BONE v. UNIVERSITY OF NORTH CAROLINA HEALTH CARE SYSTEM

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

JOHN BONE, et al., )

)

Plaintiffs, )

)

v. ) 1:18cv994

)

UNIVERSITY OF NORTH CAROLINA )

HEALTH CARE SYSTEM, )

)

Defendant. )

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”

(Docket Entry 1, ¶ 1; accord Docket Entry 18 (the “Amended

Complaint”), ¶ 1). 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.” (Docket Entry

139-7 at 3; Docket Entry 139-8 at 3.)1 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 involve compensation for (past or future) medical

expenses. (See Docket Entry 139-7 at 3-5; Docket Entry 139-8 at 4-

5.)2 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

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,

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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. (See Minute Entry

dated Feb. 8, 2022.) At the conclusion of this settlement

conference, the parties executed a “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

(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.)*

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 “[sJettlement

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.)

(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

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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

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

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

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

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. (See id. at □□□

16.) 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 on standard contract principles, it may be

accomplished within the context of the underlying 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

“[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.° “In deciding whether a

settlement agreement has been reached, the Court looks to the

objectively manifested intentions of the parties.” Moore □□□

Beaufort Cnty., 936 F.2d 159, 162 (Ath Cir. 1991)). 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

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 not justify setting aside an otherwise valid

agreement.” Hensley, 277 F.3d at 540 (brackets in original)

(internal quotation marks omitted).

II. Analysis

“Here, there is a complete [sJettlement [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

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 the “[s]ettlement

terms” (id. at 4 (emphasis omitted)). “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

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’ apparently

non-existent reimbursement obligations.” (Id.) “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

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

cannot deem the New Terms part of the parties’ settlement

agreement. 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 to UNCHCS’s position, the New Terms

prejudice Plaintiffs. 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, 7-

10.) 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

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.) As such, the

proposed New Terms would significantly alter 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. As

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,

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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).

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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

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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

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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). Rather

than requesting such basic details,8 the March Drafts 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.)

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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

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