Contacts on Capitol Hill inform me that Republicans yesterday managed to block a remarkable provision that had been slipped into the House leadership’s 794-page health care bill just before it went to a House Ways & Means markup session. If their description of the provision is accurate — and my initial reading of the language gives me no reason to think it isn’t — it sounds as if they managed to (for the moment) hold off one of the more audacious and far-reaching trial lawyer power grabs seen on Capitol Hill in a while.

For some time now the federal government has been intensifying its pursuit of what are sometimes known as “Medicare liens” against third party defendants (more). In the simplest scenario — not the only scenario, as we will see below — someone is injured in, say, a car accident, and has the resulting medical bills paid by Medicare. They then sue and successfully obtain damages from the other driver. At this point Medicare (i.e. the government) is free to demand that the beneficiary hand over some or all of the settlement to cover the cost of the health care, but under some conditions it is also free to file its own action to recover the medical outlays directly from the negligent driver (who in some circumstances might even wind up paying for the same medical bills twice). It might do this if, for example, it does not expect to get a collectible judgment from the beneficiary.

The newly added language in the Thursday morning version of the health bill (for those following along, it’s Section 1620 on pp. 713-721) would greatly expand the scope of these suits against third parties, while doing something entirely new: 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 on p. 714 of 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, pending analysis by persons more familiar with Social Security and Medicare law than myself:

• A bit of language on p. 714, I am told, would remove a significant barrier to litigation, namely a rule authorizing a lien action to be filed on behalf of Medicare only after a previous “judgment”, that is to say, only after the success of an earlier lawsuit (by the injured party) establishing responsibility for the injury.
• Language on p. 715 would double damages in cases of “intentional tort or other intentional wrongdoing”.
• P. 716 specifies that “any person” may bring the action, that is, it need not be a lawyer representing the injured person or any other injured person.
• P. 717: the bounty would be a rich one, 30 percent plus expenses. P. 719 provides that even if the federal government itself intervenes and insists on taking over the lawsuit, the bounty-hunter would still get a minimum of 20 percent, 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. Page 720 specifies that the suit may be settled “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 agrees.
• 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, the bullet seems to have been dodged. Some Republicans on the committee spotted the issue and raised strong protests, and by the end of the day an agreement had been reached with Democratic managers to withdraw the provision. That still provides no guarantee that it will not rear its head later in the process at some stage that proponents judge more favorable to their designs.

The idea being promoted here is an atrocious one. Even when it comes to garden-variety torts, there are many entirely legitimate reasons why federal managers might not decide to pursue Medicare liens from every possible defendant. To take only 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 would be free to 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. Who in Congress slipped this language in, anyway — and on whose behalf?

Incidentally, this is not the first time the idea of Medicare-lien/”secondary payer” qui tam has been given an outing. In 2006 the famous Erin Brockovich lent her name and efforts to lawsuits filed by Wilkes & McHugh and another law firm pursuing the highly adventurous theory that a qui tam right to sue over tort-induced Medicare overpayments already exists, at least against hospitals. This campaign fared extremely poorly in court (see our earlier coverage here, here, and here). Last year, in a case argued by Kenneth Connor for Wilkes & McHugh, the Sixth Circuit ruled that claims brought by Wilkes’s client against dozens of hospitals were “utterly frivolous” and ordered counsel to show cause why sanctions should not be imposed for “unreasonable and vexatious” appeals (Stalley v. Methodist Healthcare, PDF; more at Jones Day site). (reposted with slight changes and bumped from an earlier post this morning) (& welcome Popehat, Coyote, Weisenthal/Business Insider, Hemingway/NRO “Corner”, For What It’s Worth, Blogs for Victory, TigerHawk, The Agitator, Colossus of Rhodey readers).

Filed under: Erin Brockovich, Medicare, ObamaCare, qui tam, Wilkes & McHugh