ORDER
On March 11, 2004, the United States Magistrate Judge, to whom the above-captioned civil action was assigned pursuant to the General Order of Reference, filed Findings and Recommendations in which it was recommended that the claims of Plaintiff Penny Frazer (“Frazer”) be dismissed. (Doc. 18). Defendant Transcontinental Insurance Company (referred to in the complaint as CNA Insurance Company) had sought dismissal pursuant to the provisions of Rule 12(b)(6). (Doc. 8). Frazer
On June 28, 2004, following oral argument, this court entered an order which authorized the plaintiff to amend her complaint to cure the deficiencies identified by the magistrate judge in the findings and recommendation. On August 6, 2004, the plaintiff submitted what she styled as an “Amended and Recast Complaint.” (Doc. 25.) Rather than clarifying or further illuminating her own claims in light of the magistrate judge’s findings and recommendation, Frazer’s Amended Complaint merely added new individual plaintiffs, defendants and identified a purported defendants’ class. 1
On December 21, 2004, Transcontinental Insurance Company (identified as CNA Insurance Company in the Complaint) renewed its motion to dismiss correctly observing that Frazer had failed to cure or even substantively address the magistrate judge’s findings and conclusions, which found the Complaint as filed by Frazer was due to be dismissed.
After reviewing the findings and recommendation of the magistrate judge, the applicable law, and the submissions and responses of the parties, this court concludes that the magistrate judge’s findings and recommendation of March 11, 2004, (Doc. 18), are neither clearly erroneous nor contrary to law. Moreover, after a de novo review of the Plaintiffs Complaint, her objections to the magistrate judge’s findings and recommendation, the applicable law and the additional submissions of the parties, it is ORDERED that the objections be OVERRULED, the findings and recommendation be ADOPTED in its entirety and the claims of Penny Frazer be DISMISSED with prejudice.
MAGISTRATE JUDGE’S FINDINGS AND RECOMMENDATION
Ms. Penny Frazer initiated this civil action with a complaint filed in the Northern District of Alabama. (Document # 1). Although the complaint does not expressly say so, Ms. Frazer may have been injured on the job while employed by a person, entity or organization subject to the Worker’s Compensation Laws of the State of Alabama. The complaint does not indicate the nature or extent of Ms. Frazer’s injury or illness, her current medical condition, her age, whether she is disabled or currently employed. She does state that in May of 2002 she entered into a Settlement Agreement with the CNA Insurance Company to resolve a Worker’s Compensation claim. Ms. Frazer does not allege that there is any possibility that she will ever require medical treatment of any kind in the future that is in any way related to the unidentified illness or injury that was the subject of her settlement. She does explain, however, that she entered into a settlement of her otherwise unspecified worker’s compensation claim and that “... [A]s a part of which future medical benefits were waived upon payment of a sum of money, .... ” (Document # 1, p. 3, ¶ 5). Ms. Frazer purports to bring her complaint on behalf of all persons “... who, during the class period, entered into settlement agreements of Worker’s Compensation claims, as a part of which a lump sum of money was paid to terminate future
CNA has filed a motion to dismiss the plaintiffs complaint on grounds that she has failed to state a cause of action upon which relief may be granted (Rule 12(b)(6)), and asserts that dismissal is an appropriate remedy for an alleged abridgment of Rule 8(a). (Document #8). In the motion to dismiss the defendant argues that Ms. Frazer “lacks standing” to bring a cause of action, that she does not allege a violation of a legally recognized duty and that her claims of breach of contract, negligence and unjust enrichment are insufficient as a matter of law. The matter is before the undersigned judge pursuant to the provisions of 28 U.S.C. § 636(b); Rule 72(b) of the Federal Rules of Civil Procedure; LR 72.1; and the General Orders of Reference dated July 25, 1996, May 8, 1998, as amended July 27, 2000. After consideration of the complaint, the motion to dismiss and the applicable law, defendant’s motion to dismiss on Article III standing grounds is due to be GRANTED. The motion to dismiss on Rule 8 grounds is due to be DENIED.
RULE 12(b)(6)
“[A] complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.”
Conley v. Gibson,
THE MEDICARE SECONDARY PAYER ACT
The Act
Prior to 1980, Medicare generally paid for medical services whether or not the
The MSP statute was designed to curb skyrocketing health costs and preserve the fiscal integrity of the Medicare system. See
Zinman v. Shalala,
Congress established two principal directives to achieve this objective. First, the MSP bars Medicare payments where “payment has already been made or can reasonably be expected ho be made promptly (as determined in accordance with regulations)” by a primary plan. 42 U.S.C. § 1395y(b)(2)(A) (parenthetical in original). “Prompt” payment defined as payment made within 120 days of either the days of either the date on which the care was provided or when the claim was filed with the insurer, which ever is earlier. See, 42 C.F.R. § § 411.21, 411.50. The MSP defines a “primary plan” as “a workmen’s compensation law or plan, an automobile or liability insurance policy or plan (including a self-insured plan), or no fault insurance ... [ ].” 42 U.S.C. § 1395y(b)(2)(A)(ii)(parenthetical in original). This provision “is intended to keep the government from paying a medical bill where it is clear an insurance company will pay instead.”
Evanston Hospital v. Hauck,
Second, the MSP provides that when Medicare does make a payment for which a primary plan was responsible, the payment is merely conditional and Medicare is entitled to reimbursement. 42 U.S.C. § 1395y(b)(2)(B);
Blue Cross & Blue Shield of Texas v. Shalala,
Any payment under this subchapter with respect to any item or service to which subparagraph (A) applies shall beconditioned upon reimbursement to the appropriate trust fund established by this subchapter when notice or other information is received that payment for such item or service has been or could have been made under such subpara-graph.
42 U.S.C. § 1395y(b)(2)(B)(l).
Medicare payments are subject to reimbursement to the appropriate Medicare trust fund once the government receives notice that a third-party payment has been or could be made with respect to the same item or service. 4 Id.
Title 42 U.S.C. § 1395y(b)(2)(B) provides:
(B) Conditional payments.
******
(ii) Action by United States.
In order to recover payment under this subchapter for such an item or service, the United States may bring an action against any entity which is required or responsible under this subsection to pay with respect to such an item or service (or any portion thereof) under a primary plan (and may, in accordance with paragraph (3)(A) collect double damages against that entity), or against any other entity (including any physician or provider) that has received payment from that entity with respect to the item or service and may join or intervene in any action related to the events that gave rise to the need for the item or service.
42 U.S.C. § 1395y(b)(3)(A) provides as follows:
(3) Enforcement
(A) Private cause of action.
There is established a private cause of action for damages (which shall be in an amount double the amount otherwise provided) in the case of a primary plan which fails to provide for a primary payment (or appropriate reimbursement) in accordance with such paragraphs (1) and (2)(A). 5
The cause of action arises under paragraphs (1) and (2)(A) of 42 U.S.C. § 1395y(b)(1) which defines a group health plan and § (2)(A) which includes “... a group health plan, to the extent that clause (i) applies and a workmen’s compensation law or plan, an automobile or liability insurance policy or plan (including a self-insured plan) or no fault insurance, to the extent that clause (ii) applies”. Section 2(A)(ii) establishes that Medicare will not pay for any item or service for which payment has been made or can reasonably be expected to be made promptly under a workmen’s compensation law.
The MSP precludes Medicare from providing payment for services to the extent that the payment in question has been made or can reasonably be expected to be made promptly under the applicable workmen’s compensation act. This exclusion is also embodied in the Code of Federal Regulations which specifically embraces workmen’s compensation as payment subject to reimbursement to Medicare, 42 C.F.R. § 411-20 provides:
Section 411-20 basis and scope.
(a) Statutory basis.
‡ ‡ ‡ ‡ ‡ ‡
(2) Section 1862(b)(2)(A)(ii) of the Act precludes Medicare payment for services to the extent that payment has been made or can reasonably be expected to be made promptly under
(i) Worker’s compensation.
The Central Office of the Centers for Medicare and Medicaid Services (CMS), as authorized by Congress has promulgated regulations specifically intended to carry out the mandate of the MSP amendments. 6 For example, 42 C.F.R. 411.24 establishes procedure for recovery of erroneous payments. 42 C.F.R. 411.25 imposes a requirement upon insurers to notify CMS when it has been mistakenly compensated for expenses and 42 C.F.R. 411.32 establishes the rules governing Medicare as a secondary payer.
CMS regulations as interpreted by the courts offer a wide variety of options through which Medicare can pursue reimbursement. 42 C.F.R. 411.24(g) provides, for example:
CMS has a right of action to recovery its payments from any entity, including a beneficiary, provider, physician, attorney, state agency or private insurer that has received a third-party payment.
A beneficiary is required to cooperate CMS to recover conditional payments. If CMS is unsuccessful in its recovery action, as a result of the failure of a beneficiary to cooperate, CMS may then recover the conditional payment directly from a beneficiary. 42 C.F.R. 41123 (...“(b) if CMS’s recovery action is unsuccessful because the beneficiary does not cooperate CMS may recover from the beneficiary.”)
While the MSP is applicable to both worker’s compensation and personal injury tort claims settlements there is a difference in the manner in which each is considered by CMS. In the workers compensation context the obligation for the payment of medical expenses which may occur in the future arises from the worker’s compensation statute of the state rather than as a product of the settlement agreement itself. Under Alabama law for example, an employer is obligated to pay “... reasonably necessary medical and surgical treatment and attention, physical rehabilitation, medicine, medical and surgical supplies, crutches, artificial members and other apparatus as a result of an accident arising out of and during the course of employment as may be obtained by the injured employee.... ” Title 25-5-77,
Code of Alabama
(1975).
7
When a disability under the workmen’s compensation statutes has been determined it carries with it as a matter of law that the employer must provide for payment of all future medical expenses that may be rea
At subpart (c) of part 411 the regulations address “limitations on Medicare payments for services covered under worker’s compensation.” Relevant to the present inquiry is 42 C.F.R. 411.46 which provides
Lump sum payment.
(a) Lump-sum commutation of future benefits. If a lump-sum compensation award stipulates that the amount paid is intended to compensate the individual for all future medical expenses required because of the work related injury or disease, Medicare payments for such services are excluded until medical expenses related to the injury or disease equal the amount of the lump-sum payment, (emphasis added).
(b) Lump-sum compromise settlement.
(1) A lump-sum compromise settlement is deemed to be a worker’s compensation payment for Medicare purposes even if the settlement agreement stipulates there is no liability under the worker’s compensation law or plan.
(2) If a settlement appears to represent an attempt to shift to Medicare the responsibility for payment of medical expenses for the treatment of a work related condition, the settlement will not be recognized. For example, if the parties to a settlement attempt to maximize the amount of the disability benefits paid under worker’s compensation by releasing the worker’s compensation carrier and liability for medical expenses for a particular condition even though the facts show that the condition is work-related, Medicare will not pay for treatment of that condition.
* * * * * *
(d) Lump-sum compromise settlement: effect on payment for services furnished after the date of settlement-
(1) Basic rule. Except as specified in paragraph (d)(2) of this section, if a lump-sum compromise settlement forecloses the possibility of future payments of worker’s compensation benefits, medical expenses incurred after the date of the settlement are payable under Medicare, (emphasis added).
(2) Exception. If the settlement agreement allocates certain amounts for specific future medical services, Medicare does not pay for those services until medical expenses related to the injury or disease equal the amount of the lump-sum settlement allocated to future medical expenses.
Worker’s compensation settlement agreements come within the ambit of the regulations in only one of two ways. First, in a case in which the parties consider only compensation for future medical expenses and agree upon a lump sum settlement which forecloses future payments beyond the settlement sum. This “commutation” of future medical benefits is generally reached when a worker’s compensation claimant is receiving social security or disability benefits at the time of the settlement. Under the regulations, Medicare will pay for covered medical services only after the exhaustion of the lump sum amount of the agreement. When a lump sum settlement agreement includes both an income replacement component and a provision for future medical expenses, the parties are required to adequately consid
Ms. Frazer’s complaint is vague as to what her agreement with the worker’s compensation carrier might have been. She states that her “... future medical benefits were waived upon a payment of a sum of money....” This language suggests that a portion of her settlement was allocated to future medical expenses, a practice clearly permissible under the regulations and the statute. It would also appear that her agreement is within the ambit of 42 C.F.R. § 411.46(d). The putative class is described as those persons who have received a lump sum of money “... to terminate future medical payments.” The class description more closely resembles- an agreement to which § 411.46(a) is applicable. 10
The Patel memo 11
Ms. Frazer has submitted in her opposition to the motion to dismiss the July 23, 2001 letter from CMS. The transmittal clarifies CMS’s policy regarding Medicare and worker’s compensation settlements.
12
In the document, CMS distinguishes between those cases which may require prior CMS approval and those that do not. As noted above the CMS defines “commutations” as a worker’s compensation settlement that is intended to compensate the claimant for future medical expenses. “Compromise settlements” are intended to compensate the claimant for current or past medical expenses. Medicare clearly has an interest in settlements which involve future medical expenses
and
the claimant is currently eligible for Medicare benefits. A settlement is considered a commutation regardless of whether the parties admit or deny liability. A “set-aside” arrangement or allocation is applicable only to a commutation. In most cases in which a worker’s compensation claimant is not eligible for Medicare, even a commutation settlement need not be reviewed by CMS. If, however, the claimant is not eligible for Medicare but will
become
eligible for Medicare within thirty months of the settlement
and
the total settlement including attorneys fees and indemnity ex
THE MOTION TO DISMISS
Standing
The defendant alleges that Ms. Frazer has failed to state a claim upon which relief can be granted in part because she lacked standing to bring this action in her own right and on behalf of the putative class. The question of standing “involves both constitutional limitations on federal-court jurisdiction and prudential limitations on its exercise.”
Warth v. Seldin,
With respect to the requirement that the plaintiff suffer a cognizable injury at least three pre-requisites must be satisfied in order that a plaintiff has standing to bring an action. First, the plaintiff must have suffered an injury in fact that is an invasion of a judicially cognizably interest
Ms. Frazer asserts three basic arguments in her opposition to the motion to dismiss. First, she contends that her complaint is in some fashion predicated upon the private cause of action created by the 1984 amendments to the MSP. Second, she contends that because she maybe subject to a “disregard” of her worker’s compensation settlement she has the possibility of incurring an injury in the future. Third, she contends that she may proceed as a “private attorney general” and is not required to establish that she has or will incur a personal injury from the alleged conduct of the defendant.
The private cause of action
To encourage timely payment of covered medical expenses, Congress authorized a private cause of action and double damages against primary payers when covered expenses are paid for by Medicare. See 42 U.S.C. § 1395(b)(3)(A). The statute provides the government with both an independent right of action and a subrogation right to a private citizen’s recover of such funds. See 42 U.S.C. § 1395y(b) (2)(B) (ii)-(iii).
The legislation’s incentive to bring a private law suit is clearly based in turn upon the subrogation right of the government to obtain a portion of the recovery. This recovery of costs by Medicare is the primary purpose of the MSP.
14
The statute provides that a private litigant who recovers a reimbursement for claims paid by Medicare and which have been denied by an insured defendant is required to turn over the amounts of such claim to the government. See 42 U.S.C. § 1395y(b)(2)(ii)(providing action by the United States to recovery from “any other entity” that has received payment from the
As a preliminary matter it must be recognized that since the inception of the MSP there is not a single reported case in which the theory expressed by Ms. Frazer has been pled or adjudicated. Neither has the 2001 Patel memorandum established such a cause of action in any court. There is no authority from any court which has held that 42 U.S.C. § 1395y(b)(3)(A) authorizes a worker’s compensation claimant who has never been required to pay for medical care arising from an industrial accident, who has never had a claim denied by the carrier, who is not alleged to be a recipient of Medicare benefits or eligible for such benefits within thirty months to assert a cause of action for “double damages” allegedly arising from a failure to “... provide for payment ...” of a medical expense which might be incurred at some unspecified future date. Indeed, all reported cases addressing the question have presumed that such a cause of action and the relief afforded by the statute arises only when a discrete claim has accrued and will be paid or has been paid by Medicare. The consensus of reported eases is that “a private cause of action and double damages against entities designated as primary payers that fail to pay for medical costs for which they are responsible,
which are borne in fact by Medicare”. Manning v. Utilities Mutual Insurance Company, Inc.,
In the motion to dismiss and in Ms. Frazer’s reply the parties cite to the Second Circuit’s decision of the MSP in
Manning v. Utilities Mutual Insurance Company, Inc., supra.
In
Manning
the court addressed an issue unrelated to the viability of the private cause of action; however, the court considered the contours of 42 U.S.C. § 1395y(b)(3)(A). The
Manning
plaintiff had been injured in 1962 and when his tort recovery award was depleted in 1968 the worker’s compensation carrier of his employer refused to pay for services that unequivocally related directly to the 1962 injury. In 1997 the parties settled a state lawsuit with the plaintiff preserving his right to pursue any recovery under the MSP after Medicare had paid for medical expenses related to Manning’s 1962 injury. Significantly Manning, a quadriplegic following his accident, received social security disability benefits from 1962 forward. As noted earlier the Second Circuit observed that the cause of action under the MSP exists to recoup medical expenses paid by Medicare and the private party is rewarded for initiating the action by collecting an amount roughly equal to the improper payment that was received. That is, Medicare obtains its reimbursement and the private citizen initiating the lawsuit can individually recover a like amount. Following the Second Circuit’s remand, the district court in
Manning
found unrebutted evidence that the medical care expenses assumed by Medicare from 1962 were directly attributable to the industrial injury which led to both the worker’s compensation liability and the Medicare disability status of the plaintiff. See
Manning v. Utilities Mutual Insurance Company, Inc.,
The defendant relies to some extent on an analysis of Article III standing by the Third Circuit in
Wheeler v. Travelers Insurance Company,
Ms. Frazer notes that in
Brooks v. Blue Cross and Blue Shield of Florida,
In
Harris v. Humana Health Insurance Company of America,
The disregarded settlement
Ms. Frazer argues that because Medicare can “disregard” a worker’s compensation settlement under certain circumstances she is at risk of some future harm. As discussed earlier, however, the disregard merely operates to permit CMS to pursue payment for medical expenses incurred by Medicare from the insurer or the employer and then only when it is due when it is clear that the parties to the agreement have intentionally shifted responsibility for known future medical expenses to Medicare. A disregarded settlement does not result in a denial of medical treatment to the insured worker receiving Medicare benefits. The regulation and statutes authorize Medicare to make such payments and to make such payments and to seek reimbursement from the employer on the carrier. 17
Assuming that Ms. Frazer contends that she may be required herself to pay for a medical procedure from the proceeds of her settlement it is apparent that such an eventuality is not a disregard but rather is consistent with the regulatory requirements that funds which constitute an allocation for future medical expenses be exhausted before Medicare assumes responsibility for payment. Ms. Frazer simply does not allege that she is at risk for the denial of medical care nor that Medi
Private attorney general/qui tam
In support of her contention that she may bring this action as a private attorney general or a proceeding analogous to a
qui tam
action, Ms. Frazer blurs the analytical distinctions between two separate legal concepts. First, it bears repeating that Ms. Frazer has alleged no facts under which she may pursue this litigation under the MSP statutory private cause of action. “If a litigant is an appropriate party to invoke the power of the courts, it is said that he has a ‘cause of action’ under the statute.... [The] concept ... is employed specifically to determine who may judicially enforce the statutory rights or obligations.”
See Davis v. Passman,
Ms. Frazer premises her view of “private attorneys general” in part on
dicta
in two district court cases. First, in
Manning, supra,
as noted above the district court observed unremarkably, that an individual could sue to “right an economic wrong done to the government.... [T]he ... MSP allows for multiple damages to enable the government to
recover
its funds while providing a financial incentive for private citizens to bring such lawsuits .... [The] statute [ ] also creates ‘private attorneys general, by authorizing private citizens to recovery part of the recovery.’ ” (Emphasis added).
Manning,
In
Bennett
the Endangered Species Act authorizes “any person” aggrieved by a governmental agency to bring a lawsuit to challenge the decision of a government agency. In
Bennett
the Supreme Court merely observed that the expansive nature of the congressionally provided right to sue negated the zone of interest test or in the words of the Supreme Court “more accurately, expanded the zone of interest.”
Bennett,
A
qui tam
plaintiff or a private attorney general must satisfy Article III standing requirements in order to bring a suit in federal court. Ms. Frazer has not alleged that she has been injured nor even that she faces the prospect of injury. “The jurisdiction of the federal court is defined by Article III of the Constitution” and is limited to “cases” and “controversies.”
Flast v. Cohen,
CONCLUSION
The statute upon which Ms. Frazer brings her complaint will not sustain the claim because (1) she has no standing under Article III, (2) the MSPA does not create a cause of action which would permit a non-Medicare eligible worker’s compensation claimant to bring such an action and (3) the statute does not impose an obligation enforceable by a private citizen for CMS review of all worker’s compensation settlements and (4) Ms. Frazer does not allege that she or the class she purports to represent will ever fall within the
It is RECOMMENDED that the motion to dismiss is due to be GRANTED.
The parties are DIRECTED to Rule 72(b), Federal Rules of Civil Procedure.
Notes
. Whether this new aspect of the "Amended and Recast Complaint” is properly before the court is a matter for Judge Greene to determine. At a minimum in the event that Judge Greene determines that the amendment was timely or otherwise appropriate the clerk should be directed to assign the August 6, 2004, date of the Amended Complaint as the filing date and assign a 2004 civil action number.
. Ms. Frazer does not identify the contract nor the parties to the contract allegedly breached.
. The Medicare program encompasses four basic groups: (1) Persons who have reached age 65 and are entitled to receive either Social Security, widows or Railroad Retirement benefits; (2) Disabled persons of any age who have received Social Security, widows or Railroad disability benefits for 25 months; (3) Persons with end-stage renal disease ("ESRD”) who require dialysis treatment or a kidney transplant; and (4) Persons over age 65 who are not eligible for either Social Security or Railroad Retirement Benefits who purchase Medicare coverage by payment of a monthly payment. The "working aged" are those Medicare beneficiaries who are also active employees working for an employer of 20 or more employees, 42 C.F.R. § § 405.340-341. See
Cooper v. Blue Cross and Blue Shield,
. As correctly noted by the plaintiff the MSP is not an Act in the traditional sense but, rather, a series of amendments related to the Medicare Act and similar statutes.
. If MSP reimbursement is not made, the MSP authorizes the government to bring an action against "any entity which is required or responsible ... to make payment ... under a primary plan” and against "any other entity (including a physician or provider) that has received payment from that entity.” 42 U.S.C. § 1395y(b)(2)(B)(ii). The MSP also gives the government a separate right of sub-rogation. 42 U.S.C. § 1395y(b)(2)(iii).
. CMS was formerly known as the Health Care Financing Administration (HCFA).
. The worker’s compensation aspect of the MSP differs in another fundamental way. When a primary health insurance plan covers all of a participant’s medical expenses Medicare is secondary in all cases. In the worker's compensation case the obligation is to pay only reasonable expenses for specific services the need for which generally arises from a single event or illness.
. Clearly a worker's compensation statute does not require the payment of all future medical expenses but only those directly related to the injury or illness arising in the course of employment.
. In her brief Ms. Frazer argues that "... the closing of future medical expenses serves to reduce the worker’s compensation insurer’s responsibility as 'primary payer’ and shift that responsibility to Medicare ....” Clearly the regulations do not foreclose that result. .
. § 411.46(b)(2) is also within the class description. The regulation includes not only future medical expenses but a compromise with respect to expenses already incurred.
. Memorandum from Parsbar B. Patel, Deputy Director, Purchasing Policy Group, Center for Medicare Management.
. Whether the letter is properly before the court in its present form may be questionable. The letter is considered, however, in the context of the Article III standing question addressed below.
. There is a different rule for claimants who are already receiving Medicare benefits. In such a case, a “set-aside" is applicable to smaller lump-sum settlements.
. “Neither the statute nor the Conference report specifically explains Congress's intent in adding the private right of action to the MSP. However, when Senator David Duren-berger, Republican of Minnesota, introduced President Reagan's Medicare proposals for 1986, which included adding a private right of action to enforce the MSP, it was introduced as the President's 'health care cost reduction proposals.'
See
Statements of Introduced Bills & Joint Resolutions, 132 Cong. Rec. S. 11930-01 (Statement of Sen. Duren-berger) (August 15, 1986) (page references unavailable). This statement supports the intent we glean from the language of the statute-to save the government money by giving private citizens incentives to recover funds erroneously paid by Medicare.”
Manning,
. The district court’s speculation with respect to a private action by a health care provider against an individual claimant ignores the obligation of Medicare to make a conditional payment subject to reimbursement from the employer or the insurance carrier. As set out above, the regulations do not provide for an action by CMS against the individual beneficiary. The regulations do provide for payment to be made by Medicare subject to its right to seek reimbursement. CMS regulations require health care providers to determine the insurance carrier and Medicare eligibility, then submit the claim to the appropriate payer. If a vendor brings an action against an individual who is eligible for Medicare and the claims can be paid by Medicare the claimant can then initiate a lawsuit.
. Under Ms. Frazer's formulation a settlement could "fail” to "provide for” payment by failing so reserve a specific fund with which to pay a claim or establish a review process but the carrier actually pays for a covered service. According to Ms. Frazer the carrier will nonetheless be in violation of the statute because a "failure” to establish a set aside or a failure to pay constitutes separate violations of the statute. The first "failure to provide for” under Ms. Frazer’s formulation would occur when the settlement itself was reached and all possible elements of the cause of action would be satisfied at that time even though a claim was in fact later paid by the insurer. This example, of course, further demonstrates the unworkability of the notion that a cause of action for “double damages” can proceed to trial without once ever identifying the medical expenditure or amount to be doubled.
. Moreover, when a service has been provided and Medicare has assumed responsibility for the payment the worker can the pursue a private cause of action to recover double that cost. The cause of action arises with the denial and the subsequent payment by Medicare.
. Arguably, the legislative decision to create a private cause of action and define the circumstances under which such an action may be brought may well serve as evidence that Congress did not intend to permit an action not based expressly on that statute.
. While Ms. Frazer does not herself make the claim that she proceeds under the
qui tam
statutes, there is a reference to a
qui tam
in the quotation cited from Judge Weinstein’s opinion in
Mason v. American Tobacco Company
which refers to an MSP action “similar” to a
qui tam
action. A
qui tam
action is distinct from what is presented in Ms. Frazer's complaint. Generally
qui tam
actions arise under federal statutes, for example the false claims act, which authorizes both the United States Attorney General and private persons with knowledge of fraud against the government to bring a civil action as a "relator” acting on behalf of the United States government, and to share in proceeds for his or her efforts. See, e.g. 31 U.S.C. § 3730(b);
Hughes Aircraft Company v. U.S. ex rel. Schumer,
. Moreover, the defendant is correct in its assertion that the MSPA does not appear to impose the legal duty Ms. Frazer contends is the basis for her complaint. As the Patel memorandum and the enabling regulations made clear there is simply no requirement that all worker’s compensation settlement agreement outside the confines of the Patel memorandum must be submitted to CMS. Moreover, the defendant is also correct that plaintiff has offered no evidence that the Patel memorandum, the regulations or the act itself create such an obligation. This does not mean, of course, that CMS is powerless to enforces its policy preferences on a recalcitrant worker’s compensation insurer. It may do so in any number of ways. The Patel memorandum, however, does not appear to create a discrete legal obligation enforceable by a third party.