Humana Ins. Co. v. Bi-Lo, LLC, C/A No. 4:18-cv-2151-DCC

CourtU.S. District Court — District of South Carolina
Writing for the CourtDonald C. Coggins, Jr. United States District Judge
PartiesHumana Insurance Company, Plaintiff, v. Bi-Lo, LLC, Defendant.
Docket NumberC/A No. 4:18-cv-2151-DCC
Decision Date24 September 2019

Humana Insurance Company, Plaintiff,
Bi-Lo, LLC, Defendant.

C/A No. 4:18-cv-2151-DCC


September 24, 2019


This matter comes before the Court on Defendant's Motion to Dismiss. ECF No. 7. Plaintiff filed a Response in Opposition, and Defendant filed a Reply. ECF Nos. 12-13. Additionally, Plaintiff filed two Notices of Supplemental Authority, to which Defendant filed Replies. ECF Nos. 14, 15, 19, 20. Accordingly, the Motion is ripe for review.

I. Procedural and Factual History

Plaintiff Humana Insurance Company ("Humana") is a Medicare Advantage Organization ("MAO"). As an MAO, Humana is a "secondary payer," which means that workers' compensation, liability insurance, and no-fault insurance are the primary payer on any claim for medical benefits. "When an MAO makes a payment for medical services that are the responsibility of a primary plan . . . those payments are conditional, whether the primary plan's liability was established at the time of the conditional payment or not." ECF No. 1 at 6. "Optimally, when items and services are covered by both a primary plan and by Medicare benefits, the providers submit their charges to the primary payer, and Medicare avoids the expense of paying those charges." Id. "Alternatively, when Medicare makes a conditional payment for medical services that have a primary payer,

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regardless of the reason, Medicare may seek to recover those conditional payments." Id. at 6-7 (citations omitted).

This case arises out of a slip and fall accident at a store operated by Defendant. On August 29, 2013, a Humana enrollee ("Enrollee") fell at a Bi-Lo grocery store. At the time of the accident, Enrollee was eligible for Medicare and elected coverage through Humana. As a result of the fall, Humana has expended at least $25,449.88 in conditional payments for claims submitted on behalf of Enrollee. In May 2016, Defendant entered into a settlement with Enrollee, agreeing to pay Enrollee $80,000 in exchange for a release of all claims. In the summer of 2016, Defendant disbursed the settlement payment directly to Enrollee. According to Humana, "[a]lthough Enrollee was primarily responsible for reimbursing these [conditional payment] funds within 60 days of Defendant's payment, 42 C.F.R. § 411.24(h), the Defendant remained responsible to reimburse Humana under applicable federal regulations, e.g., 42 C.F.R. § 411.24(i)(1), and, by failing to make advance arrangements to see that this occurred, assumed the risk of being responsible to ensure that Humana was paid in the event Enrollee breached its obligations." ECF No. 1 at 9.

Enrollee did not comply with her obligation to repay Humana, leading Humana to send Defendant's counsel a demand letter for reimbursement of the conditional payments made on Enrollee's behalf. Defendant did not respond to Humana's letter. To date, Humana has not received any reimbursement for those conditional payments. Accordingly, Humana filed a Complaint against Defendant alleging two causes of action. First, Humana seeks a declaratory judgment as to Defendant's obligation to reimburse

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the conditional payments. Second, Humana seeks double damages1 pursuant to a private cause of action created by 42 U.S.C. § 1395y(b)(3)(A). In response to Plaintiff's Complaint, Defendant filed a Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) and 12(b)(7). ECF No. 7.

II. Legal Standard

A. Federal Rule of Civil Procedure 12(b)(6)

Rule 12(b)(6) of the Federal Rules of Civil Procedure permits the dismissal of an action if the complaint fails "to state a claim upon which relief can be granted." Such a motion tests the legal sufficiency of the complaint and "does not resolve contests surrounding the facts, the merits of the claim, or the applicability of defenses . . . . Our inquiry then is limited to whether the allegations constitute 'a short and plain statement of the claim showing that the pleader is entitled to relief.'" Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992) (internal quotation marks and citation omitted). In a Rule 12(b)(6) motion, the Court is obligated to "assume the truth of all facts alleged in the complaint and the existence of any fact that can be proved, consistent with the complaint's allegations." E. Shore Mkts., Inc. v. J.D. Assocs. Ltd. P'ship, 213 F.3d 175, 180 (4th Cir. 2000). However, while the Court must accept the facts in a light most favorable to the nonmoving party, it "need not accept as true unwarranted inferences, unreasonable conclusions, or arguments." Id.

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To survive a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), the complaint must state "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Although the requirement of plausibility does not impose a probability requirement at this stage, the complaint must show more than a "sheer possibility that a defendant has acted unlawfully." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A complaint has "facial plausibility" where the pleading "allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id.

B. Federal Rule of Civil Procedure 12(b)(7)

Federal Rule of Civil Procedure 12(b)(7) provides that courts may dismiss suits where a plaintiff fails to join a party under Rule 19. In order to determine whether an action should be dismissed on this basis, it is necessary to refer to Rule 19, which sets forth a two-step process for determining whether a party should be joined. "First, the district court must determine whether the party is 'necessary' to the action under Rule 19(a). If the court determines that the party is 'necessary,' it must then determine whether the party is 'indispensable' to the action under Rule 19(b)." Nat'l Union Fire Ins. Co. v. Rite Aid of South Carolina, Inc., 210 F.3d 246, 249 (4th Cir. 2000).

"Dismissal of a case is a drastic remedy, however, which should be employed only sparingly." Teamsters Local Union No. 171 v. Keal Driveaway Co., 173 F.3d 915, 918 (4th Cir. 1999). "When an action will affect the interests of a party not before the court the ultimate question is this: Were the case to proceed, could a decree be crafted in a way that protects the interests of the missing party and that still provides adequate relief to a successful litigant?" Id. (citation omitted). "Although framed by the multi-factor tests

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of Rule 19(a) & (b), 'a decision whether to dismiss must be made pragmatically, in the context of the substance of each case, rather than by procedural formula.'" Id. (quoting Provident Tradesmens Bank & Trust Co. v. Patterson, 390 U.S. 102, 119 n.16 (1968)). "A court must examine the facts of the particular controversy to determine the potential for prejudice to all parties, including those not before it." Id. (citation omitted).


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