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Federal Lawsuit Filed by Senior Citizen’s Group Against Tobacco Industry Seeks Recovery of Billions in Payments Made by Medicare

Aug 6, 2005 | United Seniors Association, Inc. has commenced a lawsuit in U. S. District Court in Boston, Massachusetts, to recover billions of dollars spent by Medicare on smoking-related illnesses over the past five years.

A somewhat obscure provision of the Medicare law permits beneficiaries of the federal health insurance program for the elderly to sue on behalf Medicare to recover medical expenses it has paid under certain circumstances. One such circumstance is when Medicare has paid the medical expenses incurred by a beneficiary as a result of injuries for which a third-party is liable.

The statutory provision known as the “Medicare as Second Payer” law was first enacted during the Reagan administration. In 2003, however, the statute was amended to require a business or other group that injures a Medicare recipient to pay the medical expense associated with those injuries as “first payer.” Medicare is only responsible to pay those expenses to the extent the first payer cannot. Some interpret the law as also allowing a recovery from third-parties offering a product or service that causes injuries and thereby increases Medicare costs.

The group believes that in the past five years alone (which is the statute of limitations of the law), smoking-related diseases and illnesses have cost Medicare at least $60 billion which has been passed on to the American taxpayers.

Since the government does not have the funds (or the awareness) to seek reimbursement in every case, the law encourages Medicare beneficiaries to bring the actions by making them eligible to receive an amount equal to any damages successfully recovered by Medicare.

The lawsuit follows the predictable path of blaming smoking for diseases such as lung cancer and emphysema. Claiming the defendants knew of (and hid) the additive nature of nicotine and even sought to increase it, United Seniors alleges Medicare recipients did not know of, or consent to, being exposed to the addictive property of cigarettes which led to their injuries.

The defendants believe the lawsuit will be dismissed because the claim by Medicare is “too remote” to allow it to recover as a third-party beneficiary. A similar suit by two individual plaintiffs in Florida state court was dismissed last week and is in the process of being appealed. In that case, the judge was of the opinion that liability for the injuries had to be proven in other cases before this type of lawsuit could proceed.       

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