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Fourth Circuit Court of Appeals Makes Important Ruling Regarding Government’s Partial Assignment of

In Netro v. Greater Baltimore Medical Center, Inc., 2018 U.S. App. LEXIS 14835 (4th Cir. 2018), the United States Court of Appeals for the Fourth Circuit addresses the effect of the United States Supreme Court’s ruling in Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1543-44 (2016), on the private cause of action bestowed by the Medicare Secondary Payer Act (MSPA).

Netro arises from a medical malpractice lawsuit filed against the Greater Baltimore Medical Center (GBMC). The GBMC performed surgery on Barbra Bromwell who, following the surgery, suffered complications causing partial paralysis. Bromell died two years later. Plaintiff Netro was named personal representative of the decedent’s estate. On behalf of the estate, Netro filed a medical malpractice lawsuit. A jury awarded damages to the estate, which included an award for $157,730.75, in conditional payments made by Medicare on behalf of the decedent. GBMC filed a motion seeking to reduce the amount of the judgment to reflect medical expenses actually paid, rather than the amount billed. GBMC’s motion was successful, and the court entered a final judgment on October 31, 2016.

Three weeks after final judgment was entered, Netro filed suit in the United States District Court for the District of Maryland, invoking the private cause of action and seeking double damages under the MSPA, alleging that GBMC had refused to pay the state court judgment, which included reimbursement for Medicare. Shortly after the suit was filed, GBMC paid to Netro the full state court judgment plus post-judgment interest. GBMC moved to dismiss the suit, arguing that Netro lacked standing to invoke the private cause of action provision of the MSPA. In the alternative, GBMC argued that it should be granted summary judgment because it did not fail to reimburse Medicare. The district court did not address GBMC’s standing argument, but granted its motion for summary judgment. Netro appealed.

The Fourth Circuit addressed both Netro’s standing and whether the grant of summary judgment was appropriate. First, the court determined that Netro did, in fact, have standing to sue under the private cause of action provision of the MSPA. In so holding, the court addressed the idea that, through the private cause of action provision, the government partially assigned its claim for damages under the MSPA to Medicare beneficiaries. The court reasoned that Congress intentionally effectuated such a partial assignment and created the double-damages provision to provide Medicare beneficiaries and, in this case, the representatives thereof, “with an incentive to help the agency recover funds. Noting that, “in cases such as this, Medicare will often not even know that it could recover money.” Netro, 2018 U.S. App. LEXIS 14835, *10 (4th Cir. 2018).

In holding that Netro had standing to sue using the private cause of action provision of the MSPA, the Fourth Circuit acknowledged holdings in the Third, Second, Eleventh, Sixth, Eighth, and First Circuits that not all private individuals have standing the bring suit under the MSPA. In the other circuit holdings cited by the Netro court, the suites were not brought by Medicare beneficiaries (or representatives thereof) on behalf of whom Medicare made conditional payments. The MSPA is not a qui tam cause of action, in which the government allows private individuals to sue on behalf of the government. However, the Fourth Circuit determined that, though not a qui tam provision, the MSPA can and does effect a partial assignment of the government’s recovery rights.

The Fourth Circuit also addressed any effect the United State Supreme Court’s holding in Spokeo may have on the private cause of action provision of the MSPA. The Fourth Circuit noted that the Court made clear in Spokeo that a plaintiff cannot automatically satisfy “the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue.” Spokeo, 136 S. Ct. at 1549. The Fourth Circuit distinguishes Spokeo, however, by stating that “Spokeo concerned reputational harms untethered from any concrete injury, private or public,” and that “Spokeo did not involve the government recoupment interest present here.” Netro, at *10. As such, the Fourth Circuit disagrees with the argument that Spokeo, in effect, struck down all non-qui tam private enforcement provisions involving a government recoupment interest. Instead, the Fourth Circuit contends that such an extension of Spokeo would eviscerate Congressional intent.

Despite finding that Netro had standing to file suit using the private cause of action provision of the MSPA, the court determined that GBMC’s motion for summary judgment was due to be granted and affirmed the district court’s decision, finding that a thirty-seven day delay between the date final judgment was issued and the date that Netro received the funds needed to reimburse Medicare is not sufficient to constitute a “failure to pay” under the MSPA.

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