Source: http://medicareinsights.com/category/legal_matters/page/3/
Timestamp: 2018-03-18 01:55:06
Document Index: 108619970

Matched Legal Cases: ['§ 1441', '§ 1331', '§ 1331', '§ 1441', '§ 1331', '§ 1447', '§ 1447', '§ 1983', '§1395', '§1395', '§422']

Legal Matters | MedicareInsights | Page 3
Pennsylvania Federal District Court Refuses to Remove Case from State to Federal Court, Despite Claims of MSP Involvement
On May 3, 2016, the United States District Court for the Middle District of Pennsylvania published its opinion on Mikiewicz v. Hamorski and Erie Insurance Exchange, finding that simply because a state law claim involves a federal statute or would require a state court to make a determination as to the duties and obligations under the Medicare Secondary Payer Act, does not in and of itself provide a basis for removal from state court to federal court. Applying the well-pleaded complaint rule, the Court concludes that nothing on the face of Plaintiff’s motion to enforce the settlement agreement raises a question of federal law. The Court therefore removes the case from federal court and remands it back to state court.
On December 2013, Plaintiff Helen Mikiewicz had a motor vehicle accident with Defendant Stanley Hamorski, who was insured by Defendant Erie Insurance Exchange. The decision does not provide any details regarding the sequence of events leading up to the disagreement at hand, but it seems the parties reached an agreement to settle the matter, and sometime thereafter had some difficulty with seeing eye to eye on Medicare Secondary Payer (MSP) issues. As a result, on December 4, 2015, Plaintiff initiated this action in the Lackawanna County Court of Common Pleas alleging that Erie’s requirement to satisfy certain conditions in order to receive settlement funds violated Pennsylvania Rule of Civil Procedure 229.1, which requires settlement proceeds to be paid within twenty days of the execution of a Settlement Agreement and Release.
Approximately two weeks later, on December 17, 2015, Plaintiff filed a Motion to Enforce Settlement Release and Agreement against Erie. That same day, Erie filed its Answer and sought removal to federal court pursuant to 28 U.S.C. § 1441(a). According to Erie, removal to federal court was proper because Plaintiff’s claim involved federal law, the Medicare Secondary Payer Act (MSPA) and therefore federal question jurisdiction exists under 28 U.S.C. § 1331.1. Erie further maintains that removal is appropriate because the MSPA is an “extraordinary” statute that “completely preempts” state law. In response, on January 13, 2016, Plaintiff moved to remand the action back to the Lackawanna County Court of Common Pleas.
Plaintiff’s Claims Do Not Arise Under Federal Law
The Court reiterates that federal district courts have original jurisdiction over “all civil actions arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. However, whether an action “arises under” federal law is governed by the well-pleaded complaint rule. If a federal question is presented on the face of the plaintiff’s complaint, 28 U.S.C. § 1441(a) generally permits a defendant to remove the action to federal court. Therefore, It is Erie’s burden to show that removal was proper and that the “action is properly before the federal court.”
Erie contends that federal question jurisdiction exists under 28 U.S.C. § 1331 because “the Plaintiff’s Motion to Enforce Settlement Release and Agreement involves the MSP, a federal statute and its provisions including but not limited to 42 U.S.C. Section 1395y(b), and, in particular, Medicare’s entitlement to reimbursement from the primary payer.” However, the Court here indicates that simply because a state law claim “involves” a federal statute or would require a state court to “make a determination as to the duties and obligations in the MSP Act,” does not in and of itself provide a basis for removal. Applying the well-pleaded complaint rule, the Court concludes that “nothing on the face of Plaintiff’s motion to enforce the settlement agreement raises a question of federal law.”
Instead, Erie raises federal law as a defense to Plaintiff’s claim. As the Supreme Court has long recognized, a “case may not be removed to federal court on the basis of a federal defense, including the defense of pre-emption, even if the defense is anticipated in the plaintiff’s complaint, and even if both parties concede that the federal defense is the only question truly at issue.” Therefore, Erie cannot, “merely by injecting a federal question into an action that asserts what is plainly a state-law claim, transform the action into one arising under federal law, thereby selecting the forum in which the claim shall be litigated.”
The MSP Act Does Not Completely Preempt State Law
Erie next asserts that removal is appropriate because the MSP “triggers the complete pre-emption doctrine because an interpretation of the MSP would set forth the obligation of all parties involved in civil litigation nationwide where there is an issue of whether Medicare is entitled to repayment of expenses incurred in civil litigation,” and the “issue is so extraordinary that a federal interpretation should completely preempt any state cause of action.” The “complete pre-emption doctrine,” a corollary to the well-pleaded complaint rule, provides that in certain limited circumstances “the pre-emptive force of a statute is so ‘extraordinary’ that it converts an ordinary state common-law complaint into one stating a federal claim for purposes of the well-pleaded complaint rule.”
“Once an area of state law has been completely pre-empted, any claim purportedly based on that pre-empted state law is considered, from its inception, a federal claim, and therefore arises under federal law.” Here, the Court points out that Erie pointed to no case supporting its assertion that the MSP is so “extraordinary” that it completely preempts state law and the Court is aware of none. In fact, courts in this Circuit have consistently held that a state law cause of action that “references or involves” the MSP or the Medicare statute is not removable to federal court because it does not raise a federal question. In addition, courts outside this Circuit consistently have held that “mere reference to the MSP and the Medicare statute is insufficient to confer federal question jurisdiction.”
Expenses, Costs, and Attorneys’ Fees
Plaintiff requests expenses, costs, and attorneys’ fees in connection with the Defendant’s improper removal to federal court. Pursuant to 28 U.S.C. § 1447(c) “an order remanding the case to state court may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal proceedings.” The Court here concludes that Erie lacked an objectively reasonable basis for removal. Plaintiff’s state law cause of action seeking to enforce a settlement agreement for allegedly violating state law–even if the claim hypothetically “involves” a federal statute such as the MSP–was plainly insufficient to permit removal. Because Erie’s arguments in support of removal wholly lack merit and have been consistently rejected by the federal courts, the Court concludes that Erie’s attempted removal of this action to federal court was objectively unreasonable. Accordingly, the Court grants Plaintiff’s motion for attorneys’ fees and costs under § 1447(c).
For the reasons set forth, the Court grants Plaintiff’s Motion to Remand to state court and for attorneys’ fees and costs. The case therefore is remanded to the Lackawanna County Court of Common Pleas, reminding us all that it is the claim before the court that will decide where the case belongs. Simply because an MSP issue may be a defense does not mean the case belongs in federal court. This case follows a long line of cases over the last several years in which state courts have applied and interpreted the MSP Act and resulting case law, applying it to the applicable state law. As always, Optum’s Settlement Solutions will continue to monitor and inform on the evolution of such federal and state case law.
This entry was posted in Legal Matters, Medicare Secondary Payer (MSP) on May 10, 2016 by Rafael Gonzalez.
Pennsylvania Federal District Court Dismisses Nursing Home MSP Private Cause of Action as Plaintiff Failed to Prove Nursing Home’s Responsibility to Pay Medical Bills
On March 30, 2016, the United States District Court for the Eastern District of Pennsylvania published its opinion on Hope v. Fair Acres Geriatric Center, concluding that Plaintiff failed to show that Fair Acres’ responsibility to pay had been demonstrated by any of the means recognized in the Medicare Secondary Payer Act. Since there was no determination that Fair Acres was primarily responsible for Plaintiff’s Medicare payments, it cannot be said that Fair Acres failed to provide appropriate reimbursement. Thus, because Plaintiff has failed to establish that Fair Acres is a “primary payer” and Fair Acres’ responsibility to pay has yet to be demonstrated in any fashion, Plaintiff’s Medicare Secondary Payer private cause of action was dismissed.
In January 2014, Plaintiff Georgia A. Hope was admitted to Fair Acres, a county-owned nursing home located in Lima, Pennsylvania. Plaintiff was 90 years old at the time of her admission. During her stay at Fair Acres, Plaintiff experienced infection, gangrene, dehydration, and a lower extremity sacral wound that resulted in a partial leg amputation.
On December 22, 2015, Plaintiff filed her Complaint against Fair Acres, alleging negligence per se; negligence; corporate negligence; violation of civil rights under § 1983 for Fair Acres’ failure to provide the level of care and protection required by the Federal Nursing Home Reform Amendments (“FNHRA”), and Omnibus Budget Reconciliation Act of 1987 (“OBRA”) regulations, violation of Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (“UTPCPL”), and violation of the Medicare Secondary Payer Act (“MSPA”), as to medical expenses incurred and paid for by Medicare.
On January 20, 2016, Fair Acres filed its motion to dismiss. Plaintiff then filed a response in opposition, and Fair Acres filed a reply memorandum. The Court held a hearing and in this decision addresses the motion to dismiss. Although the opinion addresses each of the allegations in the complaint and the motion to dismiss, for our purposes here, we focus only on the Plaintiff’s Medicare Secondary Payer Act claim.
A private cause of action is available under the MPSA when a primary payer fails to make required payments. 42 USC Section 1395y(b)(3)(A). A Medicare payment “may not be made with respect to any item or service to the extent that payment has been made or can reasonably be expected to be made” by a primary plan. 42 USC Section 1395y(b)(2)(A). Examples of primary plans include group health plans, worker’s compensation laws or plans, automobile or liability insurance policies (including self-insured plans), or no-fault insurance policies. See 42 USC Section 1395y(b)(2)(A)(ii). Regulations promulgated under the MSPA define “self-insured plan” as an “arrangement, oral or written to provide health benefits or medical care or assume legal liability for injury or illness” under which an entity “carries its own risk instead of taking out insurance with a carrier.” 42 CFR Sections 411.21, 411.50(b).
Here, Plaintiff’s only allegation in the Complaint regarding Fair Acres’ “primary plan” status is “Defendants and/or its insurer are primary plans under the Act.” The Court here finds this is a legal conclusion and is therefore not entitled to the presumption of truth. Therefore, the Court finds Plaintiff failed to state a claim under the MSPA.
The Court also concludes that Plaintiff’s MSPA claim also fails because she has not demonstrated Fair Acres’ responsibility to pay for any services rendered. The MSPA provides, in relevant part, that “a primary plan, and an entity that receives payment from a primary plan, shall reimburse the appropriate Trust Fund for any payment made by the Secretary under this subchapter with respect to an item or service if it is demonstrated that such primary plan has or had a responsibility to make payment with respect to such item or service.” 42 USC Section 1395y(b)(2)(B)(ii).
Under the statute’s plain language, “responsibility” can be “demonstrated” by “a judgment, a payment conditioned upon the recipient’s compromise, waiver, or release (whether or not there is a determination or admission of liability) of payment for items or services included in a claim against the primary plan or the primary plan’s insured, or by other means.” 42 USC Section 1395y(b)(2)(B)(ii). See also 42 CFR Sections 411.22(b) (interpreting 42 USC Section 1395y(b)(2)(B)(ii) and describing the ways in which “a primary payer’s responsibility for payment may be demonstrated”). The thrust of the “demonstrated responsibility” requirement is that the payer’s responsibility to pay must be demonstrated as a matter of law.
Fair Acres argues that “a claim under the MSPA simply does not lie against a defendant whose liability to pay medical costs has yet to be determined.” Fair Acres contends that an “MSPA claim must be brought after the defendant is declared responsible for payment.” Plaintiff, on the other hand, suggests that “it is this present action that would contemporaneously demonstrate Fair Acres’ payment responsibility.” (stating that “by her complaint, Plaintiff seeks to recover monies paid by Medicare on her behalf from Defendant as a primary payer”).
The Court here indicates that the Third Circuit “has not addressed the interplay between the time when a defendant’s responsibility must be demonstrated and the time when a plaintiff can bring an MSPRA claim.” But the Court notes that the “Eleventh and Sixth Circuits have held that responsibility must be demonstrated as a condition precedent to bringing an MSPRA claim.” Glover v. Liggett Grp., Inc., 459 F.3d 1304, 1309 (11th Cir. 2006) (per curiam); Bio-Med. Applications of Tenn., Inc. v. Cent. States Se. & Sw. Areas Health & Welfare Fund, 656 F.3d 277, 293 (6th Cir. 2011).
In Glover, the Eleventh Circuit held that “an alleged tortfeasor’s responsibility for payment of a Medicare beneficiary’s medical costs must be demonstrated before an MSPA private cause of action for failure to reimburse Medicare can correctly be brought.” 459 F.3d at 1309. The court explained that “until Defendants’ responsibility to pay for a Medicare beneficiary’s expenses has been demonstrated (for example, by a judgment), Defendants’ obligation to reimburse Medicare does not exist under the relevant provisions.” Id. The court reasoned that if the alleged tortfeasor’s responsibility to pay was not demonstrated before a private MSPA action, “it cannot be said that Defendants have ‘failed’ to provide appropriate reimbursement.” Id. Furthermore, if the responsibility to pay were not first and separately demonstrated, “defendants would have no opportunity to reimburse Medicare after responsibility was established but before the double damages penalty attached” under the statute’s private cause of action.” Id.
Here, the Court indicates that “Plaintiff has failed to show that Fair Acres’ responsibility to pay has been demonstrated by any of the means recognized in 42 U.S.C. §1395y(b)(2)(B)(ii). There has been no determination that Fair Acres was primarily responsible for Plaintiff’s Medicare payments, so it cannot be said that Fair Acres has failed to provide appropriate reimbursement.” Therefore, the Court concludes Plaintiff has not satisfied the condition precedent to bringing her MSPA claim.
Thus, because Plaintiff has failed to establish that Fair Acres is a “primary payer” and Fair Acres’ responsibility to pay has yet to be demonstrated in any fashion, Plaintiff’s MSPA claim was dismissed without prejudice. The Court did however grant Plaintiff leave to amend her complaint should she be able to prove responsibility for such medical expenses in the future.
In Medicare Secondary Payer private cause of action for double damage circles, the question that continues to challenge everyone involved in work comp, liability, auto, no-fault, med pay, medical malpractice, products liability, and nursing home cases is whether the plaintiff must demonstrate responsibility for payment of the medical bills which Medicare ultimately makes payment on. There are now multiple cases on both sides of the issue, but of particular interest here is the fact that the Court did not discuss any of them except for Glover and Bio-Med.
The Court here failed to mention and discuss Humana Medical Plan and Humana Insurance Company v. GlaxoSmithKline, LLC, (USCA 3rd Circuit, June 28, 2012), concluding that without showing responsibility first, any private party may bring a private cause of action under §1395y(b)(3)(A). As a result, the court found that private parties like Humana can bring suit for double damages when a primary plan fails to appropriately reimburse any secondary payer. In addition, since 42 C.F.R. §422.108 states that an Medicare Advantage Organization will exercise the same rights to recover from a primary plan, entity, or individual that the Secretary of HHS exercises under the MSP regulations, the court found that the Medicare Act treats MAOs the same way it treats the Medicare Trust Fund for purposes of recovery from any primary payer.
The Court here also failed to mention and discuss Michigan Spine and Brain Surgeons, LLC v. State Farm Mutual Automobile Insurance Company, (USCA 6th Circuit, July 16, 2014), finding that although the text of the Medicare Secondary Payer Act is unclear as to whether a private cause of action may proceed against a non-group health plan that denies coverage on a basis other than Medicare eligibility, the regulations as well as congressional intent indicate that this requirement applies only to group health plans and not to non-group health plans. Therefore, the court concludes that despite not showing any proof of responsibility, Michigan Spine may pursue its claim under the Medicare Secondary Payer Act against State Farm.
Although it is not known yet whether Ms. Hope will appeal this decision to the US 3rd Circuit Court of Appeals, as always, please count on our Settlement Solutions team to keep you informed on the ongoing evolution of MSP private cause of action. If we can be of any help or assistance with your own MSP compliance program, including private cause of action issues or concerns, please contact us at 888.672.7674, or at contactus@helioscomp.com.
This entry was posted in Legal Matters, Medicare Secondary Payer (MSP) on April 21, 2016 by Rafael Gonzalez.