Congress Introduces RAMP Act

In a major Medicare Secondary Payer (MSP) compliance development, the Repair Abuses of MSP Payments (RAMP Act) was introduced into the United States House of Representatives on June 14th as H.R. 8063 by Representatives Brad Schneider (D-IL) and Gus Bilirakis (R-FL). 

The following provides a general overview regarding the RAMP Act:

Summary

The RAMP Act seeks to repeal the MSP’s private cause of action (PCA) provision as codified at 42 U.S.C. § 1395y(b)(3)(A).[1]  The MSP’s PCA statute, which was initially enacted in 1986, states in full as follows: “There is established a private cause of action for damages (which shall be in an amount double the amount otherwise provided) in the case of a primary plan which fails to provide for primary payment (or appropriate reimbursement) in accordance with paragraphs (1) and (2)(A).”  42 U.S.C. § 1395y(b)(3)(A).[2]  In general, this statute has been interpreted to allow Medicare, Medicare Advantage Plans (in some jurisdictions), Medicare beneficiaries, and other parties, to sue insurers for “double damages” in certain situations.[3]

The RAMP Act’s introduction into Congress is being led by the Medicare Advocacy Recovery Coalition. (MARC)[4]  MARC’s website contains several RAMP Act resources for the reader’s review.  As many will recall, MARC is the same group which was instrumental in securing passage of the Strengthening Medicare and Repaying Taxpayers Act (SMART Act) (P.L. No: 112-242) back in 2012 and, more recently, the Provide Accurate Information Directly Act (PAID Act) (P.L. No. 116-215) in 2020. 

In support of repealing the PCA statute, MARC has released a RAMP Act “one-pager” outlining various bases for repealing the PCA statute. From the authors’ review of the RAMP Act one-pager, MARC argues, in main part, that the original concerns leading to the PCA’s enactment in 1986 have since been eliminated by the Section 111 reporting law.  On this point, MARC argues that the main reason why the PCA was enacted into law in 1986 was to assist the government in knowing about claims where an insurer refused to make payment thereby forcing Medicare to make payment.[5]  Thus, to address this issue, MARC notes that in 1986 “Congress added a ‘private cause of action’ allowing anyone who incurred damages to bring a double damages lawsuit against the insurer and allowing the person suing to keep the money (rather than return it to the Medicare Trust Fund).”[6]

However, MARC argues that enactment of the Section 111 reporting law in 2007 renders the PCA statute “moot” since Section 111 reporting now provides the government with direct means of knowing about claims involving Medicare beneficiaries.[7]  Very generally, Section 111 requires insurers to electronically report certain settlements and claims to CMS involving Medicare beneficiaries, subject to a potential penalty of “up to a $1,000 per day, per claimant.”[8]    Accordingly, MARC argues that:  “Whether the [PCA statute] made sense when enacted in 1986, Congress changed the MSP statute in 2007 (in Section 111 of the MMSEA) and rendered the ‘Private Cause of Action’ moot by specifically requiring that any entity paying a settlement, judgement or award report the payment to Medicare which then shares this information with Medicare and Part D plans.”[9] The 2007 law eliminates the purpose of the ‘Private Cause of Action’ … [and, as a result] there are no longer cases where only private parties, and not the government, are aware of primary plan non-payment, and there is no purpose to empower private collection efforts … The purpose of the ‘Private Cause of Action’ has been overtaken by changes in the law and is no longer relevant.”[10]

Further, MARC argues that repealing the PCA statute would eliminate “a proliferation of unwarranted, unfair and unnecessary double damages claims that have been brought against Medicare beneficiaries, their lawyers, insurers, retailers, unions, and manufacturing companies, among others.”[11]    

What happens next?

The exact path the RAMP Act may take next in Congress is presently unknown.  The bill has been referred to the House Committee on Ways and Means and the Committee on Energy and Commerce.  At this time, it is unknown what course of action (if any) these committees may take on the RAMP Act.  For example, these committees may either review the bill and put forth recommendations to the larger body of Representatives and ultimately bring to the Floor for a vote, or possibly attach the language to a larger proposal. The committees could also decide to take no action on the bill.  From another angle, it is very likely that RAMP Act proponents will seek to garner additional support and co-sponsors of the bill over the next few months.  In this regard, there will also likely be efforts toward getting the RAMP Act introduced in the Senate.  Of note, the current Congressional legislative session is scheduled to conclude on January 3, 2023, which means that if the RAMP Act is not passed into law by that date the bill would need to be re-introduced in the following legislative session.

Questions?

Verisk is closely monitoring developments related to the RAMP Act and will provide future updates as warranted.  In the interim, please do not hesitate to contact the authors if you have any questions.

[1] This bill states as follows: Section 1862(b)(3)(A) of the Social Security Act (42 U.S.C. 1395y(b)(3)(A)) is repealed. 

[2] The current version of this statute, as cited above, is the version as amended and reorganized in 1989.  See, Michigan Spine and Brain Surgeons, PLLC v. State Farm Mut. Auto. Ins. Co., 758 F.3d 787, 790 (6th Cir. 2013).   

Per 42 U.S.C. § 1395y(b)(2)(A)(ii), “the term “primary plan” means a group health plan or large group health plan, to the extent that clause (i) applies, and a workmen's compensation law or plan, an automobile or liability insurance policy or plan (including a self-insured plan) or no fault insurance, to the extent that clause (ii) applies. An entity that engages in a business, trade, or profession shall be deemed to have a self-insured plan if it carries its own risk (whether by a failure to obtain insurance, or otherwise) in whole or in part.”

In terms of the PCA’s objective, it is noted that, in general, several courts considering the PCA provision have agreed that the apparent purpose of this statute is to help the government recover conditional payments from insurers or other primary payers. See e.g., Stalley v. Catholic Health Initiatives, 509 F.3d 517 (8th Cir. 2007).  On this point, the court in Stalley stated that “[t]he thinking behind the statute is apparently that (1) the beneficiary can be expected to be more aware than the government of whether other entities may be responsible to pay his expenses; (2) without the double damages, the beneficiary might not be motivated to take arms against a recalcitrant insurer because Medicare may have already paid the expenses and the beneficiary would have nothing to gain by pursuing the primary payer; and (3) with the private right of action and the double damages, the beneficiary can pay back the government for its outlay and still have money left over to reward him for his efforts.” Stalley, 509 F.3d at 524-525.

[3] One issue that has resulted in considerable litigation over the years is exactly “who” can sue under the PCA statute given that the text of the PCA is silent on this point.  While the federal government is granted the express right to bring a claim under the PCA through another MSP provision (42 U.S.C. § 1395y(b)(2)(B)(iii)) the PCA statute itself provides no indication as to who may bring suit under its provisions. 

While a complete review of the full collection of cases addressing this question is beyond the scope of this article, it is noted that several courts have ruled that the PCA provision is not a qui tam statute. A qui tam action has been described as an action where “a private plaintiff, known as a “relator,” brings suit on behalf of the government to recover a remedy for a harm done to the government.”  See, Wood v. Empire Health Choice, Inc., 574 F.3d 92, 97 (2d Cir. 2009).   In this regard, as one court commented, that “[n]ot just anyone can wander in off the street and avail themselves of the MSP Act’s private cause of action.” Netro v. Greater Baltimore Medical Center, Inc., 891 F.3d 522, 528 (4th Cir. June 4, 2018).  Rather, as another court explained, “the PCA statute merely enables a private party to bring an action to recover from a private insurer only where that private party has itself suffered an injury because a primary plan has failed to make a required payment to or on behalf of  it” (authors’ emphasis). Woods v. Empire Health Choice, Inc., 574 F.3d 92, 101 (2d Cir. 2009). See also., In re Avandia Marketing, Sales Practices & Products Liability Litig., 685 F.3d 353 (3d Cir. 2012); ; Stalley ex rel. United States v. Orlando Regional Healthcare Sys., Inc., 524 F.3d 1229 (11th Cir. 2008); Stalley v. Methodist Healthcare, 517 F.3d 911 (6th Cir. 2008); Stalley v. Catholic Health Initiatives, 509 F.3d 517 (8th Cir. 2007); United Seniors Ass'n v. Philip Morris USA, 500 F.3d 19 (1st Cir. 2007); Netro v. Greater Baltimore Medical Center, Inc., 891 F.3d 522 (4th Cir. 2018); and O’Connor v. Mayor and City of Baltimore, 494 F.Supp.2d 372 (D. Maryland, July 19, 2007).  Similarly,  another court found that “the private right of action provided by 42 U.S.C. § 1395y(b)(3)(A) is not a qui tam statute, and [a plaintiff], who is a volunteer and who lacks any injury in fact, does not have standing to pursue such an action” and, thus, the MSP “allows a private plaintiff to assert his own rights, not those of the government.”  Stalley v. Catholic Health Initiatives, 509 F.3d 517, 527 (8th Cir. 2007).

In terms of which parties the PCA statutes does apply, it is noted that, in general, courts have found that Medicare beneficiaries can sue under the PCA, See e.g., Estate of McDonald v. Indemnity Insurance, 46 F.Supp.3d 712 (W.D. Ky. 2014) and O’Connor v. Mayor and City of Baltimore, 494 F. Supp. 2d 372 (D. Maryland, July 19, 2007), as well as medical providers,  see e.g., Michigan Spine and Brain Surgeons, PLLC v. State Farm Mut. Auto. Ins. Co., 758 F.3d 787 (6th Cir. 2013).

In addition, over the past several years the United States Circuit Courts of Appeals for the 3rd and 11th Circuits, as well as several federal district courts, have found that § 1395y(b)(3)(A) also applies to Medicare Advantage Plans (as well as, in some instances, purported assignees of Medicare Advantage Plans) thereby giving these parties the right to sue insurers for double damages under the PCA statute. The Circuit Court decisions on this point are:  In re Avandia, 685 F.3d 353 (3rd Cir. 2012) and Humana v. Western Heritage Insurance Co., 832 F.3d 1229 (11th Cir. 2016). The 3rd Circuit has jurisdiction over federal cases originating in Delaware, New Jersey, Pennsylvania, and the U.S. Virgin Islands; while the 11th Judicial Circuit has jurisdiction over federal cases originating in Alabama, Florida, and Georgia.  As part of its decision in Avandia, it is noted that the Third Circuit, in an endnote, also indicated that its decision would apply to Medicare Part D plans stating that “… our holding on the meaning of the private cause of action will apply equally to private entities that provide prescription drug benefits pursuant to Medicare Part D.”  In re Avandia, 685 F.3d 353, at n.20.

The following United States District courts have ruled (or strongly indicated) that MAPs can sue claims payers for double damages: MAO-MSO Recovery II, LLC v. Mercury Insurance, 2018 WL 3357493 (C.D. Calif. May 23, 2018); MAO-MSO Recovery II, LLC v. Farmers Insurance Exchange, 2018 WL 2106467 (C.D. Calif. May 7, 2018); Aetna v. Guerrera, 300 F.Supp.3d 367 (D. Conn. March 13,2018); MAO-MSO Recovery II, LLC v. State Farm, 2018 WL 340021 (C.D. Ill. January 9, 2018); Collins v. Wellcare Healthcare Plans, Inc., 73 F.Supp.3d 653 (E.D. La. 2014); MSP Recovery Claims Series LLC v. Plymouth Rock Assurance Corporation, 2019 WL 3239277 (D. Massachusetts, July 18, 2019); MSP Recovery Claims, Series LLC v. Phoenix Insurance Company, 2019 WL 6770981 (N.D. Ohio, December 12, 2019); MSP Recovery Claims, Series LLC v. Grange Insurance Company, 2019 WL 6770729 (N.D. Ohio, December 12, 2019); MSP Recovery Claims, Series LLC v. Progressive Corporation, 2019 WL 5448356 (N.D. Ohio, September 17, 2019); Humana Ins. Co. v. Bi-Lo, LLC, 2019 WL 4643582 (D. South Carolina, September 24, 2019); Cariten Health Plan, Inc. v. Mid-Century Ins. Co., No.: 2015 WL 5449221(E.D. Tenn. 2015); Humana Ins. Co. v. Farmers Tex. Cnty. Mut. Ins. Co., 95 F.Supp.3d 983 (W.D. Tex. 2014); Humana v. Shrader, 584 B.R. 658 (S.D. Tex. March 16, 2018); Humana Ins. Co. v. Paris Blank LLP, 187 F. Supp.3d 676 (E.D. Va. 2016).  Of note, in Humana v. Western Heritage Insurance Co., 832 F.3d 1229 (11th Cir. 2016) and Aetna v. Guerrera, 2020 WL 4505570 (D. Conn. August 5, 2020) also ultimately levied double damages against the insurers in these cases based on the facts.

Further, the 11th Circuit and a California United States District Court have also ruled that the PCA applies to Medicare Advantage “downstream entities” allowing these parties to sue under this provision.  See, MSP Recovery Claims, Series LLC v. Ace American Insurance Company, et. al., 974 F.3d 1305 974 F.3d 1305 (11th Cir. 2020).  Concerning “downstream entities,” the court described this concept and these parties in the following manner: “To operate more nimbly and to better compete with Medicare, some [MAPs] contract with smaller organizations, like independent physician associations, that have closer connections to local healthcare providers. These smaller organizations, or “downstream” actors, are also part of the Medicare Advantage system and are central to the present case.”  Id. at 1308.  See also, MAO-MSO Recovery II, LLC v. Mercury Insurance, 2018 WL 3357493 (C.D. Calif. May 23, 2018); MAO-MSO Recovery II, LLC v. Farmers Insurance Exchange, 2018 WL 2106467 (C.D. Calif. May 7, 2018).

[4] MARC’s website provides the following description of this group and its objectives:

The Medicare Advocacy Recovery Coalition (MARC) is a national Coalition advocating for the improvement of the Medicare and Medicaid Secondary Payer (MSP) programs. The Coalition collaborates and develops strategic alliances with beneficiaries, affected companies, and a wide range of other stakeholders to work with the Congress and government agencies to implement MSP reforms that will improve the process for all.  MARC was formed in September of 2008 by a group of industry leaders who saw a critical need to improve the MSP system. These leaders created the national coalition to advocate on behalf of Medicare beneficiaries and affected companies for MSP reform.  MARC’s membership represents virtually every sector of the MSP regulated community, including plaintiffs and defense attorneys, brokers, insureds, insurers, insurance and trade associations, self-insureds and third-party administrators.

[5] See, MARC’s RAMP Act “one-pager”

[6] See, MARC’s RAMP Act “one-pager”

[7] See, MARC’s RAMP Act “one-pager”

[8] Regarding Section 111 reporting, in general:  The Responsible Reporting Entity (RRE) is the party obligated to report under Section 111.  CMS’s Section 111 NGHP User Guide, Chapter II (Version 6.7, January 10, 2022), Chapter 3.  RREs are typically insurers and self-insurers but could involve other risk-bearing entities such as self-insurance pools or assigned claims funds depending on the facts. See generally, CMS’s Section 111 NGHP User Guide, Chapter III (Version 6.7, January 10, 2022), Chapter 6. RREs may use agents to handle Section 111 reporting for them; however, the RRE remains ultimately responsible and accountable for proper compliance under the law. Id.  Of note, claimants and their lawyers are not RREs and do not have reporting responsibilities under Section 111. Id.  Section 111 reporting is conducted electronically between the RRE and CMS via an electronic file exchange. Id.  Under Section 111, RREs must (i) determine if a claimant is a Medicare beneficiary, and if so, (ii) report the case to CMS, along with certain required claims-related data and information, if it meets a Section 111 “reporting trigger.” See, 42 U.S.C.  § 1395y(b)(8)(A). 

In terms of “when” RREs must report, there are two Section 111 reporting triggers:[8] on-going responsibility for medicals (ORM) and total payment obligation to the claimant (TPOC). See e.g., CMS’s Section 111 NGHPUser Guide, Chapter III (Version 6.7, January 10, 2022), Chapter 2, p. 2-2 and Chapter 6, sections 6.3-6.3.3 and 6.4-6.4.4.2.  In general, ORM involves situations where the RRE has made a determination to assume responsibility to pay, on an ongoing basis, the claimant’s medicals associated with the claim. CMS’s Section 111 NGHP User Guide, Chapter III (Version 6.4, June 11, 2021), Chapter 6, section 6.3.  The ORM trigger is particularly applicable in workers’ compensation cases as it is common for these insurers to provide treatment for the claimant’s industrial injuries or conditions. According to CMS’s reporting directives, “[i]f an RRE has assumed ORM, the RRE is reimbursing a provider, or the injured party, for specific medical procedures, treatment, services, or devices (doctor’s visit, surgery, ambulance transport, etc.). These medicals are often being paid by the RRE as they are submitted by a provider or injured party.” Id. On the other hand, the TPOC reporting trigger refers to the dollar amount of a settlement, judgment, award, or other payment, in addition to or apart from ORM.  CMS’s Section 111 NGHP User Guide, Chapter III (Version 6.7, January 10, 2022), Chapter 6, section 6.4. In general, CMS describes TPOC as a “one-time” or “lump sum” payment intended to resolve or partially resolve a claim and is the dollar amount paid to, or on behalf of, the claimant in relation to a settlement, judgment, award, or other payment. Id. TPOC reporting is applicable regardless of whether or not there is an admission or determination of liability, and regardless of any allocation made by the parties or determination by the court. Id. Currently, TPOCs greater than $750 must be reported to CMS under Section 111. Id.

Per 42 U.S.C. § 1395y(b)(8)(E)(i), RREs that fails to comply with the Section 111 reporting requirements … “may be subject to a civil money penalty of up to $1,000 for each day of noncompliance with respect to each claimant … A civil money penalty under this clause shall be in addition to any other penalties prescribed by law and in addition to any Medicare secondary payer claim under this subchapter with respect to an individual.”

[9] Id. See n. 8 for a general overview of the Section 111 reporting law.

[10] See, MARC’s RAMP Act “one-pager”

[11] See, MARC’s RAMP Act “one-pager”

By Mark Popolizio and Kate Riordan

Courtesy of Verisk

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