Michigan Circuit Court Private Cases of Action Opinion

By Rasa Fumagalli, J.D., MSCC

The recent Michigan Circuit Court opinion in the John F. Hull v Home Depot USA, Inc. case (CN. 15-148344-CZ (2/17/2016)) has raised several issues in the area of MSP compliance. The Court was asked to rule on motions for summary disposition of Hull’s Private Cause of Action (PCA) case. Hull filed the action on August 3, 2015, seeking to recover double damages for Home Depot’s failure to promptly reimburse Medicare and a Medicare Advantage Plan the sum of $42,233.16.

A review of the timeline of the events in the underlying claim is important in understanding the case. Hull submitted a workers’ compensation claim in September of 2011 for an alleged knee injury at work in April of 2010. The claim was denied by Home Depot. It went to trial several years later in March 2015. On May 5, 2015, the Workers’ Compensation Magistrate Castora signed an Opinion and Order finding that Home Depot was responsible for paying medical expenses. The Order was mailed to the parties on June 1, 2015. Home Depot filed a Claim for Review of the Order on June 26, 2015. Subsequently, on August 3, 2015, Hull filed a PCA suit seeking double damages for Home Depot’s failure to reimburse the Medicare Trust Fund. Home Depot sent a letter withdrawing its Claim for Review on August 13, 2015. The Michigan Compensation Appellate Commission issued an order granting the withdrawal on August 28, 2015. Home Depot paid Medicare $6,813.83 and Blue Cross Blue Shield $35,419.33 on
September 10, 2015. 

Home Depot raised several arguments in support of its motion to dismiss Hull’s PCA suit. The first argument focused on Home Depot’s payment of the amounts owed to Medicare and Blue Shield. In rejecting this argument, the Court noted that the Plaintiff, Hull, had not been paid.

Home Depot’s second argument focused on the lack of “demonstrated” responsibility prior to Hull’s filing of the PCA suit citing the Glover v Ligget Group case (459 F3d 1304 (CA 11, 2006)). In Glover , the Eleventh Circuit held that “an alleged tortfeasor’s responsibility for payment of a Medicare beneficiary’s medical costs must be demonstrated before an MSP private cause of action for failure to reimburse Medicare can correctly be brought under section 1395y(b)(3)(A).” “459 F3d at 1309.” Home Depot claimed that the filing of the PCA, while its appeal of the underlying workers’ compensation award was pending, was premature.

The Michigan Court was not persuaded by this argument, noting that the Glover holding was limited to claims against tortfeasors. It also noted that this interpretation was supported by the Michigan Court of Appeals in the unpublished opinion in the Holmes v Farm Bureau Gen Ins Co case( May 19, 2015, Docket No. 320723). In Holmes, the Court of Appeals found that contract-based actions involving health plans did not require the “demonstrated responsibility” discussed in the Glover case involving a tortfeasor. Home Depot’s argument that it was a “tortfeasor” was deemed “wholly without merit” since the claim was a workers’ compensation claim and not a tort action. The Court also pointed out in a footnote, that there had been a determination by the initial Magistrate that Home Depot was liable for the bills in the workers’ compensation claim. Since Home Depot did not cite any support for the argument that a determination is only effective after all appeals are exhausted, this position was not addressed by the Court.

Home Depot’s last argument, that its payment of Medicare after receipt of the dismissal of the Claim for Review order supports the dismissal of the PCA, was similarly rejected. The Michigan Court, in citing the Estate of McDonald v Indemnity Ins Co of North America, 46 F Supp 3d 712 (WD KY, 2014), noted that “Once a private cause of action claim has been lodged against a defendant, a defendant cannot escape the double damages provided for in that provision by paying single damages to Medicare.” In denying Home Depot’s motion to dismiss the PCA, the Court specifically noted that Home Depot’s denial of the Plaintiff’s medical expenses for nearly five years forced Medicare to pay them. It was only after the PCA was filed that payment was finally made. Judge McMillen granted Hull’s counter motion for summary disposition and awarded him the sum of $42,233.16 as a reward for his efforts in prompting Home Depot’s reimbursement of conditional payments to the Medicare Trust Fund.

The Hull Court’s decision raises several issues. Its comparison of a workers’ compensation policy to a no-fault insurance policy fails to consider that some workers’ compensation claims are not compensable. If the claim is not compensable, the employer is not liable for the medical bills paid by Medicare. This distinction removes it from a “contract-based action involving a health plan”. In addition, the Court’s dismissal of Home Depot’s argument that the Magistrate’s decision was not final, since an appeal had been filed, flies in the face of general appellate theory. We will continue to monitor the PCA case law and keep you advised of further developments.