Opinion ID: 783808
Heading Depth: 2
Heading Rank: 2

Heading: Does the MSP Statute Reach Alleged Tortfeasors?

Text: 25 The MSP statute establishes a program of reimbursement. That is, the statute allows Medicare (or an individual Medicare recipient) to be awarded healthcare costs pursuant to a preexisting contractual obligation: MSP liability attaches only to an entity that is `required or responsible' to pay under a `primary plan.' Philip Morris II, 156 F.Supp.2d at 5 (citing 42 U.S.C. Section 1395y(b)(2)); see also In re Dow Corning Corp., 250 B.R. at 340 (the primary plan's responsibility rests upon contract principles and the question of tort liability is not part of the equation). 26 Not surprisingly, therefore, the [MSP] statute has apparently never been successfully used to pursue a non-insurance entity. Philip Morris II, 156 F.Supp.2d at 5. And, with the exception of the Eleventh Circuit in its decision in Baxter Int'l, courts have rejected all efforts to apply the statute's heavy remedy of double damages to the context of tort litigation. See Thompson v. Goetzmann, 337 F.3d at 504 (no cause of action under MSP against party who was simply an alleged tortfeasor); Philip Morris II, 156 F.Supp.2d at 8 (neither in its brief nor in its complaint does the Government describe the actual circumstances in which `a tortfeasor that elects to carry its own risk of liability in a lawsuit rather than to claim against its insurance [would], by that election, make itself subject to an MSP claim'); In re Orthopedic Bone Screw Prods. Liab. Litig., 202 F.R.D. at 163 (MSP was not meant to encompass alleged tortfeasors who merely fund liability settlements with their own assets or corporate borrowings); In re Diet Drugs Prods. Liab. Litig., 2001 WL 283163 at  (MSP cause of action arises when the `primary plan' is obligated to pay for the primary care at issue under a contract of insurance, not when the payment obligation arises out of tort litigation). 27 We find these holdings persuasive and do not find that the plaintiffs here have offered any compelling, or even colorable, reason as to why the MSP statute should apply to tort litigation. The plaintiffs question why is it `harsh' to impose double damages on a corporate tortfeasor who has chosen to self-insure (and who actually caused the victim's harm), but it is not `harsh' to impose double damages on the corporate tortfeasor who has bought insurance, or, even worse, on the insurance company who has actually done nothing wrong? Plaintiffs' Brief at 53. But the answer to this is simply that it is harsh to impose MSP liability against alleged tortfeasors, but it is not harsh to impose such liability against entities who renege upon a pre-existing contractual arrangement to provide healthcare coverage. That is, it is not harsh to use the statute to serve the purpose for which it was enacted. In sum, the defendants are clearly correct when they assert that the trigger for bringing a MSP claim is not the pendency of a disputed tort claim, but the established obligation to pay medical costs pursuant to a pre-existing arrangement to provide insurance benefits. Defendants' Brief at 12. 28