Saturday, October 18, 2014


A couple of new developments as recently reported on the Franco Signor weblog

1. The Humana v Farmers case in the Texas Federal court (the one remaining case after the strategic dismissal of three others by Humana) finally has a decision by the Article III judge. The court has rejected most of the magistrate’s recommendation and has found that a Medicare Advantage plan does have the right to pursue a "private cause of action" under the Medicare Secondary Payer laws. The judge purported to be following the In re Avandia case from the 3rd Circuit, but of course that case did not involve this unusual issue. Implicit rather than explicit in the judge's ruling is a determination that Medicare Advantage plans do have the rights that CMS has under the Medicare Secondary Payer laws, thus putting the Eastern District of Texas in the Avandia rather than the Care Choices camp.

Our previous writeups on this case: 

This case remains very perplexing, since Humana and the court are pursuing the issue as one of the applicability of the "private cause of action" theory. In truth, Humana's theory does not need the private cause of action language at all. Its argument, in essence, is that it stands in the shoes of CMS and can assert a reimbursement right to the same extent as the Coordination of Benefits and Recovery contractor can do, on behalf of CMS, under the Medicare Secondary Payer law. The private cause of action theory under the MSP laws inures to the benefit of an outsider to the relationship between obligor and obligee under the reimbursement statute. It simply has no proper role to play in the Texas lawsuit.

Considered fairly, the issue that the courts address by the misuse of the phrase "private cause of action" in this context is whether the reimbursement claim arises under Federal law, thus raising a Federal question and permitting the case to be heard in the Federal courts.

2. CMS has withdrawn its previous Advance Notice of Proposed Rulemaking on the issue of creating Medicare Set-Asides in liability cases. This does not mean that CMS will not issue a proposed rule in the future. It does probably mean that it will not do so soon. Thus the same analysis and recommendations will continue to apply: set-asides are not mandatory in liability cases, CMS will probably not review and approve such set-asides, but a voluntary set-aside is a very reasonable consideration for certain cases, particularly large-dollar cases involving significant expected future medical expenses for a Medicare beneficiary. There is no reason for a defendant to insist upon a set-aside in a liability case, but there is every reason to agree and cooperate if the plaintiff's attorney suggests, for the protection of his client, that that step be taken.

Medivest reports that the ANPRM was withdrawn because the proposed rule, after having been developed, was rejected by the Office of Management and Budget, for reasons not apparent. 

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