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U.S. Court In Pennsylvania Says Medicare Advantage Organizations Do Not Have Private Cause Of Action Under MSP Statute


A federal district court in Pennsylvania ruled June 13 that Medicare Advantage organizations (MAOs) do not have a private cause of action under the Medicare Secondary Payer (MSP) law.

In so holding, the U.S. District Court for the Eastern District of Pennsylvania granted defendant GlaxoSmithKline’s (GSK’s) motion to dismiss MAO Humana Insurance Co.’s action under the MSP claiming a right to reimbursement of medical expenses Humana enrollees incurred after using GS’s diabetes medication Avandia.

The Medicare Act provides MAOs the right to assume secondary payer status under the MA statute and MSP law.

The MSP creates a private cause of action to enforce the right to recover payments made by Medicare that turn out to be the responsibility of a primary plan. The MA statute contains its own secondary payer provision that references, but does not fully adopt or incorporate the MSP.

GSK settled the claims of many individual plaintiffs concerning Avandia via “inventory” settlement agreements entered into between the drug maker and plaintiffs’ law firms representing various claimants.

According to the opinion, GSK’s settlements have honored the reimbursement rights of Medicare Part A and Part B providers, but not the claims for reimbursement from Humana and other Part C providers.

The court framed the issue as whether the Medicare Act or its implementing regulations grant an MAO a private right of action to enforce its rights as a secondary payer.

Answering the question in the negative, the court noted while the MA statute references the MSP, that reference is limited to the MSP’s definitions and does not include the remedies provided to the United States or the private right of action for damages when a primary plan fails to provide for primary payment or reimbursement.

The court also found no implied right of action under the factors set forth by the Supreme Court in Cort v. Ash, 422 U.S. 66 (1975), noting no stated legislative intent to do so, providing a private right of action would not further the MSP’s cost-saving goals given the Part C program’s capitated payment structure, and the MA statute’s secondary payer language is permissive rather than mandatory (unlike the MSP law itself).

Moreover, the court added, Humana is not without a remedy; it could seek payment from its enrollees in state court under the reimbursement and subrogation provisions of their insurance contracts.

Finally, the court held a Department of Health and Human Services implementing regulation indicating MAOs “will exercise the same rights” to recover from a primary plan, entity, or individual as the Secretary exercises under the MSP regulations was inconsistent with the MA statute.

“[T]he silence of Congress regarding private remedies does not create ambiguity, but rather indicates its intent not to create ambiguity, but rather indicates its intent not to create a private right of action for MAOs, instead leaving MAOs to enforce their rights as secondary payers under the common law of contracts,” the court wrote.

Even if the statute was ambiguous, the regulation was not a permissible construction of the statute, the court held.

In re Avandia Marketing, Sales Pracs. and Prods. Liability Litig., MDL No. 1871 (E.D. Pa).

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