The U.S. Supreme Court has refused to hear a case involving the recovery and reimbursement rights of Medicare Advantage Organizations, or Medicare Part C plans. The Court announced today that it had denied cert to the In Re: Avandia case, in which the Third Circuit U.S. Court of Appeals [1] ruled that Humana [2] -- the administrator of a Medicare Part C plan -- was entitled to the same rights Medicare itself would have in an action against the makers of the diabetes drug. The insurer sued GlaxoSmithKline [3] (“Glaxo”) in 2011 to recoup the costs of medical care its subscribers required after taking Avandia. [4]
Federal law [5] mandates that Medicare be reimbursed for the cost of healthcare treatment it funds, if beneficiaries later receive a settlement or judgment related to the injury which prompted that treatment. Additionally, entities which fail to reimburse Medicare as required face paying double damages as sanctions. The Third Circuit held that Humana, as a Medicare Part C administrator, had a viable cause of action against Glaxo, under the federal laws traditionally applied to Medicare.
The Third Circuit’s ruling will now stand – which means settling tort claims with Medicare Part C claimants will likely become more complicated. We expect that Medicare Part C administrators will follow Humana’s path and seek reimbursement for payments made to its enrollees, and potentially enforce those rights in federal courts. Consequently, parties who settle personal injury cases would now be well-served to identify claimants who received injury-related care from Medicare Part C plans. At this point, it’s not clear what notice Part C plans must provide to the settling parties of payments made, or when subsequent reimbursement obligations would specifically be triggered. [6]
Glaxo had hoped that the Supreme Court would ultimately reverse the Third Circuit’s ruling. The Supreme Court’s refusal to hear the matter is key because it means that, at least for the time being, private insurers which administer Medicare Part C plans arguably have the same rights of recovery as traditional Medicare. Glaxo had argued that allowing the Third Circuit’s decision to stand would severely restrict the ability to settle tort cases because there is currently no uniform procedure for determining what, if any, payments Medicare Part C plans have made on behalf of tort claimants. For its part, Humana argued that Medicare Part C plans are financed in the same way and subject to the same laws and regulations as traditional Medicare plans, and that entities won’t face liability if they reimburse Medicare Part C plans upfront during the settlement process.
Stay tuned for further updates on the impact of the Supreme Court’s decision. If you have any questions, please contact: Michael Russell at mrussell@garretsongroup.com or (704) 559-4300.
[1] In re Avandia Mktg., Sales Practices & Products Liab. Litigation, 685 F.3d 353 (3d Cir. 2012).
[2] Humana Medical Plans, Inc., and Humana Insurance Company (collectively “Humana”) were the respondents in the Supreme Court action. Humana filed suit on behalf of a class of similarly situated companies.
[3] GlaxoSmith Kline LLC and GlaxoSmithKline plc (collectively “Glaxo”) were the petitioners in the Supreme Court action.
[4] Humana initially filed suit against Glaxo in the U.S. District Court for the Eastern District of Pennsylvania, and that federal court dismissed the action, holding that Humana’s claim was not authorized under federal law. See Humana v. GlaxoSmithKline (In re Avandia Mktg., Sales Practices & Products Liab. Litigation) 2011 U.S. Dist. LEXIS 63544 (E.D. Pa. 2011). Subsequently, Humana appealed to the Third Circuit, when then held that Humana was entitled to pursue a claim. See In re Avandia Mktg., Sales Practices & Products Liab. Litigation, 685 F.3d 353 (3d Cir. 2012).
[5] 42 U.S.C. § 1395y(b); 42 C.F.R. § 422.108
[6] In light of the Supreme Court’s decision to let the Third Circuit’s ruling stand, the lien resolution process for participating claimants will likely evolve to include a private insurer acting as a provider of a Medicare Part C plan. The Garretson Resolution Group can assist settling parties to develop a proactive process to verify and resolve appropriate healthcare reimbursement claims.
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