Netro v. Greater Baltimore Medical Ctr. , 238 Md. App. 62 ( 2018 )

Kathy A. Netro, Personal
Representative of the Estate of Barbara Bromwell, deceased v. Greater Baltimore
Medical Center, Inc., No. 1990.16
Damages: Under Maryland law, assuming other conditions are met, a plaintiff who brings
a negligence action is allowed to put into evidence the bill submitted by his/her healthcare
provider and the defendant is prohibited from bringing to the attention of the jury the fact
that a portion of the bill has been written-off by the healthcare provider. See Lockshin v.
Semsker, 412 Md. 257, 284-285 (2010). Nevertheless, pursuant to Maryland Code (1974,
2016 Repl., Vol.), Courts & 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. Id. 285-86.
In 1980, the United States Congress passed the Secondary Payer Act (“SPA”), which
provides, inter alia, that when Medicare makes a conditional payment to the covered
individual for medical bills, Medicare has a right to recover the monies advanced from
either the beneficiary, the tort feasor (if self-insured) or from the tort feasor’s insurer if a
judgment for at least the amount of the medical bill is later entered in favor of the
beneficiary. No provisions in the SPA preempts any part of the Maryland Act.
Circuit Court for Baltimore County
03-C-14-009164
REPORTED
IN THE COURT OF SPECIAL APPEALS
OF MARYLAND
No. 1990
September Term, 2016
______________________________________
KATHY A. NETRO, ET AL.
V.
GREATER BALTIMORE MEDICAL
CENTER, INC.
______________________________________
Kehoe,
Reed,
Salmon, James P.
(Senior Judge, Specially Assigned),
JJ.
______________________________________
Opinion by Salmon, J.
______________________________________
Filed: July 5, 2018
Most people in the United States who receive medical services have their medical
costs paid, at least in part, by private health insurers or a government insurer such as
Medicare. When the health care providers send their bills to the patient’s private or
government health insurer, those insurers very frequently do not pay 100 percent of what
the medical care providers charge; instead, they pay a reduced amount and the difference
between the amount charged and the amount paid is often written off by the health care
providers. Under Maryland law, assuming other conditions are met, a plaintiff who brings
a negligence action is allowed to put into evidence the bill submitted by the health care
provider and the defendant is prohibited from bringing to the attention of the jury the fact
that a portion of the bill has been written-off. See Lockshin v. Semsker, 412 Md. 257, 284-
85 (2010). Nevertheless, as a result of Maryland Code (1974, 2013 Repl. Vol.), Courts and
Judicial Proceedings Article (Cts. & Jud. Proc.) § 3-2A-09 (hereinafter “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. Lockshin,
412 Md. at 285-86.1 The Maryland Act provides, in pertinent part:
1
In Lockshin, 412 Md. at 286, the court explained the reasons that write-offs should
not be considered by the jury:
If it is for the jury to consider write-offs and reduce their verdict accordingly,
it will be necessary for a defendant to introduce evidence to the jury of the
actual payments made by the plaintiff’s health insurers or other collateral
sources. As noted supra, such evidence contravenes the collateral source
doctrine. Adopting this interpretation would require reading § 3-2A-09(d),
as the Circuit Court did here, as fashioning a legislative exception on the
collateral source rule, despite the statute’s omission of any reference to that
rule. Alternatively, if evidence of write-offs and discounts by the plaintiff’s
(continued . . .)
(d) Medical expenses . . .
(1) A verdict for past medical expenses shall be limited to:
(i) The total amount of past medical expenses paid by or on behalf
of the plaintiff; and
(ii) The total amount of past medical expenses incurred but not paid
by or on behalf of the plaintiff for which the plaintiff or another
person on behalf of the plaintiff is obligated to pay.
Cts. & Jud. Proc. § 3-2A-09(d)(1).
The obvious intent of the Maryland Act was to prevent the victim of a tort from
recovering a verdict for past medical expenses that neither the plaintiff, nor anyone acting
on the plaintiff’s behalf, ever paid or was obligated to pay. In other words, insofar as past
medical expenses are concerned, the Maryland General Assembly wanted to prevent the
plaintiff from receiving a windfall by recovering for medical bills that were never actually
incurred.
(. . . continued)
health care providers is to be presented to the court in a post-verdict remittitur
setting, similar to the procedures found in [Cts. & Jud. Proc.] §§ 3-2A-05(h)
and 3-2A-09(c), the collateral source doctrine is not implicated or violated.
Under this interpretation, the collateral source rule and § 3-2A-09 may be
harmonized such that collateral source evidence of write-offs and discounts
is not presented to the jury, but to the court, after the jury has rendered its
verdict. Compelled by our duties to harmonize statutory language wherever
possible and avoid repeal of the common law by implication, we embrace the
latter interpretation as most consistent with the legislative intent and
principles of statutory interpretation.
2
In the case sub judice, the Circuit Court for Baltimore County applied the Maryland
Act based on the following undisputed facts. Barbara Bromwell, between June 1, 2011
and June 29, 2013, received medical bills from various health care providers that totaled
$451,956.00. At the time she received those bills, she was eligible to receive Medicare
benefits as well as benefits from CareFirst BlueCross BlueShield (hereinafter “CareFirst”),
her private health care insurer. Medicare made conditional payments to Ms. Bromwell of
$157,730.75; CareFirst also paid part of the bills that were submitted, and Ms. Bromwell
and/or her personal representative paid $47,609.00 in out-of-pocket expenses. But, taking
into consideration $62,941.70 in write-offs, by Medicare and CareFirst, the total amount
Ms. Bromwell, or her insurers or anyone else either paid, or were obligated to pay, was
$389,014.30 ($451,956.00 - $62,941.70).
After Ms. Bromwell’s death, Kathy Netro, personal representative of the estate of
Barbara Bromwell, filed a survival action in the Circuit Court for Baltimore County against
Greater Baltimore Medical Center (hereinafter “GBMC”) and others.2 When that case was
tried before a jury, the personal representative proved that $451,956.00 worth of medical
bills were sent to Ms. Bromwell (or her representative) as a result of the medical
malpractice committed by GBMC. On July 22, 2016, the jury returned a verdict against
GBMC and in favor of the personal representative for past medical expenses in the amount
of $451,956.00. The jury found, however, that GBMC’s negligence did not cause the death
2
Two other defendants were sued but found by a jury not to be liable for Ms.
Bromwell’s injuries.
3
of Ms. Bromwell and for that reason it rejected the wrongful death claims brought against
GBMC by Ms. Bromwell’s three surviving adult children. Additionally, the jury awarded
zero dollars in regard to the personal representative’s claim for non-economic damages.
After judgment was entered on July 22, 2016, in conformity with the jury verdicts, the
personal representative along with Ms. Bromwell’s surviving children, on August 1, 2016,
filed a motion for new trial or, in the alternative, an additur.
On August 2, 2016, which was eleven days after the judgment was entered, GBMC
filed a motion to “reduce verdict/judgment” pursuant to the Maryland Act. The trial court
denied plaintiffs’ motion for new trial or, in the alternative, an additur on August 23, 2016.
Meanwhile, the personal representative of Ms. Bromwell’s estate filed an opposition
to GBMC’s motion to reduce the verdict/judgment. The personal representative contended
that provisions set forth in the Medicare Secondary Payer Act (hereinafter “the MSP”), a
federal law, preempted the Maryland Act because, if the provisions of the Maryland Act
did not exist, Medicare would receive approximately $18,500.00 more in repayment of the
$157,730.75 conditionally paid by Medicare, than it would receive if the Maryland Act
was enforced. Her preemption argument is based on regulations that are set forth in 42
C.F.R. (Code of Federal Regulations) § 411.37, which govern how the MSP should be
implemented. Section 411.37 reads, in pertinent part:
(a) Recovery against the party that received payment—
(1) General Rule. Medicare reduces its recovery to take account of the
cost of procuring the judgment or settlement, as provided in this section,
if—
4
(i) Procurement costs are incurred because the claim is disputed; and
(ii) Those costs are borne by the party against which CMS [Centers for
Medicare and Medicaid Services] seeks to recover.
* * *
(c) Medicare payments are less than the judgment or settlement amount. If
Medicare payments are less than the judgment or settlement amount, the
recovery is computed as follows:
(1) Determine the ratio of the procurement costs to the total judgment
or settlement payment.
(2) Apply the ratio to the Medicare payment. The product is the
Medicare share of procurement costs.
(3) Subtract the Medicare share of procurement costs from the
Medicare payments. The remainder is the Medicare recovery amount.
To illustrate how C.F.R. § 411.37(c) operates, consider the following hypothetical:
A plaintiff incurs $100,000.00 in procurement costs (legal fees, bills from experts and other
costs) in order to obtain a $500,000.00 verdict for past medical expenses in a negligence
case in which Medicare has made conditional payments of $250,000.00. In that
hypothetical, Medicare’s pro rata share of the procurement costs would be 50% of
$100,000.00 or $50,000.00. But, if the total judgment is reduced from $500,000.00 to
$400,000.00 for some reason, such as implementing the Maryland Act, Medicare’s pro rata
share of the procurement costs would be 62.5% ($250,000.00 is 62.5% of $400,000.00)
and Medicare would have to pay $62,500.00 toward the procurement costs rather than
$50,000.00.
5
If, in the case sub judice, the judgment stayed at $451,956.00, Medicare would only
have to pay about 34.90% of the procurement costs because $157,730.75 is approximately
34.90% of $451,956.00. But, if the judgment were reduced pursuant to the Maryland Act,
Medicare would have to pay approximately 40.55% of the fixed procurement costs
inasmuch as $157,730.75 is about 40.55% of $389,014.30. That higher pro rata share
means, according to appellant, that Medicare would have to pay about $18,500.00 more
toward procurement costs than it would if the trial judge had not reduced the judgment
pursuant to the Maryland Act.3
In the trial court, appellant argued that the Maryland Act should not be applied
because the MSP preempted it. According to appellant’s trial counsel, because the
reduction of the judgment meant that Medicare’s share of the procurement costs would
increase, the intent of Congress would be thwarted inasmuch as Congress intended, when
it enacted the MSP, to increase revenues to the U.S government “to the maximum extent
possible.”4
On October 31, 2016, the trial judge granted GBMC’s post-trial motion to reduce
the judgment. In doing so, the court rejected the personal representative’s preemption
argument and, in accordance with the Maryland Act, the judgment was reduced to
3
The dollar amount of the procurement costs was not provided to us. Nevertheless,
the parties agree that Medicare would, if the Maryland Act is enforced and the judgment
reduced to $389,014.30, have to pay approximately $18,500.00 more in procurement costs
than it would if the judgment was not reduced.
4
As shown infra, there are situations where 42 C.F.R. § 411.37(c) is inapplicable
and the Maryland Act does not affect Medicare recovery.
6
$389,014.30. The personal representative filed this timely appeal and raised one question,
which she phrases as follows:
Do the Medicare Secondary Payer (“MSP”) provisions of federal law
preempt a state law that diminishes the subrogation interest of the United
States?
I.
MOTION TO DISMISS APPEAL
GBMC has filed a motion to dismiss this appeal because, purportedly, the appellant
does not have standing to protect the rights of Medicare. According to GBMC, the personal
representative’s entire purpose in filing this appeal is to protect the interest of Medicare.
GBMC argues:
This Court has made clear, as a “fundamental principle of standing to
appeal,” that “an appellate court will not entertain an appeal by one who does
not have an interest that will be affected by prosecuting the appeal.” Lopez-
Sanchez v. State, 155 Md. App. 580, 595 (2004), aff’d, 388 Md. 214 (2005).
Similarly, the Court of Appeals has identified standing to appeal, i.e. “the
sufficiency of an [appellant’s] interest to maintain an appeal,” as a question
which the appellate court “can and must decide. . .” Kreatchman v.
Ramsburg, 224 Md. 209, 215 (1961).
In Kreatchman, the Court of Appeals explained:
It is firmly established, we think, that in order to maintain an
appeal, the appellant must have an interest in the subject matter
of the appeal. If he does not, we think that rule 835(b)(1) [now
Rule 8-602(a)(1)] is applicable—that the appeal is not
authorized by law and that this constitutes a ground for
dismissal of the appeal; and, as we have said, the question of
the sufficiency of interest is one to be determined by this Court
and could not be tried and decided by the lower court. We
conclude that this question is properly before us.
Id. at 217 (footnote omitted).
7
We hold that the appellant does have standing because she has an interest that will
be affected if she is successful in her appeal. If this Court were to agree with appellant that
the MSP preempts the Maryland Act, appellant would receive approximately $44,442.00
more ($62,941.70 less $18,500.00) than she would receive if the Maryland Act was
applied. We therefore reject GBMC’s contention that this appeal should be dismissed for
lack of standing.
II.
DISCUSSION
As already mentioned, Medicare made a conditional payment of Ms. Bromwell’s
medical bills in the amount of $157,730.75. The payments were conditional because, when
the need for health care arose, Ms. Bromwell was eligible to receive Medicare benefits but
there existed a possibility that Ms. Bromwell (or her personal representative) might be able
to recover the amount paid for medical bills in a tort suit; in such situations, federal law
provides that Medicare’s responsibility to pay the cost of that health care is only
“secondary” to the tortfeasor’s insurance (or self-insurance). 42 U.S.C. § 1395y(b)(2). In
the subject case, GBMC was self-insured. See 42 U.S.C. § 1395y(b)(2)(A)(ii) and 42
C.F.R. § 411.22.
42 U.S.C. § 1395y(b)(2)(B)(i) provides that a conditional Medicare payment may
be made if a primary plan:
has not made or cannot reasonably be expected to make payment with respect
to such item or service promptly (as determined in accordance with
regulations). Any such payment by the Secretary [of Health and Human
8
Services] shall be conditioned on reimbursement to the appropriate Trust
Fund in accordance with the succeeding provisions of this subsection.
A “primary plan,” insofar as here material, includes a self-insured plan such as the one
GBMC had at the time Ms. Bromwell was injured. See 42 U.S.C. § 1395y(b)(2)(A)(ii) and
42 C.F.R. § 411.21.
42 U.S.C. § 1395y(b)(2)(B)(ii) reads, in material part, as follows:
(ii) Repayment required
A primary plan, and an entity that receives payment from a primary plan,
shall reimburse the appropriate Trust Fund for any payment made by the
Secretary under this subchapter 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. A primary plan’s responsibility
for such payment may be demonstrated by a judgment, a payment
conditioned upon the recipient’s compromise, waiver, or release (whether or
not there is a determination or admission of liability) of payment for items or
services included in a claim against the primary plan or the primary plan’s
insured, or by other means.
(Emphasis added.)
Under the subsection of the MSP just quoted, GBMC, as well as appellant (an entity
that receives payment from the primary plan), have a duty to repay Medicare inasmuch as
GBMC’s responsibility to repay Medicare for the medical bills was “demonstrated by a
judgment[.]” In other words, before deducting for procurement costs, GBMC and the
personal representative who received payment from GBMC, had an obligation to repay
Medicare for any “item of service” paid by Medicare. Here, health care providers (who
rendered services to Ms. Bromwell) presented bills to Medicare that totaled $210,106.49,
9
but Medicare made conditional payments only in the amount of $157,730.75.5 As a result
of Medicare paying the lower amount, medical care providers wrote-off $52,375.74
($210,106.49 - $157,730.75) of the charges.6
In arguing that the Maryland Act was preempted by the MSP, appellant relies on the
legislative history of the MSP, beginning in 1980. Appellant points out that prior to 1980,
Medicare was a “primary payer” for most health services provided to Medicare
beneficiaries. Even when a beneficiary’s need for services arose from an injury or an
illness sustained as a result of negligence committed by a third-party whose private
insurance could pay for such services, Medicare could not recover its payments. In 1980,
Congress changed the law to allow Medicare to recover from those third-party tortfeasors
in order “to achieve major fiscal savings in the Medicare program.” United States v. Geier,
816 F. Supp. 1332, 1336 (W.D. Wis. 1993). To fulfill this goal, Congress passed the
Medicare Secondary Payer (MSP) law and expressed its intent as follows:
Under present law, [M]edicare is the primary payor . . . for hospital and
medical services received by beneficiaries. This is true even in cases in
which a beneficiary’s need for services is related to an injury or illness
sustained in an auto accident and the services could have been paid for by a
private insurance carrier under the terms of an automobile insurance policy.
As a result, Medicare has served to relieve private insurers of obligations to
pay the costs of medical care in cases where there would otherwise be
liability under the private insurance contract. The original concerns that
prompted inclusion of this program policy in the law . . . no longer justify
retaining the policy, particularly if it is understood that immediate payment
5
Over 120 medical bills were sent to Medicare in this case but Medicare, in every
instance, paid the health care provider less than the amount billed.
6
CareFirst also paid $10,565.26 less than the amount shown in the bills submitted
to it, which Ms. Bromwell’s health care providers also wrote off.
10
may be made by Medicare with recovery attempts undertaken only
subsequently when liability is established.
H.R. REP. No. 1167, 96th Cong., 2d Sess. 389 (1980) (emphasis added), reprinted in 1980
U.S.C.C.A.N. 5526, 5752.
In Zinman v. Shalala, 67 F.3d 841 (9th Cir. 1995), the Court discussed the legislative
purpose of the MSP stating:
As first enacted, Medicare was the primary payer for medical services
supplied to a beneficiary, even when such services were covered by other
insurance such as an employer group health plan or liability insurance.
Responding to skyrocketing Medicare costs, Congress in 1980 enacted the
Medicare Secondary Payer legislation (MSP legislation), requiring Medicare
to serve as the secondary payer when a beneficiary has overlapping insurance
coverage. 42 U.S.C. § 1395y(b).
Id. at 843.
More recently, in 71 Fed. Reg. 9466, 9467 (February 24, 2006), the intent of the
MSP was once again summarized:
Beginning in 1980, the Congress enacted a series of amendments to section
1862(b) of the Social Security Act (the Act) (hereafter referred to as the
Medicare Secondary Payer (MSP) provisions) to protect the financial
integrity of the Medicare program by making Medicare a secondary payer,
rather than a primary payer of health care services, when certain types of
other health care coverage are available. (Workers’ compensation had
already been primary to Medicare since the implementation of the original
Medicare statute.) In enacting the MSP provisions, the Congress intended
that the MSP provisions be construed to make Medicare a secondary payer
to the maximum extent possible.
(Emphasis added.)
Appellant’s main contention in this appeal is that the Maryland Act, which allows a
judgment to be reduced by a post-trial motion, conflicts with the “paramount Congressional
11
purpose” of the MSP. Appellant argues that this “paramount [] purpose” was to ensure that
the Medicare Program be reimbursed for its conditional payments “to the maximum extent
possible.” To prove that this was Congress’s “paramount” goal, appellant relies solely on
the excerpt from the Federal Register just quoted. That excerpt does not support appellant’s
argument. To reiterate, it states that “Congress intended that the MSP provisions be
construed to make Medicare a secondary payer to the maximum extent possible.”
(emphasis added). 42 C.F.R. § 411.21 states: “Secondary payments mean payments made
for Medicare covered services or portions of services that are not payable under other
coverage that is primary to Medicare.” Applying the Maryland Act in this case will not
interfere with the goal of the MSP Act as enunciated in the Federal Register. Here, if the
Maryland Act is enforced, GBMC will be required to pay 100% of the conditional
payments to appellant who, in turn, must reimburse Medicare. In other words, GBMC, and
not Medicare, will be the primary payer. The fact that Medicare, based on its own
regulations, has to pay a higher portion of the procurement costs than it would if the
Maryland Act did not exist, does not change that result.
The case of United States v Geier provides a clear example of how federal courts
have implemented Congress’s intent that Medicare be a secondary payer to “the maximum
extent possible.” 816 F. Supp. 1332.
The Geier case arose in 1986 when Esther Geier was injured in an automobile
accident. Id. at 1334. As a result of injuries received in that accident, Ms. Geier needed
services provided by various health care providers. Medicare made conditional payments
12
of Ms. Geier’s bills in the amount of $11,150.93 and Hartford Insurance Company
(“Hartford”), Ms. Geier’s private health care insurer, paid an additional $1,494.71. Id.Ms. Geier brought a tort suit against the motorist who had caused her injuries. After
a court trial, the other motorist was found negligent and Ms. Geier was awarded $1,500.00
for past medical expenses and $3,000.00 for past pain and suffering. Id. at 1335. The
liability insurer for the negligent driver, General Casualty Insurance Company (“General
Casualty”), deposited $1,500.00 with the clerk of the court for the payment of the medical
expenses and did so because a dispute had arisen between Hartford and the United States
government (representing Medicare), as to who should receive payment of the monies
deposited. Id. The United States then filed suit against Geier, Hartford and General
Casualty claiming it was entitled to the $1,500.00 at issue. The government relied on 42
U.S.C. § 1395y(b)(1) (1982 & Supp. V 1987), which at that time read:
Payment under this subchapter may not be made with respect to any item or
service to the extent that payment . . . can reasonably be expected to be made
promptly . . . under an automobile or liability insurance policy or plan. . . .
Any payment under this subchapter with respect to any item or service shall
be conditioned on reimbursement to the appropriate Trust Fund . . . when
notice or other information is received that payment for such item or service
has been or could be made under such a law, policy, plan, or insurance. In
order to recover payment made under this subchapter . . . the United States
may bring an action against any entity which would be responsible for
payment with respect to such item or service . . . or against any entity . . .
which has been paid with respect to such item or service. . . . The United
States shall be subrogated . . . to any right of an individual or any other entity
to payment with respect to such item or service under such a law, policy,
plan, or insurance.
The Geier Court, referring to the statutory language just quoted, said:
13
This statutory language, together with the accompanying regulations,
legislative history for both the 1984 and 1989 amendments and the related
case law, established that the Medicare payments to defendant Geier were
conditional and that Congress intended for United States’ claims to take
priority over all other rights of recovery.
According to the regulations, it is evident that the medical claims paid by
Medicare to defendant Geier as a result of the motor vehicle accident were
conditional Medicare payments. 42 C.F.R. § 405.324(a). Section 405.324(a)
states:
(1) If [the Federal Medicare Program] has information that services for which
Medicare benefits have been claimed are for treatment of an injury or
illness that was allegedly caused by another party and that the beneficiary
has filed, or has the right to file, a liability claim against the other party,
a conditional Medicare payment may be made. . . .
* * *
(3) (i) If the beneficiary receives payment from an insurance carrier . . .
she must reimburse Medicare up to the amount of the Medicare payment.
816 F. Supp. at 1335 (emphasis added).
The Geier Court, applying 42 U.S.C. § 1395y(b)(1) and 42 C.F.R § 405.324(a), held
that Medicare had a right to recover the $1,500.00 awarded by the judge, because Medicare
paid Geier conditionally for her medical expenses in reliance on Medicare’s subrogated
interest and the right to reimbursement. Id. at 1335-36. That holding was in harmony with
Congress’s intent that Medicare’s claims were to have priority over all other claims.
In Geier, Hartford argued that, because it fulfilled its financial obligations to Geier
and because Medicare simply paid for the medical cost remaining after Hartford’s
payments, Medicare had no right of reimbursement. Id. at 1336. The Geier Court held
that whether Medicare paid for the remaining bills was irrelevant. In reaching its
14
conclusion, the Geier Court noted that the federal district courts applying both the 1984
and 1989 amendments to 42 U.S.C. § 1395y(b) had unanimously “held that the United
States’ right of reimbursement is paramount to any other claim.” Id. at 1337 (citations
omitted).
In Geier, Hartford also emphasized that its subrogation rights arose from its
contractual relationship with Geier and not from Wisconsin common law. Id. The Court
held that this also made no difference inasmuch as “[p]reemption occurs when Congress
enacts a federal statute and expresses a clear intent to preempt state law or when there is
an outright conflict between federal and state law.” Id. (citing Louisiana Public Service
Comm’n v. FCC, 476 U.S. 355, 368 (1986)).
In her brief, appellant cites Geier and appears to rely on it, but no language in Geier
supports appellant’s position that in enacting the MSP Congress intended that Medicare
recover its conditional payments to the greatest extent possible. Geier simply stands for
the proposition that Medicare’s “right of reimbursement is paramount to any other claim.”
816 F. Supp. at 1337. Here, there were no competing claims between GBMC and any other
insurer. After the Maryland Act was implemented, Medicare’s claim remained paramount.
Cox v. Shalala, 112 F.3d 151(4th Cir. 1997) provides another example of a set of
facts that resulted in a finding that the MSP preempted a state statute. In Cox, a Medicare
beneficiary, Jack Cox, suffered severe injuries as a result of a motorcycle accident. In
connection with that accident, Medicare made conditional payments of Mr. Cox’s medical
bills in the amount of $181,187.75. Id. at 153. After Mr. Cox died, his personal
15
representative, together with his surviving spouse and an heir, filed suit in North Carolina
under that state’s wrongful death statute. Id. Ultimately that suit was settled for
$800,000.00. Id. The settlement received by the plaintiffs included the recovery of Mr.
Cox’s medical expenses, which Medicare had conditionally paid. Id. The North Carolina
Wrongful Death Act contained a $1,500.00 limitation on the recovery of medical expenses
in a wrongful death case. Id. That $1,500.00 limitation, if enforced, would mean that
Medicare would receive less than 1% of the conditional payments it made. The Cox Court
said:
Under this provision [of the North Carolina Wrongful Death Act], the
appellants, as Jack Cox’s intestate heirs, are allowed to recover for Jack
Cox’s medical expenses, and Medicare’s subrogated right to recover those
medical expenses is limited to $1,500 of the $181,187.75 which Medicare
conditionally paid on Jack Cox’s behalf. See Forsyth County v.
Barneycastle, 18 N.C.App. 513, 197 S.E.2d 576, 579 ($1,500 limit on
creditor’s right to recover strictly construed), cert. denied, 283 N.C. 752, 198
S.E.2d 722 (1973). Thus compliance with Medicare’s secondary payer
provisions, which mandates full payment for Jack Cox’s medical expenses
from the $800,000 settlement, is impossible because of the NC Wrongful
Death Act’s $1,500 limitation on the recovery of medical expenses.
[T]he NC Wrongful Death Act’s $1,500 limit on Medicare’s right to receive
payment for services from a NC Wrongful Death Act settlement is in direct
conflict with Medicare’s secondary payer provisions which mandates full
reimbursement. Consequently, to the extent the NC Wrongful Death Act
limits Medicare’s right of recovery under the circumstances of this case to
$1,500, the NC Wrongful Death Act is preempted. Accordingly, the district
court correctly granted summary judgment to Secretary Shalala on her
counter-claim.
112 F.3d at 155 (emphasis added).
In her brief, appellant discusses the Cox case in detail, and accurately sets forth its
holding. But, we fail to see how anything set forth in the Cox case helps appellant in this
16
case. The Maryland Act allows a plaintiff to obtain a judgment for past medical expenses
conditionally paid by Medicare and to recover every penny of medical expenses paid by or
on behalf of the plaintiff. Thus, unlike the situation in Cox, the plaintiff’s recovery for past
medical expenses is not artificially or arbitrarily reduced. The Maryland Act only restricts
verdicts by prohibiting a plaintiff from recovering medical expenses that were never
actually incurred. Unlike the North Carolina law discussed in Cox, the Maryland Act does
not conflict with the MSP provision that mandate full reimbursement of conditional
payments made by Medicare.
At oral argument, appellant’s counsel argued that the legislative intent of the MSP
as expressed in the Federal Register (i.e., that provision of the MSP be construed to make
Medicare a secondary payer to the maximum extent possible) is just another way of saying
that the Congressional intent was that the Medicare program be reimbursed for conditional
payments “to the maximum extent possible.” We see no equivalency. The intent of the
MSP, insofar as it relates to this case, was “that the Medicare program be reimbursed
whenever a private insurer is obligated to pay medical costs.” Geier, 816 F. Supp. at 1337.
Clearly, that intent is not the same as an intent that the Medicare program be reimbursed
for conditional payments “to the maximum extent possible.” Moreover, there is no
indication that Congress’s paramount purpose was the one appellant advocates. As
appellant’s counsel admitted in oral argument, the federal government, if it wanted to do
so, could have required the beneficiary, after he or she makes a tort recovery for medical
expenses, to repay Medicare for its conditional payments in full – without making any
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deduction for procurement costs. If Congress had done so, as appellant admits, the
Maryland Act could be implemented without any effect on the amount Medicare would
recover. But the United States Department of Health and Human Services (HHS), the
governmental entity charged with implementing the MSP, chose to adopt 42 C.F.R. §
411.37(c). That regulation requires HHS to share procurement costs under certain
circumstances. Adoption of 42 C.F.R. § 411.37(c) insured that HHS would not recover its
conditional payments “to the maximum extent possible” in situations where section
411.37(c) was applicable. If Congressional intent was the intent attributed to it by
appellant, it would be, to say the least, strange that 42 C.F.R. § 411.37(c) would have been
adopted. Furthermore, if appellant’s argument were to be accepted, a very odd type of
preemption would exist. The Maryland Act would only be preempted if the beneficiary
brought suit against the primary payer. But the Centers for Medicare & Medicaid Services
(“CMS”), on behalf of HHS, has the right to bring a direct action against any entity
responsible for payment of medical bills. See 42 U.S.C. § 1395y(b)(2)(B) and 42 C.F.R. §
411.24(e) (“CMS has a direct right of action to recover from any primary payer.”). If CMS
sued GBMC to recover the conditional payments, the Maryland Act would have no effect
because CMS could only collect the amount of medical bills it paid. Procurement costs
and write-offs (and thus the Maryland Act) would be irrelevant. It would be illogical to
resolve the preemption question by holding 1) that the Maryland Act is preempted in cases
where a beneficiary sues a primary payer and incurs procurement costs that must be paid,
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in part by CMS but 2) also holding that the Act is not preempted in cases where the CMS
sues the primary payer directly.
There is another situation when the Maryland Act would be inapplicable: i.e., where
the amount recovered is equal to or less than the conditional payment, the regulations allow
the beneficiary to deduct all of the procurement costs from the amount received from the
primary payer, before paying Medicare the balance. 42 C.F.R. § 411.37(d). In such cases,
the Maryland Act does not impact the number entered into the formula. Therefore, as in
the cases where the CMS sued the primary payer directly, the Maryland Act has no effect
on how much the CMS collects.
For all of these reasons, we reject appellant’s argument that Congress intended,
when it enacted the MSP, that Medicare be reimbursed for its conditional payments “to the
maximum extent possible.” Instead, Congress’s intent was that the MSP be construed to
make Medicare a “secondary payer to the maximum extent possible.” The Maryland Act
does not conflict with that intent.
As both parties to this appeal admit, a state law may be preempted by federal law
when it conflicts in one of the following ways: (1) When the state law “sharply” interferes
with, or is directly contrary to a federal law; or (2) When compliance with both federal and
state law is a physical impossibility. Cox, 112 F.3d at 154. (State statute can be preempted
if it conflicts with federal law in one of two ways: “First, a conflict between state and
federal law can arise when compliance with both federal and state regulations is a physical
impossibility . . . [and second] when a state . . . statute ‘sharply’ interferes with, or is
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directly contrary to a federal law . . . .”)(citations omitted); Hosford v. Chateau Foghorn
LP, 229 Md. App. 499, 510, cert. granted sub nom. Chateau Foghorn v. Hosford, 455 Md.
462 (2017) (“conflict preemption applies either: (1) where it is impossible for a private
party to comply with both state and federal requirements, or (2) where state law stands as
an obstacle to the accomplishment and execution of the full purposes and objectives of
Congress”)(citations and quotation marks omitted.) In this case it is clear that the Maryland
Act does not “sharply” interfere with the MSP, nor is it directly contrary to a federal law.
This is shown by a close reading of the section of the MSP that spells out what amount
Medicare is entitled to recover when a plaintiff makes a recovery against a primary plan
such as GBMC’s self-insurance plan. 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.” 42 U.S.C. § 1395y(b)(2)(B)(ii). The
payment made by Medicare for all items or services in this case was $157,730.75.
Therefore, GBMC’s obligation to repay Medicare is only $157,730.75 and the judgment
entered by the Circuit Court for Baltimore County requires this amount to be paid. Nor is
any provision of the Maryland Act “directly contrary” to federal law. Thus, compliance
with the Maryland Act and the MSP is not a “physical impossibility.”
By the regulations adopted after the passage of the MSP, the Department of Health
& Human Services (HHS) developed the formula by which Medicare’s share of the
procurement cost is calculated and deducted from the recovery amount unless: 1) the CMS
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does not sue the primary payer directly, or 2) the amount recovered is equal to or less than
the conditional payment. We agree with GBMC that the fact that the Maryland Act impacts
the numbers being “entered into” that formula under certain circumstances does not create
a conflict with federal law.
Besides its principal argument, discussed supra, appellant makes a separate
argument that is founded upon the fact that GBMC waited eleven days after the
$451,956.00 judgment was entered before filing its motion “to reduce verdict/judgment.”
Appellant asserts: 1) GBMC’s filing of a post-trial motion did not stop the 30 day appeal
period from running; and 2) instead, the 30 day appeal period expired on September 22,
2016, which was 30 days after the trial judge denied appellant’s (and other plaintiffs’)
motion for new trial or in the alternative an additur. Based on those assertions, appellant
argues:
GBMC neither contested nor disputed the Judgment as to its liability in this
case. GBMC’s status as a “primary payer” for Medicare’s conditional
payments arose on September 22, 2016, when GBMC’s right to appeal from
the Judgment fixing its liability expired. GBMC concedes that it’s only post-
verdict Motion, requesting a reduction under § 3-2A-09(d)(1), was filed
under Rule 2-535 only. These undisputed facts compel the conclusion that
the trial court in this case applied § 3-2A-09(d)(1) to modify a final and non-
appealable judgment, as distinguished from a verdict.
This distinction between a verdict and a judgment is critically
important to federal MSP preemption, because federal law establishes that
Medicare’s right to reimbursement attaches when the responsibility of a
primary payer has been “demonstrated,” e.g., by a judgment[.]
* * *
Under federal MSP law and regulations, therefore, a simple jury verdict
against a primary plan (or primary payer) is insufficient; the verdict must be
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reduced to a final, non-appealable judgment. When a final and non-
appealable judgment binds a primary payer, that payer’s responsibility to
reimburse conditional payments to Medicare is demonstrated under federal
law.
Federal preemption applies in this case because Medicare’s subrogation
interest in the Judgment dated July 22, 2016, arose and existed under federal
law before the trial court applied § 3-2A-09(d)(1) to reduce that Judgment.
(Footnote omitted.)
The above argument contains one fatal flaw: the assertion that Medicare, as well as
appellant, had a “final, non-appealable” $451,956.00 judgment as of September 22, 2016
and therefore the trial judge applied the Maryland Act to “a final, non-appealable
judgment.” This flaw in appellant’s argument is demonstrated by the Court’s holding in
Gluckstern v. Sutton, 319 Md. 634 (1990). In Gluckstern, judgment was entered on January
27, 1988, but the petitioner waited twenty days after judgment to file a pleading that the
Court of Appeals treated as a Maryland Rule 2-535(a) motion to revise judgment. Id. at
646, 651. That judgment was revised, in part, on July 14, 1988. Id. at 646-47. Petitioner
filed his notice of appeal within thirty days of July 14, 1988. Id. at 647. The appellee in
Gluckstern contended that the appeal was not timely because it was not filed within thirty
days of January 27, 1988. The Gluckstern Court rejected appellee’s argument:
As Dr. Gluckstern filed a timely motion to revise the judgment in
accordance with Rule 2-535(a), as there was no timely notice of appeal prior
to revision of the judgment, and as the judgment was in fact revised on July
14, 1988, the order entered on July 14, 1988, became the final judgment. The
controlling principles were set forth in Yarema v. Exxon Corp., [] 305 Md.
[219,] 240-241, 503 A.2d at 250 [(1986)], as follows:
“Rule 2-535(a), formerly number Rule 625a, authorizes the circuit
court to exercise revisory power over a judgment on a motion filed within
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thirty days from the judgment. Nevertheless, it is settled that neither the
timely filing of a motion to revise a final judgment nor the court’s denial
of such motion, absent an order staying the operation of the judgment,
affects the finality of the judgment or the running of the time for appeal.
Unnamed Atty. v. Attorney Griev. Comm’n, 303 Md. 473, 484, 494 A.2d
940 (1985); Hardy v. Metts, 282 Md. 1, 5, 381 A.2d 683 (1978); Hanley
v. Stulman, 216 Md. 461, 467, 141 A.2d 167 (1958). But when a motion
under Rule 2-535(a) to revise a final judgment is filed within thirty days
and the circuit court in fact revises the judgment, and there has been no
intervening order of appeal, the prior judgment loses its finality and the
revised judgment becomes the effective final judgment in the case.
Unnamed Atty. v. Attorney Griev. Comm’n, supra, 303 Md. at 484, 494
A.2d 940; Brown v. Baer, 291 Md. 377, 387, 435 A.2d 96 (1981).”
Moreover, under circumstances like those in this case, as long as the motion
to revise the judgment is filed within 30 days, the revised judgment need not
be entered within 30 days of the original judgment. Brown v. Baer, supra,291 Md. at 387, 435 A.2d at 101.
Consequently, Dr. Gluckstern’s notice of appeal, filed within 30 days
of the revised judgment, was timely.
Id. at 651.
The legal principle set forth in Gluckstern, as applied to this case, shows that
GBMC’s responsibility for payment of Ms. Bromwell’s medical expenses was not finally
“demonstrated” until October 31, 2016, the date the revised judgment was entered.
Contrary to appellant’s argument, the trial judge did not apply the Maryland Act “to a final,
non-appealable judgment.”7
7
In a case recently decided by the United State Court of Appeals for the Fourth
Circuit that involved the same parties as in this appeal, the Bromwell Estate contended, as
it does here, that the date of the final judgment in this case was not October 31, 2016. See
Netro, Personal Representative of the Estate of Barbara Bromwell v. Greater Baltimore
Medical Center, ______ F.3d. _____, No. 17-1597, slip op. 12 (4th Cir. June 4, 2018). The
Court rejected that contention for the same reason that we rejected it. Id.
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CONCLUSION
The MSP does not preempt any part of the Maryland Act. The purpose of the MSP
was to ensure that Medicare is the secondary payer of medical bills to the greatest extent
possible. The Maryland Act, as implemented by the trial judge in this case, in no way
interfered with, or conflicted with that purpose.
JUDGMENT AFFIRMED; COSTS
TO BE PAID BY APPELLANT.
2018-07-06
10:47-04:00
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