The Trial Lawyers’ Earmark: Using Medicare to Finance the Lifestyles of the Rich and Infamous

In one of the starkest examples of how plaintiffs’ lawyers want to use Congress to get rich at the expense of the American taxpayer, an amendment that would have generated abusive Medicare litigation on a massive scale–along with the usual huge attorneys’ fees–was recently added to the health care reform bill in the U.S. House of Representatives.[1] The current Medicare statute simply ensures that Medicare is reimbursed for the medical benefits it pays when a third party is legally responsible for a Medicare beneficiary’s injuries or medical costs. However, the tort lawyer amendment would:

Allow new types of lawsuits against the makers of consumer products (including food) for supposed injuries to Medicare beneficiaries based on questionable statistical speculation;

Flood the federal courts with lawsuits that circumvent state tort law and federal requirements for class action lawsuits, diversity jurisdiction, or amount in controversy;

Violate the privacy of Medicare beneficiaries by making their medical records available to tort lawyers without their permission (or that of the government);

Interfere with the rights of beneficiaries against third parties responsible for their medical costs;

and

Improperly and unwisely turn the Medicare reimbursement provision into a qui tam statute that would allow plaintiffs’ lawyers to pursue claims that Medicare does not think are valid or proper, reducing the availability of medical treatment for Medicare beneficiaries.

Unscrupulous plaintiffs’ lawyers have chafed under the requirement that actual responsibility be established before an MSP suit can be filed because they see the double damages provided by the statute as a potential hen that lays golden eggs. Their attempts to pursue such MSP suits against tobacco companies for supposed injuries to Medicare recipients before any liability had even been established were rebuffed in the courts, as were a series of frivolous cases filed against hospitals.

In the hospital cases, plaintiffs alleged that hospitals had violated the MSP statute by failing to reimburse Medicare for expenses to treat unspecified medical errors with regard to unspecified Medicare beneficiaries at unspecified health care facilities owned by the defendants.[7] The plaintiffs’ lawyers wanted the court to recognize the MSP as a qui tam[8] statute granting them standing to sue as private attorneys general even though the plaintiffs were not Medicare beneficiaries who had been specifically injured. However, the MSP is not a qui tam statute that allows a plaintiff to sue on behalf of the United States, and the plaintiffs did not have standing to sue–they were acting as “self-appointed bounty hunter[s]” whose goal was to profit at the expense of the hospitals.[9] Consequently, their claims were dismissed as “utterly frivolous.”

The Heritage Foundation
8/29/9