In a consolidated appeal the Sixth Circuit affirmed seven districtcourt dismissals of suits brought by professional guardian DouglasStalley against, among others, Jones Day clients Methodist Healthcare,Sumner Regional Health Systems, Inc., Wellmont Health System, andMountain States Health Alliance under the Medicare Secondary Payer("MSP") statute's private cause of action. This is the second appellateruling on the more than 50 virtually identical suits brought by Stalleyand consumer activist Erin Brockovich against hospitals and healthsystems in Arkansas, California, Florida, Pennsylvania, and Tennessee.The Sixth Circuit’s ruling comes on the heels of a similar decision bythe Eighth Circuit in December 2007.
Thesuits alleged that the hospitals violated the MSP statute by failing toreimburse to Medicare conditional payments received on behalf ofunidentified Medicare beneficiaries for treatment necessitated byalleged and unidentified incidents of medical malpractice at thehospitals' facilities. Stalley, who is not a Medicare beneficiary,purported to bring suit on behalf of the United States and soughtrecovery of the double damages authorized by the MSP statute. Everydistrict court that has ruled on the defendants' motions to dismiss hasheld that the MSP private cause of action is not a qui tamstatute, and consequently Stalley and Brockovich do not have standing to bring suit.
In addition to affirming that the MSP private cause of action is not a qui tamstatute,the Sixth Circuit ordered Stalley’s counsel to show cause why the SixthCircuit should not impose sanctions for advancing their "utterlyfrivolous" claims. Appeals remain pending before the Third, Ninth, andEleventh Circuits. Ted Bilich argued before the Sixth Circuit on behalfof the seven appellees. Greg Luce, Ted Bilich, Jeff LeVee, Jim Poth,Erin Burke, Paul Reichert, and Nolan Young worked on the appellate anddistrict court briefs for the clients. The case is Stalley v. Methodist Healthcare, No. 07-5077.