Miami lawyers expect a recent state court victory to pave the way for billions of dollars to flow back to Medicare and its beneficiaries.
The attorneys, John Ruiz and Frank Quesada of the firm MSP Recovery, are going after liability insurers across the country for allegedly shirking their duty to reimburse Medicare benefit providers for conditional payments. Under the Medicare Secondary Payer law, the government can recover double damages from a primary payer that fails to pay Medicare back for medical expenses covered by a liability policy.
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“Between 8% to 10% of all claims that are made through Medicare or Medicare Advantage organizations are the responsibility of another payer,” Ruiz said—think car crashes, slip-and-fall accidents and workers’ compensation claims. “That’s a substantial amount because Medicare is paying in the vicinity of $600 billion a year.”
No attorney had ever secured class certification under the Medicare Secondary Payer law, despite attempts going back to an Erin Brockovich case decades ago, Quesada said. A nuanced interplay between federal and state laws made it difficult to establish common issues of law and fact, he said.
But MSP Recovery overcame those obstacles in Miami-Dade Circuit Court, where Judge Samantha Ruiz Cohen certified a class in a lawsuit against the auto insurer Ocean Harbor Casualty Insurance, a primary payer for thousands of Medicare Part C beneficiaries. In a 101-page decision, the judge ruled Medicare Advantage organizations and others who contract with the government to provide Medicare benefits could sue Ocean Harbor as a class following an August federal appellate court decision.
That 11th Circuit decision, which arose from the Southern District of Florida case Humana v. Western Heritage, established that secondary payers could recover from a liability insurer if the case met three conditions: The defendant was a primary payer, the defendant failed to provide for primary payment or appropriate reimbursement, and the damages amount was established.
In state court, Ruiz Cohen ruled Ocean Harbor could not challenge the damages amounts because there was no evidence the auto insurer administratively contested any amounts paid, and the time for any administrative appeal had expired. Because of that failure to contest the reimbursement claims, all primary payer disputes arise under the Medicare Act, she ruled.
“Each class member will have incurred the same type of injury proximately caused by the same defendant based on the same general factual scenario, a failure to pay or reimburse as a primary payer for medical bills that resulted from an automobile accident during the claims period,” she wrote in the February order.
The judge also noted MSP Recovery has developed a sophisticated system to identify claims by collecting and matching data including Centers for Medicare & Medicaid Services reports, automobile crash reports, ambulance records, insurance declaration sheets and no-fault personal injury protection payout sheets.
That system has allowed the 30-attorney firm with roughly three dozen partner firms across the country to divide claims into categories and file lawsuits across the country on behalf of more than 100 health plans.
“We’re able to figure out if someone that has had an incident—a car accident, a slip-and-fall—if another insurance carrier has reported to the government that they have a primary payer responsibility,” said Ruiz, also known for his variety of business enterprises, such as La Ley Sports.
The class certification ruling is on appeal. Ocean Harbor attorney Shannon McKenna of Conroy Simberg in Hollywood said the company does not comment on pending litigation.
Ruiz and Quesada believe their cases will not only recover billions of dollars but will push primary payers to follow the law. The attorneys have already seen liability insurers change their payment practices because of the litigation.
“Before, it was almost like, ‘Catch me if you can,’” Ruiz said. “Now that we caught them, they are doing things differently.”
— Read Group Targets Medicare Secondary Payer Issues on ThinkAdvisor.