Respondent Brief in Opposition to the Caldera Cert Petition Filed

Thursday, September 19, 2013 | 0

On Sept. 11, 2013, The Insurance Co. of the State of Pennsylvania (ICSP) responded to Guadalupe Caldera’s appeal to the Supreme Court. In the 42-page brief, respondent provides several “Reasons to Deny the Writ,” none of which are terribly substantive.

Respondent begins by attacking the language of the petition itself. The question presented by Caldera was phrased as “What is required in order to commence a private cause of action for double damages under 42 U.S.C. § 1395y(b)(3)(A)?” Respondent is correct in that it does not directly address the exact actions of the underlying courts. But it does given that the underlying courts have essentially told Caldera that he cannot bring a Medicare Secondary Payer Act (MSP) private cause of action because respondent is not responsible for payment under state law despite Caldera’s belief that the federal law views it differently.

Caldera is asking the high court if he demonstrated the proper elements to bring this particular private cause of action, not a general explanation as to how to bring one. Respondent later demonstrated some rather poor pleading practices of its own by raising standing arguments rather late in the game. If not the Medicare beneficiary, just who needed the right to file claims over a Medicare beneficiaries’ benefits, particularly in a case where that beneficiary was forced to make coinsurance and deductible payments for services that should have been covered by comp had his claim not been terminated and later required legal assistance to reopen. Much of the brief feels desperate, as if ICSP needed to say something but wanted to attempt to avoid focusing on the issue of responsibility under the MSP versus under state law.

The brief argues that federal preemption isn’t necessary because there is no conflict between the state and federal laws in question because the Fifth Circuit said so. Isn’t questioning the previous opinion the point in filing a petition for cert? Anyway, challenging a state’s 10th Amendment right to exclusive jurisdiction over workers’ compensation is admittedly serious, but this case does not propose to invalidate the Texas law requiring preauthorization, just indirectly question if the legislative intent meant to limit repayment in retroactive admissions of compensability.

It seems like Respondent’s position fosters a primary payer’s ability to deny benefits and force comp claimants to claw them back in hopes of avoiding payment liability during the battle, which hardly seems like good public policy. Preauthorization requirements are meant to prevent doctor shopping and overutilization, not shirking payment responsibility due to procedural technicalities. But interestingly, it is Respondent that cites the Supreme Court to make the point that a key tenet of statutory construction is that a statute should not be interpreted in a manner that produces an absurd result. Regardless, Respondent is probably correct that there is no need for federal preemption here but not for the reasons it states, but because this case should come down to reimbursement responsibility under the MSP following the Agreed Judgment triggering Medicare’s rights. ICSP admits responsibility for the injury, just not the unauthorized treatment, and it is this responsibility that needs to be considered for MSP purposes.

To bring a private cause of action under § 1395y(b)(3)(A), the primary plan must fail to make payment in accordance with paragraphs (1), which is not applicable here, and (2)(A), which prohibits Medicare from making payments in nongroup health insurance situations where payment has been made or can reasonably be expected to be made. The payments in question here are generally of the kind that can reasonably be expected to be made under a workers’ compensation law, just not under these particular convoluted circumstances. Medicare was not subject to the MSP and was permitted to make payments at the time of the surgeries because ICSP terminated Caldera’s workers’ compensation, making Medicare his primary payer. But when it entered into the Agreed Judgment, ICSP triggered the MSP and Medicare’s statutory reimbursement rights by admitting that all treatment received to date related back to the original claim. Due to this admission, payment for those surgeries could have reasonably been expected had the claim been open at the time and the statute is silent as to the timing of the reasonable expectation.

This all feels very similar to liability settlements that expressly deny liability despite seven-figure compensation and release from said denied liabilities, yet the parties want to argue that there is no obligation to repay Medicare because they didn’t accept liability for medical claims or allocated all settlements funds to everything but. ICSP cannot expect to accept liability yet deny responsibility to make reimbursement, as that is simply unjust enrichment. And it should be grateful that this ambiguity exists under the MSP because had this suit been filed under the False Claims Act, I’m not sure this uncertainty would exist. The Agreed Judgment’s retroactive acceptance of compensability back to the date of injury is essentially an admission of responsibility for treatment of the injury and makes the earlier termination of benefits look to be improper. FCA permits recovery from anyone that causes the federal government to make an overpayment and that carries treble damages, a civil money penalty and is a qui tam statute, meaning that anyone can file that claim, regardless of Article III standing.

Well, we will see where it goes from here. This case has so many interesting twists that it would be a shame for the Supreme Court not to dissect it. While not exactly a Supremacy Clause or 10th Amendment issue, the elements are present. Should a state law limiting compensability unilaterally limit Medicare’s ability to seek reimbursement pursuant to federal law? Even if it doesn’t go there, this is an opportunity for the court to truly define responsibility for purposes of the MSP in general. Respondent pointed out that there was no conflict among the circuits because all the various opinions with conflicting takes on responsibility had to do with applications to distinctly different entities: Medicare Advantage, potential tortfeasors, group health plans and workers’ compensation plans. What ICSP’s argument does is enhance the importance of defining the term “responsibility” and when it is applicable since it has different applications in different circumstances all stemming from the same statute. Let’s hope the court sees it this way.

Jennifer Jordan is general counsel for Medval, a Medicare Secondary Payer Act compliance firm in Maryland. This column was reprinted with the firm's permission from its Medicare Set-Aside blog.