Cooper Hosp. Univ. Med. Ctr. v. Selective Ins. Co. of Am.

• Decision Date: 18 November 2020
• Docket Number: DOCKET NO. A-0603-19T1
• Parties: COOPER HOSPITAL UNIVERSITY MEDICAL CENTER on assignment by DALE MECOUCH, Plaintiff-Respondent, v. SELECTIVE INSURANCE COMPANY OF AMERICA, Defendant-Appellant.
• Court: New Jersey Superior Court — Appellate Division

COOPER HOSPITAL UNIVERSITY MEDICAL CENTER on assignment by DALE MECOUCH, Plaintiff-Respondent, v. SELECTIVE INSURANCE COMPANY OF AMERICA, Defendant-Appellant.

DOCKET NO. A-0603-19T1

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION

Argued October 15, 2020

November 18, 2020

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION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.

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 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 SCHIP¹ 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.

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 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 State 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 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 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 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 Dow Corning Corp., 250 B.R. 298, 335 (E.D....