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ARC:HOW EMPLOYERS CAN AVOID POTENTIAL PITFALLS DEALING WITH MEDICARE LIENS AND SET-ASIDES

Humana sues Farmers over Medicare secondary payer practices

Humana Inc. Insurance
Photo by Bloomberg The Humana Inc. headquarters office in Louisville, Ky.

Humana Inc. has filed four federal lawsuits against Farmers Insurance Group of Cos. and related entities, arguing that the Medicare Secondary Payer Act entitles it to reimbursement from Farmers for benefits that Humana paid for Medicare Advantage and Medicare Part D plans.

The cases could significantly impact “workers compensation and general liability claims involving Medicare beneficiaries reaching settlement, judgment or award,” according to a memo issued this week by Bradenton, Fla.-based Medicare compliance firm Franco Signor L.L.C.

The lawsuits were filed in U.S. District Courts in Kansas, Missouri, Tennessee and Texas within the past two weeks, court records show. Each of the complaints filed by Humana argues that Farmers entities used “deceptive practices” to “shift their financial obligations under the Medicare Secondary Payer law to Medicare Advantage organizations and ultimately to the Medicare Trust Funds and to elderly and disabled Medicare Advantage enrollees.”

The Medicare Secondary Payer Act requires self-insured employers, insurers and others to notify the Centers for Medicare and Medicaid Services of workers compensation and liability settlements or payments that involve Medicare recipients. CMS can use settlement funds to recoup “conditional payments” that it previously has made on behalf of beneficiaries to medical providers. It also can require insurers, employers and other “primary payers” to set aside funds to pay for future medical costs related to a beneficiary's injury.

Humana argues in the court filings that Farmers entities served as primary payers, and that Humana and its entities are secondary payers because they acted on behalf of CMS as a Medicare Advantage plan. Therefore, Humana contends that Farmers companies are required to reimburse Humana under the Medicare Secondary Payer Act.

“Plaintiff, Humana Health Plan, has charged Defendant, Farmers Insurance Company, for those services, but Defendant, Farmers Insurance Company, has refused to make appropriate reimbursement to Plaintiff, Humana Health Plan,” according to Humana's complaint filed in Missouri on Monday.

Humana is seeking double damages against Farmers for its alleged failure to “make payment 'promptly' for medical costs for which they are responsible.'”

Humana previously sued pharmaceutical company GlaxoSmithKline P.L.C. in federal court for reimbursement under Medicare Secondary Payer rules. That suit is based on at least $460 million in settlements that Glaxo has paid for patients who suffered complications from using the Avandia diabetes drug.

The 3rd U.S. Circuit Court of Appeals ruled in June 2012 that Humana had a right to pursue its claim against Glaxo. The U.S. Supreme Court declined in April to hear Glaxo's appeal of that case, which was remanded to the Philadelphia County Court of Common Pleas.

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