United States District Court, D. Maryland
Lipton Hollander, United States District Judge.
Memorandum Opinion, I resolve an appeal from the final
decision of the Medicare Appeals Council (“MAC”),
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.
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”). 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
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.
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
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
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.
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. 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.
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.
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”).
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
to trial, the parties to the medical malpractice lawsuit
reached a confidential settlement. A.R. 404 (“Final
Settlement Detail Document”). 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.
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 . . . .”)
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.
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.
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.
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
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.”).
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
Standard of Review
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.
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)).
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
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).
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.
Medicare Secondary Payer Statute
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) ...