Avandia Decision – Case Decision Affects Medicare Part C & D Plans

July 30, 2012|Legal News, Medicare News|Case Decision, Medicare, Part C, Part D

New Case Holds Medicare Part C & D Plans Have Right to Private Cause of Action Under MSP

ear Friends and Colleagues: A significant new case from the Third District, In Re Avandia Marketing, etc., (Humana and other similarly situated plans) (Lexis 13230) has confirmed something we have seen coming given several recent CMS memos: The Medicare Secondary Payer Act’s “private right of action” under 42 USC 1395y(b)(3)(A) has been held to extend to Medicare Advantage Plans under Medicare, Parts C and D (Avandia, pgs. 20-21, Section B, and 26, fn. 20).

The implications of this case are troubling for RREs, since it is not yet clear what compliance obligations primary payers have, or how they are to meet them. However, there is now Federal Appellate authority supporting the proposition that Part C and Part D plans are on essentially equal footing with Medicare Parts A and B in important respects, including the right to seek and be awarded double damages under the “private right of action” provision of the MSP.

While we await word as to whether an en banc hearing before the entire Third District Court of Appeal, or appeal to the United State Supreme Court will be sought and granted, RREs should anticipate that Part C and D plans will expand their direct recovery efforts against RREs. RREs should consult with experienced counsel to ensure they have a plan in place to identify, address and respond to these claims so that exposure to potential private causes of action is minimized or eliminated as we wait to see how the uncertain area of compliance develops.

This is an unsettled area, to say the least. However, it is recommended that RREs have procedures in place to IDENTIFY whether there is a Part C or Part D component in every Medicare case and, if so, request consent from plaintiff’s counsel or the beneficiary directly to initiate contact with the Part C or Part D plan to determine whether a lien is being or will be asserted. Careful review of medical records will be key to this initial step. Further, in order to best protect the RRE, a carefully crafted Release is, as always, recommended, providing that the RRE directly pay those plans out of settlement proceeds on the beneficiary’s behalf to ensure that full and timely payment is made. Further, every effort should be made to obtain a Release from the plan in exchange for the direct payment, to cut off any future attempts to seek additional reimbursement from the RRE.  Any such Release should contain a waiver of the Plan’s private right of action under 42 USC 1395y(b)(3)(A).  For comments and analysis of this decision particularly applicable to plaintiff/claimant beneficiaries and their counsel, please view our MSP resources for plaintiffs’ advocates.

Attached is a copy of the complete decision for your review. Additional information will shortly be on our website. In the interim, please do not hesitate to contact our office with questions as issues arise in your Medicare cases.