Bio-Medical Applications of Tennessee, Inc. v. Central States Southeast & Southwest Areas Health & Welfare Fund
656 F.3d 277
6th Cir.2011Background
- Bio-Medical treated a patient insured by Central States for ESRD; patient later became Medicare-eligible November 2005, terminating plan coverage.
- Central States continued paying Bio-Medical for two months after Medicare entitlement began, then retroactively terminated coverage and sought to recover overpayments.
- Patient died May 18, 2006; Bio-Medical claimed approximately $210,000 in unpaid ERISA benefits and pursued Medicare Secondary Payer Act remedies.
- District court granted Bio-Medical summary judgment on its ERISA claim but dismissed the Act's private cause of action for double damages.
- On appeal, Bio-Medical argued for private damages under the Act; Central States challenged the availability and scope of that private action.
- Sixth Circuit affirmed the ERISA ruling, reversed the dismissal of the private cause of action, and remanded for issues related to double-damages calculation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| May a group health plan terminate ESRD coverage because of Medicare entitlement? | Bio-Medical contends termination violates the Act's taking-into-account provision. | Central States argues termination is permissible under a COBRA-like/benefits- vs. coverage distinction. | Plan terminated coverage in violation; termination void; Bio-Medical entitled to benefits. |
| Does the Medicare Secondary Payer Act's private cause of action require 'demonstrated responsibility' before suit against a private insurer? | Bio-Medical argues private action may proceed without prior demonstration. | Central States relies on Glover to require demonstrated responsibility before private action. | Demonstrated responsibility applies only to tortfeasors; private insurers are liable under the private action without prior demonstration. |
| What is the proper reference point for double damages under the private cause of action? | Bio-Medical seeks double damages potentially based on provider or Medicare losses. | Central States argues double damages should be tied to Medicare or paid amounts with no clear reference point. | Remanded to district court to determine the proper reference point for double damages. |
Key Cases Cited
- Stalley v. Methodist Healthcare, 517 F.3d 911 (6th Cir. 2008) (relevant framework for Medicare secondary payer issues)
- Goetzmann, 337 F.3d 489 (5th Cir. 2003) (defined 'self-insured plan' and influenced later amendments)
- Mason v. Am. Tobacco Co., 346 F.3d 36 (2d Cir. 2003) (limits on applying double damages to tort claims; legislative history context)
- Perry v. United Food & Commercial Workers Dist. Unions 405 & 442, 64 F.3d 238 (6th Cir. 1995) (limits of Medicare secondary payer applicability when Medicare not involved)
- Dolan v. U.S. Postal Serv., 546 U.S. 481 (2006) (statutory interpretation requires reading whole text with purpose)
- Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984) (deference to reasonable agency interpretations)
- United States v. Atl. Research Corp., 551 U.S. 128 (2007) (statutory interpretation should avoid nullifying provisions)
- Manning v. Utils. Mut. Ins. Co., Inc., 254 F.3d 387 (2d Cir. 2001) (context on qui tam-like incentives in the Act)