Qui Tam: The Future Is Now
In Personal Injury Litigation by Richard Neuworth © Richard Neuworth, Lebau and Neuworth, L.L.C., Baltimore, Maryland
Richard Neuworth has been a partner in the law firm of Leabu & Neuworth since it was founded in 1997. The firm’s focus areas are employment law, employee benefits and pwersonal injury litgation.
On December 8, 2003, President Bush signed the Medicare Prescription Drug, Improvement and Modernization Act of 2003,1
devoted principally to providing
insurance coverage for prescription drugs as part of an enhanced package of ben- efits offered to Medicare recipients and beneficiaries. More importantly, a series of amendments were included that en- abled Medicare recipients and beneficiaries, and others, to bring private qui tam actions on behalf of Medicare as part of the Medicare Secondary Payer Act. These ammendments provide for actions against an expanded class of entities with insurance that cause injuries or were in- volved in wrongdoing in all types of personal injury litigation. The 2003 amendments are found in Title III of the legislation.2
The possible private cause of action is
brought on behalf of Medicare against the wrongdoing individual(s) either employed by an entity such as “a self-insured em- ployer” or a “third-party administrator of
1 Public Law 108-173; 117 Stat. 2066. 2 Public Law 108-173, 117 Stat. 2066.
a health insurance plan for an employer” or an “insurance carrier for an employer or an individual” or all of the above, seek- ing double the amount of medical expenses paid by Medicare.
The action arises when a liable third party makes any payment in an underly- ing civil action or at anytime as part of a settlement of a claim for personal inju- ries.3
The premise underlying both the
Medicare Secondary Payer Act and the private cause of action is that third par- ties may not shift the cost of medical expenses attributed to their wrongdoing from themselves to taxpayers. Medicare should remain a secondary payer if an- other primary plan of insurance exists to pay the medical expenses of the Medicare beneficiary or recipient.
The Checkered History of the Private Cause of Action
Although private individuals have been permitted to file federal qui tam actions
3
Section 301 (b) of the legislation, 117 Stat. 2222.
on behalf of Medicare for nearly twenty years, prior to the enactment of the 2003 amendments, the remedy was stymied for a variety of reasons. Initially, Congress was repeatedly required to amend the statute to include important parties which had not been expressly included when the Medicare Secondary Payer Act was en- acted in 1980. In 1984, the statute was amended to authorize actions by the United States4
to recover payments from
entities “responsible” for payment. In the late 1980’s, Medicare asserted that it could also seek recovery from third- party administrators (“TPA’s”) of group health plans as well as the entity that bore the ultimate financial burden of the plan. However, that effort failed when the Dis- trict of Columbia of Appeals ruled against Medicare in 1994.5 Congress was again forced to amend the statute in 1997 to allow Medicare to re- cover against TPA’s and others “required or responsible . . . to make payment.”
In order to recover payment made un- der this title 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 ad- ministrator, or otherwise) to make payment with respect to such item or service (or any portion thereof) under a primary plan.
Telecare Corporation v. Leavitt, 409 F. 3d 1345, 1350 (Fed. Cir. 2005). Petition for writ of certiorari to the Supreme Court denied on January 13, 2005. Beginning in 2000, and relying on the
(Continued on page 26) 4 5
Public Law 98-369, sec. 2344, Section 1862 (b)(3), 98 Stat. 494, 1095-96.
Health Ins. Ass’n of America v. Shalala, 23 F. 3d 412 (D.C. Cir. 1994). That decision was overturned by Congress in the Balanced Budget Reconciliation Act of 1997, Public Law No. 105-33, section 4633 (a), Section 1862, 111 Stat. 251, 487 and H.R. Rep. No. 105-149 at 739 (1997).
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