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Marietta Memorial Hospital Employee Health Benefit Plan v. DaVita, Inc.

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Supreme Court of the United States
Marietta Memorial Hospital Employee Health Benefit Plan v. DaVita, Inc.
Term: 2021
Important Dates
Argued: March 1, 2022
Decided: June 21, 2022
Outcome
Reversed and remanded
Vote
7-2
Majority
Brett Kavanaugh • Chief Justice John Roberts • Clarence Thomas • Stephen Breyer • Samuel Alito • Neil Gorsuch • Amy Coney Barrett
Dissenting
Elena Kagan • Sonia Sotomayor

Marietta Memorial Hospital Employee Health Benefit Plan v. DaVita, Inc. is a case that was decided by the Supreme Court of the United States on June 21, 2022, during the court's October 2021-2022 term. The case was argued before the court on March 1, 2022.

The court reversed the decision of the United States Court of Appeals for the 6th Circuit and remanded the case for further proceedings in a 7-2 ruling, holding that Section 1395y(b)(1)(C) does not authorize disparate-impact liability, and the Marietta Plan’s coverage terms for outpatient dialysis do not violate §1395y(b)(1)(C) because those terms apply uniformly to all covered individuals. Justice Brett Kavanaugh delivered the majority opinion of the court. Justice Elena Kagan filed a dissenting opinion, joined by Justice Sonia Sotomayor.[1] Click here for more information about the ruling.


HIGHLIGHTS
  • The issue: The case concerned the Medicare Secondary Payer Act (MSPA), which prohibits group health plans from considering a plan participant’s eligibility when the individual has end-stage renal disease (ESRD) and from providing different benefits to these individuals than from other covered participants. The case also involves a circuit split over how much plans must reimburse their members for dialysis treatment costs. Click here to learn more about the case's background.
  • The questions presented:
    1. "Congress enacted the Medicare Secondary Payer Act as a means to conserve Medicare resources. Among other things, the Act provides that group health plans may not “take into account” the fact that a plan participant with end stage renal disease is eligible for Medicare benefits. Does a group health plan that provides uniform reimbursement of all dialysis treatments observe that prohibition?
    2. "Under the Medicare Secondary Payer Act, a group health plan also may not “differentiate” between individuals with end stage renal disease and others “in the benefits it provides.” Does a plan that provides the same dialysis benefits to all plan participants, and reimburses dialysis providers uniformly regardless of whether the patient has end stage renal disease, observe that prohibition?
    3. "Is the Medicare Secondary Payer Act a coordination-of-benefits measure designed to protect Medicare, not an antidiscrimination law designed to protect certain providers from alleged disparate impact of uniform treatment?"[2]
  • The outcome: The U.S. Supreme Court reversed the decision of the United States Court of Appeals for the 6th Circuit and remanded the case for further proceedings in a 7-2 ruling.


    • The case came on a writ of certiorari to the United States Court of Appeals for the 6th Circuit. To review the lower court's opinion, click here.[3]

    Timeline

    The following timeline details key events in this case:

    Background

    DaVita, Inc. is a dialysis treatment provider in the United States. Since April 15, 2017, an anonymous individual ("Patient A") diagnosed with end-stage renal disease (ESRD) received dialysis treatments from DaVita. Patient A's health benefit plan, Marietta Memorial Hospital Employee Health Benefit Plan, reimbursed the costs of Patient A's dialysis sessions between April 15, 2017, and August 31, 2018. The plan is self-funded through Marietta Memorial Hospital and governed by the Employee Retirement Income Security Act of 1974 (ERISA). The benefits manager is Medical Benefits Mutual Life Insurance Co. ("MedBen").[2][3]

    The plan provided three tiers of reimbursement benefits during Patient A's membership period. DaVita was listed on the bottom tier of reimbursement as an out-of-network provider; under the plan's terms, all dialysis providers are considered out-of-network and are listed on the bottom reimbursement tier. Patient A was subject to higher copayments, coinsurance payments, and deductibles since they didn't have access to in-network dialysis providers. Dialysis providers are also subject to a reimbursement limit not exceeding 125% of the Medicare allowable fee. The plan reimburses the dialysis service at 87.5% of the Medicare rate, which is lower than the industry definition of a reasonable and customary fee. DaVita was reimbursed at a lower rate relative to in-network and other out-of-network providers.[2][3]

    On December 19, 2018, DaVita filed a complaint in the U.S. District Court for the Southern District of Ohio against Marietta and MedBen, alleging that the plan violated ERISA and the Medicare Secondary Payer Act (MSPA) in treating dialysis providers differently than other medical providers. DaVita claimed that the plan illegally incentivized individuals with ESRD to drop the plan and seek Medicare coverage by offering lower benefits. On February 14, 2019, Marietta Memorial Hospital and the plan moved to dismiss DaVita's complaint. MedBen filed a motion to dismiss the day after. The district court granted the motions to dismiss with prejudice, holding that DaVita could not sue under the MSPA and that the plan had not illegally discriminated against individuals with ESRD. The court held that DaVita's ERISA claims based on the alleged MSPA violations were moot and that DaVita didn't have legal standing to pursue the remaining ERISA claims.[2][3]

    On appeal in 2020, the U.S. Court of Appeals for the 6th Circuit affirmed the U.S. District Court for the Southern District of Ohio's judgment in part and reversed the ruling in part, and remanded the case for discovery and further proceedings related to Counts I, II, and VII of DaVita's complaint. The 6th Circuit held that if DaVita could prove during discovery and further proceedings that the plan violated the MSPA, it would also prove that Patient A was denied benefits and suffered unlawful discrimination under ERISA.[2][3]

    In the joint appeal to the U.S. Supreme Court, Marietta Memorial Hospital Employee Health Benefit Plan et al. asked the court to review the MSPA's reimbursement prohibitions and resolve a circuit split between the Sixth and Ninth Circuit Courts of Appeal:[2]

    “ This case presents a direct conflict between the Sixth and Ninth Circuits over the extent to which plans must reimburse dialysis charges that their members incur. Brought by the nation’s largest dialysis provider, the case establishes that employer group health plans in the Sixth Circuit now run the risk of double damages and loss of tax status if they reimburse dialysis coverage at anything other than the “most favored nation” rate. Under the Sixth Circuit’s decision, all other medical procedures, from childbirth to elder care, must now stand in line behind payment for dialysis treatment. In the Ninth Circuit, by contrast, plans remain free to apportion their resources equitably among the wide-ranging medical needs of their members. Dialysis reimbursements must be uniform, but they do not necessarily supersede indemnification of other medical expenses.[4] ”

    SCOTUS granted review in the case on November 5, 2021.

    Employee Retirement Income Security Act of 1974 (ERISA)

    The following quotation is sourced from the U.S. Department of Labor's definition of the Employee Retirement Income Security Act of 1974 (ERISA):

    “ The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for most voluntarily established retirement and health plans in private industry to provide protection for individuals in these plans.[5][4] ”

    Questions presented

    The petitioner presented the following questions to the court:[2]

    Questions presented:
    “
    1. Congress enacted the Medicare Secondary Payer Act as a means to conserve Medicare resources. Among other things, the Act provides that group health plans may not “take into account” the fact that a plan participant with end stage renal disease is eligible for Medicare benefits. Does a group health plan that provides uniform reimbursement of all dialysis treatments observe that prohibition?
    2. Under the Medicare Secondary Payer Act, a group health plan also may not “differentiate” between individuals with end stage renal disease and others “in the benefits it provides.” Does a plan that provides the same dialysis benefits to all plan participants, and reimburses dialysis providers uniformly regardless of whether the patient has end stage renal disease, observe that prohibition?
    3. Is the Medicare Secondary Payer Act a coordination-of-benefits measure designed to protect Medicare, not an antidiscrimination law designed to protect certain providers from alleged disparate impact of uniform treatment?[4]
    		 ”

    Oral argument

    Audio

    Audio of oral argument:[6]



    Transcript

    Transcript of oral argument:[7]

    Outcome

    The court reversed the decision of the United States Court of Appeals for the 6th Circuit and remanded the case for further proceedings in a 7-2 ruling, holding that Section 1395y(b)(1)(C) does not authorize disparate-impact liability, and the Marietta Plan’s coverage terms for outpatient dialysis do not violate §1395y(b)(1)(C) because those terms apply uniformly to all covered individuals. Justice Brett Kavanaugh delivered the majority opinion of the court. Justice Elena Kagan filed a dissenting opinion, joined by Justice Sonia Sotomayor.[1]

    Opinion

    In the court's majority opinion, Justice Brett Kavanaugh wrote:[1]

    “ 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.[4] ”
    —Justice Brett Kavanaugh

    Dissenting opinion

    Justice Elena Kagan filed a dissenting opinion, joined by Justice Sonia Sotomayor.

    In her dissent, Justice Kagan wrote:[1]

    “ ... As the majority recognizes, the MSPA’s renal disease provisions were designed to prevent plans from foisting the cost of dialysis onto Medicare. See ante, at 2. Yet the Court now tells plans they can do just that, so long as they target dialysis, rather than the patients who rely on it, for disfavored coverage. Congress would not—and did not—craft a statute permitting such a maneuver. Now Congress will have to fix a statute this Court has broken. I respectfully dissent.[4] ”
    —Justice Elena Kagan

    Text of the opinion

    Read the full opinion here.

    October term 2021-2022

    See also: Supreme Court cases, October term 2021-2022

    The Supreme Court began hearing cases for the term on October 4, 2021. The court's yearly term begins on the first Monday in October and lasts until the first Monday in October the following year. The court generally releases the majority of its decisions in mid-June.[8]

    The court agreed to hear 68 cases during its 2021-2022 term.[9] Four cases were dismissed and one case was removed from the argument calendar.[10]

    The court issued decisions in 66 cases during its 2021-2022 term. Three cases were decided without argument. Between 2007 and 2021, SCOTUS released opinions in 1,128 cases, averaging 75 cases per year.


    See also

    External links

    Footnotes

    1. ↑ 1.0 1.1 1.2 1.3 U.S. Supreme Court, Marietta Memorial Hospital Employee Health Benefit Plan v. DaVita, Inc., decided June 21, 2022
    2. ↑ 2.0 2.1 2.2 2.3 2.4 2.5 2.6 U.S. Supreme Court, "Marietta Memorial Hospital Employee Health Benefit Plan v. DaVita, Inc. JOINT PETITION FOR A WRIT OF CERTIORARI," filed May 21, 2021
    3. ↑ 3.0 3.1 3.2 3.3 3.4 U.S. Court of Appeals for the 6th Circuit, DaVita, Inc. v. Marietta Mem'l Hosp. Emp. Health Benefit Plan, decided October 14, 2020
    4. ↑ 4.0 4.1 4.2 4.3 4.4 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
    5. ↑ U.S. Department of Labor, "ERISA," accessed November 10, 2021
    6. ↑ Supreme Court of the United States, "Oral Argument - Audio," argued March 1, 2022
    7. ↑ Supreme Court of the United States, "Oral Argument - Transcript," argued March 1, 2022
    8. ↑ SupremeCourt.gov, "The Supreme Court at Work: The Term and Caseload," accessed February 4, 2021
    9. ↑ Consolidated cases are counted as one case for purposes of this number.
    10. ↑ U.S. Supreme Court, "Order List: 593 U.S.," May 17, 2021
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