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Business Scores a Victory in the Courts

August 25, 2006

Below you will find a write-up on a very recent legal victory that was scored by AIF’s General Counsel firm, Stiles, Taylor & Grace, which authored an amicus brief on an important issue for the business community.  The appellate court accepted the reasoning outlined in our brief.  We owe our heartfelt thanks and appreciation for the tireless, behind-the-scenes efforts of our longtime General Counsel firm!


ELEVENTH CIRCUIT COURT OF APPEALS RULES AGAINST EXISTENCE OF PRIVATE ATTORNEY GENERAL ACTIONS IN MEDICARE CASES

The Eleventh Circuit Court of Appeals in Atlanta issued an opinion on August 14, 2006 that will probably not receive any publicity or very much notice in Florida. The case, Geneva Glover v. Liggett Group, Inc., Case No: 05-14219 (11th Cir. Aug. 14, 2006), was nevertheless an important ruling for Florida businesses because of the potential for abuse.  Because of its potential effect upon Florida businesses, Associated Industries of Florida retained the firm of Stiles, Taylor and Grace, P.A. to appear and participate on behalf of the association as amicus curiae in support of the defendants. Mary Ann Stiles, Rayford Taylor, Robert Grace, and Jowanna Oates of Stiles, Taylor and Grace all need to be thanked for the time and effort they put into AIF’s amicus brief to alert the federal court to  the problems with the plaintiffs’ arguments.  

In Glover, the plaintiffs contended they had a right to sue to recover funds from the defendants which were alleged to have been paid by Medicare on behalf of other people they asserted had been injured by the defendants’ conduct.  The plaintiffs contended they could bring such a suit, even if the people who were supposedly been injured had never sued the defendants or the defendants had never been found liable in a proper court of law.

“The Eleventh Circuit’s decision is a complete rejection of the argument advanced by the plaintiffs that the Medicare Secondary Payer Act  (“MSP”), as amended by the Medicare Prescription Drug Improvement and Modernization Act (“MMA”)  created a private attorney general action which could be brought in federal court even before a defendant had been found to have committed any tort against the alleged victim”, according to Mary Ann Stiles.  She went on to state that “the idea that strangers to a case  could sue to recover amounts allegedly due Medicare even before there had been a finding in a state or federal court that the  defendant actually owed the victim anything was completely discounted by the appeals court.”

The plaintiffs were seeking to recover twice the amount of medical benefits due Medicare without a trial court ruling the defendants had been found to be at fault.  The appellate court did not accept the argument advanced by Senator Charles Grassley (R-Iowa) as amicus curiae on behalf of the plaintiffs.  Senator Grassley argued that he was the primary author of the MMA and he intended to create such a private attorney general action.

AIF’s amicus brief discussed how such an interpretation would result in almost every tort case exposing an employer to potential litigation in federal court instead of state court.  Furthermore, if the plaintiffs’ concept were applied to workers compensation and other cases it would expose every employer and insurer to litigating cases in both the administrative venue and federal courts.  The employer and the carrier would incur the expense and exposure of defending the case twice, even though one-half of the funds recovered in such an action would go to some person who was not Medicare or the alleged victim.

If the plaintiffs had prevailed in this appeal, almost every employer in Florida with a severely injured employee would have been placed in the position of a “Hobson’s Choice” concerning the accident.  According to Rayford Taylor, “If the employer refused to accept the accident as a valid claim, it would deny the employee any benefits and become involved in a disputed the claim.  On the other hand, if the employer accepted the claim and provided benefits, it could be sued in federal court by some complete stranger seeking to recover two times an amount that might be due at some future date to Medicare.  The stranger could keep half the recovery as a reward for filing the suit, even though the employee was getting all the benefits due to him or her. Such a situation would force employers to settle such cases just to avoid the expense of litigating the claim in federal court, regardless of whether any amount might ultimately be due to Medicare“

AIF contended in its brief that if Congress had intended to create a private attorney general action in such cases, it could have done so the same way it had done in other areas of the law.  Jowanna Oates stated that “we found examples of private attorney general action statutes in other states and in federal law and the language under review in this case did not contain any clear indication of legislative history to support the plaintiffs’ interpretation of the law.”

AIF pointed out to the Court that under current law Medicare could bring suit against an employer to recover benefits it paid for an injured worker that was the responsibility of the employer in a workers’ compensation case after the employer was found to be responsible.  This is possible under current law for both past benefits and future benefits through approval of a Medicare Set-aside Agreement.  Robert Grace noted that; “In many workers’ compensation cases today, the settlement of the case will not proceed to a judge for approval until the parties have received  approval of the set-aside amount from the Social Security Administration, which means the amount due for past Medicare payments is protected or repaid out of the settlement proceeds.  There is really no reason to have a separate system of litigation, except in very few cases and Medicare can decide to pursue those cases when necessary.”

This is a very good opinion and result for Florida employers in a variety of areas of the law.  This is the type of issue AIF will continue to be involved in on behalf of its members and Florida employers.