Humana Med. Plan, Inc. v. W. Heritage Ins. Co.

• Decision Date: 08 August 2016
• Docket Number: No. 15-11436,15-11436
• Citation: 832 F.3d 1229
• Parties: Humana Medical Plan, Inc., Plaintiff–Appellee, v. Western Heritage Insurance Company, Defendant–Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

832 F.3d 1229

Humana Medical Plan, Inc., Plaintiff–Appellee,

v.Western Heritage Insurance Company, Defendant–Appellant.

No. 15-11436

United States Court of Appeals, Eleventh Circuit.

Filed: August 8, 2016

Michael P. Abate, Dinsmore & Shohl, LLP, Louisville, KY, Jeffrey T. Kuntz, Daniel Alter, GrayRobinson, PA, Fort Lauderdale, FL, Eileen Kuo, Thomas H. Lawrence, Lawrence & Russell, PLC, Memphis, TN, Caroline L. Schiff, Humana, Inc., Chicago, IL, for Plaintiff–Appellee.

Anthony John Russo, Lewis F. Collins, Jr., William Philip Schoel, Butler Weihmuller Katz Craig, LLP, Tampa, FL, Neil H. Selman, Selman Breitman, Los Angeles, CA, Jennifer J. Capabianco, Selman Breitman, LLP, San Francisco, CA, for Defendant–Appellant.

David Joseph Farber, King & Spalding, LLP, Washington, DC, for Amici Curiae The Marc Coalition, The Property Casualty Insurers Association of America.

Ryan Lee Woody, Matthiesen Wickert & Lehrer, SC, Hartford, WI, John David Kolb, Gibson & Sharps, PSC, Louisville, KY, for Amici Curiae The National Association of Subrogation Professionals, America's Health Insurance Plans.

Frank Carlos Quesada, MSP Law Firm, Miami, FL, for Amicus Curiae MSP Recovery, LLC.

Before WILLIAM PRYOR, BLACK and PARKER,^* Circuit Judges.

BLACK, Circuit Judge:

Defendant Western Heritage Insurance Co. (Western) appeals the district court's order granting summary judgment in favor of Plaintiff Humana Medical Plan, Inc. (Humana) on Humana's claims for double damages pursuant to the Medicare Secondary Payer Act (MSP) private cause of action, 42 U.S.C. § 1395y(b)(3)(A), and for a declaratory judgment regarding Western's obligation to reimburse Humana for Medicare benefits that Humana paid on behalf of its Medicare Advantage plan enrollee. This case requires the Court to decide as a matter of first impression in this circuit whether the MSP private cause of action permits a Medicare Advantage Organization (MAO) to sue a primary payer that refuses to reimburse the MAO for a secondary payment. The Third Circuit previously considered this issue and concluded that an MAO may sue a primary payer under the MSP private cause of action. In re Avandia Mktg., Sales Practices & Prods. Liab. Litig. , 685 F.3d 353, 367 (3d Cir. 2012). After review, we agree with the Third Circuit and affirm the order of the district court.

I. BACKGROUND

Humana operates as an MAO, providing Medicare Part C coverage (also known as a Medicare Advantage plan) to Medicare- eligible enrollees and receiving in return a per capita fee from the Centers for Medicare & Medicaid Services (CMS). In January 2009, Mary Reale, a Humana Medicare Advantage plan enrollee, was injured at Hamptons West Condominiums. Ms. Reale sought medical treatment for her injury, and her medical providers billed Humana. Humana paid $19,155.41.

In June 2009, Ms. Reale and her husband sued Hamptons West Condominium Association, Inc. (Hamptons West) in Florida state court for her injury. In March 2010, while the Reales' suit was pending and in light of a pending settlement between Hamptons West and the Reales, Humana issued to Ms. Reale an Organization Determination in the amount of $19,155.41. The basis for Humana's reimbursement request was the MSP, under which Medicare payments are secondary and reimbursable if any other insurer—even a tortfeasor's liability insurer—is liable. See 42 U.S.C. § 1395y(b)(2) ; see also id. § 1395w-22(a)(4). Although an administrative appeal process was available, no party appealed Humana's Organization Determination.

On April 20, 2010, in return for $115,000 from Hamptons West and its liability insurer, Western, the Reales released Hamptons West and Western. The Reales represented in the settlement agreement that there was no Medicare or other lien or right to subrogation. The Reales also agreed to indemnify Hamptons West and Western against any Medicare or other lien or right to subrogation.

On May 7, 2010, Humana sued the Reales and their attorney in the Southern District of Florida seeking reimbursement of the $19,155.41. On the defendants' motion, the district court dismissed Humana's complaint for lack of subject matter jurisdiction, holding that an MAO does not have a private cause of action to recover reimbursement from a beneficiary under the MSP. The district court later vacated its order after Humana moved the district court to correct or amend the order. The district court scheduled a hearing to consider Humana's motion. On the date of the hearing, Humana voluntarily dismissed its action against the Reales and their attorney.

Perhaps in response Humana's suit, Western and Hamptons West attempted to make Humana a payee on the settlement draft to the Reales. The Reales refused and on May 25, 2010 sought sanctions against Hamptons West for failing to comply with the settlement agreement. Thereafter, Hamptons West agreed to a stipulated order under which Humana would not be a payee on the check, but the Reales' attorney would hold $19,155.41 in trust pending resolution of the Reales' litigation. Hamptons West and Western tendered the $115,000.

On June 4, 2010, the Reales sued Humana in state court seeking a declaration as to the amount they owed Humana. Applying Florida law regarding collateral indemnity and subrogation, the trial court held that Humana was entitled to $3,685.03. See Humana Med. Plan, Inc. v. Reale , 180 So.3d 195, 199 (Fla. 3d DCA 2015). Humana appealed, and in December 2015, Florida's Third District Court of Appeal reversed for lack of jurisdiction. Id. at 197, 199. The court held that the Medicare Act creates an exclusive federal administrative process under which a Medicare Advantage plan enrollee appeals through CMS an MAO's denial of benefits or request for reimbursement. Id. at 204–05. Upon exhaustion of the administrative process, the Medicare Act provides for federal judicial review and expressly preempts state law. Id . Therefore, according to the court, Florida courts lack jurisdiction to adjudicate the dispute between Humana and Ms. Reale regarding her Medicare Advantage plan benefits. Id. at 209.

Having failed to secure reimbursement from Ms. Reale, in December 2011, Humana demanded that Western reimburse Humana's secondary payment. On January 11, 2011, Humana sued Western in the action upon which this appeal proceeds. Humana pled three counts: Count One sought double damages under the MSP private cause of action, 42 U.S.C. § 1395y(b)(3)(A) ; Count Two sought declaratory relief under the Medicare statutory and regulatory scheme; and Count Three sought damages under several state law theories including unjust enrichment and a contract implied by law. Western moved to dismiss, arguing among other things that the MSP does not permit an MAO to bring a private cause of action. In an endorsed order, the district court denied Western's motion in part, dismissing the state law claims but finding that Humana had adequately pled a question regarding whether the MSP private cause of action is available to an MAO.

On December 29, 2014, Humana moved for summary judgment. On March 16, 2015, the district court granted summary judgment in favor of Humana, finding that the MSP private cause of action is available to an MAO and that Humana is entitled to double damages, $38,310.82. Humana Med. Plan, Inc. v. W. Heritage Ins. Co. , 94 F.Supp.3d 1285 (S.D. Fla. 2015). The district court entered judgment in favor of Humana, and Western appealed.

II. STANDARD OF REVIEW

We review de novo a grant or denial of summary judgment, viewing all facts and reasonable inferences in the light most favorable to the nonmoving party. Bridge Capital Inv'rs, II v. Susquehanna Radio Corp. , 458 F.3d 1212, 1215 (11th Cir. 2006). “Summary judgment is appropriate only if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law.” Hallmark Developers, Inc. v. Fulton Cty., Ga. , 466 F.3d 1276, 1283 (11th Cir. 2006) ; see also Fed. R. Civ. P. 56(a).

III. DISCUSSION

Before considering whether the MSP private cause of action is available to an MAO on these facts and, if so, whether Humana was entitled to summary judgment, we first introduce the Medicare Act, the MSP, the Medicare Advantage program, and pertinent CMS regulations.

A. Statutory and Regulatory Background

Traditional Medicare consists of Parts A and B of the Medicare Act. These are the fee-for-service provisions entitling eligible persons to have CMS directly pay medical providers for their hospital and outpatient care. Part C is the Medicare Advantage program under which Medicare-eligible persons may elect to have an MAO (rather than CMS) provide Medicare benefits. Part D provides for prescription drug coverage, and Part E contains generally applicable definitions and exclusions. One such exclusion is the MSP.

1. The MSP

Frequently, more than one insurer is liable for an individual's medical costs. For example, a car accident victim may be entitled to recover medical expenses from both her health insurer and a tortfeasor's liability insurer. To address such situations, the MSP allocates liability between Medicare and other insurers, known as “primary plans.”¹

Before 1980, “Medicare paid for all medical treatment within its scope and left private insurers merely to pick up whatever expenses remained.” Bio – Med. Applications of Tenn., Inc. v. Cent. States Se. & Sw. Areas Health & Welfare Fund , 656 F.3d 277, 278 (6th Cir. 2011). In effect, when Medicare and a private insurer were both liable for the same expenses, Medicare satisfied or partially satisfied the private insurer's obligation. In 1980, in an effort to curb the rising costs of Medicare, Congress enacted the MSP, which “inverted that system; it made private insurers covering the same treatment the ‘primary’ payers and Medicare the ‘secondary’ payer.” Id. Medicare benefits became an entitlement of last resort, available only if no private insurer was liable.

The MSP, 42 U.S.C. § 1395y(b), is located in Part E of the Medicare...