United States v. Stricker
| Decision Date | 26 July 2013 |
| Docket Number | No. 11-14745,D.C. Docket No. 1:09-cv-02423-KOB,11-14745 |
| Parties | UNITED STATES, Plaintiff-Appellant, v. JAMES STRICKER, et al., Defendants-Appellees. |
| Court | United States Courts of Appeals. United States Court of Appeals (11th Circuit) |
[DO NOT PUBLISH]
Appeals from the United States District Court
for the Northern District of Alabama
Before JORDAN and HILL, Circuit Judges, and HOOD,* District Judge.
The government appeals the district court's dismissal of its action under the Medicare Secondary Payer Act, 42 U.S.C. § 1395y, as untimely. Having reviewed the record, and with the benefit of oral argument, we affirm.
Through Medicare, the United States government supplies medical insurance for persons who are at least 65 years old, disabled, or afflicted by end-stage kidney disease. At times, another person or entity is responsible for the payment of the Medicare beneficiary's medical bills—for example, a tortfeasor who caused the beneficiary's injuries—yet refuses to swiftly pay those bills. When that happens, the Medicare Secondary Payer Act ("MSPA"), 42 U.S.C. § 1395y,1 allows the government to pay the beneficiary's medical bills and then seek recovery from the party ultimately responsible.
For decades, from its chemical plant in Anniston, Alabama, the Monsanto Company and its predecessors—including Pharmacia Corporation and Solutia, Incorporated—produced polychlorinated biphenyls ("PCBs"), which are toxic pollutants linked to cancer and birth defects. See Memorandum Opinion at 2 [D.E. 109]. In 1996, thousands of individuals sued Monsanto, Pharmacia, and Solutia (collectively "the PCB producers") in state and federal courts in Alabama forinjuries caused by PCBs. See, e.g., Abernathy v. Monsanto Co., Case No. CV-01-832 (Ala. Cir. Ct.); Tolbert v. Monsanto Co., Case No. CV-01-C-1407-S (N.D. Ala.). Eventually, the parties reached a settlement, whereby the PCB producers would pay $300 million to the plaintiffs in return for their release of liability. More than six years after the PCB producers transferred $275 million to the PCB plaintiffs' lawyers pursuant to the settlement, but before that money was distributed to the PCB plaintiffs, the government filed suit under the MSPA against the PCB producers, the PCB plaintiffs' lawyers, and the insurance companies which furnished liability insurance to the PCB producers, seeking to recoup Medicare payments that it had made on behalf of 907 PCB plaintiffs.
As relevant here, the Federal Claims Collection Act provides that when an action is "founded upon [a] contract," the government must sue within six years of the accrual of the cause of action. See 28 U.S.C. § 2415(a). For actions "founded upon a tort," the government must file suit within three years of accrual. See 28 U.S.C. § 2415(b). The defendants moved to dismiss the government's MSPA complaint, arguing that because the underlying cause of action related to a toxic tort claim, the three-year statute of limitations under § 2415(b) applied to bar the government's action as untimely. The defendants alternatively argued that, even if the six-year statute of limitations under § 2415(a) applied, the government's actionwas still barred because the complaint was filed more than six years after the cause of action accrued. The district court agreed with both arguments and granted the motions to dismiss. We affirm, concluding that under the applicable statutory provisions and federal regulations the government's action under the MSPA accrued on October 29, 2003, when the $275 million was transferred by the PCB producers to the PCB plaintiffs' lawyers. Accordingly, even if the longer six-year limitations period applies, the government's action was untimely.
Years after the PCB plaintiffs filed their personal injury lawsuits, the federal district court and the state circuit court hearing their claims held a joint session. At this proceeding, the parties resolved their disputes, and on September 9, 2003, entered into a $300 million settlement agreement.2 By its terms, the agreement outlined a payment schedule whereby the PCB producers would first wire $75 million to an interest-bearing account. Within seven days of the state court's approval of the agreement, the PCB producers would wire another $200 million to the account. See Settlement Agreement at ¶ 3(e)-(g) [D.E. 1-1].
Under the terms of the settlement agreement, the PCB plaintiffs' lawyers weregiven 90 days to diligently secure a liability release from each client. The PCB plaintiffs' lawyers were to hold the releases until at least 75% of the adult plaintiffs had released their claims, at which point the PCB plaintiffs' lawyers had to certify that the 75% threshold had been reached. Once they so certified, the PCB plaintiffs' lawyers would receive the $275 million.3
Thereafter, the PCB plaintiffs' lawyers were to certify to the state court when 97% of the PCB plaintiffs had signed releases, and at that point give the releases to the PCB producers. The PCB producers had three days to review the releases and raise any issues of concern. At "the end of this three day verification period or following the resolution [of any issues]" by the state court, if the PCB plaintiffs' lawyers "ha[d] obtained signed [r]eleases" from at least 97% of the PCB plaintiffs, the PCB plaintiffs' lawyers were required to "distribute the funds." See Settlement Agreement at ¶ 3(c).
The agreement had one more germane provision. If, after the 90-day period, fewer than 97% of the PCB plaintiffs had released their claims, the PCB producers, "at their sole discretion and election," could give "written notice to" the PCB plaintiffs' lawyers that the agreement was "null and void." See id. at ¶ 5(b). ThePCB plaintiffs' lawyers would then have to return the $275 million. Otherwise, the PCB producers could choose to enforce the agreement as to those PCB plaintiffs who had signed and tendered their releases. The option given to the PCB producers was consistent with Alabama law, which provides that a breach of a condition subsequent merely renders a contract voidable. See Sherill v. Sherill, 99 So. 838, 839 (Ala. 1924); Baskett Lumber & Mfg. Co. v. Gravlee, 73 So. 291, 294-95 (Ala. Ct. App. 1916).
The state court approved the settlement on September 10, 2003. Once approved, the settlement was binding on the parties under Alabama law. See Beverly v. Chandler, 564 So. 2d 922, 923 (Ala. 1990). The events contemplated by the settlement agreement took place as follows:
On December 1, 2009, the government filed this lawsuit.
The Medicare Secondary Payer Act, as its name implies, is related to the Medicare program, through which the government funds health insurance for certain qualifying individuals. Prior to the Act, Medicare paid for a qualifying individual's medical services without regard to whether they were also covered under a separate health plan or other insurance coverage. See Health Ins. Ass'n of Am. v. Shalala, 23 F.3d 412, 414 (D.C. Cir. 1994). To promote the viability of the Medicare system and reduce expenditures, the Act introduced four features of relevance. See id. at 414-15 ().
First, the Act generally "declares that, under certain conditions, Medicare will be the secondary rather than primary payer for" the medical bills of Medicare beneficiaries. See United States v. Baxter Int'l, Inc., 345 F.3d 866, 874-75 (11th Cir. 2003).
Second, in instances where the responsible, primary payer4 "has not made orcannot reasonably be expected to make payment . . . promptly," the Act allows Medicare to make a conditional payment for the beneficiary's medical services, i.e., a payment conditioned on reimbursement by the primary payer. See § 1395y(b)(2)(B)(i).
Third, the Act obligates a primary payer that is demonstrably responsible for those medical bills—or anyone who received payment from that primary payer—to reimburse the government for the amount Medicare conditionally paid. See § 1395y(b)(2)(B)(ii). A primary payer's responsibility for payment is demonstrated by "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 medical-bill claims, "or by other means." See id.
Fourth, if the primary payer—or recipient of a payment from the primary payment—fails to reimburse the government despite its obligation to do so, the Act provides the government with two mechanisms through which to seek recovery: (i) the Act grants the government a right to subrogation,5 to step in and assume theMedicare beneficiary's right for payment of medical bills that should have been paid by the primary payer. See § 1395y(b)(2)(B)(iv); (ii) the government is granted an independent cause of action to sue and assert its own claim against the primary payer and anybody who receives payment from the primary payer, including physicians, attorneys, medical providers, or Medicare beneficiaries themselves. See § 1395y(b)(2)(B)(iii); 42 C.F.R. § 411.24(g).
As with most complex concepts, a real-world example helps make the Act's contours more clear. Imagine a 65-year-old Medicare beneficiary who is injured when he slips on the wet floor of a supermarket and subsequently receives medical attention for his injuries. If the supermarket's...
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