405 F.3d 1002 (Fed. Cir. 2005), 04-5051, Wilson ex rel. Estate of Wilson v. United States

Docket Nº:04-5051.
Citation:405 F.3d 1002
Party Name:Laura WILSON, Personal Representative of the Estate of Max Wilson, Deceased, Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee.
Case Date:April 21, 2005
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit

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405 F.3d 1002 (Fed. Cir. 2005)

Laura WILSON, Personal Representative of the Estate of Max Wilson, Deceased, Plaintiff-Appellant,


UNITED STATES, Defendant-Appellee.

No. 04-5051.

United States Court of Appeals, Federal Circuit

April 21, 2005

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[Copyrighted Material Omitted]

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Frank Mafrice, Sommers, Schwartz, Silver & Schwartz, P.C., of Southfield, Michigan, for appellant. With him on the brief was Patrick Burkett.

Marla Conneely, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for appellee. On the brief were Peter D. Keisler, Assistant Attorney General, David M. Cohen, Director, Brian M. Simkin, Assistant Director, and Richard S. Ewing, Trial Attorney.

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Before LOURIE, SCHALL, and LINN, Circuit Judges.

SCHALL, Circuit Judge.

Plaintiff-Appellant Laura Wilson is the personal representative of the estate of her deceased husband, Max Wilson. Prior to his death, Mr. Wilson received medical services that were paid for by Medicare. Following his death, Mr. Wilson's estate brought a medical malpractice action against a hospital and two doctors. After the estate settled the action and received payment from the defendants, the Department of Health and Human Services ("HHS"), on behalf of Medicare, claimed entitlement to a portion of the settlement. Ms. Wilson, on behalf of the estate, paid the claim and then filed suit in the United States Court of Federal Claims to recover the payment. In the suit, she contended that the government's claim against her husband's estate was improper and therefore constituted an illegal exaction. Ms. Wilson now appeals the decision of the Court of Federal Claims that dismissed her suit for lack of jurisdiction. Wilson v. United States, 58 Fed.Cl. 760 (2003) (" Order "). The court ruled that it lacked jurisdiction under the Tucker Act because Ms. Wilson's claim 1 arose under the Medicare statutes and because jurisdiction over such a claim is vested exclusively in federal district court. We affirm.



Some background will help the reader to understand the issue in this case. Title XVIII of the Social Security Act, 79 Stat. 291, as amended, 42 U.S.C.§ 1395 et seq., 2 commonly known as the Medicare Act, established the Medicare program. See Heckler v. Ringer, 466 U.S. 602, 605, 104 S.Ct. 2013, 80 L.Ed.2d 622 (1984). Medicare is a system of federally funded heath insurance for the aged, the disabled, and people suffering from end-stage renal disease. See Health Ins. Ass'n of Am., Inc. v. Shalala, 23 F.3d 412, 414 (D.C.Cir.1994). It is administered by the Centers for Medicare and Medicaid Services, a subunit of HHS, formerly known as the Health Care Financing Administration. 3 United States v. Baxter Int'l, Inc., 345 F.3d 866, 873 n. 2 (11th Cir.2003). Part A of the Medicare Act, 42 U.S.C. § 1395c et seq., provides insurance for the cost of hospital and related post hospital services. Part B of the Act provides for voluntary coverage for the cost of medical services, e.g., physicians' fees, through private health insurance carriers. 42 U.S.C. § 1395j et seq.

For the first fifteen years, Medicare paid for medical services without regard to whether they were also covered by an employer group health plan. Health Ins. Ass'n, 23 F.3d at 414. However, in 1980, Congress enacted a series of amendments, commonly referred to as the Medicare Secondary Payer ("MSP") provisions, which were designed to make Medicare a "secondary payer" with respect to such a plan. New York Life Ins. Co. v. United States, 190 F.3d 1372, 1373-74 (Fed.Cir.1999) (citing Health Ins. Ass'n, 23 F.3d at 414). The MSP statute provides, in relevant

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part, as follows: 4

(2) Medicare secondary payer

(A) In general

Payment under this subchapter may not be made, except as provided in subparagraph (B), with respect to any item or service to the extent that--

(i) payment has been made, or can reasonably be expected to be made, with respect to the item or service as required under paragraph (1), 5 or

(ii) payment has been made or can reasonably be expected to be made promptly (as determined in accordance with regulations) under a workmen's compensation law or plan of the United States or a State or under an automobile or liability insurance policy or plan (including a self-insurance plan) or under no fault insurance.

In this subsection, the term "primary plan" means a group health plan or large group health plan, to the extent that clause (i) applies, and a workmen's compensation law or plan, an automobile or liability insurance policy or plan (including a self-insured plan) or no fault insurance, to the extent that clause (ii) applies.

42 U.S.C. § 1395y(b)(2)(A). In the event that Medicare is not reimbursed for a conditional payment with respect to a medical item or service, "the United States may bring an action against any entity which is required or responsible (directly as a third-party administrator, or otherwise) to make payment with respect to the ... item or service (or any portion thereof) under a primary plan." Id. § 1395y(b)(2)(B)(ii). Finally, under the MSP provisions, the United States is subrogated (to the extent Medicare makes payment for a medical item or service) to "any right ... of an individual or any other entity to payment with respect to such item or service under a primary plan." Id. § 1395y(b)(2)(B)(iii).

Thus, if a Medicare recipient has medical insurance provided through a "primary plan," Medicare is precluded from paying for medical services except to provide secondary coverage. Put another way, "Medicare serves as a backup insurance plan to cover that which is not paid for by a primary insurance plan." Thompson v. Goetzmann, 337 F.3d 489, 496 (5th Cir.2003). As the Court of Federal Claims observed, "[m]edical care thus is secured for a Medicare-eligible person whose care is covered by an insurer that should be the primary payer, but has not resolved the claim timely enough to pay for the medical care at the time payment is due." Order, 58 Fed.Cl. at 761.

Judicial review of claims arising under the Medicare Act is pursuant to 42 U.S.C. § 405(g), which is made applicable to the Medicare Act by 42 U.S.C. § 1395ii 6 and which provides, in relevant part, as follows:

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(g) Judicial review

Any individual, after any final decision of the [Secretary] made after a hearing to which he was a party, irrespective of the amount in controversy, may obtain a review of such decision by a civil action commenced within sixty days after the mailing to him of notice of such decision or within such further time as the [Secretary] may allow. Such action shall be brought in the district court of the United States for the judicial district in which the plaintiff resides, or has his principal place of business, or, if he does not reside or have his principal place of business within any such judicial district, in the United States District Court for the District of Columbia....

Section 405(h) of Title 42 provides that "[n]o findings of fact or decision of the [Secretary] shall be reviewed by any person, tribunal, or governmental agency except as herein provided." It also provides that "[n]o action against the United States, the [Secretary,] or any officer or employee thereof shall be brought under section 1331 or 1346 of Title 28 to recover on any claim arising under this subchapter [i.e., the Medicare Act]." 42 U.S.C. § 405(h).

Finally, before bringing suit pursuant to 42 U.S.C. § 405(g), an individual must exhaust administrative remedies. Shalala v. Ill. Council on Long Term Care, Inc., 529 U.S. 1, 20, 120 S.Ct. 1084, 146 L.Ed.2d 1 (2000); Ringer, 466 U.S. at 627, 104 S.Ct. 2013; Weinberger v. Salfi, 422 U.S. 749, 762, 95 S.Ct. 2457, 45 L.Ed.2d 522 (1975). Administrative remedies are provided by 42 U.S.C. §§ 1395ff and gg. Section 1395ff provides that an individual dissatisfied with an "initial determination" with respect to a claim for benefits is entitled to reconsideration of the determination and a hearing, and after such a hearing, "to judicial review of the Secretary's final decision ... as is provided in section 405(g) of this title." 42 U.S.C.§ 1395ff(b)(1)(A). Section 1395gg provides that the Secretary may review a decision to seek reimbursement of an incorrect Medicare payment from an individual. It further provides that the Secretary shall waive recovery when an individual is "without fault," when "recovery would defeat the purposes of [the Medicare Act]," or when recovery "would be against equity or good conscience." Id. § 1395gg(c).

We now turn to the facts of this case.


In April of 2000, Ms. Wilson, as the personal representative of the estate of her deceased husband, Max Wilson, filed a medical malpractice action in state court in Michigan against the Genesys Regional Medical Center and two doctors who had treated her husband prior to his death. Eventually, Ms. Wilson settled the case for $160,000. Subsequently, on June 20, 2002, in a letter to Ms. Wilson's attorney, HHS formally asserted a claim for reimbursement against the settlement. HHS stated that Medicare had made payments for Mr. Wilson's care in the amount of approximately $126,000 under Medicare Part A and in the amount of approximately $21,000 under Medicare Part B. In seeking reimbursement, HHS discounted the total amount of the payments by the estimated amount of Ms. Wilson's attorney fees and the expenses incurred in pursuing the malpractice action. This resulted in a claim by HHS in the amount of $88,744.72. The asserted basis for seeking reimbursement from the estate was that HHS was entitled to repayment for conditional payments made by Medicare on behalf of Mr. Wilson under the MSP provisions discussed above, in particular 42 U.S.C.§ 1395y(b)(2)(B)(i). After indicating the circumstances under which HHS would waive...

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