MAOs’ New Strategy for Secondary Payer Lawsuits
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With over 34% of all CMS beneficiaries nationally opting into Medicare Advantage Organizations (MAOs) for their Medicare benefits, the question of whether and how MAOs can pursue liens under the Medicare Secondary Payer Act (MSPA) continues to evolve.
The recent opinion out of the 11th Circuit in MSP Recovery Claims v. ACE [Here] illustrates the continued expansion of lien rights for MAOs—and why personal injury firms must be equipped to address these issues. Failure to do so exposes both firms and their clients to downstream risks and liabilities.
MSP Recovery Claims is a private company that obtains assignments from MAOs and other healthcare entities and then pursues liability carriers for reimbursement of conditional payments under the MSPA. In a series of actions filed in Florida, MSP Recovery Claims initially faced hurdles related to the validity of its contractual assignments, including questions about whether “downstream actor” assignors had standing to enforce the private right of action for double damages under the MSPA, and technical defects in some of the assignment agreements themselves.
After several rounds of pleadings and appeals, the 11th Circuit ultimately sided with MSP Recovery, validating its right to pursue the private right of action under the MSPA as an assignee of those rights.
This decision expands the scope of the private right of action in several key ways. First, it permits not only MAOs but also “downstream actors”—such as practice groups that contract with MAOs on a capitated basis—to enforce these rights. This opens the door for MAOs to transfer SPA lien rights to medical providers or practice groups, shifting the cost and burden of lien enforcement downstream in their contractual agreements.
Second, the opinion confirms there is no pre-suit notice requirement when pursuing a private right of action for double damages under the SPA. While a primary payer must have knowledge of its obligation to make a payment before double damages may be pursued, such knowledge can be inferred from business practices, policies, and most notably, the mandatory reporting obligations imposed on liability carriers under the SPA. In short, any carrier that paid a settlement to a Medicare beneficiary will struggle to deny it had constructive knowledge of its obligations as a primary payer.
The ACE decision becomes even more concerning when viewed alongside MSPA Claims 1, LLC v. Kingsway Amigo Insurance Co., (Statute of Limitations on CMS Lien Recovery Action Under Secondary Payer Act) where the court held that the three-year statute of limitations in 42 U.S.C. § 1395y(b)(2)(B)(vi) does not apply to private MSPA claims brought by MAOs. This creates a long-tail risk, as claims may be pursued years after the case has resolved and the funds have been disbursed.
Practice Pointer
- Scrutinize indemnity and hold harmless language in all settlement documents addressing Medicare issues and liens. When a liability carrier is later pursued under the MSPA, it will likely tender the matter to the plaintiff based on the indemnity clause in the settlement agreement. If sued, the carrier may file a cross-complaint against the plaintiff or their counsel.
- To fully resolve all SPA-related lien issues, personal injury firms must go beyond CMS and MAO inquiries. Firms now need to identify and contact all potential “downstream actors”—including medical groups or providers who may have acquired assignments of SPA rights. Failure to do so could result in future surprise claims from recovery agents enforcing those rights—long after the settlement proceeds have been disbursed and the file closed.
Explore More Resources with Lien Project Network
For a deeper dive into lien resolution strategies, settlement planning, and reimbursement challenges, explore our educational modules. Lien Project Network serves as a trusted resource for plaintiff attorneys, providing insights on financial planning, public benefits, and structured settlements in the context of lien management.
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