SCOTUS Sided With Marietta Memorial Hospital Employee Benefit Group Health Plan

WASHINGTON,DC (June 21, 2022)—today the U,S, Supreme Court sided with Marietta and the Medicare Secondary Payer statute regarding an employer-sponsored group health plan.  Marietta is a health insurance group… and this case involves the insurer… refusing to pay for certain outpatient dialysis treatments.

Marietta Memorial Hospital Employee Health Benefit Plan is an employer-sponsored group health plan that offers all of its participants the same limited coverage for outpatient dialysis. DaVita—a major provider of dialysis services—sued the Marietta Plan, arguing that the Plan’s limited coverage for outpatient dialysis violated the Medicare Secondary Payer statute.

The statute makes Medicare a “secondary” payer to an individual’s existing insurance plan for certain medical services, including dialysis, when that plan already covers the same services.

The Facts About The Plan

First, a plan “may not differentiate in the benefits it provides between individuals having end stage renal disease and other individuals covered by such plan on the basis of the existence of end stage renal disease, the need for renal dialysis, or in any other manner.”

Second, a plan “may not take into account that an individual is entitled to or eligible for” Medicare due to
end-stage renal disease.

Lower Court’s Decision

The District Court dismissed DaVita’s claims that the Marietta Plan violated both statutory constraints. A divided panel of the U. S. Court of Appeals for the Sixth Circuit reversed. Among other things, the Court of Appeals ruled that the statute authorized disparate-impact liability and that the limited payments for dialysis treatment had a disparate impact on individuals with end-stage renal disease.

The lower Court further ruled “Because the Marietta Plan’s terms apply uniformly to individuals with and without end-stage renal disease, the Plan does not “differentiate in the benefits it provides between individuals” with and without end-stage renal disease.”

DaVita  Argument

In 2018, DaVita sued the Plan, arguing that the Plan’s limited coverage for outpatient dialysis both (i) differentiates between individuals with and without end-stage renal disease and (ii) takes into account the Medicare eligibility of individuals with end-stage renal disease in violation of the Medicare Secondary Payer statute.

DaVita argues that the statute authorizes liability even when a plan limits benefits in a uniform way if the limitation on benefits has a disparate impact on individuals with end-stage renal disease. But the text of the statute cannot be read to encompass a disparate-impact theory. The statutory provision simply
coordinates payments between group health plans and Medicare; the statute does not dictate any particular level of dialysis coverage.

DaVita’s contention that a plan that provides limited coverage for outpatient dialysis impermissibly “take[s] into account” the Medicare eligibility of plan participants with end-stage renal disease fails
for the same reason. Because the Marietta Plan provides the same outpatient dialysis benefits to all Plan participants, whether or not a participant is entitled to or eligible for Medicare, the Plan cannot be
said to “take into account” whether its participants are entitled to or eligible for Medicare.

“The Marietta Plan provides the same benefits, including the same outpatient dialysis benefits, to individuals with and without end-stage renal disease. Indeed, DaVita does not dispute that the Plan’s terms apply uniformly to all Plan participants. Therefore, the Plan does not “differentiate in the benefits it provides between individuals” with and without end-stage renal disease.”

US Supreme Court’s Opinion

Justice Kavanaugh, delivered the opinion of the Court, in which Chief Justice Roberts, and Justice Thomas, Breyer, Alito, Gorsuch, and Barrett, joined.  Justice Kagan filed an opinion dissenting in part, in which Justice Sotomayor joined. 

“The question in this case is whether a group health plan that provides limited benefits for outpatient dialysis—but does so uniformly for all plan participants—violates the Medicare Secondary Payer statute. We agree with petitioner Marietta and the United States as amicus curiae that the answer is no. We therefore reverse the judgment of the U. S. Court of Appeals for the Sixth Circuit and remand the
case for further proceedings consistent with this opinion.” 

“Given the significant costs of healthcare for those with end-stage renal disease, Congress recognized that a plan might try to circumvent the statute’s primary-payer obligation by denying or reducing coverage for an individual who has end-stage renal disease, thereby forcing Medicare to incur more of those costs. To prevent such circumvention, the statute imposed two specific constraints on group health plans,” the opinion read.

Dissenting Opinion

“The majority holds that the plan here does not so “differentiate” because it draws distinctions only between dialysis and other treatments—not between individuals with end stage renal disease and individuals without it,” write Justice Kagan.

“One fact is key to understanding this case: Outpatient dialysis is an almost perfect proxy for end stage renal disease. Virtually everyone with end stage renal disease—and hardly anyone else—undergoes outpatient dialysis.”

“Ninety-seven percent of people diagnosed with end stage renal disease—all those who do not obtain a preemptive kidney transplant—undergo dialysis.”

“Because that is so, common sense suggests that we should not care whether a health plan differentiates in benefits by targeting people with end stage renal disease, or instead by targeting the use of dialysis. When “status and conduct” are proxies for each other, “[o]ur decisions have declined to distinguish” between them,” Kagan opinion further read.

“And if common sense were not enough, statutory text would come to the rescue. Congress was well aware of the relationship between end stage renal disease and dialysis— and the text it wrote reflects that knowledge. The statute proscribes not just differentiation “on the basis of the existence of end stage renal disease,” but also “on the basis of . . . the need for renal dialysis, or in any other manner.”

 

Read US Supreme Court Opinion here

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Source: U.S. Supreme Court

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