Suppose Joe is sixty-nine (69) years old, and while driving down I-95, another vehicle suddenly rear-ends him. Joe has Personal Injury Protection (“PIP”) coverage as part of his automobile insurance, but also an enrollee of a Medicare Advantage (“MA”) health plan offered by a Medicare Advantage Organization (“MAO”).
Joe goes to the hospital as a result of the accident. Further, he receives subsequent care from his doctors. His auto no-fault insurer, the primary payer, should pay for all his medical expenses up to its policy limit, $10,000, regardless of fault. Instead, Joe’s MAO, the secondary payer, provided conditional payments to the hospital and Joe’s doctors as the auto no-fault insurer failed to pay as required by law and the Centers for Medicare and Medicaid Services (“CMS”). Once the MAO provides a conditional payment whereby the auto no-fault insurer is responsible for payment, the no-fault insurer is compelled to reimburse the MAO. Failure to do so can cause the no-fault insurer to owe double damages to the MAO.
Federal laws mandate that these auto no-fault insurers reimburse the MA plans. However, the auto insurers have failed to reimburse the plans billions of dollars. As a result, last week, MSP Recovery Law Firm, a national firm founded in Miami, filed multiple class action lawsuits against auto no-fault insurers such as Geico, State Farm, Allstate, Progressive and numerous other auto insurers on behalf of Florida MAOs. These Florida MAOs contract with CMS to enroll members, such as Joe, in Medicare Part C and are paid through the Medicare Trust Fund.
The lawsuits allege that despite having a contractual and statutory responsibility to provide coverage to its beneficiaries, the named primary plans (i.e., auto no-fault insurer) failed to reimburse the MAOs and/or Original Medicare that provided conditional payments to its Medicare beneficiaries. As alleged in the lawsuit, once an MAO pays, it is treated as the functional equivalent of a payment from Medicare. In short, the MAO stands in the shoes of Medicare for purposes of reimbursement.
Since 1980, the Medicare Secondary Payer provisions have protected Medicare funds by ensuring that Medicare does not pay for services and items that certain coverage has primary responsibility for paying. In fact, Medicare saves more than $6 billion annually on claims processed by insurances that are primary to Medicare.
However, on November 16, 2015, Medicare Part C saw an increase in improper payment rates for fiscal year 2015 according to the Health and Human Services Fiscal Year 2015 Agency Financial Report. Medicare Part C’s rate increased from 9 percent in FY 2014 to 9.5 percent in FY 2015.
“The real problem is that the auto insurance industry does not pay claims they are required to pay. Their failure to pay, coupled with the HMO’s inability to discover these claims, has resulted in the payment of billions of dollars without reimbursement. MSP has the country’s leading systems that will discover improperly paid claims,” said MSP Recovery Law Firm’s Lead Counsel John H Ruiz. “MSP has filed class actions that will require the insurance industry to pay billions and act responsibility.”
The complaints allege that the named defendants, the auto no-fault insurers, are primarily responsible for paying medical bills for services and/or supplies incurred by its insureds resulting from the use, maintenance, and/or operation of a motor vehicle. The claims involved in the lawsuits arose from medical expenses incurred by a particular Medicare beneficiary that was injured and who, in addition to having been a MA plan participant, was also covered at the time of the accident by a no-fault insurance policy issued by the named defendants.