MAP Wins Double Damages Against Primary Payer Despite Settlement

Connecticut Federal District Court Orders Corporate Entity to Pay Advantage Plan Double Damages Despite Settlement Terms

Rafael Gonzalez, Esq.

On August 5, 2020, the United States District Court for the District of Connecticut published its opinion on Aetna Life Insurance v. Guerrera. The Court found that despite protective language in the premises liability case settlement, the liability corporation, not the injured party or her attorneys, had primary responsibility for the injured party’s medical expenses. The Court therefore awarded double damages to the Medicare Advantage plan, since neither the liability corporation, injured party, or her attorneys reimbursed the Medicare Advantage plan for conditional payments it made resulting from medical care related to the premises liability claim.

The Facts

In February 2015, Guerrera sustained personal injuries at the Big Y store in Monroe, Connecticut for which she sought and received medical care. Aetna, a Medicare Advantage Organization (MAO), operates a Medicare Advantage health insurance plan (MAO Plan), in which Guerrera was enrolled and through which she maintained health insurance. Following her accident at the Big Y, Aetna paid approximately $9,854.16 in medical expenses on behalf of Guerrera. Guerrera retained the law firm of Carter Mario and/or attorneys Wisniowski and Hammil to bring a personal injury action against Big Y, which they did. Eventually, they settled the personal injury action for $30,000.00. 

Prior to the settlement, Aetna placed Big Y, Guerrera and Carter Mario 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 Guerrera 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 Guerrera and her lawyers. Neither Guerrera, her attorneys, nor Big Y reimbursed Aetna for the covered expenses. 

The First Law Suit and Judge Hall’s Decision

In May 2017, Aetna filed suit. In Count One, Aetna asserted that it was entitled to be reimbursed for the conditional payments made on behalf of Guerrera for her medical expenses pursuant to the Medicare Secondary Payer Act (MSP Act). 42 U.S.C. § 1395y(b)(2).

On July 5, 2017, the Defendants moved to dismiss the Complaint in its entirety on the basis that the MSP Act’s Private Cause of Action provision of the MSP Act, does not give MAOs, like Aetna, the right to seek or receive reimbursement for medical expenses paid to enrollees. 42 U.S.C. § 1395y(b)(3).

The United States District Court for Connecticut disagreed. In a thorough 38-page decision, Judge Hall determined that an MAO, such as Aetna, could seek reimbursement for medical expenses pursuant to the Private Cause of Action provision of the MSP Act. 

In so holding, the Court examined the legislative history of the statute, the regulations issued by CMS with respect to the statute, and relevant, though relatively scant, case law which discusses these issues. Accordingly, the Court concluded the MSP Act claim was permitted to proceed, but only against Big Y, but not against Guerrera and her attorneys. The Court retained jurisdiction over the state law claims as to the remaining defendants. 

The Second or Amended Law Suit

On April 3, 2018, as directed by the Court, Aetna filed an amended complaint to clarify its claims and to specify against whom the claims were alleged. The amended Complaint[JC1] , consisting of the same substantive allegations, includes three counts: Count One, the MSP Act claim, against Big Y; Count Two, a state law breach of contract claim, against Guerrera and Carter Mario; and Count Three, a state law breach of fiduciary duty claim, against all Defendants. 

On September 17, 2018, all Defendants filed a motion for summary judgment as to all counts and Aetna filed a motion for partial summary judgment pertaining to Count One, the MSP Act claim. What follows is the court’s analysis, discussion, and conclusions regarding the MSP Act claim.

Aetna Claims Big Y is Primary Payer, Responsible for Guerrera’s Medical Expenses

Judge Hall determined that an MAO may bring an action under the Private Cause of Action provision of the MSP Act seeking reimbursement for payments which were the responsibility of a primary plan. Aetna now seeks partial summary judgment asserting that there is no genuine issue of material fact with respect to Count One in which Aetna seeks reimbursement (and double damages) from Big Y for the medical expenses Aetna paid on behalf of Guerrera. 

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. 

Aetna asserted that there was no dispute that it was an MAO that offered a "Medicare Advantage Health maintenance plan" under which Guerrera maintained coverage. Aetna further asserted that there was no genuine dispute that: 

1) Big Y was a "primary plan" under the MSP Act and had responsibility for payment of Guerrera's medical expenses; 

2) Big Y therefore had an obligation to reimburse Aetna as the secondary payer of those expenses; 

3) Big Y failed to reimburse Aetna as was its obligation; and therefore

4) Aetna is entitled to double damages under the law. 

The parties did not dispute the amount of the covered medical expenses. Nor was there any claim by Big Y that it reimbursed Aetna for those medical expenses. The dispute here was whether Big Y was a primary plan under the MSP Act. Aetna asserted that Big Y was a primary plan responsible for payment of the medical expenses which were covered by Aetna. On the contrary, Big Y asserted that there was a factual dispute as to whether Big Y was a primary plan that had responsibility for Guerrera's medical expenses. 

Court Holds Big Y is a Primary Plan Which Has Primary Responsibility for Guerrera's Medical Expenses 

Relevant to this issue are the following uncontroverted facts: 

1) Although Big Y had liability insurance, the coverage contemplated a $350,000.00 per occurrence retention; accordingly, Big Y was "self-insured" for the first $350,000.00 of any claim(s) brought against it; 

2) Guerrera brought a premises liability personal injury action against Big Y in which she sought both economic and non-economic damages, to include her medical expenses;

3) Aetna paid $9,854.16 of those medical expenses; 

4) Big Y paid Guerrera $30,000.00 as a settlement of her claims and the settlement resolved all of Guerrera's claims, including her claim for medical expenses; and

5) Big Y conditioned the settlement payment upon Guerrera signing a release. 

Aetna asserted that these facts, under the express terms of the MSP Act, established Big Y's responsibility for primary payment. 

Big Y asserted that there was a factual dispute as to its status as a primary plan, relying in part on the following facts: 

1) 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; 

2) the settlement agreement contained an express denial of liability; 

3) in an effort to manage litigation costs and to secure finality, Big Y made a "nuisance" settlement offer to Guerrera; 

4) the offer was conditioned upon a general release containing a broad indemnity and hold harmless agreement; and 

5) 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. 

Accordingly, Big Y asserted there was a genuine issue of material fact as to whether it was responsible for Guerrera's medical expenses and whether the settlement covered those medical expenses. 

Big Y also argued that the settlement payment, being conditioned on the signing of a release, was not dispositive insofar as the statute only provides that primary responsibility "may be demonstrated" by a settlement payment conditioned upon the signing of a release (even without an admission of liability). 

The Court, however, disagreed with Big Y. “Read in its entirety, the statute compels a different conclusion. The statute provides that responsibility for payment may be demonstrated" by a settlement payment conditioned upon the signing of a release, "or by other means." The[JC2]  statute thus provides a non-exclusive list by which responsibility is demonstrated and specifically contemplates that there may be other means by which responsibility for payment can be demonstrated. 

Big Y also asserted that because the settlement funds were not allocated to cover Guerrera's medical expenses, a genuine issue of material fact exists as to whether this statutory requirement was met. 

The Court, however, again disagreed with Big Y, indicating that the statute does not require, as a factual matter, a determination as to the purpose of the settlement payment. It requires only that the settlement involve "payment for items or services included in a claim against the primary plan." As indicated above, Guerrera's claim against Big Y included a claim for her medical expenses and the settlement resolved all of her claims, which, of necessity, included the claim for medical expenses. 

Accordingly, the court concluded there was no genuine issue of fact as to whether Big Y was a primary plan under the MSP Act. It was.

Court Awards Double Damages 

Aetna sought double damages under the MSP Act’s Private Cause of Action provision. Big Y did not specifically address the issue of damages in its opposition to Aetna's motion for partial summary judgment.

As earlier addressed, the Private Cause of Action provision provides that there shall be "a private cause of action for damages (which shall be in an amount double the amount otherwise provided) in the case of a primary plan which fails to provide for primary payment (or appropriate reimbursement)."

As a result, the Court found Aetna is entitled to $19,708.32 ($9,854.16 x 2) as double damages for Big Y's failure to appropriately reimburse Aetna for the conditional payments of medical expenses it made on behalf of Guerrera pursuant to the MSP Act. 

Conclusion

MAOs use of the MSP Private Cause of Action to pursue double damages continue to create havoc on primary payers. As was made clear in this case, a settlement, judgment, award, or payment is sufficient to render the primary payer responsible. It does not matter if liability has been previously and continually denied. It does not matter that the settlement agreement contains an express denial of liability. It does not matter that the settlement was for nuisance value. It does not matter that the settlement was conditioned upon a general release containing broad indemnity and hold harmless provisions. It does not matter that the settlement did not identify the purpose for the settlement funds nor allocate the funds between claims, economic vs. non-economic injuries. A settlement, judgment, award, or payment renders the primary payer responsible for reimbursement of conditional payments made by an advantage plan or traditional Medicare. If those payments are not reimbursed, requiring legal action to recoup, the MSP Act allows the Medicare benefits provider (be it the federal government via Medicare Parts A/B or a Medicare Advantage Plan offering Medicare Part C) to use a private cause of action to recoup double damages.

Cattie & Gonzalez, PLLC focuses its law practice on Medicare and Medicaid secondary payer issues, including advantage plan conditional payments reimbursement. From identifying the existence of an advantage plan early on in the claim, to investigating the existence of conditional payments, to analyzing the payments made to determine whether related to the claim at hand, to disputing any payments unrelated to the underlying claim, to resolving such claims, to appealing or defending such claims, Cattie & Gonzalez, PLLC is available to handle all of your MSP legal and compliance needs.

About Cattie & Gonzalez, PLLC

The only national law firm focusing its entire law practice on Medicare and Medicaid secondary payer issues, Cattie & Gonzalez, PLLC provides its clients the highest quality MSP compliance advice in a law firm environment, establishing an attorney/client relationship. The Firm stands behind its work and advice, meaning the Firm will defend its opinions, advice, and work product, including any post settlement conditional payments arising from the client’s application of and reliance on the Firm’s Medicare Set-Aside (MSA) Legal Opinion. To reach the firm, you may email us at [email protected], at [email protected], call us at (844) 546-3500, or visit us at www.cattielaw.com.

About Rafael Gonzalez, Esq.

Rafael is a partner in Cattie & Gonzalez, PLLC, the first national law firm focusing its entire law practice on Medicare and Medicaid compliance issues in the liability, no-fault, and work comp industries. He is an attorney with extensive expertise in auto, medical malpractice, products liability, nursing home, med-pay, and workers compensation claims, as well as social security, Medicare, Medicaid, and affordable care compliance. He is active on LinkedIn, Twitter, Facebook, Instagram, and YouTube.