Class Action Claims Allstate Failed to Reimburse Medicare for Beneficiaries’ Accident-Related Medical Expenses

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Allstate Insurance Company and Allstate Fire and Casualty Insurance Co. have systematically and uniformly failed to reimburse Medicare Advantage Organizations and others who paid for Medicare beneficiaries’ accident-related medical expenses, a proposed class action alleges.

As a result of the Allstate defendants’ conduct, accident-related medical expenses were shouldered by Medicare Advantage organizations and other “first tier and downstream actors” pursuant to risk-sharing agreements “to the detriment of Medicare Trust Funds and the public,” the lawsuit alleges.

In situations where Medicare beneficiaries purchase no-fault or liability insurance from the defendants, Allstate is considered the primary payer under the Medicare Secondary Payer provision of the Social Security Act, the complaint says. When Medicare and Medicare Advantage organizations pay for beneficiaries’ accident-related medical expenses, the defendants are in turn obligated to reimburse them for services that fall within overlapping insurance coverage, the suit states.

“Accordingly, Defendants’ obligation to pay for accident-related medical expenses on behalf of Enrollees is primary relative to Medicare’s obligation to pay for those same accident-related medical expenses, which is secondary,” the complaint reads.

According to the lawsuit, however, the Allstate defendants have “systematically failed to make these reimbursements,” and instead passed those expenses on to Medicare and Medicare Advantage plans.

The lawsuit contends that Allstate, as a primary payer, has an additional obligation to identify whether its insureds or claimants are Medicare beneficiaries and report its primary payer responsibility to the Centers for Medicare & Medicaid Services (CMS). According to the suit, Allstate has failed to do so and has “systematically and deliberately” attempted to skirt its payment obligations.

“Even in the face of the MSP Law’s clear legal requirement that primary payers (like Defendants) pay for accident-related medical expenses, take steps to identify whether their enrollees are Medicare beneficiaries, and report their primary payer responsibility to CMS, primary payers rarely honor their obligations and, instead, take steps to ensure that the burden for those accident-related medical expenses is borne by Medicare and MA Plans,” the suit charges.

Aside from allegedly failing to reimburse the plaintiffs’ and proposed class members’ conditional payments, Allstate has entered into with Medicare beneficiaries settlements arising from liability insurance claims instead of either directly paying for accident-related medical expenses or reimbursing the Medicare payments, the complaint says.

The suit alleges the defendants’ nonpayment is a result of “systemic failures to investigate and obtain information required to determine a claimant’s Medicare eligibility, Medicare Advantage enrollment, and conditional payments made on that claimant’s behalf.”

The plaintiffs, agents who’ve been assigned legal rights of recovery and reimbursement for services provided by entities that administer Medicare benefits, have filed similar lawsuits of late against a number of other insurance carriers, including Arbella, American National, Progressive, Infinity, Travelers, Amica, and Wesco.

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