:: Court Rejects “Qui Tam” Claims Alleging Improper Medicare Billing
Plaintiff asks this Court to extend the MSP-and federal jurisdiction-beyond what Congress intended and CMS administers. Moreover, Plaintiff seeks to circumvent Fed.R.Civ.P. 23, which regulates the litigation of class action claims. Plaintiff reads the MSP to “allow individuals acting as private attorney generals [sic] to litigate the state tort liability of a defendant towards thousands of Medicare beneficiaries-as a predicate to showing MSP liability-without complying with class action requirements.†Glover II, 459 F.3d at 1309. This Court, like many courts considering the same complaint, does not so interpret the MSP. Stalley v. Erlanger Health System Slip Copy, 2007 WL 672301 (E.D.Tenn.) (February 28, 2007)
The plaintiff in this case alleged that each of five health care systems and numerous “John Doe” defendants violated the Medicare Secondary Payer Act (“MSPâ€), 42 U.S.C. § 1395y(b). The plaintiff was joined in these allegations by Erin Brockovich of Hollywood fame as described in the Overlawyered blog:
The onetime legal assistant, whose environmental crusade against a utility company inspired a hit movie starring Julia Roberts, has lent her name as plaintiff in lawsuits against several California hospitals and convalescent homes.” Two law firms, including Wilkes & McHugh, have engaged Brockovich as the public face of bounty-hunting “whistleblower” suits pursuing the adventuresome theory that hospitals defraud the government by accepting Medicare reimbursement for further medical care occasioned by their own earlier errors, even when no legal process has yet determined the earlier medical decisions to have been erroneous.
From California To Tennessee
The Brockovich team came to Tennessee with allegations similar to those made in other jurisdictions. As recounted by the court:
Plaintiff and his associate Erin Brockovich have filed 49 nearly identical complaints in jurisdictions across the country. Kris Hundley, Brockovich Teams Up With Local Firm, St. Petersburg Times, Dec. 21, 2006. Many of these complaints have already been dismissed . . .
Background On The MSP
The court described Medicare is a “back-up payer” under the MSP for healthcare claims otherwise payable under a group health plan. An individual’s “primary plan†must first cover such claims. 42 U.S.C. § 1395y(2)(A).
On the other hand, if a primary plan has not or will not promptly remit payment for healthcare services, the MSP permits Medicare to conditionally pay a provider. According to the MSP:
[a] primary plan, and an entity that receives payment from a primary plan, shall reimburse the appropriate Trust Fund … if it is demonstrated that such primary plan has or had a responsibility to make payment.†42 U. S .C. § 1395y(b)(2)(B). A “primary plan†is a group health plan, workers’ compensation, automobile, liability, or no-fault insurance, or a business which carries its own risk. 42 U.S.C. § 1395y(b)(2)(A).
An MSP claim against a primary plan must allege two elements, (1) such plan’s responsibility to pay for healthcare services, and (2) such plan’s failure to remit appropriate payment to Medicare. Glover v. Phillip Morris USA 380 F.Supp.2d 1279, 1290 (M.D.Fla.2005).
The Wrong Alleged
Medicare pays the costs of hospital and post-hospital services, home health, and hospice care for individuals who are (1) over age 65, (2) disabled, or (3) have end stage renal disease. 42 U.S.C. § 1395c. According to the complaints, the Defendants’ caused their patients to suffer ulcers, malnutrition, preventable infections, and other injuries.
Notwithstanding their culpability for these injuries, the plaintiff alleged that the Defendants billed for and received Medicare monies to treat such injuries. Thus, the Defendants had notice of such “improper billing†yet failed to reimburse Medicare as required by the MSP.
Lack of Constitutional Standing
The district court held that the plaintiff did not claim to have suffered any cognizable injury in fact. Rather, the plaintiff claimed to sue on behalf of the government.
Applying the the “irreducible†minimum test for standing, Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992), the court held that the plaintiff did not suffer an injury in fact, i.e., an invasion of a concrete, specific, legally protected interest”. Therefore, the plaintiff had no Article III constitutional standing.
Lack of Statutory Standing
Furthermore, the court rejected the plaintiff’s claims that the MSP is a qui tam statute. Therefore, the Plaintiff could not sue in the name of the United States.
The court explained the concept of a qui tam action as follows:
A qui tam action allows a private a person to sue on behalf of the federal government, and the government is understood to partially assign its rights to the qui tam claim to such private person. See Vt. Agency of Natural Res. v. United States ex rel Stevens, 529 U.S. 765, 773 (2000). The False Claims Act (“FCAâ€) is the best known qui tam statute. In comparing the MSP and FCA, courts note obvious similarities-and four dispositive differences.
In essence, the court concluded that the MSP did not authorize private persons to sue on behalf of the United States and did not contain the typical procedural safeguards of a qui tam statute (see, e.g., 31 U.S.C. § 3730(b)(2) regarding government review of complaint). Based on the historical paradigm of a qui tam action, as well as the legislativie history, the court held that the MSP did not qualify and thus the plaintiff had no standing to assert an MSP claim.
Failure To Allege Elements of MSP Claim
Since one of the defendants chose to file a motion to dismiss based upon failure to state an MSP claim as opposed to the standing issues, the court analyzed that issue as well. To properly alled an MSP action, the Plaintiff had to allege Defendants were responsible for reimbursing Medicare, as demonstrated by a judgment, a settlement, or “by other means.†42 U.S.C. § 1395y(b)(2)(B)(ii).
Under this standard, the court held that an MSP claim “is not ripe until Defendants’ responsibility has been shown by something akin to a judicial determination or a settlement.”
Moreover, the court observed that the Plaintiff has no contractual privity or relationship with defendants, stating:
If the party with whom Defendants do have Provider Contracts, the Centers for Medicare & Medicaid Services (“CMSâ€) thought Defendants to be in breach, or if the federal government thought Defendants were violating Medicare regulations, CMS or the Attorney General could sue under the MSP. 42 U.S.C. § 1395y (b)(2)(B)(iii).
In sum, the court held that the “unidentified injuries” and “improper billing†constituted “unwarranted factual inferences.†Thus, even assuming proper standing, the court held the plaintiff failed to state a claim under the MSP.
Note: The combined cases in the foregoing opinion are of interest as they constitute a pattern of claims brought in numerous jurisdictions alleging improper billing of Medicare. Though the Plaintiff did not succeed, the allegations made in such a broad campaign have attracted substantial attention. The case would have seemed more appropriately pled as a False Claims Act action given the factual allegations. In any event, the claim had fatal shortcomings as an MSP claim.
Under the MSP, reimbursement claims may be brought by (1) the United States Government or (2) a private citizen acting pursuant to a “private cause of action for damages.†42 U.S.C. §§ 1395y(b)(2)(B)(iii) & (b)(3). Since a successful claim may result in double damages, MSP claims constitute a serious legal matter.
Though the MSP statute was not designed to serve as a qui tam statute, it nonetheless serves as a potent deterent where health plans fail to properly assume responsibility for covered expenses. Unfortunately, properly identifying the circumstances of responsibility can be complex and require careful evaluation of the criteria for secondary liability.
