Penelope Stillwell v. State Farm Fire & Casualty Co.

• Court: Court of Appeals for the Eleventh Circuit
• Decided: May 27, 2026
• Docket: 21-13740
• Status: Unpublished

Opinion

USCA11 Case: 21-13740 Document: 86-1 Date Filed: 05/27/2026 Page: 1 of 25

NOT FOR PUBLICATION

In the United States Court of Appeals For the Eleventh Circuit ____________________ No. 21-13740 ____________________

WILLIAM STILLWELL, Plaintiff, PENELOPE STILLWELL, Individually, and as personal representative of the estate of William Stillwell, Plaintiff-Appellant, versus

STATE FARM FIRE & CASUALTY CO., MOTORISTS MUTUAL INSURANCE CO., Defendants-Appellees. ____________________ Appeal from the United States District Court for the Middle District of Florida D.C. Docket No. 8:17-cv-01894-SDM-AAS ____________________

Before BRANCH, LUCK, and TJOFLAT, Circuit Judges. LUCK, Circuit Judge: USCA11 Case: 21-13740 Document: 86-1 Date Filed: 05/27/2026 Page: 2 of 25

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William and Penelope Stillwell settled their tort claims after a slip-and-fall accident. As part of the settlement, the Stillwells re- ceived a lump-sum payment in exchange for their releasing State Farm Fire and Casualty Company and Motorists Mutual Insurance Company from all future liability for the tort claims. Despite the settlement, the Stillwells believed that the insurers had an ongoing responsibility to reimburse Medicare for William’s post-settlement accident-related medical expenses. So, Penelope, for herself and on behalf of William’s estate, sued the insurers under the Medicare Secondary Payer Act and the False Claims Act, seeking to recoup damages for the government based on the insurers’ failure to reim- burse Medicare for William’s post-settlement medical expenses. The district court dismissed the complaint after concluding that the insurers were not legally responsible for paying for the medical ex- penses and, therefore, did not have a responsibility to reimburse Medicare for them. After careful review and with the benefit of oral argument, we affirm.

FACTUAL BACKGROUND In December 2010, William suffered serious injuries after a slip-and-fall accident at the Sycamore Springs living community in Indianapolis, Indiana. In March 2011, William became eligible for Medicare. As his injuries worsened, he had to amputate his lower left leg. In 2011, the Stillwells sued the property management com- pany of the living community, the homeowners’ association, and the landscaping company for negligence in Indiana state court. USCA11 Case: 21-13740 Document: 86-1 Date Filed: 05/27/2026 Page: 3 of 25

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They sought damages for William’s past and future medical ex- penses and Penelope’s loss of consortium. State Farm insured the homeowners’ association and property management company, and Motorists insured the landscaping company. In 2013, the Cen- ter for Medicare and Medicaid Services sent William a letter, in- forming him that Medicare was notified about his tort suit. In 2016, the Stillwells agreed to settle their tort claims and signed a “settlement recap,” itemizing the amounts to be paid un- der the settlement. Specifically, the parties agreed that the insurers would pay $200,000 for full settlement of all claims. Notably, $5,000 of that amount came from the insureds’ “unused medpay funds,” which stemmed from the no-fault insurance coverage un- der the liability insurance policies. The agreement itemized pay- ments for attorney’s fees and costs, private health insurance reim- bursement, Medicare reimbursement for conditional payments al- ready paid for pre-settlement accident-related medical expenses, and a lump sum to the Stillwells. The Stillwells signed a memoran- dum of understanding stating that the case was settled and that the Stillwells would sign releases and dismiss the case after formalizing the settlement agreement. The memorandum was filed in the In- diana trial court. In December 2016, Medicare sent William another letter. This letter said that Medicare was aware that William settled his tort claim. And the letter explained that the Medicare Secondary Payer Act obligated William to reimburse Medicare for $19,672.99 USCA11 Case: 21-13740 Document: 86-1 Date Filed: 05/27/2026 Page: 4 of 25

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in pre-settlement accident-related medical expenses once William received the settlement payment. The insurers sent the Stillwells a check for the full amount and a proposed formal settlement agreement. The proposed for- mal agreement released the insurers from any further liability, in- cluding from William’s future medical costs, in return for the lump-sum payment. The proposed agreement also provided that the Stillwells: (1) “ha[d] considered the interests of Medicare”; (2) “ha[d] an obligation to Medicare . . . that an incident was the subject of a settlement”; (3) “ha[d] an obligation to reimburse Med- icare . . . for medical services rendered to date in this matter”; and (4) “ha[d] complied with all known obligations pursuant to” federal law. The agreement continued that the Stillwells’ “future medical care [would] not be affected by the terms and conditions” of the agreement and that the Stillwells would be responsible for “any ex- isting or future medical lien or liens of any type relating to William Stillwell.” But the Stillwells refused to sign the proposed formal agreement because they believed that the insurers had an ongoing obligation to reimburse Medicare for post-settlement accident-re- lated medical expenses. The insurers moved to enforce the terms of the proposed formal settlement agreement in the Indiana trial court. The Indi- ana trial court granted the motion and entered judgment enforcing the terms of the proposed settlement agreement. The trial court’s judgment found that the “Stillwells [were] jointly and severally lia- ble for payment of any existing or future medical lien . . . relating USCA11 Case: 21-13740 Document: 86-1 Date Filed: 05/27/2026 Page: 5 of 25

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to William Stillwell.” The judgment showed the insurers had paid what they owed under the settlement agreement, including the $19,672.99 payment to Medicare to reimburse the cost of William’s pre-settlement accident-related medical expenses. The Court of Appeals of Indiana affirmed the judgment on appeal.

PROCEDURAL HISTORY Soon after the Indiana trial court entered judgment, Penel- ope sued State Farm and Motorists in federal district court. The complaint asserted two claims under the Medicare Secondary Payer Act and eight claims under the False Claims Act. As to her Medicare Secondary Payer Act claims, Penelope alleged that the in- surers failed to reimburse Medicare for thousands of dollars in post-settlement accident-related medical expenses, entitling Penel- ope to double damages under the Act. Her eight False Claims Act claims (four claims against each insurer) were based on the assumption that the insurers held pri- mary responsibility to pay for William’s post-settlement accident- related medical expenses, meaning William’s medical providers should have submitted claims to the insurers and not to Medicare. Specifically, two counts alleged that the insurers caused William’s medical providers to submit false claims to Medicare; two counts alleged that the insurers submitted false statements material to his medical providers’ false claims to Medicare; two counts alleged that the insurers unlawfully concealed their primary payment responsi- bility to reduce the amount that had to be reimbursed to Medicare under the Medicare Secondary Payer Act; and the other two counts USCA11 Case: 21-13740 Document: 86-1 Date Filed: 05/27/2026 Page: 6 of 25

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alleged that the insurers conspired to commit the other acts of fraud. The insurers moved to dismiss the complaint for failing to state a claim, arguing that the Medicare Secondary Payer Act and the False Claims Act claims failed because the insurers had no re- sponsibility to pay for William’s post-settlement accident-related medical expenses. The district court granted the motions and dis- missed the complaint. The district court agreed with the insurers that Penelope’s Medicare Secondary Payer Act claims failed be- cause under the settlement agreement the insurers were not re- sponsible to pay for William’s post-settlement accident-related medical care expenses and were thus not responsible to reimburse Medicare for those expenses. Because the insurers were not re- sponsible to pay for those expenses or to reimburse Medicare, the district court explained that William’s medical providers submitted accurate claims to Medicare, that the insurers did not conceal their obligation to reimburse Medicare for those expenses, and that the insurers did not conspire to defraud the government. So, the dis- trict court concluded that Penelope’s False Claims Act claims also failed. Penelope appeals the district court’s dismissal of her com- plaint.

STANDARD OF REVIEW We review de novo a district court’s dismissal for failure to state a claim. United States ex rel. Lesinksi v. S. Fla. Water Mgmt. Dist., 739 F.3d 598, 602 (11th Cir. 2014). False Claims Act claims must be pleaded with particularity under Federal Rule of Civil Procedure USCA11 Case: 21-13740 Document: 86-1 Date Filed: 05/27/2026 Page: 7 of 25

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9(b). United States ex rel. Clausen v. Lab’y Corp. of Am., 290 F.3d 1301, 1309–10 (11th Cir. 2002).

DISCUSSION We divide our discussion into two parts. First, we address the dismissal of Penelope’s Medicare Secondary Payer Act claims. And, then, we consider the dismissal of her False Claims Act claims.

Medicare Secondary Payer Act Claims Penelope argues the district court erred in dismissing her Medicare Secondary Payer Act claims because, contrary to what the district court concluded, the insurers were responsible for re- imbursing Medicare for William’s post-settlement accident-related medical expenses. We disagree. As we’ve explained, the Medicare Secondary Payer Act is not one Act, but instead “a collection of statutory provisions codified during the 1980s with the intention of reducing federal health care costs.” United States v. Baxter Int’l, Inc., 345 F.3d 866, 874 (11th Cir. 2003). Generally, under the Medicare Secondary Payer Act, Medi- care should not pay for a beneficiary’s medical expenses where a “primary payer”—like a liability insurance plan—is also responsible for those expenses. MSP Recovery Claims, Series LLC v. ACE Am. Ins. Co., 974 F.3d 1305, 1308 (11th Cir. 2020). So, “if payment for cov- ered services has been or is reasonably expected to be made by someone else, Medicare does not have to pay.” MSP Recovery Claims, Series LLC v. Metro. Gen. Ins. Co., 40 F.4th 1295, 1299 (11th Cir. 2022) (quoting MSP Recovery, LLC v. Allstate Ins. Co., 835 F.3d USCA11 Case: 21-13740 Document: 86-1 Date Filed: 05/27/2026 Page: 8 of 25

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1351, 1355 (11th Cir. 2016)). “But if a primary plan ‘has not made or cannot reasonably be expected to make payment with respect to [the] item or service promptly,’ Medicare may make the initial pay- ment, ‘conditioned on reimbursement’ from the primary plan.” Id. (quoting 42 U.S.C. § 1395y(b)(2)(B)(i)). Congress created a private cause of action with double dam- ages “to encourage private parties who are aware of non-payment by primary plans” to enforce Medicare’s rights. Glover v. Liett Grp., Inc., 459 F.3d 1304, 1307 (11th Cir. 2006) (citing 42 U.S.C. § 1395y(b)(3)(A)). As a “prerequisite to pursuing th[e] private cause of action,” a plaintiff must demonstrate that the “primary plan has or had a responsibility” to pay the relevant medical expenses. Metro. Gen. Ins., 40 F.4th at 1299 (quoting 42 U.S.C. § 1395y(b)(2)(B)(ii)); see also Glover, 459 F.3d at 1309 (explaining that the demonstration of a primary payer’s responsibility to pay is “a condition precedent” to its “obligation to reimburse Medicare”). A plaintiff can demonstrate responsibility “by a judgment, a payment conditioned upon the recipient’s compromise, waiver, or release (whether or not there is a determination or admission of liability) of payment for items or services included in a claim against the primary plan or the primary plan’s insured, or by other means.” 42 U.S.C. § 1395y(b)(2)(B)(ii). Specifically, in the context of state-law torts, we’ve said that “[a]fter the Medicare beneficiary obtains a favorable judgment or settlement of state tort claims, Medicare is entitled to reimbursement to the extent of its condi- tional payments.” Glover, 459 F.3d at 1309–10. After demonstrating USCA11 Case: 21-13740 Document: 86-1 Date Filed: 05/27/2026 Page: 9 of 25

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the primary plan’s responsibility, a plaintiff can state a claim under the private cause of action by alleging “(1) the defendant’s status as a primary plan; (2) the defendant’s failure to provide for primary payment or appropriate reimbursement”; and (3) “damages.” See Humana Med. Plan, Inc. v. W. Heritage Ins. Co., 832 F.3d 1229, 1239 (11th Cir. 2016). Here, because Penelope cannot show the insurers’ responsi- bility to pay for William’s post-settlement accident-related medical expenses, she cannot state a claim under the Medicare Secondary Payer Act’s private cause of action. She does not point to a “favor- able judgment or settlement” or anything else obligating the insur- ers to pay for those expenses. See Glover, 459 F.3d at 1310. Instead, she relies on the insurers’ pre-settlement contracts which made them responsible for William’s medical expenses, generally. But the insurers could not have been responsible to make hypothetical and speculative future payment obligations that had not yet been incurred. And the settlement agreement that the Indiana trial court enforced establishes the opposite. It says the Stillwells—not the insurers—are responsible for post-settlement accident-related medical expenses. So, when Medicare paid for William’s post-set- tlement medical expenses, the insurers had no duty to reimburse Medicare. And once the settlement agreement was approved, the insurers no longer had a responsibility to pay for medical expenses. Penelope did. Because Penelope did not demonstrate the insurers’ responsibility for the payments, “a prerequisite to pursuing this pri- USCA11 Case: 21-13740 Document: 86-1 Date Filed: 05/27/2026 Page: 10 of 25

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vate cause of action,” see Metro. Gen. Ins., 40 F.4th at 1299, the dis- trict court did not err in dismissing Penelope’s Medicare Secondary Payer Act claims. Penelope offers four counterarguments. First, Penelope contends that the settlement agreement cannot extinguish the in- surers’ responsibility to reimburse Medicare for William’s post-set- tlement accident-related medical expenses. Instead, she contends that the settlement agreement showed that the insurers “had a re- sponsibility”—before the settlement—to pay for those expenses. See 42 U.S.C. § 1395y(b)(2)(B)(ii). And because the settlement shows the insurers, at one point, had a responsibility to make pay- ment, Penelope argues she has satisfied the statutory prerequisite to sue under the private cause of action. But this misreads the Medicare Secondary Payer Act’s use of the word “had.” It is not enough to show that, pre-settlement, the insurers had a responsibility for William’s accident-related medical expenses. Rather, the settlement must demonstrate that the insur- ers “had a responsibility” for a “payment made by the Secretary un- der this subchapter.” See 42 U.S.C. § 1395y(b)(2)(B)(ii). That is, the insurers must have “had” a responsibility for a payment at the time that payment was made by Medicare. It is not sufficient to point to a speculative and general future responsibility for hypothetical ex- penses that have not yet occurred. Penelope could show that re- sponsibility by a “favorable judgment”—saying the insurers were responsible for payments Medicare made—or by a settlement USCA11 Case: 21-13740 Document: 86-1 Date Filed: 05/27/2026 Page: 11 of 25

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agreement to the same effect. See Glover, 459 F.3d at 1309–10. In- deed, the settlement agreement here did show that the insurers had a responsibility for William’s pre-settlement medical expenses, and the insurers appropriately reimbursed Medicare for its payment of those expenses. But the settlement agreement also clearly estab- lished that the insurers had no responsibility for William’s accident- related medical expenses going forward. As to any medical ex- penses incurred after the settlement, the insurers never “had” a re- sponsibility to pay. So, the settlement agreement undermines any attempt to demonstrate that the insurers had a responsibility for any payment Medicare made for William’s post-settlement acci- dent-related medical expenses. Second, Penelope asserts that our decision in Humana and the Sixth Circuit’s decision in Hadden v. United States, 661 F.3d 298 (6th Cir. 2011), support her position that the settlement agreement couldn’t extinguish the insurers’ responsibility to reimburse Medi- care for William’s post-settlement accident-related medical ex- penses. For the same proposition, she also cites Medicare’s regula- tion stating that reimbursement to Medicare is still required “even though [the primary payer] has already reimbursed the benefi- ciary.” 42 C.F.R. § 411.24(i)(1). But the cases and regulation Penelope cites only apply where the liability insurer was responsible to make payment for pre-set- tlement medical expenses that Medicare already conditionally paid for. For example, in Humana, a liability insurer issued a lump-sum settlement payment to a tort plaintiff but failed to reimburse the USCA11 Case: 21-13740 Document: 86-1 Date Filed: 05/27/2026 Page: 12 of 25

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tort plaintiff’s Medicare Advantage insurer—a private insurer who contracts with the government to provide Medicare benefits—for pre-settlement accident-related expenses. 832 F.3d at 1231–32. Even though the liability insurer had already issued the lump-sum payment, we explained that the liability insurer still had a reim- bursement responsibility because the liability insurer had a respon- sibility to make payment for the pre-settlement expenses that the Medicare Advantage insurer conditionally paid for. Id. at 1239–40. Similarly, in Hadden, the Sixth Circuit concluded that a plain- tiff was responsible to reimburse Medicare because the tort plaintiff received a lump-sum settlement payment from a liability insurer but failed to use those proceeds to reimburse Medicare for pre-set- tlement accident-related medical expenses. 661 F.3d at 300–03. There, the Sixth Circuit explained that the plaintiff’s reimburse- ment responsibility arose because the liability insurer’s settlement payment demonstrated that it was responsible for the plaintiff’s pre- settlement accident-related expenses that Medicare conditionally paid for. See id. at 302–03. The Medicare regulation is consistent with Humana and Hadden. It provides that when a liability insurer has a demonstrated responsibility to make payment for pre-settlement medical ex- penses that Medicare already paid for, the responsibility to reim- burse Medicare survives post-settlement. See 42 C.F.R. § 411.24(i)(1); Humana, 832 F.3d at 1239–40; Hadden, 661 F.3d at 302–03. But the Medicare regulation, and Humana and Hadden, do not apply here because the insurers already reimbursed Medicare USCA11 Case: 21-13740 Document: 86-1 Date Filed: 05/27/2026 Page: 13 of 25

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for the pre-settlement medical expenses. They say nothing about the obligation for post-settlement medical expenses that the bene- ficiary incurred after the settlement agreement cuts off the insur- ers’ responsibility. Third, Penelope maintains that Medicare’s regulations for workers’-compensation settlements also apply to tort-liability set- tlements, even though Medicare has not issued similar regulations for tort-liability settlements. See 42 C.F.R. §§ 411.40–47. Because Medicare “will not . . . recognize[]” a workers’-compensation set- tlement that fails to account for Medicare’s interest in not paying for future work-related medical expenses, Penelope argues that Medicare would not recognize the insurers’ settlement here be- cause it impermissibly “shift[ed] to Medicare the responsibility” to pay for William’s post-settlement accident-related medical ex- penses. See 42 C.F.R. § 411.46(a)–(b). But this argument fails for two reasons. One reason is that workers- compensation liability is fundamentally different than tra- ditional tort liability. We decline to shoehorn tort liability settle- ments into a fundamentally different regulatory framework of an- other area of the law. The other reason is that, even if they did apply, the workers’-compensation regulations would not require the insurers to reimburse Medicare. The regulations say only that Medicare “will not pay for treatment of ” the accident-related con- dition, not that Medicare can seek reimbursement for post-settle- ment accident-related expenses it has already paid. 42 C.F.R. § 411.46(b)(2). USCA11 Case: 21-13740 Document: 86-1 Date Filed: 05/27/2026 Page: 14 of 25

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Last, Penelope argues that the no-fault-insurance provisions in the insurers’ liability-insurance policies, which covered medical expenses for injuries on the insured’s premises regardless of fault, demonstrated the insurers’ responsibility to pay William’s post-set- tlement accident-related medical expenses and reimburse Medicare for those expenses. But this argument, again, misunderstands the scope of the insurers’ responsibility to reimburse Medicare. Once the insurers provided the Stillwells a lump sum in exchange for a release of all their claims—and reimbursed Medicare for William’s past medical expenses—the insurers were no longer responsible to pay for William’s medical expenses under any provision of the lia- bility insurance policies. At that point, the insurers no longer “ha[ve] or had” a responsibility under the plan to pay for William’s medical expenses. See 42 U.S.C. § 1395y(b)(2)(B)(ii); see also 42 C.F.R. § 411.21. Without a responsible primary plan, the insurers were not primary payers responsible to reimburse Medicare for those expenses. See 42 U.S.C. § 1395y(b)(2)(B)(ii).

False Claims Act Claims To be liable under the False Claims Act, a plaintiff must, at a minimum, allege that the defendant acted in a way to defraud the government. See 31 U.S.C. § 3729(a)(1). Those allegations could include knowingly causing a false claim to be submitted to the gov- ernment, id. § 3729(a)(1)(A); knowingly submitting a false state- ment that is material to a false claim to the government, id. § 3729(a)(1)(B); knowingly concealing or avoiding an obligation to USCA11 Case: 21-13740 Document: 86-1 Date Filed: 05/27/2026 Page: 15 of 25

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pay the government, id. § 3729(a)(1)(G); and conspiring to do any of these acts of fraud, id. § 3729(a)(1)(C). Here, Penelope asserted eight False Claims Act violations by the insurers. All of her claims under the Act assumed that the in- surers had a primary payment responsibility for William’s post-set- tlement accident-related medical expenses. Specifically, two claims alleged that the insurers were liable under the Act for causing Wil- liam’s medical providers to submit false claims to Medicare for those expenses; two claims alleged that the insurers were liable for submitting false statements material to William’s medical provid- ers’ false claims to Medicare; two claims alleged that the insurers were liable for concealing their obligation to reimburse Medicare for William’s post-settlement accident-related medical expenses; and two claims alleged that the insurers were liable for conspiring with each other to commit the other acts of fraud against the gov- ernment. Because each of Penelope’s False Claims Act claims was based on the insurers’ responsibility to pay for William’s post-set- tlement accident-related medical expenses, they fail for the same reason her Medicare Secondary Payer Act claims do. As we ex- plained above, the insurers had no responsibility to pay for Wil- liam’s post-settlement accident-related medical expenses. Based on that conclusion, none of the insurers’ alleged actions violate the False Claims Act. William’s medical providers’ claims to Medicare were accurate, and the insurers did not conceal an obligation to re- USCA11 Case: 21-13740 Document: 86-1 Date Filed: 05/27/2026 Page: 16 of 25

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imburse Medicare for post-settlement accident-related medical ex- penses because they had no such obligation. So, the district court did not err in dismissing Penelope’s False Claims Act suit. In response, Penelope argues that the insurers’ failure to re- port the settlement agreement to Medicare caused it to pay false claims, so the district court shouldn’t have dismissed her False Claims Act counts. Under her theory, if the insurers had reported the settlement to Medicare then Medicare would not have improp- erly paid William’s post-settlement accident-related medical costs. But this theory fails for two reasons. First, Medicare’s letter at- tached to the amended complaint shows that, in fact, the settle- ment agreement was reported to Medicare. It stated that Medicare was notified about the settlement agreement and provided the pre- cise amount that William owed Medicare for pre-settlement medi- cal expenses based on the settlement agreement’s terms. Second, even if Medicare had been unaware of the settlement agreement, Penelope’s claims would still fail because the insurers had no re- sponsibility to pay for William’s post-settlement medical expenses. So, Medicare did not improperly pay those expenses, no false claims were submitted, and the insurers are not liable under the False Claims Act.

CONCLUSION The settlement agreement and the Indiana trial court’s judg- ment enforcing that agreement make clear that the insurers did not have a responsibility to pay for William’s post-settlement accident- related medical expenses when Medicare paid for those expenses. USCA11 Case: 21-13740 Document: 86-1 Date Filed: 05/27/2026 Page: 17 of 25

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Without establishing the insurers’ responsibility to pay for those expenses, Penelope’s Medicare Secondary Payer Act claims fail be- cause the insurers had no responsibility to reimburse Medicare for those expenses. And her False Claims Act claims also fail because William’s medical providers did not submit false claims to Medi- care for his post-settlement medical expenses and the insurers did not conceal any obligation to reimburse Medicare for those ex- penses. So, the district court did not err in dismissing Penelope’s amended complaint. AFFIRMED. USCA11 Case: 21-13740 Document: 86-1 Date Filed: 05/27/2026 Page: 18 of 25

21-13740 TJOFLAT, J., Concurring 1

TJOFLAT, Circuit Judge, Concurring: The threshold question before the District Court in consid- ering whether any of the counts of the Third Amended Complaint (the “Complaint”) stated a cause of action was whether the Still- wells, in settling their Indiana tort action, had released State Farm and Motorists Mutual (“Insurers”) of all claims the Stillwells might have against Insurers at any time. In their motions to dismiss the Complaint, Insurers argued that the Court of Appeals of Indiana answered this threshold question in their favor when it affirmed the judgment of the Superior Court of Marion County enforcing the settlement. 1 See Stillwell v. Eagle-Kirkpatrick Mgmt. Co., Inc., No. 49A02-1708-CT-1919, 2018 WL 3321281 (Ind. Ct. App. July 6, 2018).

1 The Superior Court entered the following judgment against the Still-

wells: The Stillwells are jointly and severally liable for payment of any existing or future medical lien or liens of any type relating to William Stillwell and shall defend, indemnify and save harm- less the Defendants and their respective insurers, agents, em- ployees, assigns, officers, directors, shareholders, partners, members liable or who might be claimed to be liable from any claim (specifically, any claim by or on behalf of William Still- well or Penelope Stillwell) brought as a result of any treatment, injuries, or damages, including, but not limited to, attorney fees incurred to defend such claims and all other costs.

Stillwell v. Eagle-Kirkpatrick Management Co., Inc., No. 49D11-1110-CT-041092, 2017 WL 11603259, at *2 (Ind.Super. July 26, 2017). USCA11 Case: 21-13740 Document: 86-1 Date Filed: 05/27/2026 Page: 19 of 25

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The Stillwells, however, argued that the settlement was invalid be- cause Insurers fraudulently induced them to agree to it. The District Court was bound to apply Stillwell and dismiss the Complaint if the Stillwell judgment was entitled to full faith and credit pursuant to 28 U.S.C. § 1738 and it determined that in settling their tort action, the Stillwells released Insurers of all claims they might have against them at any time. I conclude that the Stillwell judgment was entitled to full faith and credit and determined that the Stillwells released Insurers of all claims, including those the Complaint presented. The issue preclusion doctrine of collateral estoppel forecloses those claims. I. The Constitution of the United States provides in Article IV, § 1 that: “Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State. And the Congress may by general Laws prescribe the Manner in which such Acts, Records and Proceedings shall be proved, and the Effect thereof.” U.S. Const. art. IV, § 1. The first Congress, in 1790, exercising its authority under the Full Faith and Credit Clause, en- acted the Full Faith and Credit Act. Act of May 26, 1790, ch.11, 1 Stat. 122. The current version reads: The Acts of the legislature of any State, Territory, or Possession of the United States, or copies thereof, shall be authenticated by affixing the seal of such State, Territory or Possession thereto. USCA11 Case: 21-13740 Document: 86-1 Date Filed: 05/27/2026 Page: 20 of 25

21-13740 TJOFLAT, J., Concurring 3

The records and judicial proceedings of any court of any such State, Territory or Possession, or copies thereof, shall be proved or admitted in other courts within the United States and its Territories and Pos- sessions by the attestation of the clerk and seal of the court annexed, if a seal exists, together with a certifi- cate of a judge of the court that the said attestation is in proper form.

Such Acts, records and judicial proceedings or copies thereof, so authenticated, shall have the same full faith and credit in every court within the United States and its Territories and Possessions as they have by law or usage in the courts of such State, Territory or Possession from which they are taken.

28 U.S.C. § 1738. Federal courts must inquire into the jurisdictional basis of a state court judgment before according it full faith and credit. Am. Steel Building Co. v. Davidson & Richardson Constr. Co., 847 F.2d 1519 (11th Cir. 1988). Where the state court had subject matter jurisdic- tion to entertain the action and personal jurisdiction over the par- ties, its decision must be accorded full faith and credit in the federal court. Underwriters Nat’l Assurance Co. v. North Carolina Life & Acci- dent & Health Ins. Guaranty Ass’n, 455 U.S. 691, 706, 102 S. Ct. 1357, 1366 (1982); Durfee v. Duke, 375 U.S. 106, 111, 84 S. Ct. 242, 245 (1963); Harbuck v. Marsh Block & Co., 896 F. 2d 1327, 1329 (11th Cir. 1990). However, a state court’s determination that it had jurisdic- tion to entertain the action must also be given full faith and credit. USCA11 Case: 21-13740 Document: 86-1 Date Filed: 05/27/2026 Page: 21 of 25

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See Durfee, 375 U.S. at 111, 84 S. Ct. at 245 (“[T]here [is a] general rule that a judgment is entitled to full faith and credit—even as to questions of jurisdiction—when the second court’s inquiry dis- closes that those questions have been fully and fairly litigated and finally decided in the court which rendered the original judg- ment.”). There is no doubt that the Superior Court had subject mat- ter jurisdiction to hear the Stillwells’ tort action and their adver- saries’ motions for the enforcement of the parties’ settlement agreement. The Superior Court is a court of general jurisdiction, and it had personal jurisdiction over the parties. Indiana law would therefore accord the judgments of the Superior Court and the Court of Appeals full faith and credit. Therefore, the District Court must as well. II. The question thus becomes whether the Stillwell judgment precluded the District Court from entertaining on the merits the issue the Complaint presents: whether Insurers fraudulently in- duced the Stillwells to settle their tort action and therefore to re- lease Insurers from all past and future claims. “Issue preclusion,” commonly referred to as “collateral es- toppel,” “bars relitigation of an issue of fact or law that has been decided in a prior suit.” Baloco v. Drummond Co., 767 F.3d 1229, 1251 (11th Cir. 2014). Issue preclusion operates across a two-lawsuit con- tinuum. Graham v. R.J. Reynolds Tobacco Co., 857 F.3d 1169, 1214 USCA11 Case: 21-13740 Document: 86-1 Date Filed: 05/27/2026 Page: 22 of 25

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(11th Cir. 2017) (Tjoflat, J., dissenting). In the first lawsuit, the par- ties litigate the dispute to a final judgment on the merits. Id. at 1214–15. The court in the first lawsuit is the rendering court. Id. at 15. Then, in a later, second lawsuit between the same parties, one party proffers evidence of the earlier judgment and contends that issue preclusion should apply and foreclose the issue’s relitigation. Id. The court in the second lawsuit is the recognizing court. Id. Recognizing courts apply the issue preclusion law that the rendering court would apply. See Marrese v. Am. Acad. of Orthopaedic Surgeons, 470 U.S. 373, 381, 105 S. Ct. 1327, 1332 (1985); 28 U.S.C. § 1738. In the situation here, the Stillwell Court is the rendering court, and the District Court is the recognizing court. The District Court must apply Indiana’s doctrine of collateral estoppel to deter- mine the preclusive effect, if any, of the Stillwell judgment. Indiana courts apply collateral estoppel when three condi- tions are satisfied: “(1) a final judgment on the merits in a court of competent jurisdiction; (2) identity of the issues; and (3) the party to be estopped was a party or the privity of a party in the prior ac- tion.” Miller v. Patel, 212 N.E.3d 639, 646 (Ind. 2023) (quoting Nat’l Wine & Spirits, Inc. v. Ernst & Young, LLP, 976 N.E.2d 699, 704 (Ind. 2012)). For the second condition, courts ask whether the issue seek- ing to be precluded in the recognizing court is the same issue nec- essarily adjudicated in the rendering court. Nat’l Wine & Spirits, 976 N.E.2d at 706. Indiana courts consider two additional conditions when determining whether issue preclusion is appropriate: USCA11 Case: 21-13740 Document: 86-1 Date Filed: 05/27/2026 Page: 23 of 25

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(4) whether the party against whom collateral estoppel is being as- serted had a full and fair opportunity to litigate the issue and (5) whether it would be otherwise unfair under the circumstances to permit the use of collateral estoppel. Miller, 212 N.E.3d at 647. The Indiana Supreme Court adopted the Seventh Circuit rule out- lined in Reed v. Illinois, 808 F.3d 1103 (7th Cir. 2015), regarding “fair- ness” in defensive issue preclusion. Miller, 212 N.E.3d at 654. Un- fairness is defined as “deny[ing], without a good reason, a party’s right to press a potentially winning argument.” Id. (quoting Reed, 808 F.3d at 1108). With these principles in hand, the question is whether the Superior Court of Marion County, in enforcing the agreement to settle the Stillwells’ tort action, decided the issue of whether Insur- ers fraudulently induced them to enter into the settlement agree- ment. The evidence before the Superior Court bearing on the Still- wells’ claim of fraud as set out in Stillwell established the following: After his fall on December 13, 2011, William Stillwell filed a tort action against his property manager, homeowners’ associa- tion, and landscaping company (collectively, the “Defendants”) in the Superior Court of Marion County, Indiana. Stillwell, 2018 WL 3321281, at *1. After the trial was scheduled, the Stillwells and the Defendants agreed to settle. Id. As part of the agreement, the par- ties signed a memorandum of understanding outlining that the De- fendants agreed to collectively pay the Stillwells $200,000 as settle- USCA11 Case: 21-13740 Document: 86-1 Date Filed: 05/27/2026 Page: 24 of 25

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ment of all claims and that the parties would work over the subse- quent months to resolve issues of possible third-party interests in the settlement. Id. Several months later, the parties had fully worked out the details of the settlement, except for the release of William’s future medical expenses. Id. The Defendants tendered the settlement checks to the Stillwells. Id. Of the $200,000 paid by the Defendants, $19,672.99 was paid to the Center for Medicare and Medicaid Ser- vices as reimbursement for the conditional payments Medicare paid for William’s medical costs before the settlement and $4,000 was paid to Anthem Blue Cross and Blue Shield to settle a lien for past medical expenses. The Stillwells’ lawyer deposited the remain- der of the $200,000 settlement into the lawyer’s trust account pend- ing disbursement, but the Stillwells refused to sign the release that accompanied the settlement. In response, the Defendants moved the Superior Court to enforce the settlement, including the release that the Stillwells had previously refused to sign. Id. The Superior Court scheduled a hearing, at which the Defendants appeared through counsel and Penelope Stillwell appeared telephonically. Id. at *2. After the hear- ing, the Superior Court granted the Defendants’ motion to enforce the settlement, including the provision enforcing the release of fu- ture medical expenses. Id. A few months later, the Defendants moved the Superior Court to enter judgement enforcing the Supe- rior Court’s order. Id. The Superior Court held another hearing, at which the Stillwells failed to appear despite being ordered to do so. USCA11 Case: 21-13740 Document: 86-1 Date Filed: 05/27/2026 Page: 25 of 25

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Id. The Superior Court granted the Defendants’ motion and signed an order entering judgment. Id. The Stillwells appealed to the Court of Appeals of Indiana raising the issue of “whether the trial court properly enforced the settlement agreement.” Id. The Court of Appeals affirmed the Su- perior Court’s judgment, finding that it did not err in finding that an enforceable settlement agreement existed. Id. at *3. It is beyond doubt that the Court of Appeals judgment in Stillwell adjudicated the validity of the release the Stillwells gave Insurers and that it foreclosed the claims the Complaint presented. The issue was squarely before the Superior Court and the Court of Appeals. The Stillwells had the opportunity to fully and fairly liti- gate the issue of the release in the Indiana courts. The Indiana courts ruled against them, and therefore, the District Court was bound to give their determination full faith and credit. For that rea- son, and the others the District Court articulated, its judgment is due to be affirmed.