The opinion of the court was delivered by: THOMAS A. HIGGINS
The Court has before it the Report and Recommendation (entered July 12, 1993; Docket Entry No. 71) of the Magistrate Judge, as well as the objections of the plaintiff (filed July 26, 1993; Docket Entry No. 76), defendant Metropolitan Life Insurance Company (MetLife) (filed August 3, 1993; Docket Entry No. 77), and defendant United Food and Commercial Workers Health and Welfare Fund (United Fund) (filed August 6, 1993; Docket Entry No. 79). The Court hereby makes a de novo determination of the case upon the record, pursuant to the Federal Rules of Civil Procedure 72(b), 28 U.S.C. § 636(b)(1)(B), and Rule 506 of the Local Rules Governing Duties of and Proceedings Before Magistrates.
In his Report and Recommendation, the Magistrate Judge recommended the following: (1) denying MetLife's motion (filed January 15, 1993; Docket Entry No. 39) for summary judgment; (2) granting United Fund's motion (filed February 26, 1993; Docket Entry No. 50) for summary judgment to the extent that it is not a primary payer of the plaintiff's claim under the Medicare Act; and (3) granting the plaintiff's motion (filed March 5, 1993; Docket Entry No. 54) for summary judgment as to MetLife's obligation as the primary payer under 42 U.S.C. § 1395y(b)(1)(B).
For the reasons set forth below, the Court shall reject the Report and Recommendation. The plaintiff's objection
(Docket Entry No. 76) and the objections (Docket Entry No. 77) of defendant MetLife
to the Report and Recommendation shall be sustained. The objection (Docket Entry No. 79) of United Food,
as well as its motion (filed April 2, 1993; Docket Entry No. 62) to strike,
shall be dismissed as moot.
The plaintiff in this action, Stephen Perry, executor for the estate of Harold L. Perry, originally filed this action in state court against the defendants, MetLife, United Fund, Blue Cross and Blue Shield of Tennessee, and Vanderbilt University Medical Center (VUMC), for breach of contract and bad faith insurance practices. The cause of action against Blue Cross and Blue Shield of Tennessee was removed to this Court.
Louis Sullivan, Secretary of Health and Human Services, asserted his position as the real party in interest, since Blue Cross and Blue Shield of Tennessee simply operated as his agent in administering payment of medical benefits under Medicare, and was substituted as defendant. See order (Docket Entry No. 4) entered December 30, 1991. Sullivan also asserted the Court's lack of subject matter jurisdiction over the plaintiff's claim since the applicable administrative remedies had not been exhausted.
The plaintiff filed a motion (Docket Entry No. 17) on September 30, 1992, to amend the complaint to include additional causes of action under ERISA and 42 U.S.C. § 1395y, which was granted by the Court. Order (entered October 20, 1992; Docket Entry No. 19). The plaintiff's amended complaint (Docket Entry No. 20) was filed on October 20, 1992.
The plaintiff's claims arise out of medical bills which were incurred during Harold Perry's hospitalization at VUMC in late 1988. The facts are undisputed. Mr. Perry was an employee at General Electric (GE) for many years until he became disabled and retired in 1983. As provided in the GE benefits package, he continued to maintain medical coverage under a plan administered by MetLife. Mr. Perry became ill and was hospitalized at VUMC from November 23, 1988, until his death on December 24, 1988. During this period of time, Mr. Perry's wife was employed by Kroger and both she and Mr. Perry were beneficiaries of Kroger's employee medical plan administered by United Fund. After receiving a bill for the medical expenses incurred during Mr. Perry's hospitalization from VUMC, MetLife declined payment, stating that the GE medical plan was not the primary payer.
Likewise, United Fund declined payment of the bill submitted by Mr. Perry's estate, stating its benefits could be determined only after payment was made by the primary payer, which it asserted was the GE plan.
In essence, the plaintiff contends that Mr. Perry's medical expenses of approximately $ 117,539.13 were never paid despite the fact that he had medical coverage through both his former employer's benefits plan and the health benefits plan of his wife's employer.
He claims that one or both of these medical benefits plans are responsible as primary payer for Mr. Perry's VUMC medical expenses and that each failed to fulfill its responsibility to provide health care coverage as set forth in the benefits plan and as required by the Medicare Secondary Payer statute.
In response, MetLife contends that United Fund is the primary payer on Mr. Perry's medical claim under the Social Security Act and that MetLife's responsibility for coverage would be tertiary to Medicare's secondary status.
Furthermore, MetLife claims that any responsibility to pay is contingent upon Mr. Perry's legal obligation to pay the expenses in question and because VUMC's claim against Mr. Perry's estate is time-barred, MetLife is not required to pay.
As might be expected, United Fund asserts that MetLife is the primary payer on the medical claim and that MetLife's determination of benefits is required before United Fund can determine its benefits under the coordination of benefits provisions. It, too, claims that VUMC's medical expense claim against Mr. Perry's estate is time-barred and therefore it is not obligated to pay the expenses.
In its objections (Docket Entry No. 77) to the Report and Recommendation, MetLife contends that the facts do not support the conclusion that Mr. Perry was a GE employee at the time his medical expenses were incurred. Objections at 1-6. MetLife further asserts that the Magistrate Judge erred in concluding that because the GE plan is governed by ERISA, Mr. Perry was considered by federal law to be an employee of GE. Id. at 6-7. Finally, MetLife contends that application of the MSP statute, 42 U.S.C. § 1395y(b)(1)(B), and the administrative guidelines dictates that United Fund is the primary payer of the medical expenses. Objections at 7-9. The Court finds that these objections have considerable merit.
The standard for summary judgment and its application are fully articulated by the Magistrate Judge in his Report and Recommendation and need not be reiterated here. Report and Recommendation at 10-18. The parties have conceded that there are no genuine disputes of material fact which must be resolved. Thus, the dispute centers around the resolution of two questions of law, namely: (1) Which medical benefits plan, if not both, is the primary payer responsible for payment of Mr. Perry's VUMC medical expenses? (2) Does VUMC's failure to file a timely claim against Mr. Perry's estate extinguish the primary payer's duty to pay Mr. Perry's valid medical expenses? Therefore, the Court must answer these questions of law in order to determine which of the parties' motions for summary judgment shall be granted.
A. Medicare Secondary Payer Statute
Title XVIII of the Social Security Act (Medicare), 42 U.S.C. § 1395, et seq., provides health insurance for the aged and disabled. Although Medicare was initially the primary source of payment for its beneficiaries' medical expenses, Congress subsequently amended the Medicare Act by enacting the Medicare Secondary Payer (MSP) statute, 42 U.S.C. § 1395y, in order to reduce costs and protect the financial well-being of the Medicare program. See 128 Cong. Rec. 22402 (1982). The MSP statute is applicable to some Medicare beneficiaries having alternate health care payment plans, which are required to pay health care expenses "primary" to Medicare.
The MSP statute expressly provides for Medicare's secondary payer status relative to beneficiaries who are the working aged, disabled active individuals and individuals with end stage renal disease who are covered by designated group health plans. 42 U.S.C. § 1395y(b)(1). The statute specifically mandates that, other than a conditional payment, a Medicare payment may not be made for any medical expense for such individuals to the extent that "payment has been made, or can reasonably be expected to be made, with respect to the item or service as required" by the group health plans. 42 U.S.C. § 1395y(b)(2)(A)(i). The MSP statute further defines the term "primary plan" as a group health plan or large group health plan from which payment has been made or can reasonably be expected to be made. 42 U.S.C. § 1395y(b)(2)(A). Finally, the statute establishes a private cause of action for damages "in the case of a primary plan which fails to provide for primary payment (or appropriate reimbursement) in accordance with such paragraphs (1) and (2)(A)." 42 U.S.C. § 1395y(b)(3)(A).
It is undisputed that Mr. Perry was a participant in the health care plans administered by both MetLife and United Fund, although each of these defendants argues that primary payer status belongs to the other. Thus, the determinative question before the Court is whether Mr. Perry was a "disabled active individual" covered by either health care plan, thereby requiring primary payment of his medical expenses by one or both administrators.
The Court must first determine whether Congress manifested an "unambiguously expressed intent" that resolves this question. Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43, 104 S. Ct. 2778, 2781-82, 81 L. Ed. 2d 694, 702-03 (1984). Of course, the statutory language is the best indication of congressional intent. However, if the statute does not speak to the issue at hand, the Court must examine the administrative agency's construction of the law
and determine whether it is reasonable and conforms to the statutory language as well as statutory purposes. In such a ...