At the Intersection of a Longshore Act Claim and a Medicare Secondary Payer Act Claim: Which Side Wins?
An interesting case arose out of the United States Court of Appeals for the Ninth Circuit yesterday. The case is Grimm v. Vortex Marine Constr., No. 18-15104, 2019 U.S. App. LEXIS 11035 (9th Cir. Apr. 16, 2019), and involves an intersection of the Longshore and Harbor Workers’ Compensation Act (LHWCA), and the Medicare Secondary Payer Act.
The LHWCA is a federal law which covers the rights and remedies available to injured employees under the Longshore and Harbor Workers’ Compensation Act. The law further provides for the compensation and medical care for those employees who are injured on the navigable waters of the United States, or in adjoining areas customarily used in the loading, unloading, repairing, or building of a vessel. Disputes which may arise under the LHWCA are heard before the Office of Administrative Law Judges. However, for purposes of the Medicare Secondary Payer Act, LHWCA claims are treated as workers’ compensation claims, and require the same reporting and MSP compliance obligations and considerations, as other claims.
Facts of the Case:
- Grimm was a former employee of Vortex Marine Construction, who retired in 2010;
- Grimm filed a claim against Vortex for Longshore Act benefits, seeking workers’ compensation and medical benefits for injuries he sustained;
- Vortex denied the claim on multiple grounds, including causation;
- Grimm’s claims were tried before an Administrative Law Judge (ALJ);
- The ALJ found that Grimm sustained work-related injuries during his employment with Vortex;
- Vortex was subsequently ordered “to pay or reimburse the Claimant for all medical expenses arising from the Claimant’s work-related injuries,” and to “provide treatment going forward, including the diagnostic procedures and therapies his treating physicians judge appropriate.”
- The Order was subsequently appealed to the Benefits Review Board by Vortex, which affirmed the ALJ’s order;
- Vortex petitioned the U.S. Court of Appeals for the Ninth Circuit, but voluntarily dismissed its appeal, seeking a new hearing before the Office of Administrative Law Judges to modify the prior Order pursuant to the Longshore Act;
- The ALJ denied modification, ordering Vortex to pay Grimm’s medical benefits;
- Vortex never authorized Grimm’s treatment, such that Medicare paid for Grimm’s medical treatment;
- Grimm filed a lawsuit in the U.S. District Court for the Northern District of California, alleging that Vortex refused to pay for required medical treatment and that he was therefore forced to rely on Medicare to pay his medical expenses;
- In filing his action, Grimm sought enforcement of the ALJ’s order and also asserted a claim under the Medicare Secondary Payer Act, seeking double damages for the amounts Medicare paid for his medical services;
- The U.S. District Court dismissed the matter and Grimm appealed.
Analysis by United States Court of Appeals for the Ninth Circuit:
The case before the U.S. Court of Appeals following the dismissal of the U.S. District Court. It hinged on the ALJ order; specifically, whether the order was considered a “final order,” requiring the employer to pay for the injured worker’s medical expenses arising from the work-related injuries. This is important to note because pursuant to the Longshore Act, in order to bring an enforcement action, an employer must fail to comply with a compensation order that has become final. 33 U.S.C. § 921(d). In determining what constitutes final, the Court noted, an order must “at a minimum specify [the] amount of compensation due or provide a means of calculating the correct amount without resort to extra-record facts which are potentially subject to genuine dispute between the parties.” Grimm at 5-6.
The Court aptly asserted that with respect to the LHWCA, Congress’ intent was never to empower district courts to resolve disputes over whether a specific service should be paid for by the employer, but rather limited the courts’ enforcement abilities to that which was pre-determined by a final agency order. Recall, that as noted above, the ALJ Order, did not specifically list the amount of compensation due or provide a means of calculating the correct amount. Rather, the order left the term “medical expenses” open for interpretation. Therefore, the Court affirmed the lower court’s dismissal.
Grimm further argued that the he was entitled to bring the matter before the Court as established by the right to a private cause of action under the MSP. However, once again, the Court noted that the claim was “premature” because the ALJ’s Order was not “a final compensation order requiring that specific services either be paid or reimbursed.” Id. at 11. Such that Grimm essentially failed to state a claim for recovery under the MSP.
Takeaway and Commentary:
Fortunately, the Court properly choose not to “insert itself into the merits of the litigation,” despite the injured employee’s arguments that his claims were viable under the Longshore Act and the MSP Act. Id. at 8. The Court refused to consider the claims because such enforcement actions would be outside of its purview pursuant to the Longshore Act. This is important to note, because the Longshore Act imparts specific review procedures which are exclusive to the Act. Despite the fact that for purposes of the MSP, Longshore Act claims are treated as standard workers’ compensation claims, that does not simply allow one to bypass the statutory review procedures established for Longshore Act Claims and assert a claim for double damages; yet it did avoid a length legal discussion in this Opinion.
This litigious action is an example of an injured worker attempting to extend the reach of the MSP (as well as the Longshore Act). However, of significant note is the fact that the MSP compliance piece seems to have been overlooked in this matter. While the parties will likely begin to discuss settlement after this Opinion, the MSP compliance issue must be considered and addressed. There are two key takeaways from this case to remember and utilize as best practices moving forward with your settlements:
- Always go into a settlement having a plan to address conditional payments; At this point in the case, there may be several issues that arise if settlement is reported in this case. Medicare can attempt to recover reimbursement for conditional payments made from anyone with some sort of a nexus to the claim; and
- It is always important to consider the Medicare Set-Aside piece; If a party is ordered to pay or ends up accepting liability, it would be appropriate to understand what those future medical expenses may look like.
It will be interesting to see the outcome of this case.
Of course, reimbursement for conditional payments made by Medicare, and
future medical expenses will be limited to items and services for which there
was liability under the Longshore Act; however, ultimately the MSP Act will
come into play and cannot be avoided.