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

• Decision Date: 27 November 2007
• Docket Number: No. 06-3884.,No. 06-4121.,06-3884.,06-4121.
• Citation: 509 F.3d 517
• Parties: Douglas B. STALLEY, on behalf of the UNITED STATES of America, Plaintiff/Appellant, v. CATHOLIC HEALTH INITIATIVES, a Colorado Corporation; Bergen Mercy Foundation, Inc., a Nebraska corporation; Alegent Health-Bergen Mercy Health System, a Nebraska corporation; Alegent Health, a Nebraska corporation; Preferred Professional Insurance Company, a Nebraska corporation; Advocate Insurance Resources SPC, a Cayman Islands company, Defendants/Appellees. Douglas B. Stalley, on behalf of the United States of America, Plaintiff/Appellant, v. Triad Hospitals, LLC, a Delaware limited liability company; Triad Hospitals, Inc., a Delaware Corporation; Triad Hospitals Holdings, Inc., a Delaware corporation; Partheno Insurance Company, Limited, a Bermuda company; Health Midwest Insurance Company, Limited, a Cayman Islands company; Health Care Indemnity, Inc., a Colorado corporation, Defendants/Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

509 F.3d 517

Douglas B. STALLEY, on behalf of the UNITED STATES of America, Plaintiff/Appellant, v. CATHOLIC HEALTH INITIATIVES, a Colorado Corporation; Bergen Mercy Foundation, Inc., a Nebraska corporation; Alegent Health-Bergen Mercy Health System, a Nebraska corporation; Alegent Health, a Nebraska corporation; Preferred Professional Insurance Company, a Nebraska corporation; Advocate Insurance Resources SPC, a Cayman Islands company, Defendants/Appellees.

Douglas B. Stalley, on behalf of the United States of America, Plaintiff/Appellant, v. Triad Hospitals, LLC, a Delaware limited liability company; Triad Hospitals, Inc., a Delaware Corporation; Triad Hospitals Holdings, Inc., a Delaware corporation; Partheno Insurance Company, Limited, a Bermuda company; Health Midwest Insurance Company, Limited, a Cayman Islands company; Health Care Indemnity, Inc., a Colorado corporation, Defendants/Appellees.

No. 06-3884.

No. 06-4121.

United States Court of Appeals, Eighth Circuit.

Submitted: May 17, 2007.

Filed: November 27, 2007.

Kenneth L. Connor, argued, Leesburg, VA (Kathleen Clark Knight, Tampa, FL, on the brief,), for appellant, Douglas B. Stalley.

Catherine E. Stetson, argued, Washington DC, (Philip Kaplan, Little Rock, AR, on the brief, Stephen J. Immelt, Therese M. Goldsmith, Baltimore, MD, on the brief, Dominic F. Perella, Washington, DC, on the brief), for appellees, Catholic Health Initiatives, et al.

Gregory M. Luce, argued, Washington, DC, (Jason B. Hendren, Little Rock, AR, on the brief, Gregory M. Luce, Edward K.M. Bilich, Paul R. Reichert, Washington DC, on the brief), for appellees, Triad Hospitals, LLC, et al.

Before WOLLMAN, BRIGHT, and JOHN R. GIBSON, Circuit Judges.

JOHN R. GIBSON, Circuit Judge.

In these two consolidated appeals we consider whether a plaintiff who has alleged no injury to himself has standing to bring suit under the Medicare Secondary Payer statute, 42 U.S.C. § 1395y(b)(3)(A). Because we conclude that the suit authorized by the statute is a private cause of action, which requires the plaintiff to have standing in his own right, rather than a qui tam statute, which allows the plaintiff to assert injury to the United States, we affirm the district courts¹ dismissal of these cases.

Both of these cases were filed by the same plaintiff, Douglas B. Stalley, who has also filed many similar cases around the country.² Stalley alleges that the defendants Catholic Health Initiatives³ and Triad Hospitals, Inc.⁴ are medical care providers participating in the Medicare program, who partly self-insure for malpractice. He alleges that the insurance company defendants⁵ were subsidiaries or sister companies to the provider defendants and wrote malpractice insurance for the provider defendants.

Stalley's substantive allegations are substantially the same in the two suits before us:

On numerous occasions, [the provider defendants] by and through [their] employees and agents, caused harm to Medicare recipients who were patients in [the defendants'] hospitals, thereby triggering legal obligation on the part of [the hospital defendants] and the other primary payer Defendants herein to pay for any consequential medical service, treatment, or medication. Nevertheless, [the provider defendants] provided medical services, treatment, and medication to such Medicare recipients who were harmed by [the provider defendants'] own conduct, and thereafter received reimbursement from Medicare for treating those injured Medicare recipients.

The complaints allege that the insurer defendants knew that the provider defendants had injured the Medicare beneficiaries and that the insurer defendants were liable as primary payers, yet the insurer defendants did not reimburse Medicare for the costs of treatment. The complaint does not allege that Stalley was either a Medicare beneficiary or a patient of the defendants or that he was injured by the defendants in any way. For that matter, the complaint does not identify any particular person who was injured by the defendants at any particular time.

The defendants in both cases moved to dismiss for lack of jurisdiction and for failure to state a claim. Both district courts granted the motion. The district court in the Catholic Health Initiatives case ruled first, holding that Stalley lacked constitutional standing to bring the suit because he had not alleged any injury to himself. Stalley v. Catholic Health Initiatives, 458 F.Supp.2d 958, 962-63 (E.D.Ark. 2006). Stalley contended that he had standing because he asserted injury to the United States and the Medicare Secondary Payer statute was a qui tam statute that authorized him to bring suit as relator for the United States. The district court examined the Medicare Secondary Payer statute and found no support for the notion that it was a qui tam statute. Id. at 963. Accordingly, the court dismissed Stalley's suit under Fed.R.Civ.P. 12(b)(1) for lack of standing. Alternatively, the court held that Stalley had not alleged a cause of action under 42 U.S.C. § 1395y(b)(3)(A) because he had not alleged that the provider defendants' liability had been "demonstrated," and the duty of the primary insurer to pay or to reimburse Medicare did not arise until the tortfeasor's liability has been "demonstrated" by judgment or other comparable means. Id. at 964 (relying on Glover v. Liggett Group, Inc., 459 F.3d 1304, 1309 (11th Cir.2006)). The district court in Triad relied on Judge Howard's conclusion in Catholic Health Initiatives that § 1395y(b)(3)(A) is not a qui tam statute and that Stalley therefore lacked standing to sue.⁶

The standard of review of a district court's decision under Fed.R.Civ.P 12(b)(1) depends on whether the district court resolved a facial attack or a factual attack on subject matter jurisdiction. Osborn v. United States, 918 F.2d 724, 729 n. 6 (8th Cir.1990). If, as here, the district court addressed a deficiency in the pleadings, our standard of review is the same standard we apply in Rule 12(b)(6) cases. Mattes v. ABC Plastics, Inc., 323 F.3d 695, 697-98 (8th Cir.2003). We accept as true all factual allegations in the complaint, giving no effect to conclusory allegations of law. Id. at 698. The plaintiff must assert facts that affirmatively and plausibly suggest that the pleader has the right he claims (here, the right to jurisdiction), rather than facts that are merely consistent with such a right. See Bell Atl. Corp. v. Twombly, ___ U.S. ___, 127 S.Ct. 1955, 1964-66, 167 L.Ed.2d 929 (2007).

The party invoking federal jurisdiction has the burden of establishing that he has standing to assert the claim. Lujan v. Defenders of Wildlife, 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). Standing consists of three elements: the plaintiff must have suffered an injury in fact; there must be a causal connection between that injury and the conduct complained of; and it must be likely that the injury would be redressed by a remedy the court could order. Id. at 560-61, 112 S.Ct. 2130. "At the pleading stage, general factual allegations of injury resulting from the defendant's conduct may suffice, for on a motion to dismiss we presume that general allegations embrace those specific facts that are necessary to support the claim." Id. at 561, 112 S.Ct. 2130 (internal quotation marks omitted).

Stalley does not contend that he himself has sustained any injury in fact. Instead, he contends that the Medicare Secondary Payer statute is a qui tam⁷ statute. A qui tam statute effectively assigns part of the government's interest to a relator so that the relator has standing to assert an injury suffered by the government. See Vt. Agency of Nat. Res. v. United States ex rel. Stevens, 529 U.S. 765, 772-74, 120 S.Ct. 1858, 146 L.Ed.2d 836 (2000). ("The [False Claims Act] can reasonably be regarded as effecting a partial assignment of the Government's damages claim. . . . We conclude, therefore, that the United States' injury in fact suffices to confer standing on respondent Stevens.") Qui tam actions developed around the end of the thirteenth century as a way for individuals who had suffered harm to avail themselves of the royal courts by pleading a harm to the King as well as to themselves. Id. at 774-75, 120 S.Ct. 1858. Well before American independence, the action evolved into the modern form in which informers who had not suffered harm personally, but who knew of harm done to the government, were authorized by statute to sue the wrongdoer on the government's behalf and to retain a portion of the damages awarded the government as a "bounty" or reward for bringing the wrongdoing to light. Id. at 775-77, 120 S.Ct. 1858. "There presently is no common-law right to bring a qui tam action, which is strictly a creature of statute." United Seniors Ass'n v. Philip Morris USA, 500 F.3d 19, 23 (1st Cir.2007); accord United States ex rel. Burnette v. Driving Hawk, 587 F.2d 23, 24 (8th Cir. 1978). The best known qui tam statute today is the False Claims Act, 31 U.S.C. §§ 3729-3732, which conferred standing on the plaintiff in Vermont Agency of Natural Resources, 529 U.S. at 778, 120 S.Ct. 1858.

The plain language of § 1395y(b)(3)(A) says, "There is established a private cause of action for damages . . ." (emphasis added). A "private" right is different from a public right, see Black's Law Dictionary, "Right" (8th ed.2004) (private right is defined as "A personal right, as opposed to a right of the public or the state."), and qui tam cases exist to vindicate public rights. Thus, the Medicare Secondary Payer statute purports to give a substantive right to individuals qua individuals, not as private attorneys general or assignees of a public right. In contrast, the False Claims Act qui tam provision authorizes a private person to bring a civil action "for the person and for the United States Government. The action shall be brought in the name of the Government." 31 U.S.C. § 3730(b). Moreover, the Medicare Secondary...