Can Tort Victims Recover the Total Amount of Medical Expenses Billed?

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Good news for defendants. The Court of Special Appeals recently decided that the Medicare Secondary Payer Act does not preempt the Maryland statute that allows post-trial motions to reduce judgments for past medical expenses. The difference between the amount health care providers charge for medical expenses and the amount health insurers actually pay is often written off by health care providers. In Netro v. Greater Baltimore Medical Center, Inc., No. 1990, 2018 WL 3323712 (Md. Ct. Spec. App. July 5, 2018), the Court concluded that the federal and state laws do not conflict, and that under Maryland law medical expense judgments may be reduced by the amount of medical bills that are written off by health care providers.

Initially, the Medicare program was the primary payer for covered medical services furnished to its beneficiaries, regardless of whether the beneficiary had other insurance available. [1] As the primary payer, Medicare had the primary responsibility of paying the claim. In an attempt to reduce spending and preserve the fiscal integrity of the Medicare program, Congress enacted the Medicare Secondary Payer Act, 42 U.S.C. §1395y(b) (“MSP Act”), making Medicare the “secondary” payer in situations where a “primary plan” exists. Thus, under the MSP Act, Medicare does not pay for medical services when payment has been made or can reasonably be expected to be made by a primary plan. Instead, Medicare becomes a “secondary payer” and is only responsible for paying the excess medical expense, if and when the amount paid by the primary plan is exhausted.

Under Maryland law, a plaintiff who brings a negligence action is allowed to put into evidence the bill submitted by the health care provider and the defendant is prohibited from bringing to the attention of the jury the fact that a portion of the bill has been written off. Nevertheless, as a result of Section 3-2A-09 of the Courts and Judicial Proceedings Article (Cts. & Jud. Proc.) of the Maryland Code (hereinafter “the Maryland Act”), a defendant against whom a verdict for past medical expenses has been entered may file a post-trial motion to reduce the judgment by the amount of the write-offs.

In Netro, supra, the Court of Special Appeals considered whether these laws were in conflict—one attempting to reduce Medicare spending and the other allowing judgments to be reduced (including potential repayment owed to Medicare).  The appellant/plaintiff argued that allowing a judgment to be reduced by a post-trial motion under the Maryland Act conflicts with the “paramount Congressional purpose” of the MSP. She contended that the “paramount [ ] purpose” was to ensure that the Medicare Program be reimbursed for any conditional payments made “to the maximum extent possible,” and if the Maryland Act was enforced, Medicare would be entitled to less repayment.  

The Court found that the purpose of the MSP is to ensure that Medicare is the secondary payer of medical bills to the greatest extent possible, and that the Maryland Act in no way interferes with, or conflicts with that purpose. The Court explained that “[a] primary plan and an entity (such as appellant) must reimburse Medicare ‘for any payment made’ by Medicare ‘with respect to an item or service if it is demonstrated that such primary plan has or had a responsibility to make payment with respect to such item or service.’” 42 U.S.C. § 1395y(b)(2)(B)(ii). Ultimately, the Court held that the MSP does not preempt any part of the Maryland Act.

Put simply, Medicare is to be reimbursed for the amount actually paid, not the amount billed. In accord, the Maryland Act prevents tort victims from recovering a verdict of past medical expenses that neither the plaintiff, nor anyone acting on the plaintiff’s behalf, ever paid or was obligated to pay. 

[1] With the exception of those who were also covered by Workers’ Compensation, Veteran’s Administration benefits, and Federal Black Lung benefits. See https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Coordination-of-Benefits-and-Recovery-Overview/Medicare-Secondary-Payer/Medicare-Secondary-Payer.html.

Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. The author has provided the links referenced above for information purposes only and by doing so, does not adopt or incorporate the contents. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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