A recent decision in the District of New Jersey addressed an auto insurer’s obligations to comply with the Medicare Secondary Payer Act. Auto insurers may wish to review their practices and procedures in light of this decision.

In Negron v. Progressive Casualty Insurance Company, 2016 U.S. Dist. LEXIS 24994 (D.N.J. Mar. 1, 2016), the plaintiff brought a qui tam suit under the False Claims Act against Progressive. The allegations focused on an online application, in which policyholders were asked to select either a “health first” policy, under which the policyholder’s health insurance coverage would be the primary medical coverage for injuries arising from an auto accident, or Personal Injury Protection (PIP) primary coverage, under which Progressive would provide the primary coverage. The application noted that the policyholder should select the PIP primary coverage if one or more drivers was insured by Medicare or Medicaid. Id. at *7-8. The plaintiff selected the health first policy, even though she was a Medicare recipient. After she was injured in an auto accident, an adjuster denied her claim because the “health first” policy was a secondary payer. One of her medical bills was conditionally paid by Medicare. Id. at *6-8. The Medicare Secondary Payer Act provides that Medicare is a secondary payer where auto insurance coverage exists. The plaintiff sued, alleging that the insurer caused the submission of a false or fraudulent claim to Medicare, in violation of the Medicare Secondary Payer Act. The United States and New Jersey both declined to intervene, and the plaintiff proceeded with the qui tam suit.

Progressive moved to dismiss the federal and New Jersey False Claims Act claims. The court denied  the motion, finding that the complaint sufficiently alleged both that the defendants caused the submission of a false or fraudulent claim, and that the violation was “knowingly” made. A central part of the opinion focused on what the court concluded that the defendants could have done better:

First, Defendants could have constructed their online application to prevent Medicare and Medicaid enrollees from purchasing health first policies. This could have been accomplished through pop-up warnings, by requiring applicants to disclose the name of their health insurance carrier or provide a certification that they are not Medicare/Medicaid recipients, or by any number of other modifications to the online application process.

Second, it seems reasonable to assume that the online application process resulted in further post-application underwriting review and further communications between the Defendants and purchasers of health first policies such as the issuance of a formal policy and declarations, the issuance of permanent insurance cards, premium notices, and renewal processes. Each of these communications or interactions presented a separate opportunity to ensure that health first policies were not held by Medicare/Medicaid enrollees.

Lastly, both sides describe a claims adjustment process which involved a real human being. Yet, nowhere is it explained why the adjustor did not ask the health providers submitting the claims the simple question of what other insurance Realtor presented to the health care provider when the services were rendered. Further, no reason is given why that same simple question was not asked of Realtor at the beginning of the claims adjustment process. Patients of health care providers are routinely asked for proof of insurance and insurance companies routinely ask insureds to provide information about other available and potentially primary or overlapping coverage. Health care providers rarely miss an opportunity to get paid for their services, and as we have noted, insurance companies rarely miss the opportunity to come in second when it comes time to pay.

Id. at *18-20.

The court rejected the defendants’ argument that there was no loss to the government because Medicare’s payment was merely conditional, explaining that “[i]f that practice regularly occurred, defendants would essentially be receiving an interest free loan from the government on claims they are obligated to pay and were always obligated to pay.” Id. at *24. The court further found that the plaintiff had sufficiently alleged a knowing violation of the False Claims Act “by alleging that Defendants failed to make reasonable and prudent inquiries to ensure compliance with the [Medicare Secondary Payer] Act.” Id. at *27.

Insurers writing auto policies similar to Progressive’s “health first” policy may want to take note of this decision.

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Photo of Wystan Ackerman Wystan Ackerman

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you…

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you have something to say.  For those looking for my detailed law firm bio, click here.  If you want a more light-hearted and hopefully more interesting summary, read on:

People often ask about my unusual first name, Wystan.  It’s pronounced WISS-ten.  It’s not Winston.  There is no “n” in the middle.  It comes from my father’s favorite poet, W.H. (Wystan Hugh) Auden.  I’ve grown to like the fact that because my name is unusual people tend to remember it better, even if they don’t pronounce it right (and there is no need for anyone to use my last name because I’m always the only Wystan).

I grew up in Deep River, Connecticut, a small town on the west side of the Connecticut River in the south central part of the state.  I’ve always had strong interests in history, politics and baseball.  My heroes growing up were Abraham Lincoln and Wade Boggs (at that time the third baseman for the Boston Red Sox).  I think it was my early fascination with Lincoln that drove me to practice law.  I went to high school at The Williams School in New London, Connecticut, where I edited the school newspaper, played baseball, and was primarily responsible for the installation of a flag pole near the school entrance (it seemed like every other school had one but until my class raised the money and bought one at my urging, Williams had no flag pole).  As a high school senior, my interest in history and politics led me to score high enough on a test of those subjects to be chosen as one of Connecticut’s two delegates to the U.S. Senate Youth Program, which further solidified my interest in law and government.  One of my mentors at Williams was of the view that there were far too many lawyers and I should find something more useful to do, but if I really had to be a lawyer there was always room for one more.  I eventually decided to be that “one more.”  I went on to Bowdoin College, where I wrote for the Bowdoin Orient and majored in government, but took a lot of math classes because I found college math interesting and challenging.  I then went to Columbia Law School, where I was lucky enough to be selected as one of the minions who spent their time fastidiously cite-checking and Blue booking hundred-plus-page articles in the Columbia Law Review.  I also interned in the chambers of then-Judge Sonia Sotomayor when she was a relatively new judge on the Second Circuit, my only connection to someone who now has one-ninth of the last word on what constitutes the law of our land.  I graduated from Columbia in 2001, then worked at Skadden Arps in Boston before returning to Connecticut and joining Robinson+Cole, one of the largest Connecticut-based law firms.  At the end of 2008, I was elected a partner at Robinson+Cole.

I’ve worked on class actions since the start of my career at Skadden.  Being in the insurance capital of Hartford, we have a national insurance litigation practice and I was fortunate to have the opportunity to work on some prominent class actions arising from the 2004 hurricanes in Florida and later Hurricane Katrina, including cases involving the applicability of the flood exclusion, statutes known as valued policy laws, and various other issues.  My interest and experience in class actions gradually led me to focus on that area.

In Connecticut courts I’ve defended various kinds of class actions that go beyond insurance, including cases involving products liability, securities, financial services and consumer contracts.

My insurance class action practice usually takes me outside of Connecticut.  I’ve had the pleasure of working on cases in various federal and state courts and collaborating with great lawyers across the country.  While class actions are an increasingly large part of my practice, I don’t do exclusively class action work.  The rest of my practice involves litigating insurance coverage cases, often at the appellate level.  That also frequently takes me outside of Connecticut.  A highlight of my career thus far was working on Standard Fire Ins. Co. v. Knowles, the U.S. Supreme Court’s first Class Action Fairness Act case.  I was Counsel of Record for Standard Fire on the cert petition, and had the pleasure of working with Ted Boutrous on the merits briefing and oral argument.

I started this blog because writing is one of my favorite things to do and I enjoy following developments in class action law, writing about them and engaging in discussion with others who have an in interest in this area.  It’s a welcome break from day-to-day practice, keeps me current, broadens my network and results in some new business.

When I’m not at my desk or flying around the country trying to save insurance companies from the plaintiffs’ bar, or attending a conference on class actions or insurance litigation (for more on those, see the Seminars/Programs page of this blog), I often can be found playing or reading with my young daughter, helping my wife with her real estate and mortgage businesses, reading a book about history or politics, or watching the Boston Red Sox (I managed to find bleacher seats for Game 2 of the 2004 World Series when Curt Schilling pitched with the bloody sock).  When the weather is good I also love to take the ferry to Block Island, Rhode Island and ride a bike or walk the trails there. If you go, I highly recommend the Clay Head Trail.