U.S. v. United Services Auto. Ass'n

• Citation: 5 F.3d 204
• Decision Date: 13 September 1993
• Docket Number: No. 92-2121,92-2121
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. UNITED SERVICES AUTOMOBILE ASSOCIATION, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 204

5 F.3d 204

UNITED STATES of America, Plaintiff-Appellee, v. UNITED SERVICES AUTOMOBILE ASSOCIATION, Defendant-Appellant.

No. 92-2121.

United States Court of Appeals, Seventh Circuit.

Argued Jan. 26, 1993.

Decided Sept. 13, 1993.

Gerald M. Burke, Office of the U.S. Atty., Civ. Div., Fairview Heights, IL (argued), for plaintiff-appellee.

Bruce L. Carmen (argued), D. Kendall Griffith, Hinshaw & Culbertson, Chicago, IL, for defendant-appellant.

Before POSNER and RIPPLE, Circuit Judges, and FAIRCHILD, Senior Circuit Judge.

RIPPLE, Circuit Judge.

The United Services Automobile Association (USAA) appeals from an order directing it to reimburse the United States of America $7,660.50 for medical care the government rendered three military retirees or dependents. Judgment was entered pursuant to the pre-1990 version of 10 U.S.C. Sec. 1095, which obligates third-party payers to reimburse the government when it provides their beneficiaries with medical care. For the reasons that follow, we reverse the judgment of the district court.

I BACKGROUND

A. Facts

Five people who were either military retirees or military dependents were injured in separate, unrelated automobile accidents. All five were covered by automobile insurance policies issued by USAA. As part of the coverage under the "Easy Reading Auto Policy" issued, USAA was obligated to cover its insureds for medical expenses incurred in automobile accidents, with some exclusions, up to a specified liability limit. The policy specifically excluded the liability of USAA to the United States for medical care that the government provided the insureds. ¹ All five of the insureds were injured in auto accidents and treated prior to November 1990. In addition to their automobile insurance coverage with USAA, the five insureds were also entitled to medical care in government facilities by virtue of their military status pursuant to 10 U.S.C. Sec. 1074. Therefore, each individual could choose to seek treatment for injuries in a non-government facility for which USAA would cover the costs, or each could choose treatment in a government run facility. As a result of their injuries, each of the five insureds here sought treatment in the medical center at Scott Air Force Base; three of the insureds required inpatient care. Because the insureds received free medical care at the Air Force Base, USAA incurred no obligation to reimburse them for their costs. However, pursuant to 10 U.S.C. Sec. 1095, the United States brought suit against USAA for reimbursement of the costs of the medical care it had rendered to the insureds.

Prior to the 1990 amendments to the statute, Sec. 1095 stated in pertinent part that:

In the case of a person who is covered by section 1074(b) ... of this title, the United States shall have the right to collect from a third-party payer the reasonable costs of inpatient hospital care incurred by the United States on behalf of such person through a facility of the uniformed services to the extent that the person would be eligible to receive reimbursement or indemnification from the third-party payer if the person were to incur such costs on the person's own behalf.

Moreover, "third-party payer" was defined as "an entity that provides an insurance, medical service, or health plan by contract or agreement." 10 U.S.C. Sec. 1095(g) (1988). Effective November 5, 1990, however, the section was amended to define "third-party payer" as "an entity that provides an insurance, medical service, or health plan by contract or agreement, including an automobile liability insurance or no fault insurance carrier." 10 U.S.C. Sec. 1095(h)(1) (Supp. II 1990) (emphasis added).

B. District Court Proceedings

On June 20, 1991, the United States filed a five-count complaint against USAA pursuant to 10 U.S.C. Sec. 1095. The government sought reimbursement of the inpatient and outpatient expenses incurred at Scott Air Force Base by the five insureds. The complaint asserted that the insureds were entitled to medical care from the United States by operation of Sec. 1074 and that USAA was a On March 6, 1992, the district court granted in part and denied in part the government's motion for summary judgment. The court first determined that the pre-1990 version of Sec. 1095, and not the amended version, governed this litigation because the insureds' medical treatment was rendered prior to the November 1990 amendment. The court then held that the term "third-party payer" was unambiguously defined in Sec. 1095, and therefore rejected USAA's suggestion that it should look to the legislative history of both the original and amended versions for interpretive guidance. The court ultimately determined that, based on the clear language of the statute, USAA was a "third-party payer" as defined under Sec. 1095 and therefore was liable to the government. The court also determined that, under the plain language of the statute, the United States was only entitled to recover the costs incurred through inpatient care. Accordingly, the government's request for reimbursement for the cost of outpatient care was denied, eliminating any reimbursement for the two insureds who received no inpatient care. Finally, the court granted the government's request for a ten percent surcharge under 28 U.S.C. Sec. 3011.

"third-party payer" under Sec. 1095 and thus statutorily liable for the costs of medical care. The government filed a motion for summary judgment and USAA, in response, contended that it was not a third-party payer as defined by the statute and was therefore not liable to the United States. Additionally, it argued that the statute did not allow the government to recover the costs of outpatient care.

On March 30, 1992, the district court entered judgment in favor of the United States in the amount of $12,163.80 as the total cost of inpatient care for the three insureds who were so treated, as well as the additional ten percent statutory surcharge. On April 13, 1992, USAA filed a motion to alter or amend the judgment and also filed a motion to amend its answer to the government's complaint. The April 13 motions sought to limit USAA's liability to the United States for one of the five injured individuals in the amount of $2,000.00, which was the liability limit in his policy. ² The district court granted leave to amend the answer and entered an amended judgment in favor of the United States in the amount of $7,660.50. USAA appeals the amended judgment.

II ANALYSIS

A.

USAA first contends that the district court erred when it determined that the definition of third-party payer in the pre-1990 version of Sec. 1095 clearly includes automobile liability insurers. ³ As noted above, in the pre-1990 statute a "third-party payer" was defined as "an entity that provides an insurance, medical service, or health plan by contract or agreement." The district court stated only that this language clearly indicates that the government is entitled to recover the costs of inpatient care from USAA.

We must disagree respectfully with this assessment. In our view, the language is sufficiently vague to preclude definitive adjudication on this basis. It is unclear from the text of the statute alone whether the definition of "third-party payer" includes an insurer that had provided auto liability insurance that covers an insured's medical expenses for injuries sustained in an auto accident. More precisely, under this definition, it is uncertain whether an automobile insurance policy provision, which covers medical costs resulting from automobile accidents, is "an insurance, medical service, or health plan" under Sec. 1095. Such a provision could be characterized as "medical service" or as a "health plan" because the policy does cover medical expenses under certain circumstances. However, Congress' use of the term "insurance" as an adjective rather than a noun, and the use of the terms "medical" and "health" in juxtaposition with "plan" could also indicate that the statute was only intended to reach issuers of health care insurance.

B.

When the plain language of a statute is unclear, we may then look to its legislative history for guidance. United States v. Shriver, 989 F.2d 898, 901 (7th Cir.1992); United States v. On Leong Chinese Merchants Ass'n Bldg., 918 F.2d 1289, 1296-97 (7th Cir.1990), cert. denied, --- U.S. ----, 112 S.Ct. 52, 116 L.Ed.2d 29 (1991); Kelly v. Wauconda Park Dist., 801 F.2d 269, 270 (7th Cir.1986), cert. denied, 480 U.S. 940, 107 S.Ct. 1592, 94 L.Ed.2d 781 (1987).

In turning to the legislative history of the section, we believe that it is important to evaluate that history against the backdrop of the pre-existing statutory scheme and caselaw in this area. Before the enactment of Sec. 1095, the government was entitled, as it is today, to recover medical care costs under federal tort law from third-party tortfeasors who injured military personnel. See Federal Medical Care Recovery Act, 42 U.S.C. Secs. 2651-53 (FMCRA). ⁴ Because military personnel receive free medical care after being injured in an automobile accident, the tortfeasor who caused the injury could escape financial responsibility to the individual for the medical services rendered. The FMCRA was enacted to permit the government to obtain reimbursement from those persons whose negligence created the need for government medical services.

It is not always possible to receive reimbursement from a negligent third party. Therefore, the government often-times found that it was advantageous for it to seek reimbursement for its medical services from insurance carriers that have contracted with the injured military personnel. Prior to the enactment of Sec. 1095 in 1985, the federal courts generally had held that the United States could recover medical expenses from military personnel's private insurance carriers. Unlike negligence actions against tortfeasors that were based on explicit federal statutory authority, these actions against...