The United States District Court for the Southern District of Florida in Humana Medical Plan, Inc. v. Western Heritage Insurance Company, No. 12-20123 (S.D., Florida, March 16, 2015) allowed Humana, a Medicare Advantage Organization (“MAO”), to pursue a private cause of action under the Medicare Secondary Payer Act, 42 U.S.C. § 1395y(b) against Western Heritage, a primary payer. In doing so, the court adopted the Third Circuit’s analysis in In re Avandia Mktg., 685 F.3d 353 (3d Cir. 2012) where the court held that MAOs have a private cause of action against a primary plan under the statutory text of the Act. The court further determined that Humana was entitled to recover double damages pursuant to 42 U.S.C. § 1395y(b)(3)(A).
The factual background of the case is fairly straight forward. Mary Reale was enrolled in a Humana Medicare Advantage Plan when she sustained injuries in a slip-and-fall accident at a condominium complex that was insured by Western Heritage. Ms. Reale subsequently entered into a settlement agreement with Western Heritage and its insured. In funding the settlement, Western Heritage attempted to include Humana as a payee on the settlement check. However, Ms. Reale objected because the amount of Humana’s lien was disputed between the parties. In response, the state court judge ordered the tender of the entire settlement amount to Ms. Real without including any lien holder on the settlement check. After Humana and Mrs. Reale were unable to agree on the amount Humana was to be reimbursed, Humana sued Western Heritage seeking reimbursement for conditional payments it made on behalf of Ms. Reale, along with double damages under the MSP Act.
In reaching its decision, the court distinguished the Ninth Circuit’s holding in Parra v. Pacificare of Arizona, 715 F.3d 1146 (9th Cir. 2013). There, the Ninth Circuit found that the MSP Act does not create a private right of action in favor of MAOs, but rather only allows MAOs the right to establish such rights within their contracts. The court noted that the facts of Parra (in particular, the fact that the MAO’s claim was not against a primary payer) were distinguishable from the facts of the case, as well as from the facts of the Avandia case.
This decision follows a recent ruling by a Texas federal district court, Humana v. Farmers Texas County Mutual Insurance Company, et al, No. 13-CV-611-LY (W.D. Texas, September 24, 2014), where the court denied the defendants’ motion to dismiss and allowed Humana to pursue a private cause of action for double damages under the Medicare Secondary Payer Act, 42 U.S.C. § 1395y(b).
