Prime Healthcare can sue Humana over alleged Medicare Advantage underpayments

A federal judge in California said June 22 Humana cannot dismiss Ontario, Calif.-based Prime Healthcare's breach of contract lawsuit accusing the insurer of underpaying for its Medicare Advantage members, according to Law360.

Here are five things to know about the case:

1. Prime, one of the largest U.S. hospital chains with 45 facilities, claimed Humana underpaid for care for Medicare Advantage members from August 2012 to February 2016, when the provider was in Humana's network. Prime accused Humana of underpaying or refusing to pay anything for various services, which allegedly went against the companies' negotiated contract.

2. Humana argued any alleged breach requiring interpretation of the Medicare Act should be pre-empted. However, U.S. District Judge Virginia A. Phillips said June 22 the case is not barred by the Medicare Act, as Prime's allegations do not arise under the act, according to Law 360.

3. Prior to the ruling, Humana had been granted several motions to dismiss. Prime had been told it could not amend its complaint should Humana win another dismissal. However, the judge called Humana's claim that interpretation of the Medicare Act should be pre-empted "overly broad and inconsistent with fundamental principles of pre-emption."

4. Mark Polston, counsel for Prime and partner at King & Spalding, told Law360 the ruling is one of the first to allow a healthcare provider to sue a health plan for Medicare Advantage underpayments.

5. A Humana spokesperson declined the publication's request for comment. Damaris Medina and Andrew Selesnick, who represent Prime and are with Buchalter, said in a joint statement June 25 the decision "confirms that contracted providers do not have appeal rights through the Medicare appeals process and therefore do not have to exhaust such a process before suing."

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