2d Cir: No qui tam cases under Medicare Secondary Payor statute

by bvernia | August 1st, 2009

On July 29, the Second Circuit affirmed the dismissal of a qui tam suit against Empire Health Choice, Inc., based on alleged violations of the MSP statute, 42 USC § 1395y(b). Woods v. Empire Health Choice, Inc., No. 07-4208-cv (2d Cir. July 29, 2009). The would-be relator alleged that Empire failed in its duty as a Medicare carrier to ensure that primary insurers paid Medicare beneficiary claims, and that Empire was itself a primary insurer and in that role failed to pay claims it was obligated to cover. The relator did not allege that he suffered any personal harm or even that he was a Medicare beneficiary.

The Court reviewed the relator’s alleged standing to bring a case in his own stead, and, noting that the relator conceded that he would not pursue a case based only on his own claims (evidence of which was attached to a response to Empire’s motion to dismiss), it concluded that he lacked constitutional standing.

Turning to his argument that the MSP created a qui tam right, the Court denied that there is a common law right to qui tam standing, and instead must be created by statute, which had been rarely done. Reading the MSP statute, the Court noted that it entitled private parties to bring suit in their own name, not that of the Government, to remedy wrongs done to the private party. The MSP statute does not even provide for the Government to share in any recovery, the Court observed; a common feature of qui tam statutes, by contrast, is an automatic provision for sharing the recovery between the relator and the U.S. Similarly, the MSP law, unlike the False Claims Act, did not provide for the Government to exercise any control over a case brought under it.

The Court announced it was joining the 1st, 6th, 8th and 11th Circuits in holding that the MSP statute did not provide for qui tam suits. In doing so, the Court distinguished its prior holding in Manning v. Utils. Mut. Ins. Co., 254 F.3d 387 (2d Cir. 2001), which it concluded compared the MSP statute to the FCA only in order to identify an applicable statute of limitations.

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