MEMORANDUM OPINION
Denying The Plaintiff’s Motion For Summary Judgment; Granting the Defendant’s Cross-Motion for Summary Judgment
I. INTRODUCTION
The plaintiff, as the survivor and administrator of his mother’s estate, received a $90,000 settlement for a wrongful death and survival action that he had previously commenced in a Pennsylvania state court. Before her death, the plaintiffs mother’s medical care was paid for by Medicare, a federal program administered by the Centers for Medicare and Medicaid Services (“CMS”) of the Department of Health and
The plaintiff commenced this action, seeking review of the reimbursement amount collected by CMS and asserting that he was deprived of his settlement funds without due process. The matter is now before the court on the parties’ cross-motions for summary judgment. Because the amount collected by CMS is in accordance with the applicable laws regulating the reimbursements given to Medicare from a wrongful death settlement and because the plaintiff was not denied due process, the court denies the plaintiffs motion for summary judgment and grants the defendant’s cross-motion for summary judgment.
II. BACKGROUND
A. The Medicare Secondary Payer Provision
Medicare provides health insurance to the elderly and disabled by entitling eligible beneficiaries to have payments made on their behalf for care and services rendered by health care providers. See generally 42 U.S.C. §§ 1395 et seq. CMS is responsible for administering the Medicare program. See id. § 1395h.
In 1980, Congress enacted the Medicare Secondary Payer Provision (“MSP”) which made Medicare a secondary payer plan. See 42 U.S.C. § 1395y(b). As a secondary payer plan, any payment made by CMS on behalf of a Medicare beneficiary is conditional and subject to reimbursement by any party that receives a “primary payment.” Id. § 1395y(b)(2)(B)(i). A primary payment is any payment made by a non-Medicare entity for the medical expenses of a Medicare beneficiary based on that entity’s obligation to pay for those medical services. 42 C.F.R. § 411.21. For instance, if Medicare’s coverage overlaps with that of another insurer, CMS may seek reimbursement from that insurer for the medical expenses that were already paid through Medicare. 42 U.S.C. § 1395y(b)(2)(B)(ii); 42 C.F.R. § 411.21.
Similarly, and of particular relevance here, CMS may seek reimbursement for Medicare-disbursements from the recipient of a judicial settlement. 42 C.F.R. § 411.22(a)-(b)(3). When the primary payer is the recipient of a settlement, however, CMS’s reimbursement is reduced by its portion of the legal fees and costs that were incurred in obtaining the settlement (“the procurement costs”).
Id.
§ 411.37(a). Moreover, if a settlement covers both medical and nonmedical costs, CMS’s reimbursement may be apportioned so as to reach only the portion of the settlement allocated to cover medical costs.
See Cox v. Shalala,
In order to collect its reimbursement pursuant to the MSP, CMS may intervene in an action involving the medical costs of a Medicare beneficiary but also has a right of subrogation. 42 U.S.C. §§ 1395y(b)(2)(B)(iii)-(iv). The selection of one avenue over another does not affect CMS’s right of recovery.
Zinman v. Sha-lala,
In May 2003, the plaintiffs elderly mother suffered various injuries after falling in her home. Compl. ¶ 7. As a result, the plaintiffs mother was hospitalized and treated for a fracture of her right radius, a radial periorbital hematoma and a contusion.
Id.
¶ 8. During her hospital stay, however, she was also treated for medical conditions not directly related to these injuries.
Id.
¶ 9. In total, the plaintiffs mother received thirty-eight medical treat
In July 2005, the plaintiff, in his capacity as survivor and administrator of his mother’s estate, filed a wrongful death and survival action against his mother’s landlord in the Court of Common Pleas of Pennsylvania. Id. ¶ 11; A.R. at 591. In pursuing that action, the plaintiff expressly included his mother’s medical costs in his wrongful death claim. A.R. at 595. There is no indication, however, that the plaintiff paid any of his mother’s medical expenses.
Because the plaintiffs mother was a Medicare beneficiary at the time of her injury, CMS had paid for her hospital costs, which totaled $40,213.74. Pl.’s Mot. at 3. In December 2006, CMS notified the plaintiff of this amount, informing him that Medicare’s initial payment of his mother’s medical expenses was conditional to reimbursement from any potential settlement award. A.R. at 708. CMS also explained to the plaintiff and his counsel that they had an opportunity to contest the charges prior to payment. Id.
The parties in the wrongful death and survival action eventually settled for $90,000, with 80% of that amount allocated in settlement for the wrongful death claim (“wrongful death settlement award”) and 20% allocated in settlement for the survival claim (“survival settlement award”). Compl. ¶ 11. Although the settlement did not specify a precise numerical value allocated for medical costs, it did release the landlord from “[a]ll liens against the proceeds of this settlement” including liens related to his mother’s medical expenses. A.R. at 595.
In May 2007, the Pennsylvania court issued an order approving the parties’ settlement agreement. A.R. at 47. This order also specified that $40,213.74 would be “held in escrow pending disposition” of a lien that had been asserted by Medicare. Id.
In November 2007, CMS notified the plaintiff that pursuant to the MSP, he was required to reimburse CMS for his mother’s medical costs which had been paid through Medicare and for which he had received a settlement award. A.R. at 685-89. CMS also informed the plaintiff that he had the right to appeal this determination within 120 days. Id. CMS advised the plaintiff that he was required to pay $25,868.58, the final amount due after deducting CMS’s share of the procurement costs, within sixty days or risk incurring interest and penalties. Id. at 687-88.
To avoid interest and penalties, the plaintiff paid the full amount under protest and appealed to HHS’s initial review board. Compl. ¶ 16. After considering the plaintiffs case, the review board upheld CMS’s demand for $25,868.58. Id. The plaintiff unsuccessfully appealed that decision to both the Office of Medicare Hearings and Appeals and the Medicare Appeals Council. Id. ¶¶ 17-18. The Medicare Appeals Council ultimately held that CMS’s recovery rights are broad and, as defined in the MSP manual interpreting the statute, allocations of settlements that are not the result of an adjudicatory process, like the allocation at issue here, do not limit those rights. A.R. at 06.
The plaintiff subsequently commenced this action seeking judicial review of the Medicare Appeals Council’s final decision. See generally Compl. Both parties have filed cross-motions for summary judgment. See generally Pl.’s Mot.; Def.’s Cross-Mot. With these motions now ripe for adjudication, the court turns to the parties’ arguments and the applicable legal standards.
A. Legal Standard for a Motion for Summary Judgment
Summary judgment is appropriate when the pleadings and evidence show “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.CxvP. 56(a); see also
Celotex Corp. v. Catrett,
In ruling on cross-motions for summary judgment, the court shall grant summary judgment only if one of the parties is entitled to judgment as a matter of law upon material facts that are not genuinely disputed.
Citizens for Responsibility & Ethics in Wash. v. U.S. Dep’t of Justice,
The opposing party may defeat summary judgment through factual representations made in a sworn affidavit if he “support[s] his allegations ... with facts in the record,”
Greene v. Dalton,
B. Legal Standard for Judicial Review of Agency Actions
The Administrative Procedures Act entitles “a person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action ... to judicial review thereof.” 5 U.S.C. § 702. Under the APA, a reviewing court must set aside an agency action that is “arbitrary, capidcious, an abuse of discretion, or otherwise not in accordance with law.”
Id.
§ 706;
Tourus Records, Inc. v. Drug Enforcement Admin.,
the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.
Motor Veh. Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co.,
As the Supreme Court has explained, however, “the scope of review under the ‘arbitrary and capricious’ standard is narrow and a court is not to substitute its judgment for that of the agency.”
Motor Veh. Mfrs. Ass’n,
“The requirement that agency action not be arbitrary or capricious includes a requirement that the agency adequately explain its result.”
Pub. Citizen, Inc. v. Fed. Aviation Admin.,
C. The Court Grants the Defendant’s Cross-Motion for Summary Judgment
1. The Medicare Secondary Payer Provision Entitles CMS to Reimbursement for the Plaintiffs Mother’s Medical Expenses
The plaintiff argues that CMS may only recover from a settlement award received by a Medicare beneficiary’s estate, ie. his mother’s estate, and because under Pennsylvania law his wrongful death settlement is not a part of his mother’s estate, the plaintiff concludes that CMS may not seek reimbursement from the wrongful death settlement award. Pl.’s Mot. at 7. The plaintiff also contends that the wrongful death settlement award includes only a portion of the medical expenses that Medicare incurred on behalf of his mother and that any recovery by CMS should therefore be limited to only that portion. Pl.’s Mot. at 5. More specifically, the plaintiff contends that CMS’s reimbursement should be limited to only the costs associated with the treatment of his mother’s “fracture of surgical neck of humerus,” 1 which he asserts is the only treatment she received “related to the fall.” 2 Compl. ¶ 3.
In advancing his argument that CMS is only entitled to recover from the settlement award received by a Medicare beneficiary’s estate, the plaintiff relies entirely on two decisions that applied the MSP to the settlement of wrongful death claims:
Denekas v. Shalala,
In
Denekas,
the plaintiffs received a settlement in a wrongful death action governed by Iowa law after the death of their father.
The plaintiffs in
Bradley
also challenged CMS’s right under the MSP to recover medical costs from a wrongful death settlement award.
Here, unlike the survivor plaintiffs in
Denekas
and
Bradley,
the plaintiff claimed his mother’s medical costs in pursuing his wrongful death action.
See
A.R. at 595 (claiming “damages for the pecuniary losses occasioned by the death of [his mother] as well as for medical expenses”); 42 Pa. C.S.A. § 8301(c) (“[T]he plaintiff shall be entitled to recover ... damages for reasonable hospital, nursing, medical, funeral expenses ... necessitated by reason of injuries causing death.”). Moreover, the evidence suggests that these claimed medical expenses were taken into consideration in calculating and negotiating the ultimate wrongful death settlement award. Tellingly, as part of the resulting settlement, the plaintiff agreed to release his mother’s landlord from “any and all claims and rights,” including those associated with medical liens. A.R. at 599. This release suggests that the medical expenses claimed by the plaintiff in his wrongful death complaint were contemplated by the parties in negotiating and ultimately reaching a settlement.
See id.; Mathis v. Leavitt,
Importantly, the plaintiff provides no evidence to suggest that the wrongful death settlement did not include the medical expenses incurred by Medicare. See generally PL’s Mot.; PL’s Reply. Nor has the plaintiff provided any evidence that would indicate that the parties’ wrongful death settlement accounted for only those medical treatments associated with his mother’s “fracture of surgical neck of humerous [sic],” which, according to the plaintiff, was the only medical treatment “related to the fall.” Id.
Because the rulings in
Denekas
and
Bradley
were limited to situations in which the plaintiffs had not claimed medical expenses in their wrongful death settlement, and because the plaintiffs wrongful death settlement does appear to have included medical costs, the cases are inapposite. Nor do these cases in any way indicate that the MSP generally disallows CMS from seeking reimbursement from a survivor’s wrongful death settlement.
See generally Denekas,
The MSP is clear: if a third party is responsible for injuring a qualified individual and Medicare pays for the resulting medical treatment, the payment is considered conditional and repayment to Medicare is required.
See Mathis,
Accordingly, the court determines that the Medicare Appeals Board did not err in allowing CMS to recover from the plaintiffs wrongful death claim settlement award. Moreover, absent any evidence indicating that the plaintiff in any way limited the medical expenses in his underlying wrongful death settlement, the court declines to hold that the Medicare Appeals Board erred by allowing CMS to be reimbursed for the full costs of the thirty-eight medical treatments the plaintiffs mother received during her hospital stay.
2. The Plaintiffs Fifth Amendment Due Process Rights Were Not Violated
a. The Post-Deprivation Hearings Did Not Violate the Plaintiffs Due Process Rights
The plaintiff argues that by obtaining reimbursement under threat of high interest, CMS deprived him of his property without due process, in violation of the Fifth Amendment. Compl. ¶ 25; Pl.’s Reply 5-6. The defendant argues that the plaintiff had no property interest in the portion of the settlement award related to his mother’s medical costs and thus was not unconstitutionally deprived of his property. Def.’s Cross-Mot. at 15-16.
The Fifth Amendment requires that no person be deprived of his property without due process of law. U.S. Const. amend. V. “The fundamental requirement of due process is the opportunity to be heard ‘at a meaningful time and in a meaningful manner.’ ”
Mathews v. Eldridge,
[f]irst, the private interest that will be affected by the official action; second, the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the Government’s interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirements would entail.
Mathews,
Assuming
arguendo
that the plaintiff maintained a property interest in the portion of the settlement award at stake, the court considers whether the plaintiff received an appropriate hearing by weighing all of the factors as set forth in
Mathews v. Eldridge.
First, the court observes that the plaintiffs “private interest” is his po
Next, the court considers the risk that the procedures used by CMS resulted in the erroneous deprivation of the plaintiffs interest, as well as the “probable value, if any, of additional or substitute procedural safeguards.”
Mathews,
Here, CMS’s decision did not turn on a fact-intensive inquiry, but rather appears to have been a straightforward application of routine regulatory procedures allowing CMS to seek reimbursement under the MSP.
See
A.R. at 687. Indeed, the MSP regulations outline specific “rules” which apply to CMS’s recovery of conditional payments made from Medicare funds.
3
42 C.F.R. § 411.24. Because the nature of the inquiry here — whether there is a primary payment (like a settlement award) from which CMS is entitled to be reimbursed— generally involves “routine, standard and unbiased” evidence, the court determines that the second
Mathews
factor also does not weigh in favor of the plaintiff.
See Mathews,
Finally, the court considers the “public interest” implicated by these proceedings, including “the administrative burden and other societal costs that would be associated with requiring, as a matter of constitutional right” that CMS hold a hearing pri- or to attempting to collect from primary payers pursuant to the MSP.
See Mathews,
Accordingly, after taking into consideration the factors outlined in
Mathews
as well as the fact that the plaintiff was given three levels of review at the agency level,
see
Compl. ¶¶ 16-18, the court concludes that the plaintiff was not deprived of his due process rights,
see Wall,
b. The ALJ’s Denial of a Continuance Did Not Violate the Plaintiffs Due Process Rights
The plaintiff also argues that his due process rights were violated when the ALJ presiding over his appeal in the Office of Medicare Hearings and Appeals denied his motion to continue the hearing in order to allow his counsel a longer period of time to review the administrative record. Pl.’s Mot. at 10. The defendant maintains that the plaintiff was provided numerous and sufficient hearings at the administrative level, satisfying any due process concerns. Def.’s Cross-Mot. at 16-17.
Although “[t]here are no mechanical tests for deciding when a denial of a continuance is so arbitrary as to violate due process,” one of the factors that a court may consider is whether “denying the continuance will result in identifiable prejudice to defendant’s case, and if so, whether this prejudice is of a material or substantial nature.”
United States v. Burton,
For the foregoing reasons, the court denies plaintiffs motion for summary judgment and grants the defendant’s cross-motion for summary judgment. An Order consistent with this Memorandum Opinion is separately and contemporaneously issued this 24th day of March, 2011.
Notes
. The plaintiff calculates the medical expenses related to his mother’s slip and fall accident less CMS’s share of procurement costs to be $2,368.58. Compl. ¶ 14.
. The plaintiff also asserts that by "choosing not to intervene” and participate in the settlement negotiations, CMS “implicitly accepted the terms of the settlement” and is now barred from recovering from the plaintiff's wrongful death settlement. Pl.’s Mot. at 9-10. The defendant responds that under the MSP it "has both a subrogation right and an independent right to recovery.” Def.'s Cross-Mot. at 14. The MSP clearly allows CMS to seek reimbursement of a Medicare beneficiary's medical costs either by commencing an independent action against the beneficiary or her estate or by enforcing its right of subrogation. 42 U.S.C. §§ 1395y(b)(2)(B)(iii)-(iv). Accordingly, CMS did not waive its right to reimbursement by choosing not to intervene in the underlying action.
See Zinman v. Sha-lala,
. Under the rules set forth in the regulations, a person who "receives a primary payment,” like a settlement award, is required to reimburse Medicare within sixty days. Id. § 411.24(h). If a person does not pay within the sixty-day period, "CMS may charge interest,” which may accrue until reimbursement is made. 42 C.F.R. § 411.24(m)(2)(i)-(ii).