Osborne v. Metro. Gov't of Nashville & Davidson Cnty.

• Decision Date: 20 August 2019
• Docket Number: No. 18-6062,18-6062
• Citation: 935 F.3d 521
• Parties: Ronald OSBORNE, Plaintiff-Appellant, v. METROPOLITAN GOVERNMENT OF NASHVILLE AND DAVIDSON COUNTY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

935 F.3d 521

Ronald OSBORNE, Plaintiff-Appellant,

v.METROPOLITAN GOVERNMENT OF NASHVILLE AND DAVIDSON COUNTY, Defendant-Appellee.

No. 18-6062

United States Court of Appeals, Sixth Circuit.

Decided and Filed: August 20, 2019

ON BRIEF: James Bryan Moseley, MOSELEY & MOSELEY, Murfreesboro, Tennessee, for Appellant. J. Brooks Fox, METROPOLITAN GOVERNMENT OF NASHVILLE AND DAVIDSON COUNTY, Nashville, Tennessee, for Appellee.

Before: SILER and DONALD, Circuit Judges.^*

SILER, Circuit Judge.

Plaintiff Ronald Osborne appeals the district court’s decision dismissing his claim under the Medicare Secondary Payer Act ("MSPA"), 42 U.S.C. § 1395y(b), against the Metropolitan Government of Nashville and Davidson County ("Metro Nashville"). Because the MSPA does not provide Osborne a cause of action, the district court’s decision is AFFIRMED .

I.

Due to an unsafe condition on the premises, Osborne suffered a broken arm while throwing away trash at the East Nashville Convenience Center in 2014. The center is owned and operated by Metro Nashville.

Osborne obtained a judgment against Metro Nashville in state court under the Tennessee Governmental Tort Liability Act; the damages included specific medical expenses related to the incident and found Osborne’s comparative fault to be twenty percent.¹ The award was upheld on appeal in 2018.

This lawsuit arises because, prior to the state court suit, Osborne incurred medical expenses for which Metro Nashville did not pay at the time. Instead, and since Osborne is a Medicare recipient, Medicare made conditional payments to Osborne totaling at least $9,453.09. Because Metro Nashville failed to pay, Osborne claims he himself incurred—in addition to the costs of his state court litigation—the "cost of paying his co-pays, deductibles, and co-insurance for the treatment from his medical providers which was not covered through Medicare." According to the amended complaint, Metro Nashville still has not paid the state court judgment or reimbursed Medicare for its conditional payments.²

Osborne brought this suit in the Middle District of Tennessee alleging Metro Nashville is a primary payer who failed to pay under the MSPA, and is therefore liable for reimbursement of Medicare’s conditional payments and a double damages penalty pursuant to 42 U.S.C. § 1395y(b)(3)(A). The district court held that Osborne lacked statutory standing to sue for his individual losses and the conditional payments made by Medicare because the MSPA does not permit a private cause of action against tortfeasors. Because the MSPA is not a qui tam statute and financial injury suffered by Medicare is not attributed to Osborne, the district court found that he also lacked Article III standing to sue for Medicare’s conditional payments. Finally, it noted that the individual harms claimed by Osborne in his complaint were conclusory and insufficient to survive a motion to dismiss.

II.

This court reviews a district court’s grant of a motion to dismiss de novo. Keys v. Humana, Inc. , 684 F.3d 605, 608 (6th Cir. 2012). The complaint is construed in a light most favorable to the plaintiff, and the court accepts all well-pleaded factual allegations as true. Crugher v. Prelesnik , 761 F.3d 610, 614 (6th Cir. 2014). Those factual allegations must be enough "to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).

III.

Congress enacted the MSPA in 1980 to help curb the rising costs of Medicare. Prior to the MSPA, Medicare covered all medical treatment within its scope, and if a person also had a private insurer, that insurer would pay the remainder of covered services. Bio-Medical Applications of Tenn., Inc. v. Cent. States Se. & Sw. Areas Health & Welfare Fund , 656 F.3d 277, 278 (6th Cir. 2011). The MSPA reversed this pecking order. Private insurers who cover the same treatments as Medicare now foot the bill first as "primary payers," and Medicare pays the remainder of covered services as the "secondary payer." Id. When a primary plan "has not made or cannot reasonably be expected to make payment with respect to [an] item or service promptly[,]" Medicare may make conditional payments to ensure treatment. 42 U.S.C. § 1395y(b)(2)(B)(i). The MSPA provides for Medicare’s reimbursement of conditional payments by a primary plan, or an entity that receives payment from a primary plan, if it is demonstrated that the primary plan "has or had a responsibility to make payment with respect to such item or service." Id. § 1395y(b)(2)(B)(ii). The United States may sue for the reimbursement. Id. § 1395y(b)(2)(B)(iii).

The MSPA also includes a private right of action for double damages against a primary plan. In full, it provides:

There is established a private cause of action for damages (which shall be in an amount double the amount otherwise provided) in the case of a primary plan which fails to provide for primary payment (or appropriate reimbursement) in accordance with paragraphs (1) and (2)(A).

42 U.S.C. § 1395y(b)(3)(A).³ Through this provision, Osborne seeks double damages against Metro Nashville, a tortfeasor he alleges is a primary payer who has failed to pay or reimburse Medicare’s conditional payments.

In 2003, Congress amended the MSPA to apply to tortfeasors. First, it expanded the definition of "primary plan" to include "self-insured plan[s]" and then deemed an entity "that engages in a business, trade, or profession" to have a self-insured plan "if it carries its own risk (whether by a failure to obtain insurance, or otherwise) in whole or in part." Glover v. Liggett Grp., Inc. , 459 F.3d 1304, 1306-07 (11th Cir. 2006) (quoting § 1395y(b)(2)(A) ); see Bio-Medical , 656 F.3d at 289-90. Second, Congress added an amendment requiring primary plans to "reimburse Medicare only if its responsibility to pay has been demonstrated, which can occur through a judgment, settlement, or ‘other means.’ " Bio-Medical , 656 F.3d at 290 (quoting 42 U.S.C. § 1395y(b)(2)(B)(ii) (demonstrated responsibility provision)). To understand whether these amendments affected the private cause of action—indeed, whether Osborne may use the MSPA to sue a tortfeasor—a look at Sixth Circuit precedent is in order.

A. MSPA Private Cause of Action Against Tortfeasors After Bio-Medical

In dicta, this court has previously said Osborne may not sue. In Bio-Medical , the court undertook an exhaustive analysis of the MSPA and spoke to the claim Osborne now brings:

We believe that when Congress amended the Act in 2003 to permit lawsuits against tortfeasors and to add the "demonstrated responsibility" provision, Congress intended to permit lawsuits against tortfeasors only by Medicare , and not lawsuits against tortfeasors by private parties . Thus ... the Act does not permit a private cause of action (as opposed to one brought by Medicare) in tort.

Id. at 292-93.

Bio-Medical leaned heavily on the context in which the amendments were passed. It explained that, prior to the 2003 amendments, federal courts did not consider tortfeasors to be "self-insured plans" under the MSPA. Id. at 289. This meant that when Medicare attempted to sue tobacco companies, drug manufacturers, and breast-implant manufacturers in the early 2000’s—an effort to recover reimbursement for medical expenses it had paid to plaintiffs prior to the settlements that were then being paid out—it lost because tortfeasors were not covered by the Act. Id. In response, Congress amended the definition of "self-insured plans" to include tortfeasors, and added the demonstrated responsibility provision. Id. at 290 (citing 42 U.S.C. § 1395y(b)(2)(B)(ii) ).

The amendments did not fit neatly into the MSPA, and the Bio-Medical court undertook the task of explaining their reach. First, it determined that the demonstrated responsibility provision must have been meant as a limit on tortfeasor liability. Id. at 290-91. It noted that, practically: "the concept of demonstrated responsibility makes sense only in the context of tort (where no evidence of responsibility exists until it is adjudicated ex post), rather than in the context of an insurance contract (where insurers assume the responsibility of paying for enumerated contingencies ex ante)." Id. at 291.

The court also determined that the provision applies only to lawsuits brought by Medicare for reimbursements, and not lawsuits brought by private parties. Id. at 292-93. Since the provision applies to suits against tortfeasors, and the provision also applies only to Medicare, it follows that Medicare alone may bring actions against tortfeasors under the MSPA. Id. at 293.

The court found that "no fewer than five reasons militate in favor of this conclusion." Id. at 292. Most importantly, the demonstrated responsibility provision’s text limits only when primary plans must reimburse Medicare, and fails to mention when plans must pay private parties.⁴ Id. The provision itself was inserted in a portion of the MSPA governing the relationship between Medicare and primary payers, again suggesting the provision is limited to the reimbursement of Medicare. Id. The legislative history, and particularly the legislative backdrop of Medicare’s failed litigation position, further evidenced that it was Medicare, and not private parties, that Congress meant to be reimbursed by tortfeasors when it brought them into the MSPA’s purview. Id. Finally, the court noted that applying the "provision to lawsuits brought by private parties essentially relegates the private cause of action to a super-judgment enforcement mechanism, and no plausible explanation exists for why Congress would have sought to limit it in that way." Id. Following discussion of these five factors, the Bio-Medical opinion concluded that, when Congress amended the MSPA in 2003, it intended to permit lawsuits against tortfeasors only by Medicare, and not by private parties. Id. at 292-93.

Osborne does not grapple with any of these factors in his brief. Ins...