Court refuses to throw out suit against Humana tied to Medicare Advantage

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A California judge has refused to throw out a lawsuit against Humana, tied to Medicare Advantage, which legal experts say could help to inform future such litigation.

The case in question is between Ontario, CA, hospital system and the Louisville, KY, health insurer. Fourteen-hospital Prime Healthcare sued Humana back in 2016, alleging that the insurer refused to pay for certain services provide to enrollees of its Medicare Advantage program, Bloomberg Law reports. But the insurer countered that the Medicare Act prevents such litigation, because it was “explicitly governed by, and intertwined with, the Medicare Act.”

Judge Virginia Phillips, with the U.S. District Court for the Central District of California, however, has dismissed that motion. Bloomberg says this decision could have ramifications — for skilled nursing and other healthcare providers who rely on the increasingly popular Medicare Advantage — because it is the first time a federal court has paved the way for healthcare providers to bring contract actions against Medicare managed care payers.

“There's been a long-running battle and dispute between Medicare Advantage Organization payers and their provider networks, mostly hospitals, over the extent to which private breach of contract matters can be litigated in arbitration and federal court,” Mark Polston, an attorney with King & Spalding, which represents Prime, told Bloomberg Law. “Courts are recognizing these are private contractual arrangements where plans and hospitals agree to their own private terms.”

The judge called Humana's interpretation of the Medicare Act “overly broad,” and if pre-emption had been applied, as requested, providers like Prime would have no future means of legal recourse, Modern Healthcare reported.