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Renal Care Group Indiana, LLC v. City of Fort Wayne

United States District Court, N.D. Indiana, Fort Wayne Division

May 29, 2019




         This matter comes before the Court on competing cross-motions for summary judgment. Plaintiff filed its Motion for Summary Judgment on Counts III and IV (ECF No. 61) with Memorandum of Law in Support (ECF No. 62) on August 23, 2018. Defendant filed its Motion for Summary Judgment (ECF No. 76) and its Memorandum of Law in Opposition to Plaintiff Renal Care Group Indiana, LLC's Motion for Summary Judgment and in Support of Defendant City of Fort Wayne's Cross-Motion for Summary Judgment (ECF No. 77) on October 22, 2018. Plaintiff filed its Consolidated Reply in Support of its Motion for Summary Judgment on Counts III and IV, and Opposition to Defendant's Cross-Motion for Summary Judgment (ECF No. 86) on November 19, 2018. Defendant filed its Reply in Support of its Cross-Motion for Summary Judgment (ECF No. 89) on December 3, 2018.[1]

         The issue before the Court is whether Defendant, having improperly terminated the Patient[2]from its group health plan upon his eligibility for Medicare, is responsible to Plaintiff for breach of contract and statutory damages under the Medicare Secondary Payer Act (“MSPA”), 42 U.S.C. § 1395y(b). For the reasons set forth below, the Court concludes that Plaintiff cannot recover under the MSPA because Plaintiff has failed to demonstrate Defendant's obligation to make the contested payments. Accordingly, Defendant is entitled to summary judgment on Count IV. In addition, the Court concludes that Plaintiff has failed to establish the existence of a contract between itself and Defendant. As a result, Defendant is also entitled to summary judgment on Count III.


         Defendant operates the City of Fort Wayne Employee Benefits Plan[3] (the “Plan”), which provides health benefits to eligible employees and retirees. Like many such plans, the act of providing health benefits is achieved only through a complex system of contractual relationships between and among various parties. In this case, that system looks like the following:

• A Summary Plan Description, which is issued by Defendant to eligible participants and sets forth the rights and obligations of participants in the Plan;
• A Third-Party Administrative Services Agreement between Defendant and Automated Group Administration, Inc. (“AGA”), which names AGA as the third-party administrator for the Plan and sets forth, among other things, the terms on which health care provider charges will be paid;
• A Third-Party Administrator Agreement between AGA and Parkview Signature Care Network (the “Network”), which sets forth, among other things, the rates that will be paid for charges from health care providers that are “in-network” for the Network; and
• A Letter of Agreement between Plaintiff and the Network, which designates Plaintiff as “in-network” and sets Plaintiffs agreed compensation for “in-network” patients.

         One participant in the Plan, the Patient, received treatment at Plaintiff's dialysis facility in Fort Wayne. The Plan provided health care coverage for the Patient from March 11, 2014, through May 31, 2014. During that time period, Defendant paid Plaintiff directly for the dialysis services that the Patient received from Plaintiff at an agreed upon rate set by the Letter of Agreement. On June 1, 2014, the Patient became entitled to Medicare coverage based on the Patient's end-stage renal disease (“ESRD”) diagnosis. Because the Patient was newly eligible for Medicare, Defendant terminated the Patient's coverage under the Plan beginning on June 1, 2014. Defendant admits that it “took into account the Patient's eligibility for and entitlement to Medicare and terminated coverage for the Patient so that he would no longer be covered by the Plan beginning June 1, 2014.” (ECF No. 6 at 8, ¶27).

         After the Patient's coverage was terminated, he continued to receive dialysis treatment at Plaintiff's facility until his death in December 2017. Plaintiff submitted a claim to the Plan for dialysis services rendered on June 3, 2014, and June 5, 2014. AGA denied that claim on June 27, 2014.[4] No. additional claims for dialysis treatment were submitted to the Plan until May 31, 2018, when Plaintiff submitted twenty-three claims for services provided to the Patient from June 2014 to November 2016. AGA denied those claims on June 15, 2018. With Defendant refusing to pay for the post-June 1, 2014, services, Plaintiff submitted bills to Medicare totaling $2, 226, 582.83. It is not clear whether this amount was reflected in the bills submitted to AGA, or whether there were additional, unsubmitted bills reflected in this amount. Medicare paid each of the bills and did not deny any of the claims.


         Plaintiff filed its Complaint (ECF No. 1) on February 23, 2017. In its Complaint, Plaintiff stated four causes of action arising out of Defendant's termination of the Patient from the Plan and Defendant's subsequent denial of Plaintiff's claims for services: (1) Declaratory Relief Pursuant to the Declaratory Judgment Act, 28 U.S.C. §§ 2201, et seq.; (2) Declaratory Relief Pursuant to the Indiana Uniform Declaratory Judgment Act, Ind. Code §§ 34-14-1-1, et seq.; (3) Breach of Contract; and (4) Violation of the Medicare Secondary Payer Act, 42 U.S.C. §§ 1395y, et seq. Defendant filed its Answer and Affirmative Defenses (ECF No. 6) on April 3, 2017.

         On May 24, 2017, Plaintiff filed its Motion for Judgment on the Pleadings as to Count I (ECF No. 24) with supporting Memorandum of Law (ECF No. 25). Plaintiff argued, generally, that the admissions in Defendant's Answer established that it had terminated the Patient from the Plan because of his ESRD-based Medicare coverage, in violation of 42 U.S.C. § 1395y(b)(1)(C)(i).

         This Court granted Plaintiff's Motion for Judgment on the Pleadings on November 2, 2017 (ECF No. 28).[5] This Court found, in relevant part:

The Defendant has admitted that it runs a group health plan, that the Patient participated in the Defendant's group health plan, and that the Patient received health care coverage through the plan from March 11, 2014, through May 31, 2014. (Answer ¶ 2, 9.) The Defendant further acknowledged that from March 11, 2014, through May 31, 2014, the Plaintiff provided dialysis treatment to the Patient and submitted claims to the Defendant for payment, which the Defendant paid at a rate set by an insurance network. (Answer ¶¶ 23, 24.) Finally, the Defendant admitted that on June 1, 2014, the Patient became eligible for Medicare because of ESRD and that the Defendant terminated the Patient's coverage under the Plan because the Patient became Medicare-eligible on that date. (Answer ¶¶ 25-27.)
The MSP Act and its accompanying regulations plainly prohibit a group health plan from terminating coverage when a member becomes Medicare-eligible based on an ESRD diagnosis. 42 U.S.C. § 1395y[(b)(1)](C)(i) (“[a] group health plan . . . may not take into account that an individual is entitled to or eligible for benefits under [the end stage renal disease program.]”); 42 C.F.R. § 411.161(a)(1) (“A [group health plan] may not take into account that an individual is eligible for or entitled to Medicare benefits on the basis of ESRD during the coordination period . . . .”); 42 C.F.R. § 411.108(a)(3) (“Actions by [group health plans] that constitute taking into account that an individual is entitled to Medicare on the basis of ESRD . . . include . . . [t]erminating coverage because the individual has become entitled to Medicare . . . .”).
* * *
Under the MSP Act, a group health plan cannot terminate an individual's coverage during the 30-month coordination period that begins when an individual first becomes Medicare-eligible based on ESRD. . . . Therefore, the Defendant stands in violation of the applicable law.

(ECF No. 28 at 5-6, 7).



         Summary judgment is warranted when “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The non-moving party must marshal and present the Court with evidence on which a reasonable jury could rely to find in their favor. Goodman v. Nat'l Sec. Agency, Inc., 621 F.3d 651, 654 (7th Cir. 2010). A court must deny a motion for summary judgment when the nonmoving party presents admissible evidence that creates a genuine issue of material fact. Luster v. Ill. Dep't of Corrs., 652 F.3d 726, 731 (7th Cir. 2011) (citations omitted). A court's role in deciding a motion for summary judgment “is not to sift through the evidence, pondering the nuances and inconsistencies, and decide whom to believe. The court has one task and one task only: to decide, based on the evidence of record, whether there is any material dispute of fact that requires a trial.” Waldridge v. Am. Heochst Corp., 24 F.3d 918, 920 (7th Cir. 1994).

         Facts that are outcome determinative under the applicable law are material for summary judgment purposes. Smith ex rel. Smith v. Severn, 129 F.3d 419, 427 (7th Cir. 1997). Although a bare contention that an issue of material fact exists is insufficient to create a factual dispute, a court must construe all facts in a light most favorable to the nonmoving party, view all reasonable inferences in that party's favor, Bellaver v. Quanex Corp., 200 F.3d 485, 491-92 (7th Cir. 2000), and avoid “the temptation to decide which party's version of the facts is more likely true, ” Payne v. Pauley, 337 F.3d 767, 770 (7th Cir. 2003). Additionally, a court is not “obliged to research and construct legal arguments for parties, especially when they are represented by counsel.” Nelson v. Napolitano, 657 F.3d 586, 590 (7th Cir. 2011).

         The fact that the parties have filed cross-motions for summary judgment does not alter the standard. When evaluating each side's motion, the court simply “construe[s] all inferences in favor of the party against whom the motion under consideration is made.” Metro. Life Ins. Co. v. Johnson, 297 F.3d 558, 561-62 (7th Cir. 2002) (quoting Hendricks-Robinson v. Excel Corp., 154 F.3d 685, 692 (7th Cir. 1998)).

         B. THE MSPA

         With its determination that Defendant terminated the Patient's benefits under the Plan in violation of the MSPA in hand, Plaintiff asks this Court for summary judgment on Count IV of its Complaint seeking money damages under the MSPA. Defendant also seeks summary judgment on Count IV arguing that, while its termination of the Patient from the Plan may have been unlawful, it nonetheless is not liable to Plaintiff for damages. This Court agrees with Defendant.

         To ensure reimbursement when Medicare makes conditional payments on behalf of a group health plan, the MSPA authorizes the United States to sue a delinquent primary payer for double damages. 42 U.S.C. § 1395y(b)(2)(B)(iii); see also United States v. Baxter Int'l, Inc., 345 F.3d 866, 875 (11th Cir. 2003) (“Medicare is empowered to recoup from the rightful primary payer (or from the recipient of such payment) if Medicare pays for a service that was, or should have been, covered by the primary insurer.”). The MSPA also establishes “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) . . . .” 42 U.S.C. § 1395y(b)(3)(A). In the event a private party bringing an action for damages under the MSPA is successful, the “United States shall be subrogated (to the extent of payment made under this subchapter for such an item or service) to any right under this subsection of an individual or any other entity to payment with respect to such item or service under a primary plan.” 42 U.S.C. § 1395y(b)(2)(B)(iv); Frazer v. CNA Ins. Co., 374 F.Supp.2d 1067, 1077 (N.D. Ala. 2005) (“The statute provides that a private litigant who recovers a reimbursement for claims paid by Medicare and which have been denied by an insured defendant is required to turn over the amounts of such claim to the government.”). The statute provides for double damages in order to allow Medicare to recoup any conditional payments, and to offer a reward to the private litigant bringing the action. Frazer, 374 F.Supp.2d at 1080: accord Stalley v. Catholic Health Initiatives, 509 F.3d 517, 525 (8th Cir. 2007) (“[W]ith the private right of action and the double damages, the beneficiary can pay back the government for its outlay and still have money left over to reward him for his efforts.”).

         The obligation to reimburse Medicare is triggered upon “demonstration” that the primary plan is responsible for those payments, as follows:

A primary plan, and an entity that receives payment from a primary plan, shall reimburse the appropriate Trust Fund for any payment made by the Secretary . . . if it is demonstrated that such primary plan has or had a responsibility to make payment with respect to such item or service.

42 U.S.C. § 1395y(b)(2)(B)(ii). The MSPA describes how that responsibility may be demonstrated:

A primary plan's responsibility for such payment may be demonstrated by a judgment, a payment conditioned upon the recipient's compromise, waiver, or release (whether or not there is an admission of liability) of payment for items or services included in a claim against ...

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