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Michigan Appeals Court Remands Case for Further Consideration of Defendant’s Alleged Failure to Pay

In this case, Defendant, a no-fault insurance carrier, sought dismissal of the trial court’s order to reimburse the Plaintiff, a medical treatment center, double damages under the private cause of action (PCOA) provision of the Medicare Secondary Payer Act (MSPA). The underlying case involved Defendant’s insured, who was injured while stepping out of her car on the way to receive medical treatment related to a prior surgery. When the insured arrived at the Plaintiff’s facility, she was treated for both the recent incident and the infection from her prior surgery. At the time of her injury, the insured had a no-fault policy that was issued by the Defendant. She was also enrolled in a Medicare Advantage Plan through Blue Cross BlueShield of Michigan (BCBSM). It was determined that part of her medical care was due to be paid by BCBSM and part was due to be paid by Defendant.

Though Plaintiff’s billing for the insured’s medical care is not disputed, the process is somewhat convoluted, given that both BCBSM and Defendant were responsible for charges related to two separate, but overlapping, incidents. In short, the billing process began in April of 2016 and the “final” bill was sent on August of 2016, where Plaintiff determined that Defendant was responsible for $53,464.35 of the insured’s care. Defendant then issued an Explanation of Review on November 11, 2016 indicating that all of the charges were compensable under Michigan’s no-fault act, with the exception of $240.80. Defendant issued payment to Plaintiff on January 3, 2017 for $53,223.55 (the amount billed to Defendant minus the $240.80 that Defendant contested). In that time, Plaintiff had initiated the current lawsuit by filing the complaint on November 18,2016 and serving the compliant upon Defendant on January 6, 2017, three days after Defendant had issued payment. In addition to a breach of contract allegation, Plaintiff alleged that Defendant had failed, under the MSPA, to provide primary payment causing Medicare to make conditional payments to Plaintiff on behalf of the insured and thereby entitling Plaintiff to recover double damages from Defendant under the MSPA.

After a review of the MSPA and relevant case law, the Court recounts the findings of the trial court following Plaintiff’s allegations and both parties request for summary disposition. The trial court found that there was no issue of material fact regarding whether Defendant is a primary plan under the MSPA. The trial court did, however, determine that there was an issue of material fact regarding whether Defendant failed to provide primary payment or appropriate reimbursement within the MSPA, which creates an issue regarding whether Plaintiff was entitled to double damages. After additional proceedings, the trial court subsequently granted Plaintiff’s motion and determined that the Plaintiff was, in fact, entitled to double damages. The trial court did not, however, specifically address and determine whether Defendant “failed to provide primary payment or appropriate reimbursement within the meaning of the MSPA.”

Citing Humana Med Plan, Inc v Western Heritage Ins Co., the Court advised that “[a] plaintiff is entitled to summary disposition based upon a private cause of action under the MSPA ‘when there is no genuine issue of material fact regarding (1) the defendant’s status as a primary plan; (2) the defendant’s failure to provide for primary payment or appropriate reimbursement; and (3) the damages amount.” The Court determined that, though the trial court addressed Defendant’s status as a primary plan and determined the amount due, the trial did not find that Defendant failed to provide primary payment to Plaintiff or appropriate reimbursement to BCBSM. The Court also found that the trial court did not evaluate whether Defendant actually owed the amount it allegedly failed to pay to BCBSM, advising that “simply being a primary plan did not conclusively establish that defendant was responsible for reimbursement of all payments made by Medicare; rather defendant is only responsible to reimburse BCBSM for amounts arising from its obligations under its no-fault policy.”

The Court then addressed the timing of Defendant’s payment to Plaintiff, as Plaintiff contends that, although they were paid by Defendant, the payment was only issued as a result of Plaintiff filing this lawsuit. The Court disagreed with Plaintiff’s assertion, pointing out that Defendant did not deny liability for the claim, but, rather, indicated that it had approved payment for all but $240.80. The Court noted that Plaintiff filed suit a week later seeking double damages on the basis of nonpayment.

In their evaluation, the Court noted that the MSPA “provides for recovery of double damages when a primary payer fails to pay or reimburse, but does not provide for double damages for tardy payment” and concluded that the trial court erred in not addressing whether Defendant failed to provide a primary payment or appropriate reimbursement under the MSPA. The Court vacated the trial court’s order and directed the trial court directly address whether Defendant failed to provide a payment under the MSPA, as “double damages could not be imposed without such a determination."


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