Flagship Services Group Blog

Dog Days of Summer

Aug 24, 2020 12:27:09 PM / by Robert J. Finley

1. Civil Money Penalties. The Office of Information and Regulatory Affairs recently provided an Overall Description of Deadline on Medicare Secondary Payer and Certain Civil Money Penalties. Specifically, “Per the CMS notice published December 30, 2004 (69 FR 78442), except for certain Medicare payment regulations and certain other statutorily-mandated regulations, we schedule all Medicare final regulations for publication within the 3-year standardized time limit in the current Unified Agenda (or, February 18, 2023). We do not intend to delay publishing a Medicare final regulation for 3 years if we are able to publish it sooner.” It follows that Civil Money Penalties will be finalized and published within the next 30 months.

Medicare Secondary Payer and Certain Civil Money Penalties (CMS-6061)

2. Webinars. CMS hosted a webinar on August 13, 2020, following the release of updated NGHP Section 111 User Guide (v.5.9), and, on September 24, 2020, CMS will be hosting a Commercial Repayment Center NGHP Applicable Plan Recovery Appeals webinar. Of note, during the August webinar, CMS spent a good amount of time addressing the use of correct injury codes and no-injury codes, reporting timelines, recent common errors, and proper no-fault policy limit reporting. CMS’ itinerary suggests a focus on the underpinnings of pending Civil Money Penalties. As well, CMS discussed that “indemnity-only settlements” are not reportable under Section 111 citing to the text and purpose of the statute which is for recovery of medical payments. Notwithstanding, one might pause to also consider the current User Guide language on this subject is unchanged, and CMS’ also reiterated its general principle that the User Guide remains the authoritative text for interpreting Section 111. Finally, the Section 111 webinar also covered a variety of other subjects such as ORM guidance in support of multiple reports within a single quarter; TPOC reporting thresholds applying to physical-injury as distinguished from exposure-type claims; reporting agent changes; the CMS Alert instructing PIP and med-pay coverage under the same policy are to be reported as combined limits; and recent technical changes to Medicare Secondary Payer Recovery Portal (MSPRP) were highlighted as well.

3. Medicare Part C Case Law Update. Aetna won summary judgment against a corporate Defendant Big Y under MSP Act Private Cause of Action, based on the settlement of a personal injury case in federal district court of Connecticut. The significance of this decision is the heightening exposure to and eroding insulation from Medicare repayment claims against every party to a personal injury settlement.

The personal injury action was settled for $30,000.00. Aetna paid $9,854.16 in medical expenses on behalf of Plaintiff/Medicare beneficiary. The undisputed facts cited to by the Court find that beginning in September 2015, prior to the settlement, Aetna began to place the Defendants on notice that it was asserting a lien against any recovery or settlement in the case for the value of the medical expenses it covered. On March 10, 2016, Big Y allegedly agreed that it would not send the full amount of any settlement to Plaintiff or her attorneys without first addressing Aetna's claim. Notwithstanding, in September 2016, Big Y sent the full settlement amount of $30,000.00 to Plaintiff and/or her lawyers. Neither Plaintiff nor Big Y reimbursed Aetna for the covered expenses.

The Aetna court explained the rule, “Courts that have considered the question have held that a plaintiff seeking reimbursement under the Private Cause of Action provision of the MSP Act must establish: (1) that the defendant is, in fact, a primary plan responsible for paying a particular expense; (2) that the defendant failed to provide primary payment or, as relevant here, appropriate reimbursement to the secondary payer/plaintiff, and (3) damages. See Western Heritage, 832 F.3d at 1239; Humana, Inc. v. Shrader & Associates, LLP, 584 B.R. 658, 677 (S.D. Tex. 2018) (separating element one into two elements and leaving out damages as an element). Next, the Court framed the issue, “The parties do not dispute the amount of the covered medical expenses. Nor is there any claim by Big Y that it reimbursed Aetna for those medical expenses. The dispute here is whether Big Y was a primary plan under the MSP Act.”

The Court summarized Big Y’s argument as follows: “There is a factual dispute as to its status as a primary plan… Big Y has always denied any liability to Guerrera and has always taken the position that it was Guerrera's own negligence that caused her fall; the settlement agreement contained an express denial of liability; in an effort to manage litigation costs and to secure finality, Big Y made a "nuisance" settlement offer to Guerrera; the offer was conditioned upon a general release containing a broad indemnity and hold harmless agreement; and the settlement did not identify the purpose for the settlement funds nor allocate the funds between the various of Guerrera's claims, i.e. economic vs. non-economic injuries.”

Rejecting the corporate defendant’s arguments, the Court decided that Big Y is a Primary Plan that had primary responsibility for Plaintiff’s medical expenses under the MSP Act Private Cause of Action, awarding summary judgment in favor of Aetna, a Medicare Part C Plan, because:

“Under the MSP Act, a primary plan must reimburse the secondary payer if it is "demonstrated that such primary plan has or had a responsibility to make payment with respect to such item or service" paid by the secondary payer. 42 U.S.C. § 1395y(b)(2)(B)(ii). A primary plan is defined under the MSP Act, in part, as "a workmen's compensation law or plan, an automobile or liability insurance policy or plan (including a self-insured plan) or no fault insurance[.]" 42 U.S.C. § 1395y(b)(2)(A). Subsection 1395y(b)(2)(B)(ii) further provides that "[a] primary plan's responsibility for such payment may be demonstrated by a judgment, a payment conditioned upon the recipient's compromise, waiver, or release (whether or not there is a determination or admission of liability) of payment for items or services included in a claim against the primary plan or the primary plan's insured, or by other means." 42 U.S.C. § 1395y(b)(2)(B)(ii). Courts have consistently held that a tortfeasor, insured or self-insured, can be a "primary plan" for purposes of the MSP Act. See 42 U.S.C. § 1395y(b)(2)(A) ("An entity that engages in a business . . . shall be deemed to have a self-insured plan if it carries its own risk (whether by a failure to obtain insurance, or otherwise) in whole or in part."); Collins, 73 F. Supp. 3d at 666 ("Congress amended the MSP in 2003 to include tortfeasors and their insurance carriers" within the definition of a primary plan.); Brown v. Thompson, 374 F. 3d 253, 261-62 (4th Cir. 2004) (finding that Medicare, as a secondary payer, was entitled to reimbursement from a tort settlement paid by a self-insured tortfeasor recognizing that the act provides that "a business can create a self-insured plan through its failure to obtain insurance" which evidenced Congressional intent to give the term "self-insured plan" a broad definition.).”

As to damages, the Court found Aetna entitled to $19,708.32 as double damages for Big Y’s failure to reimburse Aetna under MSP Act. The Court reasoned, “The courts have generally recognized this provision's allowance for double damages. See, e.g., Mason v. Amer. Tobacco Co., 346 F.3d 36, 42-43 (2d Cir. 2003) (recognizing an individual's right to double damages from a primary plan that wrongfully refused payment); Manning v. Utils. Mut. Ins. Co. Inc., 254 F. 3d 387, 391-92 (2d Cir. 2001) (same); In re Avandia, 685 F.3d at 359 ("[W]e find that the provision 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."(emphasis added)); MSPA Claims 1, LLC v. Kingsway Amigo Ins. Co., 950 F.3d 764, 767 (11th Cir. 2020) (noting that the Private Cause of Action provision "rewards successful plaintiffs with double damages"); Stalley v. Catholic Health Initiatives, 509 F.3d 517, 527 (8th Cir. 2007) (noting that individuals "could recover double damages to vindicate their private rights when their primary payers fail to live up to their obligations").

Not to be overlooked, the Court also decided that Aetna had a valid, enforceable breach of contract claim under its Part C Plan against its member/the Plaintiff, but not against the other parties including Plaintiff’s attorneys; and, the Court rejected Aetna’s fiduciary duty claims under Connecticut state law because it’s not enough just to issue notice of repayment claim. The important take-away here is Medicare Part C Plans remain steadfast and resourceful in presenting good faith pleading strategies, albeit unsuccessful in this case, seeking alt-MSP Act liability theories against settling personal injury parties, perhaps developing the framework of future disputes.

Aetna Life Ins. Co. v. Guerrera

Disclaimer: This publication is provided for informational purposes only.  It is not intended to constitute, and shall not be construed as, the rendering of legal, accounting, or business advice or opinion or professional services of any type.  Nothing herein constitutes the views of the firm or its clients or the endorsement of any particular case, principle, or proposition.  The contents of this publication should not be viewed as a substitute for the guidance, advice, or recommendations of a retained professional


Flagship Services Group is the premier Medicare and Medicaid compliance services provider to the property & casualty insurance industry. Our focus and expertise have been the Medicare and Medicaid compliance needs of P&C self-insureds, insurance companies, and third-party administrators. We specialize in P&C mandatory reporting, conditional payment resolution, and set aside allocations. Whether auto, liability, no-fault, or work comp claims, we have assembled the expertise, experience and resources to deliver unparalleled MSP compliance and cost savings results to the P&C industry. To find out more about Flagship, our team, and our customized solutions, please visit us at www.flagshipservicesgroup.com. To speak with us about any of our P&C MSP compliance products and services, you may also contact us at 888.444.4125 or info@flagshipsgi.com.

Tags: MSA, civil monetary penalties, Robert Finley, Flagship Services, CMP, MSP, Medicare, Medicare Second Payers, section 111

Robert J. Finley

Written by Robert J. Finley

Robert J. Finley, a partner with Hinshaw & Culbertson LLP, has litigation and trial practice experience focused in tort, employment and healthcare. He also counsels firm clients under health plans, auto, property/casualty, no-fault, and workers compensation policies on Medicare repayment and Medicaid reimbursement compliance. Robert advises Flagship Services Group on high value matters, in administrative hearings, and with educational solutions involving Medicare Secondary Payer issues. For more information, visit: https://www.hinshawlaw.com