Opinion ID: 613077
Heading Depth: 4
Heading Rank: 3

Heading: The Demonstrated Responsibility Provision Limits Only Tortfeasor Liability

Text: We believe that Congress added the demonstrated responsibility provision as a limiting principle only for tortfeasor liability under the Act. Although the text of that provision is addressed to all primary plans  the Act's broadest category of private insurer, see id. § 1395y(b)(2)(A), which includes self-insured plans, and therefore (after the 2003 amendments) tortfeasors  the context of its inclusion strongly suggests that Congress intended it only as a condition precedent to tortfeasor liability. As discussed above, Congress added the provision in the Medicare Modernization Act, in direct response to cases that prevented tortfeasor liability, as part of an effort to amend the Act to permit tortfeasor liability. The Medicare Modernization Act made no other major changes to the Medicare Secondary Payer Act, [14] so there is no reason to believe that Congress intended to affect the liability of primary plans other than tortfeasors  that is, traditional primary plans, like private insurers. Moreover, the concept of demonstrated responsibility makes sense only in the context of tort (where no evidence of responsibility exists until it is adjudicated ex post), rather than in the context of an insurance contract (where insurers assume the responsibility of paying for enumerated contingencies ex ante). See Mason, 346 F.3d at 42 (discussing, in one of the very cases that precipitated Congress' amendments to the Act, this problem with tortfeasor liability under the Act: alleged tortfeasors ... have yet to assume the medical costs of any identifiable group of individuals). Accordingly, we hold that the demonstrated responsibility provision limits only lawsuits against tortfeasors, not lawsuits against private insurers. This interpretation is now fully supported by a federal regulation adopted in February 2006. The demonstrated responsibility statutory provision states that responsibility can be demonstrated by judgment, settlement, or other means. 42 U.S.C. § 1395y(b)(2)(B)(ii). Recognizing that Congress intended to limit the impact of this provision to tortfeasors, the Centers for Medicare and Medicaid Services (which administers Medicare) promulgated a regulation that expressly defines other means to include a contractual obligation. 42 C.F.R. § 411.22(b)(3). In other words, the federal agency recognized that an insurance contract automatically demonstrates a traditional private insurer's responsibility to pay, thereby rendering the demonstrated responsibility provision superfluous in such cases. This regulation interprets the ambiguous statutory phrase other means and is reasonable because it implicitly acknowledges that while a tortfeasor's responsibility must be determined ex post, the nature of insurance is the assumption of responsibility ex ante. Cf. Chevron U.S.A. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842-844, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). The meaning of our holding and the regulation for the instant case is that the demonstrated responsibility provision does not bar Bio-Medical's lawsuit against Central States. Central States is a traditional insurer, not a tortfeasor. And the demonstrated responsibility provision places a condition precedent only on lawsuits against tortfeasors. Thus, that provision does bar Bio-Medical's claim in this case. A healthcare provider like Bio-Medical need not first demonstrate the responsibility of a private insurer like Central States before bringing a lawsuit for double damages under the Act's private cause of action. It need not first sue and win, in order to sue again. Thus far, although we have provided a more complete analysis on this issue than the Glover opinion, we do not yet part company with it, because Glover applied the demonstrated responsibility provision in a lawsuit where the defendant was a tortfeasor. The language in Glover sweeps broadly, however, and there is widespread confusion in the district courts about the proper scope of the demonstrated responsibility provision. For these reasons, we believe it is best to address another question: whether the demonstrated responsibility provision applies only to lawsuits brought by Medicare for reimbursement, or if that provision also applies to lawsuits brought by private parties under the private cause of action.