In re Silicone Gel Breast Implants Liab. Litig., CV-92-N-10000-S.

Citation174 F.Supp.2d 1242
Decision Date26 September 2001
Docket NumberNo. CV-00-N-0837-S.,No. CV-92-N-10000-S.,CV-92-N-10000-S.,CV-00-N-0837-S.
PartiesIn re SILICONE GEL BREAST IMPLANTS PRODUCTS LIABILITY LITIGATION (MDL 926). United States of America, v. Baxter International, Inc., et al.,
CourtUnited States District Courts. 11th Circuit. United States District Court of Northern District of Alabama

Ralph I. Knowles, Jr., Doffermyre, Shields, Canfield, Knowles & Devine, Atlanta, GA, Jerry P. Sattin, McCarter & English, Newark, NJ, Diane Pompei, Sedgwick, Detert, Moran & Arnold, Newark, NJ, for Silicone Gel Breast Implants Products Liability Litigation.

Alice H. Martin, U.S. Attorney, Linda S. Trippe, Herbert J. Lewis, III, U.S. Attorney's Office, Birmingham, AL, Ruth A. Harvey, J. Christopher Kohn, Sandra P. Spooner, Mary R. Bohan, Anne M. McCormick, Lacy R. Harwell, David W. Ogden, U.S. Dept. of Justice, Civil Division, Washington, DC, for U.S.

Peter Morgan, Justin D. Simon, Dickstein, Shapiro, Morin & Oshinsky, LLP, Washington, DC, Debra E. Pole, Brobeck, Phleger & Harrison, Los Angeles, CA, for Baxter Intern., Inc. and Baxter Healthcare Corp.

Richard M. Eittreim, Jerry P. Sattin, McCarter & English, Newark, NJ, for Bristol-Meyers Squibb Co.

Maureen A. Mahoney, Latham & Watkins, Washington, DC Miles Ruthberg, Paul A. Allulis, Latham & Watkins, Los Angeles, CA, for Minnesota Mining & Mfg. Co.

William A. Krohley, Kelley, Drye & Warren, LLP, for Union Carbide Chemical & Plastics Co. and Union Carbide Corp.

Memorandum of Opinion

EDWIN L. NELSON, District Judge.

The United States1 filed this action on March 30, 2000, against Baxter International Inc., Baxter Healthcare Corporation, Bristol-Myers Squibb Company, Minnesota Mining & Manufacturing Co., Union Carbide Chemical & Plastics Co., Union Carbide Corporation (collectively, the "RSP Defendants"), and Edgar C. Gentle, III, in his official capacity as the Escrow Agent for the Settlement Fund established in In re Silicone Gel Breast Implant Products Liability Litigation (MDL 926), No. CV-92-N-10000-S (N.D.Ala.)(the Escrow Agent).

The matter is presently before the Court on motions of the RSP Defendants, the Escrow Agent, and intervenor Plaintiffs' Steering Committee (the "PSC")2, to dismiss the complaint pursuant to Fed. R.Civ.P. 12(b)(6). On September 14, 2000, the Court heard oral arguments on the motions and provisionally granted the PSC's motion to intervene.3 For the reasons discussed below, the motions to dismiss will be granted in all respects.

I. Standard of Review.

A plaintiff need only set forth "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R.Civ.P. 8(a). The complaint is sufficient if it gives a defendant notice of the claims by which the plaintiff seeks to hold the defendant liable. A plaintiff is not required "to set out in detail the facts upon which he bases his claim." Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). Accordingly, "the threshold of sufficiency that a complaint must meet to survive a motion to dismiss for failure to state a claim is exceedingly low." Quality Foods de Centro America v. Latin American Agribusiness Dev. Corp., 711 F.2d 989, 995 (11th Cir.1983). "The purpose of a Rule 12(b)(6) motion is to test the facial sufficiency of the statement of claim for relief." Brooks v. Blue Cross & Blue Shield, 116 F.3d 1364, 1368 (11th Cir.1997). A court should only grant such a motion "when the movant demonstrates `beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.'" Harper v. Blockbuster Entertainment Corp., 139 F.3d 1385, 1387 (11th Cir.1998) (quoting Conley, 355 U.S. at 45-46, 78 S.Ct. 99).

In reviewing a defendants' Rule 12(b)(6) motion to dismiss, the Court must "take the material allegations of the complaint and its incorporated exhibits as true ... and liberally construe the complaint in favor of the plaintiff." Burch v. Apalachee Community Mental Health Servs., Inc., 840 F.2d 797, 798 (11th Cir.1988) (en banc), aff'd sub nom. Zinermon v. Burch, 494 U.S. 113, 110 S.Ct. 975, 108 L.Ed.2d 100 (1990). The Court's Rule 12(b)(6) review "is limited primarily to the face of the complaint and attachments thereto." Brooks, 116 F.3d at 1368.

When this court is called upon to construe a statute, the first question must always be whether Congress has directly spoken to the precise question at issue so that the intent of Congress is clear. Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). If the statute is silent or ambiguous with respect to a specific issue, an agency's construction that is based on a permissible construction of the statute is controlling. Id. However, the litigation position of agency counsel that is wholly unsupported by regulations, rulings, or administrative practice is not entitled to deference. Bowen v. Georgetown University Hosp., 488 U.S. 204, 211, 109 S.Ct. 468, 102 L.Ed.2d 493 (1988).

II. Statement of Facts.
A. Scope.

The facts set forth below are based upon the allegations of the complaint and upon this court's public record subject to judicial notice under Fed.R.Evid. 201. A court may take judicial notice of its own records in 12(b)(6) proceedings. ITT Rayonier, Inc. v. United States, 651 F.2d 343, 345 n. 2 (5th Cir.1981). See also Bryant v. Avado Brands, Inc., 187 F.3d 1271, 1276 (11th Cir.1999)(approving practice of judicially noticing publicly filed documents with SEC on a motion to dismiss) and Wells v. United States, 318 U.S. 257, 63 S.Ct. 582, 87 L.Ed. 746 (1943)(judicial notice of court records is appropriate). This court's records subject to judicial notice include documents filed in In re Silicone Gel Breast Implant Products Liability Litigation (MDL 926), No. CV-92-N-10000-S (N.D.Ala.1992) and in Lindsey v. Dow Corning Corp., No. CV-94-N-11558-S (N.D.Ala.1994). As public records, they contain facts "capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned." Fed.R.Evid. 201.

B. The Facts.

On June 25, 1992, the Judicial Panel on Multidistrict Litigation transferred all pending federal court actions in which the plaintiffs alleged they had been injured by silicone gel breast implants to the Northern District of Alabama. See In re Silicone Gel Breast Implants Prods. Liab. Litig. (MDL 926), 793 F.Supp. 1098 (J.P.M.L.1992). In April 1994, Judge Sam Pointer, Jr.4 of this court provisionally certified Lindsey v. Dow Corning, et al., as a class action for settlement purposes under Fed.R.Civ.P. 23(b)(3). Lindsey v. Dow Corning Corp., No. CV 94-P-11558-S (N.D.Ala.). By Order 27, entered on December 22, 1995, Judge Pointer approved the "Bristol, Baxter, 3M, McGhan and Union Carbide Revised Settlement Program" (the "RSP") for the Lindsey class.

The RSP is funded by the settling MDL 926 defendants, who "pay into the fund ... such amounts as, from time to time during the 15 year period of the program, are estimated ... to be needed ... to pay benefits...." Order No. 27, ¶ J. The RSP's benefits to class members include a payment to defray the cost of explant surgery and additional benefits for those claimants with certain diseases or injuries. Claimants are not required to prove a causal link between their breast implants and the claimed disease or condition. See generally, Order No. 27.

The RSP Defendants have also entered into settlements with many plaintiffs who opted out of the Lindsey class action and the RSP. Compl. ¶¶ 21-22.

Under the terms of Order 27 in MDL 926, a "Common Benefit Fund" was also established. The Common Benefit Fund was and is used to compensate and reimburse counsel who provided services for the "common benefit" of the Lindsey class. When RSP Defendants pay settlement amounts into the RSP, they pay a six percent surcharge that is designated as the Common Benefit Fund, and held as part of the RSP fund. Plaintiffs who settle or obtain judgment in an opt-out lawsuit similarly pay 6% of the settlement amount into the Common Benefit Fund. Notice of Revised Settlement Program, ¶ 28. In Order No. 13A (December 28, 1999), the Court ordered a 2% pro-rata "rebate" of excess funds in the Common Benefit Fund and subsequent surcharge amounts have been limited to 4 percent.

The United States filed its complaint in this action more than four years after the court's approval of the Lindsey class settlement.5 The United States avers it, through HCFA, DoD, VA and IHS, has furnished or paid for medical care and treatment related to breast implants for claimants who were or will be compensated through the RSP. This is a suit to recover the costs of that medical care from the funds. The United States claims the defendants are liable to reimburse the government for the medical care of breast implant claimants despite the defendants' previous settlement payments to breast implant claimants.

The United States cannot sue to recover medical costs unless explicitly authorized by Congress. United States v. Standard Oil Co., 332 U.S. 301, 67 S.Ct. 1604, 91 L.Ed. 2067 (1947). The United States asserts that the present suit is appropriate and authorized under the Medicare Secondary Payer statute, 42 U.S.C. § 1395y(b) and/or the Medical Care Recovery Act, 42 U.S.C. §§ 2651-2653.

III. The Medicare Secondary Payer Statute.

The Medicare Secondary Payer statute (hereinafter, the "MSP" statute) is a series of amendments designed to lower Medicare costs by making Medicare coverage secondary to coverage provided by private insurance programs. The MSP statute is codified at 42 U.S.C. § 1395y(b). When a third party payer has made or can reasonably be expected to make payment to a Medicare beneficiary, Medicare's payment is "conditional" on reimbursement to the Medicare Trust Fund. 42 U.S.C. § 1395y(b)(2)(B)(i). To ensure that the required reimbursement...

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