Estate of Clinton McDonald vs Indemnity Insurance decision, Civil Action No. 3:12-
CV-577 United States District Court for the Western District of Kentucky, 2014 U.S. Dist
The Estate of McDonald case involved the “ private cause of action” provision of the
Medicare Secondary Payer Act (MSPA) 42 U.S.C. ss 1395 y(b)(3)(A). This provision
establishes “a private cause 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)” 41 U.S.C. ss 1395y(b)(3)(A).
McDonald, a Medicare beneficiary, was injured in a motor vehicle accident on May 10,
2007 while working for O’Reilly Auto. McDonald died on November 5, 2007 allegedly
from the injuries sustained in the accident. Between the accident and his death, Medicare
paid $180,185.75 in injury related medical bills.
The Kentucky Workers’ Compensation Board found that McDonald’s death was related
to the accident and ordered O’Reilly Auto’s workers’ compensation insurance carrier,
Indemnity to pay for McDonald’s medical expenses. Although an appeal was filed by the
Estate, the Kentucky Board’s subsequent March 9, 2010 Order did not impact its prior
opinion on the medical expenses. There is no indication that Indemnity took any action in
regards to Medicare’s conditional payments after this Kentucky Board Order was entered.
The Estate filed a lawsuit on September 13, 2012 under the MSPA “private cause of
action” provision seeking double recovery of the medical expenses given Indemnity’s
failure to reimburse Medicare. After the Estate filed its complaint, Indemnity received an
interim conditional payment letter from MSPRC dated September 19, 2012. Medicare
sought the sum of $181,326.38 in conditional payments. A Final Demand Letter was sent
to Indemnity on October 25, 2012 seeking $184,514.24. Indemnity issued a check to Medicare on December 11, 2012 that was acknowledged by Medicare on January 11,
Both Indemnity and the Estate filed multiple cross motions in the case seeking dismissal
of the action and summary judgment. The US District Court for the Western District of
Kentucky filed its Decision on September 2, 2014 finding that the Estate was entitled
to receive double damages under the MSPA. It rejected Indemnity’s “no harm; no foul”
argument since it disregarded the two years between the Kentucky Board’s Order for
payment of the medical and the filing of the Estate’s suit.