Advantage Plan Sues Florida Work Comp Insurer for Double Damages

Humana Files Private Cause of Action for Double Damages Against Associated Industries Insurance Company Arising from Florida Work Comp Claim

Rafael Gonzalez, Esq. Cattie & Gonzalez, PLLC

Over the last decade, we have seen Medicare Advantage Plans (“MAPs”) which make conditional payments related to an accident seek reimbursement from the corporate defendant or its insurer, otherwise considered the primary or responsible payer. When such entities deny MAPs reimbursement, and the MAP has to file its claim for reimbursement in federal court, based on the Medicare Secondary Payer Act (“MSP”), MAPs have sought double damages in private cause of action permitted by the MSP.

Most of the claims, litigation, and case law produced in this area of the law over the last decade dealt with no-fault and liability claims. Although the MSP statute is clear that such private cause of action for double damages also apply to workers compensation claims, we had not seen much legal action or litigation by MAPs against self-insured employers or workers compensation insurers. 

That was the case until recently, when on December 14, 2020, Humana Insurance Company filed an MSP private cause of action for double damages against Associated Industries Insurance Company in the United States Federal District Court, Southern District of Florida.

Humana Pays $26,000 as a Result of Work Accident

Plaintiff, Humana Insurance Company (“Humana”), contracts with the Center for Medicare and Medicaid Services (“CMS”) to administer Medicare benefits for Medicare beneficiaries who elect to enroll in MAP or “Medicare Part C” plans for such coverage. 

Defendant, Associated Industries Insurance Company, Inc. (“AIIC”) is a subsidiary of AMTRUST North America, Inc., which provided workers’ compensation coverage to DNP Associates, Inc., a Florida corporation, which employed Mr. Arnold Hariton.

The complaint alleges that on or about December 29, 2016, Mr. Hariton fell from a ladder while maintaining a light fixture at work (the “Workplace Accident”). At the time of the Workplace Accident, Mr. Hariton was eligible for Medicare and had elected Medicare Part C coverage through Humana. 

The complaint indicates Mr. Hariton was injured as a result of the Workplace Accident and received Medicare benefits for the injuries sustained during the Workplace Accident. Specifically, Humana paid $26,214.83 on Medicare claims submitted by medical providers on behalf of Mr. Hariton for medical services rendered as a result of the Workplace Accident. 

Humana Put AIIC on Notice of Conditional Payments

Humana did not know of the Workplace Accident immediately. The complaint indicates that Humana learned of the workers’ compensation claim after Mr. Hariton’s attorney notified Humana in 2019 of his representation of Mr. Hariton in that workers compensation claim. 

Upon learning of the workers compensation claim, the complaint indicates Humana sent AIIC notices of its Medicare payments in April 2019 and again in September 2019. Therefore, Humana alleges in its complaint that AIIC was significantly aware that Humana had made conditional payments on behalf of Mr. Hariton resulting from his Workplace Accident.

AIIC Settles Work Comp Claims, Becoming Primary Payer

Unbeknown to Humana, AIIC settled Mr. Hariton’s workers compensation claim at a scheduled mediation on October 3, 2019 for $40,000. The Florida Office of Judges of Compensation Claims (“OJCC”) website shows that on October 25, 2019, Mr. Hariton’s attorney filed a Notice of Resolution of Issues with the OJCC. 

The OJCC web site also shows that on December 6, 2019, a Notice of Settlement was filed by Mr. Hariton’s attorney, and that on January 30, 2020, the Fort Lauderdale Judge of Compensation Claims (JCC) signed a settlement order, approving $10,000 attorney fee and $327 in costs, netting Mr. Hariton $29,673.

The OJCC web site shows that because Mr. Hariton owed $32,418 in child support, the JCC ordered $14,836.50 withheld from the settlement to pay for child support. The JCC also ordered that no distribution of any monies held in trust would go to Mr. Hariton unless ordered by the JCC.

Considering these facts, Humana argues in its complaint that by virtue of this workers’ compensation settlement, AIIC acknowledged that it was the primary payer, and became the primary plan under 42 U.S.C. § 1395y(b)(2). As such, Humana argues, AIIC was required to make appropriate reimbursement for the conditional Medicare benefits advanced by Humana on behalf of Mr. Hariton. 

By Settling Claim, AIIC Assumed Responsibility for Reimbursement

Although it is also clear that Mr. Hariton was primarily responsible for reimbursing Humana within 60 days of AIIC’s settlement payment, 42 C.F.R. § 411.24(h), Humana argues in its complaint that AIIC remained responsible to reimburse Humana under applicable federal regulations, 42 C.F.R. § 411.24(i)(1). By failing to ensure that this occurred, Humana argues AIIC assumed the risk of being responsible to pay Humana in the event Mr. Hariton failed to do so. 

The complaint indicates that Mr. Hariton has not repaid Humana, meaning that AIIC remains responsible for reimbursing Humana, even though it has already paid Mr. Hariton. See Humana Med. Plan, Inc. v. Western Heritage Ins. Co., 832 F.3d 1229 (USCA 11th Cir. 2016) (primary plan liable to Medicare Advantage Organization for double damages even though it reimbursed Medicare enrollee for medical expenses). 

AIIC Refuses to Pay, Humana Files PCA, Demands Double Damages

The complaint indicates that, to date, AIIC has refused to honor its obligations under the MSP law and, through its attorneys, has consistently disputed Humana’s right to recover its conditional payments. Consequently, Humana has not received any reimbursement to date for the conditional payments it made on behalf of Mr. Hariton. 

Humana therefore points to the fact that Congress established a private cause of action under 42 U.S.C. § 1395y(b)(3)(A), permitting the recovery of double damages for a failure to make appropriate reimbursement in accordance with the MSP law. Humana argues that, where, as here, the Medicare payer is required to litigate because of a primary payer’s refusal to make appropriate reimbursement, the required reimbursement is the lesser of the “Medicare payment” or “total judgment of settlement amount, minus the party’s total procurement costs.” 42 C.F.R. § 411.37(e).

Humana therefore demands double damages in an amount to be determined under the formula set forth under 42 C.F.R. § 411.37 in accordance with 42 U.S.C. § 1395y(b)(3)(A). 

Conclusion

The facts are different here than other MAP cases we’ve discussed before. Instead of the underlying claim being an auto no-fault claim, or medical malpractice claim, or products liability claim, the conditional payments made by the Advantage Plan were a result of an accident in the course and scope of employment. It’s a workers compensation claim. Nonetheless, the federal law used and the arguments Humana makes are identical to those we have seen over the last decade by this and several other MAPs. A settlement, judgment, award, or payment triggers responsibility for reimbursement of conditional payments made by a primary payer, not just to Medicare, but to Medicare Advantage Plans and Prescription Drug Plans as well. 

Although the Medicare beneficiary also bears responsibility for reimbursement of such conditional payments, under MSP law, all parties involved, especially the employer or its carrier which settled the work comp claim with its employee, become primary responsible payers as a result of the settlement reached and approved here. The Medicare entity seeking recovery (whether CMS for Parts A/B, a MAP for Part C, or a prescription drug plan for Part D) may pursue any entity that made or received payment. 42 C.F.R. § 411.24. Therefore, I expect this court to award Humana double damages based on the conditional payments it made related to the medical treatment associated with the underlying work comp claim. See Humana v. Bi-Lo (USDC South Carolina, Sept. 24, 2019) (despite settlement agreement indicating injured party responsible for Medicare lien, corporate defendant held as primary payer and therefore responsible for reimbursement); Aetna v. Guerrera (USDC Conn, Aug 5, 2020) (Connecticut federal district court orders corporate entity to pay advantage plan double damages despite settlement terms).

Tips and Advice

• Reaching out to the Medicare Advantage Plan in the early stages of settlement negotiations should help with resolution of the MAP lien. Engage a law firm like Cattie & Gonzalez to educate the MAP about the facts, history, circumstances, and specifics of the file.
• Reviewing the MAP’s list of payments to ensure related vs unrelated payments. Engage legal professionals like Cattie & Gonzalez to assist with review of past medical payments and analyze relatedness.
• Advocating for the corporate defendant and its insurer will make certain reimbursement is limited commensurate with policy limits, settlement terms, and legal responsibility. Engage experienced practitioners like Cattie & Gonzalez to advocate based on established facts, evidence, and law.

About Rafael Gonzalez, Esq.

Rafael is a partner in Cattie & Gonzalez, PLLC, a national law firm focusing its practice on Medicare/Medicaid secondary payer compliance issues. In addition to assisting clients with Medicare conditional payments and Medicare set asides issues, he helps clients with Medicaid third party liability liens and Medicaid special needs trusts issues. He has over 35 years experience in the liability, no-fault, and work comp insurance industry. You can connect with him on LinkedIn, Twitter, Facebook, and YouTube, or reach him at [email protected], 844.546.3500, or www.cattielaw.com.