880 F.3d 1284
11th Cir.2018Background
- Humana (a Medicare Advantage Organization, or MAO) paid medical providers for treatment of its enrollee Mary Reale and acquired their liens/subrogation rights.
- Reale sued a tortfeasor and settled with the tortfeasor’s liability insurer, Western Heritage, which paid an amount that included sums Humana had paid; Reale released Western and the tortfeasor without an admission of liability.
- The state court awarded Humana only a portion of the sums it claimed; Humana sought additional recovery in federal court under the Medicare Secondary Payer (MSP) Act, asserting a private right to double damages against Western.
- The District Court and a divided Eleventh Circuit panel accepted Humana’s view that 42 U.S.C. § 1395y(b)(3)(A) gives MAOs a federal cause of action for double damages against primary payers once liability is shown by settlement or judgment.
- Judge Tjoflat dissented from the denial of rehearing en banc, arguing the MSP Act’s private right targets traditional Medicare (the Government), not MAOs, that statutory text and policy exclude MAOs, and the panel ruling displaces settled state subrogation and settlement law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether MAOs (like Humana) may invoke the MSP Act private cause of action (§ 1395y(b)(3)(A)) to recover double damages from a primary payer once liability is established by settlement or judgment | MAO may sue under § 1395y(b)(3)(A) and recover double damages for primary payer’s failure to reimburse sums MAO paid on beneficiary’s behalf | The private right is tied to traditional Medicare/Secretary and Trust Funds; MAOs are private payers under Medicare Advantage and not covered by the MSP private remedy | Panel affirmed that MAOs can sue under § 1395y(b)(3)(A); dissent argues statutory text and context exclude MAOs and the decision was erroneous (Tjoflat would grant en banc review) |
| Whether extending the MSP private remedy to MAOs displaces state-law subrogation rules and undermines settlement/release doctrines | Humana: federal MSP remedy attaches and may be used even if beneficiary released primary payer | Western/Tjoflat: extension would nullify releases, split causes of action, permit double recovery, and conflict with § 1395w-22(a)(4) which preserves MAOs’ state-law subrogation rights | Panel majority endorsed federal remedy; dissent warns this creates conflict preemption, upends state subrogation frameworks, and discourages settlement |
Key Cases Cited
- Stalley v. Catholic Health Initiatives, 509 F.3d 517 (8th Cir. 2007) (private MSP suit can vindicate beneficiary rights even if Medicare made conditional payments)
- In re Avandia Mktg., Sales Practices & Prods. Liab. Litig., 685 F.3d 353 (3d Cir. 2012) (held MAOs may bring private MSP actions for double damages)
- Humana Med. Plan, Inc. v. W. Heritage Ins. Co., 832 F.3d 1229 (11th Cir. 2016) (Eleventh Circuit panel affirmed MAO’s MSP double‑damages claim; en banc rehearing denied)
- Ex parte State Farm Fire & Cas. Co., 764 So.2d 543 (Ala. 2000) (discusses insurer subrogation rights under Alabama law)