US v. Stricker: Past Through Present, Where Are We Now?

To view this practice tip in a pdf, please click here.

On January 15, 2010, the Garretson Firm Resolution Group, Inc. (“GFRG”) drafted a practice tip entitled, “Dealing with U.S. v. Stricker¹ (Medicare Compliance in Mass Tort Settlement Programs)”.²   This update supplements the original Stricker practice tip and provides the current status of this significant case related to Medicare compliance in mass torts.

Since the Complaint in Stricker was filed on December 9, 2009, the lines have been clearly drawn between the Federal Government (“U.S.”), in its pursuit of conditional payment reimbursement and double damages plus interest under the Medicare Secondary Payer Act (42 U.S.C. §1395y(b)(2)) (“MSP Act”), and Defendants³.  The Parties⁴ have filed numerous Pleadings, in hopes of persuading the Court to rule in favor of their interpretation(s) of the MSP Act.  A chart depicting the relevant procedural history has been attached as Exhibit 1.  Below, we provide a summary of the arguments made on behalf of the U.S. as well as Defendants: 

 All United States Arguments

• Defendants failed to comply with 42 U.S.C. §1395y(b)
• Fed. R. Civ. P 8(a) is met – U.S. has pled facts sufficient to state a claim under MSP Act – Complaint sets forth facts that allow the Court to draw the plausible inference that the Defendants are liable under the MSP Act.
• MSP Act claims subject to six (6) year statute of limitations (U.S. states that the period is tolled until the U.S. has possession of material facts giving rise to its claim. 28 U.S.C. §2415(a) and §2416(c)) – U.S. also claims that the case falls under contract implied by law.  U.S. asserts that the key triggering event was when the Settlement Agreement was executed (U.S. focus on disbursement of funds)).
• U.S. states that it is irrelevant whether Defendants received money directly from primary plan or, as here, indirectly from a primary plan’s payments.
• U.S. states it named proper insurer defendants.

All Defendants' Arguments

• U.S. failed to state a claim upon which relief can be granted via Fed. R. Civ. P. 12(b)(6)
• U.S. failed to identify Medicare beneficiaries and the amount paid – U.S. failed to comply with Fed. R. Civ. P. 8; U.S. lacks factual assertion that would show U.S. is entitled to relief – U.S. only alleges that Defendants settled a lawsuit with individuals who happen to be Medicare recipients, and that the Defendants are then per se responsible for the U.S.’ expenses.
• Defendants cite the Federal Claims Collection Act and argue that a three (3) year statute of limitations applies because the action is founded upon a tort (underlying action/settlement is a tort); alternatively, a six (6) year statute of limitations applies; Defendants argue no tolling of statute of limitations permitted and that the U.S. did not include such in the allegations of the Complaint.  Either way, Defendants say U.S. is time barred; Defendants assert that the key triggering event is when the payment obligation arose (focus is when Defendants were obligated to make payments into the Settlement Fund – not when beneficiary actually receives payment).
• Defendant Attorneys/Law Firms state they did not receive payment from a primary plan (only fees and costs from settlement) and they no longer hold the funds in escrow.
• Holding Company Defendants say they are not the proper party because they are not insurance and paid no money to anyone.
• Holding Company Defendants state the Complaint is devoid of factual allegations concerning whether they knew Medicare had conditional payments for same medicals, etc. in the Settlement.

In sum, the primary issue that the Court must resolve is the applicability of the proper Statute of Limitations.  The Court must determine whether: 1) the United States’ claim for reimbursement of conditional Medicare payments sounds in contract, whether express, or implied in law or fact, which subjects the United States to the six (6) year limitations period in 28 U.S.C. §2415(a); 2) in tort, thereby subjecting the United States to the three (3) year limitations period in 28 U.S.C. §2415(b); or 3) neither, therefore resulting in no applicable statute of limitations.  Additionally, the Court must decide when the United States’ MSP claim began to accrue.

We will continue to follow the developments of this litigation and advise the settlement community as information becomes available.

For further details regarding how the Garretson Firm Resolution Group can assist with the resolution of healthcare reimbursement claims in liens in single event and mass tort settlements please contact Elizabeth Vish.⁵  We would be honored to assist any parties determine their Medicare compliance obligations.

¹ U.S. v Stricker (E.D. N.D. Ala. 2009) (No. CV-09-PT-2423)
² http://www.garretsonfirm.com/garretson/news/index.cfm?newsID=100
³ Defendants refers to all defendants in the underlying action: Insurer Defendants, Attorney Defendants, Law Firm  Defendants, Corporate Defendants, Holding Company Defendants.
⁴ Parties refers to both the Federal Government as Plaintiff and Defendants.
⁵ Email: evish@garretsonfirm.com; Phone: 704.559.4300 or 866.694.4446 (toll-free) (Charlotte); http://www.garretsonfirm.com/garretson/contactus/