Opinion ID: 783835
Heading Depth: 2
Heading Rank: 2

Heading: the acromed litigation

Text: 9 As noted above, the controversy surrounding the Medicare payments at issue here arose from a class action settlement of claims pertaining to orthopedic bone screws manufactured by AcroMed. AcroMed began marketing orthopedic bone screw devices for use in spinal fusion surgery in 1983. By the early part of the 1990s, thousands of individuals who had undergone spinal fusion surgery experienced complications and infirmities that they associated with AcroMed's bonescrews. A flood of product liability suits against AcroMed followed. See In re Orthopedic Bone Screw Products Liability Litigation, 176 F.R.D. 158, 165 (E.D.Pa. 1997). In 1994, the Judicial Panel on Multidistrict Litigation transferred all of the pending cases to the United States District Court for the Eastern District of Pennsylvania for pre-trial proceedings. Id. On January 8, 1997, Daniel Fanning, acting as a class representative, reached a settlement with AcroMed on behalf of the class. Id. Pursuant to the terms of that settlement, AcroMed transferred $100 million into a trust fund for distribution to class members who qualified for payment in accordance with a procedure to be established by the court. 5 Id. at 165-166. 10 Since members of the settlement class had previously received Medicare payments for medical expenses allegedly stemming from injuries caused by AcroMed's bone screws, the government filed a Statement of Interest in the district court after learning of the proposed AcroMed settlement. In that Statement of Interest, the government stated that, pursuant to the secondary payer provisions of the MSP, it intended to recover amounts Medicare had paid for the class members' medical care. 11 When efforts to settle the government claims broke down, the government sent letters to the approximately 1,800 members of the settlement class demanding repayment of the amounts Medicare had paid for medical treatment. The letters gave each class member 60 days to repay the amount set forth in each letter and warned that if the amount remained unpaid after 60 days, interest would accrue at the rate of 13.75% per annum until the debt was paid, regardless of whether a waiver of recovery request or administrative appeal was pending. The letters also told the class members that if they did not pay, Medicare could recover the outstanding balance from other federal benefits the individual plaintiff might otherwise be entitled to including additional Medicare payments, Social Security benefits and Railroad Retirement benefits. The letters similarly threatened that delinquencies would be reported to the Treasury Department for offset against any other federal payments the class members might otherwise receive. On March 21, 2001, Fanning filed an amended complaint alleging that payments from the AcroMed settlement are not the type of payments that give the government a right to reimbursement under the MSP. The amended complaint sought a permanent injunction barring the government from taking any action to enforce the rights asserted under the MSP. Concomitantly, Fanning filed a motion for a preliminary injunction and a motion for class certification. 12 The government responded with a motion to dismiss for lack of jurisdiction, arguing that 42 U.S.C. § 405(h) requires exhaustion of administrative remedies before claims that arise under the Medicare Act could be subjected to judicial review. 6 13 The district court denied the government's motion to dismiss, certified the class and entered a preliminary injunction barring the government from taking any action to obtain reimbursement for Medicare payments from the class members. In re Orthopedic Bone Screw Products Liability Litigation (Fanning v. United States), 202 F.R.D. 154 (E.D.Pa.2001). The court rejected the government's claim that the court lacked federal question jurisdiction under 42 U.S.C. § 405(h). The court found that § 405(h) did not apply to the settlement class members because they were not trying to recover Medicare benefits. Rather, in the court's view, the class members were attempting to enjoin collection of benefits the government had already paid. Id. at 170. 14 This appeal followed. 15