Carriers and Counsel Beware: Medicare Advantage Liens Create Same Obligations and Potential for Penalties as Regular Medicare Liens


When settling any claim involving a Medicare beneficiary, all parties must consider not only whether Medicare has paid for treatment related to the injury, but also whether the beneficiary has a Medicare Advantage plan that may have paid for any of that treatment. Though a Medicare Advantage Plan is privately-purchased medical insurance supplementing standard Medicare coverage, both the Third and Eleventh Circuits have held that Medicare Advantage Plans have the same right to recovery as Medicare. Humana Medical Plan, Inc. v. Western Heritage Insurance Company, 2016 U.S. App. LEXIS 14509 (11th Cir., 2016) and In re Avandia Marketing, et al, 685 F.3d 353 (3rd. Cir., 2012). Further, these Courts have approved the same double damages for carriers who fail to make repayments to the Medicare Advantage Plan as would be imposed for failing to reimburse Medicare directly.

Worse, a conditional payment statement from Medicare does not provide information concerning Medicare Advantage Plans as the latter makes payments outside of the Medicare system. Thus, parties must separately investigate whether a Medicare beneficiary also has a Medicare Advantage Plan and, if so, obtain that additional lien information directly from the plan.

Like Medicare, if the Advantage Plan asserts a lien, the payment of that lien must be made within 60 days of settlement of the claim. It is also recommended that the carrier issue payment directly to the Advantage Plan as courts have not recognized hold harmless and indemnification clauses in original settlement agreements as protection from Secondary Payer Act claims if the beneficiary fails to make payment.

Comment: Carriers and counsel must investigate whether a Medicare plaintiff has an Advantage Plan. If so, any lien asserted by a Medicare Advantage Plan must be treated the same as a lien directly from Medicare. Please note that a case may involve both a Medicare Advantage Plan lien and a traditional Medicare lien. Therefore, the existence of an Advantage Plan policy does not eliminate the obligation to address whether Medicare has a lien also. In sum: protect the lien; ensure payment within 60 days; and be aware that hold harmless and indemnification agreements will not protect carriers (and counsel) from the penalties of the Secondary Payer Act. 

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Michael J. Cavacini,
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T: 215.563.1244
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