U.S. vs. Stricker - U.S. files Motion for Partial Summary Judgment

U.S. vs. Stricker - U.S. files Motion for Partial Summary Judgment

I want to thank Tommy Thornton from Carr Allison and Jeffrey J. Signor from Goldberg Segalla for bringing this partial motion for summary judgment to my attention. I know both have written on the topic, but I feel compelled to offer my own thoughts on this very interesting case.

The U.S. filed a motion for partial summary judgment on the issue of liability on 1/28/2010 and reserved for later the issue of damages. Not all defendants were included in the motion, specifically excluded were the insurance carriers and some of the plaintiff law firms because discovery was needed to identify the money they may have paid or received as part of the settlement transaction. While certain parties are excluded for the moment, it is clear the Government intends to obtain a settlement from all parties named in the Complaint. The motion’s purpose is to dispose quickly of the issue of liability so the Government can focus the parties on damages. The Government admits the issue of damages will be contentious, an understatement to say the least, given the liberality of what it considers are conditional payments. There is more to come on that point, but let’s first analyze the elements of the Government’s liability arguments.

The Government has identified four elements that establish the defendants’ liability. They are:

  1. The assertion and release of medical claims in the underlying tort case;
  2. Medicare’s conditional payments;
  3. Payment by primary plans; and
  4. Entities that have received payment from primary plans

In regards to items 3 and 4 it would be difficult in my opinion to dispute the Government’s contention. The MSPA clearly defines primary plans and entities and there is no question that the self insureds and plaintiff lawyers named as defendants in this case fit that bill. However, the same cannot be said for points 1 and 2. This may prove to be issues of fact that the Government will have to overcome. While the release may contain general release language, it is not specific enough in identifying the potential Medicare covered injuries involved. Discovery is needed to understand what the parties intended to release related to the underlying tort. This would include a review of the underlying medical records for each plaintiff and reports to understand what the parties intended to have covered by the settlement. It may very well be that in certain instances no Medicare issues are involved. This would especially be the case with regard those Medicare beneficiaries that only had dental issues which is not a covered Medicare benefit or property damage. The Government may have to file 907 separate motions for summary judgment as to each Medicare beneficiary plaintiff because each has reacted to the exposure or sustained damage differently.

There is also an issue of fact with regard to what is a conditional payment. The Government states that it offers the declaration of Betty Noble for the purpose of establishing that conditional payments were made, not the amount. However, how can that occur without analyzing each every payment to determine if it fits the definition? It could very well be that no related payments occurred and hence no conditional payments at all.

It appears that in this filing the Government is anxious to skate over the liability issues to champion its damages element and for good reason. It is certainly a simple way to establish liability, but it does not appear appropriate given the many plaintiffs involved and the different injuries being alleged. Furthermore, there seems to be a complete void of discussion of the applicability of the limitations period. How does this case survive the claims filing period established by the Act under 42 U.S.C. §1395y(b)(2)(B)(v)? If this is not a limitations period, then what else can it be? It certainly deserves to be raised to the Court to see what the look back would be.

Aside from the limitations period, do any equitable defenses apply to the Government that should be raised? This claim was settled back in 2003. There is evidence that at least a year ago, by the Government’s own admission it has sought information about Medicare beneficiaries and there is evidence to suggest the Government was aware of this at the time of settlement based on a similar claim being settled with other PCB defendants of a significant amount that Medicare was involved in? Is estoppel possible here. While there has not been a successful estoppel defense raised by the Government, this may be the one given the passage of time.

Finally, has the Government missed a step here? I would like to thank Michelle Pieroni from Huie, Fernambucq and Stewart, LLP out of Birmingham, Alabama in providing me with the pleadings that are occurring in this case. It does appear that defendants are moving to dismiss this case and that the court will entertain those motions before proceeding with the Motion for partial summary judgment. It occurs to me that the Government’s case is not ripe here. In speaking with Michelle, I understand that the Government has only recently with the filing of the motion provided the conditional payments owed by the Government. Consequently, the Government has not followed its own established process of providing notice as required under the Medicare Secondary Payer Act of the amount it intends to collect, without providing an opportunity to have the Medicare beneficiary raise issues of relatedness to those medical services. Furthermore, the Medicare beneficiary may now be subject to indemnification claims by the defendants in this case under the settlement agreement they have signed and their rights to seek administrative remedies of waiver, partial waiver or compromise are foreclosed unless the Government first gives them that opportunity. Consequently, a similar argument can be made here in the defense that was raised in the Haro case out in AZ that the Secretary is exceeding her authority.

There is no doubt that the filing of this Motion will send shock waves throughout the industry already grappling with how to finalize a settlement with a Medicare beneficiary. The implication of the Government’s argument here is that liability extends forever to a primary plan once payment is made and the only way a primary plan can escape liability is to pay over the settlement to Medicare within 60 days of settlement. There is no incentive for the plaintiff Medicare beneficiary to bring an action if all he or she is doing is preserving their already existing Medicare benefits. However, that appears to be the unintended consequence of the Government’s actions.

We need to change this law, but we can only do it if we work together. We cannot sit idly by and allow cases to be heard without providing feedback to allow for a consistent response. It is our duty as part of the liability industry (lawyers, insurance carriers, self insureds, TPAs, etc.) to make certain these arguments are raised consistently. The Medicare Advocacy Recovery Coalition (MARC) is working hard to bring about needed change. It has launched its legislative advocacy program to bring about amendments to the Medicare Secondary Payer Act. It has also looked into various Medicare Secondary Payer cases working its way through the system to raise the legal arguments that can hopefully bring about a balanced result between the need to make the Medicare Trust Fund whole and the desire to have an efficient process to the resolution of lawsuits without further burdening the limited judicial resources.

MARC needs your financial support to bring about a coordinated approach. Any contribution is appreciated and I would recommend all of you visit us at http://www.marccoalition.org/ and make your donation, or join our membership today. It is important and I believe it will get a bit more painful for all of us if we do not act now.

Finally, I want to leave you with the lessons I am learning from the Stricker case that I will certainly look at when resolving cases involving a Medicare beneficiary. They are:

  1. Pay attention to the release. I am going to be very careful to make certain the release is accurate in whether or not the case involves future medical benefits and if so, what specific injuries are involved. I am also going to carefully review what is covered and what is not covered by Medicare. It does appear in this Stricker case that the majority of the settlements were for property damage, dental and eye issues. Property damage is certainly not covered, but Medicare also has exclusions for certain eye and dental issues. If it is not covered by Medicare, I may not have to worry about Medicare future payments;
  2. I am not only electronically reporting the settlement, award, judgment or other payment to the government, but I am notifying the Government under 42 USC 411.25. I am going to hold the Government accountable to its administrative framework;
  3. Prior to settlement I am going to work cooperatively with the plaintiff to make certain that the conditional payment information has been determined and require that as part of any settlement a demand/recovery letter be issued by the Government before any distribution of funds occur; if not, I will otherwise put Medicare on the check or go to trial; and
  4. Finally, for those cases where I want peace of mind on the future medicals, I am going to go to court and seek an allocation order by motion or other hearing to apportion damages and have a judgment entered. That appears to me the only safe harbor recognized by Medicare. Anything less than that is a private allocation by the parties which Medicare has gone on record and refuses to recognize.

  Those are the lessons I have learned. It will cost a great deal of money which is why I advocate that we need to change the law, but I see very limited alternatives.

Read the motion for partial summary judgment


Roy A. Franco
  • 02-11-2010

I had some questions about my prior post. The last time I am aware of that CMS said they will only be bound by an allocation resulting from a hearing on the merits was the 12/15/2009 NGHP teleconference, transcript page 51.  They have said the same thing on several prior occasions.