Eleventh Circuit Court of Appeals Confirms Dismissal of Government's Claims in U.S. v. Stricker as Claims are Barred by the Statute of Limitations

The district court recently dismissed the action brought by the federal government in U.S. v. Stricker as barred by the statute of limitations. The government appealed that decision to the Eleventh Circuit Court of Appeals. On July 26, 2013, that court agreed with the district court and affirmed its dismissal of the government’s complaint.

Under the Federal Claims Collection Act, the government is given two different statutes of limitations depending on the action. For actions arising under contracts, the government has six years to file a complaint. For actions arising under torts, the government has only half that time with three years. In the original case giving rise to this action, a settlement was reached on August 20, 2003, and an initial payment was made on August 26, 2003. The plaintiffs’ attorneys had to certify that 75% of the class action plaintiffs had signed a release before the second, larger payment could be made. The releases were certified and the second payment was made on October 29, 2003. After that, the only remaining payments were to be made annually. The settlement was voidable if less than 97% of the plaintiffs had not signed a release. On December 2, 2003, the plaintiffs’ attorneys certified that the required number of plaintiffs had signed a release. The government filed its complaint to recover Medicare payments on December 1, 2009.

The government argued that the statute of limitations did not begin until December 2, 2003, and that the six year statute applied as this claim arose under a contract relationship with Medicare beneficiaries. The plaintiffs to this action, which now included the original plaintiffs, their attorneys, and the original defendants, argued that the government’s claim arose under a tort and thus the three year statute applied. The court did not find it necessary to decide which statute of limitations applied however. The court found that the claim accrued on October 29, 2003, when the initial settlement payment was made. The court cited the Code of Federal Regulations, which clarified when a claim arose under the Medicare Secondary Payer Act. The regulation in question states, "[a] primary payer’s responsibility for payment may be demonstrated by (1) A judgment; (2) A payment conditioned upon the beneficiary’s compromise, waiver, or release . . . ." 21 C.F.R. § 411.22(b). When the original defendants made the second payment on October 29, 2003, the federal government’s time for filing a claim began as this constituted a payment conditioned upon a release. That the contract was voidable if less than 97% of the plaintiffs signed a release did not deter the court, as the court noted that the settlement would proceed to completion if the defendants chose to simply do nothing. As such, the court found that the government’s complaint was not timely made, whether the allowable time frame was three years or six years.