Court Opinion

ID: 4587325
Source: CourtListenerOpinion
Date Created: 2020-11-18 15:07:04.395379+00
Date Added: 2024-06-11T13:49:46.344824
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                                APPROVAL OF THE APPELLATE DIVISION
        This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
     internet, this opinion is binding only on the parties in the case and its use in other cases is limited . R. 1:36-3.

                                                         SUPERIOR COURT OF NEW JERSEY
                                                         APPELLATE DIVISION
                                                         DOCKET NO. A-0603-19T1

COOPER HOSPITAL
UNIVERSITY MEDICAL
CENTER on assignment
by DALE MECOUCH,

          Plaintiff-Respondent,

v.

SELECTIVE INSURANCE
COMPANY OF AMERICA,

     Defendant-Appellant.
_________________________

                   Argued October 15, 2020 – Decided November 18, 2020

                   Before Judges Whipple, Rose, and Firko.

                   On appeal from the Superior Court of New Jersey, Law
                   Division, Camden County, Docket No. L-0316-18.

                   Laura A. Brady argued the cause for appellant
                   (Coughlin Duffy, LLP, attorneys; Laura A. Brady, of
                   counsel and on the briefs; Christa McLeod, on the
                   briefs).
            Stanley G. Wojculewski argued the cause for
            respondent (Costello Law Firm, attorneys; Stanley G.
            Wojculewski, on the briefs).

            Susan Stryker argued the cause for amicus curiae
            Insurance Council of New Jersey (Bressler Amery &
            Ross, PC, attorneys; Susan Stryker, of counsel and on
            the brief).

            Greenbaum Rowe Smith & Davis, LLP, attorneys for
            amicus curiae New Jersey Hospital Association (Robert
            B. Hille, of counsel and on the brief; Neil Sullivan and
            John W. Kaveney, on the brief).

PER CURIAM

      In this appeal, we address whether Medicare or a private insurance carrier

has primary payment responsibility for hospital services rendered for ongoing

medical injuries arising from a 1977 automobile accident. Defendant, Selective

Insurance Company of America appeals from an August 16, 2019 order denying

its motion for summary judgment; an August 26, 2019 order granting plaintiff,

Cooper Hospital University Medical Center's summary judgment motion and

ordering defendant to pay plaintiff $769,323.06 plus interest, fees and costs; and

a September 13, 2019 order finding those reasonable attorneys' fees and costs to

be $33,340. We reverse.

      The seeds of this controversy were planted when Dale Mecouch was

injured in a 1977 automobile accident, which left him with paraplegia. Mecouch

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filed suit against defendant, and in 1979, secured an order that required

defendant pay for Mecouch's medical expenses under his father's no-fault

insurance Personal Injury Protection (PIP) policy. At that time, no-fault policies

offered unlimited medical coverage. Since that order, defendant has paid most

of Mecouch's medical expenses arising from the accident.

       On December 11, 2015, defendant sent Mecouch a letter advising him that

it was not the primary payer for any claim related to treatment for the 1977

accident. The letter informed Mecouch that pursuant to section 111 of the

Medicare, Medicaid, and SCHIP 1 Extension Act (MMSEA) of 2007, and the

Medicare Second Payer Statute (MSP), 42 U.S.C. § 1395y(b), Medicare remains

the primary payer on no-fault PIP claims where the date of injury was prior to

December 5, 1980. It stated:

             Accordingly, it is respectfully requested that you notify
             your medical providers to cease billing [defendant] as
             the primary insurance carrier for treatment related to
             the above referenced claim and instruct them to submit
             all bills for any July 16, 1977 accident[-]related
             treatment to Medicare.        If Medicare denies any
             accident[-]related bill[s] or if a deductible or co-
             payment is billed to you, kindly forward the bill and
             Medicare's Explanation of Benefits (EOB) for our
             consideration.

1
    State Children's Health Insurance Program.
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      Mecouch was treated in plaintiff's hospital from February 2016 through

May 2016 for care that was still attributable to the 1977 accident. Plaintiff billed

defendant first, in the amount of $853,663. On September 20, 2016, defendant

sent plaintiff a letter denying payment, stating "Medicare is the primary payer

for the charges submitted.      Please submit these charges to Medicare for

consideration. Any denied charges may be resubmitted with Medicare's EOB

for reconsideration." Subsequently, plaintiff submitted the bill to Medicare.

      A National Standard Intermediary Remittance Advice form from Novitas

Solutions lists a covered amount of $84,339.94 and patient responsibility, the

deductible plus co-payment, of $12,236. Medicare remitted payment to plaintiff

through Novitas Solutions for the covered amount of $84,339.94, stating the

patient's responsibility was $12,236. Plaintiff submitted the remainder of the

bill, $12,236 to defendant for payment.

      Defendant wrote back denying plaintiff's request for $12,236 in

connection with Mecouch's treatment, stating "as you know M[edicare] is

primary for this patient, you billed M[edicare] and received payment and

[b]alance [b]illing is prohibited, therefore, [defendant] will not be considering

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your submission for payment."        Defendant asserted billing primacy was

Medicare, then Tricare, 2 and then defendant.

      On January 3, 2018, plaintiff filed a complaint seeking payment of PIP

benefits pursuant to N.J.S.A. 39:6A-4(a), from defendant, for the $853,663 it

had incurred in expenses, asserting defendant "wrongfully failed and refused to

pay plaintiff the aforementioned benefits as required by the laws of the Stat e of

New Jersey and the applicable automobile insurance policy." 3

      Cross-motions for summary judgment were filed on July 15, 2019. And

after reviewing the cross-motions, the court ruled that under N.J.S.A. 39:6A-4,

defendant is responsible for Mecouch's PIP benefits covering the bodily injury

that resulted from the automobile accident and that no other limitations are

contained in that part of the statute. The court stated all issues regarding

entitlement to coverage concluded with the 1979 order and granted summary

judgment in favor of plaintiff, while entering judgment against defendant in the

amount of $769,323.06. The court also found that under the PIP statute, plaintiff

2
  Defendant later conceded including Tricare was a mistake.
3
  Mecouch assigned his right to receive direct payment of no-fault PIP medical
expense benefits to plaintiff, and, pursuant to N.J.S.A. 2A:25-1, Lech v. State
Farm Ins. Co., 335 N.J. Super. 254 (App. Div. 2000) and Tirgan v. Mega Life
& Health Ins., 304 N.J. Super. 385 (Law Div. 1997), plaintiff asserted it had
standing to litigate the issue of non-payment of the benefits against defendant.

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                                        5
is entitled to counsel fees because the claim was not properly denied. Plaintiff,

the successful party, was entitled to the recovery of counsel fees under Rule

4:42-9(a)(6), which the court found to be $33,340. 4

      This appeal followed.      With leave granted, amici curiae, Insurance

Council of New Jersey and New Jersey Hospitals Association, also filed briefs.

      We review a grant of summary judgment de novo, applying the same

standard as the trial court. Woytas v. Greenwood Tree Experts, Inc., 237 N.J.
501, 511 (2019) (citing Bhagat v. Bhagat, 217 N.J. 22, 38 (2014)). Summary

judgment must be granted when "there is no genuine issue as to any material

fact challenged" and "the moving party is entitled to a judgment or order as a

matter of law." Davis v. Brickman Landscaping, Ltd., 219 N.J. 395, 405-06

(2014) (quoting R. 4:46-2(c)).

      The Social Security Amendments of 1965, Pub. L. No. 89-97, 79 Stat.

286, 290 (Medicare statute), enacted a primacy structure wherein (1) the federal

government was required to pay for covered medical services rendered to

Medicare-eligible beneficiaries under section 101, except for workers'

compensation benefits, as provided by section 1862(b). This means Medicare

4
   On November 14, 2019, plaintiff's representative Carpenter submitted an
affidavit stating Novitas Solutions, acting as the fiscal intermediary, accepted
plaintiff's refund to Medicare in the amount of $84,339.94 on August 8, 2019.
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                                       6
was primary payer in all circumstances other than workers' compensation.

Reaching such a goal was expressly recognized by Congress when it enacted the

Medicare as Secondary Payer Act (MSP Act), 42 U.S.C. § 1395y(b)(2)(A), in

1980, noting that the original version of the statute rendered Medicare "primary

payor" for services to Medicare beneficiaries, except for workers' compensation.

H.R. Rep. No. 96-1167, at 389 (1980).

      Defendant, the responsible insurer under the 1979 court order was, and in

fact continued to act as, the "primary payer" of Mecouch's accident-related

medical expenses before Mecouch was Medicare-eligible.              Afterwards,

defendant continued to do so for thirty-seven years.

      In 1980, section (b)(2)(A) of the MSP Act made Medicare a secondary

payer when payment has been made, or can reasonably be expected to be made,

under a workers' compensation law or, among other things, no-fault insurance.

This Act gave Medicare "residual rather than primary liability" for payment of

services resulting from an injury sustained in an auto accident where payment

could also be made under an automobile insurance policy. H.R. Rep. 96-1167,

at 389 (1980). This federal report states that post-MSP Act, "[i]t is expected

that Medicare will ordinarily pay for the beneficiary's care in the usual manner

and then seek reimbursement from the private insurance carrier after, and to the

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                                        7
extent that, such carrier's liability under the private policy for the services has

been determined." Ibid. The report further explains:

            [u]nder present law, Medicare is the primary payor
            (except where a workmen's compensation program is
            determined to be responsible for payment for needed
            medical services) for hospital and medical services
            received by beneficiaries. This is true even in cases in
            which a beneficiary's need for services is related to an
            injury or illness sustained in an auto accident and the
            services could have been paid for by a private insurance
            carrier under the terms of an automobile insurance
            policy. As a result, Medicare has served to relieve
            private insurers of obligations to pay the costs of
            medical care in cases where there would otherwise be
            liability under the private insurance contract. The
            original concerns that prompted inclusion of this
            program policy in the law—the administrative
            difficulties involved in ascertaining private insurance
            liability and the attendant delays in payment—no
            longer justify retaining the policy, particularly if it is
            understood that immediate payment may be made by
            Medicare with recovery attempts undertaken only
            subsequently when liability is established.

            [Ibid.]

The MSP Act was "designed to curb skyrocketing health costs and preserve the

fiscal integrity of the Medicare system," Fanning v. United States, 346 F.3d 386,

388 (3d Cir. 2003), and was a "cost-cutting measure . . . designed to make

Medicare a 'secondary' payer" when there was other insurance available, In re

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                                        8
Dow Corning Corp., 250 B.R. 298, 335 (E.D. Mich. Bankr. 2000) (quoting

Health Ins. Ass'n of Am. v. Shalala, 23 F.3d 412, 414 (D.C. Cir. 1994)).

      However, the MSP Act only applies to services related to accidents that

occur on or after the effective date of December 5, 1980. See 42 C.F.R. §

411.50(a) (stating the provisions of subpart (c), which explains how Medicare

does not pay for services for which payment has been made or can reasonably

be expected to be made under automobile no-fault insurance, do not apply to

any services required because of accidents that occurred before December 5,

1980); see also Colonial Penn Ins. Co. v. Heckler, 721 F.2d 431, 440 (3d Cir.

1983) (stating the Secretary adopted the route more favorable to insurers and

applied the MSP regulations to services required because of accidents that occur

after December 5, 1980).

      After the MSP Act made Medicare the secondary payer, "[i]f the primary

payer has not paid and will not promptly do so . . . Medicare can conditionally

pay the cost of the treatment." Stalley v. Methodist Healthcare, 517 F.3d 911,

915 (6th Cir. 2008). If Medicare pays for an item or service payable by the

beneficiary's   insurance,   the   payment   is   conditional   and   subject     to

reimbursement, and to recover a conditional Medicare payment, the United

States "may bring an action against" the insurance company. Dow Corning, 250

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9
B.R. at 336 (citing 42 U.S.C. §§ 1395y(b)(2)(B)(i) to (ii)). However, for costs

arising out of accidents that occurred before December 5, 1980, the Centers for

Medicare and Medicaid Services does not seek to recover payments. 5

      Therefore, Medicare was the primary payer before the MSP Act and the

MSP Act permitted Medicare to remain the primary payer for injuries arising

from accidents that occurred before December 5, 1980. Because of this, if

Mecouch is indeed eligible for Medicare, which both parties assert he became

eligible for twenty-four months after his accident, Medicare serves as the

primary payer. While plaintiff argues defendant acted as if and seemed to

believe it was the primary payer from 1977 until 2015, when it sent the lett er to

Mecouch, defendant's mistake does not change the law. If anything, plaintiff

likely reaped the benefits of this mistake in prior billings.

5
  "[The Centers for Medicare and Medicaid Services] has consistently applied
the [MSP] provision for liability insurance . . . effective December 5, 1980. As
a matter of policy, Medicare does not assert an MSP liability insurance-based
recovery claim against . . . payments where the date of incident . . . occurred
before December 5, 1980." U.S. Dept. of Health and Human Servs., Center for
Medicare and Medicaid Servs., Liability Insurance (Including Self-Insurance):
Exposure, Ingestion, and Implantation Issues and December 5, 1980 (Aug. 19,
2014),           https://www.cms.gov/Medicare/Coordination-of-Benefits-and-
Recovery/Coordination-of-Benefits-and-Recovery-Overview/Non-Group-
Health-Plan-Recovery/Downloads/ExpIngestionImpRevisedOct11.pdf.
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                                        10
      Defendant asserts that when the trial court held the effect of N.J.S.A.

39:6A-6, is to grant defendant an offset against the bill's full charges in the

amount of the $84,339.94 Medicare payment, it was error because the federal

law mandate of Medicare primacy is determinative of plaintiff's asserted

entitlement to recovery from defendant and the trial court's construction of the

No-Fault Act and the related ruling in plaintiff's favor yields a direct conflict

between federal and state law, which requires the state law to yield, and which

"ultimately . . . endorses a violation by [plaintiff] of federal law governi ng

Medicare." We agree.

      New Jersey's comprehensive no-fault statutory system is designed to

ensure those injured in automobile accidents are compensated promptly for their

injuries by immediate recourse to insurance or public funds; its goal is to ensure

there are "financially responsible persons available to meet the claims of persons

wrongfully injured in automobile accidents." Craig and Pomeroy, N.J. Auto Ins.

Law, § 1:1 (2021) (quoting Ross v. Transp. of N. J., 114 N.J. 132, 135 (1989)

(quoting Selected Risks Ins. Co. v. Zullo, 48 N.J. 362, 371 (1966))). The

purpose of the No-Fault Act "is to afford reparation or at least partial reparation

for the objectively probable economic losses resulting from automobile

accidents" and "requires prompt payment for medical expenses . . . to certain

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                                       11
classes of persons injured in an automobile accident without regard to

negligence, liability or fault and without having to await the outcome of

protracted litigation." Olivero v. N.J. Mfrs. Ins. Co., 199 N.J. Super. 191, 197

(App. Div. 1985). "The PIP carrier is required under the [No-Fault Act] to pay

all benefits when due." Aetna Cas. & Sur. Co. v. Para Mfg, Co., 176 N.J. Super.
532, 535 (App. Div. 1980) (citing N.J.S.A. 39:6A-5 to -6; Solimano v.

Consolidated Mutual Ins. Co., 146 N.J. Super. 393, 396-97 (Law Div. 1977)).

      Under the collateral source rule, N.J.S.A. 39:6A-6, as it existed in 1977,

the benefits of N.J.S.A. 39:6A-4 were "payable as loss accrues, upon written

notice of such loss and without regard to collateral sources, except that benefits

collectible under workmen's compensation insurance, employees['] temporary

disability benefit statutes and [M]edicare provided under [f]ederal law, shall be

deducted from the benefits collectible . . . ." Frazier v. Liberty Mut. Ins. Co.,

150 N.J. Super. 123, 129 (Law Div. 1977) (quoting N.J.S.A. 39:6A-6).

      In Lusby v. Hitchner, we noted that the New Jersey Supreme Court made

clear in Aetna Insurance Co. v. Gilchrist Bros., Inc., 85 N.J. 550 (1981), "the

legislative intent in enacting no-fault was to make PIP benefits the immediate

and primary source of medical expense payment except as otherwise provided

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                                       12
by N.J.S.A. 39:6A-6 . . . ." Lusby v. Hitchner, 273 N.J. Super. 578, 585 (App.

Div. 1994).

      However, both no-fault insurance and Medicare have gone through many

changes since 1977. In short, the trial court's ruling cannot stand due to the

current workings of Medicare, the adoption of fee schedules by Medicare, the

non-adoption of in-patient hospital fee schedules by New Jersey's no-fault

scheme, more recent interpretations of both, and federal preemption.

      Based on our review of the record and the relevant statutes and

regulations, the trial court's ruling impermissibly approves plaintiff's violation

of federal law governing Medicare benefits, because plaintiff cannot accept the

payment from defendant awarded by the trial court without violating its

obligations under federal law as a Medicare-participating provider.

      Plaintiff, as a participating provider, was required by federal law to bill

Medicare and accept its disposition of the charges as payment in full under 42

U.S.C. § 1395cc. This means the provider must bill Medicare only and the

beneficiary can only be charged for deductible and co-insurance amounts. Holle

v. Moline Pub. Hosp., 598 F. Supp. 1017, 1019-20 (C.D. Ill. 1984) (interpreting

42 U.S.C. § 1395cc(a)(1)(A)). Federal law dictates that Medicare participating

providers "are prohibited from trying to collect the remaining balance," which

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is the difference between the billed costs of treatment and the Medicare

reimbursement payments, and are contractually obligated to accept the Medicare

reimbursement payments as a condition of their participation in the Medicare

system. Froedtert Mem'l Lutheran Hosp., Inc. v. Nat'l States Ins. Co., 765
N.W.2d 251, 254 (Wis. 2009).

      Medicare, in the present day, is administered by the CMS. Froedtert, 765
N.W.2d at 253.     CMS contracts with hospitals to provide patient care for

Medicare beneficiaries under 42 U.S.C. § 1395cc, which requires participating

providers, in exchange for receiving Medicare payments, to refrain from

charging beneficiaries for "items or services" already paid by Medicare. Id. at

253-54 (quoting 42 U.S.C. § 1395cc(a)(1)(A)); see also Holle, 598 F. Supp. at

1019. The provider may only charge the beneficiary for deductible or co -

insurance amounts. Holle, 598 F. Supp. at 1020.

      In the Omnibus Budget Reconciliation Act of 1989, Pub. L. No. 101-239,

103 Stat. 2106, Congress authorized the use of Medicare fee schedules to replace

the previous methodology of customary, prevailing and reasonable charges.

Under the new fee schedule method, participating hospitals were to charge each

patient at the hospital's standard rates for the actual services rendered, and then

Medicare was to reimburse the providers at the previously-contracted Medicare

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reimbursement rates.    Froedtert, 765 N.W.2d at 254.         After Medicare has

reimbursed the provider, the participating hospital is "prohibited from trying to

collect the remaining balance—the difference between the billed costs of

treatment and the Medicare reimbursement payments. Ibid. (citing 42 U.S.C.

1395cc(a)(1)(A)).   They are contractually obligated to accept the Medicare

reimbursement payments as a condition of their participation in the Medicare

system." Ibid. (citing 42 U.S.C. § 1395cc(a)(1)(A)). Participating hospitals are

thus prohibited from what is referred to as "balance billing," for instance,

"[u]nder its agreement with Medicare, the [h]ospital may not file a lien for

amounts that represent charges for covered services for which Medicare has

been billed by the provider, except for deductible or co-insurance amounts."

Holle, 598 F. Supp. at 1021. "Payment of the provider's charges by Medicare

extinguishes the beneficiary's debt to the provider." Ibid.

      Here, after defendant informed plaintiff that Mecouch was covered by

Medicare, plaintiff billed Medicare and Medicare remitted payment under its fee

schedule. Thus, as a Medicare participating hospital, plaintiff was required to

accept Medicare's payment as extinguishing Mecouch's debt except for the

deductible and co-payment amounts. Plaintiff did so, billing defendant for the

deductible and co-payment amounts, which defendant was required to pay on

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Mecouch's behalf, but did not, something defendant now concedes was a

mistake. Therefore, Medicare's payment extinguished Mecouch's debt except

for the deductible and co-payment amounts, and plaintiff was not permitted to

"balance bill" defendant for its total costs of treating Mecouch.

      As explained on the Medicare website, when there is more than one payer,

"coordination of benefits" rules decide which one pays first. U.S. Centers for

Medicare & Medicaid Servs., How Medicare Works with Other Insurance,

Medicare.gov,          (last       visited         Oct.        22,       2020),

https://www.medicare.gov/supplements-other-insurance/how-medicare-works-

with-other-insurance. The "primary payer" pays first, up to the limits of its

coverage, and the "secondary payer" only pays if there are costs the primary

insurance did not cover. Id. Under 42 U.S.C. §§ 1395y(b)(2)(B)(i) to (iii), if

the primary payer does not or cannot reasonably be expected to make payment

promptly, Medicare may make a conditional payment, for which Medicare can

later seek reimbursement from the primary payer, initiating legal action if

necessary. However, if there is a dispute as to whether an individual is covered

by Medicare, the insured must go through an administrative process and hearing

pursuant to 42 U.S.C. § 405(b).

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      Here, Medicare, as the primary payer (because of the exception to the MSP

Act for Mecouch's 1977 accident) would pay plaintiff up to its limits, now

according to a fee schedule, and defendant would be required to pay the costs

Medicare did not cover, the deductible and co-insurance, of $12,236. Even

where Medicare is not the primary payer, the statutes provide that it is to make

a conditional payment if the primary payer does not pay promptly, and then seek

reimbursement from the insurance company later, if it turns out Medicare is not

liable. Further, plaintiff is not permitted to bill defendant for the balance of its

expended costs under 42 U.S.C. § 1395cc(a)(1)(A).

      Thus, to require defendant to pay the over-$800,000 bill upfront, then to

bill Medicare, interferes with Medicare's methods of paying first according to

its fee schedule, as well as its prohibition on balance-billing, presenting a

conflict with, and an obstacle to, the federal scheme. This sequence of payment

would essentially be balance-billing, albeit in a reverse order, which is

prohibited for participating hospitals that contract with Medicare. Accordingly,

interpreting N.J.S.A. 39:6A-6, as applied to those cases that fall under the MSP

Act exception, requiring the insurance company to pay first cannot stand as it

presents a conflict with the federal statute barring balance billing, along with an

obstacle to the federal method of utilizing Medicare as the primary payer, thus

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implying preemption.    Nor is it necessary to rely on this interpretation to

effectuate the purpose of the New Jersey No-Fault Act: prompt payment

regardless of fault. Therefore, Medicare will promptly pay, even where the MSP

Act applies, and Medicare may make a conditional payment when the primary

payer does not pay promptly.

      Lusby recognized that the MSP Act, rendering Medicare as a secondary

payer for accidents after December 5, 1980, supersedes the "contrary provision

of N.J.S.A. 39:6A-6," which Lusby stated "apparently" renders Medicare

primary to no-fault. Lusby, 273 N.J. Super. at 585-86. The Lusby court noted

under the Supremacy Clause of Article VI of the United States Constitution,

"contrary provisions of state no-fault law are preempted by the federal [MSP

Act]." Ibid. Here, as discussed, Mecouch's accident fell under an exception

under the MSP Act, so the provision of N.J.S.A. 39:6A-6 that "apparently"

makes Medicare primary is not pre-empted in this case.

      The Lusby court also noted the workers' compensation carrier is primarily

liable for any "benefits collectible" under the workers' compensation statute.

Lusby, 273 N.J. Super. at 585. In Talmadge v. Burn, decided in 2016, the court

stated that workers' compensation "is the primary source of satisfaction of the

employee's medical bills, as provided by the collateral source rule, N.J.S.A.

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                                     18
39:6A-6, which 'relieves the PIP carrier from the obligation of making payments

for expenses incurred by the insured which are covered by workers'

compensation benefits.'" Talmadge v. Burn, 446 N.J. Super. 413, 418 (App.

Div. 2016) (quoting Lefkin v. Venturini, 229 N.J. Super. 1, 7 (App. Div. 1988)).

"Where only workers' compensation benefits and PIP benefits are available, the

primary burden is placed on workers' compensation as a matter of legislative

policy by way of the collateral source rule of N.J.S.A. 39:6A-6." Ibid. (quoting

Lefkin, 229 N.J. Super. at 9 (citing Gilchrist Bros., 85 N.J. at 550)).

      In Lambert v. Travelers Indemnity Co. of America, also decided in 2016,

we held that "workers' compensation benefits are the primary source of recovery

for injuries suffered by employees in a work-related automobile accident," and

because of that, "PIP insurers are relieved from the obligation to pay medical

expenses under N.J.S.A. 39:6A-6." Lambert v. Travelers Indem. Co. of Am.,

447 N.J. Super. 61, 71 (App. Div. 2016).         The Lambert court held "[t]he

collateral source rule does not make workers' compensation insurance part of

the PIP no-fault system; rather it shifts the burden of providing insurance from

the automobile insurance system to the workers' compensation system." Id. at

74. "Indeed, the statutory words 'deducted from' are most clearly understood as

                                                                          A-0603-19T1
                                       19
shifting the insurance coverage from automobile insurance to workers'

compensation insurance." Ibid.

      Although these cases deal with workers' compensation, the practical

application is the same for those situations where the MSP Act does not apply,

such as here, where Mecouch's accident occurred before December 5, 1980. In

this case, the burden is shifted from the no-fault PIP carrier to Medicare;

Medicare takes the primary payer position; and Medicare pays according to its

own fee schedule, separate from that of New Jersey no-fault insurance. See In

re the Commissioner's Failure to Adopt 861 CPT Codes and To Promulgate

Hospital and Dental Fee Schedules, 358 N.J. Super. 135, 150 (App. Div. 2003).

Then, the Medicare participating hospital must accept Medicare's fee schedule

payment as extinguishing the beneficiary's debt other than co-insurance and

deductibles, which are then covered by the PIP carrier. Interpreting N.J.S.A.

39:6A-6 as to Medicare in the same way it is interpreted in Talmadge and

Lambert as shifting the responsibility to Medicare is logical and efficient, and

comports with and does not present a conflict or obstacle to the federal Medicare

method of payment.

      However, again, where there is no exception to the MSP Act, Medicare is

the secondary payer and the PIP insurer would have to pay the bill according to

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                                      20
New Jersey no-fault fee schedules. Here, that would be the entire bill because

there is no fee schedule for inpatient hospital services.

      Although the hospital expended over $800,000 in treating Mecouch, its

contract with Medicare requires them to consider Mecouch's bill extinguished

on Medicare's payment according to its fee schedule. It follows, then, that

Mecouch only incurred expenses of the co-insurance and deductible amount of

$12,236.

      Even if defendant did mistakenly serve as primary payer for thirty-seven

years, well after Mecouch likely became eligible for Medicare, that does not

change the law, and if anything, plaintiff has benefitted from prior payments

reflecting the fully-billed amount. Plaintiff received prompt payment from

Medicare once directed to bill Medicare, but then chose to refund that amount

to pursue the fully-billed amount.

      We reverse and remand to order defendant to pay $12,236 due from

Mecouch's co-insurance and deductible after Medicare submitted payment to

plaintiff, plus interest. Although plaintiff returned the Medicare payment, and

it is possible that payment is no longer recoverable, doing so was plaintiff's

choice in a bid to recover its fully-billed amount. We do not consider such

payments defendant's responsibility.

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      Going forward, Medicare should be billed primarily, with defendant liable

to pay Mecouch's costs of co-insurance and deductible, afterwards. However,

should Medicare find Mecouch is not covered under its program, defendant is

liable for the amounts according to New Jersey's no-fault insurance scheme,

which here, is the fully-billed amount, whether or not an appeal is brought to

Medicare under Olivero and Para Mfg. The trial court must also determine

appropriate fees and costs because plaintiff is now unsuccessful. But, similarly,

defendant is now only partially successful because it is still responsible to pay

the $12,236 in co-insurance and deductible immediately, which it did not pay

before.

      Reversed and remanded for the entry of an order consistent with this

opinion.

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