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Litigation to win Medicare payments from insurance companies has become big business over the past decade, making one Miami attorney a billionaire and an expensive and ongoing legal headache for property-casualty insurers.
But a federal law that allows third parties to recover double damages by shedding light on Medicare payments that should have been paid by private insurers has limits, a federal appeals court ruled this week, answering some recent concerns raised by insurance carriers. years.
Nationwide Class-Action Case, 4Th A lead plaintiff in the U.S. Court of Appeals has ruled that the widow of a North Carolina UPS worker has no standing to sue Liberty Mutual Insurance Companies because she was not injured and did not lose any money.
“No matter what rights or actions the statute may confer on a plaintiff, she must still have damages to sue in federal court,” said the 4th panel.Th Circuit Judges wroteReferring to the 2016 court decision.
Yes, the Medicare Secondary Payer Act of 1980 requires private insurers to pay medical expenses covered before Medicare chips in many cases. It also allows parties to act on behalf of Medicare to enforce the law, the court noted. But Article III of the United States Constitution provides that plaintiffs must have standing to bring that legal action.
The Court wrote that “Congress may raise previously insufficient damages to state a claim for “recipient legal status'' in the statutory causes of action.” “This does not mean that Congress can abrogate Article III and expand the jurisdiction of the federal courts beyond its constitutional limits.”
Although the requirements are often ambiguous, the legal position “ensures that we, as judges, do not abdicate our constitutional authority to decide cases and controversies,” the appellate judges said.
The decision explains the 2018 4 of attorneys familiar with Medicare reimbursement.Th Circuit opinion by Netro vs. Greater Baltimore Medical CenterA decision heavily relied upon by the plaintiffs in Pengar. This week's ruling also helps put the brakes on a growing effort by some third parties to use the MSP Recovery Act, similar to what a Miami company and law firm have done in recent years to win billions of dollars in damage awards.
The North Carolina case began in 2013, when Johnny Ray Penegar Jr. of Monroe was diagnosed with mesothelioma. He filed a workers' compensation claim against his employer, UPS, and his insurance carrier, Liberty Mutual. Penegar died in 2015 before the claim was settled.
The North Carolina Industrial Commission, which handles the workers' dispute, awarded Penegar's wife the cost of medical treatment while she was still alive and state death benefits. In the year In 2020, his widow, Cara Jane Pennegar, and Liberty Mutual settled for $18,500.
A few weeks later, Mrs. Penegar filed a Medicare recovery lawsuit in federal court in the Western District of North Carolina, alleging that the insurer improperly billed Medicare for her husband's medical services. Liberty Mutual pushed back, in fact, with an excellent underwriting fee for Medicare. The carrier argued that Kara Pengar lacked standing and was not harmed under the settlement agreements.
A federal district court agreed with Liberty Mutual and dismissed the suit. Penegar appealed and 4Th The circuit court affirmed the lower court. The exception was made by appellate court judge Julius Richardson in the 2018 Netro case, where the insurance company ordered Medicare directly. In the Penegar case, Liberty Mutual paid Penegar to settle the claim, the court said. I sent a letter to the Centers for Medicare and Medicaid Services asking the widow to pay the money, but she didn't have to pay that.
“Because Liberty Mutual was not obligated to pay Penegar the amount owed to Medicare, its failure to pay did not prejudice the plaintiff in Netro.”Th A circuit opinion is read.
The court agreed with some of the arguments presented by Tampa attorneys Matt Lavisky and Mihaela Cabulea of the Butler Weighmuller Katz law firm. Although the attorneys are based in Florida, they were asked by Liberty Mutual to help represent them in the Penegar case: For the past decade, LaVsky has been one of the leading attorneys for insurance companies fighting double-damage Medicare recovery lawsuits brought by third parties. Many are represented by prominent Miami attorney John Ruiz.
Lavsky, who recently became president of the Florida Defense Lawyers Association, declined to comment on the Penegar case. But in their appellate briefs, LaVsky and Cabulia indicated that Penegar and her attorney hoped to obtain a monetary award under the Medicare Second Payer Act.
“This is one of hundreds of lawsuits brought by non-injured plaintiffs across the country with the prospect of recovering double damages under the MSP Act,” the brief reads.
But as past courts have confirmed, the MSP Act whispers or qui tam Act, which allows Penegar to sue on behalf of the federal government for violating civil rights. Butler's attorneys also argued that Penegar Group never informed Liberty Mutual that Medicare had asked her to pay $18,500 in 2020. If Liberty Mutual had known, it would have paid the loss sooner.
“Instead, Penegar rushed to court and filed the lawsuit eighteen days later, perhaps motivated by the prospect of recovering double damages,” LaVsky and Cabulia wrote.
The double damages allowed under the MSP Act up to Ruiz received little notice until the mid-2010s when he began suing thousands of auto insurers. At the time, his company, MSP Recovery, now known as LifeWallet, argued that Medicare Part C companies, or Medicare Advantage companies, that offer supplemental insurance plans to Medicare beneficiaries have been covering medical expenses after accidents for years — expenses that should have been paid. By primary insurers, auto insurance carriers.
Ruiz became a billionaire from the controversy, buying Boeing 767 airlines and pledging to build a new football stadium at the University of Miami, according to news reports.
But LifeWallet, which went public this summer, had some financial problems.
Last week, Ruiz told investors it was doubtful the company would be able to continue operations, according to the Miami Herald. reported. The company reported a net loss of more than $200 million for the second quarter of 2022.
This is unlikely 4Th The circuit's ruling this week will have several implications for the Ruiz company's litigation against insurers. Medicare supplement companies, unlike Widow Penegar, have suffered financial losses when auto insurers default, lawyers say.
Ruiz could not be reached for comment Tuesday. The entire 4th round comment can be seen over here.
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