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Netro v. Greater Baltimore Medical Center, Inc.

Court of Special Appeals of Maryland

July 5, 2018

KATHY A. NETRO, ET AL.
v.
GREATER BALTIMORE MEDICAL CENTER, INC.

          Circuit Court for Baltimore County 03-C-14-009164

          Kehoe, Reed, Salmon, James P. (Senior Judge, Specially Assigned), JJ.

          OPINION

          SALMON, J.

         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:

(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.

         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 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-
(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.

         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 $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 ...

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