Recently, the U.S. District Court in Richmond, VA denied a defendant’s motion to dismiss in Humana v. Paris Blank.[1] Paris Blank (Defendant) filed the motion, alleging that the Medicare Secondary Payer (MSP)[2] statutory framework did not grant Humana (Plaintiff) the right to utilize its private cause of action provision.[3] The Court disagreed, finding that the plain language of the statute in question “is broad and unambiguous, placing no limitations upon which private (i.e., non-governmental) actors can bring suit for double damages when a primary plan fails to appropriately reimburse any secondary payer.”[4] Even if the language of the statute was ambiguous, the Court reminds us that Chevron[5] deference would have required it to conclude that Medicare Advantage Organizations (MAOs) have a right to pursue recovery of conditional payments just like the federal government can.[6]
The conclusion should not be surprising. In fact, this issue has been trending for years now. Since the 3rd Circuit’s In re Avandia decision in 2012, courts around the country have found its reasoning persuasive, concluding that MAOs have the same rights to pursue recovery of conditional payments as the federal government. The noteworthy part of this case is who Paris Blank is. It’s not a person as you might suspect; it’s a law firm.
Paris Blank represented Keith Marcus. Mr. Marcus was injured in a motor vehicle accident on October 11, 2013. Humana made $191,612.09 worth of medical expense payments on Mr. Marcus’ behalf. Mr. Marcus received settlement proceeds from several insurance companies as a result of a lawsuit totaling approximately $475,600. Mr. Marcus hired Paris Blank to represent his interests in negotiating with those insurance companies. While the facts show that Paris Blank confirmed that no reimbursement obligations existed with respect to Medicare Parts A or B fee-for-service, it did not address any reimbursement obligations owed to any MAO under a Medicare Part C plan. Unbeknownst to Paris Blank at the time, there was a flaw in its lien resolution process which went unidentified until now. In focusing so much on dealing with the Centers for Medicare & Medicaid Services (CMS) to address the Medicare lien in the case, it overlooked other potential Medicare obligations lying in the weeds.
In reading this opinion, one might recall the Harris case. Remember that one? There, the federal government successfully collected reimbursement of the Medicare conditional payments from the lawyer representing the Medicare beneficiary. Humana v. Paris Blank appears to be very similar. Both involve Medicare beneficiaries. Both involve lawyers failing to ensure that Medicare is reimbursed for conditional payments made. Both involve the government pursuing reimbursement from the lawyer (albeit Humana is standing in the shoes of the federal government via its private cause of action claim). It would not be surprising to see the ultimate outcome mirror Harris as well.
However, there is a significant difference from my perspective. While the present matter relies on the MSP Act's private cause of action provision at 42 U.S.C. Sec. 1395y(b)(3)A), the federal government in the Harris case utilized the direct action rights the MSP Act affords it under 42 U.S.C. Sec. 1395y(b)(2)(B)(iii). The distinction could be significant. While the direct action provision grants recovery against entities making or receiving payment, the private cause of action provision permits recovery "... in the case of a primary plan which fails to provide for primary payment …”[7]
Is a lawyer or law firm a primary plan? That might be the ultimate question facing the federal court here. While the unambiguous language allows Humana to bring the private cause of action claim against Paris Blank, that same unambiguous language may also serve to deny Humana repayment should the court conclude that lawyers and law firms are not primary plans.
This opinion is a warning for all attorneys out there handling cases involving medical expenses and Medicare beneficiaries. Perhaps the Court ultimately sides with Humana; perhaps it doesn’t. Either way, the lawyer has the power to prevent this from happening to them. Make sure your process proactively identifies all possible lien interests and then handle those accordingly. If you question your process for one second, consult a third party whose work focuses on these issues. Preferably, choose one that has consistently been solving these same problems for years. Based on Humana’s current winning streak[8], that light in front of you is not likely the light at the end of the Medicare lien tunnel; it’s the MAO train barreling towards you.
[1] Humana v. Paris Blank LLP, et al., 2016 U.S. Dist. LEXIS 61814 (Decided May 10, 2016).
[2] 42 U.S.C. § 1395y(b)(2).
[3] 42 U.S.C. § 1395y(b)(3)(A).
[4] Humana v. Paris Blank at *9 (citing to In re Avandia, 685 F.3d 353, 359 (3d Cir. 2012).
[5] Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984).
[6] Humana v. Paris Blank at *10.
[7] 42 U.S.C. § 1395y(b)(3)(A).
[8] See, e.g. Humana Med. Plan, Inc. v. Western Heritage Ins. Co., 94 F. Supp. 1285 (S.D. Fla. 2015); Humana Ins. Co. v. Farmers Texas Cty. Mutual Ins. Co., 95 F. Supp. 3d 983 (W.D. Tex. 2014).
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