Justia Insurance Law Opinion Summaries

The Medicare program pays teaching hospitals to cover "direct" and "indirect costs of medical education," 42 U.S.C. 1395ww(d)(5)(B), (h). Direct costs include expenses such as residents' salaries. Indirect costs are incurred due to "general inefficiencies" and "extra demands placed on other staff." Congress created a formula for calculating indirect expenses based on full-time equivalency interns; an HHS regulation referred to time residents spend in the "portion of the hospital subject to the prospective payment system or in the outpatient department of the hospital." In reimbursing plaintiff, HHS excluded from the FTE count time residents spent on pure research, unrelated to treatment of a patient. While appeal of a decision favoring the hospital was pending, Congress enacted the Patient Protection and Affordable Care Act, 124 Stat. 119, 660â61. For the years at issue, HHS must include in FTE: "all the time spent by an intern or resident in an approved medical residency training program in non-patient care activities, such as didactic conferences and seminars, as such time and activities are defined by the Secretary." HHS promulgated a regulation specifying that eligible non-patient care activities do not include time residents spend conducting pure research. The Sixth Circuit upheld the regulation as within the Secretary's authority and applicable to the years at issue.

After suffering a work-related injury, Employee underwent surgery at a hospital owned by HealthEast Care System. The injury required surgical implantation of a spinal cord stimulator. Employer's worker's compensation insurance provider, State Auto Insurance, paid part but not all of the surgical expenses, asserting (1) the withheld portion of the expenses was attributable to a price markup added by HealthEast to the price paid by HealthEast for the implant hardware used in Employee's surgery, and (2) the manufacturer of the implant hardware should be required to charge directly for the implant hardware. The compensation judge found that Employer and State Auto were liable for the unpaid balance. The Workers' Compensation Court of Appeals affirmed. The Supreme Court affirmed, holding (1) HealthEast could charge for the implant hardware because when more than one health care provider is responsible for the creation of a service, article, or supply, the provider that provides the service, article, or supply in its final form is entitled to charge for it; and (2) a compensation judge does not have the authority to determine a reasonable value of a treatment, service, or supply that is lower than eighty-five percent of the provider's usual or customary charge.

When plaintiffs left their jobs, they did not receive notices describing how to extend their health insurance coverage within the period prescribed by statute (COBRA notices). Responding to solicitation from a lawyer, they became named plaintiffs in a proposed class action seeking damages from and statutory penalties against their former employer. The district court declined to certify the class and, on consideration of the individual claims, denied the request for statutory penalties and one of the plaintiffs' requests for damages. The Seventh Circuit affirmed. The district court properly denied class certification because it found the proposed class counsel inadequate to represent the class, based on observations about counsel's diligence, respect for judicial resources, and promptness. Denial of statutory penalties under 29 U.S.C. 1132 was appropriate; there was no evidence of an administrator's bad faith (such as misrepresentations or willful delay in response to requests for information) or gross negligence. The district court was within its discretion in denying damages as compensation for expenses, where there was no evidence to indicate that the expenses were incurred as a result of the failure to provide timely notice of COBRA rights.

Doctors and a patient challenged the Patient Protection and Affordable Care Act requirement, effective in 2014, that all non-exempt applicable individuals either maintain a certain minimum level of health insurance or pay a monetary penalty (26 U.S.C. 5000A) and a provision that penalizes certain employers if they fail to offer full-time employees the opportunity to enroll in an employer-sponsored insurance plan that satisfies the individual mandate's minimum essential coverage requirement (26 U.S.C. 4980H(a)).The district court dismissed for lack of standing. The Third Circuit affirmed. There is no evidence that the patient-plaintiff or doctors are in any way currently impacted by the law or that harm is imminent.

Plaintiff filed suit against Liberty Mutual, both personally and on behalf of a putative class of similarly situated individuals, alleging that the company's failure to disburse "medical payments" coverage (MedPay) benefits to her constituted a breach of contract, a breach of implied covenant of good faith and fair dealing, and a violation of G.L.c. 93A, 2. At issue was whether a claimant could seek medical expense benefits under the MedPay of a standard Massachusetts automobile insurance policy where she had already recovered for those expenses under a separate policy of health insurance. The court held that plaintiff's complaint and the extrinsic materials submitted by Liberty Mutual contained alleged facts sufficient to "raise a right to relief above the speculative level." The court also held that Liberty Mutual had not demonstrated as a matter of law that plaintiff could not receive MedPay benefits when she already had received medical expense benefits under her policy of health insurance. Accordingly, the order allowing Liberty Mutual's motion to dismiss was reversed and the matter remanded.

Appellant appealed the district court's summary judgment on her ERISA, 29 U.S.C. 1132(a)(1)(B), claim to recover denied health care benefits and the magistrate judge's decision to limit discovery. At issue was the scope of admissible evidence and permissible discovery in an ERISA action to recover benefits under section 1132(a)(1)(B). The court held that the district court too narrowly defined the scope of discovery where appellant sought to discover evidence that would indicate whether the administrative record was complete, whether Blue Cross complied with ERISA's procedural requirements, and whether Blue Cross previously afforded coverage claims related to the jaw, teeth, or mouth. The court concluded that appellant's discovery request was at least reasonably calculated to lead to the discovery of some admissible evidence and that the district court's abuse of discretion prejudiced appellant's ability to demonstrate that Blue Cross failed to comply with ERISA's procedural requirements. Accordingly, the court vacated and remanded for further proceedings.

In consolidated appeals, defendants appealed the denial of their motions for judgment on the pleadings where plaintiffs brought a diversity suit to enforce California Civil Code 2527 and 2528, which required defendants to supply the results of bi-annual studies of California's pharmacies' retail drug pricing for private uninsured customers to their clients, who were third-party payors such as insurance companies and self-insured employer groups. At issue was whether the court was bound by the Erie doctrine to follow the state appellate court decisions striking down section 2527 and if not, whether section 2527 violated the First Amendment or the California Constitution's free speech provision. The court held that the Erie doctrine did not require it to follow the state appellate court decisions and that section 2527 did not unconstitutionally compel speech under either the United States or California Constitutions. Accordingly, the court affirmed the judgment.

After being diagnosed with fibromyalgia, chronic pain, anxiety, and depression, plaintiff was awarded long-term disability benefits under an employee benefit plan issued and administered by defendant. Benefits were discontinued about 24 months later, when defendant determined that plaintiff had received all to which she was entitled under the planâs self-reported symptoms limitation. Because plaintiff had retroactively received social security benefits, defendant also sought to recoup equivalent overpayments as provided by the plan. The district court dismissed. The Seventh Circuit reversed in part and remanded for reinstatement. The self-reported symptom limitation violates ERISA, 29 U.S.C., 1022; the policy sets out that long-term benefits will be discontinued after 24 months if disability is due to mental illness or substance abuse, but does not mention that the time limitation applies if a participantâs disability is based primarily on self-reported symptoms. The Social Security Act does not bar recovery of overpayments occasioned by receipt of social security benefits.

Respondent, on behalf of the estate of her deceased sister, filed suit against petitioner, a nursing home, alleging that while the sister was being cared for by petitioner, she was bitten by a brown recluse spider and died. At issue was whether the claims were healthcare liability claims that required an expert report to be served. The court held that the claims fell within the statutory definition of a health care liability claim and therefore, the statute required the suit to be dismissed unless respondent timely filed an expert report. Accordingly, the court granted the petition for review and reversed and remanded.

Carlin Jewett was employed as a welder by Real Tuff where Jewett often worked on his knees. In 2006, Jewett suffered a right knee injury. Jewett received arthroscopic surgery, during which the surgeon found pre-existing bilateral osteoarthritis in Jewett's knee. Jewett subsequently filed a petition with the state Department of Labor, seeking workers' compensation for a right knee replacement. Two years later, Jewett suffered a second work-related injury to his left knee. Jewett added a workers' compensation claim for diagnostic treatment of his left knee. The Department and the circuit court ruled that Jewell failed to sustain his burden of proof on the alternate theories that (1) work-related injuries to both knees were a major contributing cause of the need for medical treatment, and (2) the cumulative effect of Jewett's work-related activities was a major contributing cause of the osteoarthritis. On appeal, the Supreme Court affirmed, holding the Department and circuit court did not err in finding (1) Jewett's first injury was not a major contributing cause of Jewett's need for a right knee replacement, and (2) Jewett did not prove that working on his knees was a major contributing cause of his osteoarthritis.