Strawser v. Atkins

290 F.3d 720, 2002 U.S. App. LEXIS 9648, 2002 WL 1025085
CourtCourt of Appeals for the Fourth Circuit
DecidedMay 22, 2002
DocketNos. 01-1175, 01-1557 and 01-2245
StatusPublished
Cited by47 cases

This text of 290 F.3d 720 (Strawser v. Atkins) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fourth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Strawser v. Atkins, 290 F.3d 720, 2002 U.S. App. LEXIS 9648, 2002 WL 1025085 (4th Cir. 2002).

Opinion

Affirmed by published opinion. Judge DIANA GRIBBON MOTZ wrote the opinion, in which Judge TRAXLER and Judge BROADWATER joined.

OPINION

DIANA GRIBBON MOTZ, Circuit Judge.

These appeals grow out of a 1998 settlement of litigation that many states brought against a group of major tobacco companies. West Virginia, North Carolina, and South Carolina, like all other states participating in the settlement, stand to receive substantial funds pursuant to it. Residents of each of those states, who have received Medicaid assistance for medical problems related to tobacco, filed suit to obtain a share of the funds their respective states will receive under the settlement. In each case, the district court dismissed the patients’ complaints on multiple grounds. Because federal law bars the claims, see 42 U.S.C.A. § 1396b(d)(3)(B)(ii) (West Supp.2001), we affirm the judgment of the district court in each case.

I.

These cases concern the relationship between the Medicaid program, which provides funds for health care for poor people, and the 1998 tobacco settlement. To facilitate understanding of the issues involved, we briefly describe the relevant federal and state Medicaid law, the litigation and 1998 settlement between the states and the tobacco companies, and the claims raised in these appeals.

A.

In the United States, a person who cannot pay his or her medical bills may be eligible for financial assistance under the Medicaid program. If so, and if the state in which the person lives participates in the federal Medicaid program, both the federal government and the government of his or her state contribute through the program to pay some of the medical bills. See 42 U.S.C.A. §§ 1396, 1396a-1396u (1992 & West Supp.2001). West Virginia, North Carolina, and South Carolina all participate in the Medicaid program and receive federal funds under the program. See N.C. Gen.Stat. § 108A-54 (1999); W. Va.Code Ann. §§ 9-1-1 to 9-2-3 (Michie 1998 & Supp.2001); S.C.Code Ann. § 43-7-20, 43-7-410 to 43-7-460 (Law. Coop.1985 & Supp.2001).

In some instances, third parties are liable for the health-care expenses of Medicaid patients, through, for example, insurance, tort liability, or a court order based on familial obligation. To obtain federal assistance with Medicaid costs, a state must require Medicaid recipients to assign any rights they possess against such third parties to the state, and must make reasonable efforts to collect on all third-party claims that are assigned. See 42 U.S.C.A. §§ 1396a(a)(25), 1396k(a) (West 1992 & Supp.2001). In keeping with these federal requirements, West Virginia, North Carolina, and South Carolina each mandate such an assignment. See W. Va.Code Ann. § 9-5-ll(a) (Michie 1998); S.C.Code Ann. §§ 43-7-420 to 43-7-430 (Law.Co-op.Supp. 2001); N.C. Gen.Stat. §§ 108A-57, 108A-59(a) (1999).

Federal law also governs a participating state’s distribution of any recovery on a third-party claim assigned by a Medicaid [725]*725recipient. If a state recovers “under an assignment,” payments from third parties go first to the state up to its relevant Medicaid expenses; then to the federal government, up to its relevant Medicaid expenses (minus an incentive payment to encourage the state to collect, see 42 C.F.R. § 433.158 (2001)); and finally, if any funds remain, to the patient who assigned the claim. See 42 U.S.C.A. § 1396k(b); see also 42 C.F.R. § 433.154 (2001). A state must distribute any remainder to the individual Medicaid recipient. See 42 U.S.C.A. § 1396k(b) (requiring that after both governments cover all of their expenses, “the remainder of such amount collected shall be paid to such individual” (emphasis added)).

B.

In the 1998 settlement of the tobacco litigation, each settling state recovered a substantial amount of money from tobacco companies. In many of the settling states, including West Virginia, North Carolina, and South Carolina, Medicaid patients then brought suit against state officials.1 The patients contend that at least part of the tobacco settlement constituted a Medicaid recovery subject to the statutory framework outlined above. Therefore, they argue, state officials should distribute excess funds recovered under the settlement to them. Before analyzing these contentions, we describe the nature of the state lawsuits against tobacco companies and the settlement reached.

1.

In the 1990s, nearly all the states sued major tobacco companies for harm arising from the deliberate concealment of the health risks posed by tobacco.2 In their complaints, West Virginia, North Carolina, and South Carolina all cited the medical costs of treating smoking-related injuries as a major source of damages.

West Virginia filed suit on September 20, 1994. The state’s third amended complaint lists a number of tobacco harms to the state, including its expenses in treating tobacco-related health problems, its expenses in countering tobacco advertising aimed at young people, products-liability claims, and antitrust violations. The complaint includes fourteen counts; several discuss damage to the state other than health-care costs, such as the cost of public campaigns about the dangers of tobacco, and pursue relief other than the money the state had spent on health-care costs.

South Carolina filed suit on May 12, 1997. Preliminary language in its amend[726]*726ed complaint describes only the medical expenses the state had incurred. The complaint includes sixteen counts. The only harm to the state discussed in any of the counts is the cost of medical treatment for tobacco-related health problems. However, South Carolina did seek an order requiring the tobacco companies to fund a campaign of public education about smoking and health, as well as orders barring them from marketing and sales practices aimed at minors and requiring them to disclose information related to tobacco.

North Carolina filed suit on December 21, 1998. (North Carolina’s lawsuit actually followed the execution of the settlement between the tobacco companies and many other states by several weeks; on the same day, the state. both filed suit and immediately dismissed its suit in order to join the settlement.) The complaint included two state-law claims, for restraint of trade and unfair commercial practices. The state cited the financial harm that the shrinking tobacco market inflicted on its communities that depended on growing tobacco and health-care costs incurred in treating smoking-related illnesses. It sought damages “for the past and future medical costs paid by North Carolina to medical assistance beneficiaries, state employees, and others for treatment of tobacco-related illnesses.” The state also sought injunctions and “mandatory orders” to bar tobacco advertising and tobacco-related conspiracy and to provide funds for public education about the dangers of tobacco and for financial assistance to “tobacco-dependent communities.”

2.

Late in 1998, without admitting liability, the tobacco companies settled the claims of West Virginia, North Carolina, South Carolina, and most other states.

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Cite This Page — Counsel Stack

Bluebook (online)
290 F.3d 720, 2002 U.S. App. LEXIS 9648, 2002 WL 1025085, Counsel Stack Legal Research, https://law.counselstack.com/opinion/strawser-v-atkins-ca4-2002.