North Carolina Lawyers Weekly
A plaintiff who was owed a medical-malpractice judgment that would partially be reimbursed to Medicare had standing to sue the judgment debtor for delayed payment. However, the 37 days between the judgment and payment did not constitute “delay.”
Background
In 1980, Congress enacted the Medicare Secondary Payer Act, making Medicare an entitlement of last resort, available only if no private party was liable. But Congress included a caveat: Where a private party responsible for medical costs does not or cannot promptly meet its obligations, Medicare may pay up front, so long as the responsible party eventually reimburses the government. Congress later added 42 U.S.C. § 1395y(b)(3)(A), providing “a private cause of action for damages (which shall be in an amount double the amount otherwise provided) in the case of a primary plan which fails to provide for primary payment (or appropriate reimbursement) ….”
In June 2011, Defendant Greater Baltimore Medical Center performed hip replacement surgery on Barbara Bromwell. Bromwell suffered complications resulting in partial paralysis and died two years later. Her daughter and personal representative, Kathy Netro, sued the Center in Maryland state court for medical malpractice. A jury found the Center liable for $451,956 in damages, including $157,730.75 in “conditional payments” made by Medicare for Bromwell’s treatment. Netro was obligated to pass along that portion of the state court judgment to Medicare.
Shortly after the verdict, the Center moved to reduce the initial judgment amount to more accurately reflect the medical expenses actually paid, rather than the amount billed, for Bromwell’s care. Meanwhile, the Center began making arrangements to pay Netro. The state court ultimately granted the Center’s motion, entering final judgment for $389,014.
Three weeks later, Netro sued the Center for allegedly refusing to pay the state court judgment, invoking the Act’s private cause of action. Sixteen days after Netro filed the federal suit, the Center paid her $403,722, which represented the amended final judgment amount plus post-judgment interest. The Center then moved to dismiss or, in the alternative, for a grant of summary judgment because it did not “fail” to provide reimbursement for Medicare. The district court granted the Center’s motion for summary judgment on the merits. This appeal followed.
Standing
Netro’s monetary liability is an injury-in-fact that gives her standing to sue. Under the Act, the Center became responsible for the costs of Bromwell’s medical care when the state court found it liable for medical malpractice. Under the state court judgment, the money owed to Bromwell’s estate included the funds ultimately due to Medicare.
That Netro was legally obligated to pass along the money to Medicare cannot erase the fact that the Center owed it to her. Imagine more mundane litigation: If Plaintiff Pam borrows something from Lender Lisa, and Defendant Dan steals it, Pam obviously has standing to recover from Dan. Her injury is not erased by the fact that the recovery will ultimately end up in Lisa’s hands.
The same logic applies here. Medicare paid for treatment that Bromwell received. It later became apparent that the Center was responsible for those payments, and a state court ordered it to pay Netro. Her independent legal obligation to pass along those funds to Medicare does not defeat her standing.
The Center objects that it did pay Netro, satisfying her claim and leaving her uninjured. But at the time the complaint was filed, the Center had not yet paid Netro and her injury was intact. The Center’s prompt payment did not moot the case. The Act authorizes double recovery. To hold that any defendant can moot an enforcement action by writing a check as soon as a complaint is filed would dismantle the statute. No plaintiff would have any incentive to bring suit in the first place, and the government’s ability to recoup conditional payments would be hobbled. Netro was injured when the Center was obligated under law to pay for her medical care, but didn’t.
Further, the government’s recoupment interest, assigned to a Medicare beneficiary by the Act, is a derivative injury that also supports Netro’s standing. Just as in Vt. Agency of Nat. Res. v. U.S. ex rel. Stevens, 529 U.S. 765 (2000), the government’s injury in this case is beyond doubt: The Center owed Medicare $157,731. Also as in Stevens, the plaintiff has a concrete private interest in the outcome of the suit — the amount Netro would receive if she prevailed.
When combined with Congress’s intent to authorize Medicare beneficiaries to collect funds paid by Medicare on their behalf, it is clear that the Act can reasonably be regarded as effecting a partial assignment of the Government’s damages claim.
Other reasons also support standing here. Netro represents a Medicare beneficiary. She is the person closest to the event that made the Center responsible for reimbursing Medicare. In order to control costs, Medicare incentivized individuals to help the agency recover funds. In such cases, Medicare will often not even know that it could recover money. Netro and similar plaintiffs are therefore in a better position to recover on behalf of Medicare than the government itself.
This holding is narrow one. Not just anyone can wander in off the street and avail themselves of the Act’s private cause of action. But if this court held that Netro, as the representative of a Medicare beneficiary, lacked standing under these circumstances, it is not clear that any party besides the government could bring suit under the Act. That would essentially render Congress’s express provision of the private cause of action null and void. It could also throw into serious question any non-qui-tam private cost recoupment action authorized by Congress across the board.
No failure to pay
The Center became responsible for conditional payments on the day the state court issued its final judgment. The 37 days between the judgment and Netro’s receipt of funds hardly constitutes a failure to pay under the Act. There cannot be a failure to pay when there has been payment.
The court declines Netro’s invitation to transform the statute to read “unreasonable delay.” Even if the clock started in July, with the state court’s prior judgment, it is not apparent that the Center violated the Act. The Center ultimately paid Netro, who was then obligated to pay Medicare. And much of the delay she complains about was due to the state court’s consideration of the appropriate judgment amount, not any evasion by the Center. To the contrary, the Center showed its intention to pay by asking for information it thought necessary to transfer funds to Bromwell’s estate. This is hardly the kind of recalcitrance Congress had in mind when it created a private action for double damages.
The court also declines to adopt Netro’s proposed rule that would leave any primary plan vulnerable to suit exactly 60 days after becoming responsible for reimbursing Medicare. The statutory text does not support any specific deadline. In any event, counting from the proper date of final judgment, the Center’s payment was well within this proposed deadline.
Affirmed.
Dissent
(Traxler, J.) Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016), held that even when a statute purports to give a plaintiff the right to sue for damages, the plaintiff must demonstrate that it was actually harmed by the conduct it challenges in order to establish Article III standing to sue on its own behalf. Because the Estate’s complaint does not allege it was harmed by the Center’s failure to pay for Bromwell’s medical care or to reimburse the government for its payment, Spokeo plainly requires a holding that the Estate has not established standing to sue. I believe the majority errs in holding to the contrary.
I also believe there is error in the alternative holding that the Estate actually was not required to establish standing in its own right because Congress effected a partial assignment of the government’s right of action to Medicare beneficiaries when it created a private right of action in the Act. Congress did not intend to partially assign its Medicare damages claim to private plaintiffs, and private plaintiffs must therefore establish standing on their own behalf in order to bring private actions under the Act.
I would vacate the judgment and remand for dismissal for lack of standing.
Netro v. Greater Baltimore Bed. Ctr. Inc. (Lawyers Weekly No. 001-096-18, 26 pp.) (Wilkinson, J.) No. 17-1597; June 4, 2018; from DMD at Baltimore (Russell, J.) George Somerville Tolley III for Appellant; Christina Nicole Billiet for Appellee. 4th Cir.
