Strawser v. Atkins

• Decision Date: 22 May 2002
• Docket Number: No. 01-1557.,No. 01-2245.,No. 01-1175.,01-1175.,01-1557.,01-2245.
• Citation: 290 F.3d 720
• Parties: Lois STRAWSER; Joyce Perry; James H. Sheppard; Mary Jean Booth; Joyce D. Barker; Betty Jean Gilman; Kathy Robertson, individually and on behalf of all others similarly situated, Plaintiffs-Appellants, v. Nancy V. ATKINS, in her capacity as Commissioner of the Bureau of Medical Services, West Virginia Department of Health and Human Resources; Darrell W. Peters, in his capacity as supervisor, Third Party Liability Office of Administration, Accounts Receivable Unit of the Bureau for Medical Services, West Virginia Department of Health and Medical Services, West Virginia Department of Health and Human Resources; Paul L. Nusbaum, in his capacity as Secretary of the West Virginia Department of Health and Human Resources; Darrell V. McGraw, in his capacity as Attorney General of the State of West Virginia; Citibank, N.A., Escrow Agent, Defendants-Appellees. Stephen Albert Joseph, Jr.; Selma Charlene Hatfield; Howard S. Miller; Annie Sams Mosteller; David Kay Mullins; Mamie Brewer; Brenda Carson, Personal Representative of the Estate of Bondale Carson Miller; Margaret Renee Fleming, Personal Representative of the Estate of Earnestine Fleming; Laura Kelly, Personal Representative of the Estate of Elizabeth McAbee; Alford Welborn, Individually and on behalf of others similarly situated, Plaintiffs-Appellants, v. Charles M. Condon, in his official capacity as South Carolina Attorney General; Citibank, N.A.; William A. Prince, in his official capacity as Director of South Carolina Department of Health and Human Services, Defendants-Appellees, and Chase Manhattan Bank (USA), N.A., in its official capacity as Escrow Agent, Defendant. Hilda White; The Estate of Robert Cornelison, by and through Personal Representative, Helen Forte; Maude C. Strickland; The Estate of Robert W. Eltz, by and through Personal Representative, Nellie Eltz; The Estate of Marvin King, by and through Personal Representative, Donna King; The Estate of Maggie Irving, by and through Personal Representative, Wanda Jones; The Estate of Annis E. Messer, by and through Personal Representative, Charles Messer; Deborah Morey; The Estate of Hester Heatherly, by and through Personal Representative, Carroll Heatherly, Plaintiffs-Appellants, v. Michael F. Easley, Governor, in his official capacity as Governor of North Carolina; John Doe, in his official capacity as Tobacco Escrow Agent for the State of North Carolina; Richard H. Moore, in his official capacity as Treasurer of North Carolina; Carmen Hooker Buell, in her official capacity as Secretary of the North Carolina Department of Health & Human Services; Nina M. Yeager, in her official capacity as Director of the Division of Medical Assistance; The Golden L.E.A.F. (Long-Term Economic Advancement Foundation), Inc., a North Carolina Nonprofit Corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fourth Circuit

290 F.3d 720

Lois STRAWSER; Joyce Perry; James H. Sheppard; Mary Jean Booth; Joyce D. Barker; Betty Jean Gilman; Kathy Robertson, individually and on behalf of all others similarly situated, Plaintiffs-Appellants, v. Nancy V. ATKINS, in her capacity as Commissioner of the Bureau of Medical Services, West Virginia Department of Health and Human Resources; Darrell W. Peters, in his capacity as supervisor, Third Party Liability Office of Administration, Accounts Receivable Unit of the Bureau for Medical Services, West Virginia Department of Health and Medical Services, West Virginia Department of Health and Human Resources; Paul L. Nusbaum, in his capacity as Secretary of the West Virginia Department of Health and Human Resources; Darrell V.

McGraw, in his capacity as Attorney General of the State of West Virginia; Citibank, N.A., Escrow Agent, Defendants-Appellees.

Stephen Albert Joseph, Jr.; Selma Charlene Hatfield; Howard S. Miller; Annie Sams Mosteller; David Kay Mullins; Mamie Brewer; Brenda Carson, Personal Representative of the Estate of Bondale Carson Miller; Margaret Renee Fleming, Personal Representative of the Estate of Earnestine Fleming; Laura Kelly, Personal Representative of the Estate of Elizabeth McAbee; Alford Welborn, Individually and on behalf of others similarly situated, Plaintiffs-Appellants, v. Charles M. Condon, in his official capacity as South Carolina Attorney General; Citibank, N.A.; William A. Prince, in his official capacity as Director of South Carolina Department of Health and Human Services, Defendants-Appellees, and Chase Manhattan Bank (USA), N.A., in its official capacity as Escrow Agent, Defendant.

Hilda White; The Estate of Robert Cornelison, by and through Personal Representative, Helen Forte; Maude C. Strickland; The Estate of Robert W. Eltz, by and through Personal Representative, Nellie Eltz; The Estate of Marvin King, by and through Personal Representative, Donna King; The Estate of Maggie Irving, by and through Personal Representative, Wanda Jones; The Estate of Annis E. Messer, by and through Personal Representative, Charles Messer; Deborah Morey; The Estate of Hester Heatherly, by and through Personal Representative, Carroll Heatherly, Plaintiffs-Appellants, v. Michael F. Easley, Governor, in his official capacity as Governor of North Carolina; John Doe, in his official capacity as Tobacco Escrow Agent for the State of North Carolina; Richard H. Moore, in his official capacity as Treasurer of North Carolina; Carmen Hooker Buell, in her official capacity as Secretary of the North Carolina Department of Health & Human Services; Nina M. Yeager, in her official capacity as Director of the Division of Medical Assistance; The Golden L.E.A.F. (Long-Term Economic Advancement Foundation), Inc., a North Carolina Nonprofit Corporation, Defendants-Appellees.

No. 01-1175.

No. 01-1557.

No. 01-2245.

United States Court of Appeals, Fourth Circuit.

Argued April 3, 2002.

Decided May 22, 2002.

COPYRIGHT MATERIAL OMITTED

ARGUED: Antonio Ponvert, III, Koskoff, Koskoff & Bieder, P.C., Bridgeport, Connecticut; Larry Stephen McDevitt, Van Winkle, Buck, Wall, Starnes & Davis, P.A., Asheville, North Carolina, for Plaintiffs-Appellants. Charles R. Bailey, Bailey & Wyant, P.L.L.C., Charleston, West Virginia; John F. McCuskey, Shuman, McCuskey & Slicer, P.L.L.C., Charleston, West Virginia; Randall Lee Trautwein, Lamp, O'Dell, Bartram, Levy & Trautwein, P.L.L.C., Huntington, West Virginia; James Emory Smith, Jr., Assistant Deputy Attorney General, Columbia, South Carolina; Cory Hohnbaum, Kennedy, Covington, Lobdell & Hickman, L.L.P., Charlotte, North Carolina; James Carey Gulick, Senior Deputy Attorney General, North Carolina Department of Justice, Raleigh, North Carolina, for Defendants-Appellees. ON BRIEF: Richard A. Bieder, Koskoff, Koskoff & Bieder, P.C., Bridgeport, Connecticut; Troy N. Giatras, Giatras & Webb, Charleston, West Virginia; Robert James Gould, Charleston, West Virginia; W. Carleton Metcalf, Van Winkle, Buck, Wall, Starnes & Davis, P.A., Asheville, North Carolina; Charles E. Burgin, Dameron, Burgin & Parker, P.A., Marion, North Carolina; John A. Hagins, Jr., Karen W. Creech, Covington, Patrick, Hagins, Stern & Lewis, P.A., Greenville, South Carolina; Dick James, The Dick James Law Firm, Greenville, South Carolina; William A. Jordan, William A. Jordan, L.L.C., Greenville, South Carolina; J. David Flowers, J. David Flowers, P.A., Greenville, South Carolina, for Plaintiffs-Appellants. John T. Molleur, Bailey & Wyant, P.L.L.C., Charleston, West Virginia; Roberta F. Green, Shuman, McCuskey & Slicer, P.L.L.C., Charleston, West Virginia; Frances A. Hughes, Managing Deputy Attorney General, State of West Virginia, Charleston, West Virginia; Charlie Condon, Attorney General, Treva G. Ashworth, Deputy Attorney General, Columbia, South Carolina; Marie Ellen Gibbs, Kennedy, Covington, Lobdell & Hickman, L.L.P., Charlotte, North Carolina; Richard G. Hepfer, Deputy General Counsel, Department of Health and Human Services, Columbia, South Carolina; Roy Cooper, North Carolina Attorney General, Daniel F. McLawhorn, Special Deputy Attorney General, North Carolina Department of Justice, Raleigh, North Carolina; Matthew W. Sawchak, Ellis &amp Winters, L.L.P., Raleigh, North Carolina, for Defendants-Appellees.

Before MOTZ and TRAXLER, Circuit Judges, and W. Craig BROADWATER, United States District Judge for the Northern District of West Virginia, sitting by designation.

Affirmed by published opinion. Judge DIANA GRIBBON MOTZ wrote the opinion, in which Judge TRAXLER and Judge BROADWATER joined.

OPINION

DIANA GRIBBON MOTZ, Circuit Judge.

These appeals grow out of a 1998 settlement of litigation that many states brought against a group of major tobacco companies. West Virginia, North Carolina, and South Carolina, like all other states participating in the settlement, stand to receive substantial funds pursuant to it. Residents of each of those states, who have received Medicaid assistance for medical problems related to tobacco, filed suit to obtain a share of the funds their respective states will receive under the settlement. In each case, the district court dismissed the patients' complaints on multiple grounds. Because federal law bars the claims, see 42 U.S.C.A. § 1396b(d)(3)(B)(ii) (West Supp.2001), we affirm the judgment of the district court in each case.

I.

These cases concern the relationship between the Medicaid program, which provides funds for health care for poor people, and the 1998 tobacco settlement. To facilitate understanding of the issues involved, we briefly describe the relevant federal and state Medicaid law, the litigation and 1998 settlement between the states and the tobacco companies, and the claims raised in these appeals.

A.

In the United States, a person who cannot pay his or her medical bills may be eligible for financial assistance under the Medicaid program. If so, and if the state in which the person lives participates in the federal Medicaid program, both the federal government and the government of his or her state contribute through the program to pay some of the medical bills. See 42 U.S.C.A. §§ 1396, 1396a-1396u (1992 & West Supp.2001). West Virginia, North Carolina, and South Carolina all participate in the Medicaid program and receive federal funds under the program. See N.C. Gen.Stat. § 108A-54 (1999); W. Va.Code Ann. §§ 9-1-1 to 9-2-3 (Michie 1998 & Supp.2001); S.C.Code Ann. § 43-7-20, 43-7-410 to 43-7-460 (Law. Co-op.1985 & Supp.2001).

In some instances, third parties are liable for the health-care expenses of Medicaid patients, through, for example, insurance, tort liability, or a court order based on familial obligation. To obtain federal assistance with Medicaid costs, a state must require Medicaid recipients to assign any rights they possess against such third parties to the state, and must make reasonable efforts to collect on all third-party claims that are assigned. See 42 U.S.C.A. §§ 1396a(a)(25), 1396k(a) (West 1992 & Supp.2001). In keeping with these federal requirements, West Virginia, North Carolina, and South Carolina each mandate such an assignment. See W. Va.Code Ann. § 9-5-11(a) (Michie 1998); S.C.Code Ann. §§ 43-7-420 to 43-7-430 (Law. Co-op. Supp. 2001); N.C. Gen.Stat. §§ 108A-57, 108A-59(a) (1999).

Federal law also governs a participating state's distribution of any recovery on a third-party claim assigned by a Medicaid recipient. If a state recovers "under an assignment," payments from third parties go first to the state up to its relevant Medicaid expenses; then to the federal government, up to its relevant Medicaid expenses (minus an incentive payment to encourage the state to collect, see 42 C.F.R. § 433.153 (2001)); and finally, if any funds remain, to the patient who assigned the claim. See 42 U.S.C.A. § 1396k(b); see also 42 C.F.R. § 433.154 (2001). A state must distribute any remainder to the individual Medicaid recipient. See 42 U.S.C.A. § 1396k(b) (requiring that after both governments cover all of their expenses, "the remainder of such amount collected shall be paid to such individual" (emphasis added)).

B.

In the 1998 settlement of the tobacco litigation, each settling state recovered a substantial amount of money from tobacco companies. In many of the settling states, including West Virginia, North Carolina, and South Carolina, Medicaid patients then brought suit against state officials.¹ The patients contend that at least part of the tobacco settlement constituted a Medicaid recovery subject to the statutory framework outlined above. Therefore, they argue, state officials should distribute excess funds recovered under the settlement to them. Before analyzing these contentions, we describe the nature of the state lawsuits against tobacco companies and the settlement reached.

1.

In the 1990s, nearly all the states sued major tobacco companies for harm arising from the deliberate concealment of the health risks...