The decedent had been eligible for benefits under a Medicare supplemental plan, which provided secondary insurance coverage to Medicare. The plan was to pay 80 percent of the difference between what was allowed but unpaid by Medicare, after a $250.00 annual deductible was paid, subject to a $300,000.00 per-person, per-lifetime limitation.

The decedent was hospitalized from December 31, 2008 until his death on February 17, 2009. The hospital submitted an invoice to Medicare for this period of $266,573.00. Medicare accepted the charges, but adjusted the claim to $58,770.28, which was paid to the hospital. After this payment, the outstanding balance due the hospital was $0.00 because the hospital had agreed to accept the amount paid by Medicare as payment in full.

The decedent’s executor subsequently filed a claim with the plan for $165,992.18, representing 80 percent of the difference between $266,573.00 and $58,770.28, less the $250.00 deductible. The plan denied the claim, stating that the decedent’s estate had no financial liability to the hospital. The decedent’s estate agreed that no financial liability existed, but filed suit in district court, claiming that it was entitled to the amount of its claim because the $266,573.00 had been “allowed” by Medicare, but only $58,770.28 was paid.

The court found the estate’s argument lacked merit. The court held that the plan’s interpretation of plan language stating “your total benefits from all sources will be limited to 100% of reasonable and customary charges for the medical expenses incurred” as requiring an actual financial liability was reasonable. Since no such liability existed, the court granted summary judgment in favor of the plan. (Griffin v. Corning Inc., WDNY August 16, 2011)