Litigation Over MAO Recovery Rights Advances as Maryland Court Upholds Assignments

Under the Medicare Secondary Payer (MSP) Statute, Medicare Advantage Organization (MAO) plans, also known as Medicare Part C and Part D plans, may be entitled to recover double damages when another party is primarily responsible for payment of medical expenses but fails to reimburse the MAO plan timely.

Originally enacted to prevent Medicare from paying for services that should be covered by another insurer (such as no-fault, workers' compensation, or liability insurers), the MSP Statute establishes Medicare as a "secondary payer" when other coverage is available. This includes not only traditional Medicare but, through various court rulings and statutory interpretations, MAO plans as well.

Key to this recovery is the MSP private cause of action provision found in 42 U.S.C. § 1395y(b)(3)(A), which allows for double damages when a non-group health plan (NGHP) fails to reimburse Medicare. Courts have increasingly affirmed that MAO plans can utilize this private right of action. The seminal case of Humana Medical Plan, Inc. v. Western Heritage Insurance Co. (11th Cir. 2016) confirmed that MAO plans have the same right as the federal government to seek reimbursement and potentially recover double damages under the MSP Statute

This legal pathway arguably incentivizes timely and accurate payment by NGHPs and encourages MAO plans to pursue reimbursement actively. The prospect of double damages (i.e. twice the amount of unpaid medical expenses), serves as a strong deterrent against non-compliance by NGHPs. For MAO plans, which operate on fixed capitated payments and bear risk for enrollees’ care, the ability to recover these additional amounts strengthens their financial position and enhances the overall integrity of the Medicare system.

However, the scope and application of this recovery right have been subject to litigation and ongoing debate, especially concerning the preemption of state law and the mechanisms through which MAO plans assert their rights. Despite these challenges, the trend in federal appellate courts has largely supported the notion that MAO plans stand on equal footing with traditional Medicare in enforcing secondary payer rights, including the right to double damages under the MSP private cause of action.

GEICO,  et. al. v. MAO-MSO

On July 11th 2025, in the case of Government Employees Insurance Company, et al. v. MAO-MSO Recovery II, LLC, Series PMPI, et al., the Maryland Supreme Court analyzed whether MSP Recovery’s solicitation of secondary payers (e.g., private MAO plans) to assign their MSP conditional payment reimbursement recovery rights to MSP Recovery was a violation of Maryland’s barratry statute.[1] As discussed further below, the Maryland Supreme Court ruled such assignments are not void under Maryland public policy.

Class action lawsuits were brought against GEICO by MSP Recovery following an assignment of recovery rights by MAOs asserting more than $1 billion in unpaid conditional payments in the U.S. District Court for the District of Maryland. MSP Recovery routinely engages in these assignments in which they receive a percentage of any monies recovered.

GEICO argued that the suit was invalid under the common law doctrines of maintenance, champerty and barratry as well as Maryland’s barratry statute (Md. Code Ann., Bus. Occ. & Prof. § 10-604(b)(1)). Champerty is an agreement where a party with no previous interest in a lawsuit finances the suit with intent to share the disputed property if the suit succeeds. Barratry is the persistent incitement of litigation. These doctrines were established to stop “the officious stirring up of … litigation in which a person had no interest[.]” Son v. Margolius, Mallios, Davis, Rider & Tomar, 349 Md. 441, 457 (1998).

Ultimately, the court ruled the assignments did not violate either the common law nor the barratry statute, finding that obtaining the right to sue the Defendants themselves, was not the same as soliciting as described in the statute, nor were there violations of the common law doctrines in their analysis of whether the suit was “useless."

Sanderson Commentary and Best Practices

The question of whether MAOs have a right to use the private cause of action provision has yet to be addressed by the Fourth Circuit Court of Appeals, however, favorable outcomes have occurred in the Third, Eleventh and Second Circuits.[2] It is noteworthy that Defendants chose not to address this specific issue, but instead seemingly thought challenging the assignment to MSP Recovery was more likely to succeed.

Given the common law doctrines at issue and the track record for dismissals of suits brought by MSP Recovery, many believed the Defendants would prevail. MSP Recovery has filed hundreds of similar suits, retains a percentage of the profits recovered, and often twists the meaning of the MSP Statue to imply that the mere existence of a conditional payment should result in double damages. This does not seem unlike the “officious stirring up” the doctrines aim to avoid, and there is no question they qualify as a party with no previous interest in the suit.

While this is a procedural win for MSP Recovery, the outcome of the actual class actions is yet to be determined. The important takeaway here is that the litigation in the area of MAO recovery continues and the use of more creative arguments could be illustrative of two things:

First, a fear that challenging the suit on the premise that MAOs do not have a right to double damages under the private cause of action could firmly create unwanted precedent in a new circuit. 

Second, an acceptance that MAOs’ utilization of the private cause of action is here to stay.

Is your claims organization properly identifying and resolving MAO plan liens? At Sanderson Firm, we recommend our clients proactively identify MAO plans that may have reimbursable claims to avoid possible litigation by MAOs or entities such as MSP Recovery for double damages. Further, we highly specialize in MAO recoveries for our clients, with an on average savings of 93%. Contact us to learn more about our Medicare/MAO conditional payment services. 

[1] Md. Code Ann., Bus. Occ. & Prof. § 10-604.

[2] See In re Avandia Mktg., Sales Pracs. & Prod. Liab. Litig., 685 F.3d 353 (3d Cir. 2012); Humana Med. Plan, Inc. v. W. Heritage Ins. Co., 832 F.3d 1229 (11th Cir. 2016); Aetna Life Ins. Co. v. Big Y, 2022 U.S. App. LEXIS 29797 (2nd Cir. 2022)