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Weiss v. Azar

United States District Court, D. Maryland

December 7, 2018



          Ellen Lipton Hollander, United States District Judge.

         In this Memorandum Opinion, I resolve an appeal from the final decision of the Medicare Appeals Council (“MAC”), [2] requiring a portion of the settlement proceeds obtained in a medical malpractice case to be used to reimburse Medicare for medical expenses that it paid for the care of the patient, who died a few days after surgery.

         Mary Patricia Weiss, in her individual capacity and as the Personal Representative of the Estate of Ronald A. Weiss (the “Estate”), her deceased husband, filed suit for declaratory relief against defendants Thomas Price, M.D., Secretary of the United States Department of Health and Human Services (the “Secretary”), and the United States Department of Health and Human Services (the “Agency”). ECF 1-1 (“Complaint”).[3] Plaintiff challenges the request of the Agency's Centers for Medicare and Medicaid Services (“Medicare”) for $26, 404.20 from the $600, 000 in settlement proceeds obtained by plaintiff in connection with a medical malpractice action litigated in Baltimore County.

         Pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201, Ms. Weiss, in her individual capacity, sought a declaration that Medicare “has no legal interest in the escrowed settlement funds recovered by Mary Weiss as a result of the wrongful death of her husband, Ronald A. Weiss.” Id. at 11. As Personal Representative of the Estate, she also asks this Court to (1) reverse findings made by the MAC, and (2) award the Estate “an interest penalty” due to the length of time the settlement funds have been escrowed. Id. at 11-12.

         By Memorandum (ECF 22) and Order (ECF 23) of March 5, 2018, I dismissed the claims filed by Ms. Weiss in her individual capacity. Thereafter, pursuant to Fed.R.Civ.P. 54(b), she moved to certify as final the Court's judgment dismissing her individual claims. ECF 28 (the “Motion”). Defendants opposed the Motion. ECF 29. That Motion is pending.

         Plaintiff filed a brief in support of the appeal of the MAC's decision on June 22, 2018. ECF 30 (“Appeal”). Medicare filed its opposition. ECF 31 (“Opposition”). Plaintiff replied (ECF 32), and Medicare filed a surreply. ECF 33; see also ECF 27.[4]

         The Appeal and the Motion have been fully briefed, and no hearing is necessary to resolve them. See Local Rule 105.6. For the reasons that follow, I shall affirm the order of the MAC and deny the Motion as moot.

         I. Factual Background

         Ms. Weiss's late husband, Ronald A. Weiss (“Mr. Weiss” or the “Decedent”), was a Medicare recipient. Administrative Record (“A.R.”) 126-159 (“ALJ Decision”) at 127.[5] In July 2007, Mr. Weiss was informed by a physician that he needed heart surgery to “redo” his coronary artery bypass surgery. A.R. at 130. It appears undisputed that the surgery was medically necessary. A.R. at 32.

         According to plaintiff, the physician falsely told Mr. Weiss that the surgeon who performed his initial bypass surgery was unavailable. A.R. 165-207 (“State Court Complaint”) at 203. Therefore, a less experienced surgeon performed the second operation. Id.

         Mr. Weiss underwent heart surgery on August 3, 2007, at St. Joseph Medical Center, Inc. (the “Hospital”). During the surgery, the surgeon allegedly punctured a vein and several arteries, causing massive bleeding that necessitated further surgery. Id. Mr. Weiss died from complications on August 6, 2007. Id. at 197, 203. During the three-day period that culminated in Mr. Weiss's death, Medicare spent about $50, 468 on his care. A.R. at 4, 101 (“Payment Summary Form”).

         On July 30, 2010, Ms. Weiss, individually, and as Personal Representative of the Estate of Ronald Weiss, and to the use of their four adult children, filed a medical malpractice lawsuit in the Circuit Court for Baltimore County against 60 defendants, including many physicians and the Hospital. See A.R. 165-207; id. at 153 n.4. On behalf of the Estate, the suit contained six counts: fraud (A.R. at 197-199); battery (A.R. at 199); intentional failure to obtain informed consent (A.R. at 200); negligent failure to obtain informed consent (A.R. at 201-02); medical negligence (A.R. at 202-04); and breach of warranty (A.R. at 204). In her individual capacity, Ms. Weiss brought a wrongful death action (A.R. 205). Ms. Weiss sought both compensatory damages, in excess of $60, 000, and punitive damages. A.R. at 199.

         Prior to trial, the parties to the medical malpractice lawsuit reached a confidential settlement. A.R. 404 (“Final Settlement Detail Document”).[6] Ms. Weiss has not produced a copy of this settlement. A.R. at 152. But, her counsel acknowledges that “the settlement agreement released all claims against the Defendants, including claims for medical bills.” ECF 32 at 12. Notably, the amount of damages to which Ms. Weiss was entitled for her wrongful death claim, and the amount due to the Estate, were not judicially determined at that time.

         On September 21, 2012, Ms. Weiss filed a “Petition for Court Approval of Settlement and Allocation, ” requesting that the Circuit Court for Baltimore County allocate the settlement proceeds between Ms. Weiss and the Estate. A.R. 509-22 (“Petition for Approval of Settlement”). Plaintiff also included a draft order. Cf. Id. at 512 (“Plaintiff's Certification of Service”) (“[O]n this 21st day of September, 2012, a copy of Plaintiff's Petition for Court Approval of Settlement Amount and Allocation Thereof and attached Order, were hand delivered to . . . .”) (emphasis added).

         Ms. Weiss told the State court that she had accepted a settlement offer, id. at 509, and she asked that court “to allocate the entire amount of the settlement to [her] Wrongful Death Claim” because the Estate had “no viable claims.” A.R. at 415; id. at 417. Ms. Weiss claimed that Mr. Weiss “was sedated after his operation until his death” and therefore “suffered no conscious pain and suffering as a matter of law for which his Estate could recover.” Id. at 416. She also claimed that the surgery was “needed . . . to repair his heart condition, ” so “the cost of the operation itself could not be an element of damages for which the Estate could recover.” Id. And, she asserted that she, not the Estate, paid for the funeral. Id.

         On September 25, 2012, the State court judge signed the proposed order submitted by plaintiff's counsel. A.R. at 69 (“State court order” or “State court allocation”); see also Id. at 5 (MAC decision) (“[T]he state court judge signed the proposed Order written and submitted by the appellant's counsel.”); id. at 152 (ALJ decision) (“[T]he Circuit Court Judge signed the proposed Order that had been submitted and prepared [by] the Appellant's counsel.”). The order stated, id.:

(1) That no claim for the costs of Ronald Weiss' heart surgery at St. Joseph Hospital could be made since the evidence showed that the operation was indicated and not caused by negligence;
(2) That the evidence indicates Ronald Weiss had no conscious pain and suffering after his operation until his death; and
(3) That the funeral expenses were not paid from the Estate of Ronald Weiss.

         Accordingly, the court allocated all of the settlement proceeds to the wrongful death claim of Ms. Weiss. Id.; see also ECF 1-1, ¶¶ 28, 30, 32.

         On October 19, 2012, the Medicare Secondary Payer Recovery Contractor (“MSPRC”) informed plaintiff that it received notification of the liability insurance claim. A.R. 408-412 (MSRPC notification) at 408. The letter also confirmed the establishment of a MSP recovery case. Id. On November 19, 2012, Medicare asked the Estate to reimburse the Agency in the sum of $50, 648.45 for the medical expenses incurred on the Decedent's behalf during August 2007. A.R. 393-398 (initial demand letter) at 393. However, on December 15, 2013, Medicare reduced its demand to $26, 404.20 to reflect the Estate's procurement expenses. Id. at 361 (MSPRC revised demand letter, dated July 26, 2013).[7]

         The Estate challenged the Agency's demand through the four-level administrative process. See 42 U.S.C. § 1395ff; see also 42 C.F.R. §§ 405.940, 405.960, 405.1000, 405.1100. An appeal is first heard by the Medicare Secondary Payer Recovery Contractor (MSPRC). It then proceeds before a Qualified Independent Contractor. That matter is followed by a proceeding conducted by an Administrative Law Judge. Ultimately, the matter is heard by the Medicare Appeals Council. Under 42 U.S.C. § 405(g), the statute affords Medicare beneficiaries a mechanism for judicial review if the beneficiary has obtained a final decision under the Agency's administrative process. Id. When Congress authorized judicial review of Medicare decisions under § 405(g), it specifically foreclosed any other judicial review of the Agency's decisions. See 42 U.S.C. § 405(h) (incorporated into the Medicare Act by 42 U.S.C. § 1395ii) (“No findings of fact or decision of the [Secretary] shall be reviewed by any person, tribunal, or government agency except as herein provided.”).

         At each stage of the administrative appeals process, the Estate was found liable for the amount sought by Medicare. See A.R. 492-97 (MSPRC demand letter, dated November 19, 2012); A.R. 432-434 (MSPRC redetermination, dated December 15, 2013); A.R. 330-37 (decision of Qualified Independent Contractor, dated March 5, 2014); A.R. 125-62 (decision of the Administrative Law Judge, dated August 25, 2014); A.R. 1-17 (decision of the MAC, dated February 23, 2017). This suit followed.

         II. Standard of Review

         The Administrative Procedure Act (“APA”) provides the statutory basis for a court to review the final action of a federal agency. See 5 U.S.C. § 702; see also Ergon- W.Va., Inc. v. U.S. Envtl. Prot. Agency, 896 F.3d 600, 609 (4th Cir. 2018); Roland v. U.S. Citizenship & Immigration Servs., 850 F.3d 625, 629 n.3 (4th Cir. 2017); Friends of Back Bay v. U.S. Army Corps of Eng'rs, 681 F.3d 581, 586 (4th Cir. 2012); Lee v. U.S. Citizenship & Immigration Servs., 592 F.3d 612, 619 (4th Cir. 2010); Ohio Valley Envtl. Coal v. Aracoma Coal Co., 556 F.3d 177, 192 (4th Cir. 2009). Notably, “claims brought under the APA are adjudicated without a trial or discovery, on the basis of an existing administrative record . . . .” Audubon Naturalist Soc'y of the Cent. Atl. States, Inc. v. U.S. Dep't of Transp., 524 F.Supp.2d 642, 659 (D. Md. 2007) (citing Citizens for the Scenic Severn River Bridge, Inc. v. Skinner, 802 F.Supp. 1325, 1332 (D. Md. 1991), aff'd, 1992 WL 180138, 1992 U.S. App. LEXIS 17466 (4th Cir. July 29, 1992)). In this context, “review of the administrative record is primarily a legal question.” Citizens for the Scenic Severn River Bridge, 802 F.Supp. at 1332.

         “The APA provides that a reviewing court is bound to ‘hold unlawful and set aside agency action' for certain specified reasons, including whenever the challenged act is ‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.'” Friends of Back Bay, 681 F.3d at 586-87 (quoting 5 U.S.C. § 706(2)(A)); see United States v. Bean, 537 U.S. 71, 77 (2002). Review under the APA is highly deferential, however, and the agency action enjoys a presumption of validity. Ohio Valley Envtl. Coal. v. Aracoma Coal Co., 556 F.3d 177, 192 (4th Cir. 2009) (citing Natural Res. Def. Council, Inc. v. EPA, 16 F.3d 1395, 1400 (4th Cir. 1993)).

         In assessing an agency decision, “the reviewing court ‘must consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment.'” Marsh v. Oregon Natural Res. Council, 490 U.S. 360, 378 (1989) (quoting Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416 (1971)). Notably, “[t]he scope of review under the ‘arbitrary and capricious' standard is narrow and a court is not to substitute its judgment for that of the agency.” Motor Vehicle Mfrs. Ass'n of the U.S. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983). “Deference is due where the agency has examined the relevant data and provided an explanation of its decision that includes ‘a rational connection between the facts found and the choice made.'” Ohio Valley Envtl. Coal., 556 F.3d at 192 (quoting State Farm, 463 U.S. at 43). Thus, “[t]he agency action will stand if the record reveals a rational basis for the decision.” Oddo v. Reno, 175 F.3d 1015, 1999 WL 170173, at *2 (4th Cir. Mar. 29, 1999) (unreported) (citing Trinity Am. Corp. v. U.S. EPA, 150 F.3d 389, 395 (4th Cir. 1998); Clevepak Corp. v. U.S. EPA, 708 F.2d 137, 141 (4th Cir. 1983)).

         “[T]he MAC's decision stands as the final decision of the Secretary.” Paraskevas v. Price, No. 16-9696, 2017 WL 5957101, at *1 (N.D. Ill. Nov. 27, 2017) (citing Wood v. Thompson, 246 F.3d 1026, 1029 (7th Cir. 2001) (stating that when the MAC adopts the administrative law judge's decision, that decision is the final decision of the Secretary)). As to judicial review of factual determinations, “the Medicare statute specifies that ‘the findings of the [Secretary] as to any fact, if supported by substantial evidence, shall be conclusive.'” Almy v. Sebelius, 679 F.3d 297, 301 (4th Cir. 2012) (quoting 42 U.S.C. § 405(g) (alteration in original).

         Substantial evidence requires “‘more than a mere scintilla. [I]t means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.''” Id. at 301-02 (quoting Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)). Accordingly, district courts “do not undertake to re-weigh conflicting evidence, make credibility determinations, or substitute our judgment for that of the Secretary. Where conflicting evidence allows reasonable minds to differ . . ., the responsibility for that decision falls on the Secretary.” Almy, 679 F.3d at 302 (quoting Craig v. Chater, 76 F.3d 585, 589 (4th Cir. 1996)). Accordingly, my review of factual determinations is “necessarily a limited one.” Almy, 679 F.3d at 302.

         III. Discussion

         A. Medicare Secondary Payer Statute

         Medicare is a federal program providing health insurance primarily to individuals aged 65 and older and some disabled individuals under age 65. See 42 U.S.C. §§ 1395 et seq. In 1980, “[t]o preserve Medicare's financial integrity [and] curb skyrocketing Medicare costs, ” Congress enacted the Medicare Secondary Payer (“MSP”) statute. See 42 U.S.C. § 1395y(b); Salveson v. Sebelius, No. 10-4045, 2012 WL 1665424, at *1 (D.S.D. May 11, 2012) ...

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