Osborne v. Metro. Gov't of Nashville & Davidson Cnty.

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 19a0201p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
RONALD OSBORNE, ┐
Plaintiff-Appellant, │
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v. > No. 18-6062
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METROPOLITAN GOVERNMENT OF NASHVILLE AND
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DAVIDSON COUNTY, │
Defendant-Appellee. │
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┘
Appeal from the United States District Court
for the Middle District of Tennessee at Nashville.
No. 3:18-cv-00390—Aleta Arthur Trauger, District Judge.
Decided and Filed: August 20, 2019
Before: SILER and DONALD, Circuit Judges.*
_________________
COUNSEL
ON BRIEF: James Bryan Moseley, MOSELEY & MOSELEY, Murfreesboro, Tennessee, for
Appellant. J. Brooks Fox, METROPOLITAN GOVERNMENT OF NASHVILLE AND
DAVIDSON COUNTY, Nashville, Tennessee, for Appellee.
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OPINION
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SILER, Circuit Judge. Plaintiff Ronald Osborne appeals the district court’s decision
dismissing his claim under the Medicare Secondary Payer Act (“MSPA”), 42 U.S.C. § 1395y(b),
*Judge Julia Smith Gibbons, a member of the original panel, was unavailable to participate in the panel’s
decision. Judge Siler and Judge Donald act as a quorum pursuant to 28 U.S.C. § 46(d).
No. 18-6062 Osborne v. Metro Gov’t of Nashville Page 2
against the Metropolitan Government of Nashville and Davidson County (“Metro Nashville”).
Because the MSPA does not provide Osborne a cause of action, the district court’s decision is
AFFIRMED.
I.
Due to an unsafe condition on the premises, Osborne suffered a broken arm while
throwing away trash at the East Nashville Convenience Center in 2014. The center is owned and
operated by Metro Nashville.
Osborne obtained a judgment against Metro Nashville in state court under the Tennessee
Governmental Tort Liability Act; the damages included specific medical expenses related to the
incident and found Osborne’s comparative fault to be twenty percent.1 The award was upheld on
appeal in 2018.
This lawsuit arises because, prior to the state court suit, Osborne incurred medical
expenses for which Metro Nashville did not pay at the time. Instead, and since Osborne is a
Medicare recipient, Medicare made conditional payments to Osborne totaling at least $9,453.09.
Because Metro Nashville failed to pay, Osborne claims he himself incurred—in addition to the
costs of his state court litigation—the “cost of paying his co-pays, deductibles, and co-insurance
for the treatment from his medical providers which was not covered through Medicare.”
According to the amended complaint, Metro Nashville still has not paid the state court judgment
or reimbursed Medicare for its conditional payments.2
Osborne brought this suit in the Middle District of Tennessee alleging Metro Nashville is
a primary payer who failed to pay under the MSPA, and is therefore liable for reimbursement of
Medicare’s conditional payments and a double damages penalty pursuant to 42 U.S.C.
1Osborne’s amended complaint incorporated by reference the final judgment of the Davidson County
Circuit Court. We may consider it in reviewing the grant of a motion to dismiss. Wyser-Pratte Mgmt. Co. v. Telxon
Corp., 413 F.3d 553, 560 (6th Cir. 2005) (“In addition to the allegations in the complaint, the court may also
consider other materials that are integral to the complaint, are public records, or are otherwise appropriate for the
taking of judicial notice.”).
2Metro Nashville claims it paid the judgment in full, including discretionary costs, on May 22, 2018—the
same month the Tennessee Court of Appeals filed its mandate. At this stage, we accept the factual allegations of the
complaint as true. Directv, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007).
No. 18-6062 Osborne v. Metro Gov’t of Nashville Page 3
§ 1395y(b)(3)(A). The district court held that Osborne lacked statutory standing to sue for his
individual losses and the conditional payments made by Medicare because the MSPA does not
permit a private cause of action against tortfeasors. Because the MSPA is not a qui tam statute
and financial injury suffered by Medicare is not attributed to Osborne, the district court found
that he also lacked Article III standing to sue for Medicare’s conditional payments. Finally, it
noted that the individual harms claimed by Osborne in his complaint were conclusory and
insufficient to survive a motion to dismiss.
II.
This court reviews a district court’s grant of a motion to dismiss de novo. Keys v.
Humana, Inc., 684 F.3d 605, 608 (6th Cir. 2012). The complaint is construed in a light most
favorable to the plaintiff, and the court accepts all well-pleaded factual allegations as true.
Crugher v. Prelesnik, 761 F.3d 610, 614 (6th Cir. 2014). Those factual allegations must be
enough “to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly,
550 U.S. 544, 570 (2007).
III.
Congress enacted the MSPA in 1980 to help curb the rising costs of Medicare. Prior to
the MSPA, Medicare covered all medical treatment within its scope, and if a person also had a
private insurer, that insurer would pay the remainder of covered services. Bio-Medical
Applications of Tenn., Inc. v. Cent. States Se. & Sw. Areas Health & Welfare Fund, 656 F.3d
277, 278 (6th Cir. 2011). The MSPA reversed this pecking order. Private insurers who cover
the same treatments as Medicare now foot the bill first as “primary payers,” and Medicare pays
the remainder of covered services as the “secondary payer.” Id. When a primary plan “has not
made or cannot reasonably be expected to make payment with respect to [an] item or service
promptly[,]” Medicare may make conditional payments to ensure treatment. 42 U.S.C.
§ 1395y(b)(2)(B)(i). The MSPA provides for Medicare’s reimbursement of conditional
payments by a primary plan, or an entity that receives payment from a primary plan, if it is
demonstrated that the primary plan “has or had a responsibility to make payment with respect to
No. 18-6062 Osborne v. Metro Gov’t of Nashville Page 4
such item or service.” Id. § 1395y(b)(2)(B)(ii). The United States may sue for the
reimbursement. Id. § 1395y(b)(2)(B)(iii).
The MSPA also includes a private right of action for double damages against a primary
plan. In full, it provides:
There is established a private cause of action for damages (which shall be in an
amount double the amount otherwise provided) in the case of a primary plan
which fails to provide for primary payment (or appropriate reimbursement) in
accordance with paragraphs (1) and (2)(A).
42 U.S.C. § 1395y(b)(3)(A).3 Through this provision, Osborne seeks double damages against
Metro Nashville, a tortfeasor he alleges is a primary payer who has failed to pay or reimburse
Medicare’s conditional payments.
In 2003, Congress amended the MSPA to apply to tortfeasors. First, it expanded the
definition of “primary plan” to include “self-insured plan[s]” and then deemed an entity “that
engages in a business, trade, or profession” to have a self-insured plan “if it carries its own risk
(whether by a failure to obtain insurance, or otherwise) in whole or in part.” Glover v. Liggett
Grp., Inc., 459 F.3d 1304, 1306-07 (11th Cir. 2006) (quoting § 1395y(b)(2)(A)); see Bio-
Medical, 656 F.3d at 289-90. Second, Congress added an amendment requiring primary plans to
“reimburse Medicare only if its responsibility to pay has been demonstrated, which can occur
through a judgment, settlement, or ‘other means.’” Bio-Medical, 656 F.3d at 290 (quoting
42 U.S.C. § 1395y(b)(2)(B)(ii) (demonstrated responsibility provision)). To understand whether
these amendments affected the private cause of action—indeed, whether Osborne may use the
MSPA to sue a tortfeasor—a look at Sixth Circuit precedent is in order.
3This court has previously explained the private cause of action in straightforward terms: “a primary plan
is liable under the private cause of action when it discriminates against planholders on the basis of their Medicare
eligibility and therefore causes Medicare to step in and (temporarily) foot the bill.” Bio-Medical, 656 F.3d at 286
(explaining how primary plans fail to pay in accordance with “paragraphs (1) and (2)(A)”).
However, a later Sixth Circuit opinion distinguished Bio-Medical, holding the Medicare eligibility
requirement in paragraph (1) applies only to group health plans, rather than all primary plans. Mich. Spine and
Brain Surgeons, PLLC v. State Farm Mut. Auto. Ins. Co., 758 F.3d 787 (6th Cir. 2014). Here, neither party has
submitted argument concerning paragraph (1) as referenced in the private cause of action and the distinction does
not affect the outcome of this case.
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A. MSPA Private Cause of Action Against Tortfeasors After Bio-Medical
In dicta, this court has previously said Osborne may not sue. In Bio-Medical, the court
undertook an exhaustive analysis of the MSPA and spoke to the claim Osborne now brings:
We believe that when Congress amended the Act in 2003 to permit lawsuits
against tortfeasors and to add the “demonstrated responsibility” provision,
Congress intended to permit lawsuits against tortfeasors only by Medicare, and
not lawsuits against tortfeasors by private parties. Thus . . . the Act does not
permit a private cause of action (as opposed to one brought by Medicare) in tort.
Id. at 292-93.
Bio-Medical leaned heavily on the context in which the amendments were passed. It
explained that, prior to the 2003 amendments, federal courts did not consider tortfeasors to be
“self-insured plans” under the MSPA. Id. at 289. This meant that when Medicare attempted to
sue tobacco companies, drug manufacturers, and breast-implant manufacturers in the early
2000’s—an effort to recover reimbursement for medical expenses it had paid to plaintiffs prior to
the settlements that were then being paid out—it lost because tortfeasors were not covered by the
Act. Id. In response, Congress amended the definition of “self-insured plans” to include
tortfeasors, and added the demonstrated responsibility provision. Id. at 290 (citing 42 U.S.C.
§ 1395y(b)(2)(B)(ii)).
The amendments did not fit neatly into the MSPA, and the Bio-Medical court undertook
the task of explaining their reach. First, it determined that the demonstrated responsibility
provision must have been meant as a limit on tortfeasor liability. Id. at 290-91. It noted that,
practically: “the concept of demonstrated responsibility makes sense only in the context of tort
(where no evidence of responsibility exists until it is adjudicated ex post), rather than in the
context of an insurance contract (where insurers assume the responsibility of paying for
enumerated contingencies ex ante).” Id. at 291.
The court also determined that the provision applies only to lawsuits brought by
Medicare for reimbursements, and not lawsuits brought by private parties. Id. at 292-93. Since
the provision applies to suits against tortfeasors, and the provision also applies only to Medicare,
it follows that Medicare alone may bring actions against tortfeasors under the MSPA. Id. at 293.
 No. 18-6062 Osborne v. Metro Gov’t of Nashville Page 6
The court found that “no fewer than five reasons militate in favor of this conclusion.” Id.
at 292. Most importantly, the demonstrated responsibility provision’s text limits only when
primary plans must reimburse Medicare, and fails to mention when plans must pay private
parties.4 Id. The provision itself was inserted in a portion of the MSPA governing the
relationship between Medicare and primary payers, again suggesting the provision is limited to
the reimbursement of Medicare. Id. The legislative history, and particularly the legislative
backdrop of Medicare’s failed litigation position, further evidenced that it was Medicare, and not
private parties, that Congress meant to be reimbursed by tortfeasors when it brought them into
the MSPA’s purview. Id. Finally, the court noted that applying the “provision to lawsuits
brought by private parties essentially relegates the private cause of action to a super-judgment
enforcement mechanism, and no plausible explanation exists for why Congress would have
sought to limit it in that way.” Id. Following discussion of these five factors, the Bio-Medical
opinion concluded that, when Congress amended the MSPA in 2003, it intended to permit
lawsuits against tortfeasors only by Medicare, and not by private parties. Id. at 292-93.
Osborne does not grapple with any of these factors in his brief. Instead, he simply points
out that this statement in Bio-Medical was not essential to the holding of the case and, instead,
was dicta. See id. at 299-300 (White, J. concurring). It is true that neither party in the case being
decided was a tortfeasor—the court explained the limits of the demonstrated responsibility
provision because of the “widespread confusion” it had caused among district courts. Id. at 292.5
And there exist grounds to view the Bio-Medical dicta with skepticism. Recall: the
opinion explains tortfeasors were included as “primary plans” with amendment of the MSPA.
Id. at 289-90. As Judge White points out in her concurrence with the Bio-Medical majority, the
private cause of action allows one to proceed against “primary plans.” Id. at 299 (“the provision
4This point may not be as instructive as the Bio-Medical court indicated because the private cause of action
is also governed by the relationship between a primary payer and Medicare—the cause of action rests on Medicare’s
failure to be reimbursed as required. 656 F.3d at 286-87.
5So far, we have discussed two conclusions of the Bio-Medical court: (1) that the demonstrated
responsibility provision applies only to tort actions, and (2) that the provision only applies to Medicare, and not
individuals. While the latter is decidedly dicta, the former is more central to Bio-Medical’s holding. There, the
court addressed an argument that the demonstrated responsibility provision disposed of the lawsuit. The primary
payer had not been demonstrated responsible by a previous judgment, but also was not a tortfeasor. Thus, the court
concluded the demonstrated responsibility provision was inapplicable. Id. at 291.
 No. 18-6062 Osborne v. Metro Gov’t of Nashville Page 7
permitting a private action . . . does not exclude tortfeasors from the definition of primary plan or
except primary plans whose liability is based in tort.”). Perhaps the Bio-Medical majority would
rest on its observation that the circumstances surrounding the amendment still show that
Congress meant only for Medicare to proceed against tortfeasors; after all, Congress at the same
time added the demonstrated responsibility provision, which applies to suits against tortfeasors
and, as discussed above and below, seems incompatible with a private right of action. But it
would have been nice for Congress to have explained explicitly.
B. Bio-Medical’s Holding Applied to This Case
Ultimately, Bio-Medical provides an exhaustive account of the MSPA, and provides dicta
that is directly on point for our case. While not controlling, its reasoning is persuasive.
Bifurcating the demonstration of a tortfeasor’s liability (i.e., through a suit in state court) and
then allowing that private party to bring an MSPA claim surely was not Congress’s intent—it
would lead to very odd results.
Consider Osborne’s claimed injury in this case: he had to pay co-pays that should have
been borne by Metro Nashville, and he incurred litigation costs to demonstrate it. As to co-pays,
we know that the state court judgment attached to Osborne’s original complaint shows that he
recovered $54,566.94 in itemized medical expenses. Here, Osborne does not claim that his co-
pays were more than what he recovered in the state court judgment. 6 Further, attorney’s fees or
costs arising from prior litigation alone do not usually open the doors to federal court. See, e.g.,
Lewis v. Cont'l Bank Corp., 494 U.S. 472, 480 (1990) (“[i]nterest in attorney’s fees is, of course,
insufficient to create an Article III case or controversy where none exists on the merits of the
underlying claim”). Defendants in Metro Nashville’s position no doubt will argue that claims for
fees, costs, and co-pays could, and should, have been brought in the underlying state court suit.
When the judgment from that suit is paid, it is difficult to see how Osborne remains injured in
the way he claims here, or that this court can redress such an injury.
6In fact, Osborne claims that the amount he paid in co-pays is immaterial to this case “because the available
remedy under the MSPA is the double damages provision.”
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And to the extent Osborne claims Metro Nashville has not yet satisfied that judgment,
Bio-Medical warned of this exact scenario: use of the MSPA as a super-judgment enforcement
mechanism. The Bio-Medical court explained:
[W]hy would Congress include a private cause of action within a statutory scheme
but then limit its use to situations in which the defendant’s liability has already
been legally demonstrated? Assuming that a primary plan’s responsibility to pay
is generally demonstrated by a judgment, then the private cause of action (with its
provision for double damages) is morphed into a super-judgment enforcement
mechanism: when a primary plan is adjudged liable . . . but obstinately refuses to
pay the judgment, the plaintiff can file a new cause of action so that the primary
plan is really forced to pay. But why would Congress think such an unusual
mechanism to be necessary here? Why is the typical judicial process for
executing judgments insufficient? No answer is given . . . .
Id. at 288.
Here, Osborne has already obtained a judgment against Metro Nashville in state court.
Since he claims Metro Nashville has not paid that judgment, he comes to federal court in an
effort to collect (doubly). He has not offered any defense to the Bio-Medical court’s reasoning
that the MSPA is not intended for such use. And his citation to other Sixth Circuit cases shines
little light on the issue, since those cases did not involve private actions against tortfeasors. See
Duncan v. Liberty Mut. Ins. Co., 745 F. App’x 575 (6th Cir. Aug. 16, 2018) (insured proceeding
against automobile insurer); Gucwa v. Lawley, 731 F. App’x 408 (6th Cir. Apr. 16, 2018)
(employee proceeding against workers’ compensation administrator); Mich. Spine and Brain
Surgeons, PLLC v. State Farm Mut. Auto. Ins. Co., 758 F.3d 787 (6th Cir. 2014) (health care
provider proceeding against nongroup health insurance plan).
Put simply, Bio-Medical’s conclusion appears prudent. In the tort context, the Medicare
beneficiary’s injury will likely have been redressed by a state court judgment, and allowing that
same injury in federal court risks turning the MSPA into a super-judgment enforcement
mechanism. Surely Congress did not intend for such a result when it, albeit confusingly,
amended the MSPA. Instead, this reading is consistent with what this court has previously
explained was Congress’s purpose: Medicare’s recovery. Bio-Medical, 656 F.3d at 289-93.
Medicare’s injury remains after the tortfeasor has been demonstrated to have responsibility, and
No. 18-6062 Osborne v. Metro Gov’t of Nashville Page 9
Medicare has been provided a mechanism to recover conditional payments from the primary
payer or an entity paid by the primary payer. 42 U.S.C. § 1395y(b)(2)(B)(ii)-(iii).
One wrinkle remains: what about private parties other than the Medicare beneficiary
who were harmed by the tortfeasor’s refusal to pay (i.e., a hospital that footed the bill because
the beneficiary was neither paid upfront by the tortfeasor, nor conditionally paid the full amount
by Medicare)? We noted earlier that, because his injury has been redressed in state court,
Congress surely would not mean for a beneficiary to bring an MSPA claim once he has
demonstrated responsibility. But the hypothetical hospital stands in a different position: its
injury would not have been redressed, the tortfeasor’s liability would have been demonstrated,
and Medicare might not yet have been paid. Could the hospital bring an MSPA claim? Bio-
Medical blanketly says no. 656 F.3d at 293.
Perhaps that is right. But the case is not before the Court. Here, Osborne cannot proceed
because he is a Medicare beneficiary and now attempts to sue the tortfeasor under the MSPA,
something we persuasively foreclosed in Bio-Medical.
AFFIRMED.