US v. Stricker done? Not so fast my friends!

Posted date in Jason D. Lazarus, J.D., LL.M., MSCC Medicare, Medicare Secondary Payer Act, MSP Compliance

I have previously posted on this very important Medicare Secondary Payer action brought by CMS against insurers and plaintiff attorneys involved in a mass tort settlement. The case was dismissed on 9/30/2010.  However, in a stunning turn of events for those who thought Stricker was over, the United States District Court in Alabama granted CMS’s motion to reconsider the dismissal under an “accrual theory” to avoid any “manifest injustice”.  According to the court:

“As its fourth ground for reconsideration, Plaintiff argues that the court erred in concluding that the Government inadequately raised a theory of continuing accrual against all defendants concerning the annual $2.5 million payments from 2004 through 2014 contemplated in the Abernathy Settlement Agreement. Admittedly, Plaintiff did not address this theory in its responsive briefing to the Defendants’ motions to dismiss. At the September 13, 2010 hearing, the court granted verbal leave for Plaintiff to submit a motion to amend its complaint to more clearly articulate a claim on this issue. For whatever reason, Plaintiff has failed to do so, but argues in its motion to reconsider that it properly pled a theory of continuing accrual in its First Amended Complaint and raised it at the hearing. Though this theory should have been raised and argued in Plaintiff’s brief in response to the multiple motions to dismiss filed by Defendants, the court will allow Defendants an opportunity to respond in full to this issue to avoid any possible clear error. Therefore, the court GRANTS Plaintiff’s motion to reconsider as to the issue raised in part D regarding a continuing accrual theory and ORDERS that Defendants have until Tuesday, November 16, 2010 to respond as to whether the allegations pled in Plaintiff’s First Amended Complaint are sufficient to state a claim for a theory of continuing accrual; and if so, whether the court committed clear error in dismissing Count VI of Plaintiff’s First Amended Complaint.”

“Finally, the court RESERVES RULING as to the tolling issue raised in part E of Plaintiff’s motion to reconsider. To avoid any possible clear error and/or manifest injustice, the court will allow Defendants until Tuesday, November 16, 2010 to respond as to: 1) whether the court should reconsider the issue of tolling; and 2) if the court does, whether it committed clear error in application of the appropriate burden of raising or pleading tolling in this context and in granting the motion to dismiss before discovery had yet occurred.”

The US has also sought to amend its complaint alleging that the defendants knew of the outstanding conditional payments made by CMS yet failed to reimburse the payments pursuant to the requirements in the MSP.  The motion filed by CMS pleads the following:

“Although the United States contends that it has set forth sufficient facts alleging its cause of action, the amendments set forth with more specificity (1) the Defendants’ payment of and receipt of annual payments made and received through 2013 as a result of the Abernathy Settlement Agreement, (2) their liability under the MSP Statute stemming from the annual payments, (3) additional information concerning the identified Medicare beneficiaries among the Abernathy Plaintiffs, (4) changes to certain allegations based on facts included in Court filings, and (5) the removal of The Cody Law Firm as a defendant.”

The motion to amend came just after the Court granted CMS’s motion for reconsideration based on a $25 million dollar continuing accrual theory claim.  I guess that CMS does not want to give up its shot at recovering a significant amount of money for Medicare conditional payments it alleges were ignored by the insurers and plaintiff attorneys in the Alabama Monsanto mass tort settlement.  If the government succeeds in recovery in this case, it will be a significant victory and will also serve to clarify exactly what the statute of limitation is for MSP recovery actions and what may toll the statute from running.