By Guest Author Kevin E. James, Esq. – Lien Resolution Attorney
The Medicare Secondary Payer Act (MSP) has often been described by many courts as notoriously “complex”. This complexity has only increased as Medicare Advantage Organizations (MAO) have increasingly become more litigious in attempts to make law and validate their recovery rights under the MSP.
From exhausting administrative appeals, to applying the correct statute of limitations, to the correct application of the procurement cost reduction under 42 CFR 411.37, to even what the lien amount should be has vexed many personal injury attorneys when aggressive Medicare Advantage Organizations (MAOs) attempt recovery from a members tort settlement.
The 11th Circuit Court of Appeals has attempted to bring some clarity to the statute of limitations in a recent case.
An individual was attacked by a dog, pursued a tort claim against the tortfeasor and obtained a settlement in 2012 for $25,000. The defendant insurance carrier reported this settlement to CMS as required under the MSP, but the MAO plan was never notified.
The Medicare beneficiary was covered under an MAO plan, that since had gone defunct, and paid approximately $8,000 to cover medical bills allegedly paid by the plan. The defunct plan had assigned it its rights to a subsidiary of MSP Recovery or MSPA Claims 1, a Miami based-group that pursues recovery actions.
At some point in 2105, MSPA Claims 1, the assignee for the MAO plan, became aware of the claim and sent a demand letter to the tortfeasor’s carrier, Tower Hill. For reasons unknown, MSPA Claims 1 did not file suit until August of 2018.
At the district court level, MPSA Claims 1 filed suit under the private cause of action provision, 42 U.S.C. § 1395y(b)(3)(A). Both parties then filed summary judgment motions arguing that the 3-year statute of limitations contained in the governmental cause of action was applicable to the case. The essential argument was whether the 3-year statue began to run when the case settled or when MSPA Claims 1 became aware of their potential interest.
The private cause of action that MSPA Claims 1 made in its claim does not actually contain a statute of limitations, the Court requested further arguments on if the governmental statute was the applicable one.
Tower Hill filed a motion for reconsideration and argued that the Court should borrow Florida’s statute of limitations which has a four-year statute of limitations for causes of “actions other than recovery for real property”. The District Court ruled in favor of Tower Hill ruling MSPA Claims 1 claim untimely.
The question before the circuit court, as briefed by the parties, was whether the governmental statute of limitations began to run when the payments and settlement occurred in 2012 or when MSP claims became aware of the settlement. Both parties agreed that the district court had erred by borrowing from Florida’s four-year statute of limitation. Essentially the parties were seeking a determination on if the statute was notice-based or one of occurrence.
Addressing the first question of which statute of limitations is the correct one, the Court ultimately decided that none of the statutes that henceforth been proffered was the correct one.
The Court agreeing that there existed no statute of limitation in the private cause of action that MSPA Claims 1 brought its claim under, the Court ultimately ruled that the appropriate statute of limitation to apply was found in 26 U.S.C. § 1658(a), a catch all statute of limitations found in the federal code. This statute contained a four-year statute of limitations. Thus, the Court held there was no need to borrow from Florida state law and the three-year statute of limitations applied to the government only.
The question left to be answered was when did MSPA 1 Claim’s claim accrue. Thus, the court had come full circle and returned to the essential disagreement between the parties.
The Court found that Section 1658(a) is one of occurrence and that since the MSPA Claims 1 became entitled to reimbursement, through the Medicare Secondary Payer Act, when it paid the claims and the case had been settled in 2012, the claim had accrued in 2012. As stated previously, this was more than six years after the claim had been settled, with the court ultimately ruling that MSPA Claims 1 suit was untimely.
While this case was a defeat for the MAO plan in this instance, it did clarify within the 11th Circuit what the appropriate statute of limitations are for an MAO plan to avail itself of the private cause of action. It also arguably extends the rights of MAO plans as the government would only have a three-year window to enforce its claims while MAO plans now have four.
This case also illustrates why Medicare Advantage liens are often referred to as “hidden liens”. This makes it doubly important that plaintiff’s attorneys are doing their due diligence in ensuring they have located any potential lien holders in a case, particularly when dealing with Medicare eligible individuals. Developing a process to identify and then monitor which “Part” of Medicare a personal injury victim has coverage under is critical to proper resolution as well as compliance with the MSP at settlement.
Jason D. Lazarus is the managing partner and founder of the Special Needs Law Firm; a Florida law firm that provides legal services related to public benefit preservation, liens and Medicare Secondary Payer compliance. He is also the founder and Chief Executive Officer of Synergy Settlement Services, which offers healthcare lien resolution, Medicare secondary payer compliance services, public benefit preservation and complex settlement consulting.