Court Rejects Deadline Asserted by Insurer in Secondary Payer Act Dispute

Insurers cannot rely on an apparent three-year deadline within the Secondary Payer Act to protect themselves from litigation if they don’t reimburse Medicare for all expenses paid on behalf of a beneficiary, a federal appellate court in Atlanta ruled.

The 11th Circuit Court of Appeals reversed a district court judge’s decision and held that a Medicare Advantage Plan insurer was not bound by a three-year time limit stated in the act. The decision allows a collection agent for Florida Heathcare Plus to proceed with a lawsuit against an automobile insurer for $21,965 in medical bills paid through Medicare.

The case is MSPA Claims 1, LLC v. Kingsway Amigo Insurance Co.

“With this trend we’ve seen of greater enforcement of the Secondary Payer Act, this decision adds more ammunition and gives insurers another reason to protect Medicare in any settlement,” said Robert Lockwood, an employment law attorney and partner with the Wilmer & Lee law firm in Huntsville, Ala. He wrote a blog post on the case for the firm’s Employing Alabama blog.

Lockwood said during an interview Tuesday that in the past several years, more and more claims companies have signed on as collection agents for Medicare Advantage insurers. They pursue reimbursement from workers’ compensation, automobile and liability insurers that settle with claimants without reimbursing Medicare for all of the beneficiary’s medical expenses.

The Medicare Secondary Payer Act requires “primary insurers” — meaning the carrier that provided insurance coverage to a Medicare beneficiary — to protect Medicare’s interest when settling claims. “Fiduciary agents” such as attorneys that fail to comply can be sued for double the amount that wasn’t paid.

Florida Healthcare Plus paid $21,965 in medical bills for treatment of a Medicare beneficiary’s accident related injuries in 2012. In 2013, that beneficiary settled a personal-injury claim with Kingsway Amigo for $6,667.

MSPA Claims 1, which has been assigned recovery rights by Florida Healthcare, inquired about the accident in November 2015. After learning about the settlement, MSPA demanded reimbursement for the bills paid by Medicare. Kingsway didn’t pay, so MSPA filed suit in December 2015.

Kingsway argued that U.S. Code Section 1395y(b)(2)(B)(vi) requires that any reimbursement under the Secondary Payer Act to be made within three years of the date of service. U.S. District Judge James Lawrence King in Miami agreed. He ruled that the deadline for seeking reimbursement had expired before MSPA Claims made its demand. MSPA appealed.

Magistrate Judge Edwin G. Torres was the first judge to hear the dispute. He noted that the Secondary Payer Act had been described in a previous appellate court decision as “one of the most impenetrable texts within human experience.” He said there are apparently two three-year deadlines in the act.

One section of the law states that a complaint must be filed within three years of the date Medicare receives notice that it had paid for a service that should have been covered by another insurer.

Kingsway pointed to another section in the act that states regardless of any deadlines set by an “employer’s group health insurance plan,” the government may seek reimbursement “within the three-year period” after services are provided.

Torres decided the first apparent deadline should be applied. Because MSPA had sought reimbursement well within three years after receiving notice of the settlement, he recommended that Kingsway’s argument be rejected. Judge King disregarded that advice.

The 11th Circuit panel, in a 3-0 opinion written by Judge Kevin C. Newsom, found that Torres had it right.

Newsom wrote that the deadline that Kingsway relied on in the case isn’t a deadline at all.

“Rather than imposing a strict requirement, the provision simply allows Medicare to overcome any time limits prescribed by an employer’s group health plan that might otherwise prevent it from requesting reimbursement,” the opinion says. “Put simply, the claims-filing provision is a ‘get to,’ not a ‘have to.'”

So why does the other section of the statute addressing employer health plans say that claims must be filed within a three-year period?

The 11th Circuit didn’t directly answer that question. But the court did say the intent of the statute is that the government has three years to file a claim regardless of any deadline imposed by an insurance contract. The section does not create “another box to check” in addition to the requirement that Secondary Payer Act claims be filed within three years after notice is received, the court said.

Lockwood said the decision means that insurers aren’t off the hook three years after services are provided if a claim is settled and Medicare isn’t paid what it is owed.

“It makes it a little bit easier for Medicare to sue insurance companies that settle claims that are subject to the Secondary Payer Act,” he said.