Opinion ID: 29579
Heading Depth: 4
Heading Rank: 2

Heading: Action by United States

Text: 26 In order to recover payment under this subchapter for such an item or service, the United States may bring an action against any entity which is required or responsible (directly, as a third-party administrator, or otherwise) to make payment with respect so such item or service (or any portion thereof) under a primary plan ..., or against any other entity (including any physician or provider) that has received payment from that entity with respect to the item or service, and may join or intervene in any action related to the events that gave rise to the need for the item or service.... 15 27 Thus, the structure of the MSP statute is relatively simple. If a Medicare recipient has medical insurance provided through a primary plan, then Medicare is precluded from paying for medical services except to provide secondary coverage. Stated differently, Medicare serves as a back-up insurance plan to cover that which is not paid for by a primary insurance plan. 28 A primary plan is defined as a group health insurance plan, or as any another type of insurance plan, such as workman's compensation, liability insurance, or a self-insurance plan, that may reasonably be expected to pay for services promptly. Promptly is defined by the Health Care Financing Administration (HCFA) regulations as payment within 120 days after the earlier of (1) the date the claim is filed, or (2) the date the service was provided or the patient was discharged from the hospital. 16 If the Medicare program chooses to make conditional payments when a Medicare recipient has coverage under a primary plan, then the government may seek reimbursement for these payments by suing the insurance entities that provide the primary coverage. 29 To entice us to consider the lengthy and abstruse legislative history of the MSP statute, the government urges us to agree with it that the statute is ambiguous; however, we decline to find ambiguity where none exists. 17 As ably pointed out by Zimmer and amici curiae, the term self-insurance plan, as used in the MSP statute, is not only clear in its meaning; it plainly does not apply automatically to alleged tortfeasors, such as Zimmer, who settle with plaintiffs. 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. We are compelled to draw this conclusion when we apply several well-established canons of statutory interpretation. 30 First, the term self-insurance plan does not exist in a vacuum within the MSP statute. Rather, it is predicated on the term primary plan. As the MSP statute plainly provides, Medicare is a secondary provider of insurance if and only if a Medicare recipient has another source of medical coverage under a primary plan. The term primary plan is pivotal to the applicability of the MSP statute — its reimbursement provisions are not triggered unless a Medicare recipient's source of recovery meets the definition of primary plan, regardless of whether that source is a group healthcare plan, workman's compensation, liability insurance, or a self-insurance plan. 31 The government asks us to accept its interpretation of self-insurance plan without reference to the more fundamental requirement of the MSP statute that this type of insurance plan constitute a primary plan. To do so would violate the most basic principle of statutory construction: Unless indicated otherwise in a statute, its words are to be given their ordinary meaning, which cannot be determined in isolation, but must be drawn from the context in which [they are] used. 18 This maxim is particularly apposite here because the MSP statute does not define the term self-insurance plan; neither does it define a primary plan beyond listing some examples of various types of plans that are deemed primary. 32 We must, accordingly, look to the ordinary meaning of these terms. 19 A plan denotes a method for achieving an end or a detailed formulation of a program of action. 20 An insurer is the party to a contract of insurance who assumes the risk and undertakes to indemnify the insured, or pay a certain sum on the happening of a specified contingency. 21 Therefore, in the sense used in the MSP statute, a primary plan of self-insurance requires an entity's ex ante adoption, for itself, of an arrangement for (1) a source of funds and (2) procedures for disbursing these funds when claims are made against the entity. 22 Recognizing that [t]he term `self-insurance' had no precise legal meaning, a leading insurance treatise nonetheless confirms this definition of self-insurance, noting that 33 to meet the conceptual definition of self-insurance, an entity would have to engage in the same sorts of underwriting procedures that insurance companies employ; estimating likely losses during the period, setting up a mechanism for creating sufficient reserves to meet those losses as they occur, and, usually, arranging for commercial insurance for losses in excess of some stated amount. 23 34 Thus, according to the ordinary meaning of the terms of the MSP statute, it is wrong for the government to contend that an entity's negotiating of a single settlement with an individual plaintiff is sufficient, in and of itself, for such entity to be deemed as having a self-insurance plan. 35 In addition, the regulations promulgated under the MSP statute by the HCFA reflect the ordinary meaning of a self-insurance plan. The HCFA regulations define a plan as any arrangement, oral or written, by one or more entities, to provide health benefits or medical care or assume legal liability for injury or illness. 24 The regulations further define a self-insurance plan as a plan under which an individual, or a private or governmental entity, carries its own risk instead of taking out insurance with a carrier. 25 It is clear from the regulations implementing the MSP statute that the existence of a self-insurance plan requires that there by some form of arrangement — the creation ex ante of a fund and distribution procedures — for making potential payments to a set of prospective claimants. The HCFA regulations even speak in prospective terms. For example, § 411.21 defines a plan as an arrangement ... to provide health benefits or assume legal liability. Such language contemplates a pre-arrangement and makes sense only if a self-insurer creates or maintains a fund or source and establishes rules for making disbursements therefrom in covering the self-insurer's future risk, i.e., when one acts as an insurance carrier for oneself. 26 36 Furthermore, the well-known interpretative canon, expressio unius est exclusio alterius — the expression of one thing implies the exclusion of another 27 — confirms that the government is advocating an unreasonably broad interpretation of the MSP statute. The MSP statute explicitly speaks in terms of insurance plans that provide primary medical coverage. Nowhere does the MSP statute mention or even suggest that an alleged tortfeasor who settles a single claim with a single plaintiff falls within the ambit of the statute's category of a self-insurance plan. The failure of Congress to include in the MSP statute a right of action for reimbursement of medical expenditures against tortfeasors indicates that this statute plainly intends to allow recovery only from an insurer.  28 37 This application of expressio unius to the MSP statute is further supported by the canon that instructs courts to adopt harmonious interpretations of statutes addressing similar subjects. 29 In this respect, the Medical Care Recovery Act 30 (MCRA) explicitly provides for the right of action that the government is attempting to read into the MSP statute. The MCRA expressly arms the government with a right to recover medical payments that it has made under circumstances creating a tort liability upon some third person. 31 In such instances, the government may institute and prosecute legal proceedings against the third person who is liable for the injury or disease ... for the payment or reimbursement of medical expenses or lost pay.... 32 In express terms, then, the MCRA affords the government the legal right of recovery that it is urging us to read into the MSP statute, which is silent on the point. The express inclusion of recovery from tortfeasors in the MCRA supports the conclusion that Congress's omission of tortfeasors from the list of those potentially liable under the MSP statute was knowing and intentional. 33 38 Recognizing the government's attempt to fold the MCRA into the MSP, the In re Diet Drugs court noted that 39 [u]nlike the MCRA, the MSP does not mention a right by the Government to recover from a tortfeasor. Rather, the express wording of the [MSP] statute creates a cause of action only against insurers and their payees.... Under the Government's construction of the [MSP] statute, every tortfeasor that used its general assets to fund a tort settlement with persons who had received federal health care benefits would be potentially liable under the MSP. There is simply no support for this extremely broad construction of the [MSP] statute. 34 40 When faced with two statutes on similar subjects, courts must, whenever possible, interpret them so as to give effect to both. 35 Yet, if we were to adopt the broad construction of the MSP statute urged by the government in this case, we would, in effect, eliminate the need for the MCRA, or at least condemn some of Congress's language in the MCRA to the scrap heap of surplusage. This would be unacceptable, particularly when a completely reasonable interpretation of the MSP statute is offered by the plain terms of the statute itself. As a district court noted in rejecting another government attempt to read MCRA authority into the MSP statute: [I]t is clear that Congress did not intend MSP to be used as an across the board procedural vehicle for suing tortfeasors. 36 41 By its plain terms, the MSP statute and the HCFA regulations predicate reimbursement liability on the existence of a primary insurance plan. In its First Amended Complaint, the government obfuscates this fact when it cabins the MSP statute's requirements as applying to those entities that have only primary payment responsibility. 37 More important, in its specific count against Zimmer, the government never alleges that Zimmer paid Goetzmann and Loftin according to a pre-existing plan; it asserts only the conclusions that Zimmer was responsible to pay for Defendant Loftin's medical expenses and that Zimmer was self-insured for its liability to Loftin. As the D.C. district court noted in granting a motion to dismiss by a similarly situated defendant corporation in a parallel case: In fact, the Complaint does not even allege the existence of any elements of a `primary plan,' such as a `plan' or `arrangement.' 38 42 Even when we liberally construe the government's complaint, as we must, we see that the MSP statute and its implementing regulations require a primary insurance plan. But Zimmer has only negotiated a discrete settlement with a single plaintiff and paid that plaintiff accordingly. It is simply a non sequitur for the government to infer from payment responsibility in tort a pre-existing primary plan of self-insurance. In considering the government's allegations against Zimmer under the MSP statute, we are compelled to pose the rhetorical question, where's the plan? 39 Beyond oblique references to Zimmer's responsibility to pay Loftin, the existence of a primary plan is nowhere to be found in the government's complaint against Zimmer. 43 On appeal, the government repeatedly (but in isolation) quotes the MSP statute's phrase that an entity which is required or responsible for paying for a Medicare recipient's healthcare expenses is liable to reimburse the government. Ergo, the government urges, Zimmer is arguably liable under the MSP statute, or at least there is a basis for inferring potential liability sufficient to survive a Rule 12(b)(6) motion to dismiss. Yet, litigants cannot cherry-pick particular phrases out of statutory schemes simply to justify an exceptionally broad — and favorable — interpretation of a statute. 40 As the D.C. district court held only one year ago in a similar case litigated by the government under the MSP statute, MSP liability attaches only to an entity that is `required or responsible' to pay under a `primary plan. ' 41 As we already noted, nothing in the government's pleadings can be read to support the conclusional allegation that Zimmer maintained such primary plan of self-insurance for paying claimants such as Loftin. 42 According to the plain terms of the MSP statute and the HCFA regulations, therefore, Zimmer can have no MSP liability. 44 3. No Chevron Deference for the Government's Interpretation of the MSP Statute. 45 The government further argues that the term self-insurance plan, as used in the MSP statute, is ambiguous, entitling the agency's own interpretation to Chevron deference. 43 According to the government, this is particularly relevant because Zimmer is a large and sophisticated manufacturer of medical devices. As such, Zimmer's status as a large corporation permits a reasonable inference that Zimmer can readily be regarded as self-insured. The government concludes that this is a reasonable interpretation of the MSP statute's ambiguous terms and legislative history, to which we must defer. 46 We reject this effort by the government to clothe itself in the deference given to agencies' reasonable interpretations of ambiguous statutory provisions. First, the clarity of the MSP statute's terms readily discloses the statute's plain meaning, eschewing the label of ambiguity. Thus, there is no need even to consider Chevron deference because the government's argument fails the first prong of the analysis for granting such deference — the determination that a statutory grant of authority to a regulatory agency is ambiguous. As the Chevron court recognized, [i]f the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress. 44 47 Second, even if the MSP statute were ambiguous and we were to consider legislative history and the agency's regulations, and conclude that the HCFA regulations would support the government's appellate argument that Zimmer's settlement agreement with Loftin constituted a primary self-insurance plan, there is simply no statutory support for the government's position that uninsured sophisticated corporations are per se self-insurers. There is no language in the MSP statute justifying a distinction between a sophisticated corporation and an individual or small business. The government does not invite our attention to anything that could serve as a statutory hook on which to hang this argument. In fact, the government has already attempted to sell this argument to district courts in New York and D.C., but to no avail. 45 It offers us no reason why we should reject or depart from these previous judicial decisions. In summary, the government's proffered interpretation of the MSP statute, as it currently stands, constitutes nothing more than the litigation position of agency counsel that is wholly unsupported by regulations, rulings, or administrative practice [and thus] is not entitled to deference by this or any court. 46 48 4. Zimmer Cannot Pay for Medical Services Promptly, and Thereby Fails the MSP Statute's Requirement for a Self-Insurance Plan. 49 The district court determined that Zimmer does not possess a self-insurance plan because it could not reasonably be expected to pay Loftin's healthcare claim promptly, as required under the MSP statute. 47 The MSP statute provides for reimbursement of conditional expenditures by Medicare for medical services in which another primary plan is reasonably expected to pay promptly. 48 The HCFA's regulations define a prompt payment as one that occurs within 120 days of either the date the claim is filed or the date of the medical treatment itself, whichever is earlier. 49 As a district court in Pennsylvania remarked on this same issue: 50 Given the time delay inherent in strongly prosecuted and defended tort litigation, the Government cannot legitimately assert that a settlement arrived at in the heat of a hard fought adversarial engagement for alleged tort liability from a defective product is the type of insurance plan that the Government can reasonably expect to make prompt payment for medical care. 50 51 Similarly, a bankruptcy court observed that [i]t would seem to be folly for the Government to argue that, when it made the Medicare payments in question, there was a reasonable expectation that [an alleged tortfeasor] would promptly pay for such medical care. 51 In the instant case, the statutory requirement that a primary insurance plan pay within 120 days of a claim for medical care unquestionably precludes our holding Zimmer potentially liable as a self-insurer. 52 52 We must disagree nonetheless with the district court's suggestion that it is wrong to determine, on a motion to dismiss, whether an alleged tortfeasor who enters into a settlement agreement is, ipso facto, a self-insurer. This is an issue of statutory interpretation; accordingly, a court may determine, as a matter of law, whether an alleged tortfeasor is a self-insurer under the MSP statute. 53 Thus, the district court would have been justified in dismissing the complaint solely on the basis of the government's failure to allege in its complaint the essential statutory element that Zimmer actually had in place a primary insurance plan. 54 We have determined, on the basis of the government's pleadings, that Zimmer is not a self-insurer under the MSP statute. Even when construed liberally in favor of the government as plaintiff, its complaint's allegations do not rise to the level of showing the existence of a primary plan of self-insurance. 55 Even so, the district court was correct in holding that the MSP statute's requirement of prompt payment is a valid basis for precluding per se liability for an alleged tortfeasor under the MSP statute. 53