Humana Ins. Co. v. Paris Blank LLP

• Decision Date: 10 May 2016
• Docket Number: Civil Action No. 3:16CV79-HEH
• Parties: Humana Insurance Co., Plaintiff, v. Paris Blank LLP, et al., Defendants.
• Court: U.S. District Court — Eastern District of Virginia

187 F.Supp.3d 676

Humana Insurance Co., Plaintiff,

v.Paris Blank LLP, et al., Defendants.

Civil Action No. 3:16CV79-HEH

United States District Court, E.D. Virginia, Richmond Division .

Signed May 10, 2016

John Anson Burlingame, Squire Patton Boggs (US) LLP, Washington, DC, Michael Patrick Abate, Dinsmore & Shohl LLP KY-NA, Louisville, KY, for Plaintiff.

William Leonard Mitchell, II, Michelle Benitez, Eccleston and Wolf PC, Fairfax, VA, for Defendants.

MEMORANDUM OPINION

(Motion to Dismiss)

Henry E. Hudson, United States District Judge

THIS MATTER is before the Court on Defendant Paris Blank LLP's ("Paris Blank") and Defendant Keith Marcus's ("Marcus") Motion to Dismiss (ECF No. 14), filed on March 16, 2016. Distilled to its essence, the Motion contends that the applicable federal statutory framework does not create a private right of action such that Plaintiff Humana Insurance Company ("Plaintiff" or "Humana") may pursue recovery in this Court. Accordingly, Paris Blank and Marcus (collectively "Defendants") ask this Court to dismiss the federal claims for failure to state a claim and to decline to exercise jurisdiction over the remaining state law claims. (Defs.' Mem. Grounds & A. Supp. Mot. Dismiss ("Defs.' Mem.") 1-2, ECF No. 14-1.) For the reasons set forth below, the Court will deny Defendants' Motion.

I. BACKGROUND

On a motion to dismiss, the Court takes the well-pleaded allegations as true and views them in light most favorable to the plaintiff. T.G. Slater & Son, Inc. v. Donald P. & Patricia Brennan LLC , 385 F.3d 836, 841 (4th Cir.2004). Accordingly, the Court finds as follows:

Medicare operates as a federally-funded health insurance program for individuals aged sixty-five or older, suffering from certain disabilities, or battling End Stage Renal Disease

. (Compl. ¶ 7, ECF No. 1.) Subchapter XVIII of the Social Security Act, also known as the Medicare Act, contains five "Parts." (Id. ¶ 8.) Applicable here, Parts A and B provide certain hospital and medical benefits and constitute "the original Medicare fee-for-service program option." (Id. ¶ 9.) Part C, commonly referred to as Medicare Advantage, provides an alternative option for Medicare beneficiaries by allowing for those eligible individuals to obtain health care benefits from private companies, known as Medicare Advantage Organizations ("MAO"). (Id. ¶ 10.) Funded by the Medicare Trust Funds, Medicare Advantage operates as a federal program under federal rules. (Id. ¶¶ 14-15.) Eligible individuals have the right to receive Medicare benefits either through Parts A and B or through Part C. (Id. ¶ 13.)

In 1980, Congress passed the Medicare Secondary Payer ("MSP") law. (Id. ¶ 17.) It creates a federal coordination of benefits between primary and secondary payers.

(Id. ¶ 19–20.) Worker's compensation plans, liability insurance plans, and no fault insurance plans act as primary payers, and Medicare benefits act as secondary payers. (Id. ) When a primary plan is responsible for payment for medical services, a secondary payer may make a conditional payment on behalf of the beneficiary and then seek recovery for such conditional payment from the primary plan. (Id. ¶¶ 21-22.)

Plaintiff contracts with the Centers for Medicare and Medicaid Services ("CMS") to administer Medicare benefits for those electing to receive their benefits through the Medicare Advantage program. (Id. ¶ 1.) Enrollee¹ elected to obtain Medicare Advantage benefits through Plaintiff. (Id. ¶ 34.)

On October 11, 2013, Enrollee suffered injuries as a passenger in a motor vehicle accident. (Id. ¶¶ 33, 35.) As a result, Plaintiff made conditional payments in the amount of $191,612.09 on Enrollee's behalf to cover medical expenses. (Id. ¶ 35.) Enrollee engaged Defendants to represent Enrollee. (See id. ¶¶ 33-46.) As a result of a lawsuit initiated after the accident, Enrollee received payments from several insurance companies totaling approximately $475,600. (Id. ¶ 36.)

The insurance companies issued checks for the settlement to Paris Blank, as well as to Humana and Paris Blank jointly. On April 17, 2014, Rockingham Casualty Company issued to Humana and Paris Blank a check for $20,000. (Id. ¶ 37.) Plaintiff alleges Marcus contacted Rockingham Casualty to ask it to reissue the check and make it payable solely to Paris Blank. (Id. ¶ 38.) Rockingham Casualty denied this request, and Marcus ultimately deposited the check without Humana's endorsement. (Id. ¶¶ 38–39.) Plaintiff contends a portion of these funds were distributed to Enrollee. (Id. ¶ 40.)

Additionally, Donegal Mutual Insurance Company issued a check to Paris Blank for $250,000 under Enrollee's underinsured motorist coverage. (Id. ¶ 41.) Plaintiff pleads that companies issued to Paris Blank, Enrollee, or both, checks in the amount of $100,000 from State Farm Insurance Company, $100,000 from Rockingham Mutual Insurance Company, and another $5,600 from Donegal Mutual Insurance Company under Enrollee's no fault policy. (Id. ¶ 42.)

On January 15, 2015, Plaintiff communicated to Enrollee that Enrollee owed to Plaintiff $191,612.09 in reimbursements for the conditional payments Plaintiff made for Enrollee's medical expenses. (Id. ¶ 43.) The communication sought payment within sixty (60) days and included information regarding the request of a waiver or the filing of an appeal. (Id. ) Marcus sent a request for waiver to Plaintiff on Enrollee's behalf. (Id. ¶ 44.) The request contained correspondence between Marcus and the CMS purportedly showing that Enrollee did not owe obligations under Medicare Part A and Part B; however, the correspondence did not address any obligations to any MAO under Part C. (Id. ¶ 45.) On April 23, 2015, Plaintiff denied Enrollee's request for waiver and, as of the filing of the Complaint, had not received any reimbursement for the conditional payments. (Id. ¶¶ 47, 51.)

II. LEGAL STANDARD

The well-pleaded facts contained within the complaint both inform and constrain this Court's review of a motion to dismiss filed under Federal Rule of Civil Procedure 12(b)(6). The Court must endeavor to determine the sufficiency of the complaint, "not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses." Republican Party of N.C. v. Martin , 980 F.2d 943, 952 (4th Cir.1992). In considering a motion to dismiss, the Court accepts plaintiff's well-pleaded allegations as true and views the complaint in the light most favorable to the plaintiff. T.G. Slater & Son, Inc. , 385 F.3d at 841. The Court, however, "need not accept the legal conclusions drawn from the facts," nor must the Court "accept as true unwarranted inferences, unreasonable conclusions or arguments." Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc. , 591 F.3d 250, 253 (4th Cir.2009) (quoting Giarratano v. Johnson , 521 F.3d 298, 302 (4th Cir.2008) ).

To survive Rule 12(b)(6) scrutiny, a plaintiff must provide more than merely "labels and conclusions" or a "formulaic recitation of the elements of a cause of action." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (citations omitted). Instead, a plaintiff must allege facts sufficient "to raise a right to relief above the speculative level," stating a claim that is "plausible on its face," rather than merely "conceivable." Id. at 555, 570 (citations omitted). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Twombly , 550 U.S. at 556, 127 S.Ct. 1955 ).

III. DISCUSSION

Defendants lodge several challenges to Plaintiff's Complaint. These challenges, however, rest upon the assertion that no private right of action exits permitting Plaintiff to pursue recovery for any conditional payments. (Defs.' Mem. 7-25.) As a result, Defendants contend, this Court should dismiss Plaintiff's Complaint in its entirety. Without any binding Fourth Circuit precedent on point, Plaintiff responds that this Court should follow the reasoning of In re Avandia Marketing, Sales Practices, & Products Liability Litigation ("In re Avandia "), 685 F.3d 353 (3d Cir.2012), in which the Third Circuit found that MAOs indeed could maintain a private right of action to recover conditional payments made on behalf of a beneficiary. (Pl.'s Opp'n Defs.' Mot. Dismiss Compl. ("Pl.'s Opp'n") 15-22, ECF No. 16.)

As noted above, eligible individuals may elect to receive their Medicare benefits either from the Government under Parts A and B or from a MAO under Part C. In re Avandia , 685 F.3d at 357. If an individual elects to participate in Medicare Advantage, the CMS pays to the MAO a fixed amount for each enrollee, and the MAO then administers benefits and assumes the risk associated with insuring that individual. Id. at 357–58. A MAO exercises discretion as to the design of the plans; however, a MAO must provide benefits covered under Parts A and B of Medicare. Id. at 358. A MAO may provide additional benefits as well. Id. (citing 42 U.S.C. § 1395w–22(a)(1)–(3) ).

Passed in 1980, the MSP statute creates a federal coordination of benefits regime between primary and secondary payers. The MSP statute generally prohibits Medicare from making payment for items or services to the extent "payment has been made or can reasonably be expected to be made under" workmen's compensation plans, liability plans, or no fault insurance plans. 42 U.S.C. § 1395y(b)(2)(A)(ii). In this manner, the MSP statute positions those plans as the primary payer and Medicare as the secondary payer.

The MSP authorizes "the Secretary" to make conditional payments—premised upon reimbursement—if the workmen's compensation plan, liability plan, or no fault insurance plan has not made or cannot be reasonably expected to make payment for those items or services. Id. § 1395y(b)(2)(B)(i). The government may then bring an...