Did the United States Court of Appeals for the Sixth Circuit Just Pave the Way for More MSP Private Causes of Action?

Medicare Set-Aside Blog, MSP Litigation, MSP News on April 18, 2018
Posted by Jean S. Goldstein, JD, CMSP

In today’s day and age of conditional payment recoveries, whenever a settlement of a claim is imminent, parties begin to worry about what possible challenges may impede the settlement, or even arise after settlement.  Yesterday, an interesting case from the United States Court of Appeals for the Sixth Circuit was issued; and while the fact pattern is not similar to the other conditional payment recovery cases we see regularly, it is a case which should be recognized and noted.  The case is Gucwa v. Lawley, et al[1] and is a private cause of action based upon violation of the RICO Act (Racketeer Influenced and Corrupt Organizations), in which plaintiffs alleged entitlement to double damages under the MSP (Medicare Secondary Payer Act), while also alleging tortious interference (based on allegations of false medical reports) and false imprisonment (with respect to alleged threats of loss of benefits if medical examinations were not attended by the plaintiff).

This case arises out of Michigan, which is certainly reminiscent of Hull v. Home Depot [2], a 2016 case in which a Michigan Circuit Court held that a claimant can bring a private cause of action and obtain double damages, even if payment is made. [3] Naturally, as soon as this case was issued, I was concerned that this was yet another example of a court allowing an injured worker to bring suit under the MSP, and allowing for double damages, as we regularly see in MSP actions these days.  Fortunately, this was not the case, as the Court here reaffirmed the District Court’s dismissal of the action for failure to state a claim.  However, in doing so, the court included what I believe to be some instructions for future cases.

Facts of the Case

The facts of this case are as follows:

  • Plaintiff, Marusza, was struck by a car in October, 2011, while working and sustained injuries. As result of the injuries Marusza’s live-in significant other, Gucwa, provided attendant care for his injuries;
  • Marusza personally agreed to pay Gucwa for the care he received, despite Gucwa having no background as a professional healthcare provider;
  • Defendant, Accident Fund Insurance Company, initially paid Marsuza for Gucwa’s services until July 2012, after receiving four physician-reports from the defendants who were also named in the matter;
  • Marusza alleged that Medicare paid medical expenses to which Medicare suffered a financial injury;
  • However, defendant paid for reasonable and necessary medical treatment of Marusza’s employment related conditions, excluding payment to Gucwa for her attendant care services, which are non-Medicare covered expenses;
  • Marusza and Gucwa filed a complaint naming Accident Fund and the four doctors who provided medical reports as defendants;
  • The case was subsequently dismissed on a Motion to Dismiss, for failure to state a claim which led to the filing in the United States Court of Appeals.

Findings of the Court

In reviewing the case, the Court reviewed each claim alleged, to determine if the lower court abused its discretion in dismissing the claims, which as mentioned above, included:

  • Individual RICO claims;
  • Private Causes of Action Under the Medicare Secondary Payer Act;
  • Tortious Interference; and
  • False Imprisonment.

With respect to the individual RICO claims, the court found both parties lacked standing.[4]

Regarding the more relevant claim of a private cause of action under the MSP, Marusza alleged that the defendants “defrauded Medicare by forcing them to pay $15,665 in medical bills for which Accident fund was responsible…” Gucwa, at 1. Marusza also asserted that under the MSP, he was entitled to double damages.  In addressing the claims, the Court held that, a

…party invoking federal subject matter jurisdiction, [bears] the burden of establishing…that the plaintiff (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision. Article III standing requires a concrete injury even in the context of a statutory violation. Congress cannot erase Article III’s standing requirements by statutorily granting the right to sue to a plaintiff who would not otherwise have standing. [S]tanding is not met simply because a statute creates a legal obligation and allows a private right of action for failing to fulfil this obligation. Id. at 9-10. Emphasis Added). (Internal Citations Omitted).

Plaintiff cited to a jurisdictional precedential case arguing he had standing under the MSP, because as a Medicare beneficiary he was denied coverage by a primary payer.  However, the Court distinguished the misinterpretation by Plaintiff, and efficiently noted that being denied coverage is insufficient to confer standing to bring an action under the MSP.

Plaintiff asserted he suffered a physical injury and cited to a Second Circuit case, which he argued “…enables a private party to bring an action to recover from a private insurer only where that private party has itself suffered an injury because a primary plan has failed to make a required payment to or on behalf of it.” Id. at 11.  The Court differentiated the facts between the two cases, and took a different view, finding that plaintiff’s actual physical injury was insufficient to confer standing; as “physical injury…is not the kind of injury contemplated by the [MSP].” Id.

Furthermore, the Court indicated that case law does not support Marusza’s position in that a “plaintiff does not satisfy the elements of standing simply by showing that the insurer failed to make payments on his behalf, the plaintiff must allege that he was injured by defendants’ failure to pay, but Marusza alleged that [it was] Medicare [which] suffered a financial injury when defendant failed to pay.”  Id. at 12.  Essentially, the plaintiff here could have pled differently by asserting he suffered a financial injury when the defendant failed to pay all medical expenses.  Interestingly, the Plaintiff did in fact note he suffered financial loss, but only after the district court’s decision was issued; such that it was untimely pled.

In addition, the Court asserted that the “Medicare Secondary Payer Act is not a qui tam statute, [and] the financial injury suffered by the government does not confer standing upon other parties.” Id. at 10.  See Stalley v. Methodist Healthcare, 517 F.3d 911, 919 (6th Cir. 2008).  A qui tam statute is one which enables an individual to bring a cause of action in the name of the United States, which will benefit both the individual and the government. See Id.  Just because there is a legal obligation to pay under the MSP, does not mean that any party cannot bring a private cause of action. Rather the MSP creates a private cause of action with double damages against primary payers who fail to provide the appropriate payment or reimbursement.

Lastly, the court dismissed the tortious interference and false imprisonment claims, which were based upon the business relationship and nature of the independent examinations conducted by the physicians hired by the Defendant.

Why Is This Case Important to Note?

This is yet another example of the extent to which plaintiffs are going to apply the MSP to bring a cause of action for double damages against a primary payer.  As we saw in Hull v. Home Depot, a private citizen was entitled to bring a private cause of action for double damages.  Arguably, Hull is a completely different set of facts, in that there the defendant refused to pay Plaintiff’s medical expenses for nearly five years, which forced Medicare to pay the expenses.  In the instant matter, expenses were paid by Defendant excluding the attendant care; and while Medicare may have paid for certain medical expenses, the conditional payment issue is not addressed in this case.  However, as we have seen with other MSP recovery cases, these are essentially “trial and error cases” which serve as a recovery roadmap to MSP causes of action.  In this case in particular, if you read between the lines, the Court is advising that had Plaintiff properly pled standing, by showing personal financial loss or injury, the Court would have likely heard the matter.  Essentially, we are seeing another example of a Court paving the way for private citizens to sue primary payers.

The takeaway from this case is that it is not just the government or Medicare Advantage Plans who can sue to enforce conditional payment recovery, but also private citizens.  It is just a matter time before we see more plaintiff’s testing the boundaries of MSP in other jurisdictions.


[1] Gucwa v. Lawley, No. 17-1823, 2018 U.S. App. LEXIS 9428. (April 16, 2018).

[2] Hull v. Home Depot United States, 2016 Mich. Cir. LEXIS 1.

[3] In Hull, the defendant refused to pay Plaintiff’s medical expenses for nearly five years, which forced Medicare to pay the expenses.  Defendant only paid the medical expenses after the matter was litigated.  Of particular interest in the Court’s commentary is the manner by which the Court was not amused with the “no harm; no foul” approach taken by the defendant and finding that such “…course of conduct is not permitted in light of the clear intent and purpose of the MSP.” Hull, at 16.

[4] Marusza’s RICO claim failed as he lacked standing as required by the statute as his personal injury did not qualify as an injury to a business or property.  While, case law has provided that professional medical provider’s loss of reimbursement is an injury to a business or property, Gucwa is not licensed, registered or certified as a healthcare provider, and for this reason did not have an identifiable RICO claim.