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Robinett v. Shelby County Healthcare Corp.

United States Court of Appeals, Eighth Circuit

July 13, 2018

Lacey Robinett, Individually and on behalf of all others similarly situated Plaintiff - Appellant
v.
Shelby County Healthcare Corporation, doing business as Regional One Health, doing business as Regional Medical Center; Avectus Healthcare Solutions LLC Defendants - Appellees

          Submitted: January 11, 2018

          Appeal from United States District Court for the Eastern District of Arkansas - Jonesboro

          Before SMITH, Chief Judge, MELLOY and SHEPHERD, Circuit Judges.

          SMITH, Chief Judge.

         Lacey Robinett appeals the district court's[1] grant of judgment on the pleadings to Shelby County Healthcare Corporation ("the Med") and Avectus Healthcare Solutions, LLC. Robinett contends that the district court erroneously concluded that the federal and Arkansas Medicaid laws do not bar a medical services provider from billing patients directly until and unless the provider bills Medicaid. We affirm.

         I. Background

         Lacey Robinett was severely injured in an automobile accident in Arkansas. Another vehicle's driver was at fault. An air ambulance transported Robinett to the Med, the nearest trauma center, in Memphis, Tennessee, for immediate treatment. As a general condition of admission, the Med requires its patients to assign to the facility all of their health, hospitalization, and other insurance benefits.[2] At the time of her admission, Robinett was a Medicaid recipient. The Med had an agreement with Arkansas Medicaid to provide services to Medicaid beneficiaries from Arkansas. However, subsequent to treating Robinett, the Med chose not to bill Arkansas Medicaid for its services. Instead, pursuant to Tenn. Code Ann. § 29-22-101, the Med pursued a lien against Robinett's third-party claim against the tortfeasor "for all reasonable and necessary charges for hospital care, treatment and maintenance."

         Following the accident, Robinett filed suit against the other driver who caused the wreck. She settled her damages claim with the at-fault driver's insurance company and received $100, 000 in compensation. The Med billed Robinett for $23, 750.54, the amount the Med claimed she owed for its medical services. Because Robinett was Medicaid eligible under Arkansas law, the Med could have billed Arkansas Medicaid but chose to bill Robinett directly instead. The Med contracted with Avectus as a collection agent to recover the charges from Robinett. In response to the collection effort, Robinett filed a class action suit against the Med and Avectus, alleging that both federal and Arkansas Medicaid laws prohibited the Med from directly billing Medicaid beneficiaries. The Med moved for judgment on the pleadings. The district court ruled for the Med and Avectus, concluding that they had "gambled on Robinett's potential recovery from a third party, and won." Robinett v. Shelby Cty. Healthcare Corp., No. 3:16-cv-00188-DPM, 2017 WL 417197, at *1 (E.D. Ark. Jan. 31, 2017). Robinett appeals.

         II. Discussion

         Robinett contends the district court misapplied both federal and Arkansas Medicaid law when it granted judgment on the pleadings in favor of the Med and Avectus. "We review the grant of judgment on the pleadings de novo, viewing the facts in [Robinett's] complaint as true and granting all reasonable inferences in her favor." McIvor v. Credit Control Servs., Inc., 773 F.3d 909, 912 (8th Cir. 2014) (citing Poehl v. Countrywide Home Loans, Inc., 528 F.3d 1093, 1096 (8th Cir. 2008)).

         A. Patient Billing Under Federal Medicaid Laws

         Robinett contends that federal law bars direct patient billing. She grounds her argument on 42 U.S.C. § 1396a(a)(25)(C), which requires:

that in the case of an individual who is entitled to medical assistance under the State plan with respect to a service for which a third party is liable for payment, the person furnishing the service may not seek to collect from the individual (or any financially responsible relative or representative of that individual) payment of an amount for that service (i) if the total of the amount of the liabilities of third parties for that service is at least equal to the amount payable for that service under the plan . . ., or (II) the amount by which the amount payable for that service under the plan . . . exceeds the total of the amount of the liabilities of third parties for that service . . . .

         Robinett interprets the provision to prohibit a Medicaid services provider from all direct patient billing. The district court disagreed, citing to 42 U.S.C. § 1396a(a)(25)(B), (H), and (I)(ii). Based on its interpretation of those provisions, the district court concluded that § 1396a(a)(25)(C)'s prohibition of direct patient billing only comes into effect once a provider has opted to bill and to accept payment from Medicaid. Although we have not had the occasion to interpret the provision, several of our sister circuits have concluded that § 1396a(a)(25)(C) has a much narrower scope than Robinett suggests. We agree. See Mader v. United States, 654 F.3d 794, 800 (8th Cir. 2011) (en banc) ("We ...


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