Thompson v. Goetzmann

• Decision Date: 17 December 2002
• Docket Number: No. 02-10198.,02-10198.
• Citation: 315 F.3d 457
• Parties: Tommy THOMPSON, Secretary, Department of Health & Human Services, Plaintiff-Appellant, v. Stephen GOETZMANN; et al., Defendants, Stephen Goetzmann; Bernice Loftin; Zimmer, Inc., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

315 F.3d 457

Tommy THOMPSON, Secretary, Department of Health & Human Services, Plaintiff-Appellant, v. Stephen GOETZMANN; et al., Defendants Stephen Goetzmann; Bernice Loftin; Zimmer, Inc., Defendants-Appellees.

No. 02-10198.

United States Court of Appeals, Fifth Circuit.

December 17, 2002.

Peter Angus Winn, Dallas, TX, Mark Bernard Stern, Alisa Beth Klein (argued) U.S. Dept. of Justice, Civ. Div.-App. Staff, Washington, DC, for Plaintiff-Appellant.

Stephen R. Goetzmann (argued), Dallas, TX, pro se and for Loftin.

Michael S. Elvin (argued), Baker & Daniels, Fort Wayne, IN, Daniel R. Roy, Matthew Ryan Gutwein, Baker & Daniels, Indianapolis, IN, for Zimmer, Inc.

Brian P. Quirk, Irwin, Fritchie, Urquhart & Moore, New Orleans, LA, Jerry P. Sattin, Alissa Pyrich, McCarter & English, Newark, NJ, for Advanced Medical Technology Ass'n, Amicus Curiae.

Nancy Jane Marshall, Anne B. Rappold, Duetsch, Kerrigan & Stiles, New Orleans, LA, Hugh F. Young, Jr., Product Liability Advisory Council, Reston, VA, for Product Liability Advisory Council, Inc., Amicus Curiae.

Appeal from the United States District Court for the Northern District of Texas.

Before JOLLY, DUHÉ, and WIENER, Circuit Judges.

WIENER, Circuit Judge:

Plaintiff-Appellant Tommy Thompson, Secretary of the United States Department of Health & Human Services ("government") appeals from the district court's dismissal of complaints against (1) Defendant-Appellee Zimmer, Inc. ("Zimmer"), pursuant to FED.R.CIV.P. 12(b)(6), and (2) Defendant-Appellee Bernice Loftin and her attorney, Defendant-Appellee Stephen Goetzmann, by summary judgment in their favor. The government had filed suit against all three Defendants-Appellees, seeking reimbursement for Medicare expenditures related to Loftin's medical treatment. This was the same treatment that was the genesis of Loftin's retaining Goetzmann to sue Zimmer, the manufacturer of her artificial hip prosthesis, which suit was settled prior to trial. Concluding that the government's complaint is without any basis in law and that there is no legal right of recovery against these three parties, we affirm the district court's dismissal of the government's action.

I. FACTS & PROCEEDINGS

In June 1993, Loftin underwent surgery to replace her hip joint with a prosthesis manufactured by Zimmer. That procedure was paid for by the government through the Medicare program. Complications arose, requiring Loftin to undergo a second surgery. Thereafter, Loftin continued to experience medical problems related to her hip prosthesis. Medicare paid approximately $143,881.82 for Loftin's two surgeries and subsequent medical treatment.

Representing Loftin, Goetzmann filed suit against Zimmer for products liability, alleging defective design of the hip prosthesis. Lofitn's claims included the medical expenses paid for by Medicare. Loftin and Zimmer settled in lieu of going to trial. Without admitting liability, Zimmer paid Loftin the unitemized lump sum of $256,000. Zimmer disbursed the full amount of the settlement to Goetzmann, who, after deducting his 40% contingency fee, distributed the balance to Loftin. The entire settlement was paid by Zimmer; no part was paid from insurance.

In October 2000, the government filed suit against Goetzmann, Loftin, and Zimmer under the Medicare Secondary Provider ("MSP") statute,¹ which authorizes the government to seek reimbursement from entities providing primary insurance coverage for medical services previously paid by Medicare. Among other things, the MSP statute authorizes the government to obtain reimbursement from a firm or entity that has a "self-insurance plan."²

The government alleged that Zimmer was "self-insured for its liability to Loftin," which, as a putative tortfeasor settling Loftin's products-liability action against it, had paid Loftin a substantial sum of money. This payment, insisted the government, was ostensibly for Loftin's medical expenses, which were originally paid for by the Medicare program. Claiming entitlement to relief under the MSP statute and its implementing regulations, the government sought reimbursement from Goetzmann and Loftin, and double damages from Zimmer.

Zimmer moved to dismiss the government's complaint against it under Rule 12(b)(6) for failure to state a claim on which relief could be granted. Zimmer asserted that its tort settlement with Loftin was not tantamount to maintaining a "self-insurance plan," as defined in the MSP statute. Zimmer argued, in the alternative, that its inability to pay for Loftin's medical services "promptly," as required by the MSP statute, precluded it from meeting the definition of a "self-insured plan." The district court declined to determine, on a motion to dismiss, whether Zimmer's settlement agreement with Loftin met the statutory definition of a "self-insured plan." The district court nonetheless ordered the government's complaint dismissed, holding that, as a matter of law, Zimmer could not have paid for Loftin's medical services "promptly," as required by the MSP statute.

Goetzmann and Loftin subsequently moved for summary judgment, arguing that they were not required to reimburse Medicare because they did not receive payment from an insurer or self-insured entity. Agreeing with Goetzmann and Loftin that the MSP statute predicates their reimbursement liability on their receipt of payment from, inter alia, a self-insurance plan that would pay "promptly" for medical services, the district court granted summary judgment to both Goetzmann and Loftin. The government timely filed a notice of appeal from the court's dismissals of Zimmer, Goetzmann, and Loftin.

II. ANALYSIS

A. Background.

Although the government has litigated similar cases in several district courts around the country, we are the first appellate court to address the issue of an alleged tortfeasor's reimbursement liability under the MSP statute. Notably, the government's prior efforts have proved uniformly feckless — every court that has heard its arguments on this issue, including the district court in the instant case, has rejected the government's expansive interpretation of the MSP statute.

In this case, the government retreads the same unsuccessful arguments that it has advanced in these prior cases. As we conclude that the statutory analyses performed by the district courts in the prior cases are sound, that the law has not changed, and that the government has not adduced any new facts that require us to reconsider the meaning or scope of the MSP statute, we affirm the district court's decision in this case. We shall first discuss the government's claims against Zimmer, because the liability of Goetzmann and Loftin is predicated on determining whether Zimmer qualifies as having a "self-insured plan" under the MSP statute.

B. Zimmer's Reimbursement Liability Under the MSP Statute.

1. Standard of Review.

A district court's order dismissing a complaint under Rule 12(b)(6) is reviewed de novo.³ On appeal, we must liberally construe the complaint and assume that all facts pleaded therein are true,⁴ keeping in mind that such dismissals of complaints are "viewed with disfavor."⁵ We must also remain mindful of the Supreme Court's injunction that a Rule 12(b)(6) motion should not be granted "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief."⁶

2. Zimmer's Settlement Agreement with Loftin is Not a "Self-Insurance Plan" Under the MSP Statute.

The government contends that Zimmer is liable for reimbursing the government's Medicare expenditures by virtue of Zimmer's having a "self-insurance plan" because Zimmer was "required or responsible" to make healthcare-related payments to Loftin, a Medicare recipient. The government's argument for holding Zimmer liable under the MSP statute is relatively straightforward: (1) The legislative history reflects that the purpose of the MSP is to reduce Medicare expenditures, (2) the statute achieves this purpose by requiring reimbursement of payments from any "self-insurance plan,"⁷ (3) an entity is "self-insured" if it is "required or responsible" for making payments to a Medicare recipient,⁸ and (4) the MSP statute provides a right of recovery to the government in seeking reimbursement from such "self-insurance plans" that have paid monies to Medicare recipients.⁹ In this case, the "self-insurance plan" is alleged by the government to exist by virtue of Zimmer's payment to Medicare recipient Loftin under the terms of their products-liability settlement agreement. Thus, the government concludes, Zimmer (as well as Goetzmann and Loftin) must reimburse the government for its Medicare expenditures because this is in accord with the legislative intent underlying the MSP statute.

In assessing whether the MSP statute applies to Zimmer's settlement agreement with Loftin, we must start with the actual words of the MSP statute,¹⁰ for it is the words of the statute that set the metes and bounds of the authority granted by Congress.¹¹ Thus, we need not — and, indeed, should not — look to legislative history when the statute is clear on its face. When "the language of the federal statute is plain and unambiguous, it begins and ends our enquiry."¹²

The terms and structure of the MSP statute aptly reflect its general purpose. In enacting this law, Congress laudably 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.¹³ The MSP statute states, in pertinent part, that:

Payment under [the Medicare program] may not be made ... with respect to any item or service to the extent that

(i) payment has been made, or can reasonably be expected to be made, ... as required [under a group health plan], or

(ii) payment has been made or can reasonably be expected to be made promptly (as determined in accordance with...