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MSP Broadens Possibilities for Private Causes of Action

On Monday,  a U.S. District Court in Michigan denied a request to dismiss a private cause of action motion brought under the Medicare Secondary Payer (MSP) Act in a no-fault, motor vehicle accident case (Nawas v. State Farm) where the claim has not yet settled or been established by judicial determination.

Nawas, (Plaintiff) alleged that, since State Farm (Defendant) refused to pay a no-fault insurance claim following an automobile accident, Medicare stepped in and paid conditionally.  Thus, the Plaintiff seeks to recover from the Defendant double the amount of these conditional payments.

The Defendant’s sole argument was that the Plaintiff’s claim that it refused to pay is premature since there has been no judicial determination or settlement establishing the defendant’s “responsibility to make payment”, as required by the MSP Act.

After analyzing several other court cases and the statute itself, the U.S. District Court held that the “demonstrated responsibility” provision of the MSP Act limits only lawsuits against tortfeasors, not lawsuits against private insurance companies. For that reason, it denied the Defendant’s motion to dismiss the case.

It will be very interesting to see what happens as this case moves forward.

The purpose of the MSP private cause of action clause is to allow double damage recovery to private parties to encourage them to file suit against insurance carriers to collect money owed to Medicare. A few days ago in the McDonald v. Indemnity case, the court awarded the claimant’s estate $184,514 for their efforts in successfully filing a lawsuit to collect the same amount for Medicare.  Now, in Nawas v. State Farm, the court denied a motion to dismiss a private cause of action suit in a no-fault auto insurance case prior to a settlement or judicial determination.

It sure seems like this up-to-now, little-used MSP provision is becoming popular.  Also, these two cases should be a strong signal for carriers to make sure they promptly take care of paying the conditional payments that they owe. Stay tuned.  We will follow these two cases and let you know what develops.

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