The plaintiffs are personal representatives of the estates of Massachusetts residents who received free medical care during their lives under the Commonwealth’s Medicaid program, G. L. c. 118E, §§ 15 et seq. In this action, the plaintiffs seek to enjoin the Commonwealth from recovering the cost of that care from their decedents’ estates or, where the money has already been recovered, to require the Commonwealth to return the funds. The plaintiffs base their claim on the premise that their decedents received such care for tobacco-related illnesses, and the Commonwealth already has recovered the cost of that care from settlement of its litigation against various manufacturers of tobacco products. The plaintiffs argue that recovery from the decedents’ estates would amount to double recovery and unjust enrichment, as well as violation of various State and Federal statutory and constitutional provisions. The Commonwealth filed a motion to dismiss the complaint under Mass. R. Civ. P. 12 (b) (1) and (6), 365 Mass.
1. Background. We summarize the facts set forth in the complaint.
Medicaid, Title XIX of the Social Security Act, 42 U.S.C. §§ 1396 et seq. (2000), is a Federal program in which participating States are reimbursed payment of medical services made on behalf of eligible low-income individuals. Massachusetts is a participating State. See G. L. c. 118E, § 15. As a condition of Federal reimbursement, participating States are required to institute and operate an estate recovery program designed to recover from the estates of certain Medicaid recipients the costs of certain nursing facility and other long-term care services paid on their behalf. See 42 U.S.C. §§ 1396a(a)(18), 1396p(a), (b); G. L. c. 118E, §§ 31 et seq.
Participating States also are required to “take all reasonable measures to ascertain the legal liability of third parties ... to pay for care and services available under the [State’s Medicaid] plan.” 42 U.S.C. § 1396a(a)(25)(A). Participating States must seek reimbursement from liable third parties where the State can reasonably expect to recover an amount greater than the cost of pursuing such recovery. See 42 U.S.C. § 1396a(a)(25)(B); G. L.
Consistent with the Commonwealth’s obligation to pursue reimbursement from hable third persons, the Attorney General brought a direct action
The Commonwealth’s claims against the manufacturers of tobacco products were based on common-law theories of fraud, misrepresentation, breach of warranty, public nuisance, con
In 1998, the Commonwealth’s lawsuit against the manufacturers of tobacco products was settled as part of a nationwide settlement of similar claims by all fifty States, the District of Columbia, and five territories. Four States entered into individual settlement agreements with the manufacturers of tobacco products. The others, including Massachusetts, entered into a master settlement agreement. Under the terms of the master settlement agreement the manufacturers of tobacco products, without admitting liability or wrongdoing, agreed to pay the States approximately $240 billion over twenty-five years, plus $8.3 billion annually thereafter, in perpetuity. The Commonwealth had received $300 million as of the filing of the plaintiffs’ complaint. It expects to receive approximately $8
The Commonwealth has sought, and in certain cases already has received, reimbursement from the estates of the plaintiffs’ decedents for medical and hospital care made in connection with the decedents’ alleged tobacco-related illnesses, under the Commonwealth’s estate recovery program, G. L. c. 118E, § 31. The plaintiffs allege that because the Commonwealth already has recovered, and will recover, monies from the tobacco product manufacturers for Medicaid payments made on behalf of their decedents and persons similarly situated,
2. Sovereign immunity. The Commonwealth contends that all the plaintiffs’ claims are barred by principles of sovereign immunity. The plaintiffs claim that sovereign immunity is not a defense because the Commonwealth recovered the monies in the tobacco litigation while acting in its capacity as subrogee of the plaintiffs’ decedents or, alternatively, that sovereign immunity does not apply to actions in contract or to claims raised in a contractual setting.
Sovereign immunity bars a private action against a State in its own courts absent consent by the Legislature or abrogation of sovereignty by Congress acting under its Fourteenth Amendment powers. See Alden v. Maine,
The Legislature has not authorized a suit against the Commonwealth to recoup money that allegedly has been wrongfully recovered under the estate recovery program, G. L. c. 118E, § 31. The plaintiffs’ only remedy under the estate recovery program is found in G. L. c. 118E, § 32, which provides a procedure by which an executor or administrator may disallow a claim by the Commonwealth, or assert the existence of “circumstances and conditions where the division [either] is required to defer recovery under [§ ] 31 . . . or . . . will waive recovery for undue hardship under its regulations.” G. L. c. 118E, § 32 (d). If the Commonwealth (division) receives notice of disallowance, it must commence action to enforce its claim within sixty days of receipt of such notice. See G. L. c. 118E, § 32 (f). That the statute provides an express form of relief from sovereign immunity is an indication that the Legislature did not intend to waive immunity as to other forms of relief. See Broadhurst v. Director of the Div. of Employment Sec.,
The plaintiffs suggest that waiver of sovereign immunity is implicit in the Commonwealth’s pursuit of the manufacturers of tobacco products under its statutory authority to sue hable third parties as subrogee of Medicaid beneficiaries. 42 U.S.C. § 1396a(a)(25)(A). G. L. c. 118E, § 22. This argument fails because the Commonwealth did not proceed against the manufacturers of tobacco products as subrogee of Medicaid beneficiaries. It proceeded against them under its own “separate and independent cause of action” created by G. L. c. 118E, § 22, and St. 1994, c. 60, § 276. The Commonwealth’s amended complaint against the manufacturers of tobacco products expressly alleges this authority. By pursuing its direct cause of action, the Commonwealth hoped to avoid both the
The terms of the master settlement agreement support the maintenance of the tobacco litigation by the States as a direct action rather than a subrogation action. Contrary to the plaintiffs’ contention, the master settlement agreement preserves the right of smokers to bring their own actions against the manufacturers of tobacco products. The master settlement agreement does not release any claims that Medicaid recipients or their estates may have against the tobacco companies. Nor does it release the Commonwealth’s claims under the estate recovery program, but it expressly preserves the Commonwealth’s rights to pursue parties whose claims have not been released. Such parties include Medicaid recipients. Moreover, the relief sought in the Commonwealth’s tobacco litigation extended well beyond the scope of a subrogation action, and the amounts payable under the master settlement agreement are not earmarked for any particular purpose or tied to any particular claim. See Barton v. Summers,
Congress has not abrogated the Commonwealth’s sovereign immunity for purposes of this action. Neither Federal statute relied on by the plaintiffs — the Medicaid Act or the civil rights statute, 42 U.S.C. § 1983 — abrogates the States’ sovereign immunity. See Florida Dep’t of Health & Rehabilitative Servs. v. Florida Nursing Home Ass’n,
The plaintiffs make the alternative argument that sovereign immunity is not applicable because their claim is based in contract. See Mintor Constr. Corp. v. Commonwealth,
The plaintiffs rely on J.A. Sullivan Corp. v. Commonwealth,
Finally, the plaintiffs contend that, to the extent their request for declaratory and injunctive relief is prospective, sovereign immunity does not apply because of the rule articulated by the Supreme Court in Ex parte Young,
We further note that the relief the plaintiffs seek — declaratory and injunctive relief to prevent the Commonwealth from proceeding under its estate recovery program against the estates of persons who have died or will die of tobacco-related illnesses — would actually produce a violation of Federal law. The Medicaid Act requires participating States to maintain and operate an estate recovery program. Failure to do so places at risk continued receipt of Federal funding for Medicaid. See 42 U.S.C. §§ 1396a(a)(18), 1396c. There is no exception for the estates of persons who received Medicaid benefits for tobacco-related illnesses. Moreover, the scope of the injunctive relief sought is too broad, as it would deprive the Commonwealth of the right to recover the amount of Medicaid benefits paid to or on behalf of the plaintiffs’ decedents for treatment of illnesses that were not tobacco-related.
There is one aspect of the plaintiffs’ case that is not barred by sovereign immunity. The plaintiffs claim a setoff of a portion of tobacco litigation settlement funds against the benefits received for tobacco-related illnesses, a setoff that would reduce the liability of their estates. The Commonwealth argues that that claim is barred by sovereign immunity under the theory that a setoff constitutes an “accrued monetary liability” that is “in es
We conclude that sovereign immunity bars the plaintiffs’ actian, except to the extent they seek a declaratory judgment that they are entitled to raise the defense of setoff in a claim brought against them by the Commonwealth, pursuant to G. L. c. 118E, § 32.
3. Failure to state a claim. Because a portion of the plaintiffs’ complaint is not barred by sovereign immunity, we turn to the Commonwealth’s additional ground for dismissal, namely, failure to state a claim on which relief may be granted, Mass. R. Civ. P. 12 (b) (6). We may affirm the judgment on “any ground apparent on the record that supports the result reached in the [trial] court.” Gabbidon v. King,
The Commonwealth contends that a 1999 amendment to the Medicaid Act forecloses any claim by the plaintiffs to any portian of, or interest in, the payment to the Commonwealth under the master settlement agreement with the manufacturers of tobacco products. At the time the master settlement agreement in the tobacco litigation cases was executed in 1998, Federal law required that, when a State pursued a subrogation claim and recovered from a third party, the proceeds were to be distributed in the following manner: first, to the State, an amount equal to its share of Medicaid expenditures for the individual on whose right the collection was based; then, to the Federal government, its share of the Medicaid expenditures paid on behalf of such individual; and last, any amount remaining was to be paid to
In 1999, in response to the 1998 master settlement agreement, Congress passed amendments to the Medicaid Act that specified how the tobacco settlement funds were to be distributed. First, Congress eliminated any obligation on the States to reimburse the Federal government from such funds. See 42 U.S.C. § 1396b(d)(3)(B)(i). Second, and pertinent to the plaintiffs’ claims, Congress provided that “a State may use amounts recovered or paid to the State as part of a comprehensive or individual settlement, or a judgment, described in clause (i) [the master settlement agreement with the manufacturers of tobacco products] for any expenditures determined appropriate by the State.” 42 U.S.C. § 1396b(d)(3)(B)(ii). Six Federal Circuit Courts of Appeals have held that the plain language of § 1396b(d)(3)(B)(ii) exempts from the distribution requirements of 42 U.S.C. § 1396k(b) amounts due under the master settlement agreement, thereby foreclosing any claim to such funds by Medicaid recipients where those recipients have sued on a theory of subrogation. See Cardenas v. Anzai,
Unlike cases in which the plaintiffs sought a portion of the tobacco settlement funds representing amounts recovered in excess of Medicaid benefits paid, the plaintiffs here seek a setoff against the Commonwealth’s claim for reimbursement under its estate recovery program. In Anderson v. Willden,
Although we have concluded that the Commonwealth proceeded against the manufacturers of tobacco products with a direct action, the distribution provisions of 42 U.S.C. § 1396k(b) would arguably still apply, especially where the Commonwealth sought restitution for health care expenses incurred under the Medicaid program in one of its prayers for relief. However, we are persuaded that the plain language of 42 U.S.C. § 1396b(d)(3)(B)(ii) precludes any claim against the Commonwealth for any amount received by the Commonwealth under the master settlement agreement, including a claim of setoff in a proceeding under the estate recovery program, G. L. c. 118E, §§ 31, 32. Congress amended the Medicaid Act specifically to exempt amounts received under the master settlement agreement from distribution under 42 U.S.C. § 1396k(b), leaving all such amounts to be spent in the sole discretion of the States. We conclude that the plaintiffs have failed to state a claim for relief and are not entitled to any interest, including
4. Miscellaneous issues. The plaintiffs’ failure to state a claim under the Medicaid Act defeats their claims under the Federal and State civil rights acts, 42 U.S.C. § 1983, and G. L. c. 12, § 111, respectively, based on the Medicaid Act. See Maine v. Thiboutot,
Because of the conclusion we reach, we need not address the Commonwealth’s claim of waiver under G. L. c. 118E, § 32.
Judgment affirmed.
Notes
“In reviewing a dismissal under [Mass. R. Civ. R 12 (b) (1) or (6),
The Commonwealth also had authority to proceed as subrogee of Medicaid beneficiaries with respect to the cost of medical assistance provided under Medicaid. See notes 6 and 7, infra. It did not sue as subrogee.
General Laws c. 93A, § 4, states in relevant part: “Whenever the attorney general has reason to believe that any person is using or is about to use any method, act, or practice declared by [§ 2] to be unlawful, and that proceedings would be in the public interest, he may bring an action in the name of the commonwealth against such person to restrain ... the use of such method, act or practice.”
General Laws c. 118E, § 22, states in relevant part: “The commonwealth shall be subrogated to a [Medicaid recipient’s] entire cause of action or right to proceed against any third party and to a [Medicaid recipient’s] claim for monies to the extent of assistance provided under. . . [c. 118E]. The commonwealth shall also have a separate and independent cause of action to recover, from any third party, assistance provided to a [Medicaid recipient] under said chapter[], which cause of action shall be in addition to other causes of action” (emphasis added).
Statute 1994, c. 60, § 276, states, in relevant part: “The Attorney General is hereby authorized to bring an action on behalf of the division of medical assistance against any liable third party who is a manufacturer of cigarettes to recover the full amount of medical assistance provided by the Commonwealth under [G. L. c. 118E], and ... is automatically subrogated to any rights that an applicant, recipient, or legal representative has to any third party benefit for the full amount of medical assistance provided under [G. L. c. 118E]. The division of medical assistance has a cause of action against a liable third party manufacturer of cigarettes to recover the full amount of medical assistance provided by the Commonwealth under [G. L. c. 118E], and such cause of action is independent of any rights or causes of action of the recipient” (emphasis added).
The plaintiffs brought their action as a class action, but no class has been certified.
A different equal protection claim alleged in the amended complaint is not argued on appeal. It is deemed waived. See Mass. R. A. P. 16 (a) (4), as amended,
The primary basis for the court’s decision was sovereign immunity; 42 U.S.C. § 1396b(d)(3)(B)(ii) was a secondary basis for denying relief. Barton v. Summers,