ElderLaw News-The Estate Planning & Elder Law Firm, P.C. — MD, VA, DC
ElderLaw News
ElderLaw News is a weekly e-newsletter that brings you reports of legal developments and other trends of vital interest to seniors and their advocates. This newsletter is brought to you by The Estate Planning & Elder Law Firm, P.C., William S. Fralin, Esq., President., William S. Fralin, Esq., President.

Medicare Advantage Plans


In an effort to reduce government spending and preserve the Medicare program, Congress enacted the Medicare Secondary Payer (“MSP”) Act in 1980. Prior to that time, Medicare was the primary payer for any covered medical expense, the only exception being those persons covered by Worker’s Compensation. With the adoption of the MSP Act, Medicare’s responsibility for medical expenses is reduced to only those expenses not covered from another source, such as another insurance plan, which includes health, Worker’s Compensation, automobile, liability, and no-fault insurance plans, known as a primary plan. As a result, Medicare can recover any payments that have been made, or can reasonably be expected to be made, that are the responsibility of a primary plan.

In cases when it is expected that the primary plan will either not pay for services or not pay promptly, Medicare may make conditional payments, thereby creating a Medicare lien. This lien must then be repaid by a primary plan or any entity that receives a third-party payment. The MSP Act therefore affects everyone involved in a MSP claim, including, but not limited to, any beneficiary, provider, physicians, state agency or attorney. Failure to comply with this requirement could result in Medicare’s ability to recover double damages.

For years, there has been a debate with regard to whether the MSP Act extends to private companies that contract with Medicare, typically under what is referred to as a Medicare Advantage Plan (“MAP”). Under a MAP, an individual elects to receive Medicare services from an insurance company of his choosing, Medicare pays the MAP a fixed fee, and the MAP assumes the insurance risk by providing Medicare Part A and B services. The United States District Court for the Eastern District of Virginia recently held that a Medicare Advantage Plan has a private right to recover under the MSP Act, and may pursue recovery from any entity that receives payment from a primary plan.

In Humana Insurance Co. v. Paris Blank, LLP, Humana, which made conditional payments as a MAP, sought recovery from various parties, including Paris Blank, LLP, a law firm representing a Plaintiff in a personal injury action as a result of an automobile accident. Paris Blank argued that Medicare was a private insurance company, and as a result, was not entitled to recover under the MSP Act, and specifically, that recovery could not be made against the law firm. Citing In re Avandia and a memorandum from the Centers from Medicare & Medicaid Services, the court essentially determined that Medicare, in contracting with the MAP, assigns the MAP its rights and responsibility in recovering from a primary plan. The Court then reasons that although the attorneys are not the primary plan, the MSP Act extends to any entity, including attorneys or law firms, receiving payment from the primary plan, and that as a result, the MAP could recover from an attorney who was paid from the proceeds of a personal injury settlement.

This case at hand established precedence in the Commonwealth of Virginia and should be seen as a cautionary tale for any person or entity involved in personal injury actions. It is anticipated that more MAPs will begin pursuing its right to recovery, and when payment is not made in compliance with the MSP Act, seek double damages, as permitted under the MSP Act, from the parties involved.


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The Estate Planning & Elder Law Firm, P.C. is an elder law firm. We represent older persons, disabled persons, their families, and their advocates. The practice of elder law includes estate planning, estate and trust administration, powers of attorney, advance medical directives, titling of assets and designations of beneficiaries, guardianships, conservatorships, and public entitlements such as Medicaid, Medicare, Social Security, and SSI, disability planning, income tax planning and preparation, care management, and fiduciary services. For more information about The Estate Planning & Elder Law Firm, P.C., please visit our website at http://www.chroniccareadvocacy.com.

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