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Covenant Medical Center, Inc. v. Farm Bureau Mutual Insurance Company of Michigan (COA  – UNP 11/24/2020; RB #4189)


 Michigan Court of Appeals; Docket # 350645; Unpublished
Judges Markey, Meter, and Gadola; per curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion

Not applicable

Medicare Benefits

In this unpublished per curiam opinion, the Court of Appeals reversed and remanded the trial court’s order granting summary disposition and double damages to Plaintiff on the issue of whether Defendant failed to make primary payment to Plaintiff or reimburse Blue Cross Blue Shield of Michigan (hereinafter BCBSM) under the Medicare Secondary Payer Act (hereinafter MSPA).

This dispute arose when Nancy Hutchinson, the Defendant’s insured, fell and was injured while trying to enter her vehicle. Hutchinson was attempting to drive to an emergency medical facility to receive care for complications from a surgery she had undergone days prior. Following her fall, Hutchinson was hospitalized at Plaintiff’s facility, Covenant Medical Care, where she received medical treatment for both the fall and an infection related to her prior surgical procedure. At the time, Hutchinson had both a no-fault insurance policy issued by Defendant and a Medicare Advantage Plan through Blue Cross Blue Shield of Michigan. Plaintiff initially billed BCBSM for Hutchinson’s medical care – which Defendant alleged included charges related to complications from her previous surgery. BCBSM paid this amount to Plaintiff, and Plaintiff provided Defendant with an itemized bill of Hutchinson’s care, indicating that BCBSM had paid certain charges. Both BCBSM and Plaintiff then notified Defendant of the reimbursement and payment, respectively, owed. Before receiving payment from Defendant, however, Plaintiff brought the current action alleging that Defendant had breached its contract with Hutchinson by failing to promptly pay Plaintiff under the no-fault act for her medical care, and that Defendant had failed under the MSPA to provide primary payment, entitling Plaintiff to recover double damages.

In reaching its holding, the Court looked to the relevant language of the MSPA. Under the MSPA, private insurers are the primary payers and Medicare is the secondary payer. But the MSPA “permits Medicare to make a conditional payment on behalf of a beneficiary when a primary payer has not promptly paid, and then to seek reimbursement from the primary payer.” The MSPA also allows “a private cause of action which permits private entities such as a healthcare provider to bring a cause of action against a primary payer that has not paid the healthcare provider or has failed to reimburse Medicare.” This action allows a successful plaintiff to receive double damages. The MSPA provides that before a plaintiff can recover under the act’s private cause of action provision, the primary plan’s obligation to pay must be established. The Court noted that an insurance contract automatically establishes a private insurer’s obligation to pay. However, the Court also cautioned that “[t]his does not relieve Plaintiffs of their burden to allege in their complaints, and then subsequently prove with evidence, that Defendants’ valid insurance contracts actually render Defendants responsible for primary payment of the expenses Plaintiffs seek to recover.”

In the instant case, the Court noted that Defendant did not dispute that it had a contractual obligation to pay Plaintiff or to reimburse BCBSM. Defendants argument instead centered on the allegation that Plaintiff was seeking payment from Defendant for amounts not within the contractual obligation of its no-fault policy. Specifically, Defendant argued that “the amount that Plaintiff asserts has not been reimbursed to BCBSM is related to Hutchinson’s medical care for complications from her earlier surgery and not to her fall-related injuries, and therefore the amount is not compensable under the no-fault policy.” In applying the relevant language of the MSPA to Defendant’s argument, the Court concluded that the MSPA provides for a private cause of action for double damages “in the case of a primary plan which fails to provide for primary payment (or appropriate reimbursement).” The MSPA also establishes that when a responsible primary plan does not “promptly meet its obligations,” Medicare is authorized to pay the entire amount and the primary plan is then obligated to reimburse Medicare. “The statute thus 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. Upon review of the record in this case, we conclude that the trial court did not resolve whether defendant failed to provide primary payment or appropriate reimbursement under the MSPA, and double damages could not be imposed without such a determination.” The Court therefore reversed and remanded, instructing the trial court  to determine whether a genuine issue of material fact exists regarding (1) whether the amount allegedly not reimbursed to BCBSM is compensable under Defendant’s no fault policy, and (2) whether Defendant failed to provide primary payment under the MSPA.

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