In this blogger's family, Monopoly is cutthroat. No freebies. No passes. I own it, you land on it – you pay. Can't pay, take a mortgage. We play to bankruptcy. Being from New Jersey we are partial to the original based on the streets of Atlantic City. But we've also owned the Star Wars edition, the Simpsons edition, a few anniversary editions, and the Cheaters Edition. So, we are vey familiar with drawing the card that says: "Go directly to jail; do not pass go, do not collect $200." The point of the card is to say that you have to do as it says immediately and you forego any of the usual benefits you would be entitled to from moving around the board – such as collecting $200 when you pass go. In our household, the phrase has taken on a slight variation in meaning. We use it to convey that if you don't do "A," you're not going to get "B." We've been known to throw in a little, "how can you have any pudding if you don't eat your meat?" from time to time too; but until hitting their teens, Pink Floyd didn't resonate as well with the youngsters. The point is, if you aren't meeting the prerequisite, you don't get to jump straight to the reward.
That's what plaintiff learned in Humana v. St. Jude Medical, 2020 U.S. Dist. LEXIS 231796. *1 (D. Del. Dec. 10, 2020). Plaintiff is a Medicare Advantage private insurer who filed suit against the manufacturer of defibrillators under the Medicare Secondary Payer statute ("MSP") to recover costs associated with devices that had to be explanted. Defendant became aware that in some devices the battery was depleting prematurely. Some patients opted to have their devices replaced and the manufacturer offered to cover any out-of-pocket expenses not covered by their insurers. Id. at *4-5.
Plaintiff brought two federal causes of action. First, under the charge rule, a Medicare Advantage provider, as a secondary payer, is entitled to charge another entity for services it paid for if that other entity should have covered the cost. Second, plaintiff sued under the MSP's private right of action which allows an insurer to request reimbursement from a third-party that had a responsibility to pay. Both of those provisions entitle a secondary payer to seek reimbursement, but both require more – a demonstration that the party from whom reimbursement is sought is in fact responsible. Id. at *6-7.
Plaintiff also filed five state claims, but notably missing from among them was a product liability claim. Id. at *5. So, plaintiff wanted the manufacturer to reimburse it with absolutely no showing whatsoever that the defibrillators were defective and/or that defendant was liable. Or as the court put it, plaintiff wanted to skip over "[t]hose knotty state-law issues," and "jump right to getting paid." Id. at *2. But if you don't pass go...?
Until a product is proven defective, its manufacturer is not a person that should have paid for a related medical procedure. The MSP helps "insurers collect from a third party after it has been found liable." Id. There are so many things the court does not know because plaintiff skipped the step of filing a product liability suit. The devices may not be defective at all. Or, if defective it might not be the manufacturer who is liable. Or claims against the manufacturer might be preempted. The court cannot assume that had plaintiff brought a product liability action it would have won. Id. at *7.
Plaintiff argued that the manufacturer's voluntary payment of some expenses was an admission that the manufacturer knew it was responsible for the costs of the surgeries. The court, however, concluded there were several reasons why a manufacturer would defray its customers' costs beyond a legal duty to do so. Id. at *8. In its brief, plaintiff argued that the payments were actually settlements with patients who agreed not to sue. The court ignored the argument for two reasons – plaintiff seems to have simply made it up and it could not amend its complaint via its briefing. Id.
After dismissing the federal claims as baseless, the court had no jurisdiction over the remaining state law claims and so dismissed those as well. The overall takeaway, "[plaintiff] cannot skip straight to getting paid; not in court at least." Id. at *1. Or Monopoly.
Originally Published by Reed Smith, December 2020
This article is presented for informational purposes only and is not intended to constitute legal advice.