THE STATE
OF SOUTH CAROLINA
In the Supreme Court
APPEAL FROM BEAUFORT COUNTY
Court of Common Pleas
Curtis L. Coltrane, Special Circuit Court Judge
Opinion Number 4026 (S.C. Ct. App. filed September 26, 2005)
Phyllis J. Wogan, Individually and as Personal Representative
of the Estate of James John Wogan…………………………………Appellant/Petitioner,v.
Kenneth C. Kunze, M.D.; Hilton Head Gastroenterology, P.A.;
Thomas P. Rzeczycki, M.D.; Hilton Head General and
Laparoscopic Surgery, P.A.; Gary W. Thomas, M.D.;
and Gary W. Thomas, M.D., P.A……………………………….…………...Respondents.
REPLY BRIEF OF APPELLANT/PETITIONER
Timothy M. Wogan
PO Box 22124
Hilton Head, SC 29925
(843) 815-6921|
Attorney for Petitioner\
Samuel S. Svalina
Jennifer I. Campbell
PO Drawer 1207
Beaufort, SC 29901
(843) 524-0333
Attorney for the Petitioner
May 17, 2007
INDEX
Index………………………………………………………………… …… 2
Table of Authorities……………………………………………………..... 3
Arguments……………………………………………………………….... 4
42 C.F.R. § 422 is inapplicable to this case and
does not
govern the rights of the
Appellant/Petitioner…………………… 4
Respondent must file claims with Medicare and
his
failure to do so precluded any remedy under
the Medicare Act………………………………………………….. 8
The Respondent had a duty to file Medicare
Claims……………………………………………………………… 10
Appellant/Petitioner’s state law claims
are not preempted by federal law……………………………… 12
Conclusion………………………………………………………………… 13
TABLE OF AUTHORITIES
Brogdon ex rel. Cline v. Nat’l Healthcare Corp., 103
F.Supp.2d 1322
(N.D. GA. 2000)……………………………………………………… 7
Christus Health Gulf Coast v. Aetna, Inc.,
167 S.W.3d 879,
(Tex.App.-Houston [14 Dist.], 2005]………………………………… 9,12
Peterson v. Nat’l Railroad Passenger Corp., 365 S.C.
391, 618
S.E.2d 903 (2005)……………………………………………………... 10,11
STATUTES AND REGULATIONS
Section 114 of The Benefits Improvement and Protection
Act of 2000, Pub. Law. 106-554……………………………………… 8
49 C.F.R. § 213…….………………………………………………… 11
42 C.F.R. § 405(2003)………………………………………………… 4,5,12
42 C.F.R. § 405.801(2003)…………………………………………… 6,7,10
42 C.F.R. § 405.1136(d) (2003)……………………………………… 6
42 C.F.R. § 422(2003)………………………………………………… 4,5,12
42 C.F.R. § 422.1(b)(2003)…………………………………………… 4,5
42 C.F.R. § 422.2(2003)……………………………………………… 5
42 C.F.R. § 422.402(2003)…………………………………………… 12
42 C.F.R. § 422.402(b)(3)(2003)……………………………………… 12
42 C.F.R. § 422.564(2003)…………………………………………….. 4
OTHER AUTORITY
Department of Health and Human Services, Health
Care Financing Administration, Transmittal B-01-10,
Dated February 9, 2001………………………………………………… 9
Medicare Claims Processing Manual
Chapter 1, § 30.3.10, entitled “Carrier
Submitted Bills by Beneficiary………………………………………… 9
42 C.F.R. § 422 is inapplicable to this case and does not govern the rights of the Appellant/Petitioner
Respondent Kunze’s main argument in response to Petitioner/Appellant is that the Decedent failed to exhaust all administrative remedies available under the Medicare Act and, as such, the claims of Appellant/Petitioner for state law negligence and breach of fiduciary duty are barred. This argument is without merit and was never raised at the trial level.
Respondent’s legal basis to support his exhaustion argument is flawed because it relies almost entirely on sections of the Medicare Act, which are completely inapplicable to the instant case. The Respondent relies upon the portion of the Medicare Act dealing with Medicare HMO’s (42 C.F.R. § 422)(2003) and not the portion of the Medicare Act dealing with Physician services/supply reimbursement under Medicare Part B (42 C.F.R. § 405)(2003). They are two completely different Parts of the Medicare Act with differing rules, regulations and obligations.
Respondent erroneously applies the rules and regulations applicable to Medicare HMO’s (42 C.F.R. § 422)(2003) to the instant case, which involves Medicare Part B (42 C.F.R. § 405)(2003) and argues that “dissatisfaction” with the Respondent’s refusal to submit claims could have been “grieved [by the Decedent] pursuant to 42 C.F.R. § 422.564” and such grievance procedure must be exhausted by the Decedent prior to bringing the instant case. See Respondent’s Brief, p. 14.
42 C.F.R. § 422’s application to Medicare HMOs is clearly set forth in 42 C.F.R. § 422.1(b)(2003), which states the section “establishes standards and sets forth the requirements, limitations and procedures for Medicare services furnished, or paid for, by Medicare +Choice organizations through Medicare +Choice plans.” See 42 C.F.R. § 422.1(b)(2003) [emphasis added]. “M+C organization means a public or private entity organized and licensed by a State as a risk-bearing entity…M+C plan means health benefit coverage offered under a policy or contract by an M+C organization that includes a specific set of health benefits offered at a uniform premium and uniform level of cost sharing to all Medicare beneficiaries residing in the service area of the M+C plan…” See 42 C.F.R. § 422.2 (2003). Any grievance procedure provided for under 42 C.F.R. § 422 is clearly applicable only to Medicare HMO’s. The Respondent is not a Medicare HMO, the Decedent was not enrolled in a Medicare HMO and, therefore, Respondent’s reliance on 42 C.F.R. § 422 is completely misplaced.
It is clear that the only administrative scheme available to the Decedent would have been governed by the rules, regulations and obligations set forth in 42 C.F.R. § 405, Subpart H, entitled “Appeals under the Medicare Part B Program.” The administrative scheme for Medicare Part B benefits mandates the filing of a claim by the physician and, ultimately, a coverage determination by the Medicare Carrier. Specifically,
“As a rule, providers are not required to submit claims for non-covered services. However, if a beneficiary or his/her representative believes a service may be covered or desires a formal Medicare determination for consideration by a supplemental insurance, the provider must submit a claim.”
R. p. 148. [emphasis added]
And,
“The Medicare Carrier makes an initial determination when a request for payment for part B benefits is submitted. If an individual beneficiary is dissatisfied with the initial determination, he or she may request, and the carrier will perform, a review of the claim. Following the carrier’s review determination, the beneficiary may obtain a carrier hearing if the amount remaining in controversy is at least $100…Following the carrier hearing, the beneficiary may obtain a hearing before an ALJ if the amount remaining in controversy is at least $500. If the beneficiary is dissatisfied with the decision of the ALJ, he or she may request the Departmental Appeals Board to review the case. Following the action of the DAB, the beneficiary may file suit in Federal district court if the amount remaining in controversy is at least $1,000.”
42 C.F.R. § 405.801 (2003)
And,
“In any civil action described in paragraph (a) of this section, the Secretary of HHS, in his or her official capacity, is the proper defendant. Any civil action properly filed shall survive notwithstanding any change of the person holding the Office of the Secretary of HHS or any vacancy in such office.”
42 C.F.R. § 405.1136(d).
Medicare Part B contains an administrative scheme, as set forth above, however, that scheme is inapplicable to Appellant/Petitioner’s claims and does not require exhaustion. If Respondent filed these claims, there could only be two outcomes. The first outcome would be consistent with the uncontradicted expert testimony in this case, namely, that these claims, most probably, would have been accepted by Medicare. See R. 143 ¶ 17(c) and (d) and p. 165 ¶ 19. With acceptance of the claims there would be no need for Medicare’s administrative remedies. The Respondent’s refusals precluded this possible outcome and this remedy.
The other outcome would be that the claims would have been denied, which, again, is completely contradictory to the uncontested expert testimony. With a denial, the Decedent would have had the opportunity to challenge that denial by and through Medicare’s Part B appeal process, which could ultimately result in a claim against the Secretary of Health and Human Services in Federal court. Again, Respondents refusal to submit claims precluded this possible outcome and left the Decedent with no recourse but the instant case. Therefore, Medicare Part B’s administrative scheme is not an effective administrative remedy when the Respondent negligently and purposefully failed to file claims.
Even if the Medicare appeals process applied to the state law claims brought by the Appellant/Petitioner against the Respondent, any exhaustion requirement under that process would not apply to those claims. “[T]he Court is not authorized to address claims against the United States, the Secretary of Health and Human Services, or their officers and employees, that arise under the Medicare Act until after the conclusion of an administrative review process.” Brogdon ex rel. Cline v. Nat’l Healthcare Corp., 103 F.Supp.2d 1322 (N.D. GA 2000). Clearly, the Brogdon Court emphasized the requirement of exhaustion under the Medicare administrative scheme is strictly limited. Specifically, in denying the Brogdon defendants motion to dismiss, the Court stated, “Plaintiff’s do not assert claims against the United States, the Secretary of Health and Human Services, or their officers of employees. Furthermore, the Medicare Act contains no administrative review process that applies to Plaintiff’s claims. The Court therefore rejects this argument.” Id at 1328. The Brogdon ruling makes sense considering the administrative scheme established by 42 C.F.R. § 405.801 (2003), which clearly contemplates the issue subject to the appeal process is a claim denial made by the Medicare carrier and not state law claims brought against a physician seeking state law remedies. Furthermore, Brogdon states that Congress “did not intend to preclude residents from pursuing common law remedies.” Id. at 1331.
Obviously, the Respondent is neither the United States Government, the Secretary of Health and Human Services nor an officer or employee of The United States. His attempt to avail himself of an administrative process that he thwarted and an administrative exhaustion requirement that is strictly limited to The United States, The Secretary of Health and Human Services and/or officers or employees of The United States is completely misplaced.
Respondent must file claims with Medicare and his failure to do so precluded any remedy under the Medicare Act
Respondent argues that the Decedent has the ability to file his own claims with Medicare. This contention is incorrect.
The Decedent was precluded from filing his own claims because of Medicare’s specific regulations related to drugs covered under Medicare Part B. The Medicare rules and regulations required the Respondent to take assignment of the claims for drugs covered under Medicare Part B, this is called mandatory assignment. Specifically, “Under § 114 of BIPA [Benefits Improvement and Protection Act], payment for any drug or biological covered under Part B of Medicare may be made only on an assignment-related basis. Therefore, no charge or bill may be rendered to anyone for these drugs or biologicals for any amount except the Medicare Part B deductible and coinsurance amount.” See Department of Health and Human Services, Health Care Financing Administration, Transmittal B-01-10, dated February 9, 2001. “CMS [the Center for Medicare Services] does not accept beneficiary submitted claims for items subject to mandatory assignment”. See Chapter One, Section 30.3.10 of the Medicare Claims Processing Manual. http://www.cms.hhs.gov/manuals/downloads/clm104c01.pdf. Because drugs, under Medicare Part B, are subject to mandatory assignment by Medicare, the Decedent was precluded from submitting his own claim to Medicare and the Respondents contention that the Decedent had this option is incorrect.
Additionally, the Respondent has clearly attempted to argue that he is entitled to make coverage determinations with filing a claim, this is absolutely incorrect. [1]
His contention in this regard is obviously contrary to Medicare’s administrative scheme, which requires the Medicare Carrier to make coverage determinations, and is completely contradictory to the statements of his own Nurse Manager as to why the claims were not filed.[2] Respondent’s assertions are also contrary to Christus Health Gulf Coast v. Aetna, Inc., 1678 S.W.3d 879, a case Respondent cites for the proposition that “uniformity is crucial on decision regarding Medicare coverage so that a Medicare patient’s right to health care services does not very from state to state. Thus all coverage decisions must go through the administrative procedures of the Medicare program” See Respondent’s Brief p. 10-11.
As before, Christus discusses the Medicare+Choice program pursuant to 42 C.F.R. § 422, not Medicare Part B and, therefore, inapplicable. However, assuming arguendo that the policy set forth in Christus is applicable to Medicare Part B, Respondent’s position (i.e. that he is entitled to determine whether to submit a claim based on his subjective determination of coverage), is inapposite to the proposition for which he cites Christus. If Medicare’s policy is uniformity in claims determination, as stated in Christus and as advocated by the Respondent, the coverage determination cannot be left to the differing subjective opinions of tens of thousand of the individual physicians in the United States. Uniformity is achieved by requiring all physicians to file claims, as required by Medicare’s Mandatory Claim Submission Rule, and allowing the Medicare Carrier to make coverage determinations, as required by 42 C.F.R. § 405.801. Respondent’s negligent acts precluded the exact administrative process he now relies upon to support the dismissal of Petitioner’s state law claims.
Clearly, the instant case has nothing to do with the denial of a claim, it has everything to do with a physician who was negligent and breached his fiduciary duty to his patient and, as such, there is not now nor has there been an administrative review process available to review Decedent’s claims. Appellant/Petitioner’s only avenue of redress is this instant action.
The Respondent had a duty to file Medicare claims
Respondent argues that he did not have a duty to submit these Medicare claims. This argument, by the Respondent disregards current case law and the uncontradicted affidavit testimony of Decedent’s experts.
Federal regulations can be used in a state proceeding to establish the standard of care. Peterson v. National Railroad Passenger Corp., 365 S.C. 391, 618 S.E.2d 903 (2005). Peterson involved the driver of a street sweeper who fell asleep behind the wheel. The street sweeper lost control of the vehicle. The vehicle went through a stop sign and hit train tracks knocking them out of line. Shortly thereafter, a train traveled through the incident site, hit the misaligned tracks and derailed, injuring the Plaintiff, a passenger on the train. In a state law negligence claim against the train company, Peterson alleged that the Defendant, the owner of the train tracks, did not properly maintain the tracks, which caused them to shift upon impact with the street sweeper. At trial, Peterson presented expert testimony that the Defendants violated track safety standards under 49 C.F.R. § 213 as well as their own internal policies. Regarding not only the use of federal regulations in a state law negligence case but also imposition of a duty based on these regulations, this Court ruled, “the trial judge ruled that the standard of care is established by federal law…We agree the standard of care is established by federal law.” Peterson at 906.
Application of the Peterson ruling to the instant case supports a finding that the Respondent had a duty to adhere to the Mandatory Claim Submission Regulation. This regulation sets the standard of care requiring the Respondent, as a Medicare participating physician, to submit a Medicare claim for his patient, a Medicare recipient. He failed to do this, and this failure was a breach of their standard of care, as established by regulation and a breach of his duty.
More importantly, the uncontradicted affidavit testimony in this case shows that the Respondent had a duty, as a reasonable physician, to not only answer the repeated pleas for assistance from his patient, which he failed to do, but also submit the Medicare claims at issue, which he failed to do. This duty arises independent of the Medicare Act. Based on this testimony, the acts and/or omissions of the Respondent, Kunze, were a violation of the standard of care of a reasonable physician and should be allowed to be used as evidence of his negligence and/or a breach of a fiduciary duty.
Appellant/Petitioners state law claims are not preempted by federal law.
Next, the Respondent has argues, at least in a cursory manner, the idea that the Medicare Act preempts any and all state law, by referencing, “42 C.F.R. § 422.402(b)(3) (2003) stating the Medicare Act preempts all state law coverage determinations); Medicare +Choice Program, 65 Fed.Reg. at 40261 (explaining that state courts are preempted from deciding any claim ‘in which the legal issue before the court is … whether services are covered under the terms of an M+C contract.)” See Respondent’s Brief p. 11.
As stated above, Respondents argument is flawed because 42 C.F.R. § 422 applies to the Medicare+Choice Program and is completely inapplicable to the Medicare Part B program. Furthermore, while 42 C.F.R. § 422 does contain a section regarding federal preemption of state law, namely 42 C.F.R. § 422.402; however, Appellant/Petitioner can find no corresponding section under 42 C.F.R. § 405, the section governing Medicare’s traditional fee-for-service program. Finally, 42 C.F.R. § 422.402 makes clear that “This preemption of State law…applies only to coverage pursuant to an M+C contract, and does not extend to benefits outside of such contract or to individuals who are not M+C enrollees of an organization with an M+C contract.” (emphasis added) Because the Decedent was not a M+C enrollee and the Respondent’s were not M+C providers, Christus and 42 C.F.R. § 422.402 are inapplicable to this case. Appellant/Petitioner’s state law claims for negligence and breach of fiduciary duty are not preempted by federal law.
CONCLUSION
The omissions of the Respondent and the ruling of the lower courts have left the Decedent and the Appellant/Petitioner to suffer a wrong without a remedy. The Lower Courts’ ruling would have the practical effect of granting complete immunity to a Medicare participating physician who willfully and knowingly fails to file Medicare claims for their Medicare recipient patients - a failure that violates federal statute, federal policy and the applicable standard of care of a reasonable physician.
The Decedent and the Appellant/Petitioner have been left with no recourse in the denial of the Decedent’s Medicare and supplemental insurance benefits and no recourse to recover their damages. If left to stand the Lower Courts’ ruling has left a wrong without a remedy. This could not be what Congress intended when it placed such emphasis on the beneficiary’s right to obtain a Medicare determination of benefit coverage. It could not be what Congress intended when it knew that supplemental Medigap insurance coverage is dependent on a Medicare determination. It is difficult, at best, to believe that Congress would, without comment, remove all means of judicial recourse (state, federal and/or administrative) for those injured by improper conduct and allow them to be left without any means to enforce the benefits and protections Congress granted them.
The Appellant/Petitioner prays for this Honorable Court to reverse the Lower Court’s dismissal of her state law claims for negligence and breach of fiduciary duty and remand the matter back to the lower court for trial.
Respectfully submitted.
________________________
Timothy M. Wogan
PO Box 22124
Hilton Head, SC 29925
843) 815-6921
Attorney for Appellant________________________
Samuel S. Svalina
Jennifer I. Campbell
PO Drawer 1207
Beaufort, SC 29901
(843) 524-0333
Attorney for the Appellant
May 17, 2007
[1] See Respondent’s Brief p. 12 (“In order to determine the validity of a claim for negligence or breach of fiduciary duty, of which the alleged breach of duty is whether the doctor acted inappropriately in failing to file a Medicare claim because he believed the claim to not be covered by Medicare”)(“the determination of a breach of duty as sought by the Appellant would ultimately require a determination [sic] benefits under the Medicare Act as they key issue in Kunze’s refusal to submit the claim, is because he did not believe the treatment was covered by the Medicare Act.”) and p. 14 Footnote One (1)(“The Reason Dr. Kunze refused to file the claim with Medicare is because he believed the treatment was not covered given the circumstances of the Appellant’s condition”)
[2] Gerri Burr, R.N. testified that the reason the claims were not filed was because the Respondent did not want to wait to be reimbursed by Medicare. See R. p. 206, lines 18-25. This position by the Respondent is further evidenced in the May 22, 2001 phone message “Gastro does not want to buy the Sandostatin every month and then wait to get reimbursed for this. Phyllis is desperate.” See R. p. 207.