The opinion of the court was delivered by: Weinstein, Senior District Judge.
Plaintiffs bring this class action pursuant to the private cause of
action provision of the Medicare as Secondary Payer ("MSP') statute.
42 U.S.C. § 1395y(b)(3)(A) (2002). They seek certification of the
following proposed class:
Individuals who have received or are receiving health
care services for the treatment of tobacco-related
illnesses, including, but not limited to, lung
cancer, heart disease, emphysema, and chronic
obstructive pulmonary disease, which services have
been paid for or are being paid for, by Medicare.
Defendants oppose certification and move to dismiss.
The motion of certification is denied and the case is dismissed.
Viability of the action and certification are intertwined and need to be
considered together. See W. Gordon Dobie, Assuming the Factual
Truthfulness of Plaintiffs' Complaint and the Class Certification
Decision, 71 U.S.L.W. 2019 (2002); Karin S. Schwarz et al., Notes From
the Cave: Some Problems in Dealing with Class Action Settlements, 163
F.R.D. 369, 382 (1995); Szabo v. Bridgeport Machines Inc., 249 F.3d 672,
674 (7th Cir.) (Easterbrook, J.), cert. denied, ___ U.S. ___, 122 S.Ct.
348, 151 L.Ed.2d 263 (Oct. 9, 2001).
The complaint is based upon an imaginative but inappropriate
interpretation of an ambiguous statute. As construed by plaintiffs it
would permit a qui-tam type of individual action where the entire
judgement for double the medicare payments would be split between the
government and the named plaintiffs; it would not support an action
masquerading as one for a class. Plaintiffs' attempts to limit the
statute's interpretation to cover only large corporate defendants is a
limiting construction having no support in the statutory language or
legislative history. As sought to be applied by plaintiffs the statute
would (distort the federal-state substantive tort balance by creating a
harsh (double recovery) shadow federal tort action in any case where
medicare payments were made on behalf of any person injured by the
delict. The language of the provision, while confusing, does not support
This action is quite different from a lien that Medicare might have
after recovery by a plaintiff who was a medicare beneficiary and was
injured by a mass tort. "Medicare has a right to intervene in the action
against the tortfeasor and can bring or join any action against the
responsible primary payor. Medicare can also pursue third parties,
including attorneys, who receive payments of any sums which should be
reimbursed to Medicare, a fact that would cause any prudent personal
injury attorney to involve Medicare before any disbursement of settlement
proceeds is made." Denekas v. Shalala, 943 F. Supp. 1073, 1080 (S.D.Iowa
1996) (internal quotations omitted); see also 42 U.S.C. § 2651 (a)
(2002). The government has declined to intervene directly in this case,
instead bringing all claims before Judge Kessler in the District Court
for the District of Columbia. Despite the decision not to intervene
directly, a representative of the government argued forcefully on
plaintiffs' behalf at the hearing of July 2, 2002. See Transcript at
Should the court of appeals find that a valid cause of action has been
stated on behalf of a class, a viable class action could be accommodated
and certified under Rule 23 of the Federal Rules of Civil Procedure.
Denial of certification and dismissal is not based upon any failure to
come within the procedural ambit of Rule 23.
II. History of the MSP Provision
From 1965 to 1980 Medicare was the primary payer of health care costs
for individuals over the age of 65. United States v. Blue Cross Blue
Shield of Michigan, 859 F. Supp. 283, 286 (E.D.Mich. 1994). The Medicare
Secondary Payer Act of 1980 sought to lower Medicare's expenses by making
Medicare the secondary payer, after any other entity contractually
obligated to pay for an individual's primary health care. HIAA v.
Shalala, 23 F.3d 412, 414 (D.C.Cir. 1994).
Pursuant to the statute, Medicare is to be the secondary payer when:
[P]ayment has been made, or can reasonably be expected
to be made promptly (as determined in accordance with
regulations) under a workman's compensation law or
plan of the United States or a State or under an
automobile or liability insurance policy or plan
(including a self-insured plan) or under no fault
42 U.S.C. § 1395y(b)(2)(A)(ii) (2002).
In such cases, the primary insurer is expected to pay for the
services. If an entity responsible for payment fails to do so. the
government can sue that entity for reimbursement of payments Medicare
made. 42 U.S.C. § 1395y(b)(2)(B)(ii) (2002). In addition, the MSP
statute creates a private right of action with double recovery to
encourage private parties who are aware of non-payment by primary
insurers f to bring actions to enforce Medicare's rights.
42 U.S.C. § 1395y(b)(3)(A) (2002). In such private suits, ...