Did the 7th Circuit Allow Medicare Advantage Plans a More Powerful Right of Recovery than Traditiona

*The 7th Circuit Court of Appeals covers Indiana, Illinois and Wisconsin.*
The Central District of Illinois dismissed a lawsuit brought by an Medicare Advantage Plan (MAP) against State Farm asserting double damages through a private cause of action when conditional payments had not been fully reimbursed although State Farm exhausted its no-fault policy limits.

The suit, filed by MSP Recovery, LLC, a Miami, Florida based law firm that pursues claims for MAPs, was allowed by the 7th Circuit Court of Appeals to amend it’s complaint to assert a right of recovery. Simply stated, the claim would allow the MAP to assert recovery rights even after the primary plan has exhausted its policy limits.

In contrast, traditional Medicare will not pursue recovery when the primary plan can demonstration exhaustion of it’s policy limits. Chapter 5 of the Medicare Secondary Payer Manual provides that once the contractor determines that no-fault benefits have been exhausted, the contractor shall terminate ongoing responsibility for medicals and Medicare will begin paying for injury related claims.

This case is still ongoing and the plaintiff’s amended complaint survived a motion to dismiss. However, it could broaden the scope of a MAPs right of recovery beyond that of Medicare. We will continue to monitor this decision and keep our clients abreast of any further decision. See MSP Recovery vs State Farm, 2018 U.S. Dist. LEXIS 117356 (July 13, 2018).

Bennett L. Pugh, JD
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