What’s happening in Medicare Advantage Organization Subrogation, and Why Should Claims Payers be on High Alert?

Medicare Advantage Organizations (MAOs) are private insurance companies that contract with the federal government to provide Medicare benefits to eligible individuals. Like traditional Medicare, these organizations may make “conditional payments” for medical treatment when another party—such as an insurer, workers’ compensation carrier, or liable third party—has primary responsibility for covering the costs.

Under federal law, MAOs have a right to recover these conditional payments and ensure that the responsible party bears the proper financial burden. To enforce these recovery rights, MAOs often engage specialized subrogation companies, which act on their behalf to identify, pursue, and collect reimbursements from settlements, judgments, or other insurance sources, thereby streamlining the recovery process and protecting the financial integrity of the Medicare program. Unlike Traditional Medicare, they do not have access to recoup funds via the U.S. Department of Treasury, so some MAOs choose to sue for double damages to enforce their rights.

The current landscape of MAO subrogation for both Part C and Prescription Drug Part D plans is constantly shifting. This blog will provide an update on two noteworthy developments and their potential immediate impact on claims payers: namely, a resurgence of activity by MSP Recovery LLC and additionally, a case addressing validity and proof of debt issues when dealing with third-party subrogation companies. 

 Resurgence in Activity From MSP Recovery

In early September, Sanderson Firm was retained to assist a client with several matters involving MSP Recovery. MSP Recovery is a law firm that engages in both third-party subrogation and Medicare Secondary Payer litigation. Not long ago, MSP Recovery would target no-fault carriers and self-insureds by sending large batches of dubious recovery demands, sometimes thousands a day to primary payers. These demands often had unreasonably short response deadlines and arbitrarily demanded double damages. The practice of sending these large letter batches is on the rise again.

If you or your company receives one of these letters, it is important they be taken seriously and handled in a timely fashion as MSP Recovery is litigious: a quick search will show that as of today over 430 individual lawsuits across the country are associated with MSP Recovery.

Of the demands we have reviewed in this recent wave, we have disputed 99.4% of all the charges. While these demands assert immediate rights to double damages under 42 U.S.C. § 1395y(b)(3)(A), the mere existence of a conditional payment legally does not equate to double damages being owed. Additionally, while the review of these liens should be expedited to avoid potential litigation, there is no foundation for the short deadlines asserted, nor do these practices conform in any way to the routine recovery processes employed by Traditional Medicare.

Validity and Proof of Debt Issues with Third Party Subrogation Companies:

In Series v. State Farm Mut. Auto. Ins. Co., 1:23 CV 22982 (July 15, 2025), the Magistrate delved into issues of proof of assignment and proof of debt. The decision by the Magistrate, which is subject to further review, ultimately determined that Series did not have standing, but the themes brought up in this case regarding third-party subrogation companies failing to provide adequate proof of debt are a poignant takeaway as we continue to deal with these entities.

When a MAO has assigned its rights of recovery to a third-party subrogation company, the validity and adequacy of the debt should be questioned. The Magistrate found that often the third party does not have adequate support to withstand judicial scrutiny. Two firsthand scenarios handled here at Sanderson Firm demonstrate significant gaps in this area: where it turned out that the MAO had never issued payment for the charges in question at all, or that the subrogation company was trying to recover for the total billed amount and not what was actually paid by the MAO.  

If you receive an MAO conditional payment lien from any third-party subrogation company, our team of attorneys and recovery specialists stand ready to assist and scrutinize the validity of conditional payment debt. Contact us to learn about our conditional payment services.