73 F. Supp. 3d 653
E.D. La.2014Background
- Collins, a Medicare Advantage (MAO) enrollee, received medical treatment after a 2009 auto accident; WellCare paid $181,261.97 to providers on her behalf.
- Collins sued in Louisiana state court seeking a declaration that WellCare is not entitled to subrogation/reimbursement; WellCare removed to federal court and counterclaimed for reimbursement.
- WellCare moved to dismiss Collins’ declaratory-judgment claim for lack of jurisdiction (failure to exhaust Medicare administrative remedies) and for summary judgment on its counterclaim asserting a statutory right to reimbursement under the MSP and related MAO provisions.
- Collins argued her suit arises under state law, that MAO statutory language does not create a private right of action, that her settlement is not a “primary plan” or a conditional payment, and that WellCare’s claim is time-barred.
- The Court dismissed Collins’ claim for declaratory relief for failure to exhaust administrative remedies, held MAOs may sue under the MSP private cause-of-action provision, and denied summary judgment as to the amount (and thus reimbursement entitlement from the settlement) because material facts about the settlement’s allocation remain disputed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Subject-matter jurisdiction / exhaustion of administrative remedies | Collins: her declaratory state-law suit does not "arise under" Medicare and therefore exhaustion is not required. | WellCare: plaintiff must exhaust Medicare administrative remedies under 42 U.S.C. §405(h); federal courts lack jurisdiction otherwise. | Court: Claim arises under the Medicare Act; dismissal for failure to exhaust administrative remedies granted. |
| Whether MAO Statute (Part C) creates a private cause of action | Collins: MAO statutory language only allows contract subrogation rights, not an independent private cause of action. | WellCare: MAO has statutory reimbursement/subrogation rights and may enforce them. | Court: Declines to resolve MAO-statute exclusivity because MSP provides an independent basis; persuasive authority supports MAO access to MSP remedies. |
| Whether MAOs may sue under the MSP private cause of action and whether Collins’ settlement is a “primary plan” | Collins: MSP private cause-of-action does not cover MAOs or tort settlements here; settlement not a primary plan / conditional payment absent proper investigation. | WellCare: MSP language and CMS regulations permit MAOs to sue; tort settlement qualifies as proceeds of a primary plan and WellCare made conditional payments. | Court: Adopts Third Circuit reasoning—MAOs can bring MSP private actions; Collins’ tort settlement qualifies as a primary plan and WellCare made conditional payments. |
| Remedies, double damages, and statute of limitations | Collins: WellCare not entitled to double damages; counterclaim time-barred. | WellCare: Entitled to reimbursement (and potentially double damages); statute of limitations is six years or otherwise viable. | Court: Double damages not available because Collins segregated settlement funds (no active failure to reimburse); MSP SMART-Act 3-year notice limitation governs and WellCare timely pursued reimbursement given it learned of settlement only through this suit; amount of reimbursement unresolved (genuine dispute). |
Key Cases Cited
- Heckler v. Ringer, 466 U.S. 602 (1984) (administrative exhaustion required for claims that arise under Medicare)
- Shalala v. Illinois Council on Long Term Care, 529 U.S. 1 (2000) (scope of claims that "arise under" the Medicare Act)
- In re Avandia Mktg., Sales Practices & Prods. Liab. Litig., 685 F.3d 353 (3d Cir. 2012) (MSP private cause of action includes MAOs; persuasive statutory interpretation)
- Parra v. PacifiCare of Arizona, Inc., 715 F.3d 1146 (9th Cir. 2013) (MAO statute does not itself create an automatic private right; contract-based recovery; distinguished)
- Michigan Spine & Brain Surgeons, PLLC v. State Farm Mut. Auto. Ins. Co., 758 F.3d 787 (6th Cir. 2014) (permitting MSP claims by MAOs; rejecting limiting MSP private cause-of-action to group plans)
- Brown v. Thompson, 374 F.3d 253 (4th Cir. 2004) (tort settlement can qualify as a primary plan for MSP reimbursement)
- Taransky v. Secretary of U.S. Dep’t Health & Human Servs., 760 F.3d 307 (3d Cir. 2014) (settlement releasing tortfeasor can suffice to show primary-plan responsibility for reimbursement)
- Bodimetric Health Servs., Inc. v. Aetna Life & Cas., 903 F.2d 480 (7th Cir. 1990) (cannot avoid Medicare Act exhaustion by recasting claim in state-law terms)