IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
__________________________
No. 02-10198
__________________________
TOMMY THOMPSON, SECRETARY,
DEPARTMENT OF HEALTH & HUMAN SERVICES,
Plaintiff-Appellant,
v.
STEPHEN GOETZMANN; ET AL.,
Defendants,
STEPHEN GOETZMANN; BERNICE LOFTIN;
ZIMMER, INC.,
Defendants-Appellees.
___________________________________________________
Appeal from the United States District Court
for the Northen District of Texas, Dallas
___________________________________________________
December 17, 2002
Before JOLLY, DUHÉ, and WIENER, Circuit Judges.
WIENER, Circuit Judge:
Plaintiff-Appellant Tommy Thompson, Secretary of the United
States Department of Health & Human Services (“government”) appeals
from the district court’s dismissal of complaints against (1)
Defendant-Appellee Zimmer, Inc. (“Zimmer”), pursuant to FED. R. CIV.
P. 12(b)(6), and (2) Defendant-Appellee Bernice Loftin and her
attorney, Defendant-Appellee Stephen Goetzmann, by summary judgment
in their favor. The government had filed suit against all three
Defendants-Appellees, seeking reimbursement for Medicare
expenditures related to Loftin’s medical treatment. This was the
same treatment that was the genesis of Loftin’s retaining Goetzmann
to sue Zimmer, the manufacturer of her artificial hip prosthesis,
which suit was settled prior to trial. Concluding that the
government’s complaint is without any basis in law and that there
is no legal right of recovery against these three parties, we
affirm the district court’s dismissal of the government’s action.
I. FACTS & PROCEEDINGS
In June 1993, Loftin underwent surgery to replace her hip
joint with a prosthesis manufactured by Zimmer. That procedure was
paid for by the government through the Medicare program.
Complications arose, requiring Loftin to undergo a second surgery.
Thereafter, Loftin continued to experience medical problems related
to her hip prosthesis. Medicare paid approximately $143,881.82 for
Loftin’s two surgeries and subsequent medical treatment.
Representing Loftin, Goetzmann filed suit against Zimmer for
products liability, alleging defective design of the hip
prosthesis. Lofitn’s claims included the medical expenses paid for
by Medicare. Loftin and Zimmer settled in lieu of going to trial.
Without admitting liability, Zimmer paid Loftin the unitemized lump
sum of $256,000. Zimmer disbursed the full amount of the
settlement to Goetzmann, who, after deducting his 40% contingency
fee, distributed the balance to Loftin. The entire settlement was
paid by Zimmer; no part was paid from insurance.
In October 2000, the government filed suit against Goetzmann,
Loftin, and Zimmer under the Medicare Secondary Provider (“MSP”)
2
statute,1 which authorizes the government to seek reimbursement
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.”2
The government alleged that Zimmer was “self-insured for its
liability to Loftin,” which, as a putative tortfeasor settling
Loftin’s products-liability action against it, had paid Loftin a
substantial sum of money. This payment, insisted the government,
was ostensibly for Loftin’s medical expenses, which were originally
paid for by the Medicare program. Claiming entitlement to relief
under the MSP statute and its implementing regulations, the
government sought reimbursement from Goetzmann and Loftin, and
double damages from Zimmer.
Zimmer moved to dismiss the government’s complaint against it
under Rule 12(b)(6) for failure to state a claim on which relief
could be granted. Zimmer asserted that its tort settlement with
Loftin was not tantamount to maintaining a “self-insurance plan,”
as defined in the MSP statute. Zimmer argued, in the alternative,
that its inability to pay for 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 declined
1
42 U.S.C. § 1395y(b) (2002).
2
§ 1395y(b)(2)(A)(ii).
3
to determine, on a motion to dismiss, whether Zimmer’s settlement
agreement with Loftin met the statutory definition of a “self-
insured plan.” The district court nonetheless ordered the
government’s complaint dismissed, holding that, as a matter of law,
Zimmer could not have paid for Loftin’s medical services
“promptly,” as required by the MSP statute.
Goetzmann and Loftin subsequently moved for summary judgment,
arguing that they were not required to reimburse Medicare because
they did not receive payment from an insurer or self-insured
entity. Agreeing with Goetzmann and Loftin that the MSP statute
predicates their reimbursement liability on their receipt of
payment from, inter alia, a self-insurance plan that would pay
“promptly” for medical services, the district court granted summary
judgment to both Goetzmann and Loftin. The government timely filed
a notice of appeal from the court’s dismissals of Zimmer,
Goetzmann, and Loftin.
II. ANALYSIS
A. Background.
Although the government has litigated similar cases in several
district courts around the country, we are the first appellate
court to address the issue of an alleged tortfeasor’s reimbursement
liability under the MSP statute. Notably, the government’s prior
efforts have proved uniformly feckless —— every court that has
4
heard its arguments on this issue, including the district court in
the instant case, has rejected the government’s expansive
interpretation of the MSP statute.
In this case, the government retreads the same unsuccessful
arguments that it has advanced in these prior cases. As we
conclude that the statutory analyses performed by the district
courts in the prior cases are sound, that the law has not changed,
and that the government has not adduced any new facts that require
us to reconsider the meaning or scope of the MSP statute, we affirm
the district court’s decision in this case. We shall first discuss
the government’s claims against Zimmer, because the liability of
Goetzmann and Loftin is predicated on determining whether Zimmer
qualifies as having a “self-insured plan” under the MSP statute.
B. Zimmer’s Reimbursement Liability Under the MSP Statute.
1. Standard of Review.
A district court’s order dismissing a complaint under Rule
12(b)(6) is reviewed de novo.3 On appeal, we must liberally
construe the complaint and assume that all facts pleaded therein
are true,4 keeping in mind that such dismissals of complaints are
“viewed with disfavor.”5 We must also remain mindful of the
3
Lowrey v. Tex. A&M Univ. Sys., 117 F.3d 242, 246 (5th Cir.
1997).
4
Id. at 247 (citing Campbell v. Wells Fargo Bank, 781 F.2d
440, 442 (5th Cir. 1986)).
5
Kaiser Aluminum & Chem. Sales v. Avondale Shipyards, 677
F.2d 1045, 1050 (5th Cir. 1982).
5
Supreme Court’s injunction that a Rule 12(b)(6) motion should not
be granted “unless it appears beyond doubt that the plaintiff can
prove no set of facts in support of his claim that would entitle
him to relief.”6
2. Zimmer’s Settlement Agreement with Loftin is Not a “Self-
Insurance Plan” Under the MSP Statute.
The government contends that Zimmer is liable for reimbursing
the government’s Medicare expenditures by virtue of Zimmer’s having
a “self-insurance plan” because Zimmer was “required or
responsible” to make healthcare-related payments to Loftin, a
Medicare recipient. The government’s argument for holding Zimmer
liable under the MSP statute is relatively straightforward: (1) The
legislative history reflects that the purpose of the MSP is to
reduce Medicare expenditures, (2) the statute achieves this purpose
by requiring reimbursement of payments from any “self-insurance
plan,”7 (3) an entity is “self-insured” if it is “required or
responsible” for making payments to a Medicare recipient,8 and (4)
the MSP statute provides a right of recovery to the government in
seeking reimbursement from such “self-insurance plans” that have
paid monies to Medicare recipients.9 In this case, the “self-
insurance plan” is alleged by the government to exist by virtue of
6
Conley v. Gibson, 355 U.S. 41, 45-46 (1957).
7
§ 1395y(b)(2)(A)(ii).
8
§ 1395y(b)(2)(B)(ii).
9
Id.
6
Zimmer’s payment to Medicare recipient Loftin under the terms of
their products-liability settlement agreement. Thus, the
government concludes, Zimmer (as well as Goetzmann and Loftin) must
reimburse the government for its Medicare expenditures because this
is in accord with the legislative intent underlying the MSP
statute.
In assessing whether the MSP statute applies to Zimmer’s
settlement agreement with Loftin, we must start with the actual
words of the MSP statute,10 for it is the words of the statute that
set the metes and bounds of the authority granted by Congress.11
Thus, we need not —— and, indeed, should not —— look to legislative
history when the statute is clear on its face. When “the language
of the federal statute is plain and unambiguous, it begins and ends
our enquiry.”12
The terms and structure of the MSP statute aptly reflect its
general purpose. In enacting this law, Congress laudably sought to
reduce Medicare costs by making the government a secondary provider
of medical insurance coverage when a Medicare recipient has other
10
Robinson v. Shell Oil Co., 519 U.S. 337, 340 (1997)
(recognizing that the “first step in interpreting a statute is to
determine whether the language at issue has a plain and
unambiguous meaning”).
11
Blue Cross & Blue Shield of Tex. v. Shalala, 995 F.2d
70, 73 (5th Cir. 1993) (noting that the words of a statute
reflect the intention of Congress, and “Congress’s intention is
the law and must be followed”).
12
United States v. Osborne, 262 F.3d 486, 490 (5th Cir.
2001).
7
sources of primary insurance coverage.13 The MSP statute states,
in pertinent part, that:
Payment under [the Medicare program] may not be made . . .
with respect to any item or service to the extent that
(i) payment has been made, or can reasonably be
expected to be made, . . . as required [under a
group health plan], or
(ii) payment has been made or can reasonably be expected
to be made promptly (as determined in accordance
with regulations) under a workmen’s compensation
law or plan of the United States or a State or
under an automobile or liability insurance policy
or plan (including a self-insurance plan) or under
no fault insurance.
In this subsection, the term “primary plan” means a group
health plan or large group health plan, to the extent that
clause (i) applies, and a workman’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.14
The MSP statute also authorizes the government to make conditional
healthcare payments when a Medicare recipient already has coverage
provided by a primary insurance plan; and the government has a
right of action in reimbursement to recover these conditional
healthcare payments from such primary plans:
(i) Primary Plans
Any payment under this subchapter . . . shall be conditioned
on reimbursement to the appropriate Trust Fund established by
this subchapter when notice or other information is received
13
Blue Cross & Blue Shield of Tex., 995 F.2d at 70-73. See
also In re Silicone Gel Breast Implants Prods. Liab. Litig., 174
F. Supp. 2d 1242, 1250 (N.D. Ala. 2001) (summarizing the purpose
and structure of the MSP statute).
14
§ 1395y(b)(2)(A) (emphasis added).
8
that payment for such item or service has been or could be
made under such subparagraph. . . .
(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 (directly, as a
third-party administrator, or otherwise) to make payment with
respect so such item or service (or any portion thereof) under
a primary plan . . ., 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. . . .15
Thus, the structure of the MSP statute is relatively simple.
If a Medicare recipient has medical insurance provided through a
“primary plan,” then Medicare is precluded from paying for medical
services except to provide secondary coverage. Stated differently,
Medicare serves as a back-up insurance plan to cover that which is
not paid for by a primary insurance plan.
A “primary plan” is defined as a group health insurance plan,
or as any another type of insurance plan, such as workman’s
compensation, liability insurance, or a self-insurance plan, that
may reasonably be expected to pay for services promptly.
“Promptly” is defined by the Health Care Financing Administration
(“HCFA”) regulations as payment within 120 days after the earlier
of (1) the date the claim is filed, or (2) the date the service was
provided or the patient was discharged from the hospital.16 If the
15
§ 1395y(b)(2)(B) (emphasis added).
16
42 C.F.R. § 411.50(b).
9
Medicare program chooses to make conditional payments when a
Medicare recipient has coverage under a primary plan, then the
government may seek reimbursement for these payments by suing the
insurance entities that provide the primary coverage.
To entice us to consider the lengthy and abstruse legislative
history of the MSP statute, the government urges us to agree with
it that the statute is ambiguous; however, we decline to find
ambiguity where none exists.17 As ably pointed out by Zimmer and
amici curiae, the term “self-insurance plan,” as used in the MSP
statute, is not only clear in its meaning; it plainly does not
apply automatically to alleged tortfeasors, such as Zimmer, who
settle with plaintiffs. Although we agree with the district
court’s determination that Zimmer is not liable under the MSP
statute because it could not be reasonably expected to pay
“promptly” for Loftin’s medical care, we also agree with the other
district courts that have concluded that an alleged tortfeasor who
settles with a plaintiff is not, ipso facto, a “self-insurer” under
the MSP statute. We are compelled to draw this conclusion when we
apply several well-established canons of statutory interpretation.
First, the term “self-insurance plan” does not exist in a
vacuum within the MSP statute. Rather, it is predicated on the
17
A prior district court also rejected the government’s
attempt to rely upon the MSP statute’s legislative history,
noting then that the “legislative history of the MSP Statute is
cryptic and uninformative on the interpretative question now
raised.” Mason v. American Tobacco Co., 212 F. Supp. 2d 88, 93
(E.D. N.Y. 2002).
10
term “primary plan.” As the MSP statute plainly provides, Medicare
is a secondary provider of insurance if and only if a Medicare
recipient has another source of medical coverage under a “primary
plan.” The term “primary plan” is pivotal to the applicability of
the MSP statute —— its reimbursement provisions are not triggered
unless a Medicare recipient’s source of recovery meets the
definition of “primary plan,” regardless of whether that source is
a group healthcare plan, workman’s compensation, liability
insurance, or a self-insurance plan.
The government asks us to accept its interpretation of “self-
insurance plan” without reference to the more fundamental
requirement of the MSP statute that this type of insurance plan
constitute a “primary plan.” To do so would violate the most basic
principle of statutory construction: Unless indicated otherwise in
a statute, its words are to be given their ordinary meaning, which
“cannot be determined in isolation, but must be drawn from the
context in which [they are] used.”18 This maxim is particularly
apposite here because the MSP statute does not define the term
“self-insurance plan”; neither does it define a “primary plan”
beyond listing some examples of various types of plans that are
deemed primary.
We must, accordingly, look to the ordinary meaning of these
18
United States v. Lyckman, 235 F.3d 234, 238 (5th Cir.
2001).
11
terms.19 A “plan” denotes “a method for achieving an end” or “a
detailed formulation of a program of action.”20 “An insurer is the
party to a contract of insurance who assumes the risk and
undertakes to indemnify the insured, or pay a certain sum on the
happening of a specified contingency.”21 Therefore, in the sense
used in the MSP statute, a “primary plan” of “self-insurance”
requires an entity’s ex ante adoption, for itself, of an
arrangement for (1) a source of funds and (2) procedures for
disbursing these funds when claims are made against the entity.22
19
See INS v. Phinpathya, 464 U.S. 183, 189 (1984) (noting
that “in all cases involving statutory construction, our starting
point must be the language employed by Congress, . . . and we
assume that the legislative purpose is expressed by the ordinary
meaning of the words used”) (quotations and citations omitted);
White v. Black, 190 F.3d 366, 368 (5th Cir. 1999) (“The canons of
statutory construction dictate that when construing a statute,
the court should give words their ordinary meaning and should not
render as meaningless the language of the statute.”) (citation
omitted).
20
Webster’s Ninth New Collegiate Dictionary 898 (Merrian-
Webster 1985). Dictionaries are a principal source for
ascertaining the ordinary meaning of statutory language, see
generally Babbitt v. Sweet Home Chapter of Communities for a
Great Oregon, 515 U.S. 687 (1995) (invoking dictionaries by both
the majority and the dissent in defining terms in the Endangered
Species Act).
21
3 COUCH ON INSURANCE 39:1 (3d 2002).
22
See In re Orthopedic Bone Screw Prods. Liab. Litig., 202
F.R.D. 154, 166 (E.D. Penn. 2001) (noting that a “‘plan’ connotes
some type of formal arrangement . . . to set aside funds to cover
potential future liabilities and a formal procedure for
processing claims made against that fund”); In re Diet Drugs,
2001 WL 283163, at *10 (E.D. Penn. 2001) (noting that “the
existence of a primary ‘plan’ connotes some type of formal
arrangement”).
12
Recognizing that “[t]he term ‘self-insurance’ had no precise legal
meaning,” a leading insurance treatise nonetheless confirms this
definition of “self-insurance,” noting that
to meet the conceptual definition of self-insurance, an entity
would have to engage in the same sorts of underwriting
procedures that insurance companies employ; estimating likely
losses during the period, setting up a mechanism for creating
sufficient reserves to meet those losses as they occur, and,
usually, arranging for commercial insurance for losses in
excess of some stated amount.23
Thus, according to the ordinary meaning of the terms of the MSP
statute, it is wrong for the government to contend that an entity’s
negotiating of a single settlement with an individual plaintiff is
sufficient, in and of itself, for such entity to be deemed as
having a “self-insurance plan.”
In addition, the regulations promulgated under the MSP statute
by the HCFA reflect the ordinary meaning of a “self-insurance
plan.” The HCFA regulations define a “plan” as “any arrangement,
oral or written, by one or more entities, to provide health
benefits or medical care or assume legal liability for injury or
illness.”24 The regulations further define a “self-insurance plan”
as “a plan under which an individual, or a private or governmental
23
1 COUCH ON INSURANCE 10:1 (3d 1997). See also Alderson v.
Ins. Co. of N. Am., 223 Cal. App. 3d 397, 407 (1990) (noting that
“[i]t is implicit in the term, ‘self-insurer,’ that such person
maintains a fund, or a reserve, to cover possible losses, from
which it pays out valid claims, and that the self-insurer have a
procedure for considering such claims and for managing that
reserve”).
24
42 C.F.R. § 411.21.
13
entity, carries its own risk instead of taking out insurance with
a carrier.”25 It is clear from the regulations implementing the MSP
statute that the existence of a self-insurance plan requires that
there by some form of arrangement —— the creation ex ante of a fund
and distribution procedures —— for making potential payments to a
set of prospective claimants. The HCFA regulations even speak in
prospective terms. For example, § 411.21 defines a “plan” as an
“arrangement . . . to provide health benefits or assume legal
liability.” Such language contemplates a pre-arrangement and makes
sense only if a self-insurer creates or maintains a fund or source
and establishes rules for making disbursements therefrom in
covering the self-insurer’s future risk, i.e., when one acts as an
insurance carrier for onself.26
Furthermore, the well-known interpretative canon, expressio
unius est exclusio alterius —— “the expression of one thing implies
the exclusion of another”27 —— confirms 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
25
42 C.F.R. § 411.50(b) (emphasis added).
26
See Silicone Gel Breast Implants,174 F. Supp. 2d at 1254
(noting that “the regulatory language defining ‘self-insured
plan’ connotes some type of formal arrangement by which funds are
set aside and accessed to cover future liabilities”).
27
73 AM. JUR. 2d Statutes § 129 (2002).
14
single claim with a single plaintiff falls within the ambit of the
statute’s category of a self-insurance “plan.” The failure of
Congress to include in the MSP statute a right of action for
reimbursement of medical expenditures against tortfeasors indicates
that this statute “plainly intends to allow recovery only from an
insurer.”28
This application of expressio unius to the MSP statute is
further supported by the canon that instructs courts to adopt
harmonious interpretations of statutes addressing similar
subjects.29 In this respect, the Medical Care Recovery Act30
(“MCRA”) explicitly provides for the right of action that the
government is attempting to read into the MSP statute. The MCRA
expressly arms the government with a right to recover medical
payments that it has made “under circumstances creating a tort
liability upon some third person.”31 In such instances, the
government may “institute and prosecute legal proceedings against
the third person who is liable for the injury or disease . . . for
28
Health Ins. Ass’n v. Shalala, 23 F.3d 412, 427 n.* (D.C.
Cir. 1994) (Henderson, J., concurring) (emphasis added).
29
73 AM. JUR. 2d Statutes § 168 (2002). We recently
recognized that “we should attempt to give horizontal coherence
to the United States Code and ensure that different statutes
interact coherently and harmoniously.” Murphy v. Penn. Higher
Educ. Assistance Agency & Educ. Mgmt. Credit Corp., 282 F.3d 868,
872 (5th Cir. 2002) (citing Pierce v. Underwood, 487 U.S. 552,
561-63 (1988)).
30
42 U.S.C. § 2651-53 (2002).
31
§ 2651(a).
15
the payment or reimbursement of medical expenses or lost pay . . .
.”32 In express terms, then, the MCRA affords the government the
legal right of recovery that it is urging us to read into the MSP
statute, which is silent on the point. The express inclusion of
recovery from tortfeasors in the MCRA supports the conclusion that
Congress’s omission of tortfeasors from the list of those
potentially liable under the MSP statute was knowing and
intentional.33
Recognizing the government’s attempt to fold the MCRA into the
MSP, the In re Diet Drugs court noted that
[u]nlike the MCRA, the MSP does not mention a right by the
Government to recover from a tortfeasor. Rather, the express
wording of the [MSP] statute creates a cause of action only
against insurers and their payees. . . . Under the
Government’s construction of the [MSP] statute, every
tortfeasor that used its general assets to fund a tort
settlement with persons who had received federal health care
benefits would be potentially liable under the MSP. There is
simply no support for this extremely broad construction of the
[MSP] statute.34
When faced with two statutes on similar subjects, courts must,
32
§ 2651(b).
33
Cf. In re Dow Corning Corp., 250 B.R. 298, 339 (Bankr.
E.D. Mich. 2000) (noting that the court is “dubious that the term
‘self-insured plan’ covers or was meant to cover every tortfeasor
who fails to obtain insurance”); 54 Fed. Reg. 41727 (Oct. 11,
1989) (responding to a comment that explicitly asks for
clarification on whether an alleged tortfeasor is liable under
the MSP statute as a “self-insurer,” the HFCA notes that “the
mere absence of insurance purchased from a carrier does not
necessarily constitute a ‘plan’ of self-insurance”).
34
2001 WL 283163, at *10 (citations omitted).
16
whenever possible, interpret them so as to give effect to both.35
Yet, if we were to adopt the broad construction of the MSP statute
urged by the government in this case, we would, in effect,
eliminate the need for the MCRA, or at least condemn some of
Congress’s language in the MCRA to the scrap heap of surplusage.
This would be unacceptable, particularly when a completely
reasonable interpretation of the MSP statute is offered by the
plain terms of the statute itself. As a district court noted in
rejecting another government attempt to read MCRA authority into
the MSP statute: “[I]t is clear that Congress did not intend MSP
to be used as an across the board procedural vehicle for suing
tortfeasors.”36
By its plain terms, the MSP statute and the HCFA regulations
predicate reimbursement liability on the existence of a primary
insurance plan. In its First Amended Complaint, the government
obfuscates this fact when it cabins the MSP statute’s requirements
as applying to those entities that have only “primary payment
responsibility.”37 More important, in its specific count against
35
United States v. Borden, 308 U.S. 188, 198 (1939) (“When
there are two acts upon the same subject, the rule is to give
effect to both if possible.”).
36
Philip Morris, Inc., 116 F. Supp. at 135. See also
Orthopedic Bone Screw, 202 F.R.D. at 165 (“Unlike the MCRA, the
MSP does not mention a right by the government to recover from a
tortfeasor.”).
37
In its discussion of the HCFA regulations later in the
complaint, the government acknowledges that a “third party payer”
must possess an “insurance policy, plan . . ., or program that is
17
Zimmer, the government never alleges that Zimmer paid Goetzmann and
Loftin according to a pre-existing plan; it asserts only the
conclusions that Zimmer was “responsible to pay for Defendant
Loftin’s medical expenses” and that Zimmer “was self-insured for
its liability to Loftin.” As the D.C. district court noted in
granting a motion to dismiss by a similarly situated defendant
corporation in a parallel case: “In fact, the Complaint does not
even allege the existence of any elements of a ‘primary plan,’ such
as a ‘plan’ or ‘arrangement.’”38
Even when we liberally construe the government’s complaint, as
we must, we see that the MSP statute and its implementing
regulations require a primary insurance plan. But Zimmer has only
negotiated a discrete settlement with a single plaintiff and paid
that plaintiff accordingly. It is simply a non sequitur for the
government to infer from “payment responsibility” in tort a pre-
existing primary plan of self-insurance. In considering the
government’s allegations against Zimmer under the MSP statute, we
are compelled to pose the rhetorical question, where’s the plan?39
primary to Medicare” in order to be liable under the MSP statute,
citing 42 C.F.R. § 411.21. The government, however, never
indicates how this essential legal element for liability under
the MSP statute applies to Zimmer in this case.
38
United States v. Philip Morris, Inc., 116 F. Supp. 2d
131, 145 (D.D.C. 2000) (original emphasis).
39
See Orthopedic Bone Screw, 202 F.R.D. at 165-66 (noting
that the “Government’s argument . . . fails to account for the
repeated use of the word ‘plan’ throughout the MSP and
regulations promulgated thereunder”).
18
Beyond oblique references to Zimmer’s responsibility to pay Loftin,
the existence of a “primary plan” is nowhere to be found in the
government’s complaint against Zimmer.
On appeal, the government repeatedly (but in isolation) quotes
the MSP statute’s phrase that an entity which is “required or
responsible” for paying for a Medicare recipient’s healthcare
expenses is liable to reimburse the government. Ergo, the
government urges, Zimmer is arguably liable under the MSP statute,
or at least there is a basis for inferring potential liability
sufficient to survive a Rule 12(b)(6) motion to dismiss. Yet,
litigants cannot cherry-pick particular phrases out of statutory
schemes simply to justify an exceptionally broad —— and favorable
—— interpretation of a statute.40 As the D.C. district court held
only one year ago in a similar case litigated by the government
under the MSP statute, “MSP liability attaches only to an entity
that is ‘required or responsible’ to pay under a ‘primary plan.’”41
As we already noted, nothing in the government’s pleadings can be
read to support the conclusional allegation that Zimmer maintained
such “primary plan” of self-insurance for paying claimants such as
40
“It is a ‘fundamental canon of statutory construction
that the words of a statute must be read in their context and
with a view to their place in the overall statutory scheme.’” FDA
v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 133 (2000)
(quoting Davis v. Michigan Dept. of Treasury, 489 U.S. 803, 809
(1989)).
41
United States v. Philip Morris, Inc., 156 F. Supp. 2d 1,
4 (D.D.C. 2001) (citing 42 U.S.C. § 1395y(b)(2)) (emphasis
added).
19
Loftin.42 According to the plain terms of the MSP statute and the
HCFA regulations, therefore, Zimmer can have no MSP liability.
3. No Chevron Deference for the Government’s Interpretation
of the MSP Statute.
The government further argues that the term “self-insurance
plan,” as used in the MSP statute, is ambiguous, entitling the
agency’s own interpretation to Chevron deference.43 According to
the government, this is particularly relevant because Zimmer is a
“large and sophisticated manufacturer of medical devices.” As
such, Zimmer’s status as a “large corporation” permits a reasonable
inference that Zimmer “can readily be regarded as self-insured.”
The government concludes that this is a reasonable interpretation
of the MSP statute’s ambiguous terms and legislative history, to
which we must defer.
We reject this effort by the government to clothe itself in
the deference given to agencies’ reasonable interpretations of
ambiguous statutory provisions. First, the clarity of the MSP
42
On appeal, the government submits a copy of a portion of
the 10-K filing by Zimmer’s parent corporation, Bristol-Myers
Squibb Company (“Bristol-Myers”), showing that Bristol-Myers has
obtained insurance coverage for a substantial number of breast-
implant products-liability claims. Beyond another oblique
argument that this 10-K filing reveals that Bristol-Myers has
arranged for additional insurance coverage, the government fails
to explain how this is relevant to whether Zimmer settled
Loftin’s discrete hip-prosthesis product-liability lawsuit under
a “primary plan” of “self-insurance.”
43
Chevron U.S.A. v. Natural Res. Def. Council, 467 U.S.
837, 843-44 (1984) (holding that courts must defer to an agency’s
“permissible construction” or “reasonable interpretation” of
ambiguous statutory terms).
20
statute’s terms readily discloses the statute’s plain meaning,
eschewing the label of ambiguity. Thus, there is no need even to
consider Chevron deference because the government’s argument fails
the first prong of the analysis for granting such deference —— the
determination that a statutory grant of authority to a regulatory
agency is ambiguous. As the Chevron court recognized, “[i]f the
intent of Congress is clear, that is the end of the matter; for the
court, as well as the agency, must give effect to the unambiguously
expressed intent of Congress.”44
Second, even if the MSP statute were ambiguous and we were to
consider legislative history and the agency’s regulations, and
conclude that the HCFA regulations would support the government’s
appellate argument that Zimmer’s settlement agreement with Loftin
constituted a primary self-insurance plan, there is simply no
statutory support for the government’s position that uninsured
“sophisticated corporations” are per se self-insurers. There is no
language in the MSP statute justifying a distinction between a
“sophisticated corporation” and an individual or small business.
The government does not invite our attention to anything that could
serve as a statutory hook on which to hang this argument. In fact,
the government has already attempted to sell this argument to
44
Id. at 842-43. Notably, the Court recognized that the
meaning of a statute is ascertained by “employing traditional
tools of statutory construction,” such as the above-referenced
canons. Id. at 843, n.9.
21
district courts in New York and D.C., but to no avail.45 It offers
us no reason why we should reject or depart from these previous
judicial decisions. In summary, the government’s proffered
interpretation of the MSP statute, as it currently stands,
constitutes nothing more than “the litigation position of agency
counsel that is wholly unsupported by regulations, rulings, or
administrative practice [and thus] is not entitled to deference” by
this or any court.46
4. Zimmer Cannot Pay for Medical Services “Promptly,” and
Thereby Fails the MSP Statute’s Requirement for a “Self-
Insurance Plan.”
The district court determined that Zimmer does not possess a
“self-insurance plan” because it could not reasonably be expected
to pay Loftin’s healthcare claim “promptly,” as required under the
MSP staute.47 The MSP statute provides for reimbursement of
conditional expenditures by Medicare for medical services in which
45
See Mason, 212 F. Supp. 2d at 92; Philip Morris, 156 F.
Supp. 2d at 7.
46
Silicone Gel Breast Implants, 174 F. Supp. 2d at 1249
(citing Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 211
(1988)). See also Orthopedic Bone Screw, 202 F.R.D. at 164
(denying Chevron deference to the government’s interpretation of
the MSP statute and regulations).
47
See Diet Drugs, 2001 WL 283163, at 11 n.20 (discussing
how an alleged tortfeasor could not be “reasonably expected” to
pay for health care expenses “promptly,” as is required of a
“primary plan” under the MSP statute and the HCFA’s regulations);
Orthopedic Bone Screw, 202 F.R.D. at 167-69 (same); Dow Corning
Corp., 250 B.R. at 348 n.29 (same).
22
another primary plan is “reasonably expected” to pay “promptly.”48
The HCFA’s regulations define a “prompt” payment as one that occurs
within 120 days of either the date the claim is filed or the date
of the medical treatment itself, whichever is earlier.49 As a
district court in Pennsylvania remarked on this same issue:
Given the time delay inherent in strongly prosecuted and
defended tort litigation, the Government cannot legitimately
assert that a settlement arrived at in the heat of a hard
fought adversarial engagement for alleged tort liability from
a defective product is the type of insurance “plan” that the
Government can reasonably expect to make prompt payment for
medical care.50
Similarly, a bankruptcy court observed that “[i]t would seem to be
folly for the Government to argue that, when it made the Medicare
payments in question, there was a reasonable expectation that [an
alleged tortfeasor] would promptly pay for such medical care.”51
In the instant case, the statutory requirement that a primary
insurance plan pay within 120 days of a claim for medical care
unquestionably precludes our holding Zimmer potentially liable as
a “self-insurer.”52
48
§ 1395y(b)(2)(A)(ii).
49
42 C.F.R. § 411.50(b).
50
Orthopedic Bone Screw, 202 F.R.D. at 167.
51
Dow Corning Corp., 250 B.R. at 348, n.29.
52
As the Orthopedic Bone Screw court poignantly observed,
“the other types of insurance included in the definition of a
‘primary payer’ under § 1395y(b)(2)(A), i.e., workmen’s
compensation, automobile and no fault insurance, are frequently
required by the terms of the policy itself to make prompt payment
for medical expenses. See, e.g., 47 Fed. Reg. 21103 (stating
23
We must disagree nonetheless with the district court’s
suggestion that it is wrong to determine, on a motion to dismiss,
whether an alleged tortfeasor who enters into a settlement
agreement is, ipso facto, a “self-insurer.” This is an issue of
statutory interpretation; accordingly, a court may determine, as a
matter of law, whether an alleged tortfeasor is a “self-insurer”
under the MSP statute.53 Thus, the district court would have been
justified in dismissing the complaint solely on the basis of the
government’s failure to allege in its complaint the essential
statutory element that Zimmer actually had in place a primary
insurance plan.54 We have determined, on the basis of the
government’s pleadings, that Zimmer is not a “self-insurer” under
the MSP statute. Even when construed liberally in favor of the
that ‘under automobile medical or no fault insurance, payment can
frequently be foreseen with reasonable certainty’).” 202 F.R.D.
at 168, n.14.
53
Chevron, 467 U.S. at 843, n.9 (noting that the “judiciary
is the final authority on issues of statutory construction”);
Texas Beef Group v. Winfrey, 201 F.3d 680, 692 (5th Cir. 2000)
(Jones, J., concurring) (noting that the district court’s
determination of “the scope of the Act . . . remain questions of
law that the court must determine pursuant to the rules of
statutory construction”).
54
See Mason, 212 F. Supp. 2d at 91-94 (granting defendant’s
motion to dismiss the government’s complaint under the MSP
statute given its sole allegation that defendant is only a
sophisticated corporate tortfeasor); Philip Morris, Inc., 156 F.
Supp. 2d at 7 (granting defendant’s motion to dismiss the
government’s complaint given its failure to allege a “self-
insured plan”); Philip Morris, Inc., 116 F. Supp. 2d at 144-46
(granting defendant’s motion to dismiss the government’s
complaint given the government’s failure to allege that the
defendant had a “self-insured plan”).
24
government as plaintiff, its complaint’s allegations do not rise to
the level of showing the existence of a “primary plan” of self-
insurance.55 Even so, the district court was correct in holding
that the MSP statute’s requirement of “prompt” payment is a valid
basis for precluding per se liability for an alleged tortfeasor
under the MSP statute.
C. Goetzmann and Loftin’s Reimbursement Liability Under the MSP
Statute.
1. Standard of Review.
We review a grant of summary judgment de novo, applying the
same standard as the district court.56 A motion for summary
judgment is properly granted only if there is no genuine issue as
to any material fact.57 A fact issue is material if its resolution
could affect the outcome of the action.58 In deciding whether a
fact issue has been created, we view the facts and the inferences
to be drawn therefrom in the light most favorable to the nonmoving
party.59
55
Cf. Conticommodity Serv., Inc. v. Ragan, 63 F.3d 438, 442
(5th Cir. 1995) (affirming the grant of summary judgment “on
grounds other than the basis of the district court’s decision”).
56
Morris v. Covan World Wide Moving, Inc., 144 F.3d 377,
380 (5th Cir. 1998).
57
Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S.
317, 322 (1986).
58
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986).
59
See Olabisiomotosho v. City of Houston, 185 F.3d 521, 525
(5th Cir. 1999).
25
The standard for summary judgment mirrors that for judgment as
a matter of law.60 Thus, we must review all of the evidence in the
record, but make no credibility determinations or weigh any
evidence.61 In reviewing all the evidence, we must disregard all
evidence favorable to the moving party that the jury is not
required to believe, and should give credence to the evidence
favoring the nonmoving party as well as the evidence supporting the
moving party that is uncontradicted and unimpeached.62 The
nonmoving party, however, cannot satisfy his summary judgment
burden with conclusional allegations, unsubstantiated assertions,
or only a scintilla of evidence.63
2. Goetzmann and Loftin are not Required to Reimburse the
Government Because They did Not Receive Payment from an
Insurer.
The government asserts a right of recovery against Goetzmann
and Loftin based on their receipt of monies from Zimmer pursuant to
the terms of the settlement agreement. “Under the MPSA, the United
States is limited to pursuing an independent right of recovery
against two types of entities: a ‘primary plan;’ or an entity that
60
Celotex Corp., 477 U.S. at 323.
61
Reeves v. Sanderson Plumbing Products, Inc., 530 U.S.
133, 150 (2000).
62
Id. at 151.
63
Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.
1994) (en banc).
26
has received payment from a primary plan.”64 As neither Goetzmann
nor Loftin can be found to have received monies from an entity ——
Zimmer —— that distributed funds under a “primary plan,” neither
Goetzmann nor Loftin can be required to reimburse the government
under the MSP statute.
III. CONCLUSION
This case is the latest illustration of the government’s
refusal to accept the burgeoning weight of jurisprudence comprising
at least seven judicial rejections of its repeated attempts to have
the MSP statute construed beyond its plain terms. Six federal
district courts and one bankruptcy court have already rejected the
government’s interpretation of the MSP statute to include alleged
tortfeasors who settle with injured plaintiffs.65 In this case, the
government brings nothing new to the table in support of the very
same interpretation of the MSP statute that it has repeatedly
advanced and had repeatedly rejected by the courts. Rather, the
government simply regurgitates yet again the same unavailing
arguments.
We appear to be the first appellate court to address this
64
Dow Corning Corp., 250 B.R. at 337 (citing cases). See
also Silicone Gel Breast Implants, 174 F. Supp. 2d at 1253
(noting that “[t]he express wording of the [MSP] statute creates
a cause of action against insurers and their payees”).
65
See generally Mason, 212 F. Supp. 2d at 91-93; Silicone
Gel Breast Implants, 174 F. Supp. 2d at 1250-59; Philip Morris,
156 F. Supp. 2d at 3-8; Orthopedic Bone Screw, 202 F.R.D. at 163-
69; Diet Drugs, 2001 WL 283163, at *9-*12; Philip Morris, 116 F.
Supp. 2d at 144-46; Dow Corning Corp., 250 B.R. at 335-42, 348.
27
issue, but we see no valid reason to depart from the numerous trial
courts’ adept analyses of the MSP statute and its implementing
regulations. Although we might applaud its motive in seeking to
recoup funds it has disbursed for Medicare treatment and services,
the government’s desire to expand the list of those responsible for
reimbursement likely should be directed to Congress rather than to
the courts, lest future repetitions be met with sanctions for
unnecessarily protracting baseless or even frivolous litigation.
As the In re Dow Corning Corp. court noted:
Despite the relatively simple structure of the MSP
[statute], it has generated considerable case law. . . .
[S]adly, a significant amount of the legal melee is the direct
result of the Government urging statutory constructions, as it
has done in this case, that are entirely unsupported by the
statute and which appear to be intended to convert the MSP
[statute] from an important and sensibly fashioned fiscal
cost-cutting measure into a mere, heavy-handed collection
tool.66
When the instant case is reduced to basics, the government’s
allegations do not depict Zimmer as having had acted under a
primary self-insurance plan when it settled with Loftin. Zimmer
was simply an alleged tortfeasor —— nothing more and nothing less.
Loftin, through her attorney, Goetzmann, was simply a plaintiff in
a products-liability lawsuit who, through Goetzmann, agreed to
settle with the defendant rather than proceeding to trial. As
alleged, the settlement reached between Zimmer and Loftin was a
discrete agreement, the result of nothing more than the parties’
66
Dow Corning Corp., 250 B.R. at 336 n.21.
28
particular litigation tactics in this one case. In fact, the
government does not allege anywhere in its complaint that Zimmer
paid Goetzmann and Loftin according to a pre-existing primary plan
of self-insurance. The conclusion is thus inescapable: These
three parties are well outside the scope of the MSP statute. For
the foregoing reasons, the district court’s dismissals of the
government’s claims against Zimmer under Rule 12(b)(6), and against
Goetzmann and Loftin via summary judgment, are, in all respects,
AFFIRMED.
29