Benson v. Sebelius

• Citation: 771 F.Supp.2d 68
• Decision Date: 24 March 2011
• Docket Number: Civil Action No. 09–1931 (RMU).
• Parties: Glen N. BENSON, Plaintiff,v.Kathleen SEBELIUS, Secretary of the Department of Health and Human Services, Defendant.
• Court: U.S. District Court — District of Columbia

771 F.Supp.2d 68

Glen N. BENSON, Plaintiff,

v.Kathleen SEBELIUS, Secretary of the Department of Health and Human Services, Defendant.

Civil Action No. 09–1931 (RMU).

United States District Court, District of Columbia.

March 24, 2011.

Pamela Joy Bethel, The O'Riordan Bethel Law Firm, LLP, Washington, DC, for Plaintiff.Mitchell P. Zeff, U.S. Attorney's Office, Washington, DC, for Defendant.

MEMORANDUM OPINION

Denying The Plaintiff's Motion For Summary Judgment; Granting the Defendant's Cross–Motion for Summary Judgment

RICARDO M. URBINA, District Judge.

I. INTRODUCTION

The plaintiff, as the survivor and administrator of his mother's estate, received a $90,000 settlement for a wrongful death and survival action that he had previously commenced in a Pennsylvania state court. Before her death, the plaintiff's mother's medical care was paid for by Medicare, a federal program administered by the Centers for Medicare and Medicaid Services (“CMS”) of the Department of Health and Human Services (“HHS”). Under protest by the plaintiff, CMS collected a sum from the wrongful death and survival action settlement as reimbursement for the portion of his mother's medical costs incurred by Medicare.

The plaintiff commenced this action, seeking review of the reimbursement amount collected by CMS and asserting that he was deprived of his settlement funds without due process. The matter is now before the court on the parties' cross-motions for summary judgment. Because the amount collected by CMS is in accordance with the applicable laws regulating the reimbursements given to Medicare from a wrongful death settlement and because the plaintiff was not denied due process, the court denies the plaintiff's motion for summary judgment and grants the defendant's cross-motion for summary judgment.

II. BACKGROUND

A. The Medicare Secondary Payer Provision

Medicare provides health insurance to the elderly and disabled by entitling eligible beneficiaries to have payments made on their behalf for care and services rendered by health care providers. See generally 42 U.S.C. §§ 1395 et seq. CMS is responsible for administering the Medicare program. See id. § 1395h.

In 1980, Congress enacted the Medicare Secondary Payer Provision (“MSP”) which made Medicare a secondary payer plan. See 42 U.S.C. § 1395y(b). As a secondary payer plan, any payment made by CMS on behalf of a Medicare beneficiary is conditional and subject to reimbursement by any party that receives a “primary payment.” Id. § 1395y(b)(2)(B)(i). A primary payment is any payment made by a non-Medicare entity for the medical expenses of a Medicare beneficiary based on that entity's obligation to pay for those medical services. 42 C.F.R. § 411.21. For instance, if Medicare's coverage overlaps with that of another insurer, CMS may seek reimbursement from that insurer for the medical expenses that were already paid through Medicare. 42 U.S.C. § 1395y(b)(2)(B)(ii); 42 C.F.R. § 411.21.

Similarly, and of particular relevance here, CMS may seek reimbursement for Medicare-disbursements from the recipient of a judicial settlement. 42 C.F.R. § 411.22(a)-(b)(3). When the primary payer is the recipient of a settlement, however, CMS's reimbursement is reduced by its portion of the legal fees and costs that were incurred in obtaining the settlement (“the procurement costs”). Id. § 411.37(a). Moreover, if a settlement covers both medical and nonmedical costs, CMS's reimbursement may be apportioned so as to reach only the portion of the settlement allocated to cover medical costs. See Cox v. Shalala, 112 F.3d 151, 154–55 (4th Cir.1997); Denekas v. Shalala, 943 F.Supp. 1073, 1080 (S.D.Iowa 1996).

In order to collect its reimbursement pursuant to the MSP, CMS may intervene in an action involving the medical costs of a Medicare beneficiary but also has a right of subrogation. 42 U.S.C. §§ 1395y(b)(2)(B)(iii)-(iv). The selection of one avenue over another does not affect CMS's right of recovery. Zinman v. Shalala, 67 F.3d 841, 844–45 (9th Cir.1995).

B. Factual & Procedural Background

In May 2003, the plaintiff's elderly mother suffered various injuries after falling in her home. Compl. ¶ 7. As a result, the plaintiff's mother was hospitalized and treated for a fracture of her right radius, a radial periorbital hematoma and a contusion. Id. ¶ 8. During her hospital stay, however, she was also treated for medical conditions not directly related to these injuries. Id. ¶ 9. In total, the plaintiff's mother received thirty-eight medical treatments, only one of which, the plaintiff claims, was related to the fall—the “fracture of the surgical neck humerous [sic].” Id. The plaintiff's mother died ten days after the accident. Id. ¶ 10.

In July 2005, the plaintiff, in his capacity as survivor and administrator of his mother's estate, filed a wrongful death and survival action against his mother's landlord in the Court of Common Pleas of Pennsylvania. Id. ¶ 11; A.R. at 591. In pursuing that action, the plaintiff expressly included his mother's medical costs in his wrongful death claim. A.R. at 595. There is no indication, however, that the plaintiff paid any of his mother's medical expenses.

Because the plaintiff's mother was a Medicare beneficiary at the time of her injury, CMS had paid for her hospital costs, which totaled $40,213.74. Pl.'s Mot. at 3. In December 2006, CMS notified the plaintiff of this amount, informing him that Medicare's initial payment of his mother's medical expenses was conditional to reimbursement from any potential settlement award. A.R. at 708. CMS also explained to the plaintiff and his counsel that they had an opportunity to contest the charges prior to payment. Id.

The parties in the wrongful death and survival action eventually settled for $90,000, with 80% of that amount allocated in settlement for the wrongful death claim (“wrongful death settlement award”) and 20% allocated in settlement for the survival claim (“survival settlement award”). Compl. ¶ 11. Although the settlement did not specify a precise numerical value allocated for medical costs, it did release the landlord from “[a]ll liens against the proceeds of this settlement” including liens related to his mother's medical expenses. A.R. at 595.

In May 2007, the Pennsylvania court issued an order approving the parties' settlement agreement. A.R. at 47. This order also specified that $40,213.74 would be “held in escrow pending disposition” of a lien that had been asserted by Medicare. Id.

In November 2007, CMS notified the plaintiff that pursuant to the MSP, he was required to reimburse CMS for his mother's medical costs which had been paid through Medicare and for which he had received a settlement award. A.R. at 685–89. CMS also informed the plaintiff that he had the right to appeal this determination within 120 days. Id. CMS advised the plaintiff that he was required to pay $25,868.58, the final amount due after deducting CMS's share of the procurement costs, within sixty days or risk incurring interest and penalties. Id. at 687–88.

To avoid interest and penalties, the plaintiff paid the full amount under protest and appealed to HHS's initial review board. Compl. ¶ 16. After considering the plaintiff's case, the review board upheld CMS's demand for $25,868.58. Id. The plaintiff unsuccessfully appealed that decision to both the Office of Medicare Hearings and Appeals and the Medicare Appeals Council. Id. ¶¶ 17–18. The Medicare Appeals Council ultimately held that CMS's recovery rights are broad and, as defined in the MSP manual interpreting the statute, allocations of settlements that are not the result of an adjudicatory process, like the allocation at issue here, do not limit those rights. A.R. at 06.

The plaintiff subsequently commenced this action seeking judicial review of the Medicare Appeals Council's final decision. See generally Compl. Both parties have filed cross-motions for summary judgment. See generally Pl.'s Mot.; Def.'s Cross–Mot. With these motions now ripe for adjudication, the court turns to the parties' arguments and the applicable legal standards.

III. ANALYSIS

A. Legal Standard for a Motion for Summary Judgment

Summary judgment is appropriate when the pleadings and evidence show “that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Diamond v. Atwood, 43 F.3d 1538, 1540 (D.C.Cir.1995). To determine which facts are “material,” a court must look to the substantive law on which each claim rests. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A “genuine dispute” is one whose resolution could establish an element of a claim or defense and, therefore, affect the outcome of the action. Celotex, 477 U.S. at 322, 106 S.Ct. 2548; Anderson, 477 U.S. at 248, 106 S.Ct. 2505.

In ruling on cross-motions for summary judgment, the court shall grant summary judgment only if one of the parties is entitled to judgment as a matter of law upon material facts that are not genuinely disputed. Citizens for Responsibility & Ethics in Wash. v. U.S. Dep't of Justice, 658 F.Supp.2d 217, 224 (D.D.C.2009) (citing Rhoads v. McFerran, 517 F.2d 66, 67 (2d Cir.1975)). To prevail on a motion for summary judgment, the moving party must show that the opposing party “fail[ed] to make a showing sufficient to establish the existence of an element essential to that party's case.” Celotex, 477 U.S. at 322, 106 S.Ct. 2548. By pointing to the absence of evidence proffered by the opposing party, a moving party may succeed on summary judgment. Id.

The opposing party may defeat summary judgment through factual representations made in a sworn affidavit if he “support[s] his allegations ... with facts in the record,” Greene v. Dalton, 164 F.3d 671, 675 (D.C.Cir.1999) (quoting Harding v. Gray, 9 F.3d 150, 154 (D.C.Cir....