Spectrum Health Continuing v. Anna Marie Bowling
| Decision Date | 20 February 2004 |
| Docket Number | No. 1:03-CV-383.,1:03-CV-383. |
| Citation | 336 F.Supp.2d 697 |
| Parties | SPECTRUM HEALTH CONTINUING CARE GROUP, Plaintiff, v. ANNA MARIE BOWLING IRREVOCABLE TRUST, Defendant. |
| Court | U.S. District Court — Western District of Michigan |
Wayne J. Miller, Sputhfield, MI, for Plaintiff.
Michael C. Gibbons, for Defendant.
This action involves a dispute over the enforceability of a lien on the proceeds of a settlement agreement. Anna Marie Bowling ("Bowling") was injured by a physician's malpractice. While her malpractice lawsuit was pending, Bowling was admitted to a care facility operated by Plaintiff, Spectrum Health Continuing Care Group ("Spectrum"), after Bowling's attorney agreed to grant Spectrum a lien on the proceeds of the malpractice settlement or verdict to cover the costs of her care. Defendant, the Anna Marie Bowling Irrevocable Trust (the "Trust"),1 as Bowling's representative, maintains that when Spectrum chose to accept Medicaid payments as compensation for Bowling's care, the lien became unenforceable under federal and state Medicaid law. Both Spectrum and the Trust have filed declaratory judgment actions seeking a court determination of the whether the lien is enforceable. Now before the Court are Spectrum's Motion for Summary Judgment, in which it argues that litigation of the lien's enforceability is foreclosed by the doctrine of issue preclusion, and the Trust's Motion for Summary Judgment, in which it contends that the lien must not be enforced because payment would constitute unlawful "balance billing." In addition, Spectrum has requested that summary judgment be entered for it on the grounds that the lien does not violate the "balance billing" prohibition.2
For the reasons stated below, the Court will deny Spectrum's motion on the issue preclusion question, deny the Trust's motion on the "balance billing" question, and grant summary judgment in favor of Spectrum because the lien is valid and enforceable.
The parties agree that the material facts in this case are not disputed. The sequence of events leading up to this matter began on November 17, 1997, when Anna Marie Bowling suffered a severe anoxic brain injury due to the improper administration of anesthesia during surgery at a New York hospital. As a result of her physical and cognitive impairment, Bowling requires maximum use of a wheelchair, has little or no control of her limbs, and is unable to speak. She requires twenty-four hour assistance with all of her daily activities. Bowling filed a medical malpractice lawsuit in the State of New York through her attorney, Joseph Dubinsky, with Linda Ershow-Levenberg acting as guardian ad litem to represent Bowling in the malpractice action.
Because her sister lives in Michigan, Bowling sought long-term treatment in Grand Rapids. Spectrum Health Continuing Care Group ("Spectrum") is the parent company of a group of providers of sub-acute rehabilitation and nursing services, including Spectrum Health Continuing Care Center ("SHCCC"), formerly known as Grand Valley Health Center ("GVHC"). Spectrum agreed to admit Bowling to GVHC conditioned upon written acknowledgment of a lien in Spectrum's favor on any settlement or verdict proceeds for the cost of services provided to Bowling. On November 24, 1998, Dubinsky wrote and signed a letter to Robin White, Spectrum's CFO, confirming the lien. Ershow-Levenberg also acknowledged the lien by affixing her signature to the letter on November 30, 1998. (Id.) Subsequent correspondence to and from Dubinsky further affirmed the lien. (Id. Exs. C-I.) Indeed, the Trust concedes that "[t]here is no dispute as to whether there was a valid lien at the time it was granted." (Def.'s Reply Br. at 8.)
Bowling was admitted to GVHC in December 1998, where she resided until September 23, 2002. She became eligible for Medicaid benefits in April of 1999. In anticipation of delay in realizing the lien on proceeds from the medical malpractice action, Spectrum decide to begin billing Medicaid for Bowling's care. GVHC received a total of $101.021.86 from Medicaid for payment of services provided to Bowling from May 1999 to September 2002. Spectrum also received monthly Medicaid co-payments from Bowling's representatives totaling $45,233.87. The total customary cost of services Spectrum rendered to Bowling during her time at GVHC totaled $639,594.67.
The parties in Bowling's medical malpractice action reached a settlement agreement on June 18, 2002. On July 18, 2002, the Probate Court of Kent County, Michigan, entered a protective order approving the settlement agreement and creating an irrevocable special needs trust (the "Trust") for Bowling's benefit. (Pl.'s Br. Supp. Mot. Summ. J. Ex. B.) The protective order recognized that the settlement agreement "provides for payment of all liens associated with [Bowling's] medical care" and therefore ordered "satisfaction of the existing liens." (Id. at 2.) On October 9, 2002, the Supreme Court of the State of New York, County of New York, entered a settlement order in the medical malpractice action ordering, among other things, "[p]ayment of Anna Bowling's outstanding healthcare liens." More specifically the settlement order included a line item requiring payment of $575,000 to Spectrum's Grand Valley Health Center of Spectrum's lien for the balance of Bowling's care costs not covered by Medicaid. (Id. at 6.) To discharge the obligation to Spectrum under the settlement order, Bowling's attorney, Dubinsky, sent Spectrum a check for $575,000 on February 24, 2003. Spectrum later refunded $36,427.19 to the Trust, leaving a balance of $538,572.81. Also pursuant to the settlement agreement, Dubinsky satisfied the Michigan Medicaid agency's lien by sending it $104,719.68 in reimbursement of Medicaid's payments to Spectrum.
Co-trustees of the Trust later objected to the payment of any funds to Spectrum, claiming that Spectrum is prohibited from receiving the funds under federal Medicaid law and regulations under Title XIX of the Social Security Act. Pursuant to the agreement of the parties in this matter, the disputed balance of the settlement proceeds, $538,572.81, is currently being held in an interest-bearing trust account until the matter now before the Court is resolved.
On May 5, 2003, Plaintiff Spectrum filed a declaratory judgment action against the Trust in the Circuit Court of Kent County, Michigan, seeking a declaration of its right to payment under the lien.3 The Trust removed the action to this Court, which exercises subject matter jurisdiction pursuant to 28 U.S.C. § 1331, in that the action arises under federal Medicaid law, Title XIX of the Social Security Act, 42 U.S.C. § 1396 et seq. On June 17, 2003, the Trust filed a counterclaim against Spectrum, alleging that Medicaid law renders the lien on the settlement proceeds invalid and unenforceable and seeking a declaratory judgment directing the $538,572.81 currently in escrow to be paid to the Trust. The parties later filed the instant cross-motions for summary judgment on their respective declaratory judgment actions. The Trust's summary judgment motion contends that Spectrum's lien must not be enforced because to do so would comprise unlawful "balance billing." Spectrum's summary judgment motion argues that the state court orders approving the medical malpractice settlement agreement are binding judgments in favor of enforcing the lien, precluding further litigation of the issue.
Summary judgment is appropriate if there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56. Material facts are facts which are defined by substantive law and are necessary to apply the law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). A dispute is genuine if a reasonable jury could return judgment for the non-moving party. Id.
A motion for summary judgment is properly supported if the moving party shows that there is no evidence to support the non-moving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 324-25, 106 S.Ct. 2548, 2553-54, 91 L.Ed.2d 265 (1986). If the moving party makes its showing, the non-moving party must demonstrate with "concrete evidence" that there is a genuine issue of material fact for trial. Id.; Frank v. D'Ambrosi, 4 F.3d 1378, 1384 (6th Cir.1993). The court must draw all inferences in a light most favorable to the non-moving party when evaluating a summary judgment motion. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 578-88 106 S.Ct. 1348, 1352-58, 89 L.Ed.2d 538 (1986). It may, however, grant summary judgment when "the record taken as a whole could not lead a rational trier of fact to find for the non-moving party." Agristor Fin. Corp. v. Van Sickle, 967 F.2d 233, 236 (6th Cir.1992) (quoting Matsushita Elec. Indus. Co., 475 U.S. at 587, 106 S.Ct. at 1356).
The parties' respective summary judgment motions set forth two different issues for the Court to decide. First, the Court addresses Spectrum's Motion for Summary Judgment, concluding that the doctrine of issue preclusion does not bar the Trust's claims in its declaratory judgment action. Second, the Court addresses the Trust's Motion for Summary Judgment, concluding that payment of the lien amount would not constitute "balance billing."
Spectrum's Motion for Summary Judgment asserts that the Trust is barred by the doctrine of issue preclusion from seeking a declaration that Spectrum's lien is unenforceable. Two state courts, in New York and Michigan, have already issued orders approving the settlement, which called for payment of a portion of the proceeds to Spectrum pursuant to...
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Greenbaum v. Clarksville Health Sys., G.P.
...note, Defendants rely heavily on what they describe as a "nearly identical" case in Spectrum Health Continuing Care Grp. v. Anna Marie Bowling Irrevocable Tr., 336 F. Supp. 2d 697 (W.D. Mich. 2004). (Doc. No. 1 at 2; Doc. No. 23 at 7-9). In Spectrum, the Western District of Michigan exercis......