By Carolina Bolado
Law360 (September 4, 2020, 8:12 PM EDT) — The Eleventh Circuit ruled Friday that downstream health care providers can sue primary insurers for nonpayment under the private right of action in the Medicare Secondary Payer Act, a ruling that revives several proposed class suits in Florida and paves the way for billions of dollars in reimbursements for providers around the country.
The three-judge panel reversed the dismissal of four suits brought by MSP Recovery Claims — an assignee of Medicare Advantage organizations and downstream entities like physician associations that provide health care to Medicare enrollees — and said the district court erred by narrowly construing the act to exclude claims by downstream actors.
Under the Medicare Secondary Payer Act, when more than one insurer is liable for an insurance cost, private insurers are treated as primary payors and Medicare as a secondary payor. A Medicare Advantage organization not reimbursed by a private insurer can sue for reimbursement under the statute.
The language of the statute “is easily read to cover downstream actors who have borne the cost of a conditional payment and thus have suffered damages,” according to the published opinion.
“Furthermore, allowing downstream actors who have directly paid beneficiaries’ medical bills or reimbursed an MAO to recoup damages would plainly benefit the Medicare Advantage system,” the panel said. “It would enable downstream actors to avoid costs that, under the Medicare Secondary Payer Act, should be borne by primary payers, not actors within the Medicare Advantage system.”
The Eleventh Circuit noted that various other circuit courts that have dealt with this issue have come to the same conclusion. Rejecting downstream entities’ access to the private right of action would jeopardize Medicare Advantage organizations’ ability to negotiate favorable contract terms and would pass primary payors’ risks and costs into the Medicare Advantage system, according to the opinion.
“Finally, rejecting downstream actors’ ability to seek double damages would incentivize primary payers to delay making primary payments and reimbursing conditional payments, in the hope that these costs would be permanently passed from an MAO to a downstream actor with no recourse,” the panel said. “Both the text and the objective of §1395y(b)(3)(A) support allowing downstream actors to bring suit, or assign their right to bring suit, against primary payers.”
The consolidated case appealed four decisions in the Southern District of Florida dismissing MSP Recovery Claims’ class suits against Ace American Insurance Co., Auto-Owners Insurance Co., Travelers Casualty and Surety Co. and Liberty Mutual Fire Insurance Co.
At oral arguments in December, Travelers’ attorney Bryce Friedman of Simpson Thacher & Bartlett LLP told the panel that the Medicare Advantage organizations were paid back in full and having downstream entities fight over how to split the money “is outside the zone of the statute.”
But the panel disagreed in its opinion, saying the defendants had presented “no persuasive rationale for limiting downstream actors’ access to the private right of action.”
MSP Recovery Law Firm founder John H. Ruiz called the decision the “biggest victory of my legal career” and said it could mean billions of dollars in reimbursements for hundreds of thousands of downstream health care providers.
He said the ruling is a vindication of the legal strategy he developed in 2014 to go after payments on behalf of these providers.
“The auto insurance industry and other primary payers have unlimited resources,” Ruiz said. “It’s like fighting an 800-pound gorilla with a slingshot. The insurance companies tossed the kitchen sink at us, but we caught it and threw it right back, hitting them between the eyes and turning the industry on its head.”
Attorneys for the insurance companies did not immediately respond to requests for comment Friday.
U.S. Circuit Judges Adalberto Jordan, Jill Pryor and John M. Walker Jr. sat on the panel.
MSP Recovery is represented by Francesco A. Zincone and J. Alfredo Armas of Armas Bertran Pieri, Frank Carlos Quesada and John H. Ruiz of MSP Recovery Law Firm, and Andres Rivero and Alan H. Rolnick of Rivero Mestre LLP.
Ace American Insurance is represented by Nancy A. Copperthwaite, Valerie B. Greenberg and Ari H. Gerstin of Akerman LLP.
Auto-Owners Insurance Co. is represented by Lori M. McAllister of Dykema Gossett PLLC, and Shannon McKenna, Francisco Ramos Jr. and Spencer H. Silverglate of Clarke Silverglate PA.
Travelers Casualty and Surety Co. is represented by Bryce L. Friedman of Simpson Thacher & Bartlett LLP, and Laura E. Besvinick of Stroock & Stroock & Lavan LLP.
Liberty Mutual Fire Insurance Co. is represented by Anthony J. Russo, Mihaela Cabulea, David B. Krouk and Matthew J. Lavisky of Butler Weihmuller Katz Craig LLP.
The case is MSP Recovery Claims v. Ace American Insurance Co. et al., case numbers 18-12139, 18-12149, 18-13049 and 18-13312, in the U.S. Court of Appeals for the Eleventh Circuit.
–Editing by Breda Lund.