Guest Article

MCRA, MSP Provisions Do Not Support Federal Government's Lawsuit Against Tobacco Industry

Summary: A federal district court ruled that neither the Medicare secondary payer rules nor the Medical Care Recovery Act could be used as the basis for a lawsuit by the federal government against the tobacco industry.

The federal government's massive civil action against the tobacco industry seeking billions of dollars in damages for an allegedly unlawful conspiracy to deceive the American public about the health effects of smoking and the addictiveness of nicotine cannot be based on either the Medical Care Recovery Act (MCRA) or the Medicare secondary payer (MSP) rules, a federal district court ruled. The case is United States of America v. Philip Morris, 2000 U.S. Dist. LEXIS 14211 (D.D.C., Sept. 28, 2000).

The government's lawsuit against the tobacco industry was based on claims arising from three statutes, and the court dismissed two of those claims. The claims against the industry based on the Racketeer Influenced and Corrupt Organizations Act (RICO) may proceed.

The court dismissed the MCRA claim after concluding that the congressional intent in enacting MCRA in 1962 was to provide a means for the federal government to recover medical expenses it had furnished to federal employees - mainly those in the military - from third-party tortfeasors. After a thorough review of the broad context of the statute, including its legislative history, the construction given it by the federal agencies charged with its interpretation, the body of long-standing state and federal case law, and the fact that the U.S. Department of Justice has not enforced its provisions for 37 of the 38 years it was in existence, the court ruled that Congress did not intend that MCRA could be used to recover Medicare or Federal Employees Health Benefits Act costs.

The court dismissed the MSP claim after noting that the Social Security Act's MSP provisions permit the federal government to seek reimbursement from insurance entities and non-insurance entities required to pay for health care costs under a "self-insured plan," when Medicare has paid for health care expenses for which those entities should have paid. The court concluded that the government's complaint did not allege that any of the defendants maintained a "self-insured plan" (as that term is defined in the MSP provisions and the relevant regulations), and that Congress did not intend the MSP provisions to be used as an across-the-board procedural vehicle for suing tortfeasors, which is how the court viewed the government's actions in this case.

Excerpted from the January 2001 supplement to Coordination of Benefits Handbook, ©Thompson Publishing Group, Inc., 2001. All rights reserved.

BenefitsLink is an independent national employee benefits information provider, not formally affiliated with the firms and companies who kindly provide much of the content and advertisements published on this Web site, including the article shown above.