Estate of McDonald v. Indemnity Insurance Co. of North America

107 F. Supp. 3d 764, 2015 U.S. Dist. LEXIS 154169
CourtDistrict Court, W.D. Kentucky
DecidedApril 8, 2015
DocketCIVIL ACTION NO. 3:12CV-577-CRS
StatusPublished

This text of 107 F. Supp. 3d 764 (Estate of McDonald v. Indemnity Insurance Co. of North America) is published on Counsel Stack Legal Research, covering District Court, W.D. Kentucky primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Estate of McDonald v. Indemnity Insurance Co. of North America, 107 F. Supp. 3d 764, 2015 U.S. Dist. LEXIS 154169 (W.D. Ky. 2015).

Opinion

MEMORANDUM OPINION AND ORDER

Charles R. Simpson III, Senior Judge, United States District Court

This matter is before the court on motion of the defendant, Indemnity Insurance Company of North America (“Indemnity”), to alter or amend the court’s August 28, 2014 Memorandum Opinion (DN 34) and Order and Judgment (DN 35), pursuant to Fed. R. Civ. P. 59.

For purposes of continuity, the court will recite the basic facts and procedural history of the action.1

Plaintiff Estate of Clinton McDonald (the “Estate”) brought this action pursuant to the “private cause of action” provision of the Medicare Secondary Payer Act (“MSPA”). 42 U.S.C. § 1395y(b)(3)(A). The court initially denied a motion by Indemnity to dismiss for failure to state a claim (DN 14) and a motion by the Estate for summary judgment (DN 16). In so doing, the court indicated that its reading of the case of Bio-Medical Applications of Tennessee, Inc. v. Central States Southeast and Southwest Areas Health and Welfare Fund, 656 F.3d 277 (6th Cir.2011) compelled the conclusion that the Estate could not maintain a cause of action against Indemnity under the MSPA. However, as neither party had directly addressed the various inconsistencies in the statute and Bio-Medical’s interpretation of the those provisions, the court declined to enter judgment in either party’s favor, and afforded the parties an opportunity to address the court’s analysis in light of the Bio-Medical case.

The parties then filed cross-motions for summary judgment. ( DNs 27; 28). After briefing was completed, the United States Court of Appeals for the Sixth Circuit decided Michigan Spine and Brain Surgeons, PLLC v. State Farm Mutual Automobile Insurance Company, 758 F.3d 787 (6th Cir.2014). The Estate filed a notice of the issuance of the Michigan Spine decision, noting that the case was directly on point supporting the Estate’s position that it had a viable cause of action. Indemnity did not comment on this new authority. For the reasons set forth in a second Memorandum Opinion (DN 34), the court concluded that Michigan Spine controlled in this case, and that the Estate was entitled to summary judgment against Indemnity for $184,514.24.00, a “double damage” award under § 1395y(b)(3)(A).2

I.

Clinton McDonald (“McDonald”) was employed by O’Reilly Auto Parts (“O’Reilly”). Indemnity was the workers’ compensation insurance carrier for O’Reilly. On May 10, 2007, McDonald was in a motor vehicle accident while acting within the course and scope of his duties as an employee of O’Reilly. McDonald suffered severe injuries as a result of the accident. On November 5, 2007, he passed away. At the time of the accident, McDonald was a Medicare recipient. Medicare paid in excess of $180,000.00 in medical costs on behalf of McDonald between the accident and his death.

O’Reilly disputed whether McDonald’s death was caused by the work-related acci[766]*766dent. On December 28, 2009, the Kentucky Workers’ Compensation Board found that McDonald’s death was caused by the accident. The Workers’ Compensation Board ordered O’Reilly or its workers’ compensation insurance carrier to pay for McDonald’s medical expenses. After the Estate moved to reconsider portions of the Workers’ Compensation Board Opinion and Order, the Workers’ Compensation Board issued a second Order, amending its decision, but not" as to its conclusion that O’Reilly or its workers’ compensation insurance carrier was required to pay McDonald’s medical expenses. (03/09/10 Order).

On September 13, 2012, the Estate filed suit against Indemnity alleging that Indemnity had not reimbursed Medicare for the conditional payments of McDonald’s medical costs. The Estate alleged that, under the private cause of action provision of the MSPA, it was entitled to recover double the sum of the conditional payments owed to Medicare which remained unpaid at the time of the filing of the action.

After the Estate filed its complaint, Indemnity received a Conditional' Payment Letter from the Medicare Secondary Payer Recovery Contractor (“Medicare”) that was dated September 18, 2012.3 That Conditional Payment Letter stated that Medicare had made $181,326.38 in conditional payments for McDonald’s healthcare. As is customary, the letter requested that Indemnity “refrain from sending any monies to Medicare prior to submission of settlement information and receipt of a demand/recovery calculation letter from [Medicare’s] office ...” On October 25, 2012, Medicare.issued Indemnity a “Final Demand Letter” asking that Indemnity pay $184,514.24. On December 11, 2012, Indemnity issued a check to Medicare for $184,514.24. A January 11, 2013 letter from Medicare acknowledged receipt of the check and stated that the amount due had been reduced to zero.

n.

A.

Medicare is a federal government health insurance program that provides benefits to individuals that are 65 years of age or older, disabled, or have end-stage renal disease. 42 U.S.C. § 1395c. Although Medicare was at one time the primary payer of health costs for eligible individuals, escalating health care costs led Congress to enact the MSPA. Stalley v. Methodist Healthcare, 517 F.3d 911, 915 (6th Cir.2008). The MSPA “designates certain private entities — such as a group health plan, a workers’ compensation plan, or an automobile or liability insurance ■ plan — as ‘primary payers’ that have the responsibility to pay for a personas medical. treatment.” Id. Medicare thus does not have to pay if payment for covered medical services has been or is reasonably expected to be made by a primary payer. See id.; 42 U.S.C. § 1395y(b)(2)(A). However, “[i]f the primary payer has not paid and will not promptly do so,” Medicare is empowered to “conditionally pay the cost of the treatment.” Stalley, 517 F.3d at 915; see 42 U.S.C. § 1395y(b)(2)(B)(i). Medicare may then seek reimbursement for any conditional medical payments from the primary payer. Stalley, 517 F.3d at 915; 42 U.S.C. § 1395y(b)(2)(B)(iii).

[767]*767In addition, “[t]he MSPA also creates a private right of action with double recovery to encourage private parties who are aware of non-payment by primary' plans to bring actions to enforce Medicare’s rights.” Stalley, 517 F.3d at 916 (quoting Glover v. Liggett Group, Inc., 459 F.3d 1304, 1307 (11th Cir.2006) (citing 42 U.S.C.

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107 F. Supp. 3d 764, 2015 U.S. Dist. LEXIS 154169, Counsel Stack Legal Research, https://law.counselstack.com/opinion/estate-of-mcdonald-v-indemnity-insurance-co-of-north-america-kywd-2015.