Exhaustion of Administrative Remedies

In Darrell R. Cupp v. Dane F. Johns and Humana Ins. Co. , 2014 U.S. Dist. LEXIS 30537, U.S. District Court for the Western District of Arkansas, March 10, 2014, the court again upholds that parties must exhaust administrative remedies.  Plaintiff, Darrell Cupp, was injured in an automobile accident involving Defendant, Dane Johns. Humana, Cupp’s Medicare Advantage health insurance provider, paid approximately $25,000 in medical payments as a result of the accident. Cupp sued Johns in state court and later settled for $25,000. After the settlement, Humana asserted a subrogation lien. Cupp sought a declaratory judgment in state court that Humana was not owed reimbursement under state subrogation law. Humana removed to federal court and subsequently filed a motion to dismiss.
The court ruled in favor of Humana, holding first that Humana was within its rights under the Medicare Secondary Payer Act to seek subrogation of the conditional payments it made on behalf of Cupp after his accident. The court further held that the Medicare Act, Title XVIII of the Social Security Act, established a review and appeals process that Medicare Advantage Plan enrollees must use to dispute claims asserted by Medicare and Medicare Advantage Plans regarding the services an enrollee receives. Plaintiff Cupp did not use this process to dispute the claims asserted by Humana. Thus, the court held, it did not have jurisdiction to determine that Humana’s claims were wrongfully asserted.