On January 12, 2018, in the Circuit Court of the 11th Judicial Circuit in and for Miami Dade County, Florida, MSPA Claims 1 filed its motion for approval of a class action settlement against Ocean Harbor Casualty Insurance. The settlement agreement is intended by the parties to fully, finally, and forever resolve, discharge, and settle all claims. The motion indicates that the settlement agreement provides a fair, flexible, speedy, cost-effective, and assured monetary settlement to the class members. Thus, the settlement agreement provides considerable benefit to the class members while avoiding costly litigation of difficult and contentious issues. The parties also indicate that the settlement agreement is a compromise, and shall not be construed as, or deemed to be evidence of admission or concession of liability or wrongdoing on the part of Ocean Harbor with respect to any claim of any fault or liability or wrongdoing or damage whatsoever.
MSPA’s Class Action Complaint
On January 27, 2016, MSPA filed an amended class action complaint as the assignee of Florida Healthcare Plus, Inc., (FHCP) a defunct Medicare advantage organization, seeking to recover amounts paid by FHCP on behalf of an enrollee who sustained injuries while she was traveling in a motor vehicle insured by Ocean Harbor. MSPA also sought to certify a class on behalf of itself and other Medicare advantage organizations to recover from Ocean Harbor, a no-fault insurer, amounts paid by Medicare advantage organizations to providers for the medical care and treatment of enrollees injured in motor vehicle accidents insured under auto policies issued by Ocean Harbor.
The amended complaint alleged that Ocean Harbor was a primary payer under Florida law and a primary plan under the Medicare Secondary Payer law. As a result, it alleged that Ocean Harbor was required to reimburse, up to the limits of their contractual responsibility, conditional payments made by FHCP and other Medicare advantage organizations related to such similar claims.
Class Action Settlement Agreement
After two years of extensive litigation, motions, hearings, appeals, and continued expenses, on December 19, 2017, Sandra Rodriguez, managing member of MSPA Claims 1, and also acting as class representative, John Ruiz, Esq., of the MSP Recovery Law Firm, acting as class counsel and counsel for plaintiff, Joe Celli, Vice President of Claims for Ocean Harbor Casualty Insurance, and Shannon McKenna, Esq., of Conroy Simberg, counsel for defendant, reached and signed a class action settlement agreement.
The settlement agreement indicates that the settlement class includes Medicare advantage organizations and related entities that have paid or are financially liable for the payment of motor vehicle accident related expenses, where the beneficiary is insured under an Ocean Harbor automobile policy, medical care and treatment was provided pursuant to a Medicare advantage contract, and where Ocean Harbor was the primary plan and therefore responsible to pay PIP benefits for such medical care and treatment.
The settlement agreement also indicates that the beneficiary class includes beneficiaries, and their heirs, who have paid out-of-pocket cost for such motor vehicle accident related expenses, or are also insured by Ocean Harbor, in the medical care and treatment was provided by a Medicare advantage organization. The settlement class period is from January 1, 2010 through December 31, 2017.
As part of the settlement, Ocean Harbor will reimburse class members the amount that he or she paid for the motor vehicle accident related medical expenses as PIP benefits, except that any amount already paid as PIP benefits for the beneficiary under a policy for the same date of loss shall be credited to Ocean Harbor so that any amounts paid pursuant to the settlement agreement shall not exceed the difference between such credit and the policy limit.
Settlement Agreement Capped at $5 Million, $1.1 Million are Fees and Costs
Also as part of the settlement agreement, Ocean Harbor will pay a total of $1.1 million as attorneys fees, costs, pre-litigation, litigation, and selling expenses to class counsel, which shall have the primary and total responsibility for defending the settlement agreement at the trial court and appellate level, if necessary.
However, within 15 days of the date of the court’s approval of settlement amounts, Ocean Harbor shall have the right to terminate the settlement agreement if the amount of its payments exceeds $5 million inclusive of settlement payments, fees and costs. In the event this settlement agreement is terminated by Ocean Harbor, the settlement agreement will have no force and effect, shall be without prejudice to the rights and contentions of the parties, shall not be admissible into evidence, and shall not be deemed or construed to be an admission or confession by any party of any fact, matter, or proposition.
And away we go! In the first of its kind, a P&C carrier has agreed to settle a class action for not reimbursing a Medicare advantage plan, or its assignee, medical payments related to injuries sustained in motor vehicle accidents where the carrier provided PIP coverage and was therefore the primary payer for the Medicare advantage plan beneficiary. This will not be the last one. You may be next. As I have been counseling, speaking and writing about for many years, if you haven’t already, now is the time to make sure self-insureds, insurers, and third party administrators have a conditional payment resolution system in place that not only handles traditional Medicare hospital and physician coverage (Parts A and B), but also investigates, identifies, negotiates, and resolves conditional payment reimbursement rights of Medicare advantage plans and prescription drug plans (Parts C and D).
About Rafael Gonzalez
Rafael Gonzalez, Esq. is President of Flagship Services Group. He has over 30 years of experience in the auto, liability, no-fault, and work comp industries. He is one of the country’s top experts on Medicare and Medicaid compliance, serving insurers, self-insureds, and third party administrators. He speaks and writes on mandatory insurer reporting, conditional payment resolution, set aside allocations, and professional administration, as well as the interplay and effect of these processes and systems and the Affordable Care Act throughout the country. Rafael blogs on these topics at Medicare Compliance for P&C Insurers at www.flagshipservicesgroup.com/blog. He is very active on LinkedIn, Twitter, Instagram, and Facebook. He can be reached at firstname.lastname@example.org or 813.967.7598.
About Medicare Conditional Payments
42 CFR Section 411.21 indicates that Medicare conditional payments are payments made by Medicare for medical treatment where a primary payer (insurer or self-insurer) has or may have an obligation to make such payment. Primary payers must reimburse Medicare for conditional payments it has made. 42 USC Section 1395y indicates that primary payers include group health providers, workers’ compensation, liability and no-fault insurers and self-insured entities, as well as physicians, attorneys, hospitals, or clinics that receive payment from a primary payer must make reimbursement.
42 USC Section 1395y also indicates responsibility as a primary payer arises even if liability for the medical expense is contested. Such a responsibility can be demonstrated by entry of a judgment or by payment conditioned on a release or waiver of payment, even if liability is denied. 42 CFR Section 411.24 indicates Medicare has a direct right of action against all primary payers responsible for making payment. And, Medicare has a direct right of action against any person or entity that received a primary payment, including the Medicare beneficiary, medical provider, physician, attorney, state agency or private insurer.
About Medicare Advantage and Prescription Drug Plans Reimbursement
42 CFR Section 422.108(f) provides MAPs with the same rights of recovery that the Secretary of HHS has under the MSP regulations in subparts B through D of part 411 of 42 CFR. Additionally, the same MSP regulations at 42 CFR Section 422.108 are extended to PDPs at 42 CFR Section 423.462. Therefore, PDPs have the same MSP recovery rights as MAPs, which have the same recovery rights as HHS. This includes, as recent federal appellate and district court decisions have indicated, the ability to pursue double damages through MSP private cause of action pursuant to 42 USC Section 1395y(b)(3) should the primary payer deny the MAP or PDP reimbursement of any due conditional payments.
About Medicaid Third Party Liability Liens
42 USC Section 1396a mandates that all reasonable measures to ascertain legal liability for Medicaid payments and reimbursement of same be taken. The state or agency administering a Medicaid plan must take all reasonable measures to ascertain the legal liability of third parties to pay for care and services paid by Medicaid. Federal law also provides that in any case where such a legal liability is found to exist after medical assistance has been made available on behalf of the individual, the state or local agency must seek reimbursement for such assistance to the extent of such legal liability. 42 U.S.C. Section 1396a(a)(25).
The 2013 Strengthening Medicaid Third Party Liability Act, effective October 1, 2017, allows state Medicaid agencies or the insurers/managed care organizations contracted with to provide such benefits to seek reimbursement from any responsible third party of all payments made from the entirety of settlement, judgment, award funds, not just a portion thereof.
About Flagship Services Group
Flagship Services Group is the premier Medicare and Medicaid compliance services provider to the property & casualty insurance industry. Our focus and expertise has been the Medicare and Medicaid compliance needs of P&C self-insureds, insurance companies, and third party administrators. We specialize in P&C mandatory reporting, conditional payment resolution, and set aside allocations. Whether auto, liability, no-fault, or work comp claims, we have assembled the expertise, experience and resources to deliver unparalleled MSP compliance and cost savings results to the P&C industry. To find out more about Flagship, our folks, and our customized solutions, please visit us at www.flagshipservicesgroup.com. To speak with us about any of our P&C MSP compliance products and services, you may also contact us at 888.444.4125 or email@example.com.