Thompson v. Goetzmann, 02-10198.

CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)
Citation337 F.3d 489
Docket NumberNo. 02-10198.,02-10198.
PartiesTommy THOMPSON, Secretary, Department of Health & Human Services, Plaintiff-Appellant, v. Stephen GOETZMANN; et al., Defendants, Stephen Goetzmann; Bernice Loftin; Zimmer, Inc., Defendants-Appellees.
Decision Date07 July 2003
337 F.3d 489
Tommy THOMPSON, Secretary, Department of Health & Human Services, Plaintiff-Appellant,
Stephen GOETZMANN; et al., Defendants,
Stephen Goetzmann; Bernice Loftin; Zimmer, Inc., Defendants-Appellees.
No. 02-10198.
United States Court of Appeals, Fifth Circuit.
July 7, 2003.

Page 490


Page 491

Alisa Beth Klein (argued), Mark Bernard Stern, U.S. Dept. of Justice, Civil Div. — Appellate Staff, Washington, DC, Peter Angus Winn, Seattle, WA, for Plaintiff-Appellant.

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

Michael S. Elvin (argued), Dahm & Elvin, 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, Deutsch, 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.


(Opinion Dec. 17, 2002, 5th Cir.2002, 315 F.3d 457)

Before JOLLY, DUHÉ, and WIENER, Circuit Judges.

Page 492


On petition for rehearing, we amend our opinion by deleting Part B.4, titled "Zimmer Cannot Pay for Medical Services `Promptly,' and Thereby Fails the MSP Statute's Requirement for a `Self-Insurance Plan,'" in its entirety, and deleting, in Part B.2, the italicized portion of the following sentence: "Although we agree with the district court's determination that Zimmer is not liable under the MSP statute because it could not be reasonably expected to pay `promptly' for Loftin's medical care, we also agree with the other district courts that have concluded that an alleged tortfeasor who settles with a plaintiff is not, ipso facto, a `self-insurer' under the MSP statute."

These withdrawn portions of the opinion addressed the holding of the district court that the tort settlement — the ad hoc settlement agreement entered into between Zimmer and Loftin in the course of Loftin's products-liability lawsuit against Zimmer — from which the government was seeking reimbursement under the MSP statute was not a "self-insurance plan" within the meaning of § 1395y(b)(2)(A)(ii), because the purported self-insurance plan could not have been expected to "pay promptly" for Loftin's healthcare services. As that part of the opinion was an alternative holding, our withdrawal of these portions of the opinion does not affect the central holding of our decision that the government lacked authority under the MSP statute to seek reimbursement from the Zimmer.

Notwithstanding the foregoing withdrawals, we remain convinced that the plain language of the MSP statute makes the reasonable expectation of a prompt payment a requirement for the government's collection from those "primary plans" listed in § 1395y(b)(2)(A)(ii), including a self-insurance plan. In short, under the language of § 1395y(b)(2)(B)(i), which expressly cross-references § 1395y(b)(2)(A)(i)-(ii), absent an expectation of prompt payment, the government has no cause of action to collect from a "self-insured plan," or from any of the other primary plans enumerated in § 1395y(b)(2)(A)(ii).

As a result of arguments made for the first time in the government's petition for rehearing, however, we concede that it is arguable that this plain language of the statute produces an absurd result: The MSP statute seeks to cast Medicare as the secondary payer in virtually all situations in which there is any other insurance, providing a cause of action for reimbursement to Medicare from such insurance funds and allowing the government to intervene in litigation between the beneficiary and the primary insurer when the primary insurer is disputing the beneficiary's claim. Yet, at the same time, the plain language of this statute requires a reasonable expectation of prompt payment from the primary insurer. As a practical matter, this requirement precludes the right to reimbursement from any disputed or potentially disputed funds. Furthermore, the plain language of the MSP statute permits a reimbursement action with respect to the "primary plans" enumerated in § 1395y(b)(2)(A)(ii) only in situations in which Medicare usually would not make conditional payments, that is, when it is reasonably expected for "payment ... to be made promptly" by the "primary plan."

Because our holding with regard to the prompt payment requirement was an alternative holding, and because there is no necessity for us to grapple with whether the arguably absurd results may somehow militate against enforcing the plain language of the statute, we delete the abovenoted portions of the opinion. In all other respects, the opinion remains unchanged.

Page 493

Finally, we reiterate that the courts are not in the business of amending legislation. If the plain language of the MSP statute produces the legislatively unintended result claimed by the government, the government's complaint should be addressed to Congress, not to the courts, for such revision as Congress may deem warranted, if any.

Except as provided in this order, the petition for rehearing and the petition for rehearing en banc are DENIED. This court's opinion, 315 F.3d 457 (5th Cir. 2002), is hereby withdrawn, and the following opinion is substituted:

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.


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. Loftin'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

Page 494

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.


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