Insurers Must Ferret Out Claims Involving Medicare Advantage Organizations or Risk Paying 3X

This article discusses a case that involves secondary payments made by a Medicare Advantage Organization (“MAO”), which may lead to insurers paying three times for the same damages. It explains the history and meaning of an MAO and the MSP, addresses the recent opinion of the Eleventh Circuit and its extension to self-insured companies, and best practices to minimize an insurer’s risk of paying three times.

Two federal circuits and numerous federal district courts now agree that a liability insurer can still be found responsible for reimbursing an MAO, even if there is a contrary agreement of the parties regarding the responsibility for the reimbursement of secondary payments. Moreover, pursuant to federal regulations, any recovery by an MAO must be in double damages, which would result in the tortfeasor’s liability insurer paying three times for the same damages. Further, although not yet explicitly held by any court, the federal regulations applicable to a liability insurer are equally applicable to self-insured companies. Accordingly, it is imperative that an insurer, whether self-insured or otherwise, (1) complete its own due diligence into secondary payments and the existence of an MAO and (2) take steps to ensure that an MAO is reimbursed before settling a case....

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