Health Care Bill: Dodging the Freelance Lawyers, Suing on Spec

Taxpayers, businesses and pretty much everyone not associated with the litigation industry dodged a bullet last week when the House Ways & Means Committee rejected an amendment to the health care bill that Walter Olson of the Manhattan Institute characterizes as “one of the most audacious and far-reaching trial lawyer power grabs seen on Capitol Hill in a while.” The National Association of Manufacturers helped beat back the amendment, but you know how these schemes can return, again and again, in different guises.

America's Affordable Health Care Choices Act (sure it is)
The amendment would have expanded the Medicare Secondary Payer (MSP) Act, which allows the government to sue to recoup Medicare expenses, for example, from an insurance settlement in the case of an auto accident caused by a negligent driver. As Walter explains in his excellent post at, “Medicare qui tam: a health care bill surprise,” the federal government has been recently stepping up its efforts to collect from what are sometimes known as “Medicare liens” against third party defendants.

Medicare, not to mention Medicare law, gets very abstruse very quickly. Apparently in this complexity someone from the plaintiffs’ bar saw an opportunity to expand the opportunities for litigation. If the health care bill set a precedent, a wealth of new industry targets could open up.

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.

Now that IS familiar.  NAM President John Engler sent a letter to Chairman Charlie Rangel of the Ways & Means Committee opposing the language. Excerpt:

The amendment would allow any citizen to sue any company under the MSP and recover double medical costs allegedly caused by the company’s products if the injured party is a Medicare recipient. However, the federal suit may be brought before any determination of liability on the part of the company has been made. Faced with the potential of double damages, targeted businesses and industries will be under even more pressure than usual to settle for business reasons. Again, these newly authorized federal lawsuits could be brought even before the fact-finder in an underlying civil court case has rendered a ruling on liability.

The attempt to sneak in this amendment is the kind of self-serving, special-interest maneuvering that becomes easier the more complex and specialized the topic of legislation — in this case, health care — and the larger the bill — in this case, 1,000-plus pages. When business tries this sort of thing, it’s appropriately seen as newsworthy (even if only in the context of the legislative sausage-making). Yet when the self-serving, cash-seeking litigation industry tries the same thing, nobody in the media pays much attention.

But as Walter’s post and the NAM’s letter make clear, the stakes for law and the economy are high, very high.

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