United States v. James Stricker
524 F. App'x 500
11th Cir.2013Background
- Monsanto, Pharmacia, and Solutia ("PCB producers") settled thousands of PCB toxic-tort claims for $300 million in a 2003 settlement approved by Alabama state court; $275 million was to be held and distributed to plaintiffs upon satisfaction of release conditions.
- Settlement terms: initial transfers to an interest-bearing account; PCB plaintiffs’ counsel would receive $275 million after certifying 75% of adult plaintiffs had signed releases, and would distribute funds when 97% had signed (defendants could void the agreement if 97% threshold not met).
- On October 29, 2003 the PCB producers transferred $275 million to plaintiffs’ counsel; counsel later certified 97% signed on December 2, 2003.
- Medicare had made conditional payments for medical care of 907 PCB plaintiffs and the government sought recovery under the Medicare Secondary Payer Act (MSPA).
- The United States sued the PCB producers, insurers, and plaintiffs’ counsel on December 1, 2009. Defendants moved to dismiss under 28 U.S.C. § 2415 as time-barred; the district court dismissed and the government appealed.
- The Eleventh Circuit affirmed, holding the government’s MSPA cause of action accrued on October 29, 2003 (date of $275 million transfer) and the suit was untimely even under the six-year limitations period.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| When does the government’s MSPA claim against non-beneficiaries accrue? | Accrual occurred when the settlement became final/enforceable (Dec. 2, 2003, 97% certification) because a final release was required. | Accrual occurred when the $275M payment was transferred (Oct. 29, 2003) because that transfer was a payment "conditioned upon release." | Accrual occurred Oct. 29, 2003 — the transfer constituted a payment conditioned on releases under 42 U.S.C. §1395y as interpreted by HHS regulation. |
| Which statute of limitations applies under 28 U.S.C. § 2415? | Government framed MSPA claim as "contract"-based to get six-year period. | Defendants argued claim is tort-based (three years) or, alternatively, untimely even under six years. | Court assumed six-year period for decision but held claim untimely even under §2415(a) because accrual was Oct. 29, 2003 and suit filed Dec. 1, 2009. |
| Whether 42 C.F.R. § 411.22(b) should be deferred to in interpreting "payment conditioned upon . . . release" | Government downplayed/regarded the regulation as inapplicable; urged statutory reading requiring finalized releases. | Defendants relied on regulation to show payment conditioned on future releases qualifies as a conditioned payment. | Court applied Chevron deference to 42 C.F.R. § 411.22(b) and concluded it reasonably interprets the statute to include payments conditioned on future releases. |
| Whether government must await irrevocable beneficiary release or knowledge of exact beneficiaries before suing | Government argued accrual could not occur until certainty which plaintiffs settled and until 97% threshold met. | Defendants argued accrual upon transfer irrespective of which specific plaintiffs would sign releases. | Court rejected government’s uncertainty argument; transfer put defendants on notice and could be enforced absent affirmative voiding, so accrual occurred at transfer. |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (pleading standard for Rule 12(b)(6))
- Bay Area Laundry & Dry Cleaning Pension Trust Fund v. Ferbar Corp. of Cal., 522 U.S. 192 (accrual requires a complete and present cause of action)
- Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837 (deference to reasonable agency interpretations)
- United States v. Baxter Int’l, Inc., 345 F.3d 866 (11th Cir.) (overview of MSPA structure and HHS role)
- Glover v. Liggett Group, 459 F.3d 1304 (11th Cir. 2006) (requirement that tortfeasor responsibility be demonstrated before private MSPA action)
- United States v. Kass, 740 F.2d 1493 (reason for §2415 limitations on government actions)