BONE et al v. UNIVERSITY OF NORTH CAROLINA HEALTH CARE SYSTEM et al
Filing
143
MEMORANDUM OPINION AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE signed by MAG/JUDGE L. PATRICK AULD on 05/06/2022, that the Motion (Docket Entry 139 ) be granted by ordering UNCHCS to perform its obligations under the February Settlement Agreement. (Bowers, Alexis)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
JOHN BONE, et al.,
Plaintiffs,
v.
UNIVERSITY OF NORTH CAROLINA
HEALTH CARE SYSTEM,
Defendant.
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1:18cv994
MEMORANDUM OPINION AND RECOMMENDATION
OF UNITED STATES MAGISTRATE JUDGE
This
case
comes
before
the
undersigned
United
States
Magistrate Judge for a recommendation on the “Motion to Enforce
Settlement Agreement” (Docket Entry 139) (the “Motion”).
For the
reasons that follow, the Court should grant the Motion.
BACKGROUND
In December 2018, John Bone, Timothy Miles, the National
Federation of the Blind, Inc. (the “NFB”), and Disability Rights
North Carolina (individually, the “DRNC,” and collectively, the
“Plaintiffs”) initiated “this action against the University of
North Carolina Health Care System (d/b/a UNC Health Care) (‘[UNCHCS
or Defendant]’) . . . for denying blind individuals an equal
opportunity to access their health care information, in violation
of Titles II and III of the Americans with Disabilities Act of 1990
([the] ‘ADA’), . . . Section 504 of the Rehabilitation Act . . .,
and Section 1557 of the Patient Protection and Affordable Care Act”
Case 1:18-cv-00994-TDS-LPA Document 143 Filed 05/06/22 Page 1 of 23
(Docket
Entry
1,
¶
Complaint”), ¶ 1).
1;
accord
Docket
Entry
18
(the
“Amended
The Complaint and Amended Complaint seek
compensatory and injunctive relief for these alleged violations,
but do not request compensation for any medical expenses.
(See
generally Docket Entries 1, 18.)
UNCHCS subsequently propounded interrogatories to Bone and
Miles requiring that, for “each claim brought by [them],” they
“detail
the
actual
relief
sought
by
[them],
including
the
injunctive relief sought and the economic and compensatory damages
suffered by [them] for which recovery is sought as a result of the
allegations contained in the Amended Complaint.”
139-7 at 3; Docket Entry 139-8 at 3.)1
(Docket Entry
In February 2021 (see
Docket Entry 139-7 at 6; Docket Entry 139-8 at 6), Bone and Miles
detailed the grounds for their compensatory damages demands, none
of
which
expenses.
5.)2
involve
compensation
for
(past
or
future)
medical
(See Docket Entry 139-7 at 3-5; Docket Entry 139-8 at 4-
Nevertheless, shortly before 5 p.m. on Friday, October 15,
2021, UNCHCS’s counsel wrote Plaintiffs’ counsel an email stating,
in relevant part:
If a monetary settlement is reached in this matter,
the defendants’ [sic] insurance carrier will require the
1 Docket Entry page citations utilize the CM/ECF footer’s
pagination.
2 Their injunctive relief demands likewise did not involve
medical expenses. (See Docket Entry 139-7 at 5; Docket Entry 139-8
at 5.)
2
Case 1:18-cv-00994-TDS-LPA Document 143 Filed 05/06/22 Page 2 of 23
following information from each of the individual
plaintiffs in compliance with Section 111 of the
Medicare, Medicaid and SCHIP Extension Act of 2007
(Section 111) and related obligations under the Medicare
Secondary Payer (MSP) statute.
This process can take
significant time and, accordingly, we are requesting this
information now.
1. Is either Plaintiff Medicare eligible and
enrolled in the Medicare Program?
2. Is either Plaintiff a Medicare beneficiary?
3. Has Medicare made any conditional payments
relating to this matter?
4. Please provide us with the DOB, address, and SSN
for each Plaintiff[.]
(Docket Entry 139-6 at 2-3.)
On Monday, October 18, 2021, Plaintiffs’ counsel responded
with an email stating, in relevant part:
We were surprised to receive your email [above]
because this case doesn’t implicate these statutes. This
is not a personal injury case where plaintiffs are
seeking compensation for injuries for which medical costs
are associated (and, thus, for which Medicare may have
already paid or may be responsible for paying).
Plaintiffs seek injunctive relief and damages for garden
variety emotional distress — there are no medical bills
implicated. If we are able to resolve this case through
settlement, we can explore language making that clear.
For now, however, we will not be providing the highly
sensitive information requested.
(Id. at 2.)
Plaintiffs represent, and UNCHCS does not dispute,
that “UNCHCS never responded to Plaintiffs’ email and never raised
the issue during [the parties’ subsequent] mediation” (Docket Entry
139-5 at 3).
(See generally id. at 2-7; see also Docket Entry 140
at 3-4, 7; Docket Entry 141 at 5-7, 11-12.)
Prior to this email exchange, the parties filed cross-motions
for summary judgment.
(See Docket Entries 103, 107, 109, 111,
3
Case 1:18-cv-00994-TDS-LPA Document 143 Filed 05/06/22 Page 3 of 23
112.)
In January 2022, the undersigned issued a detailed opinion
on those motions, recommending, as relevant here, that:
The Court should conclude that, as a matter of law,
UNCHCS repeatedly violated its effective communication
obligations to Miles and Bone. However, the Court should
determine that factual disputes prevent the entry of
summary judgment as to certain other alleged violations.
The Court also should not view the record as establishing
deliberate indifference as a matter of law and instead
should allow a factfinder to decide that issue (and the
amount of compensatory damages, if any, owed to Miles and
Bone). Additionally, the Court should find against NFB
as to organizational standing but should permit both NFB
and DRNC to proceed via associational standing.
Furthermore, the Court should await trial to resolve the
propriety and/or scope of injunctive relief, particularly
in light of the above-mentioned factual disputes.
(Docket Entry 125 at 187.)
The following month, the parties participated in a lengthy
settlement conference with the undersigned.
dated
Feb.
conference,
8,
the
2022.)
parties
At
the
conclusion
executed
a
(See Minute Entry
of
this
“Settlement
settlement
Checklist/Term
Sheet” (Docket Entry 139-1 (the “February Settlement Agreement”) at
2 (all-cap font and emphasis omitted)).
(See id. at 2, 5.)
As
relevant here, the February Settlement Agreement provided that:
Bone and Miles would each receive a certain monetary payment,
which payment would not include attorney’s fees.
(Id. at 2.)3
Notably, the February Settlement Agreement explicitly stated that
“[n]o” “third party liens [would] be paid from [those] proceeds.”
3
The February Settlement Agreement noted that the “Tax
Treatment” for these payments would involve “1099[s].”
(Id.
(emphasis omitted).)
4
Case 1:18-cv-00994-TDS-LPA Document 143 Filed 05/06/22 Page 4 of 23
(Id.
(emphasis
omitted).)
The
February
Settlement
Agreement
specified a one-way release from Plaintiffs to UNCHCS, with Bone
executing a general release and Miles, NFB, and DRNC executing a
limited release; specifically, they would not release their claims
for injunctive relief.
(Id.)
The parties stipulated that, inter
alia, (1), as to Miles, NFB, and DRNC, a violation of the ADA
occurred during the period between October 2016 and October 2018;
(2) UNCHCS “agrees that Plaintiffs are entitled to reasonable
attorneys’ fees and costs, as determined under the ADA, for all
claims resolved through settlement[;]” and (3) “[t]o the best of
Defendant’s knowledge, [Plaintiff] Bone owes no debt to Defendant.”
(Id. at 3-4.)4
As for the “effective date” of the parties’ agreement, they
entered into “[a] binding agreement today” (id. at 4 (all-cap font
and emphasis omitted)), February 8, 2022 (see id. at 2), with
UNCHCS to prepare a typed agreement incorporating the “[s]ettlement
terms” (id. at 4 (emphasis omitted)).
They further agreed that
Bone would dismiss his claims and Miles, NFB, and DRNC would
stipulate to dismissal of any damages claim, with “the Court [to]
retain jurisdiction for the purpose of enforcing the terms of the
settlement
agreement
through
December
31,
2022.”
(Id.
at
5
4 In his deposition, Bone testified that, due to his receipt
of bills in standard font rather than in Braille, he experienced
stress from not knowing how much, if anything, he owed UNCHCS.
(See Docket Entry 141-1 at 6-7.)
5
Case 1:18-cv-00994-TDS-LPA Document 143 Filed 05/06/22 Page 5 of 23
(emphasis omitted).) The party representatives confirmed that they
possessed “full authority to enter into [the February] Settlement
Agreement,” and Bone, Miles, and representatives from UNCHCS, NFB,
and DRNC all signed the February Settlement Agreement.
(Id.
(emphasis omitted).)
However, on March 11, 2022, the parties sent the undersigned
a joint letter, which stated, inter alia:
At the conclusion of the February 8 conference with
the
Court,
the
Parties
resolved
the
individual
Plaintiffs’ claims for damages and executed a term sheet
memorializing the terms of their agreement. Defendant
did not include in those terms the need to obtain
confirmation from the Centers for Medicare & Medicaid
Services (“CMS”) that neither individual Plaintiff has
outstanding Medicare liens related to this case.
Subsequently, Defendant provided Plaintiffs proposed
settlement agreements memorializing the terms reached on
February 8 that include this new, material term regarding
Medicare liens. As a result, the Parties have not yet
reached agreement on the language of the settlement
agreements.
The parties explain their respective
positions below.
Plaintiffs’ Position
Following the February 8 conference, Plaintiffs made
repeated requests for the draft settlement agreements,
but [UNCHCS] did not send Plaintiffs the first drafts of
the
settlement
agreements
until
March
2,
2022.
Unfortunately, these draft agreements contained terms
neither discussed nor agreed upon during the February 8
settlement conference, specifically in regard to UNCHCS’s
agreed-upon payments to Plaintiffs John Bone and Timothy
Miles being contingent on receiving confirmation from CMS
that each Plaintiff has no outstanding Medicare liens
related to this case. UNCHCS raised this issue on one
previous occasion — in an email from October 15, 2021,
asking
for
the
individual
Plaintiffs’
personal
information (such as their Social Security numbers).
Plaintiffs responded the next business day, noting that
the Medicare Secondary Payer (“MSP”) statute referred to
6
Case 1:18-cv-00994-TDS-LPA Document 143 Filed 05/06/22 Page 6 of 23
in UNCHCS’s email was not applicable here given that
Plaintiffs do not seek compensation in this case for
injuries with associated medical costs — simply for
garden
variety
emotional
distress
stemming
from
discriminatory treatment. Because UNCHCS never responded
to Plaintiffs’ email and never raised the issue during
mediation, Plaintiffs believed their response had put the
issue to rest.
Therefore, after agreeing on the
carefully-worded terms included in the term sheet all
parties signed on February 8, Plaintiffs were surprised
to receive draft settlement agreements containing
additional terms not negotiated for, such as:
- Payments to the individual Plaintiffs being
contingent on receiving confirmation from CMS
concerning Medicare liens
- Terms requiring the individual Plaintiffs to
consent to the release of private health care
information to UNCHCS
- Terms requiring both the individual Plaintiffs
and their counsel to indemnify UNCHCS for any
future claims related to Medicare and Medicaid
liens
In an effort to compromise, Plaintiffs offered the
following alternative language to address UNCHCS’s
concern regarding potential Medicare liens:
The claims described and pled by [Bone/Miles] in
the
Civil
Action
involve
allegations
of
discrimination and arise exclusively pursuant to
the
ADA,
Section
504,
and
Section
1557.
[Bone/Miles] has asserted no claims for bodily
injury or harm, wrongful death, or any other injury
requiring medical or mental health care.
No
portion of the settlement payment is made to
compensate [Bone/Miles] for bodily injuries or
harm, or past or future medical, mental health, or
other health care expenses, as no such claims were
advanced in this case.
[Bone/Miles] agrees that
there are no known or knowable claims, liens, or
super-liens against this settlement arising from
the events that are the subject of the Civil
Action. To the extent that any liens are asserted,
[Bone/Miles] agrees that he will ensure that any
and all claims, liens, and super-liens shall be
7
Case 1:18-cv-00994-TDS-LPA Document 143 Filed 05/06/22 Page 7 of 23
paid and satisfied or waived in full from the
proceeds of this settlement as reflected in this
Settlement Agreement and Release.
Counsel for UNCHCS, however, rejected this language,
stating that the terms initially included in the draft
agreements would have to be included in the final
agreements because of requirements imposed by its
insurance
carrier.
UNCHCS’s
insurance
carrier
participated in the February 8 conference with the Court
but never brought this issue to Plaintiffs’ attention or
insisted that a term related to Medicare liens be
included in the Parties’ term sheet.
Plaintiffs would appreciate [the Court’s] assistance
in resolving this issue.
In particular, Plaintiffs
believe that UNCHCS should be held to the settlement
terms agreed upon on February 8, which did not include
the new terms involving Medicare liens included in
UNCHCS’s draft settlement agreement. . . .
Defendant’s Position
It is no mystery to parties to a settlement
agreement that payments to plaintiffs will be made
contingent upon receiving information from plaintiffs,
such as tax forms and other information necessary to
comply with the law.
Here, Defendant will be making
settlement payments to Plaintiffs Miles and Bone through
Defendant’s insurer. Defendant’s insurer is obligated to
comply with the Medicare Secondary Payer Act (“MSP”), 42
U.S.C. § 1395y(b)(2), under which Medicare is entitled to
reimbursement and the parties’ knowledge of Medicare’s
reimbursement rights is statutorily presumed. 42 C.F.R.
§ 411.245.
Further, Section 111 of the Medicare,
Medicaid, and SCHIP Extension Act of 2007 requires all
liability insurers, referred to as Responsible Reporting
Entities (“RREs”), to determine whether Plaintiffs are
Medicare eligible and report every case in which there is
a payment to a Medicare beneficiary in the form of a
settlement or judgment, with failure to follow the
reporting requirements subjecting the RRE to significant
penalties and fines. 42 U.S.C. § 1395y(b)(7) and (8).
Ironically, Plaintiffs want Defendant to comply with the
ADA, Section 504, and Section 1557, but seek to impede
Defendant’s insurer’s compliance with the MSP and Section
111.
8
Case 1:18-cv-00994-TDS-LPA Document 143 Filed 05/06/22 Page 8 of 23
On October 15, 2001, Defendant clearly notified
Plaintiffs that Defendant’s insurance carrier would
require information from Plaintiffs Miles and Bone to
ensure the insurance carrier’s compliance with Section
111 and the MSP. Defendant notified Plaintiffs of the
exact basic information needed and informed Plaintiffs
that the process of complying with Section 111 and the
MSP can be time consuming.
In response, Plaintiffs declined to provide the
“highly sensitive information requested” despite the fact
that this litigation, in general, implicates highly
sensitive information such as Plaintiffs’ medical records
and
medical
services
billing
records,
thereby
necessitating the parties to enter into a Stipulated
Protective Order.
Plaintiffs’ refusal to provide the
information did not resolve the issue of Defendant’s
insurer’s compliance with Section 111 and the MSP as
Plaintiffs now suggest. Additionally, in their refusal,
Plaintiffs clarified that they seek “damages for garden
variety emotional distress.” Such allegations trigger
reporting obligations for Defendant’s insurer under
Section 111. 42 U.S.C. § 1395y(b)(8).
The settlement terms proposed to Plaintiffs are
intended to allow Defendant’s insurer to comply with the
law. The terms are not intended to prejudice Plaintiffs
and do not in fact prejudice Plaintiffs as Plaintiffs
never identified any prejudice they would feasibly suffer
as a result of enabling the insurer’s legal compliance.
If, as Plaintiffs state in their proposed compromise,
Plaintiffs Bone and Miles “agree[] that there are no
known or knowable claims, liens, or super-liens against
this settlement arising from the events that are the
subject of the Civil Action,” then it should not be a
problem for Plaintiffs to simply provide the information
necessary for Defendant’s insurer to satisfy its
reporting obligations and be satisfied that it has
complied with the law.
Agreement to Defendant’s
settlement terms will allow its insurer to comply with
the law and will allow payments to be made to Plaintiffs
Bone and Miles.
This is simple and should not be
tortured for no clearly articulated reason, especially
when there is no identified prejudice to Plaintiffs.
(Docket Entry 139-5 at 2-7 (emphasis, formatting, and certain
brackets in original) (footnote omitted).)
9
Case 1:18-cv-00994-TDS-LPA Document 143 Filed 05/06/22 Page 9 of 23
Plaintiffs thereafter filed the Motion, “request[ing] that the
Court enforce the Parties’ February settlement and order Defendant
to perform its obligations thereunder.”
(Docket Entry 139 at 3.)
According to Plaintiffs, UNCHCS “now seeks to insert new material
terms into the Parties’ typed settlement agreements” (Docket Entry
140 at 1), namely:
(1) they newly condition and delay UNCHCS’s payments to
Mr. Miles and Mr. Bone on and until CMS identifies any
Medicare liens to be paid; (2) they require the
individual Plaintiffs to pay liens out of the settlement
monies; (3) they require the individual Plaintiffs to
consent to the release of private health care information
from CMS to UNCHCS; and (4) they mandate that Plaintiffs
and their counsel indemnify and pay UNCHCS back any
fines, penalties, and liens paid by UNCHCS to CMS.
(Id. at 5 (the “New Terms”); see generally Docket Entries 139-2 to
139-4.)
Plaintiffs
contend
that
“[t]he
Court
should
reject
Defendant’s attempt to depart from the material terms agreed to on
February 8 and enforce the February [Settlement Agreement] as
drafted and agreed upon by all parties.”
(Docket Entry 140 at 1.)
Plaintiffs further maintain that,
because Plaintiffs have never sought compensation in this
action or by settlement agreement for injuries with
associated past or future medical costs, this case is not
subject to the Medicare Secondary Payer provisions in the
Medicare, Medicaid and SCHIP Extension Act of 2007, 112
Stat. 2492, 110 P.L. 173 (“MMSEA”), 42 U.S.C.
§ 1395y(b)(2). Even if it were, however, compliance with
the MMSEA’s reporting requirements does not require
inclusion of the onerous, material new terms Defendant
has now inserted into its draft typed settlement
agreements.
(Docket Entry 140 at 2.)
10
Case 1:18-cv-00994-TDS-LPA Document 143 Filed 05/06/22 Page 10 of 23
UNCHCS opposes the Motion.
(See Docket Entry 141.)
Notably,
UNCHCS does not dispute that it seeks to introduce new terms into
the parties’ agreement.
(See generally id.)
Instead, UNCHCS
argues that such terms remain necessary for its insurer to comply
with the MMSEA and MSP, that “the Parties’ agreed upon settlement
should provide for MSP[] and MMSEA compliance” (id. at 2), and that
the proposed terms will not prejudice Plaintiffs.
16.)
(See id. at 1-
In UNCHCS’s view, the proposed “MMSEA and MSP[] reporting
terms should be part of the Parties’ Settlement Agreement as it
should be assumed and embraced that the Parties entered into a
Settlement Agreement compliant with all applicable laws.
The
Parties’ agreed upon settlement must simply be fair and lawful.”
(Id. at 15.)
DISCUSSION
I. Relevant Standard
“Although resolution of a motion to enforce a settlement
agreement
draws
accomplished
on
within
standard
the
contract
context
of
principles,
the
underlying
it
may
be
litigation
without the need for a new complaint.”
Hensley v. Alcon Lab’ys,
Inc., 277 F.3d 535, 540 (4th Cir. 2002).
“To this extent, district
courts have inherent authority, deriving from their equity power,
to enforce settlement agreements.
The exercise of this authority
has the ‘practical effect’ of entering a judgment by consent.” Id.
(citation omitted).
11
Case 1:18-cv-00994-TDS-LPA Document 143 Filed 05/06/22 Page 11 of 23
“[T]o exercise its inherent power to enforce a settlement
agreement, a district court (1) must find that the parties reached
a complete agreement and (2) must be able to determine its terms
and
conditions.”
Id.
at
540-41.5
“In
deciding
whether
a
settlement agreement has been reached, the Court looks to the
objectively manifested intentions of the parties.”
Beaufort Cnty., 936 F.2d 159, 162 (4th Cir. 1991)).
Moore v.
Under North
Carolina law, “where the language used in the contract is clear and
unambiguous, the intention of the parties is to be gathered from
the face of the contract.”
Augusta Homes, Inc. v. Feuerstein, No.
COA08-1456, 199 N.C. App. 318, 682 S.E.2d 247, 2009 WL 2501399, at
*4 (2009) (citing Goodyear v. Goodyear, 257 N.C. 374, 380, 126
S.E.2d 113, 118 (1962)); see also Crockett v. First Fed. Sav. &
5
In the absence of a factual dispute regarding the
settlement agreement, a court may summarily enforce the settlement
agreement; “[w]hen, however, there is a material dispute about the
existence of a settlement agreement or the authority of an attorney
to enter a settlement agreement on behalf of his client, the trial
court must, of course, conduct a plenary evidentiary hearing in
order to resolve that dispute.” Millner v. Norfolk & W. Ry. Co.,
643 F.2d 1005, 1009 (4th Cir. 1981) (citations omitted); see also
Hensley, 277 F.3d at 541 (“If there is a factual dispute over the
existence of an agreement, over the authority of attorneys to enter
into the agreement, or over the agreement’s terms, the district
court may not enforce a settlement agreement summarily. Instead,
when such factual disputes arise, the court must conduct a plenary
evidentiary hearing in order to resolve that dispute and make
findings on the issues in dispute.” (citations, internal quotation
marks, and footnote omitted) (emphasis in original)).
“Because
there are no disputed facts in this case, a hearing on this issue
is unnecessary.” Newson v. Prinston Pharm., Inc., No. 3:18-cv-269,
2021 WL 3811483, at *2 (W.D.N.C. Aug. 26, 2021), aff’d, No.
21-2064, 2022 WL 1261321 (4th Cir. Apr. 28, 2022).
12
Case 1:18-cv-00994-TDS-LPA Document 143 Filed 05/06/22 Page 12 of 23
Loan Ass’n of Charlotte, 289 N.C. 620, 631, 224 S.E.2d 580, 588
(1976) (“Where the terms of the contract are not ambiguous, the
express language of the contract controls in determining its
meaning and not what either party thought the agreement to be.”).
“[H]aving second thoughts about the results of a valid settlement
agreement
does
agreement.”
not
justify
setting
aside
an
otherwise
valid
Hensley, 277 F.3d at 540 (brackets in original)
(internal quotation marks omitted).
II. Analysis
“Here, there is a complete [s]ettlement [a]greement, signed by
[all] parties, under which the Court is able to determine its terms
and conditions.”
Medlin v. City of Mount Holly, No. 3:20-cv-722,
2022 WL 19768, at *1 (W.D.N.C. Jan. 3, 2022).
Specifically, as
relevant to terms and conditions here, the February Settlement
Agreement provides that, in exchange for certain releases and
dismissals, UNCHCS will make certain stipulations and payments to
Bone and Miles, with “[n]o” “third party liens to be paid from
[those] proceeds” (Docket Entry 139-1 at 2).
(See id. at 2-5.)
Further, the February Settlement Agreement manifests assent to
those terms and conditions by explicitly confirming that the
parties entered into “[a] binding agreement today” (id. at 4) and
documenting
the
signature
of
all
parties
(see
id.
at
5).
See Thomco Realty, Inc. v. Helms, 107 N.C. App. 224, 228, 418
S.E.2d 834, 837 (1992) (“[A]n essential contractual term, mutual
13
Case 1:18-cv-00994-TDS-LPA Document 143 Filed 05/06/22 Page 13 of 23
assent, is evidenced by the signatures of defendants.”); see also
Augusta Homes, 2009 WL 2501399, at *6 (“Moreover, mutual assent
evidenced by the signing of the Agreement by all the parties is
apparent
from
the
face
of
the
Agreement.”).
The
February
Settlement Agreement includes no contingencies regarding Medicare
reporting or confirmation of the absence of any Medicare liens (see
generally Docket Entry 139-1) and it does not make the parties’
agreement contingent upon further negotiation over the contents of
the “typed
written
agreement”
memorializing
terms” (id. at 4 (emphasis omitted)).
the
“[s]ettlement
“It is evident that the
[February Settlement] Agreement in this case contains the essential
terms of the contract, definite within themselves or capable of
being made definite[,] and, thus, that a valid and enforceable
agreement was reached between the parties on [February 8, 2022].”
Augusta Homes, 2009 WL 2501399, at *6 (internal quotation marks and
citation omitted) (second set of brackets in original); see also
Topiwala
v.
Wessell,
509
F.
App’x
184,
186
(4th
Cir.
2013)
(concluding that “[t]he ‘Settlement Terms’ document unambiguously
evinces an intent to be bound, and contains sufficiently definite
terms,” where “both the document’s title and its contents would
lead a reasonable person in the parties’ position to believe that
it was susceptible to only one meaning, as a binding agreement to
settle the case along the terms contained therein,” and “the
document contained all essential terms of the settlement, including
14
Case 1:18-cv-00994-TDS-LPA Document 143 Filed 05/06/22 Page 14 of 23
specific properties and sums of money to be transferred, specific
dates of transfers, a release, a warrantee, and a nondisparagement
agreement,” notwithstanding “the absence of various terms[,] such
as a venue provision, a liquidated damages clause, and the precise
timing of some transfers[,]” and observing “that those terms’
absence did not prevent enforceability, because such terms were
relevant, but nonessential”).
Nevertheless, based on the theory that settlements “must
contain terms that are fair and lawful,” UNCHCS contends that “the
Parties’ agreed upon settlement should provide for MSP[] and MMSEA
compliance.”
(Docket Entry 141 at 2.)
In UNCHCS’s view, the New
Terms included in the draft “long-form Settlement Agreement and
Release” (id. at 3) it proposed in March 2022 (see Docket Entries
139-2, 139-3 (collectively, the “March Drafts”)) result in “no
prejudice to Plaintiffs” (Docket Entry 141 at 4).
According to
UNCHCS, “Plaintiffs suffer no harm and undertake no additional
detriment for which consideration is necessary if UNCHCS’s insurer
is
able
to
confirm
the
absence
of
Plaintiffs’
non-existent reimbursement obligations.”
(Id.)
apparently
“Thus,” UNCHCS
argues, “the Court should deny Plaintiffs’ ambiguous Motion and
instead have the Parties execute the [March Drafts] prepared by
counsel for UNCHCS or have Plaintiffs provide the information
necessary for MSP[] and MMSEA compliance.”
(Id. at 5.)
UNCHCS’s
argument lacks merit.
15
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To begin, the New Terms that UNCHCS seeks to insert into the
parties’ settlement agreement constitute material terms. See Davis
v. American Standard Ins. Co. of Wis., No. 2:15-cv-4136, 2015 WL
6742120, at *2-4 (W.D. Mo. Nov. 2, 2015) (explaining that terms
regarding,
inter
alia,
payment
of
Medicare
liens,
Medicare
reporting forms and verifications, and indemnification qualify as
material,
“essential”
terms,
“not
simply
minor
details,”
and
observing that “terms involving the handling of Medicaid liens and
the like cannot be perfunctory and non-essential ones in view of [a
case upon which the plaintiff relied], particularly not where, as
here, the insurance company sought to add the term that payment of
unspecified liens in an unspecified amount would be made from the
$10,580 the insurance company had agreed to pay [the plaintiff]”).
Accordingly, if UNCHCS wanted the New Terms to form part of its
settlement of Plaintiffs’ damages claims, it needed to have secured
Plaintiffs’ agreement thereto and included such terms in the
February Settlement Agreement.
Moreover, UNCHCS’s proposal for
payment of any Medicare or Medicaid liens out of “the total amount
of the settlement of [Bone’s or Miles’s] claim against UNCHCS”
(Docket Entry 139-2 at 3; Docket Entry 139-3 at 3; see Docket Entry
139-2 at 3-4, 7-10; Docket Entry 139-3 at 3-4, 7-10) directly
contradicts the February Settlement Agreement.
(See Docket Entry
139-1 at 2 (specifying that “[n]o” “third party liens [are] to be
paid from proceeds” of settlement payments).)
The Court therefore
16
Case 1:18-cv-00994-TDS-LPA Document 143 Filed 05/06/22 Page 16 of 23
cannot
deem
agreement.
the
New
Terms
part
of
the
parties’
settlement
See, e.g., Hensley, 277 F.3d at 542 (observing that
court cannot “supply a material term”); Chappell v. Roth, 353 N.C.
690, 692, 548 S.E.2d 499, 500 (2001) (“[G]iven the consensual
nature of any settlement, a court cannot compel compliance with
terms not agreed upon or expressed by the parties in the settlement
agreement.”); see also Harris-Teeter Supermarkets, Inc. v. Hampton,
76 N.C. App. 649, 652, 334 S.E.2d 81, 83 (1985) (“When the terms of
a contract are clear and unambiguous the express terms of the
contract control in determining its meaning.”).
Moreover,
contrary
prejudice Plaintiffs.
to
UNCHCS’s
position,
the
New
Terms
For instance, they require payment of any
potential liens from the settlement proceeds, contrary to the terms
of the February Settlement Agreement (see Docket Entry 139-1 at 2).
(See Docket Entry 139-2 at 3-4, 7-10; Docket Entry 139-3 at 3-4, 710.) They also delay payment of the settlement proceeds until “the
final
determination
of
the
total
amount
due
Medicare
in
reimbursement” (Docket Entry 139-2 at 4; Docket Entry 139-3 at 4),
a process that, per UNCHCS’s lawyer, “can take significant time”
(Docket Entry 139-6 at 3; see also Docket Entry 139-2 at 7
(indicating
“that
the
length
of
time
to
obtain
benefits
and
repayment information . . . can extend [for] many months”); Docket
Entry 139-3 at 7 (same)). In addition, they require Plaintiffs and
their counsel to broadly indemnify “UNCHCS and all of its agents,
17
Case 1:18-cv-00994-TDS-LPA Document 143 Filed 05/06/22 Page 17 of 23
assigns, servants, employees, officers, board members, owners,
insurers,
reinsurers,
subsidiaries,
affiliates,
parents
and
attorneys” (Docket Entry 139-2 at 4; Docket Entry 139-3 at 4).
(See Docket Entry 139-2 at 9-10; Docket Entry 139-3 at 9-10.)
And
as a final example, they require Miles and Bone to authorize CMS to
release their medical information to UNCHCS “and its agents and
insurers” (Docket Entry 139-4 at 3).
(See id. at 2-5; see also
Docket Entry 139-2 at 7; Docket Entry 139-3 at 7.)
proposed
New
Terms
would
significantly
alter
As such, the
the
parties’
agreement, in ways detrimental to Plaintiffs (and their counsel).
UNCHCS’s characterization of the New Terms as necessary for
its insurer to comply with its obligations also lacks merit.
recently explained:
Before 1980, “Medicare paid for all medical
treatment within its scope and left private insurers
merely to pick up whatever expenses remained.” Bio-Med.
Applications of Tenn., Inc. v. Cent. States Se. & Sw.
Areas Health & Welfare Fund, 656 F.3d 277, 278 (6th Cir.
2011). In 1980, to curb the rising costs of Medicare,
Congress enacted the MSP Act, which changed the prior
system and made private insurers covering the same
treatment the primary payers and Medicare the secondary
payer. Id. “Medicare benefits became an entitlement of
last resort, available only if no private insurer was
liable.” Humana Med. Plan, Inc. v. Western Heritage Ins.
Co., 832 F.3d 1229, 1234 (11th Cir. 2016).
The MSP Act designates when Medicare will pay for
medical items or services as the primary payer and when
Medicare will pay as the secondary payer.
42 U.S.C.
§ 1395y(b).
When an individual has private coverage,
such as no-fault insurance or liability insurance, the
MSP Act establishes Medicare’s status as a secondary
payer to a primary plan. § 1395y(b)(2). Medicare will
send a confirmation explaining a liability insurance,
18
Case 1:18-cv-00994-TDS-LPA Document 143 Filed 05/06/22 Page 18 of 23
As
no-fault insurance, or workers’ compensation claim was
filed with Medicare and a Medicare Secondary Payer
recovery case was established in the system. (See Doc.
61, Ex. B). Typically, Medicare does not pay for items
or services for which a primary plan has paid or can
reasonably
be
expected
to
pay.
42
U.S.C.
§ 1395y(b)(2)(A).
However, Medicare may make a conditional payment
despite its status as secondary payer. § 1395y(b)(2)(B).
When the primary plan does not fulfill its duties, the
Secretary of Health & Human Services (Secretary) may make
a
payment
conditioned
on
reimbursement.
§ 1395y(b)(2)(B)(i).
If the Secretary makes a
conditional payment, the primary plan must reimburse the
Secretary.
§ 1395y(b)(2)(B)(ii).
The MSP Act also
establishes and defines a government cause of action to
recover from a primary plan. § 1395y(b)(2)(B)(iii).
Stillwell v. State Farm Fire & Cas. Co., No. 8:17-cv-1894, 2020 WL
7389916, at *4-5 (M.D. Fla. Feb. 27, 2020) (emphasis added), report
and recommendation adopted as modified in non-relevant part sub
nom. United States ex rel. Stillwell v. State Farm Fire & Cas. Co.,
No. 8:17-cv-1894, 2020 WL 7389878 (M.D. Fla. May 29, 2020).
Thus, as the MMSEA Section 111, Medicare Secondary Payer
Mandatory
Reporting,
Liability
Insurance
(Including
Self-Insurance), No-Fault Insurance, and Workers’ Compensation User
Guide (the “User Guide”) makes clear, Non-Group Health Plan6 “claim
information is to be submitted where the injured party is a
Medicare beneficiary and payments for medical care (‘medicals’) are
6 “Liability insurance (including self-insurance), no-fault
insurance, and workers’ compensation are often collectively
referred to as ‘Non-Group Health Plan’ or ‘NGHP’ insurance.” User
Guide, Chapter I, p. 2-2, available at https://www.cms.gov/files/
document/mmsea-111-january-10-2022-nghp-user-guide-version-67-cha
pter-i-introduction-and-overview.pdf (emphasis omitted).
19
Case 1:18-cv-00994-TDS-LPA Document 143 Filed 05/06/22 Page 19 of 23
claimed and/or released, or the settlement, judgment, award, or
other payment has the effect of releasing medicals.”
User Guide,
Chapter I, p. 6-2, available at https://www.cms.gov/files/document/
mmsea-111-january-10-2022-nghp-user-guide-version-67-chapter-i-in
troduction-and-overview.pdf (emphasis added); see also User Guide,
Chapter III, p. 6-19 (“Information is to be reported for claims
related to liability insurance (including self-insurance), no-fault
insurance, and workers’ compensation where the injured party is (or
was)
a
Medicare
beneficiary
and
medicals
are
claimed
and/or
released or the settlement, judgment, award, or other payment has
the
effect
of
releasing
medicals.”
(emphasis
in
original)),
available at https://www.cms.gov/files/document/mmsea-111-january
-10-2022-nghp-user-guide-version-67-chapter-iii-policy-guidance.p
df.
Accordingly, “‘indemnity-only’ settlements, which seek to
compensate for non-medical damages, should not be reported.
The
critical variable to consider is whether or not a settlement
releases or has the effect of releasing medicals.”
User Guide,
Chapter III, p. 6-22 (emphasis added).
UNCHCS contends that the MSP reporting requirements apply here
because the parties’ settlement agreement releases Bone’s medical
debt.
(See, e.g., Docket Entry 141 at 12 (arguing that reporting
“process must be followed because . . . UNCHCS agreed to release
Bone from any obligation to pay outstanding debts for medical
treatment”), 15 (arguing that “this is a case in which CMS’s
20
Case 1:18-cv-00994-TDS-LPA Document 143 Filed 05/06/22 Page 20 of 23
instructions should be followed for MMSEA and MSP[] reporting
purposes because . . . there is a release of any debt for medical
services rendered”).)
This argument misconstrues the February
Settlement Agreement, which explicitly states that the “Release”
remains “One Way From Plaintiff(s) to Defendant(s)” rather than
“Mutual” (Docket Entry 139-1 at 2 (emphasis omitted)) and merely
confirms that, “[t]o the best of Defendant’s knowledge, [plaintiff]
Bone
owes
no
debts
to
Defendant”
(id.
at
4),
resolving
an
outstanding stressor that UNCHCS’s failure to provide information
to Bone in Braille caused (see, e.g., Docket Entry 141-1 at 6-7).
Moreover, in ascertaining whether a settlement implicates MSP
reimbursement obligations, one looks to the scope of the Medicare
beneficiary’s “own claim against the third party that is later
released in settlement.”
Taransky v. Secretary of U.S. Dep’t of
Health & Hum. Servs., 760 F.3d 307, 315 (3d Cir. 2014) (internal
quotation marks and emphasis omitted).
Here, Plaintiffs did not
seek compensation for medical expenses.
(See, e.g., Docket Entry
139-7 at 3-5; Docket Entry 139-8 at 3-5.)
Accordingly, UNCHCS’s
theory that the February Settlement Agreement releases medical debt
or other medical expenses misses the mark.
Further, as UNCHCS tacitly concedes (see, e.g., Docket Entry
141
at
2-3,
7,
11-12,
14),
even
if
the
parties’
settlement
agreement triggered such reporting obligations, compliance with MSP
and MMSEA reporting requirements would not necessitate adherence to
21
Case 1:18-cv-00994-TDS-LPA Document 143 Filed 05/06/22 Page 21 of 23
the New Terms.
“The mechanism for making Plaintiffs’ Medicare
benefits determination is set forth in the CMS User Guide,” and
states, in relevant part, that to ascertain “‘the Medicare status
of the injured party,’” an RRE may “‘submit a query’” containing
“‘the injured party’s Social Security Number (SSN) or Medicare ID
(Health Insurance Claim Number [HICN] or Medicare Beneficiary
Identified [MBI]), name, date of birth and gender.’”
(Id. at 11
(emphasis omitted) (brackets in original) (quoting User Guide,
Chapter I, p. 6-1);7 see also 42 U.S.C. § 1395y(b)(8)(B).
than requesting
such
basic
details,8
the
March
Drafts
Rather
oblige
Plaintiffs to provide an expansive list of information to UNCHCS.
(See Docket Entry 139-2 at 6-7; Docket Entry 139-3 at 6-7.)
In
addition, the MSP and MMSEA do not require insurers to report
claims before payment of monetary settlements.
See, e.g., 42
U.S.C. § 1395y(b)(8)(C) (“Information shall be submitted . . .
within a time specified by the Secretary after the claim is
resolved through a settlement, judgment, award, or other payment
. . . .” (emphasis added)); User Guide, Chapter III, p. 6-20 (“RREs
are to report after there has been a [Total Payment Obligation to
the Claimant (the “TPOC”)] settlement, judgment, award, or other
payment and/or after [Ongoing Responsibility for Medicals] has been
7
Further, “[w]hen submitting an SSN,[ ]RREs may enter a
partial SSN.” User Guide, Chapter I, at p. 6-1.
8 Indeed, the March Drafts do not mention Social Security
Numbers or Medicare IDs. (See Docket Entries 139-2, 139-3.)
22
Case 1:18-cv-00994-TDS-LPA Document 143 Filed 05/06/22 Page 22 of 23
assumed.”
(bold
font
in
original)
(underlining
added));
see
also User Guide, Chapter III, p. 6-20 (explaining that timeliness
of reporting “will be based upon the latter of the,” id., date on
which “the payment obligation [i]s established,” id. at p. 2-2, or
the payment “will be funded or disbursed,” id. at p. 6-20, and
cautioning that “RREs should not report the TPOC until the RRE
establishes when the TPOC will be funded or disbursed,” id.).
Accordingly, contrary to the New Terms (see Docket Entry 139-2 at
3-4; Docket Entry 139-3 at 3-4), the reporting process could occur
after UNCHCS paid Plaintiffs the amounts due under the February
Settlement Agreement.
CONCLUSION
The February Settlement Agreement constitutes an enforceable
settlement agreement between UNCHCS and Plaintiffs.
UNCHCS’s
proposed New Terms qualify as material, contradict the February
Settlement Agreement, prejudice Plaintiffs, and remain unnecessary
for MSP and MMSEA compliance.
IT IS THEREFORE RECOMMENDED that the Motion (Docket Entry 139)
be granted by ordering UNCHCS to perform its obligations under the
February Settlement Agreement.
This 6th day of May, 2022.
/s/ L. Patrick Auld
L. Patrick Auld
United States Magistrate Judge
23
Case 1:18-cv-00994-TDS-LPA Document 143 Filed 05/06/22 Page 23 of 23
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