Recently the Maryland Court of Special Appeals addressed this question in Netro v. Greater Balt. Med. Ctr., Inc., No. 1990, 2018 Md. App. LEXIS 679 (App. July 5, 2018). Netro is also a case in which the Fourth Circuit was added to the growing list of jurisdictions addressing who can sue under the private cause of action provision of the Medicare Secondary Payer Act (“MSP”) and when double damages may apply. The MSP provides that "[t]here is established a private cause of action for damages (which shall be in an amount double the amount otherwise provided) in the case of a primary plan which fails to provide for primary payment (or appropriate reimbursement)…” 42 U.S.C. §1395y(b)(3)(A).
In Netro, the Fourth Circuit held that a personal representative of a Medicare beneficiary’s estate had standing to sue under the MSP, allowing for a private cause of action to proceed. However, the Fourth Circuit also found that the Defendant did not fail to reimburse Medicare for conditional payments. Most recently, the Court of Special Appeals, Maryland’s intermediate appellate court, addressed an additional MSP question related to Netro; whether the MSP preempted a Maryland state law.
Background
Netro was originally brought as a medical malpractice suit in a Maryland state court by a personal representative (“Netro”) of a Medicare beneficiary’s estate, against the Greater Baltimore Medical Center (“GBMC”). After a trial on the merits, a jury returned a verdict for damages, which included compensation for conditional payments made by Medicare for the decedent’s treatment. As a result of the verdict, GBMC became liable under federal law for the conditional payments Medicare made for decedent’s treatment as the “primary payer.” Pursuant to the MSP, Medicare is to be secondarily responsible for expenses covered by group health insurance, a workers’ compensation plan, or under an automobile, liability, or no-fault insurance policy. See 42 U.S.C. § 1395y(b)(2). Despite being a secondary payer, Medicare also has a statutory right to make payments for treatment or services when payment from a primary payer will not be made promptly. Payments are made on the condition that Medicare can recover the payments made from the primary payer.
Following the Netro verdict, the estate was required to repay the payments Medicare made from the total judgment received. However, GBMC filed a post-trial motion seeking to reduce the amount of the initial judgment and obtained a reduced judgment. Netro then filed a federal suit under the private cause of action provision of the MSP, alleging that GBMC refused to pay the state court judgment. After the filing of the federal suit, GBMC paid the estate the amended final judgment amount plus post-judgment interest, and subsequently filed a motion to dismiss the action for lack of standing, and because it did not fail to pay. The Fourth Circuit in addressing the federal question, held that while Netro’s estate had standing to bring the matter before the Court, GBMC did not fail to pay the funds owed to Medicare.
At the root of the MSP question before the Maryland Court of Special Appeals, is a Maryland state law. The law provides that a plaintiff who brings a negligence action can put into evidence the bill submitted by a health care provider, and the defendant is prohibited from bringing the jury’s attention to the fact that a portion of the bill has been written-off. Nevertheless, pursuant to Maryland Code, Courts and Judicial Proceedings Article §3- 2A-09 (“the Maryland Act”), a defendant against whom a verdict for past medical expenses has been entered may file a post-trial motion to reduce the judgment by the amount of the write-offs. GBMC filed a post-trial motion to reduce the judgment pursuant to the Maryland Act, in consideration of the amount of the medical expenses which were written off. Plaintiff/Appellant filed an opposition to the motion and asserted that the Maryland Act should not be applied because the MSP preempts it. Plaintiff/Appellant further contended that if the provisions of the Maryland Act did not exist Medicare would receive more in repayment of the amount conditionally paid by Medicare, than it would if the Maryland Act was enforced. Plaintiff/Appellant also asserted that the Maryland Act conflicts with the “paramount Congressional purpose” of the MSP; the “paramount purpose” being that the Medicare Program be reimbursed for its conditional payments “to the maximum extent possible.” Netro v. Greater Balt. Med. Ctr., Inc, at 9. Essentially, the Plaintiff asserted that with application of the Maryland Act, Medicare would be entitled to less repayment.
Court Analysis
In addressing the issue of whether the MSP preempts Maryland law, the Court opined that the congressional intent and purpose of the MSP was to ensure that Medicare was the secondary payer of medical bills to the greatest extent possible, and for Medicare claims to take a priority right of recovery.
The court further noted the circumstances when federal law may preempt state law, specifically, when either:
- the state law “sharply” interferes with, or is directly contrary to a federal law; or
- when compliance with both federal and state law is a physical impossibility. at 27.
The Court of Special Appeals applied the circumstances to the matter before the Court, as follows:
Does the Maryland Act “sharply interfere” with or is it directly contrary to the MSP?
The MSP spells out the amount for which Medicare is entitled to recover. Specifically, “[a] primary plan and an entity (such as appellant) must reimburse Medicare “for any payment made” by Medicare “with respect to an item or service if it is demonstrated that such primary plan has or had a responsibility to make payment with respect to such item or service.” Id. at 28-29. In the instant matter, Medicare’s priority right to recovery was paramount to any other claim, as there were no competing claims between GBMC and any other insurer. Therefore, the Maryland Act did not “sharply” interfere with Medicare’s priority right to recovery for payments made, and Medicare’s claims remained paramount even after the Maryland Act was implemented.
Is compliance with both the MSP and Maryland Act a physical impossibility?
The MSP requires full reimbursement of all conditional payments made. The conditional payments made by Medicare for all items and services in Netro totaled $157,730.75; and therefore, Defendant’s obligation to repay Medicare was also $157,730.75. The Maryland Act could be implemented without any effect on the amount Medicare would recover. Furthermore, the Maryland Act was not “directly contrary” to the MSP, or Medicare’s priority right to full recovery of the payments made. Therefore, the Court found that compliance with both the Maryland Act and the MSP was not a “physical impossibility.”
The Court held that the MSP does not preempt any provisions of the Maryland Act primarily, because the Act does not interfere or conflict with the purpose of the MSP. The purpose being that Medicare be the secondary payer. As such, the Maryland Act allowing for a reduction in the judgment amount was applicable; enabling Medicare to be reimbursed for the medical payments that were made, rather than all the medical payments billed.
In general, state law dictates the standards of compensability, which means that reimbursement obligations will ultimately be controlled by state law. However, a state law cannot directly conflict with a federal law. In cases involving MSP considerations, any state law that purposefully interferes or conflicts with the MSP, particularly with ability to obtain full reimbursement, will likely not survive. This most recent case solidifies the MSP’s position with respect to federal preemption. In MSP considerations, state law can survive if it does not stand in the way of the MSP. The MSP does not preempt state law if certain conditions are met.