319 F.3d 605 | 3rd Cir. | 2003
ROTH, Circuit Judge:(cid:13) In 1998, a number of States, including the(cid:13) Commonwealth of Pennsylvania, settled their lawsuits(cid:13) against the major tobacco companies. Under the Tobacco(cid:13) Settlement, the Tobacco Companies agreed to pay the(cid:13) Commonwealth of Pennsylvania more than $11 billion.(cid:13) Plaintiffs, a class of Pennsylvania Medicaid recipients who(cid:13) have various smoking-related illnesses, believe that a(cid:13) provision of the Medicaid Act, 42 U.S.C. S 1396k, entitles(cid:13) them to part of the Tobacco Settlement. They contend that(cid:13) the Commonwealth recovered the Tobacco Settlement funds(cid:13) under an assignment from them. Accordingly, they assert(cid:13) 2(cid:13) that pursuant to the provisions of S 1396k(b) they are(cid:13) individuals to whom the remainder of the amount collected(cid:13) should be paid.(cid:13) The District Court dismissed plaintiffs’ action against the(cid:13) Commonwealth, finding that the Eleventh Amendment(cid:13) barred the suit. We will affirm that dismissal, but not on(cid:13) Eleventh Amendment grounds.(cid:13) I. Procedural History(cid:13) On January 27, 2000, plaintiffs filed a complaint in the(cid:13) United States District Court for the Eastern District of(cid:13) Pennsylvania, pursuant to 42 U.S.C. S 1983. They named(cid:13) as defendants three officers of the Commonwealth of(cid:13) Pennsylvania and Citibank N.A. They sought declaratory(cid:13) and injunctive relief to compel the officers of the(cid:13) Commonwealth to comply with 42 U.S.C. S 1396k(b), which(cid:13) they contend requires the Commonwealth to pay them(cid:13) whatever portion of the Tobacco Settlement is not used to(cid:13) reimburse the Commonwealth for its Medicaid expenses.(cid:13) On April 27, 2001, the District Court granted the(cid:13) Commonwealth’s motion to dismiss for failure to state a(cid:13) claim, Fed. R. Civ. P. 12(b)(6), on the grounds that the(cid:13) Eleventh Amendment barred the suit. The court also denied(cid:13) plaintiffs’ motion for reconsideration.(cid:13) II. Jurisdiction and Standard of Review(cid:13) Because these claims were brought pursuant to 42(cid:13) U.S.C. S 1983 and the Medicaid Act, the District Court had(cid:13) subject matter jurisdiction under 28 U.S.C. S 1331. We(cid:13) have appellate jurisdiction under 28 U.S.C. S 1291.(cid:13) We exercise plenary review over decisions to grant a(cid:13) motion to dismiss. See Malia v. General Electric , 23 F.3d(cid:13) 828, 830 (3d Cir. 1994). Thus, we will reverse only if,(cid:13) accepting all well pleaded allegations in the complaint as(cid:13) true, the plaintiff is not entitled to relief. (cid:13) III. Discussion(cid:13) As the District Court concluded, before plaintiffs can(cid:13) prevail in this suit they must demonstrate that the relief(cid:13) 3(cid:13) they seek is not barred by the Eleventh Amendment of the(cid:13) United States Constitution, which generally bars suits(cid:13) brought by individuals against state officers acting in their(cid:13) official capacity. See MCI Telecommunications Corp. v. Bell(cid:13) Atlantic Pennsylvania, 271 F.3d 491, 503 (3rd Cir. 2001).(cid:13) Before we address the difficult Eleventh Amendment issues,(cid:13) however, we can consider whether there are alternative(cid:13) grounds, logically antecedent to the Eleventh Amendment(cid:13) inquiry, upon which we can base a decision in favor of the(cid:13) State. See Amchem Prods. v. Windsor, 521 U.S. 591, 612(cid:13) (1997). The Supreme Court has specifically held, for(cid:13) example, that it is appropriate to decide whether a statute(cid:13) permits a cause of action against a State before deciding(cid:13) whether the Eleventh Amendment bars the suit. See(cid:13) Vermont Agency of Natural Res. v. United States, 529 U.S.(cid:13) 765, 779-80. We will, therefore, bypass the issue of the(cid:13) Eleventh Amendment bar because we conclude that, for two(cid:13) antecedent reasons, plaintiffs’ action fails to state a claim(cid:13) for which relief can be granted. See Strawser v. Condon,(cid:13) 290 F.3d 720, 729 (4th Cir. 2002) (holding, in appeal of(cid:13) Medicaid recipients’ actions against the States of West(cid:13) Virginia, North Carolina, and South Carolina, that actions(cid:13) could be dismissed on basis of 1999 amendment to(cid:13) Medicaid statute without resolving Eleventh Amendment(cid:13) bar).(cid:13) As to the first of these antecedent grounds, we have(cid:13) determined that S 1396k(b) does not authorize the relief(cid:13) plaintiffs seek because the funds from the Tobacco(cid:13) Settlement were not collected under an assignment from(cid:13) plaintiffs. Second, even if the funds were collected on(cid:13) assignment, a 1999 amendment to the Medicaid Act bars(cid:13) plaintiffs’ claims to any portion of the Tobacco settlement.(cid:13) See 42 U.S.C. S 1396b(d)(3)(B)(ii). That amendment allows(cid:13) the States to use the funds from the Tobacco Settlement for(cid:13) any purpose the States find appropriate. Thus, even if(cid:13) S 1396k(b) had given the plaintiffs a right to some of the(cid:13) Tobacco Settlements funds, the amendment absolved the(cid:13) Commonwealth of the obligation to pass on any of the(cid:13) funds to Medicaid beneficiaries. We note that our sister(cid:13) circuit courts of appeals that have considered these claims(cid:13) by Medicaid beneficiaries for Tobacco Settlement funds(cid:13) have come to the same conclusion. See Cardenas v. Anzai,(cid:13) 4(cid:13) 311 F.3d 929, 937-40 (9th Cir. 2002) (holding(cid:13) S 1396b(d)(3)(B)(ii) expressly allowed State to use all(cid:13) Tobacco Settlement funds for any purpose); Strawser, 290(cid:13) F.3d at 730-31 (same); Greenless v. Almond, 277 F.3d 601,(cid:13) 608 (1st Cir. 2002) (same); Tyler v. Douglas, 280 F.3d 116,(cid:13) 123 (2d Cir. 2001) (same); Harris v. Owens, 264 F.3d 1282,(cid:13) 1295 (10th Cir. 2001) (same); Watson v. Texas , 261 F.3d(cid:13) 436, 444-45 (5th Cir. 2001) (holding complaint did not(cid:13) plead an assignment from Medicaid beneficiaries under(cid:13) S 1396k(b); cf. Barton v. Summers, 293 F.3d 944 (6th Cir.(cid:13) 2002) (holding Medicaid beneficiaries’ claims barred by(cid:13) Eleventh Amendment but, even if not barred, plaintiffs had(cid:13) no implied private right of action under S 1983 and(cid:13) S 1396b(d)(3)(B)(ii) permits use of Tobacco Settlement funds(cid:13) as States determine appropriate).(cid:13) We turn first to the question whether the funds were(cid:13) collected on assignment from plaintiffs.(cid:13) A. Does S 1396k(b) Entitle Plaintiffs to a Portion of the(cid:13) Tobacco Settlement Funds?(cid:13) Subsection (a) of S 1396k requires Medicaid recipients to(cid:13) assign to the State their right to recover medical expenses(cid:13) from a third party. Subsection (b) provides that whenever a(cid:13) State recovers Medicaid costs from a third party under(cid:13) such an assignment, it must distribute that recovery, first,(cid:13) to itself to pay for its share of Medicaid expenses and, next,(cid:13) to the federal government to pay for the federal share of(cid:13) Medicaid expenses. The State must pay any remainder to(cid:13) the Medicaid recipient whose illness prompted the Medicaid(cid:13) expenditure.1 Section 1396k(b) applies, however, only when(cid:13) _________________________________________________________________(cid:13) 1. Section 1396k provides in pertinent part:(cid:13) (a) For the purpose of assisting in the collection of medical support(cid:13) payments and other payments for medical care owed to recipients of(cid:13) medical assistance under the State plan approved under this(cid:13) subchapter, a State plan for medical assistance shall--(cid:13) (1) provide that, as a condition of eligibility for medical assistance(cid:13) under the State plan to an individual who has the legal capacity to(cid:13) execute an assignment for himself, the individual is required--(cid:13) (A) to assign the State any rights, of the individual or of any other(cid:13) person who is eligible for medical assistance under this subchapter(cid:13) 5(cid:13) the recovery is made "under an assignment" from the(cid:13) Medicaid recipient.(cid:13) Our review of the complaint in the Commonwealth of(cid:13) Pennsylvania’s action against the Tobacco Companies(cid:13) indicates that the Tobacco Settlement funds were not(cid:13) collected "under an assignment" from Medicaid recipients.(cid:13) Instead, the Commonwealth recovered those funds by suing(cid:13) the Tobacco Companies directly, under a parens patria(cid:13) theory. That theory allows a state to bring suit on its own(cid:13) behalf to protect the well being of its residents. See Alfred(cid:13) L. Snapp & Son, Inc. v. Puerto Rico, ex rel., Barez , 458 U.S.(cid:13) 592 (1982).(cid:13) There is substantial evidence in the Commonwealth’s(cid:13) complaint that the Commonwealth proceeded against the(cid:13) Tobacco Companies under a parens patria theory. The(cid:13) Commonwealth expressly invoked this theory as the basis(cid:13) for its complaint. It also attempted to defuse any statute of(cid:13) limitations issues by invoking the doctrine of nullum tempus(cid:13) occurrit regi, a doctrine that exempts a State from the(cid:13) statute of limitations when the State brings suit itself to(cid:13) protect the public’s rights. See Dep’t of Trans. v. J.W.(cid:13) Bishop & Co., 439 A.2d 101, 104 (Pa. 1981). This(cid:13) exemption from the statute of limitations would not exist(cid:13) for claims assigned to the State by Medicaid beneficiaries,(cid:13) and, indeed, the claims of many of these beneficiaries(cid:13) would have been barred by the statute of limitations.(cid:13) _________________________________________________________________(cid:13) and on whose behalf the individual has the legal authority to(cid:13) execute an assignment of such rights, to support (specified as(cid:13) support for the purpose of medical care by a court or administrative(cid:13) order) and to payment for medical care from any third party.(cid:13) * * *(cid:13) (b) Such part of any amount collected by the State under an(cid:13) assignment made under the provisions of this section shall be(cid:13) retained by the State as is necessary to reimburse it for medical(cid:13) assistance payments made on behalf of an individual with respect to(cid:13) whom such assignment was executed (with appropriate(cid:13) reimbursement of the Federal Government to the extent of its(cid:13) participation in the financing of such medical assistance), and the(cid:13) remainder of such amount collected shall be paid to such individual.(cid:13) 6(cid:13) In the form of pleading the Commonwealth chose for the(cid:13) Complaint, as to each cause of action, the Commonwealth(cid:13) made clear that one item of damage it was seeking was the(cid:13) Medicaid expenditures it had paid out. The Commonwealth(cid:13) does not claim a right to recover all the medical(cid:13) expenditures by and for Medicaid beneficiaries. For each(cid:13) cause of action, the Complaint cites, as a direct and(cid:13) foreseeable result of defendants’ wrongful conduct, that the(cid:13) "Commonwealth has paid and will continue to be required(cid:13) to pay medical costs of Medicaid . . . incurred because of(cid:13) tobacco-related disease."(cid:13) Plaintiffs point out, nevertheless, that the(cid:13) Commonwealth, in Paragraph 9 of the Damages and(cid:13) Injunctive Relief Requested, prays for "restitution,(cid:13) including, but not limited to, health care costs of Medicaid(cid:13) and state medical assistance recipients for diagnosis and(cid:13) treatment of tobacco-related disease." This language is(cid:13) broader and could be read to refer not only to the(cid:13) Commonwealth’s share of expenditures but also to the(cid:13) federal government’s and that of the Medicaid recipients. In(cid:13) view, however, of the specific description of damage in each(cid:13) cause of action, we conclude that the language of the(cid:13) prayer for relief reflects that specifically described damage,(cid:13) i.e., the Commonwealth’s share of Medicaid costs.(cid:13) Thus, the language of the complaint demonstrates that(cid:13) the Commonwealth did not proceed "under an assignment"(cid:13) from Medicaid recipients. See Watson, 261 F.3d at 444-445(cid:13) (holding that complaint, seeking to recover funds"expended(cid:13) by the State" to provide medical treatment, does not plead(cid:13) an assignment to enforce the rights of smokers).(cid:13) Accordingly, we conclude that, in view of the nature of the(cid:13) remedy sought by the Commonwealth, plaintiffs do not(cid:13) have a claim under S 1396k(b) for any recovery assigned to(cid:13) the Commonwealth by them. Id.(cid:13) Plaintiffs contend, however, that this result empowers(cid:13) States to ignore their obligations to Medicaid recipients and(cid:13) to the federal government. They urge that, by prosecuting(cid:13) all recovery actions under a parens patria theory, a State(cid:13) could avoid paying Medicaid recipients and the federal(cid:13) government their shares of any Medicaid recovery. Plaintiffs(cid:13) overestimate this threat. The doctrine of parens patria can(cid:13) 7(cid:13) only be used in certain, well-defined cases. A State may(cid:13) seek recovery under parens patria only when it can show(cid:13) that it has a "quasi-sovereign interest." Alfred L. Snapp &(cid:13) Son, Inc, 458 U.S. at 607-08. To do so, the State must(cid:13) articulate "an interest apart from the interests of particular(cid:13) private parties" that affects a "sufficiently substantial"(cid:13) segment of its residents. Id. at 607.(cid:13) Here, the Commonwealth cited in its Complaint how the(cid:13) defendants had misled its residents about the dangers of(cid:13) smoking and how defendants had manipulated nicotine(cid:13) content and delivery to cause addiction. The Complaint(cid:13) particularly focussed on the targeting by the Tobacco(cid:13) Companies of children, adolescents, and African-(cid:13) Americans. Few, if any, S 1396k(b) Medicaid suits for(cid:13) recovery from third parties could assert such a broad(cid:13) interest in the well-being of the people of a State, as(cid:13) opposed to the narrower interests of individual Medicaid(cid:13) beneficiaries who have suffered a particular illness or(cid:13) injury.(cid:13) B. Does the 1999 Amendment to the Medicaid Act Bar(cid:13) Plaintiff’s Claims?(cid:13) Even if Pennsylvania had recovered the Tobacco(cid:13) Settlement funds "under an assignment" from Medicaid(cid:13) recipients, we would still find that plaintiffs have failed to(cid:13) state a claim for which relief could be granted. In a rider to(cid:13) a 1999 appropriations bill, Congress amended the Medicaid(cid:13) Act by promulgating what is now S 1396b(d)(3)(B)(i) and (ii)(cid:13) and renumbering S 1396b(d)(3) as S 1396b(d)(3)(A). In this(cid:13) amendment, Congress absolved the states from any(cid:13) potential liability to the federal government or to Medicaid(cid:13) recipients for any part of the Tobacco Settlement funds by(cid:13) explicitly giving to the States the authority to use the(cid:13) Tobacco Settlement funds for any purpose the States(cid:13) deemed appropriate. Plaintiffs’ arguments to the contrary(cid:13) cannot overcome the plain meaning of the language of that(cid:13) amendment. Thus, even if S 1396k(b) applied to the(cid:13) Tobacco Settlement funds, the 1999 amendment would(cid:13) absolve the Commonwealth of its obligation to share its(cid:13) recovery with the plaintiffs.(cid:13) The amended Act now reads:(cid:13) 8(cid:13) (A) The pro rata share to which the United States is(cid:13) equitably entitled, as determined by the(cid:13) Secretary, of the net amount recovered during(cid:13) any quarter by the State or any political(cid:13) subdivision thereof with respect to medical(cid:13) assistance furnished under the State plan shall(cid:13) be considered an overpayment to be adjusted(cid:13) under this subsection.(cid:13) (B)(i) Subparagraph (A) and paragraph (2)(B) shall not(cid:13) apply to any amount recovered or paid to a State(cid:13) as part of the comprehensive settlement of(cid:13) November 1998 between manufacturers of(cid:13) tobacco products, as defined in section 5702(d)(cid:13) of Title 26 [26 U.S.C.A. S 5702(d)], and State(cid:13) Attorneys General, or as part of any individual(cid:13) State settlement or judgment reached in(cid:13) litigation initiated or pursued by a State against(cid:13) one or more such manufacturers.(cid:13) (ii) Except as provided in subsection (i)(19), a State(cid:13) may use amounts recovered or paid to the State(cid:13) as part of a comprehensive or individual(cid:13) settlement, or a judgment, described in clause (i)(cid:13) for any expenditures determined appropriate by(cid:13) the State.2(cid:13) These provisions outline the federal government’s(cid:13) response to the Tobacco Settlement. Subsection (A)(cid:13) provides that, in most cases, when a State recovers funds(cid:13) spent on Medicaid expenses, the federal government is(cid:13) entitled to its share. Subsections (B)(i) and (ii) directly(cid:13) address the Tobacco Settlement funds. Subsection (B)(i)(cid:13) waives the federal entitlement to a share of the Tobacco(cid:13) Settlement. Subsection (B)(ii) expressly grants the states(cid:13) the authority to use the Tobacco Settlement funds"for any(cid:13) expenditures determined appropriate by the State." The(cid:13) meaning of the above language is plain. It allows the States(cid:13) to refuse to compensate Medicaid recipients as otherwise(cid:13) _________________________________________________________________(cid:13) 2. The exception in clause (ii) refers to a prohibition against making(cid:13) payments "with respect to any amount expended on administrative costs(cid:13) to initiate or pursue litigation described in subsection (d)(3)(B)." 42(cid:13) U.S.C. S 1369b(i)(19).(cid:13) 9(cid:13) would be required by 42 U.S.C. S 1396k(b). As we set out(cid:13) above, many of our sister circuits agree. See Cardenas, 311(cid:13) F.3d at 939-40; Strawser, 290 F.3d at 730-31; Greenless,(cid:13) 277 F.3d at 608; Tyler, 280 F.3d at 123; Harris, 264 F.3d(cid:13) at 1295.(cid:13) Plaintiffs advance several arguments in an attempt to(cid:13) overcome this plain language. First, they contend that,(cid:13) while subsection (B)(ii) permits the States to use the federal(cid:13) share of the Tobacco Settlement for any appropriate(cid:13) expenditure, that permission does not extend to the share(cid:13) of Medicaid beneficiaries. To support this contention,(cid:13) plaintiffs argue that subsection (B)(ii) refers only to the(cid:13) sums described in subsection (B)(i) -- sums which they(cid:13) contend include only the federal share. Unfortunately for(cid:13) the plaintiffs, "the amount recovered" as stated in(cid:13) subsection (B)(ii) is not merely a reference to the federal(cid:13) share which is the subject of subsection (B)(i). There is no(cid:13) language in subsection (B)(ii) containing such a limitation.(cid:13) There is reference in subsection (B)(ii) to subsection (B)(i)(cid:13) but the pertinent language is in the phrase "a(cid:13) comprehensive or individual settlement, or a judgment,(cid:13) described in clause (i);" this constitutes a specific reference(cid:13) to the Tobacco Settlement and its progeny as set out in(cid:13) subsection (B)(i). See Strawser, 790 F.3d at 731. As such,(cid:13) it does not limit the use of "the amounts recovered."(cid:13) Plaintiffs also argue that the plain meaning of subsection(cid:13) (B)(ii) is contradicted by the legislative history of the(cid:13) enactment. They claim that once Congress decided to let(cid:13) the States keep the federal share, the debate surrounding(cid:13) the enactment of subsection (B)(ii) then focussed on(cid:13) whether to attach conditions on the use of the federal(cid:13) share. Subsection (B)(ii), they claim, merely makes explicit(cid:13) that Congress decided not to do so. Although this point was(cid:13) raised in the debate, plaintiffs’ argument skips over other(cid:13) equally significant parts of the debate.(cid:13) In fact, the legislative history indicates that Congress was(cid:13) not entirely convinced that Medicaid even covered the(cid:13) Tobacco Settlement and that S 1396b(d)(3)(B)(ii) was passed(cid:13) to remove doubt and to avoid costly litigation -- litigation(cid:13) like the case before us. See Harris, 264 F.3d at 1294-95(cid:13) (setting forth significant portions of the floor debate). Thus,(cid:13) 10(cid:13) despite plaintiffs’ contentions, the legislative history also(cid:13) supports the plain meaning of S 1396b(d)(3)(B)(ii) -- that it(cid:13) allows states to use the Tobacco Settlement funds for any(cid:13) purpose they deem appropriate.(cid:13) In addition, plaintiffs argue that applying the plain(cid:13) meaning of S 1396b(d)(3)(B)(ii) contradicts several canons of(cid:13) interpretation: (1) statutes should be read to avoid(cid:13) surplusage, TRW Inc. v. Andrews, 534 U.S. 19, 24 (2001);(cid:13) (2) implied repeals are disfavored, United States v. United(cid:13) Continental Tuna Corp., 425 U.S. 164, 168 (1976); and (3)(cid:13) retroactive application is disfavored, I.N.S. v. St. Cyr, 533(cid:13) U.S. 289 (2001). None of these canons is applicable here.(cid:13) Deciding whether a statute is retroactive is primarily a(cid:13) question of legislative intent, see DeSousa v. Reno, 190(cid:13) F.3d 175, 186 (3d Cir. 1999). Here, subsection (B)(i)(cid:13) specifically states that it applies to "any amount" received(cid:13) under the Tobacco Settlement. We conclude that this(cid:13) reference to "any amount" includes funds received prior to(cid:13) the passage of the amendment. For that reason, the(cid:13) amendment is clearly retroactive.(cid:13) As to implied repeal, plaintiffs argue that the plain(cid:13) meaning of S (B)(ii) should be ignored because it would(cid:13) implicitly repeal S 1396k(b). Subsection (B)(ii), however,(cid:13) does not repeal S 1396k(b). It applies only to the Tobacco(cid:13) Settlement funds and applies to those funds explicitly. For(cid:13) that reason, S 1396k(b), as it applies to the usual action to(cid:13) recover Medicaid costs from a third party, continues in(cid:13) effect.(cid:13) We also reject plaintiffs’ argument that the plain meaning(cid:13) of subsection (B)(ii) makes the rest of the 1999 amendment(cid:13) superfluous. Plaintiffs argue that if subsection (B)(ii) means(cid:13) what it says, then that subsection in and of itself gives up(cid:13) the federal share of recovery. Subsection (B)(i) is therefore(cid:13) meaningless. Plaintiffs assert that statutes should be read(cid:13) to avoid surplusage. See TRW Inc. v. Andrews, 534 U.S. at(cid:13) 24. This argument fails, however, because the plain(cid:13) meaning of subsection B(ii) does not make subsection B(i)(cid:13) meaningless. If Congress had enacted subsection (B)(ii)(cid:13) without subsection (B)(i), the language of the amendment(cid:13) would have been ambiguous. The question of whether the(cid:13) 11(cid:13) federal government had given up its share of the recovery(cid:13) would not have been expressly dealt with. That ambiguity(cid:13) might eventually have been resolved in favor of releasing(cid:13) the federal share. We should not, however, mistake for(cid:13) surplusage Congress’s attempts to clarify its intent.(cid:13) We conclude, therefore, that S 1396b(d)(3)(B)(ii) explicitly(cid:13) allows the States to use the Tobacco Settlement funds for(cid:13) any appropriate expenditure and, as a result, that Medicaid(cid:13) beneficiaries have no claim to those funds.(cid:13) IV. Conclusion(cid:13) For the reasons stated above, we will affirm the judgment(cid:13) of the District Court.(cid:13) A True Copy:(cid:13) Teste:(cid:13) Clerk of the United States Court of Appeals(cid:13) for the Third Circuit(cid:13) 12(cid:13)
