Mich. Spine & Brain Surgeons, PLLC v. State Farm Mut. Auto. Ins. Co.

• Decision Date: 29 August 2014
• Docket Number: No. 13–2430.,13–2430.
• Citation: 758 F.3d 787
• Parties: MICHIGAN SPINE AND BRAIN SURGEONS, PLLC, Plaintiff–Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant–Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

758 F.3d 787

MICHIGAN SPINE AND BRAIN SURGEONS, PLLC, Plaintiff–Appellant,

v.STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant–Appellee.

No. 13–2430.

United States Court of Appeals, Sixth Circuit.

Argued: June 17, 2014.

Decided and Filed: July 16, 2014.

Rehearing En Banc Denied Aug. 29, 2014.

ARGUED:Bryan L. Schefman, Bloomfield Hills, Michigan, for Appellant. James F. Hewson, Hewson & Van Hellemont, P.C., Oak Park, Michigan, for Appellee. ON BRIEF:Bryan L. Schefman, Bloomfield Hills, Michigan, for Appellant. James F. Hewson, Stacey L. Heinonen, Hewson & Van Hellemont, P.C., Oak Park, Michigan, for Appellee. April N. Ross, Crowell & Moring LLP, Washington, D.C., for Amicus Curiae.

Before: KEITH, CLAY, and McKEAGUE, Circuit Judges.

OPINION

McKEAGUE, Circuit Judge.

This case presents the question of whether a health care provider can bring the Medicare Secondary Payer Act's private cause of action against a nongroup health plan that denies coverage for a reason besides Medicare eligibility. We hold that it can.

I.

This action arises out of an October 26, 2010 automobile accident in which State Farm's insured, Jean Warner,¹ allegedly sustained injuries. Following the accident, Michigan Spine provided approximately $26,000 of neurological treatment to Warner. Michigan Spine submitted the claim to State Farm, but State Farm denied coverage, stating that Warner's medical condition was the result of a preexisting condition. Thereafter, Michigan Spine submitted the claim to Medicare, which approved a conditional payment of approximately $5,000 pursuant to the Medicare Secondary Payer Act.

Michigan Spine brought suit against State Farm in state court, asserting a claim for direct payment of benefits under Michigan's No–Fault Act as well as a claim for damages under the Medicare Secondary Payer Act, which permits private causes of action against primary plans that fail to pay medical expenses for which they are responsible. State Farm removed the action to federal court and filed a motion to dismiss and/or motion for partial summary judgment on the Medicare Secondary Payer Act claim. The district court granted State Farm's motion,² holding that Michigan Spine's claim was foreclosed by Bio–Medical Applications of Tennessee, Inc. v. Central States Southeast & Southwest Areas Health & Welfare Fund, 656 F.3d 277, 285 (6th Cir.2011), which stated that a private party can recover under the Medicare Secondary Payer Act only if a “primary plan” has failed to provide appropriate reimbursement “in accordance with paragraphs (1) and (2)(A).” Because the Bio–Medical court stated that “[p]aragraph (1) prevents primary plans from limiting a planholder's benefits or coverage simply because the planholder is entitled to Medicare benefits,” and State Farm did not deny coverage because of Warner's entitlement to Medicare benefits, the district court reasoned that Michigan Spine could not pursue a private cause of action against State Farm. Id. at 286. The district court then declined to exercise supplemental jurisdiction over the state law claim and remanded the action to state court. This appeal followed.

II.

Michigan Spine appeals the district court's grant of State Farm's motion to dismiss and/or motion for partial summary judgment on its Medicare Secondary Payer Act claim. This court reviews de novo a district court's grant of a motion to dismiss as well as a motion for summary judgment. See, e.g., Wurzelbacher v. Jones–Kelley, 675 F.3d 580, 583 (6th Cir.2012); Bruederle v. Louisville Metro Gov't, 687 F.3d 771, 776 (6th Cir.2012). Dismissing a motion on the pleadings is appropriate when, even after taking all allegations of the non-moving party as true, “the moving party is nonetheless clearly entitled to judgment.” Wurzelbacher, 675 F.3d at 583 (quoting Tucker v. Middleburg–Legacy Place, LLC, 539 F.3d 545, 549 (6th Cir.2008)). Summary judgment is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Bruederle, 687 F.3d at 776 (quoting Fed.R.Civ.P. 56(a)). Determining whether Michigan Spine's claim against State Farm may proceed requires statutory interpretation of the Medicare Secondary Payer Act, which involves questions of law also subject to de novo review. See Ajan v. United States, 731 F.3d 629, 631 (6th Cir.2013) (internal quotation marks omitted).

III.

“Medicare is a federal health insurance program that provides health insurance benefits to people 65 years of age or older, disabled people, and people with end-stage renal disease.” Stalley v. Methodist Healthcare, 517 F.3d 911, 915 (6th Cir.2008). Medicare served as the primary payer of health care costs for eligible individuals until 1980, when Congress, in an effort to counteract escalating healthcare costs, enacted the Medicare Secondary Payer Act. Under the Medicare Secondary Payer Act, in most situations where an individual is covered by both Medicare and another payer, Medicare serves as the secondary payer rather than the primary payer. Put differently, when payment is available from a primary plan, the primary plan and not Medicare is responsible for paying the costs of the individual's medical treatment. See id. When “a primary plan ... has not made or cannot reasonably be expected to make payment with respect to such item or service promptly[,]” Medicare may conditionally pay for the cost of the treatment. 42 U.S.C. § 1395y(b)(2)(B)(i); see also Stalley, 517 F.3d at 915. In such cases, recouping the conditional payment, and ensuring that the responsible primary plan pays the provider of medical care, becomes necessary.

Providers of medical care can sue primary plans who fail to pay under the Medicare Secondary Payer Act's private cause of action provision—provided that the primary plan's failure to pay satisfies certain criteria outlined elsewhere in the Act. When the private cause of action was added in 1986, the provision stated that a private cause of action was available when a primary payer failed to reimburse in accordance with “paragraph (1), (2), (3), or (4), respectively.” Pub.L. No. 99–509, § 9319(b), 100 Stat. 1874 (emphasis added). In 1989, the provision was reorganized into its current form, and now reads as follows:

(3) Enforcement

(A) Private cause of action

There is established a private cause of action for damages (which shall be in an amount double the amount otherwise provided) in the case of a primary plan which fails to provide for primary payment (or appropriate reimbursement) in accordance with paragraphs (1) and (2)(A).

42 U.S.C. § 1395y(b)(3)(A) (emphasis added). Despite the change in conjunctive from “and” to “or” and the paragraphs being consolidated, the requirements regarding when conditional payment may be made have remained very similar. See Bio–Medical, 656 F.3d at 298 (White, J., concurring).

Determining what is required so as to trigger the availability of the private cause of action—despite the Act's convoluted and “torturous” text, see id. at 279 (majority opinion)—is at the heart of this case. State Farm's entire argument depends on Congress's use of the conjunctive “and,” as State Farm insists that both paragraphs have to be met in all cases. Michigan Spine counters that the use of the conjunctive “and” is not instructive, and represents “simply the current, short-handed iteration of the original provision.” Id. at 298 (White, J., concurring). Michigan Spine alleges that State Farm's interpretation is nonsensical because one of those paragraphs applies only to group health plans, a subset of primary plans, and so adopting State Farm's interpretation would render the private cause of action unenforceable against all primary plans besides that subset—a result that does violence to the rest of the statutory scheme and runs afoul of congressional intent.

An analysis of these two paragraphs is in order. For this, the Bio–Medical court's discussion of the Act is instructive. Paragraph (1), “Requirements of group health plans,” essentially lays out a system of rules instructing when group health plans must pay for medical items and services. See42 U.S.C. § 1395y(b)(1). “The term ‘group health plan’ means a plan (including a self-insured plan) of, or contributed to by, an employer (including a self-employed person) or employee organization to provide health care (directly or otherwise) to the employees, former employees, the employer, others associated or formerly associated with the employer in a business relationship, or their families.” 26 U.S.C.A. § 5000(b)(1). Group health plans are one subset of primary plans to which Medicare is a secondary payer under the Act. See42 U.S.C. § 1395y(b)(2)(A) (noting that the term “primary plan” means group health plans, workmen's compensation plans, other insurance policies, and no-fault insurance). The first three subparagraphs of paragraph (1) prevent group health plans from “taking into account” that an individual is entitled to Medicare benefits due to “being (a) at least sixty-five years old, (b) disabled, or (c) diagnosed with end-stage renal disease.” Bio–Medical, 656 F.3d at 285. Therefore, it is at least clear that a group health plan fails to reimburse in accordance with paragraph (1) when it takes into account an individual's entitlement to Medicare benefits, meaning that coverage is denied on the basis of Medicare eligibility. See id. at 285–86.

Paragraph (2), “Medicare secondary payer,” instructs when Medicare may pay for medical items and services. As this court noted in Bio–Medical, it is odd that the Act conditions the private cause of action on a primary plan's failure to reimburse in accordance with subparagraph (2)(A) because “subparagraph [2] (A) only addresses Medicare—not primary plans—as its subject.” Id. at 285. Despite subparagraph (2)(A)'s only addressing Medicare, the Bio–Medical court construed the Act “collectively” so as not to render the private...