Med-mal plaintiffs fend off Medicare lien

A Medicare Advantage Organization could not place a lien on the potential proceeds of medical malpractice claims for wrongful death and loss of consortium brought by the family members of a woman whose medical bills were paid by the MAO, a U.S. District Court judge has held.

Plaintiffs Kenneth and Thomas Meador sued the government, alleging that Paula Meador died as a result of the negligence of a doctor who qualified as a federal employee. United Health Group, a Medicare Advantage Organization that had paid for Paula’s medical care, asserted a lien in the medical malpractice case, seeking reimbursement for the expenses United had incurred treating the injuries that resulted in Paula’s death.

The plaintiffs filed a motion for injunctive relief, requesting an order that United’s lien on any proceeds from their personal injury action was invalid.

Judge Denise J. Casper granted the plaintiffs’ motion, rejecting United’s argument that it had a private right of action under the Medicare Act.

“Although some courts have come to a different conclusion, this Court is persuaded by the majority of courts that have concluded that MAOs, like United, do not have a private right of action against beneficiaries, their attorneys or other non-primary payers,” Casper wrote.

The 20-page decision is Meador, et al. v. United States, Lawyers Weekly No. 02-082-24.

Strategy pays off

The plaintiffs’ attorney, Eugenie S. Reich of Boston, said the lesson for practitioners is not to claim medical expenses in a personal injury case when those expenses have already been paid by Medicare Advantage or Medicare.

“Let the insurance plan bring its own action,” Reich said. “I claimed for what matters to the Meador family, which is the pain and suffering of Paula Meador, the loss of Paula Meador, and the loss of consortium and all the companionship and care that she would have provided.”

Casper cited the fact that medical expenses were not sought as part of the plaintiffs’ claim for damages as bolstering the court’s conclusion that United could not assert a lien in Meador.

“The benefit of what the court did is that, first of all, it made clear that [the Medicare Advantage Organization] could bring its action against the tortfeasor: the government doctor here,” Reich said. “But they can’t bring it against the beneficiaries of [this personal injury] suit.”

Reich said she learned in dealing with United Healthcare’s subrogation agent that what happened in her clients’ case is being repeated in other personal injury cases.

“The subrogation agent said, ‘We — United Healthcare — scrape court records. We find people who are [plan] enrollees and assert liens in those cases,’” Reich recounted. “So they exploit all the work that the families and attorneys have done in bringing the action and claim their piece.”

There has been an “uptick” in the last few years of MAOs trying to assert liens in cases, according to Boston med-mal lawyer Nicholas D. Cappiello.

“Somehow, some way, these Medicare Advantage Organizations seem to be monitoring these cases and asserting liens more and more,” Cappiello said.

Cappiello noted that the statute makes clear that MAOs do not have a private cause of action, and by its plain language, the Medicare Secondary Payer Act allows only for recovery from primary plans by the MAO.

“That’s their right of recovery — to go at the primary plan but not the individual,” he said.

“Somehow, some way, these Medicare Advantage Organizations seem to be monitoring these cases and asserting liens more and more.”

Medical liens in general can be a “huge problem” for personal injury lawyers and their clients, said Gloucester attorney Joseph M. Orlando Jr.

Orlando said the problem arises when there is a settlement offer on the table that would put money in the client’s pocket while avoiding the expenditures that come with trial or extensive litigation.

“If the lien is so significant that the client would not see enough of the money, then they have no impetus to accept the offer,” Orlando said. “As in [Meador,] where there was a charitable cap on damages, or in other cases where there are insurance policy limits, there are so many things that limit recovery these days. If you have a big lien, it makes it very difficult to put any money in the client’s pocket.”

United’s attorney, Joan O. Vorster, deferred comment to her client. United had not responded as of press time.

FTCA suit

The case involved the death of 62-year-old Paula Meador in June 2019. According to court records, Meador had been a longtime patient at Greater Gardner Community Health Center, which is part of Community Health Connections. The Community Health Connections network receives federal funding and is an “FTCA-deemed facility” within the meaning of 42 U.S.C. §233(g).

At the time of her death, Paula’s primary care physician at Greater Gardner Community Health was Dr. Kim Houde, who had prescribed lithium carbonate to treat Paula’s bipolar disorder. The plaintiffs alleged that Paula died from acute lithium toxicity due to Houde’s failure to monitor lithium levels in her blood.

Because under federal law Houde was effectively immune from suit, the plaintiffs were required to sue the U.S. as a substitute for the doctor. In March 2022, the plaintiffs filed a Federal Tort Claims Act action against the government.

The government moved for partial summary judgment, contending that the plaintiffs’ claims were subject to G.L.c. 231, §85K, which provides a $100,000 cap on damages for medical malpractice claims against charitable organizations, including nonprofit organizations such as Community Health Connections that provide health care.

In June 2023, Casper ruled that under 28 U.S.C. §1346(b), as a substitute defendant the U.S. played the role of the private employer of Houde entitled to invoke the state’s charitable cap.

Meanwhile, through a subrogation agent, United had asserted a lien in the medical malpractice case. The plaintiffs responded by filing their motion for injunctive relief.

In conjunction with that motion, the plaintiffs moved to amend their complaint to add claims for wrongful death and loss of consortium against both United and Jennifer Favazza, a nurse employed in United’s HouseCalls program.

According to the plaintiffs, Houde in her treatment of Paula Meador had relied on a report filed by Favazza following a home visit in February 2019.

Finding that the amendment adding claims against United and Favazza related back to the original complaint and would not result in undue delay or undue prejudice, Casper granted the plaintiffs’ motion to amend in conjunction with her ruling on injunctive relief.

Injunctive relief

Given the paucity of precedent on the issue of Medicare liens as it pertains to MAOs in the 1st Circuit, Casper leaned heavily on out-of-circuit precedent, in particular a 2018 decision by a U.S. District Court judge in Connecticut, Aetna Life Insurance Co. v. Guerrera (“Aetna I,” as referred to by Casper).

In that case, the judge determined that an MAO could seek reimbursement for medical expenses pursuant to the Private Cause of Action provision of the Medicare Secondary Payor Act, but limited such liability to “primary plans” as defined under the statute.

In Meador, United argued that the plaintiffs were not entitled to injunctive relief because they were unable to establish a likelihood of success on the merits. That argument brought to the fore the statutory question of whether an MAO may assert a lien on the proceeds of a personal injury litigation to recover Medicare payments.

Casper looked to the history of the Medicare Act. She noted that Congress amended the Medicare Act in 1980 to include the Medicare Secondary Payer Act. Under the Medicare Secondary Payer Act, private insurers covering the same treatment are defined as “primary payers.”

In 1986, Congress enacted the Medicare Secondary Payer Act’s private cause of action provision, 42 U.S.C. §1395y(b)(3)(A). The statute provides “a private cause of action for damages (which shall be in an amount double the amount otherwise provided) in the case of a primary plan which fails to provide for primary payment (or appropriate reimbursement).”

Subsequently, Congress in 1997 enacted Part C of the Medicare Act, creating the Medicare Advantage Program under which those eligible for Medicare may elect to have an MAO — like United in Meador — to provide Medicare benefits.

Because MAOs did not exist when the private cause of action provision was enacted, Congress in all likelihood did not anticipate such plans bringing actions such as United’s assertion of its lien in Meador, Casper said.

She noted that the parties did not dispute that the Medicare Act’s private cause of action provision applies to MAOs in terms of seeking reimbursement for payments from primary payers.

“The Meadors, however, are not primary payers, but rather individual beneficiaries of any settlement or damages that may arise from the lawsuit, and argue that the private cause of action provision does not extend to recovery against the beneficiaries of a lawsuit,” Casper wrote.

Accordingly, Casper was persuaded by the majority of courts, and in particular the court in Aetna I, to conclude that MAOs, like United, do not have a private right of action against “non-primary payers” such as the Meadors.

“By its plain language, even considering it in light of the applicable regulations and by comparison to the government cause of action, the MSP allows only for recovery from primary plans,” Casper wrote.

She went on to explain that her decision to grant the requested injunctive relief was bolstered by the fact that the plaintiffs did not include medical expenses in their claim for damages.

“Given that the Meadors’ claims did not include a claim for medical expenses, United would likely not be able to recover reimbursement of same from any resulting settlement or damages award,” Casper said.

“Accordingly, the Meadors have demonstrated a reasonable likelihood of success on the merits of defeating United’s lien,” Casper wrote.