Medicare Secondary Payer

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Medicare Secondary Payer (MSP) is a statute that requires insurance companies and other “primary payers” to reimburse Medicare when evidence shows that they are liable for Medicare’s costs. If the primary payer fails to do so, MSP permits Medicare to sue to recover the funds.

For years, plaintiffs’ lawyers have brought novel lawsuits trying to expand the MSP statute into a bounty-hunting law, in the hope of recovering double damages from an expansive class of defendants. Now, after repeatedly failing in the court system, the trial lawyer lobby is turning to Congress to expand MSP liability through legislative action.

This trial lawyer-backedlegislation isdesigned to change these pre-existing laws to allow Medicare Secondary Payer liability to be imposed with far less evidence. While trial lawyers now have to produce evidence that a primary payer’s actions harmed the plaintiffs in some way, this bill would allow statistics to constitute proof of liability instead.

Additionally, only the government or the injured Medicare patient currently has standing to sue. However, proposals to change the MSP statute would allow any person to bring an action.

Tort Lawyers Failed in Court to Expand Scope of MSP Liability

Plaintiffs’ lawyers have unsuccessfully brought tort suits against companies with no preexisting obligation to Medicare based on mere allegations that their products have injured Medicare patients. They have argued that any person can sue for double damages under MSP, including people who were never Medicare beneficiaries. The courts, including five Federal Circuit Courts of Appeal, have wisely rejected these attempts to expand MSP.

The Trial Lawyer Lobby Has Turned to Congress to Enact MSP-Expanding Legislation

MSP liability legislation being considered in Congress attempts an end-run around these judicial decisions. The proposals do not protect Medicare or patients, but merely enrich tort lawyers.

These potential expansions of the MSP statute would invite lawsuits against companies or industries based on whatever type of “study” purporting to link systemic health care costs to those companies’ or industries’ products or activities that the trial bar and its allies can dream up.

For example, liability could be imposed on restaurants and food manufacturers for the amount of money collectively paid out by Medicare that could be statistically “linked” to obesity-related illnesses. Other manufacturers, whose products could somehow be tied to Medicare expenditures, include: drug manufacturers for costs of treating side effects; medical device manufacturers for costs of treating device failures; gun makers for costs of treating gun violence; and car producers for costs of treating people harmed by exhaust emissions. The list is virtually endless.

MSP Liability Changes Would Increase Health Care Costs

Proposals currently before Congress would allow a class action style of recovery by permitting a single plaintiff to file an MSP action to seek double damages for all Medicare patients potentially harmed by a defendant’s products or services. Plaintiff’s lawyers would routinely seek huge sums from any company or industry they can allege caused Medicare to spend funds.

The threat of double damages under the MSP statute would increase the costs for all companies, such as pharmaceutical and medical device firms, which would increase Medicare costs and health care costs.

Federal Courts Would be Clogged with Tort Litigation

Expansions of the MSP statute would have the effect of federalizing routine state-court tort suits. Because of the relaxed burden of proof and the potential for double damages, plaintiffs’ lawyers would clog the federal courts with tort actions dressed in MSP clothing.

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