State Court Orders Double Damages in Private Cause of Action Case
April 29, 2016
A disturbing decision was issued in February by a Michigan state court in Hull v. Home Depot (Case No. 15-148344-CZ, Oakland County Circuit Court) involving the Medicare Secondary Payer Act private cause of action. The claimant had initially filed a workers’ compensation claim in September 2011, which was denied by Home Depot. A hearing was held before the Michigan Workers’ Compensation Board of Magistrates and on May 5, 2015, the Magistrate issued an Order and Opinion finding that the claim was compensable and that Home Depot was responsible for paying related medical expenses. A copy of the Order and Opinion was mailed to the parties on June 1, 2015. Home Depot filed an appeal on June 26, 2015.
Since the claimant was a Medicare beneficiary and the claim had been denied, the claimant’s medical expenses had been paid by Medicare and the claimant’s Medicare Advantage Plan. It is not apparent from the facts presented in the case that Medicare and/or the Advantage Plan had asserted a demand for reimbursement. However, on August 3, 2015, the claimant filed a private cause of action in the Oakland County Circuit Court seeking double damages for medical expenses paid by Medicare and the Medicare Advantage Plan. On August 13, 2015, Home Depot sent a letter to the Appellate Commission withdrawing their appeal. On August 28, 2015, the Commission issued an order granting the withdrawal, and Home Depot received the order on September 3, 2015. On September 10, 2015 Home Depot issued payment to Medicare for $6,813.83 and to the Medicare Advantage Plan for $35,419.33.
The Oakland County Circuit Court denied Home Depot's motion for summary disposition and granted the claimant's counter-motion for summary disposition, ordering Home Depot to pay $42,233.16 (the amount previously paid to Medicare and the Advantage Plan), since the private cause of action provides for double damages. The judge wrote in the opinion: "Here, Home Depot refused to pay for Plaintiff's medical expenses for nearly five years, forcing Medicare to pay them. Only after the instant action was filed did Home Depot finally pay the amounts owed and argue 'no harm; no foul.' This course of conduct is not permitted in light of the clear intent and purpose of the MSP."
There are a number of problems with this decision. For one, courts have held in other cases that federal courts have exclusive jurisdiction over claims arising under the Medicare Act. Further, Home Depot was appealing the Magistrate’s Order and Opinion finding compensability at the time the private cause of action was filed. Additionally, it is not apparent that a demand was issued by Medicare or by the Medicare Advantage Plan. If such a demand had been issued, Home Depot would have the right to appeal it and go through an administrative appeals process to challenge the demand. "As the Supreme Court has recognized, Congress has insisted that matters arising under the Medicare Act be presented in the first instance to the agency." Wilson v. U.S., 405 F.3d 1002, 1016 (Fed. Cir. Ct. App. 2005) (citing Shalala v. Ill. Council on Long Term Care, Inc., 529 U.S. 1, 20 (2000); Heckler v. Ringer, 466 U.S. 602, 627 (1984)). The decision from the Oakland County Circuit Court, however, fails to recognize that an administrative process exists for determining the amount of conditional payment claims owed by a primary payer, which is not a state court matter. The decision also does not appropriately recognize that employers may deny workers’ compensation claims, which in some cases are later determined to be compensable. In cases when a claim is denied, in accordance with federal regulations it is appropriate for Medicare to issue a conditional payment claim, which is subject to reimbursement later if and when primary payment responsibility is demonstrated. Hopefully this decision is appealed and overturned.