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Wetterman v. Secretary, Department of Health and Human Services

United States District Court, S.D. Ohio, Eastern Division

July 16, 2019





         This matter is before the Court upon Defendants' Motion to Dismiss (ECF No. 5), Plaintiff's Response in Opposition to Defendants' Motion to Dismiss (ECF No. 6), and Defendants' Reply in Support of their Motion to Dismiss (ECF No. 7). For the reasons that follow, the Court GRANTS Defendants' Motion and DISMISSES Plaintiff's Complaint.

         I. BACKGROUND

         On October 19, 2008, Barbara Wetterman was involved in a motor vehicle collision caused by the negligence of Charles Wolfe. (Complaint, ¶¶ 3, 22-24, ECF No. 1). Following the accident, Ms. Wetterman was treated for serious injuries at Grant Medical Center, but she died on November 4, 2008. (Id. ¶¶ 26, 28). Ms. Wetterman was survived by two adult children: Craig Wetterman (“Plaintiff”) and Lana Schurb. (Id. ¶¶ 28, 30).

         On January 13, 2009, Union County Probate Court (“Probate Court”) designated Plaintiff as the executor for Ms. Wetterman's estate. (Id. ¶ 31). On January 20, 2009, [1] the Probate Court authorized Plaintiff to enter into a contract for legal services with attorney Frank Ray to “investigate, negotiate and, if necessary, prosecute the wrongful death claim of the estate” of Ms. Wetterman. (Id. ¶ 32).

         On July 15, 2009, the Probate Court approved Ms. Wetterman's estate's acceptance of a wrongful death settlement and life insurance payout in the amount of $87, 500 (Id. ¶ 47). The settlement and payout included: $12, 500 from Mr. Wolfe's bodily injury coverage through Permanent General Assurance Company (“Permanent”), $100, 000 from Ms. Wetterman's uninsured/underinsured motorist (“UM/UIM”) coverage through State Automobile Mutual Insurance Company (“State Auto”)-set off against Permanent's payout-and a $25, 000 life insurance payout from State Auto. (Id. ¶¶ 34-35, 41). Included in the application for settlement to the Probate Court was Mr. Ray's statement that “Ms. Wetterman did not exhibit provable evidence of conscious pain and suffering from her injuries. Since evidence of pain and suffering by the decedent as a result of the trauma is speculative based on provable evidence, the estate has not assessed any damages to a survivorship claim arising from the fatal collision.” (Id. ¶ 46). Pending resolution of any liens asserted by Medicare under the Medicare Secondary Payer Act (“MSP Act”), Mr. Ray deposited the settlement check from Permanent and the life insurance payment from State Auto in his law firm's trust account and State Auto continued to maintain possession of the UM/UIM funds. (Id. ¶¶ 48-49).

         On October 30, 2009, Mr. Ray notified the Medicare Secondary Payer Recovery Contractor (“MSPRC”) and Medicare that Plaintiff had been appointed as the executor of Ms. Wetterman's estate and requested an itemized breakdown of medical costs paid by Medicare for treatment of Ms. Wetterman's injuries. (Id. ¶ 50). On January 26, 2010, Mr. Ray followed up with an enclosed consent form signed by Plaintiff. (Id. ¶ 51). On July 22, 2010, MSPRC responded that Medicare had issued $139, 832.31 in conditional payments for Ms. Wetterman's medical care, notified Mr. Ray that a formal demand letter would be forthcoming, and demanded a detailed report from Plaintiff regarding sources and amounts of insurance coverage within 30 days. (Id. ¶ 52). On August 17, 2010, Mr. Ray provided MSPRC with information regarding the wrongful death settlement. (Id. ¶ 53). Mr. Ray received a letter on September 11, 2011 from MSPRC, which included Medicare's demand notice and its asserted lien of $106, 096.87 for the cost of medical care relating to Ms. Wetterman's estate's liability recovery. (Id. ¶¶ 62-63). The letter also notified Mr. Ray that Medicare had begun assessing interest from August 11, 2011. (Id. ¶ 63).

         On October 10, 2011, Plaintiff mailed MSPRC a “Request for Waiver and Notice of Appeal, ” which “described Plaintiff's exceptions to MSPRC's findings that produced Medicare's demanded reimbursement against Mrs. Wetterman's estate's wrongful death settlements and the life insurance payout.” (Id. ¶¶ 64, 73). Plaintiff also alleges that Mr. Ray enclosed two checks with the letter to MSPRC: a check issued by State Auto for $87, 500.00 made jointly payable to MSPRC and/or Ms. Wetterman's estate and a check from Mr. Ray's law firm's trust account made jointly payable to Plaintiff and Medicare for $18, 596.87, both endorsed by Plaintiff. (Id. ¶ 76). Plaintiff did so to “defray Medicare's ongoing assessment of interests against Ms. Wetterman's estate for nonpayment of MSPRC's final determination of Medicare's demanded reimbursement[]” while he expressly retained the right to contest Medicare's claim. (Id. ¶ 78).

         On November 21, 2011, Plaintiff again requested waiver of Medicare's demanded reimbursement by filling out and submitting the appropriate form. (Id. ¶ 82). Specifically, Plaintiff argued that because the settlement proceeds from the tort recovery were based on a wrongful death action with no survivorship claim, Medicare did not have the right to recover against the settlement pursuant to Ohio law. (Id. ¶¶ 68-71). On December 3, 2011, MSPRC advised Plaintiff that his internal administrative appeal of Medicare's initial decision was denied. (Id. ¶ 83). On December 5, 2011, MSPRC also advised Plaintiff that the estate owed a past-due debt of $92, 075.30. (Id. ¶ 84).

         On December 29, 2011, Plaintiff appealed Medicare's internal administrative review. (Id. ¶ 88). That appeal was rejected by MSPRC on February 6, 2012. (Id. ¶ 91). The initial decision was affirmed again on May 16, 2012 upon Plaintiff's request for reconsideration. (Id. ¶ 92). On July 3, 2012, Plaintiff appealed to an Administrative Law Judge (“ALJ”). (Id. ¶ 93). After conducting an oral hearing by telephone, ALJ Jane Van Duzer issued a written decision on October 28, 2014 ruling that the life insurance payment was not subject to Medicare's recovery under the MSP Act but upholding Medicare's prior internal decisions, which determined that Medicare was entitled to recover reimbursement under the MSP Act from Plaintiff against the wrongful death settlements. (Id. ¶ 97). Plaintiff appealed the ALJ's decision to the Medicare Appeals Council on December 19, 2014, assigning error to Medicare's recovery reimbursement from the wrongful death settlement. (Id. ¶ 98). Plaintiff did not make an escalation request regarding the Council's review of the ALJ's decision.

         Based on the ALJ's decision, Coordination of Benefit and Recovery Systems (“COB&R”)-formerly MSPRC-notified Plaintiff of the revised amount due to Medicare as $81, 096.87 in principal and $24, 921.55 in interest. (Id. ¶ 99). Accounting only for the $18, 596.87 check as received from Plaintiff, it became clear to Mr. Ray that MSPRC had either lost or ignored the check issued by State Auto that he sent on October 10, 2011. (Id. ¶ 102). State Auto confirmed that the check issued for $87, 500.00 to MSPRC had not been cashed. (Id. ¶ 101). As a result, State Auto reissued a replacement check on December 24, 2015, which Mr. Ray sent to COB&R and Medicare, along with a letter explaining what he believed had occurred, and a $514.91 check issued from his former law firm's trust account to cover accrued interest. (Id. ¶ 104). Upon satisfying Plaintiff's outstanding Medicare balance of $106, 611.78, Mr. Ray sent Medicare a letter on January 7, 2015 demanding a refund of $24, 921.55 as interest “improvidently assessed” to Plaintiff based on his belief that Medicare had lost or ignored State Auto's originally issued check. (Id. ¶ 107). Medicare did not respond. (Id. ¶ 109).

         Thereafter, Mr. Ray requested that the Medicare Appeals Council supplement the record with certified entries from the Probate Court designating Ms. Wetterman's estate's settlements as “provable only as a wrongful death claim, ” as he sought redress for Medicare's “improvidently assessed” interest through a second assignment of error. (Id. ¶¶ 111-12). Medicare never responded to Plaintiff's requests. (Id. ¶ 113). On August 25, 2018, a representative from the Medicare Appeals Council confirmed receipt of Plaintiff's request for review of the ALJ's decision. (Id. ¶ 115). To date, the Medicare Appeals Council has not issued a decision on Plaintiff's appeal.[2] (Id. ¶ 116).

         On January 31, 2018, Plaintiff filed a complaint seeking writs of mandamus under 28 U.S.C. § 1361 that require Alex M. Azar II, [3] in his role as Secretary of the United States Department of Health and Human Services (“HHS”), and Constance B. Tobias, in her role as Chair of the Departmental Appeals Board of HHS (collectively “Defendants”) to do the following: (1) require the Medicare Appeals Council to complete its assignment within the administrative appeals process; (2) refund $24, 921.55 plus interest to Plaintiff as erroneously assessed by Medicare; (3) pay Plaintiff's attorneys fees for legal services in bringing this case; and (4) reimburse Plaintiff's “deposit” of Mrs. Wetterman's estate's funds with Medicare of $106, 671.78 plus interest. (Id. ΒΆΒΆ 118-67). Plaintiff also ...

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