Stalley v. Methodist Healthcare, No. 07-5077.

• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)
• Writing for the Court: Alice M. Batchelder
• Citation: 517 F.3d 911
• Parties: Douglas B. STALLEY, Plaintiff-Appellant, v. METHODIST HEALTHCARE, Defendant-Appellee. Douglas B. Stalley, Plaintif-Appellant, v. Sumner Regional Health Systems, Inc., Defendant-Appellee. Douglas B. Stalley, Plaintif-Appellant, v. Erlanger Health System, Defendant-Appellee. Douglas B. Stalley, Plaintif-Appellant, v. Wellmont Health System (07-5360), Mountain States Health Alliance (07-5362), The Baptist Health System of East Tennessee (07-5364), Defendants-Appellees. Douglas B. Stalley, Plaintif-Appellant, v. Covenant Health, Defendant-Appellee.
• Decision Date: 28 February 2008
• Docket Number: No. 07-5147.,No. 07-5360.,No. 07-5077.,No. 07-5364.,No. 07-5358.,No. 07-5362.,No. 07-5363.

517 F.3d 911 Douglas B. STALLEY, Plaintiff-Appellant,
v.
METHODIST HEALTHCARE, Defendant-Appellee.
Douglas B. Stalley, Plaintif-Appellant,
v.
Sumner Regional Health Systems, Inc., Defendant-Appellee.
Douglas B. Stalley, Plaintif-Appellant,
v.
Erlanger Health System, Defendant-Appellee.
Douglas B. Stalley, Plaintif-Appellant,
v.
Wellmont Health System (07-5360), Mountain States Health Alliance (07-5362), The Baptist Health System of East Tennessee (07-5364), Defendants-Appellees.
Douglas B. Stalley, Plaintif-Appellant,
v.
Covenant Health, Defendant-Appellee. No. 07-5077. No. 07-5147. No. 07-5358. No. 07-5360. No. 07-5362. No. 07-5364. No. 07-5363. United States Court of Appeals, Sixth Circuit. Argued: December 4, 2007. Decided and Filed: February 28, 2008.

[517 F.3d 913]

ARGUED: Kenneth L. Connor, Wilkes & McHugh, Leesburg, Virginia, for Appellant. Edward K.M. Bilich, JONES DAY,

[517 F.3d 914]

Washington, DC, Daniel M. Stefaniuk, Spears, Moore, Rebman & Williams, Chattanooga, Tennessee, John L. Miller, Wagner, Myers & Sanger, Knoxville, Tennessee, Reuben N. Pelot IV, Egerton, McAfee, Armistead & Davis, Knoxville, Tennessee, for Appellees. ON BRIEF: Kathleen C. Knight, Wilkes & McHugh, Tampa, Florida, for Appellant. Edward K.M. Bilich, Gregory M. Luce, Paul R. Reichert, Jones Day, Washington, DC, Daniel M. Stefaniuk, Fred H. Moore, Spears, Moore, Rebman & Williams, Chattanooga, Tennessee, Reuben N. Pelot IV, Egerton, McAfee, Armistead & Davis, Knoxville, Tennessee, Robert L. Trentham, Miller & Martin, Nashville, Tennessee, Martin B. Bailey, Wagner, Myers & Sanger, Knoxville, Tennessee, for Appellees.

Before RYAN, BATCHELDER, and GRIFFIN, Circuit Judges.

OPINION

ALICE M. BATCHELDER, Circuit Judge.

Plaintiff-Appellant Douglas B. Stalley ("Stalley") filed seven separate lawsuits in the district courts in Tennessee — in addition to numerous cases in other jurisdictions against different defendants — claiming that Defendants-Appellees Methodist Healthcare ("Methodist"), Sumner Regional Health Systems, Inc. ("Sumner"), Erlanger Health System ("Erlanger"), Wellmont Health System ("Wellmont"), Mountain States Health Alliance ("Mountain States"), Covenant Health ("Covenant"), and The Baptist Health System of East Tennessee ("Baptist")¹ (collectively referred to as "Appellees") all violated the Medicare Secondary Payer Act ("MSP"), 42 U.S.C. § 1395y(b). In none of the virtually identical complaints does Stalley allege any direct injury. Instead, the complaints are premised on his belief that the MSP is a qui tam statute granting him standing to sue as a private attorney general. The several district courts, following the clear language of the MSP and a plethora of case law, separately ruled that the MSP is not a qui tam statute and, therefore, Stalley does not have Article III standing to raise these claims. Stalley appeals those decisions. Because we find no basis upon which to hold that the MSP is a qui tam statute, and no basis upon which to find that Stalley can otherwise demonstrate standing, we AFFIRM the judgments of the district courts.

I. BACKGROUND

A. Procedural History

Stalley sued Appellees complaining that they violated the MSP by failing to reimburse Medicare for unspecified payments that Medicare supposedly advanced to treat unspecified medical errors made with regard to unspecified Medicare beneficiaries at unspecified health care facilities owned by Appellees. Appellees all filed motions to dismiss, asserting that Stalley lacked standing to raise his claim, Fed. R. Civ. Proc. 12(b)(1),² and that Stalley failed to state a claim upon which relief may be granted, Fed. R. Civ. Proc. 12(b)(6).

The District Court for the Eastern District of Tennessee consolidated the actions filed in that district, namely, those against Erlanger, Wellmont, Mountain States,

517 F.3d 915

Covenant and Baptist, and dismissed the claims, both because Stalley lacked Article III standing to assert them and because Stalley failed to state a claim upon which relief could be granted. The District Court for the Middle District of Tennessee dismissed Stalley's complaint against Sumner on the same grounds. Finally, the District Court for the Western District of Tennessee dismissed Stalley's claim against Methodist, holding that Stalley lacked standing to assert his claim; the court did not address the question of whether Stalley had raised a claim upon which relief could be granted. All of the district courts held that the MSP is not a qui tam statute. Stalley timely appealed all three decisions, and the cases were consolidated for appeal because they raise identical issues of law and fact as to all Appellees.

B. The Medicare Secondary Payer Statute

Medicare is a federal health insurance program that provides health insurance benefits to people 65 years of age or older, disabled people, and people with end-stage renal disease. 42 U.S.C. § 1395c. For a number of years, Medicare served as the primary payer of health costs for eligible individuals. Mason v. American Tobacco Co., 212 F.Supp.2d 88, 91 (E.D.N.Y.2002). In 1980, however, Congress enacted the MSP to counteract escalating health-care costs. United Seniors Ass'n v. Philip Morris USA, 500 F.3d 19, 21 (1st Cir. 2007), cert. denied, ___ U.S. ___, 128 S.Ct. 1125, ___ L.Ed.2d ___ (2008). The MSP "makes Medicare the secondary payer for medical services provided to Medicare beneficiaries whenever payment is available from another primary payer." Id. "This means that if payment for covered services has been or is reasonably expected to be made by someone else, Medicare does not have to pay." Cochran v. United States Health Care Fin. Admin., 291 F.3d 775, 777 (11th Cir.2002). Consequently, the MSP makes Medicare a secondary payer and designates certain private entities — such as a group health plan, a worker's compensation plan, or an automobile or liability insurance plan — as "primary payers" that have the responsibility to pay for a person's medical treatment. See Glover v. Philip Morris USA, 380 F.Supp.2d 1279, 1282 (M.D.Fla.2005); see also 42 U.S.C. 1395y(b)(2)(ii). If the primary payer has not paid and will not promptly do so, however, Medicare can conditionally pay the cost of the treatment. United Seniors, 500 F.3d at 21 (citing 42 U.S.C. § 1395y(b)(2)(B)).

The MSP empowers Medicare to seek reimbursement for any conditional medical payments from the primary payer — or from the recipient of the payment — if it is demonstrated that the primary payer has responsibility to pay. Id. (citing 42 U.S.C. § 1395y(b)(2)(B)); see also Cochran, 291 F.3d at 777 ("The way the system is set up the beneficiary gets the health care she needs, but Medicare is entitled to reimbursement if and when the primary payer pays her."). One demonstrates that a primary plan is responsible for reimbursing Medicare by showing a "judgment, a payment conditioned upon the recipient's compromise, waiver, or release (whether or not there is a determination or 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." 42 U.S.C. § 1395y(b)(2)(B)(ii).

In order "to facilitate recovery of conditional payments, the MSP provides for a governmental action against any entity that was responsible for payment under a primary plan, 42 U.S.C. § 1395y(b)(2)(B)(iii), and subrogates the United States to the rights of a Medicare

517 F.3d 916

beneficiary to collect payment under a primary plan for items already paid by Medicare, § 1395y(b)(2)(B)(iv)." Glover v. Liggett Group, Inc., 459 F.3d 1304, 1307 (11th Cir.2006). "The MSP also creates a private right of action with double recovery to encourage private parties who are aware of non-payment by primary plans to bring actions to enforce Medicare's rights." Id. (citing 42 U.S.C. § 1395y(b)(3)(A)). Stalley contends that the MSP private right of action is actually a qui tam provision, allowing any individual to bring a suit on behalf of the United States.

II. STANDARD OF REVIEW

We review de novo a district court's dismissal of a case for lack of standing — lack of subject matter jurisdiction — under Fed. R. Civ. Proc. 12(b)(1). Prime Media, Inc. v. City of Brentwood, 485 F.3d 343, 348 (6th Cir.2007) (citing Am. Canoe Ass'n, Inc. v. City of Louisa Water & Sewer Comm'n, 389 F.3d 536, 540 (6th Cir.2004)).

III. ANALYSIS

A. The MSP is not a qui tam statute.

Stalley, as the party invoking federal subject matter jurisdiction, has the burden of demonstrating that he satisfies each element of Article III standing. Courtney v. Smith, 297 F.3d 455, 459 (6th Cir.2002) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992)); see also Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765, 771, 120 S.Ct. 1858, 146 L.Ed.2d 836 (2000) ("As we have frequently explained, a plaintiff must meet three requirements in order to establish Article III standing."). "The irreducible constitutional minimum of standing contains three elements." Lujan, 504 U.S. at 560, 112 S.Ct. 2130. First, Stalley must show that he has suffered an "injury" in fact. Id. He must have suffered "a harm that is both `concrete' and `actual or imminent, not conjectural or hypothetical.'" Vt. Agency, 529 U.S. at 771, 120 S.Ct. 1858 (quoting Whitmore v. Arkansas, 495 U.S. 149, 155, 110 S.Ct. 1717, 109 L.Ed.2d 135 (1990)). Second, Stalley must establish a causal connection between the alleged injury and the Appellees' conduct of which he complains. Lujan, 504 U.S. at 560, 112 S.Ct. 2130. That is, the injury must be "fairly traceable" to the Appellees' actions. Id. (quoting Simon v. Eastern Ky. Welfare Rights Organization, 426 U.S. 26, 41-42, 96 S.Ct. 1917, 48 L.Ed.2d 450 (1976)). Third, Stalley must demonstrate that the injury is redressable in this action. Vt. Agency, 529 U.S. at 771, 120 S.Ct. 1858. There must be a "substantial likelihood," id., as...