Humana Medical Plan, Inc. v. Reale
180 So. 3d 195
| Fla. Dist. Ct. App. | 2015Background
- Humana, a Medicare Advantage Organization (MAO), paid $19,155.41 in conditional Medicare benefits for enrollee Mary Reale after a 2009 fall; the Reales later recovered a $135,000 settlement from third parties and placed funds in counsel’s trust account.
- Humana sought reimbursement; it sent a demand letter to Reales’ counsel but the Reales did not pursue any administrative appeal through the Medicare/MAO process described in Humana’s Evidence of Coverage.
- Humana initially sued the Reales in federal court, dismissed that suit, then sued the primary insurer (Western Heritage) in federal court and obtained summary judgment (now on appeal).
- Meanwhile the Reales sued in Florida circuit court for a declaratory judgment that Florida subrogation law and the collateral source statute, Fla. Stat. § 768.76, governed Humana’s recovery; the circuit court applied § 768.76 and awarded Humana $3,685.03.
- The Florida Third District Court of Appeal reversed: it held the state court lacked subject-matter jurisdiction because the dispute arose under the Medicare Act (requiring exhaustion and exclusive federal review under 42 U.S.C. §§ 405(g), 405(h)), and that § 768.76 is facially inapplicable to Medicare benefits and Part C subrogation/reimbursement rights are expressly preempted by 42 U.S.C. § 1395w-26(b)(3).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held | |
|---|---|---|---|---|
| Whether state court had subject-matter jurisdiction over Reales’ declaratory action | Reales: MAO reimbursement claim arises under state law (no federal private cause of action to bar state review); thus state court jurisdiction is proper | Humana: Dispute is a claim "arising under" the Medicare Act and is subject to exclusive federal review after exhaustion under § 405(g) and § 405(h) | Held: Claim arises under Medicare; exhaustion and exclusive federal jurisdiction apply; state court lacked subject-matter jurisdiction | |
| Whether exhaustion/administrative remedies are required | Reales: dispute is at most a grievance or administrative path distinction permits state suit; Humana waived exhaustion by suing in federal court | Reales: Humana’s prior federal suit and informal negotiations relieved Reales of exhaustion | Humana: Administrative appeal/organization-determination process applies and was not exhausted; Humana cannot substitute for Secretary; filing by Humana did not waive requirement | Held: Exhaustion required; grievance/organization-determination distinctions do not evade § 405(g); waiver argument rejected |
| Whether Fla. Stat. § 768.76 (collateral source statute) applies to Medicare/MAO benefits | Reales: § 768.76 governs state subrogation allocation and should limit Humana’s recovery (pro rata formula) | Humana: Medicare/Part C payments are governed by federal law and not by § 768.76 | Held: § 768.76 expressly excludes Medicare benefits on its face; circuit court erred to apply it | |
| Whether state subrogation law is preempted as to MAO reimbursement rights | Reales: state subrogation standards control allocation between claimant and MAO | Humana: Part C contains an express preemption clause (42 U.S.C. § 1395w-26(b)(3)) and federal MSP/Part C regulations govern MAO reimbursement rights | Held: Part C’s express preemption provision and regulations supersede state law affecting MAO reimbursement; state subrogation law preempted |
Key Cases Cited
- Heckler v. Ringer, 466 U.S. 602 (1984) (§ 405(g)/(h) makes the Social Security Act’s judicial-review scheme the exclusive avenue for claims arising under the Medicare Act)
- Parra v. PacifiCare of Arizona, Inc., 715 F.3d 1146 (9th Cir. 2013) (discussing Medicare Advantage/Part C and administrative-review context)
- Care Choices HMO v. Engstrom, 330 F.3d 786 (6th Cir. 2003) (addressing MA/Medicare HMO reimbursement issues)
- In re Avandia Mktg., Sales Practices & Prods. Liab. Litig., 685 F.3d 353 (3d Cir. 2012) (Part C cross-reference to MSP and applicability of MSP rules to MA plans)
- Potts v. Rawlings Co., LLC, 897 F. Supp. 2d 185 (S.D.N.Y. 2012) (Medicare Advantage reimbursement claims arise under Medicare and are subject to § 405(g) exhaustion and Part C preemption analysis)