Stalley ex rel. U.S. v. Catholic Health Initiatives

• Citation: 458 F.Supp.2d 958
• Decision Date: 20 October 2006
• Docket Number: No. 4:06CV00629GH.,4:06CV00629GH.
• Parties: Douglas B. STALLEY, on Behalf of the UNITED STATES of America, Plaintiff v. CATHOLIC HEALTH INITIATIVES, et al., Defendants.
• Court: U.S. District Court — Eastern District of Arkansas

458 F.Supp.2d 958

Douglas B. STALLEY, on Behalf of the UNITED STATES of America, Plaintiff v. CATHOLIC HEALTH INITIATIVES, et al., Defendants.

No. 4:06CV00629GH.

United States District Court, E.D. Arkansas, Western Division.

October 20, 2006.

Brian David Reddick, Susan N. Estes, Timothy C. McHugh, Wilkes & McHugh, P.A., Little Rock, AR, James L. Wilkes, II, Kathleen Clark Knight, Wilkes & McHugh, P.A, Tampa, FL, for Plaintiff.

Stephen J. Immelt, Therese M. Goldsmith, Hogan & Hartson LP, Baltimore, MD, Philip E. Kaplan, Kaplan, Brewer, Maxey & Haralson, P.A., Little Rock, AR, for Defendants.

ORDER

HOWARD, District Judge.

Plaintiff filed this action on behalf of the United States of America seeking to recover monies he claims is owed Medicare under the Medicare Secondary Payer ("MSP") statute, 42 U.S.C. § 1395y(b)(2). This action is one of many recently filed by plaintiff in several jurisdictions.¹

Plaintiff alleges that "on numerous occasions," defendant Medicare-participating health care provider Catholic Health Initiatives ("CHI"), "by and through its employees and agents, caused harm to Medicare recipients who were patients in CHI's hospitals, thereby triggering legal obligation on the part of CHI and the other primary payer Defendants ... to pay for any consequential medical service, treatment, or medication ... CHI provided medical services, treatment and medication to such Medicare recipients who were harmed by CHI's own conduct, and thereafter received reimbursement from Medicare for treating those injured Medicare recipients." (complaint, ¶ 7) The complaint alleges that "[d]efendants, as primary payers, breached their duties to Medicare by not paying for the care that injured Medicare recipients received as a result of CHI's conduct and further by not reimbursing Medicare after Medicare provided conditional payment for the care that such Medicare recipients received as a result of CHI's conduct." (complaint, ¶ 9).

Defendants have filed a motion to dismiss. They contend that plaintiff lacks standing to sue either on behalf of himself or the United States, that the complaint should be dismissed for lack of personal jurisdiction as to the Alergent entities and Advocate Insurance Resources, that the complaint should be dismissed for failure to comply with the requirements of Fed. R.Civ.P. 8(a) and 9(b), and that the complaint should be dismissed for failure to state a claim.

Medicare is a federal health insurance program, generally benefiting the aged and the disabled. Blue Cross & Blue Shield of Texas, Inc. v. Shalala, 995 F.2d 70, 71 (5th Cir.1993). The MSP statute was enacted in 1980 to reduce federal health care costs. Glover v. Liggett Group, Inc., 459 F.3d 1304, 1306 (11th Cir.2006). Under the MSP, "Medicare [is] the secondary payer for medical services provided to Medicare beneficiaries whenever payment is available from another primary payer." Id. See Thompson v. Goetzmann, 337 F.3d 489, 495 (5th Cir. 2003)(In enacting the MSP, Congress "sought to reduce Medicare costs by making the government a secondary provider of medical insurance coverage when a Medicare recipient has other sources of primary insurance coverage.")

The statute provides a Medicare payment "may not be made., with respect to any item or service to the extent that payment has been made or can reasonably be expected to be made under" a primary plan. 42 U.S.C. § 1395y(b)(2)(A). A "primary plan" includes "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. An entity that engages in a business, trade, or profession shall be deemed 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." 42 U.S.C. § 1395y(b)(2)(A)(ii). The MSP statute provides for "conditional payments" for services where the primary plan "has not made or cannot reasonably be expected to make payment with respect to such item or service promptly ..." 42 U.S.C. § 1395y(b)(2)(B)(i). Medicare may seek reimbursement from the primary plan or any entity receiving payment from a primary plan if the primary plan had responsibility to make the payment. 42 U.S.C. § 1395y(2)(B)(ii). Responsibility for reimbursing Medicare "may be demonstrated by a judgment, a payment conditioned upon the recipient's compromise, waiver, or release (whether or not there is a determination of admission of liability), of payment for items or services included in a claim against the primary plan or the primary plan's insured, or by other means." Id.

Enforcement of a primary plan's payment of reimbursement obligation may be made by a direct cause of action by the government, 42 U.S.C. § 1395y(b)(2)(B)(iii); a subrogation claim brought by the government, 42 U.S.C. § 1395y(b)(2)(B)(iv); and by a private cause of action.

Congress added a private cause of action in 1986. Omnibus Budget Reconciliation Act of 1986, Pub.L. 99-509, § 9319, 100 Stat. 1874 (1986). The provision sets forth:

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). MSP liability, that is double damages, attaches when the primary plan fails to make payment "promptly" or within 120 days of a claim being filed or a service being rendered. 42 C.F.R. § 411.50(b). See United Seniors Ass'n, Inc. v. Philip Morris USA, 2006 WL 2471977, *1 (D.Mass. Aug. 28, 2006). "If the Medicare beneficiary on whose behalf a conditional payment is made has a tort claim, Medicare may seek reimbursement from the tortfeasor's insurance carrier, but only `after, and to the extent that, such carrier's liability under the [tortfeasor's] private policy for the services has been determined.' The same rules apply when the tortfeasor has internalized the insurance function by creating a `self-insured plan.'" Id. (quoting 54 Fed.Reg. 41,716-01 at 41, 727 (Oct. 11, 1989)). See also 42 C.F.R. § 411.52(a).

Plaintiff seeks to bring his claim under the above MSP provision.

CHI, Bergen Mercy Foundation, Inc., Alegent Health-Bergen Mercy Health System, and Alegent Health (Providers) are alleged to be participant providers in the Medicare program.² Plaintiff contends that the Providers bill Medicare for the medical mistakes they commit. Plaintiff asserts that under the MSP statute, none of the costs should be borne by Medicare or the taxpayers. Defendants Preferred Professional Insurance Company and Advocate Insurance (Insurers) are alleged to insure the Providers. Plaintiff asserts that the defendant Insurers allow the defendant Providers to bill Medicare for payments for which all defendants are primary payers under the law. Plaintiff asserts that the defendants have not reimbursed Medicare as required under the MSP statute.

Plaintiff does not allege that he ever received medical treatment at any of the defendant Providers, that he is a Medicare recipient, or that he knows of or was victim of any medical mistakes allegedly committed by the defendant Providers. Defendants assert that plaintiff does not have standing to bring this action. Plaintiff counters that the MSP statute is a qui tam statute.

Federal Rule of Civil Procedure 12(b)(1) requires dismissal if the Court lacks subject matter jurisdiction. Before reaching the merits, the Court must determine whether jurisdiction exists, including a determination of whether the plaintiff has standing. Ashley v. United States Dept. of Interior, 408 F.3d 997, 1000 (8th Cir.2005).

A plaintiff's standing to maintain his lawsuit is "an essential and unchanging part of the case-or-controversy requirement of Article III." Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). The burden is on plaintiff to establish his standing under Article III. Id. at 561, 112 S.Ct. 2130. If the plaintiff lacks standing, the Court does not have subject matter jurisdiction. Young America, v. Affiliated Computer Services, 424 F.3d 840, 843 (8th Cir.2005) (citation omitted). "To show standing under Article III of the U.S. Constitution, a plaintiff must demonstrate (1) injury in fact, (2) a causal connection between that injury and the challenged conduct, and (3) the likelihood that a favorable decision by the court will redress the alleged injury." Id.

It is clear that plaintiff does not meet the basic standing requirements. At the very least, he does not allege an injury in fact. Plaintiff, however, asserts he is bringing the claim "on behalf of the United States of America." He contends that the MSP statute is a qui tam statute and therefore he has standing to bring his claim. Plaintiffs construction of the MSP statute is at odds with the definition of a qui tam action.

A qui tam action may be brought by a private person (the relator) in the name of the government against the alleged false claimant. Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765, 769, 120 S.Ct. 1858, 146 L.Ed.2d 836 (2000) ("Qui tam is short for the Latin phrase qui tam pro domino rege quam pro se ipso in hoc parte sequitur, which means "who pursues this action on our Lord the King's behalf as well as his own.' The phrase dates from at least the time of Blackstone.") A qui tam relator sues on behalf of the government as an agent of the government, "which is always the real party in interest." United States ex rel. Rodgers v. State of Arkansas, 154 F.3d 865, 868 (8th Cir.1998) (citation omitted). The government makes a partial assignment of its claim to the private litigant. 529 U.S. at 773, 120 S.Ct. 1858 ("we are asserting that a qui tam relator...