In late September, the United States District Court for the District of South Carolina issued a decision on a motion to dismiss that should be instructive for insurance carriers in cases where they are primary payers.
The facts of the case are simple. Their simplicity helps in understanding The Court’s ruling.
A Humana enrollee fell at a Bi-Lo grocery store. She was Medicare eligible but elected coverage through Humana. Medical care associated with the injury was paid by Humana. The enrollee settled a negligence claim against Bi-Lo. The Court instructs the enrollee was primarily responsible for reimbursing Humana for all payments made on her behalf within 60 days of the settlement payment, but the enrollee failed to pay Humana. Counsel for Humana put Bi-Lo on notice of this failure and advised Bi-Lo it remained responsible. A demand was sent and ignored. Humana filed suit alleging two causes of action: the first was a declaratory judgement on Bi-Lo’s conditional payment reimbursement obligation and the second sought double damages under a private right of action provision in Title 42. Bi-Lo, the defendant filed a Motion to Dismiss.
It was Bi-Lo’s contention the complaint should be dismissed and advanced for four reasons:
- No private right of action exists as presented in the complaint
- Humana failed to join an indispensable party (the enrollee)
- The complaint as pled is insufficient
- Bi Lo already provided payment
The Court carefully considered each argument.
It noted Bi-Lo’s contention, the long-standing practice in South Carolina has been the plaintiff in settling a negligence claim satisfies medical liens from the settlement proceeds. The Court held the statute controls and local practices do not. It also gave a brief appreciation for the role of Medicare Advantage programs. The Court held there is a private right of action in the statute.
The Court next considered the indispensable party argument. In doing so, it noted an aggrieved party is the master of its case. It need not sue all joint tortfeasors when seeking relief and because it has an independent and direct statutory cause of action against Bi-Lo, it need not go any further.
The Court considered the sufficiency of the complaint argument and in somewhat of a summary fashion found the pleadings sufficient, observing any shortcomings can be addressed via discovery.
In an even more cursory manner, the Court rejected Bi-Lo’s, “we already paid” argument. The Court did this commenting payment was made, but it was to the enrollee, not to Humana. Direct payment to Humana is why the suit was filed.
Based on the analysis above, the Court denied Bi-Lo’s Motion to Dismiss, ordering the parties address case scheduling.
This is not the first time a case presenting the issue of direct reimbursement has been addressed by a Federal Court. It does serve however as a reminder to the carrier community of the direct obligation to satisfy all primary payer liens. Care must be exercised at the time a claim involving a Medicare beneficiary or Medicare Advantage plan is settled to ensure all primary payor obligations to secondary payers are fully satisfied. Failure to do so could result in double payments and additional avoidable litigation.
