No Fault Insurance Carrier, Citizens Insurance Company of American (Citizens) filed suit against the U.S. with respect to eight motorists injured before the Medicare Secondary Payer Act became effective on December 5, 1980. Each of the injured motorists was covered by Medicare since 2005. Citizens paid medical expenses for the injured motorists under the requirements of the Michigan No-Fault Automotive Insurance Act. This lawsuit seeks reimbursement from Medicare as a Primary Plan.
- Is the U.S. subject to jurisdiction by Citizens?
2. If jurisdiction is established, is Medicare a Primary Payer?
In regard to the first issue, the Court refused jurisdiction under the Tucker Act. Citizen’s position was that the Medicare Secondary Payer Act (MSPA) was in effect a money-mandating provision and thereof jurisdiction was triggered under the Tucker Act. The U.S. disagreed and moved to dismiss. The Court stated that the Tucker Act is “merely jurisdictional” and does not create any substantive right enforceable against the US for money damages. The Tucker Act jurisdiction requires “not only a claim against the United States, but also requires, based on principles of ‘sovereign immunity,’ that there be a separate money-mandating statute the violation of which supports a claim for damages against the United States.” See Holley v. United States, 124 F. 3d 1462, 1465 (Fed. Cir. 1997). The MSPA establishes only an order of priority for payment; it does not create an obligation to pay; and therefore does not mandate the government to reimburse private insurers for their own expenses when Medicare is not a secondary payer. The MSPA merely authorizes the government to bring action against an entity which is responsible for payment. Since the MSPA cannot be considered a money-mandating source that supports a claim for damages, there Citizens cannot establish jurisdiction against the U.S. on that basis.
Citizen’s attempted an alternative argument under the Tucker Act to establish jurisdiction – illegal exaction. However, illegal exaction claims involve money that was “improperly paid, exacted or taken from the claimant in contravention of the Constitution, statute, or a regulation.” Norman v. United States, 429 F.3d 1081, 1095 (Fed Cir. 2005). The Tucker Act provides jurisdiction to recover illegal exaction; however, Citizen’s has not alleged that the U.S. required it to make a payment that was contrary to the law. Therefore, the plaintiff’s argument of illegal extraction cases establishing the Tucker Act jurisdiction is incorrect.
Citizen’s also raised an implied contract claim between it and Medicare to determine “the rights of priority under the statutes and regulations”. The MSPA certainly establishes when Citizens must pay for Medicare beneficiary medical payments after December5, 1980, and therefore should also be used to establish situations where Medicare is primary. However, the court disagreed and distinguished between an implied contract in law and one in fact. Where an agreement is implied in law it “is a ‘fiction of law’ where a promise is imputed to perform a legal duty, as to repay money obtained by fraud or duress.” Hercules Inc. v. Untied States, 516 U.S. 417, 424 (1996). The Tucker Act can only be applied to implied-in-fact contracts; and therefore, a plaintiff must allege all the same elements of an express contract, including mutual intent. In this case the plaintiff does not allege the existence of such a contract and does not allege the requisite elements of an implied-in-fact contract that requires Medicare to reimburse the plaintiff. Therefore, the plaintiff cannot establish the court’s jurisdiction under this argument.
Finally, Citizens asked the Court to assert jurisdiction based on having no other means of relief. The Tucker Act requires a source of substantive law to create a right to money damage against the U.S. Citizens asserts it has a right to reimbursement without it being declared by statute; however, the MSPA provides a right of action and cause of action for the United States, it does not, nor was it intended by Congress to allow reimbursement by no-fault automobile insurers. As the Court could not find a basis for jurisdiction against the U.S., the second issue raised was moot and not discussed.
Franco Signor Commentary
This case represents the challenge by insurance carriers to establish jurisdiction against the U.S. The MSPA does not confer jurisdiction for money damages. It is a priority statute that simply establishes situations Medicare should not pay, and if it does, authorizes the U.S. to file for reimbursement. Since the MSPA did not exist before December 5, 1980, Citizens’ position made sense. Unfortunately, without an avenue of jurisdiction against a sovereign, Citizens’ right of recovery is academic without a remedy. This happens. The best way for Citizens’ to find equity in this situation is to amend state law to allow it to suspend payments if another primary payer situation exists, such as Medicare. If it does not pay, then Medicare will and should Medicare make a determination later that it is entitled to recovery; Citizens would have its day in Court, since Medicare is prosecuting the action.
No Comments »
No comments yet.