Opinion
Case No. 19-cv-2514 (DSD/TNL)
08-21-2020
Estate of William Fisher, Plaintiff, v. Alex M. Azar II, Secretary of the United States Department of Health and Human Services Defendant.
Marcia K. Miller and Shannon C. Carey, SiebenCarey, P.A., 901 Marquette Avenue, Suite 500, Minneapolis, MN 55402 (for Plaintiff); and Adam J. Hoskins, Assistant United States Attorney, United States Attorney's Office, 300 South Fourth Street, Suite 600, Minneapolis, MN 55415 (for Defendant).
REPORT AND RECOMMENDATION
Marcia K. Miller and Shannon C. Carey, SiebenCarey, P.A., 901 Marquette Avenue, Suite 500, Minneapolis, MN 55402 (for Plaintiff); and Adam J. Hoskins, Assistant United States Attorney, United States Attorney's Office, 300 South Fourth Street, Suite 600, Minneapolis, MN 55415 (for Defendant).
I. INTRODUCTION
Plaintiff seeks judicial review of a decision of the Medicare Appeals Council pursuant to 42 U.S.C. § 1395ff(b) and 42 C.F.R. § 405.1130. This matter is before the Court on the parties' cross motions for summary judgment. These motions have been referred to the undersigned for a report and recommendation to the Honorable David S. Doty, District Judge for the United States District Court for the District of Minnesota, under 28 U.S.C. § 636 and D. Minn. LR 72.1. For the reasons set forth below, the Court recommends that Plaintiff's motion be granted in part and denied in part, that Defendant's motion be denied, and the matter be remanded to the Medicare Appeals Council for further proceedings.
II. BACKGROUND
This action results from a medical malpractice lawsuit that was filed in Minnesota state court. The lawsuit alleged that the Mayo Clinic negligently administered ibuprofen to Decedent William Fisher, who suffered renal failure and required hospitalization and dialysis treatment before ultimately passing away. (ECF No. 2-11). Plaintiff made an initial settlement demand that included a claim for costs of Decedent's hospitalization and dialysis. (Id.).
After Plaintiff filed suit, the Medicare Secondary Payer Recovery Center ("MSPRC") sent a notice of conditional payment in the amount of $277,206.58, which included payments made for Decedent's hospitalization and renal failure. (A.R. 93-127). In response, Plaintiff informed the MSPRC that expert testimony had established the administration of ibuprofen did not cause Decedent's renal failure. (A.R. 130). Plaintiff therefore asked the MSPRC to remove charges for Decedent's hospitalization and dialysis treatment because they were unrelated to any negligent conduct. (A.R. 130). In response, the MSPRC issued a second conditional payment notice, which largely excluded those charges and identified $12,657.92 in payments that Medicare made on behalf of Decedent. (A.R. 132-135). Plaintiff then lowered its settlement demand. (ECF No. 1-10). The case ultimately settled.
Plaintiff notified Medicare of the settlement. (ECF No. 2-3). Medicare issued a demand letter calculating that it paid $65,363.83 for Decedent's medical care and, based on reductions for procurement costs, informed Plaintiff that it required repayment of $35,356.60. (A.R. 276-77).
Plaintiff appealed for redetermination. (ECF No. 1-6). Medicare reaffirmed its demand. (ECF No. 1-5). Plaintiff requested reconsideration, arguing that the appropriate conditional payment amount was no greater than $12,657.92. (A.R. 157). A Qualified Independent Contractor reviewed the request for reconsideration and upheld the demand. (ECF No. 1-4).
Plaintiff appealed the decision to an administrative law judge. ("ALJ"). (A.R. 34-43). The ALJ concluded the amount due was $12,657.92. (A.R. 42). The ALJ's decision was based largely on representations that Medicare made previously to Plaintiff. (A.R. 42).
Plaintiff then submitted a form entitled "Request for Review of Administrative Law Judge (ALJ) Medicare Decision/Dismissal." (A.R. 10). Attached to that form was a letter, in which Plaintiff's counsel indicated it sought clarification as to whether the ALJ's award of $12,657.92 was subject to reduction for procurement costs. (A.R. 11-12). Counsel requested reclassification of that amount. (A.R. 12).
The Medicare Appeals Council ("MAC") deemed Plaintiff's request to be an appeal of the ALJ's decision. The MAC reversed the ALJ and determined that the amount due to Medicare was $35,356.60. (A.R. 1-7). Plaintiff now appeals that decision.
III. ANALYSIS
A. Legal Standard
Medicare pays the medical expenses of qualified individuals. Mathis v. Leavitt, 554 F.3d 731, 732 (8th Cir. 2009). Because Medicare is a secondary payer, qualified individuals must use other sources of insurance coverage before turning to it for coverage. 42 U.S.C. § 1395y(b)(2). In cases where it is uncertain whether other coverage is available, Medicare makes a conditional payment for services, the condition being that the beneficiary reimburse Medicare if he or she receives payment from a primary provider. Id . § 1395y(b)(2)(B)(i). Thus, if Medicare makes a conditional payment, and then the beneficiary recovers payment for those services in a judgment or settlement following a negligence action, then Medicare may recover its payments from that judgment or settlement. 42 C.F.R. §§ 411.22, .24(g).
Federal law permits a party to appeal Medicare's demand for reimbursement of a conditional payment through an administrative review process. See 42 U.S.C. § 405(g). The final decision for the Secretary of the Department of Health and Human Services is made by the MAC. 42 C.F.R. §§ 405.1100, 405.1108(a). A beneficiary may seek review of a MAC decision in federal court. Heckler v. Ringer, 466 U.S. 602, 607 (1984).
The parties dispute whether the Administrative Procedures Act ("APA") governs review of a MAC decision. The APA governs review of an agency action only when there is no other adequate remedy in court. 5 U.S.C. § 704. In this case, federal law provides another mechanism for reviewing the MAC's decision: 42 U.S.C. § 1395ff(b)(1)(A), which incorporates the judicial review process set forth in 42 U.S.C. § 405(g). As a result, the APA does not apply here.
Under 42 U.S.C. § 1395ff(b)(1)(A), this Court reviews whether substantial evidence supports the MAC's decision. "Substantial evidence means less than a preponderance but enough that a reasonable person would find it adequate to support the decision." Boettcher v. Astrue, 652 F.3d 860, 863 (8th Cir. 2011) (citing Guilliams v. Barnhart, 393 F.3d 798, 801 (8th Cir. 2005)); see also Int'l Rehab. Scis. Inc. v. Sebelius, 688 F.3d 994, 1000 (9th Cir. 2012). The Court's role in this matter is limited to reviewing the record. Besaw v. Sec'y of Health and Human Servs., 966 F.2d 1028, 1030 (6th Cir. 1992). The Court may not make credibility determinations or reweigh conflicting evidence. Almy v. Sebelius, 679 F.3d 297, 302 (4th Cir. 2012).
Remand is appropriate here. Federal guidelines require the party seeking MAC review to identify only "the parts of the ALJ's . . . action with which the party requesting review disagrees[.]" 42 C.F.R. § 405.1112(b). Federal guidelines further provide that MAC "will limit its review of an ALJ's . . . actions to those exceptions raised by the party in the request for review, unless the appellant is an unrepresented beneficiary." 42 C.F.R. § 405.1112(c).
Here, Plaintiff was represented by counsel, and sought review only of the ALJ's decision not to deduct procurement costs from the award of $12,657.92. (A.R. 12). But rather than decide this narrow issue, the MAC conducted a full review of the record, including the total amount owned to Medicare. It then increased that award by more than $20,000. In doing so, the MAC acted contrary to its own regulations. See 42 C.F.R. § 405.1112(c). The Court therefore recommends the matter be remanded to the MAC to consider only the issues that Plaintiff raised in its appeal.
The Court recognizes that the MAC may decide to review an ALJ decision on its own motion. 42 C.F.R. § 405.1110. But the MAC did not claim to exercise that authority when it decided this matter. (A.R. 3-7).
In addition, even if the Court were to conclude that the MAC had authority to conduct a full review of the award, the Court would still recommend that the matter be remanded to the MAC for additional findings. The scope of a beneficiary's obligation to reimburse Medicare is defined by the scope of his or her own claim against the third party. Salveson v. Sebelius, No. 10-cv-4045, 2012 WL 1665424, at *8 (D.S.D. May 11, 2012) (citing 42 U.S.C. § 1395y(b)(2)(B)(ii)). Accordingly, Medicare may seek reimbursement only for expenses that arise from, or relate to, the negligent actions alleged in the complaint. 42 U.S.C. § 1395y(b)(2)(B)(ii); Young v. Sec'y Health & Human Servs., No. 11-cv-002, 2012 WL 379510, at *3 (N.D. Miss. Feb.3, 2012). Though it is not necessary for Medicare to establish that the medical expenses paid were "necessitated by the underlying malpractice," if the plaintiff can establish a prima facie case that the reimbursement request is overinclusive, then the burden falls to Medicare to show the requested expenses were related to the alleged negligent conduct. Weinstein v. Sebelius, No. 12-cv-154, 2013 WL 1187052, at *4 (E.D. Pa. Feb. 13, 2013), report and recommendation adopted by 2013 WL 1187048 (E.D. Pa. Mar. 22, 2013).
Plaintiff argues the MAC erred in disregarding the two reports of the medical experts that were retained in the underlying negligence action. One expert, Dr. Steven B. Deitelzweig, indicated that Decedent's kidney function decline resulted from his chronic renal insufficiency and other medications, rather than the ibuprofen overdose. (A.R. 73-74). The second expert, Dr. Julia Breyer Lewis, stated that Decedent would still have required dialysis and would have likely passed away regardless of whether he received ibuprofen. (A.R. 81). Though the MAC considered both reports, it concluded that they did not "establish that the ibuprofen did not exacerbate the beneficiary's preexisting condition." (A.R. 6). The MAC reached this conclusion because Dr. Deitelzweig stated that "[Decedent] was on numerous medications that could have caused or contributed to his acute on chronic renal failure," and because Dr. Lewis said that "[Decedent's] dialysis was imminent prior to the administration of NSAIDs[.]" (A.R. 6).
Respectfully, the Court finds the MAC did not properly consider these isolated statements within the full context of the opinions in which they were contained. Dr. Deitelzweig followed the statement the MAC relied on by MAC by listing several other medications that could have caused or contributed to his acute on chronic renal failure, none of which was ibuprofen. (A.R. 73). He further explained that Decedent's creatinine levels increased prior to the administration of ibuprofen and concluding by saying that, given the other risk factors present, Decedent's "decline cannot be equated to the administration of Ibuprofen." (A.R. 73-74). Dr. Lewis also stated that in her opinion "the limited administration of NSAIDs to [Decedent] . . . was irrelevant to his ultimate clinical course. (A.R. 81).
It is true that in listing those medications, Dr. Deitelzweig indicated that his list was not exhaustive, thus leaving open the possibility that he might also conclude that other medications caused or contributed to Decedent's renal failure. But the rest of his opinion is largely devoted to explaining why ibuprofen did not cause Decedent's renal failure. Thus, the isolated statement cited to by the MAC cannot serve as substantial evidence for its conclusion that Dr. Deitelzweig intended to leave open the possibility that the ibuprofen exacerbated Decedent's renal failure. --------
When the expert statements are considered in this context, the Court cannot conclude that the MAC had substantial evidence to find that the expert reports did not establish that ibuprofen did not exacerbate Decedent's pre-existing condition is supported by substantial evidence. Other evidence in the record may support the MAC's findings on this issue. The MAC did not, however, cite to any of that evidence, and so the Court will not consider it on appeal.
The MAC also increased the amount owed to Medicare because it found that the record did not establish what claims for medical expenses were included in the final settlement, thus making it impossible to determine what portion of its conditional payment was made for services unrelated to the settlement. (A.R. 7). Defendant argues before this Court that had Plaintiff wanted to avoid this issue, it should have submitted medical reports, bills, or other estimates of the amounts overcharged in the administrative process. But Plaintiff provided some information on this topic. In its request for reconsideration, Plaintiff submitted a list of claim codes that it argued were unrelated to the settlement, explaining that these codes were for unrelated treatment for pre-existing conditions. (A.R. 159). In that request, Plaintiff also explained, consistent with the reports discussed above, that multiple experts testified that "ingestion of the NSAID did not cause his acute o[n] chronic renal failure and need for dialysis." (A.R. 157).
At a minimum, the documentation that Plaintiff submitted was sufficient to put Medicare to its burden to show the requested expenses were related to the negligent conduct. See Young, 2012 WL 379510, at *3 (rejecting MAC decision that preparation of a list entitled "Summary of Related and Unrelated Charges" was insufficient to show medical care for other conditions were unrelated to underlying lawsuit). Remand would therefore also be appropriate so that the MAC could make additional findings regarding the expert reports and explain why the documents that Plaintiff submitted during reconsideration were insufficient to establish what portion of the conditional payment was unrelated to the settlement.
Furthermore, if the MAC felt that it required additional information, it had the authority to request those records or remand the matter back to the ALJ so that the ALJ could obtain those records and reconsider the decision. See id. (citing 42 C.F.R. §§ 405.1122 (a), (b), (d), (e), and (f); 42 C.F.R. §§ 1126(a) and (b)). The MAC's decision not to use that authority here is troubling since it decided to sua sponte expand its review of the ALJ's decision beyond the issues identified by Plaintiff. If the MAC truly felt it necessary to expand its review, then the MAC should have used all the tools at its disposal to develop the most complete record possible, rather than surprise Plaintiff by deciding issues that Plaintiff did not raise on the basis that Plaintiff did not provide a complete record for review.
To summarize, because the MAC did not comply with federal regulations when it conducted a full de novo review of the award, the Court recommends the matter be remanded to the MAC so that it can consider only the issues that Plaintiff raised in its appeal. Furthermore, even if the MAC were to establish that it properly reviewed the full award on appeal, the Court would still recommend the matter be remanded for additional findings, so that the MAC could consider whether it was appropriate to supplement the record with additional information.
The Court therefore recommends that Plaintiff's motion for summary judgment be granted to the extent Plaintiff seeks reversal of the MAC decision. But because the MAC has not yet considered the argument made by Plaintiff in its initial appeal, the Court recommends that Plaintiff's motion for summary judgment be denied to the extent that Plaintiff seeks an order clarifying whether conditional payment amount owed to Medicare is subject to deductions for procurement costs. Instead, the Court recommends the matter be remanded to the MAC so that it can consider the procurement cost issue in the first instance or, if determined that the MAC had the authority to consider the entire award on appeal, for the MAC to make any further findings consistent with this opinion.
IV. RECOMMENDATION
Based upon the record, memoranda, and the proceedings herein, and for the reasons stated above, IT IS HEREBY RECOMMENDED that Plaintiff's Motion for Summary Judgment (ECF No. 18) be GRANTED AND DENIED IN PART; Defendant's Motion for Summary Judgment (ECF No. 23) be DENIED; the matter be remanded back to the MAC for further proceedings consistent with this opinion; and judgment be entered accordingly. Date: August 21, 2020
s/ Tony N . Leung
Tony N. Leung
United States Magistrate Judge
District of Minnesota
NOTICE
Filing Objections: This Report and Recommendation is not an order or judgment of the District Court and is therefore not appealable directly to the Eighth Circuit Court of Appeals. Under Local Rule 72.2(b)(1), "a party may file and serve specific written objections to a magistrate judge's proposed finding and recommendations within 14 days after being served a copy" of the Report and Recommendation. A party may respond to those 11 objections within 14 days after being served a copy of the objections. LR 72.2(b)(2). All objections and responses must comply with the word or line limits set for in LR 72.2(c).