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Exposure for Double Damages to Attorneys and Law Firms under Medicare Part C (Medicare Advantage)

Medicare provides eligible individuals the right to receive Medicare benefits through Parts A and B or through Part C of the program.  Parts A and B are the original Medicare fee-for-service program providing certain hospital and medical benefits.  Part C, referred to as Medicare Advantage, provides an option for eligible individuals to obtain health care benefits from private companies, known as Medicare Advantage Organizations.  A recent case out of United States District of Virginia, Richmond Division reminds attorneys and law firms that they could be held liable for double damages for the failure to reimburse medical providers for payments made as a Medicare Secondary Payer.

In Humana Ins. Co. v. Paris Blank, LLP, et al, 187 F.Supp.3d 676 (E.D. Va. 2016), Humana filed suit against a law firm asserting a private cause of action under 42 USC 1395y(b)(3)(A). The claim was for double damages of $328,836.27 for the firm’s failure to reimburse Humana for medical payments out of settlement proceeds paid to the Firm’s client.  The client was an enrollee in the Medicare Advantage Plan under Part C of Medicare through Humana.

The Medicare Secondary Payer Law passed in 1980 created a federal coordination of benefits between primary and secondary payers.  Worker’s compensation, liability insurance and no fault insurance plans act as primary payers while Medicare insurance acts as a secondary payer.  A secondary payer may make conditional payments for medical services for their enrollee and subsequently seek recovery from the primary plan.

In the instant case, the client suffered injuries resulting from a motor vehicle accident.  Humana made conditional payments as a secondary payer under Medicare on behalf of the the client.  After suit was initiated by the Firm on behalf of the client, the client received settlement payments from several insurance companies totaling $475,600.  The checks were issued in the name of the firm, the client, or both of them.  One insurance company issued a check in the name of the firm and Humana.  The firm cashed the check without obtaining Humana’s endorsement.

In January 2015, Humana notified the client that the client owed Humana $191,612.09 in reimbursements for conditional payments it made for the client’s medical expenses.  Humana sought payment within sixty (60) days. The client requested a waiver or file an appeal.  The firm requested a waiver, enclosing a copy of correspondence between the law firm and the Centers for Medicare and Medicaid Services (“CMS”) which administered Humana’s Medicare benefits. The CMS correspondence indicated that the client owed nothing under Medicare Part A and Part B, but said nothing about Part C.  CMS does not maintain records of conditional payments made under the Part C Medicare Advantage Plan.  Humana denied the request for waiver and filed suit.

The firm filed a Motion to Dismiss arguing Humana did not have a private cause of action and even if it did, attorneys and law firms are not primary payers against which Humana could seek recovery under the statute.  The Court denied the Firm’s motion to dismiss finding 42 USC 1395y(b)(3)(A) does not limit the parties against whom suit may be maintained and the CMS promulgated regulations identifying attorneys as an entity from which recovery may be sought under the Medicare Secondary Payer Law.  The case was subsequently dismissed by joint motion of the parties who presumably settled the matter.

If you, as an attorney, or your firm settles a case where your client receives injury-related medical care, and CMS reports no conditional payments, you should investigate to determine who paid for the care and negotiate repayment.   Be aware of the differences between traditional Medicare under Parts A and B versus the Medicare Advantage Plan under Part C.  Keep in mind that CMS does not maintain records of conditional payments made under Part C.  Request your client provide you copies of their insurance identification cards.  If you see “Med Advantage” on the card issued by an insurance carrier, then a Medicare Advantage Plan is involved.  Review the Explanation of Benefits statements your client receives to see if it has Medicare’s name or Medicare Advantage stated on them.