Saturday, April 20, 2013

U.S. Supreme Court will not hear Avandia

In a couple of days, we will post a listing of the several cases that have addressed the status of Medicare Advantage (MA) plans. These cases fall into two separate lines of authority:

1. Medicare Advantage plans are state actors and are subject to state laws, unlike ordinary Medicare. They do not have an automatic right of reimbursement. They have reimbursement rights only if their contracts specifically so provide, as is the case with private insurers. (Sixth Circuit, followed by district courts in numerous circuits.)
2. Medicare Advantage plans have the same reimbursement and secondary payer rights as ordinary Medicare. (Second and Third Circuits)

One of the cases in the second line of authority is the decision of the Third Circuit Court of Appeals, issued in June 2012, in In Re Avandia Marketing, 685 F.3d 353 (3d Cir. 2012) The primary issue was not reimbursement, but rather whether the private cause of action provisions of the Medicare Secondary Payer statute would apply to MA plans. What was important procedurally was the Third Circuit's determination to give Chevron deference to a regulation adopted by CMS, found at 42 CFR 422.108(f), which purports to grant preemptive effect to CMS's rules and regulations. The District Court in In re Avandia had stated, rightly in our opinion:
"The Court finds that the silence of Congress regarding private remedies does not create ambiguity, but rather indicates its intent not to create a private right of action for MAOs, instead leaving MAOs to enforce their rights as secondary payers under the common law of contract. However, even if the Court found that Congress's intent was ambiguous, the regulation is not a permissible construction of the statute, as the Secretary cannot create a right that Congress has not created. Accordingly, the Court will not defer to the regulation in deciding this matter."
In other words, the District Court would not permit CMS to grant preemptive effect to its own regulations. Congress must provide for such preemptive effect. The Circuit Court, however, thought otherwise.

On April 15, 2013, the U.S. Supreme Court declined to grant certiorari on the case. The Third Circuit's decision thus stands as the definitive law in the Third Circuit.

In the Sixth Circuit, however, the contrary ruling in Care Choices HMO v. Engstrom, 330 F.3d 786 (6th Cir. 2003) remains good and effective law. It will remain as the definitive pronouncement in the Sixth Circuit until either that court or the U.S. Supreme Court says otherwise.

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