Kaiser Found. Health Plan, Inc. v. Brice

• Decision Date: 31 May 2022
• Docket Number: 82498-8-I
• Citation: 510 P.3d 1017
• Parties: KAISER FOUNDATION HEALTH PLAN, INC., d/b/a Kaiser Foundation Health Plan, f/k/a Group Health Cooperative, Respondent, v. Laura BRICE and John Doe Brice, and the marital community comprised thereof, Appellants.
• Court: Washington Court of Appeals

510 P.3d 1017

KAISER FOUNDATION HEALTH PLAN, INC., d/b/a Kaiser Foundation Health Plan, f/k/a Group Health Cooperative, Respondent,

v.Laura BRICE and John Doe Brice, and the marital community comprised thereof, Appellants.

No. 82498-8-I

Court of Appeals of Washington, Division 1.

FILED May 31, 2022

David Joseph Balint, Balint and Associates PLLC, 5950 6th Ave. S Ste. 200, Seattle, WA, 98108-3317, for Appellants.

Michael H. Church, Courtney Jewel Esq. Hagermann, Attorneys at Law, 720 W Boone Ave. Ste. 200, Spokane, WA, 99201-2560, for Respondent.

PUBLISHED OPINION

Smith, A.C.J.

¶1 Laura Brice suffered complications from a negligent tooth extraction that led to permanent disabilities. Her follow-up medical care was covered by Medicare as administered by Kaiser Foundation Health Plan, a Medicare Advantage Organization (MAO). Brice eventually settled with the dentist for $1,427,870, and Kaiser charged Brice $190,747.13 for reimbursement of the medical services it had covered. Brice disputed the amount of one of these items where Kaiser paid more than the hospital had billed. Kaiser brought a declaratory judgment action to enforce its reimbursement right, and the court granted summary judgment for Kaiser. Brice appealed, contending that Kaiser was only entitled to reimbursement for the amounts it had been billed and that the court was required to reduce Kaiser's reimbursement right to share the attorney fees and costs incurred in obtaining the settlement. Because Kaiser was entitled to reimbursement for the full costs it incurred where Brice's settlement covered these costs, and because attorney fee sharing is not required when an insurance company must file suit to obtain its reimbursement because the insured party opposes its recovery, we affirm.

FACTS

¶2 In July 2013, Laura Brice suffered complications from a tooth extraction that led to facial and neck disfigurement and permanent disabilities. Brice incurred extensive medical bills for follow-up care, which were covered by Kaiser.¹

¶3 In June 2016, Brice sued the dentists involved in the tooth extraction for medical negligence. The parties engaged in discovery, hiring experts and conducting depositions to determine liability. In October 2017, Brice's newly retained lawyer, David Balint, sent a letter to Kaiser informing it of the personal injury suit. In anticipation of settlement negotiations, he requested a ledger showing Kaiser's claimed reimbursement interests. Kaiser sent a log showing the medical expenses it had paid on Brice's behalf, coming to a total of $192,637.99. This included $113,387.18 that Kaiser had paid for Brice's stay at Virginia Mason Medical Center from November 3 to November 7, 2014, for which Virginia Mason had only charged $50,088.86. Balint responded, requesting that Kaiser reduce its reimbursement claim to represent the amount billed. Kaiser declined to do so, explaining that the payment was based on its contractual arrangement with Virginia Mason and based on Medicare rules and procedures.

¶4 On February 22, 2018, Brice settled with one of the dentists for $1,427,870. The settlement agreement provided that Brice would satisfy and be solely responsible for any of Kaiser's rights of subrogation from the proceeds of the settlement. On October 17, 2018, Balint informed Kaiser that the case had settled. The parties continued to dispute the value of Kaiser's reimbursement interest. In September 2019, Balint sent a trust check for $25,000 to Kaiser based on his valuation of what the disputed charge should have been.

¶5 On January 23, 2020, Kaiser sued for declaratory relief regarding its right to be reimbursed in the amount of the medical expenses it had paid. Brice answered with affirmative defenses and a counterclaim, asserting that Brice had fully satisfied Kaiser's interest and that Kaiser was violating the Washington Consumer Protection Act. The parties filed cross motions for summary judgment, and the court granted summary judgment to Kaiser, declaring that Kaiser had a right to be reimbursed in the amount of $165,747.13, the amount remaining after Brice's partial payment of $25,000 is subtracted from the full $190,747.13 that Kaiser paid.

¶6 Brice appeals.

BACKGROUND

¶7 Medicare is a "federal health insurance program primarily benefitting those 65 years of age and older." Parra v. PacifiCare of Arizona, Inc., 715 F.3d 1146, 1152 (9th Cir. 2013). Under the Medicare Act, Medicare insurance is "secondary to any ‘primary plan’ [that is] obligated to pay a Medicare recipient's medical expenses," including a third-party tortfeasor's liability insurance policy or plan.² Parra, 715 F.3d at 1152 (quoting 42 U.S.C. § 1395y(b)(2)(A) ). Medicare may pay for such expenses anyway if the primary plan "has not made or cannot reasonably be expected" to pay for the service "promptly," but this secondary payment is "conditioned on reimbursement." 42 U.S.C. § 1395y(b)(2)(B)(i). The responsibility to reimburse Medicare extends to both "a primary plan[ ] and an entity that receives payment from a primary plan." 42 U.S.C. § 1395y(b)(2)(B)(ii).

¶8 "In 1997, Congress enacted Medicare Part C, providing for Medicare Advantage plans." Parra, 715 F.3d at 1152. "Part C allows eligible participants to opt out of traditional Medicare and instead obtain various benefits through MAOs, which receive a fixed payment from the United States for each enrollee." Parra, 715 F.3d at 1152 ; 42 U.S.C. §§ 1395w-21, 1395w-23. Like Medicare, MAOs may seek reimbursement for secondary payments they make toward medical services for which a primary plan is responsible. 42 U.S.C. § 1395w-22(a)(4).

¶9 "All payments to providers of services must be based on the reasonable cost of services covered under Medicare and related to the care of beneficiaries." 42 C.F.R. § 413.9. The Medicare Act "explicitly delegates to the Secretary [of Health and Human Services] the authority to develop regulatory methods for the estimation of reasonable costs." Good Samaritan Hosp. v. Shalala, 508 U.S. 402, 418, 113 S. Ct. 2151, 124 L. Ed. 2d 368 (1993). To achieve this pricing scheme, the Centers for Medicare and Medicaid Services "establishes a classification of inpatient hospital discharges by Diagnosis-Related Groups" and assigns each an "appropriate weighting factor" to calculate appropriate costs. 42 C.F.R. § 412.60.

ANALYSIS

¶10 Brice contends that the court erred by granting summary judgment for Kaiser. Specifically, she contends that the court could not properly consider a declaration filed by Kaiser with its reply memorandum on summary judgment; that Kaiser's recovery should have been limited to the amount it was billed, rather than the full amount it paid; and that Kaiser's recovery should have been reduced by a proportionate amount of the attorney fees and costs Brice incurred to obtain the settlement funds. We address each issue in turn.

Standard of Review

¶11 "Summary judgment is appropriate where there is no genuine issue as to any material fact, so the moving party is entitled to judgment as a matter of law." Meyers v. Ferndale Sch. Dist., 197 Wash.2d 281, 287, 481 P.3d 1084 (2021). "We view the facts and reasonable inferences in the light most favorable to the nonmoving party." Meyers, 197 Wash.2d at 287, 481 P.3d 1084. "We review rulings on summary judgment and issues of statutory interpretation de novo." Am. Legion Post No. 149 v. Dep't of Health, 164 Wash.2d 570, 584, 192 P.3d 306 (2008). "Contract interpretation is a question of law for the court when it is unnecessary to rely on extrinsic evidence." Wash. State Major League Baseball Stadium Pub. Facilities Dist. v. Huber, Hunt & Nichols-Kiewit Const. Co., 176 Wash.2d 502, 517, 296 P.3d 821 (2013).

Reply Declaration of Pamela Henley

¶12 As a threshold issue, Brice contends that we should disregard the declaration of Pamela Henley filed with Kaiser's reply in support of summary judgment. Brice challenges this declaration on the grounds that Henley did not certify that it was based on her personal knowledge and that the declaration raised new issues that were not in strict rebuttal.³ We are not persuaded.

¶13 With respect to the personal knowledge issue, Brice is presumably relying on CR 56(e), which requires that "affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein." Henley's first declaration explicitly stated that it was made "based upon [her] own personal knowledge and [her] review of Kaiser's files and records,"⁴ and explained that as part of her duties she "monitor[ed] the medical expenses paid by Kaiser on behalf of Defendant Brice for medical services arising from [the tooth extraction,] evaluate[d] Kaiser's right to obtain reimbursement for those payments from the proceeds of settlement ..., and [sought] reimbursement for the medical expenses Kaiser paid on Defendant Brice's behalf." These statements demonstrate Henley's knowledge of and competence to testify about the information shared in her reply declaration, which include a redacted copy of a claim for Brice's medical care, a screenshot of the Medicare pricer tool used by Kaiser, and a copy of the completed priced claim for Brice's inpatient care. Brice cites no case indicating that a declarant must repeat statements about her personal knowledge in a follow-up declaration, and given that the civil rules must be "construed and administered to secure the just, speedy, and inexpensive determination of every action," we are not persuaded that this was required. CR 1.

¶14 Moreover, Brice is incorrect that Kaiser could not submit new evidence along with its summary judgment reply. Brice relies on cases indicating that a party cannot raise new issues on rebuttal, White v. Kent Med. Ctr., Inc., PS, 61 Wash. App. 163, 168, 810 P.2d 4 (1991), but Kaiser did not raise new issues. Instead, Kaiser provided additional evidence to support an...