Medicare Secondary Payer Statute Excludes Right of Action Against Tortfeasors

The U.S. Fifth Circuit Court of Appeals rules that the government is not entitled to reimbursement under the Medicare Secondary Payer statute from an alleged tortfeasor who settled with a Medicare recipient. Thompson v. Goetzmann, et al. (5th Cir., No. 02-10198, Dec. 17, 2002).

In June 1993, Bernice Loftin's hip joint was replaced with a prosthesis manufactured by Zimmer, Inc. Because of complications, Ms. Loftin required a second surgery, and she continued to experience related medical problems. Medicare paid $143,882 for Ms. Loftin's two surgeries and subsequent medical treatment. Representing Ms. Loftin, attorney Stephen Goetzmann sued Zimmer, alleging defective design of the hip prosthesis. Ms. Lofitn's claims included the medical expenses paid for by Medicare. Without admitting liability, Zimmer settled for the unitemized lump sum of $256,000. The entire settlement was paid by Zimmer; no part was paid from insurance.

In October 2000, the government filed suit against attorney Goetzmann, Ms. Loftin, and Zimmer under the Medicare Secondary Payer (MSP) statute, which authorizes recovery from entities providing primary insurance coverage for medical services previously paid by Medicare. Among other things, the MSP statute authorizes the government to obtain reimbursement from a firm or entity that has a "self-insurance plan."

Zimmer moved for dismissal, asserting that its tort settlement with Ms. Loftin was not tantamount to maintaining a "self-insurance plan." Zimmer also argued that its inability to pay for Ms. Loftin's medical services "promptly," as required by the MSP statute, precluded it from meeting the definition of a "self-insured plan." The district court dismissed the government's complaint, holding that Zimmer could not have paid for Ms. Loftin's medical services "promptly," as required by the MSP statute. The district court then granted summary judgment to attorney Goetzmann and Ms. Loftin.

The U.S. Court of Appeals for the Fifth Circuit affirms, noting that the the government "retreads the same unsuccessful arguments" it has advanced in prior district court cases. The court holds that the government is advocating "an unreasonably broad interpretation of the MSP statute. The MSP statute explicitly speaks in terms of insurance plans that provide primary medical coverage. Nowhere does the MSP statute mention or even suggest that an alleged tortfeasor who settles a single claim with a single plaintiff falls within the ambit of the statute's category of a self-insurance 'plan.'" The court adds that the failure of Congress to include in the MSP statute the right of action for reimbursement of medical expenditures against tortfeasors indicates that the statute intends to allow recovery only from an insurer.

To download the full text of this decision in PDF format, go to: https://www.ca5.uscourts.gov/opinions/pub/02/02-10198-cv0.pdf

The court subsequently denied a request for rehearing but amended its opinion regarding the requirement of prompt payment. For the amended sections, go to:   https://www.ca5.uscourts.gov/opinions/pub/02/02-10198.CV1.wpd.pdf

Did you know that the ElderLawAnswers database now contains summaries of more than 2,000 fully searchable elder law decisions dating back to 1993? To search the database, click here.