Physicians and Other Providers Can Now Sue Insurers for Double Damages Under the Medicare Secondary Payer Law
The Medicare Secondary Payer Act is a law that allows Medicare and Medicare Advantage (MA) plans to recover monies they paid for a Medicare patient’s health care from other insurers who are primarily liable for the patient’s health care costs. Usually, these other insurers are auto insurers, worker’s compensation insurers and general liability insurance. The law was created to protect the Medicare program from unnecessary expenditures for treating injuries that are covered under one of these other types of insurance. Generally, the other insurers are obligated to reimburse Medicare or MA plans on a voluntary basis once their liability for coverage has been established, such as when a car accident suit is settled or the insurer loses at trial. But when the insurers do not voluntarily reimburse the Medicare program for these costs, the Medicare Secondary Payer Act allows Medicare and the MA plans to sue the liable insurers directly and recover, not only the amount actually paid for the patient’s treatment, but actually DOUBLE that amount. The double damages provision is designed to act as a hammer against insurers who do not reimburse Medicare in good faith. Absent the double damages award, these third party insurers have no incentive to reimburse Medicare timely or even at all.
In November, in MSP Recovery Claims, Series LLC v. ACE Am. Ins. Co., 974 F.3d 1305 (11th Cir. 2020) (MSP), a Federal Court determined that this same private right to sue the primary insurers for double damages is not limited to the Medicare program or MA plans, but is also available to physician groups and other downstream providers who remain unpaid for the cost of caring for patients covered under these policies. In a decision vigorously opposed by the insurance lobby, the Court stated that this “is a broadly worded provision that enables a plaintiff to vindicate harm caused by a primary plan’s failure to meet its [Medicare Secondary Payer} primary payment or reimbursement obligations”. In the MSP case, the Plaintiff was not even a downstream provider but instead was a collections agency that purchased the assignment of these claims from downstream providers and then sought to collect on them. This decision paves the way for downstream providers and shrewd business people to make insurers pay for their failure to comply with their obligations under the Medicare Secondary Payer law.