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Woods v. Empire Health Choice

August 20, 2007


The opinion of the court was delivered by: Dora L. Irizarry, U.S. District Judge


On February 1, 2005, plaintiff Jack Woods, acting pro se,brought suit pursuant to the Medicare as Secondary Payer statute, 42 U.S.C. § 1395y(b)(3)(A), against defendants Empire Health Choice, Inc. and Empire Medicare Services, a division of Empire Health Choice Assurance, Inc. (collectively, "Empire"). Plaintiff claims that Empire fraudulently withheld payments to the Medicare system, and failed to ensure that Medicare was not charged for services covered by other insurance companies.

On March 24, 2005, Empire filed a motion to dismiss in lieu of an answer for lack of subject matter jurisdiction pursuant to Fed. R. Civ. P. 12(b)(1), or in the alternative, for failure to state a claim upon which relief may be granted pursuant to Fed. R. Civ. P. 12(b)(6). Upon plaintiff's requests, and in consideration of his pro se status, the parties submitted several stipulations extending plaintiff's time to submit opposition papers to Empire's motion. The court granted three such requests, extending plaintiff's total time to respond to over four months. Plaintiff, however, failed to respond without any explanation.

After the court's third deadline of August 1, 2005 had expired, Empire filed a letter on September 12, 2005 requesting that its dismissal motion be deemed unopposed. The court granted Empire's application on September 13, 2005. On September 30, 2005, plaintiff filed a letter pro se requesting "one final extension of time" to respond to Empire's motion. The court granted plaintiff's request, vacating its September 13, 2005 order and extending plaintiff's deadline to submit his opposition papers until October 20, 2005. The court admonished plaintiff that failure to submit opposition papers by October 20, 2005 would reinstate the court's order of September 13, 2005 and render Empire's motion unopposed.

On November 1, 2005, after plaintiff again failed to comply with the court's deadline to file its opposition papers, Empire filed a letter requesting that the court reinstate its order of September 13, 2005. The court granted Empire's request the following day, on November 2, 2005. On August 4, 2006, plaintiff, with the assistance of newly-obtained counsel, filed a letter request for oral argument on Empire's motion. The court denied plaintiff's request in an order dated August 11, 2006. Plaintiff made a final request on August 15, 2006 for oral argument; however, the court denied this request as well on August 30, 2006, reiterating that the instant motion is deemed unopposed.

For the reasons set forth below, Empire's motion to dismiss is granted, and plaintiff's complaint is dismissed in its entirety.

I. Background

A. Medicare and the MSP Statute

The Medicare program was established in 1965 as Title XVIII of the Social Security Act to provide health insurance benefits for persons above sixty-five years of age, persons who are disabled, and persons with end-stage renal disease. See 42 U.S.C. § 1395 et seq. The program consists of two parts: (1) Part A, entitled "Hospital Insurance Benefits for Aged and Disabled," provides insurance coverage for hospital, related post-hospital, and home health services, as well as hospice care, see 42U.S.C. § 1395c; and (2) Part B, entitled "Supplementary Medical Insurance Benefits for Aged and Disabled," is a federally-subsidized, voluntary health insurance program that provides insurance for a portion of some medical expenses excluded from Part A coverage. See 42 U.S.C. §§ 1395j-1395t. The Department of Health and Human Services ("HHS") contracts with "fiscal intermediaries," or private insurance companies, to administer major medical claims under the Part A program, as well as "carriers," also private insurance companies, to administer claims submitted under the Part B program. See 42 U.S.C. §§ 1395h(a), 1395u(a).

From its inception until 1980, Medicare generally paid for medical services whether or not the recipient was also covered by another health plan. Fanning v. United States, 346 F.3d 386, 388 (3d Cir. 2003) (citing Social Security Amendments of 1965, Pub.L. No. 89-97, § 1862(b), 79 Stat. 286). Beginning in 1980, however, Congress enacted a series of cost cutting amendments to the Medicare program, collectively known as the Medicare as Secondary Payer ("MSP") statute.*fn1 Id. The MSP statute was designed to "lower overall federal Medicare disbursements by requiring Medicare beneficiaries to exhaust all available insurance coverage before looking to Medicare's coverage." Id. at 388-39 (citing United States v. R.I. Insurers' Insolvency Fund, 80 F.3d 616, 618 (1st Cir. 1996)). The MSP statute achieves this objective in two ways: (1) it "bars Medicare payments where 'payment has already been made or can reasonably be expected to be made promptly (as determined in accordance with regulations)' by a primary plan," id. at 389 (quoting 42 U.S.C. § 1395y(b)(2)(A)); and (2) "when Medicare makes a payment that a primary plan was responsible for, the payment is merely conditional and Medicare is entitled to reimbursement for it." Id. (citing 42 U.S.C. § 1395y(b)(2)(B); Blue Cross and Blue Shield of Texas v. Shalala, 995 F.2d 70, 73 (5th Cir. 1993)). Both fiscal intermediaries and carriers process claims submitted by beneficiaries' health-care providers; part of their duty is to ensure that Medicare does not pay for services covered by private insurers, and to reimburse Medicare when this does occur. See Pani v. Empire Blue Cross Blue Shield, 152 F.3d 67, 70 (2d Cir. 1998).

The MSP statute sets forth an avenue by which the United States may bring an action against a fiscal intermediary or carrier to recover payments in the event that Medicare is not properly reimbursed. 42 U.S.C. § 1395y(b)(2)(B)(iii). The statute also provides for a limited private right of action "for damages (which shall be in an amount double the amount otherwise provided) in the case of a primary plan which fails to provide for primary payment (or appropriate reimbursement) in accordance with paragraphs (1) and (2)(A)." 42 U.S.C. § 1395y(b)(3)(A). As interpreted by the Second Circuit in Manning v. Utils. Mut. Ins. Co., § 1395y(b)(3)(A) allows "individuals whose medical bills are improperly denied by insurers and instead paid by Medicare" to bring suit, and "the government is subrogated to the right of the private citizen for the recovery of such funds." 254 F.3d 387, 394 (2d Cir. 2001) (citing 42 U.S.C. § 1395y(b)(3)(A) and (b)(2)(B)(iii)).

B. The Instant Action

In the complaint, plaintiff alleges that Empire is a private health insurer contracted by HHS as both a Medicare carrier and fiscal intermediary. (Compl. ¶ 4.) Part of Empire's duties is to ensure that the Medicare program is not billed for and does not pay claims that are primarily covered by another private insurance plan. (Id. at ¶ 5.) Plaintiff further alleges that Empire "failed to collect monies owed to the Medicare system by other responsible entities in accordance with its responsibilities as a carrier/intermediary and pursuant to the MSP statute." (Id. at ¶ 7.) Additionally, Empire, "in its role as a private health insurer was, itself, responsible for a ...

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