12, 2019); MSP Recovery Claims, Series LLC v. Grange Insurance Company, 2019 WL 6770729 (N.D. Ohio, December 12, 2019); and MSP Recovery Claims, Series LLC v. Progressive Corporation, 2019 WL 5448356 (N.D. Ohio, September 17, 2019), the court ruled, in part, that (i) MAPs can sue insurers for “double damages” under the MSP and (ii) the MSP’s three-year claims filing period outlined in 42 U.S.C. §1395y(b)(2)(B)(vi) does not create a statutory presentment requirement as a pre-condition to filing a PCA claim.

As each of these cases share similar facts, issues, and rulings, the author provides a general collective overview of these decisions as follows:

MAP assignee sues for “double damages”

In each case, plaintiff MSP Recovery Claims, Series LLC (“MSP Recovery”), as the purported assignee of certain Medicare Advantage Plans (MAPs), filed suit against the defendant insurers for their alleged failure to reimburse MAP payments for accident-related medical treatment provided to its enrollees stemming from various auto accident claims.[2]

The insurers moved to dismiss MSP Recovery’s complaint on a variety of bases, including the two grounds which are the limited focus of this article: (i) MAPs do not have PCA rights under the MSP; and (ii) MSP Recovery’s claims were barred because it failed to adhere to the MSP’s three-year presentment deadline under 42 U.S.C. §1395y(b)(2)(B)(vi) and/or failed to provide proper notice of its alleged conditional payment claim.

The court ultimately rejected these arguments and denied the insurers’ efforts to get MSP Recovery’s claim dismissed on these particular grounds as follows:

MAPs can sue for “double damages” under the MSP

The courts in each case ruled that the MSP’s PCA statute applies to MAPs and, therefore, MAPs may sue insurers for “double damages” in connection with their recovery claims.

In reaching this conclusion, the courts rejected the insurers’ arguments that MAPs did not have PCA rights based on prior decisions from the United States Sixth Circuit Court of Appeals (whose jurisdiction includes Ohio). On this point, the court noted that while the Sixth Circuit has previously addressed the private cause of action provision, it has not done so concerning the precise issue at hand – that being, whether the MSP’s PCA statute applies to MAPs.[3]

From there, each court noted (favorably) that the Third Circuit in In re Avandia Marketing, Sales Practices and Products Liability Litigation, 685 F.3d 353 (3rd Cir. 2012), and the Eleventh Circuit, in Humana Medical Plan, Inc v. Western Heritage Insurance Co., 832 F.3d 1229 (11th Cir. 2016), has ruled that MAPs indeed have PCA rights. Also, it was noted that numerous federal district courts have either agreed with these rulings or otherwise found that MAPs have PCA rights.[4]

Following a very detailed analysis of Avandia and Western Heritage, each court ultimately sided with the rationale and ruling contained in those decisions. As the court expressed in the Grange and Phoenix decisions:

The Court finds the reasoning in In re Avandia [and Western Heritage] to be persuasive. The Court agrees with those courts that the language of §1395y (b)(3)(A) is broadly worded and does not include any language limiting the types of private parties that can bring suit for double damages when a primary payer fails to appropriately reimburse a secondary payer.[5]

Further, in line with Avandia, the courts noted that even if the language of §1395y(b)(3)(A) is considered ambiguous, the same conclusion was warranted applying Chevron deference to CMS’s regulations per the United States Supreme Court’s decision in Chevron U.S.A. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1985). Very generally, under Chevron deference when the statutory text is unclear, ‘the courts afford deference to and seek guidance from agency regulations” and will defer to the agency’s regulations unless they are “arbitrary, capricious, or manifestly contrary to the statute.”[6]

On this point, it was noted that CMS had the “undisputed” Congressional authority “to promulgate regulations interpreting and implementing Medicare-related statutes.”[7]In support of this position, the court cited 42 C.F.R. §422.108(f) which states that “[MAPs] will exercise the same rights to recover from a primary plan, entity, or individual that the Secretary exercises under the MSP regulations in subparts B through D of part 411 of this chapter.” Based on this regulation, the courts in Grange and Phoenix found that “[a]s the Third Circuit noted in In re Avandia, [t]he plain language of this regulation suggests that the Medicare Act treats MAOs the same way it treats the Medicare Trust Fund for purposes of recovery from any primary payer.”[8]The court in Progressive reached this same conclusion.[9]

Based on the above, the courts in each case found that MAPs could bring PCA claims against insurers under the MSP and denied the insurers’ efforts to dismiss MSP Recovery’s complaint on this ground.[10]

MAPs have no statutory “presentment requirement” for bringing PCA claims

In each case, the insurers also argued that MSP Recovery’s action should be dismissed on grounds that it failed to allege that it (or the actual MAPs) presented their claims to the insurers within the three-year presentment period outlined in 42 U.S.C. §1395y(b)(2)(B)(vi). This section, entitled “Claims Filing Period,” states:

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. (Emphasis Added).

In response, MSP Recovery countered that the matter was governed by the three-year limitations period in 42 U.S.C. §1395y(b)(2)(B)(iii). This section, entitled “Action by the United States” (and commonly referred to as the SMART Act’s statute of limitations), states:

An action may not be brought by the United States under this clause with respect to payment owed unless the complaint is filed not later than 3 years after the date of the receipt of notice of a settlement, judgment, award, or other payment made pursuant to paragraph (8) relating to such payment owed. (Emphasis Added).

After conducting an exacting analysis into this confusing area, each court ultimately sided with MSP Recovery. The courts found, in general, that §1395y(b)(2)(B)(vi) pertained to group health plans, and that there was no indication that the intent was to “restrict the government’s ability to pursue claims by imposing a mandatory presentation requirement;” while, by contrast, the three year limitations period contained in §1395y(b)(2)(B)(iii) related to “bringing suit to enforce obligations under the [MSP] and provides a clear mandate regarding the time period for initiating litigation.”[11]

On these points, the court in Progressive perhaps explained it best as follows:

[§1395y(b)(2)(B)(vi) – Claims Filing Period] merely authorizes the United States to assert a claim against a primary plan within a three year period regardless of whether a group plan contains a shorter period for asserting a claim … [this section] does not place any limit on the United States from bringing an action if it does not file a claim. Furthermore, it contains no language concerning any consequence for filing a claim outside the limitation period. However, there is a clear limitation period found in 2(B)(iii) and [the insurers] do not contend [MSP Recovery's] Complaint was filed outside that limitation period. Thus, under statutory interpretation rules, the specific clear limitation period found in (iii) controls the general permissive claim filing period found in (vi), and the Court holds that purposes of litigation, (iii) presents the obvious limitation period.[12]

From its analysis, the courts ultimately concluded that “based on a natural reading” of the full text of §1395y(b)(2)(B)(vi) this section did not create a statutory presentment requirement as a pre-condition to a MAP filing a PCA action under the MSP.[13]

Accordingly, the court in Progressive found that MSP Recovery’s failure to file a claim in the three-year time period of §1395y(b)(2)(B)(vi) was not a condition precedent depriving the court jurisdiction or justifying dismissal of MSP Recovery’s complaint.[14] Similarly, the courts in Phoenix and Grange rejected the insurers’ arguments that the complaint should be dismissed because MSP Recovery [or the MAP itself] failed to allege it sent conditional payment letters to them within the three-year Claims Filing Period.[15]

From a similar angle, the court also rejected the argument that MAPs were prohibited from making conditional payment under the MSP until they first presented its claims for payment to the primary payer stating:

Defendants rely primarily on §1395y(b)(2)(B)(vi) for their presentment argument. This Court has already rejected the Defendants’ argument that this section presents a condition precedent to suit. Furthermore, the Court’s review of the above statute and the CFRs cited by Defendants reveal no requirement that Medicare or an [MAP] first present the claim to the primary plan. An Oklahoma court held, “Medicare’s reimbursement rights are automatic, and it is not required to give notice of its claim.” (citations omitted). In the absence of any clear authority requiring an [MAP] first present its claim to the primary payer before suit, the Court holds Defendants arguments to the contrary are meritless.[16] (Emphasis added).

MAP recovery – claims considerations

These three decisions raise several consideration points from a practical claims perspective.

First, Ohio insurers should take careful note of these decisions when dealing with potential MAP issues and recovery claims. As these cases now proceed, it will be interesting to see if the courts ultimately find the insurers in these cases liable for double damages.

Second, Ohio joins a growing number of jurisdictions finding that MAPs can sue insurers for “double damages” under the MSP. As noted above, the United States Third and Eleventh Circuit Courts of Appeals, as well as United States District Courts in Connecticut, Illinois, Louisiana, Massachusetts, South Carolina, Tennessee, Texas, and Virginia, have ruled in favor of MAPs on this issue.[17]

Third, as noted above, the courts in these cases were called upon to address the issues of notice and presentment as they relate to the larger MAP-PCA question. Overall, these issues remain somewhat underdeveloped in the larger MAP-PCA litigation. A full review into this area is beyond the scope of this article; however, we have at least learned that the Northern District of Ohio has concluded that MAPs do not have a notice or presentment requirement before bringing their PCA claims. In contrast, earlier this year a Florida district court in MSPA Claims 1, LLC v. First Acceptance Insurance Company, 2019 WL 2150692 (M.D. Fla. May 6, 2019) ruled that Florida’s no-fault pre-suit notice requirement must first be satisfied before a MAP PCA claim could proceed. Going forward, it will be interesting to monitor how these issues continue to develop before the courts.

Finally, as MAPs continue to successfully establish the right to sue for “double damages,” it is critical that claims payers develop MAP compliance protocols. While a detailed examination into all the factors necessary to build best practices is beyond this article’s scope, starter considerations include developing practices aimed at obtaining MAP enrollee status, procuring MAP lien information, disputing the MAP lien (if applicable), and addressing who will be responsible for actually reimbursing any MAP lien(s) as part of the settlement process.

ISO Claims Partners has been the leader in helping claims payers build MAP protocols, and we would look forward to helping you address your MAP compliance needs. Please contact the author directly if you are interested in learning more.

In the meantime, learn more about our MAP services and/or review our state-by-state guide to Medicare Advantage in the courts.


[1] The MSP’s private cause of action statute as codified at 42 U.S.C. § 1395y(b)(3)(A) states as follows: There is established a private cause of action for damages (which shall be in an amount double the amount otherwise provided) in the case of a primary plan which fails to provide for primary payment (or appropriate reimbursement) in accordance with paragraphs (1) and (2)(A) [of 42 U.S.C. § 1395y(b)].

[2] MSP Recovery suit against Grange and Phoenix was the result of liability settlements reached by these insurers arising from the underlying automobile accidents; while the action against Progressive dealt with no-fault insurance.

[3] In this regard, the court noted that the Sixth Circuit in Bio-Med Applications of Tenn., Inc. v. Central States Health and Welfare Fund, 656 F.3d 277 (6th Cir. 2011) found that the MSP’s PCA statute permitted medical services providers to recover payment for medical services from a group health plan designated as a primary payer, when the group plan denied payment for an enrollee because the enrollee was eligible for Medicare. In Michigan Spine & Brain Surgeons, PLLC v. State Farm, 758 F.3d 787 (6th Cir. 2014) the court noted that the Sixth Court found the MSP’s PCA statute to be ambiguous with respect to the statutory obligations of primary plans that are not group health plans. Ultimately, the Sixth Circuit in this case “held that a medical service provider had a federal right of action to recover payment for services rendered to a person covered by an automobile insurance policy, when the automobile insurance policy made the insurance company a primary payer under §1395y (b)(2)(A).” See, MSP Recovery Claims, Series LLC v. Grange Insurance Company, 2019 WL 6770729, at *18 and MSP Recovery Claims, Series LLC v. Phoenix Insurance Company2019 WL 6770981, at *17.

On another front, the court rejected the insurer’s reliance on the Sixth Circuit’s 2003 decision in Care Choices HMO v. Engstrom, 330 F.3d 786 (6th Cir. 2003). In this case, a Medicare substitute HMO, Care Choice, argued that 42 U.S.C. § 1395mm(e)(4) provided an implied federal private cause of action.

This statute states:

Notwithstanding any other provision of law, the eligible organization may (in the case of the provision of services to a member enrolled under this section for an illness or injury for which the member is entitled to benefits under a workmen's compensation law or plan of the United States or a State, under an automobile or liability insurance policy or plan, including a self-insured plan, or under no fault insurance) charge or authorize the provider of such services to charge, in accordance with the charges allowed under such law or policy-- (A) the insurance carrier, employer, or other entity which under such law, plan, or policy is to pay for the provision of such services, or (B) such member to the extent that the member has been paid under such law, plan, or policy for such services.

The Sixth Circuit declined to find that § 1395mm(e)(4) created an implied private cause of action right. In reaching this decision, the Sixth Circuit compared the language of the MSP Act private cause of action provision with § 1395mm(e)(4), noting that 1395y(b) uses mandatory language to create a federal right of action whereas § 1395mm(e)(4) does not. As such, the court in MSP Recovery found that the Sixth Circuit in Care Choices did not consider whether the Medicare substitute HMO could sue under 1395y(b)(3)(A). MSP Recovery Claims, Series LLC v. Grange Insurance Company, 2019 WL 6770729, at *22.

[4] On this point, the court’s citations included: Humana Inc. v. Medtronic Sofamor Danek USA, Inc., 133 F.Supp.3d 1068, 1078 (W.D. Tenn. 2015); Cariten Health Plan, Inc. v. Mid-Century Ins. Co., 2015 WL 5449221 (E.D. Tenn. Sept. 1, 2015); Humana Insurance Co. v. Paris Blank LLP, 187 F.Supp.3d 676 (E.D. Va. 2016); Collins v. Wellcare Healthcare Plans., 73 F.Supp.3d 653 (E.D. La. 2014). See, MSP Recovery Claims, Series LLC v. Grange Insurance Company, 2019 WL 6770729, at *20.

[5] MSP Recovery Claims, Series LLC v. Grange Insurance Company, 2019 WL 6770729, at *21 and MSP Recovery Claims, Series LLC v. Phoenix Insurance Company, 2019 WL 6770981, at *16. See also, MSP Recovery Claims, Series LLC v. Progressive Corporation, 2019 WL 5448356, at *7-8.

[6] Chevron, 467 U.S. at 844 and Michigan Spine, 758 F.3d at 792

[7] See, MSP Recovery Claims, Series LLC v. Grange Insurance Company, 2019 WL 6770729, at *22 and MSP Recovery Claims, Series LLC v. Phoenix Insurance Company2019 WL 6770981, at *17.

[8] MSP Recovery Claims, Series LLC v. Phoenix Insurance Company2019 WL 6770981, at *22, citing In re Avandia, 685 F.3d at 366 and MSP Recovery Claims, Series LLC v. Phoenix Insurance Company2019 WL 6770981, at *17, citing In re Avandia, 685 F.3d at 366.

[9] MSP Recovery Claims, Series LLC v. Progressive Corporation, 2019 WL 6770981, at *8.

[10] See, MSP Recovery Claims, Series LLC v. Grange Insurance Company, 2019 WL 6770729, at *23 and MSP Recovery Claims, Series LLC v. Phoenix Insurance Company, 2019 WL 6770981, at *22. See also, MSP Recovery Claims, Series LLC v. Progressive Corporation, 2019 WL 6770981, at *8.

[11] MSP Recovery Claims, Series LLC v. Grange Insurance Company, 2019 WL 6770729, at *24-25.

[12] MSP Recovery Claims, Series LLC v. Progressive Corporation, 2019 WL 6770981, at *9.

[13] MSP Recovery Claims, Series LLC v. Phoenix Insurance Company, 2019 WL 6770981, at *22 and MSP Recovery Claims, Series LLC v. Grange Insurance Company, 2019 WL 6770729, at *24

[14] MSP Recovery Claims, Series LLC v. Progressive Corporation, 2019 WL 6770981, at *10.

[15] MSP Recovery Claims, Series LLC v. Phoenix Insurance Company, 2019 WL 6770981, at *22 and MSP Recovery Claims, Series LLC v. Grange Insurance Company, 2019 WL 6770729, at *25

[16] MSP Recovery Claims, Series LLC v. Progressive Corporation, 2019 WL 6770981, at *14.

[17] In re Avandia, 685 F.3d 353 (3rd Cir. 2012); Humana v. Western Heritage, 832 F.3d 1229 (11th Cir. 2016); Collins v. Wellcare Healthcare Plans, Inc., 73 F.Supp.3d 653 (E.D. La. 2014) Humana Ins. Co. v. Farmers Tex. Cnty. Mut. Ins. Co., 95 F.Supp.3d 983 (W.D. Tex. 2014); Cariten Health Plan, Inc. v. Mid-Century Ins. Co., No.: 2015 WL 5449221(E.D. Tenn. 2015); Humana Ins. Co. v. Paris Blank LLP, 187 F. Supp.3d 676 (E.D. Va. 2016); Aetna v. Guerrera, 300 F.Supp.3d 367 (D. Conn. March 13,2018); Humana v. Shrader, 584 B.R. 658 (S.D. Tex. March 16, 2018); MSP Recovery Claims Series LLC v. Plymouth Rock Assurance Corporation, 2019 WL 3239277 (D. Massachusetts, July 18, 2019); MAO-MSO Recovery II, LLC v. State Farm, 2018 WL 340021 (C.D. Ill. January 9, 2018); and Humana Ins. Co. v. Bi-Lo, LLC, 2019 WL 4643582 (D. South Carolina, September 24, 2019).


Mark Popolizio, J.D., is vice president of MSP compliance and policy at ISO Claims Partners, a Verisk business. You can contact Mark at mpopolizio@verisk.com.