PHILADELPHIA - (Mealey's) Medicare
Advantage provider Humana Medical Plan Inc. is allowed under Medicare law to
seek reimbursement from GlaxoSmithKline PLC (GSK) for the costs of treating
insurance customers who were injured by GSK's Avandia diabetes drug, a
unanimous Third Circuit U.S. Court of Appeals panel said yesterday (In Re:
Avandia Marketing, Sales Practices and Products Liability Litigation, No.
11-2664, 3rd Cir.; 2012 U.S. App. LEXIS 13230; See 6/16/11, Page 13).
(Opinion available. Document #28-120712-005Z.)
In 2010, Humana Medical Plan
and related entity Humana Insurance Co. (Humana) filed a class action complaint
against GSK in the U.S. District Court for the Eastern District of
Pennsylvania, alleging that the drug maker was obligated under the Medicare
Secondary Payer (MSP) Act to reimburse Humana for the cost of treating
insurance policy holders who were injured by Avandia. Humana operates a
Medicare Advantage plan, which is a private insurance policy that provides coverage
to Medicare-eligible persons who choose not to participate directly in the
federal Medicare program.
organizations (MAOs) pay medical costs for plan participants and each year are
paid a fixed annual amount by Medicare.
Avandia is a prescription
drug prescribed to lower blood glucose levels in type 2 diabetics.
Plaintiffs allege that the drug substantially increases the risk of heart
attack and stroke. Federal lawsuits are centralized in an Eastern
District multidistrict litigation.
Medicare Got Settlement
GSK has begun settling with
plaintiffs and, at the time Humana filed its suit, had paid $460 million.
In the MDL, a portion of each settlement is set aside to reimburse the federal
Medicare Trust Fund for Avandia injury treatment expenses paid by the federal
GSK has not included Medicare
Advantage plans in its settlement agreements, although the plans may have paid
for treatment of Avandia injuries. Humana argued in its suit that under
the Medicare Secondary Payer Act, MAOs have a private right of action to
collect double damages and to compel GSK to identify settling claimants to
Medicare Advantage providers that cover those claimants.
In 2011, Judge Cynthia M.
Rufe granted GSK's motion to dismiss Humana's suit, finding that Medicare law
does not provide MOAs with a private cause of action to seek reimbursement.
Private Right Of Action
In a unanimous opinion, the
Third Circuit panel said that the Medicare Secondary Payer Act does provide
Humana with a private cause of action against GSK. "Even if we were to
find, as Appellees suggest, that this provision is ambiguous, we would
nonetheless be required to defer to regulations issued by the Centers for
Medicare and Medicaid Services ('CMS')," the panel wrote.
"The language of the MSP
private cause of action is broad and unrestricted and therefore allows any
private plaintiff with standing to bring an action," the panel wrote.
"Since private health plans delivered Medicare services prior to the 1980 passage
of the MSP Act, Congress was certainly aware that private health plans might be
interested private parties when it drafted the cause of action, and it did not
exclude them from that provision's ambit."
"That decision is logically
consistent because affording MAOs access to the private cause of action for
double damages comports with the broader policy goals of the [Medicare
Advantage] program," the panel continued. "Further, even if we were to
find the statutory text to be ambiguous on the issue, Chevron [Chevron,
U.S.A., Inc. v. Natural Resources Defense Council, Inc, 467 U.S. 837,
842-43 (1984)] deference to CMS regulations, which grant MAOs parity with
traditional Medicare, would require us to find in favor of Humana here."
The panel reversed the District
Court and remanded for further proceedings.
Circuit Judge Joseph A.
Greenaway wrote the opinion. The other panel members were Chief Circuit
Judge Theodore A. McKee and Circuit Judge D. Michael Fisher.
Humana is represented by
Richard W. Cohen, Peter D. St. Phillip Jr. and Gerald Lawrence of Lowey,
Dannenberg, Cohen & Hart in White
GSK is represented by Thomas E. Zemaitis, George A. Lehner and Kenneth H.
Zucker of Pepper Hamilton in Philadelphia.
Amicus curiae America's
Health Insurance Plans is represented by Arthur N. Lerner of Crowell &
Moring in Washington, D.C.
[Editor's Note: Lexis
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