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Forbes.com

 

Inside The Health Care Bill

July 22, 2009

By Walter Olson

A trial lawyer power grab that may unleash a flood of Medicare lawsuits.

Just before the House leadership’s 794-page health care reform bill went to a Ways & Means markup last Thursday, a remarkable provision was slipped in that amounts to one of the more audacious and far-reaching trial lawyer power grabs seen on Capitol Hill in a while. Republicans managed to fend it off for the moment--but don’t be surprised if it shows up again down the road in some form.

The provision would have drastically widened the scope of lawsuits against what are known as Medicare third-party defendants. In the simplest scenario, Medicare has paid the bills of someone injured in, say, a car accident, and then learns that the beneficiary has successfully sued and obtained damages from the other driver. Sometimes at this point Medicare (i.e., the government) demands that the beneficiary hand over some or all of the settlement toward the cost of the health care. Under some conditions, however, it is also free to file its own lawsuit to recover the medical outlays directly from the negligent driver (who in some circumstances might even wind up covering the same medical bills twice). It might file suit directly if, for example, it does not expect to get a collectible judgment from the beneficiary.

For some time now, the federal government has been stepping up its pursuit of money from these defendants. The language slipped into the health bill would greatly expand the scope of these suits against third parties, while doing something entirely new, namely allow freelance lawyers to file them on behalf of the government--without asking permission--and collect rich bounties if they manage thereby to extract money from the defendants. Lawyers will recognize this as a “qui tam” procedure, of the sort that has led to a growing body of litigation filed by freelance bounty hunters against universities, defense contractors and others alleged to have overcharged the government.

It gets worse. Language in the bill would permit the lawyers to file at least some sorts of Medicare recovery actions based on “any relevant evidence, including but not limited to relevant statistical or epidemiological evidence, or by other similarly reliable means.” This reads very much as if an attempt is being made to lay the groundwork for claims against new classes of defendants who might not be proved liable in an individual case but are responsible in a “statistical” sense. The best known such controversies are over whether suppliers of products such as alcohol, calorie-laden foods or guns should be compelled to pay compensation for society-wide patterns of illness or injury.

A few other highlights of the provision:

--It would knock out a significant current barrier to litigation by doing away with a rule that restricts the filing of a Medicare suit until after a previous “judgment,” that is to say, after the success of an earlier lawsuit establishing responsibility for the injury.

--Damages would double in cases of “intentional tort or other intentional wrongdoing.”

--“Any person” could bring the action, that is, not just a lawyer representing the Medicare recipient, and the bounty would be a rich one, 30% plus expenses. Even if the federal government itself intervened and insisted on taking over the lawsuit, the bounty hunter would still get a minimum of 20%, perhaps as reward for winning the race to the courthouse. No one other than the federal government could oust the first-to-file lawyer from control of the action, so other private lawyers who lost the race to the courthouse would be out of luck. And the lawyer could settle the suit with the designated defendants “notwithstanding the objections of the United States”--that is, the objections of the entity on whose behalf it was supposedly filed--if a court so agreed.

--Medicare would have to cooperate with the private lawyers, whether or not the government joined or approved of the action, by handing over various documents useful to them.

For the moment, at least, we’ve dodged the bullet. Some Republicans on the committee spotted the issue and raised strong protests, and by the end of Thursday, Democratic managers had agreed to withdraw the provision. That still provides no guarantee that it will not rear its head at some later stage in the process that proponents judge more favorable to their designs.

The idea is truly atrocious. Even when it comes to garden-variety torts, there are many entirely legitimate reasons why federal lawyers might not decide to pursue Medicare recovery from every possible defendant. To take but one example, they might have scruples about suing peripheral defendants who might be made to cough up settlement money to avoid the costs of litigation but against whom liability was doubtful. Freelance private lawyers could and often would sue everyone in sight and employ the most hardball tactics along the way. If the language about epidemiological and statistical evidence is indeed meant to pave the way for future suits against liquor, gun or cheeseburger purveyors, it represents a stealth attempt to restore (via fine print) a lawyerly dream that the courts have almost uniformly rejected over the past decade, as well as personally enrich lawyers with fees that could soar beyond even those of the scandalous tobacco-Medicaid litigation.

It’s worth recording that Rep. Lloyd Doggett, a Texas Democrat long allied with trial lawyers, took the lead arguing for the measure at the markup session, while critical questioning from Republicans Dave Camp of Michigan and Eric Cantor of Virginia helped shoot the idea down. How many other surprises lay undiscovered in this monster enactment--and how many of them do we risk learning about only after they pass into law?

Original Source: http://www.forbes.com/2009/07/22/medicare-republicans-reform-bill-opinions-contributors-walter-olson.html

 

 
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