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Estate of McDonald v. Indem. Ins. Co. of N. Am.

United States District Court, W.D. Kentucky, Louisville Division

September 2, 2014

ESTATE OF CLINTON MCDONALD, PLAINTIFF
v.
INDEMNITY INSURANCE COMPANY OF NORTH AMERICA, DEFENDANT

Decided August 28, 2014

For Vivian McDonald, Administratix estate of Clinton McDonald, Plaintiff: Linda R. Magruder, LEAD ATTORNEY, Louisville, KY.

For Indemnity Insurance Company of North America, Defendant: Allison W. Weyand, LEAD ATTORNEY, Tanya Y. Bowman, Frost Brown Todd LLC - Louisville, Louisville, KY.

Page 713

MEMORANDUM OPINION

Charles R. Simpson III, Senior United States District Judge.

Plaintiff Estate of Clinton McDonald (the " Estate" ) brings this action pursuant to the " private cause of action" provision of the Medicare Secondary Payer Act (" MSPA" ). 42 U.S.C. § 1395y(b)(3)(A). The court previously denied a motion to dismiss for failure to state a claim made by Defendant Indemnity Insurance Company of North America (" Indemnity" ) (DN 14) and a motion for summary judgment made by the Estate (DN 16). In so doing, the court indicated that its reading of the case of Bio-Medical Applications of Tennessee, Inc. v. Central States Southeast and Southwest Areas Health and Welfare Fund, 656 F.3d 277 (6th Cir. 2011) compelled the conclusion that the Estate could not establish a cause of action against Indemnity under the MSPA. However, as neither party had directly addressed the conundrum caused by various inconsistencies in the statute and Bio-Medical's interpretation of the those provisions, the court declined to enter judgment in either party's favor, and affording the parties an opportunity to address the court's conclusions about the language of the statute in light of Bio-Medical.

The parties filed cross-motions for summary judgment. DNs 27; 28. After briefing was completed, the United States Court of Appeals for the Sixth Circuit decided Michigan Spine and Brain Surgeons, PLLC v. State Farm Mutual Automobile Insurance Company, No. 13-2430, 758 F.3d 787, 2014 WL 3440644 (6th Cir. July 16, 2014). The Estate filed a notice of the issuance of the Michigan Spine decision, noting that the case is directly on point supporting the Estate's position that it does have a viable cause of action. Indemnity has not commented on this new authority. For the reasons set forth herein, the court concludes that the Estate is entitled to summary judgment against Indemnity in this matter for $184,514.24.00.

I.

Clinton McDonald (" McDonald" ) was employed by O'Reilly Auto Parts.[1] Indemnity was the worker's compensation insurance carrier for O'Reilly. On May 10, 2007, McDonald was in a motor vehicle accident while acting within the course and scope of his duties as an employee of O'Reilly Auto Parts. McDonald suffered severe injuries as a result of the accident. On November 5, 2007, he passed away. At the time of the accident, McDonald was a Medicare recipient. Medicare paid $180,185.75 in medical bills to treat McDonald between the accident and his death.

O'Reilly disputed whether McDonald's death was caused by the work-related accident. On December 28, 2009, the Kentucky Workers' Compensation Board found that McDonald's death was caused by the accident. The Worker's Compensation

Page 714

Board ordered O'Reilly or its worker's compensation insurance carrier to pay for McDonald's medical expenses. After the Estate moved to reconsider portions of the Worker's Compensation Board opinion and order, the Worker's Compensation Board issued an order on March 9, 2010 amending its earlier opinion and order, although not as to its conclusion that O'Reilly or its worker's compensation insurance carrier were required to pay for McDonald's medical expenses.

On September 13, 2012, the Estate filed this lawsuit alleging that Indemnity having failed to reimburse Medicare for the medical expenses of McDonald that Medicare had paid, the Estate was entitled to a double recovery of that sum under the private cause of action provision of the MSPA. After the Estate filed its complaint, Indemnity received a Conditional Payment Letter from the Medicare Secondary Payer Recovery Contractor (" Medicare" ) that was dated September 18, 2012. That Conditional Payment Letter stated that Medicare had made $181,326.38 in conditional payments for McDonald's healthcare. The letter requested that Indemnity " refrain from sending any monies to Medicare prior to submission of settlement information and receipt of a demand/recovery calculation letter from [Medicare's] office," so as to " eliminate underpayments, overpayments, and/or associated delays." Then, on October 25, 2012, Medicare issued Indemnity a " Final Demand Letter" asking that Indemnity pay $184,514.24. The Final Demand Letter stated that interest would be assessed on that amount if it was not fully resolved within 60 days of the date of the letter. On December 11, 2012, Indemnity issued a check to Medicare for $184,514.24. A January 11, 2013 letter from Medicare acknowledged receipt of the check and stated that the amount due had been reduced to zero.

On February 25, 2013, Indemnity filed a motion to dismiss the Estate's complaint. The Estate responded, arguing that Indemnity's motion to dismiss should be treated as a motion for summary judgment and denied. ...


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