Opinion ID: 4029645
Heading Depth: 4
Heading Rank: 1

Heading: A judgment;

Text: (2) A payment conditioned upon the beneficiary’s compromise, waiver, or release (whether or not there is a determination or admission of liability) of payment for items or services included in a claim against the primary payer or the primary payer's insured; or (3) By other means, including but not limited to a settlement, award, or contractual obligation. 42 C.F.R. § 411.22(b). 17 Case: 15-14353 Date Filed: 08/30/2016 Page: 18 of 25 Chevron U.S.A. Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 844, 104 S. Ct. 2778, 2782, 81 L. Ed. 2d 694 (1984). If a statute is silent or ambiguous with respect to a certain issue, we proceed to ask whether the executive’s construction of the statute is permissible. Gulfcoast Med. Supply, Inc. v. Sec’y, Dep’t of Health & Human Servs., 468 F.3d 1347, 1351 (11th Cir. 2006) (citing Chevron, 467 U.S. at 842–44, 104 S. Ct. at 2781–82). Here, the statutory phrase “other means” is ambiguous: it is not apparent from the text of the statute alone which “other means” Congress intended to allow. And a contractual obligation seems to us to be an eminently reasonable method of demonstrating responsibility. Defendants do not claim that the interpretation of the statute provided in the regulations is unreasonable. Instead, they fall back on their primary argument: that the existence of a contract does not necessarily demonstrate responsibility. They point out that PIP insurance contracts do not promise payment or reimbursement for all medical expenses, and they argue that it is possible that Plaintiffs seek to recover for injuries not covered under their policies. In other words, Defendants argue that a contract can demonstrate responsibility, but only once it is reduced to a judgment or settlement. We disagree, and our disagreement underscores an important difference between tort liability and contractual obligations. It is a fundamental principle of 18 Case: 15-14353 Date Filed: 08/30/2016 Page: 19 of 25 contract law that a contract imposes enforceable rights and obligations: “The heart of ‘contract’ is thus found both in its promissory nature and in its enforceability. . . . [O]nce a contract is entered, the parties’ rights and obligations are binding under the law . . . .” 1 Williston on Contracts § 1:1 (4th ed.). A contract imposes obligations on the parties immediately, without any involvement of the courts. While a lawsuit may be necessary to enforce a contract in the event of a breach, the obligations created by the contract exist as soon as it is executed. By contrast, an alleged tortfeasor has no obligations until he is adjudged liable. In a similar vein, demonstrating responsibility by means of a “judgment” necessarily presupposes a separate proceeding in which that judgment was obtained. On the other hand, the term “contractual obligation” in the CMS regulations presupposes only the existence of a contract. Moreover, adopting Defendants’ interpretation would render meaningless the statutory phrase “by other means,” as well as the specific reference to contractual obligations in the regulation. Defendants’ reading of the law “is thus at odds with one of the most basic interpretive canons, that a statute should be construed so that effect is given to all its provisions, so that no part will be inoperative or superfluous, void or insignificant.” Corley v. United States, 556 U.S. 303, 314, 129 S. Ct. 1558, 1566, 173 L. Ed. 2d 443 (2009) (internal quotation 19 Case: 15-14353 Date Filed: 08/30/2016 Page: 20 of 25 marks and brackets omitted). If Defendants are correct that a judgment or settlement agreement is always a prerequisite to suit under the MSP Act, then there are no “other means” that may demonstrate responsibility, and that part of the statute is superfluous. Additionally, Defendants’ preferred interpretation renders the reference in the regulations to contractual obligations entirely inoperative. If Defendants are correct that a contract must always be reduced to a judgment, then a “contractual obligation” can never demonstrate responsibility; only a judgment can. The regulations envision demonstrating responsibility with a judgment or settlement from a separate proceeding. If a contractual obligation, absent such a judgment or settlement, cannot demonstrate responsibility to pay, then the reference to judgments and settlements would be sufficient. There is no purpose at all for listing a contractual obligation as a means of demonstrating responsibility. Requiring that such a contractual obligation be reduced to a judgment renders superfluous the phrase “by other means.” This line of reasoning is entirely consistent with Glover. In Glover, we concluded that responsibility must be demonstrated by “a separate adjudication or agreement.” 459 F.3d at 1309. An insurance contract is, of course, a separate agreement, and permitting demonstration of responsibility via a contractual obligation is therefore consistent with our holding in Glover. Glover was decided 20 Case: 15-14353 Date Filed: 08/30/2016 Page: 21 of 25 in the tort context, and the “agreement” the Glover panel likely had in mind was a settlement agreement. But a settlement agreement is just a type of contract. So if Defendants are correct that a contractual obligation alone cannot demonstrate responsibility, then, presumably, even the beneficiary of a settlement agreement has not demonstrated responsibility until he has sued for breach of the settlement agreement, prevailed, and obtained a judgment. Given the explicit references in the text of the law to settlements and waivers as means of demonstrating responsibility, Congress clearly did not intend the result Defendants request. The plain language of the MSP Act indicates that at least some contractual obligations—namely, settlement agreements—are sufficient to demonstrate responsibility. We see no reason that other types of agreements—such as insurance contracts—should be treated differently. We hold that a contractual obligation may serve as sufficient demonstration of responsibility for payment to satisfy the condition precedent to suit under the MSP Act. This does not relieve Plaintiffs of their burden to allege in their complaints, and then subsequently prove with evidence, that Defendants’ valid insurance contracts actually render Defendants responsible for primary payment of the expenses Plaintiffs seek to recover. And Defendants may still assert any valid contract defense in arguing against their liability. We hold only that a contractual 21 Case: 15-14353 Date Filed: 08/30/2016 Page: 22 of 25 obligation may satisfy the demonstrated responsibility requirement, not that the existence of a contractual obligation conclusively demonstrates liability under the MSP Act’s private cause of action. 3. Policy Maximums Defendants IDS and Infinity Auto Insurance Company (“Infinity”) argue in the alternative that, even if Plaintiffs’ insurance contracts are sufficient to demonstrate Defendants’ responsibility to pay, Plaintiffs’ claims still fail because their complaints show that Defendants no longer have a responsibility to pay. Defendants’ argument is grounded in the fact that Plaintiffs’ insurance policies provided for a maximum of $10,000 in benefits. Defendants claim that any responsibility they had to pay was exhausted once the policy maximums were reached, which may have occurred in some of these cases. Plaintiffs respond that the statute requires repayment whenever a primary plan “has or had a responsibility to make payment,” 42 U.S.C. § 1395y(b)(2)(B)(ii) (emphasis added), and that Defendants are therefore liable if they ever had a responsibility to make a payment, even if they subsequently paid out the maximum benefits available under the policies.6 6 In their brief, Plaintiffs do concede that they cannot recover more than twice the policy limits. 22 Case: 15-14353 Date Filed: 08/30/2016 Page: 23 of 25 The district courts to which these arguments were presented did not reach them, instead dismissing the cases solely on the grounds that Glover barred liability. On remand, we leave it to the district courts to decide this issue in the first instance. 7