United States v. Baxter Int'l, Inc., 345 F.3d 866 (11th Cir. 2003)

The settlement agreement purported to make the class claimants, rather than the RSP Defendants, liable for reimbursement claims by the Government or by other insurers. The district court did not, however, render its decision based on any agreement by the parties that the RSP Defendants were not liable. Wisely, none of the Defendants attempts to argue here that parties could override a statutory right of action afforded to the Government by a contractual arrangement to which the Government was not a party.

When this case was initiated, the agency administering the Medicare program was known as the Health Care Financing Administration (HCFA), a subunit of the Department of Health and Human Services (HHS). Subsequently, the unit was renamed as the Centers for Medicare and Medicaid Services (CMS). For simplicity, we refer to the inter-venor/appellant here as "HHS,” "the Government” or “Medicare.”

While the MSP statute is directed at recovery from "primary plans,” the MCRA statute is directed at recovery from tortfeasors. It provides that, where the Government is obliged to pay for the medical care of a person who is injured “under circumstances creating tort liability upon some third person ... to pay damages therefor,” the Government has the right to recover from the tortfeasor (or their insurers) the “reasonable value” of the care it provides. 42 U.S.C. § 2651(a); see United States v. Haynes, 445 F.2d 907, 908-09 (5th Cir.1971) (discussing history and purpose of MCRA statute).

Part of the dispute in this case revolves around the meaning and scope of the statutory term “self-insured plan.” Two HHS regulations are pertinent. Under 42 C.F.R. § 411.50(b), a “self-insured” plan "means a plan under which an individual, or a private or governmental entity, carries its own risk instead of taking out insurance with a carri*876er.” Under 42 C.F.R. § 411.21, a "plan” is defined as "any arrangement, oral or written, by one or more entities, to provide health benefits or medical care or assume legal liability for injury or illness.”

As the measure was originally proposed in the House, Medicare would have been secondary only to automobile insurance; a Senate amendment, adopted in conference, added no-fault and liability insurance. See House Conf. Rep. No. 96-14, 96th Cong., 2d Sess. 133, reprinted in 1980 U.S.C.C.A.N. 5903, 5924.

In the Omnibus Budget Reconciliation Act of 1981, Congress augmented the MSP to provide that Medicare would be secondary to group health coverage for end-stage renal patients. H. Res. 3982, 97th Cong., 1st Sess., 95 Stat. 357 (1981) § 2146. In the Tax Equity and Fiscal Responsibility Act ("TERFA”) of 1982, Congress made Medicare the secondary payer for “working aged” employees and their spouses between the ages of 65 and 69 belonging to large employer group health plans (covering twenty or more workers). H. Res. 4961, 97th Cong., 2d Sess., 96 Stat. 324 (1982) § 116. In the Omnibus Budget Reconciliation Act ("OBRA”) of 1986, Congress made Medicare the secondary payer for disabled individuals enrolled in large employer group health plans. H. Res. 5300, 99th Cong., 2d Sess., 100 Stat. 1874 (1986) § 9319.

As noted above, the Government has now abandoned its MCRA claims.

The opinion below was published as In re Silicone Gel Breast Implants Products Liability Litig., 174 F.Supp.2d 1242 (N.D.Ala.2001).

In determining the required elements of a proper complaint, the district court placed principal reliance on In re Dow Corning Corp., 244 B.R. 705 (Bnkr.E.D.Mich.1999), which involved Government claims under the MSP and MCRA seeking reimbursement from a manufacturer that opted out of this litigation. See id. at 713 (detailing necessary contents of Government's claims). Significantly, Dow Coming arose in the context of a Chapter 11 proceeding to validate the cramdown of a plan of reorganization, pursuant to 11 U.S.C. § 1129(b)(1), not in the context of a Rule 12(b)(6) motion to dismiss. Consideration of a § 1129(b)(1) motion requires the court to review evidence and resolve issues of fact. Thus, the Government did not have the benefit of the deferential review afforded to allegations at the motion-to-dismiss stage. Dow Coming's standard for what constitutes an adequately supported objection to the validation of a § 1129(b)(1) reorganization is of limited usefulness in determining what an ordinary civil complaint in intervention must contain.

Even this is a dubious assumption. Many women will doubtless have received Medicare-compensated treatment for generic symptoms not specifically identified on their providers’ bills as related to breast implants, or perhaps not diagnosed as implant-related until later in the course of treatment.

The district court believed that the Government was required to plead the names of Medicare patients who have actually received payment from the Defendants. Because tens of thousands of pending claims remain to be evaluated by the RSP Claims Office, even if the Government were able to produce a perfectly accurate list in compliance with the district court's standards, such list would be obsolete essentially from the day of submission due to the ongoing claims adjudication process. We fail to see how the conduct of this litigation would be aided by forcing Medicare at this initial stage to produce what will necessarily be a grossly inaccurate and constantly changing claimant list.

The Defendants argue that it would be inequitable to allow Medicare to proceed on the basis of an unspecific complaint when the Government failed to request access to the names of the RSP claimants — a request that the district court had indicated it might view favorably. Whether or not the Government conducted itself with optimal diligence is not conclusive. A complaint that is otherwise satisfactory under Rule 8 — as is this one— does not become inadequate merely because the complainant had access to more detailed information but failed to include it. (We note that the district court did not rely on the Government’s failure to move for disclosure of the identity of the RSP claimants as a basis for dismissing the Complaint.)

In a sworn declaration submitted to the district court in May 2000, the Government reported that 457 people (140 who participated in the RSP settlement and 317 who opted out) had identified themselves to HHS as having received payment from the breast implant litigation. This number hints at the immense litigation management problems that would’ ensue if the Government were forced to plead the individualized medical and payment histories of each of its beneficiaries.

Our facts materially differ from those presented in City of Birmingham v. American Tobacco Co., 10 F.Supp.2d 1257 (N.D.Ala.1998), on which the district court relied. In City of Birmingham, which involved a somewhat analogous claim for recovery of health care expenses under a state statute, the district court found that the plaintiffs were required to plead details about each patient and each expenditure for which reimbursement was sought. In that non-class action, however, there was considerable doubt as to whether the plaintiffs could identify even a single person for whose care they were entitled to reimbursement, and information as to the patients' identities and medical history was within the plaintiffs’ exclusive control. It is also noteworthy that, even in City of Birmingham, the court did not dismiss the complaint outright, but rather, granted the plaintiffs leave to amend. For similar reasons, we do not find the principal case cited by Defendants, Health Care Serv. Corp. v. Brown & Williamson Tobacco Corp., 208 F.3d 579 (7th Cir.2000), to be on point. In Brown & Williamson, the Seventh Circuit upheld the dismissal of a sub-rogatory claim by various Blue Cross/Blue Shield associations suing tobacco companies to recover for smoking-related health care expenses for their insureds. Although the court did find the complaint lacking because it failed to plead the identity of the parties insured, its principal weakness was a failure to show either a right to recovery or a basis for federal jurisdiction, both of which are supplied in our case by the MSP statute. Moreover, as with City of Birmingham, Brown & Williamson did not arise out of an underlying class action, which (in our case) itself serves to give the defendants notice of the universe of patients for whose expenses reimbursement may be sought.

If Medicare's payments were conditional only if Medicare paid when the primary obli-gor had already paid or was expected to pay promptly, as Defendants would have us hold, then the vast majority of Medicare payments for services also covered by primary obligors would not be conditional. This is so because the only payments Defendants want to label as conditional are the very payments which § 1395y(b)(2)(A) provides Medicare should not make at all. Thus, Congress’ cost-saving measures would have borne little or no fruit.

To the extent that there is any record of legislative intent at all, it indicates that Congress was dissatisfied that Medicare was not recouping as much from primary payers as it could; there is not the slightest indication of congressional sentiment that Medicare was recovering too much. See 136 Cong. Rec. S13419-01 (daily ed. Sept. 19, 1990) (statement of Sen. Roth) ("Unfortunately, performance under the MSP Program has not measured up. Failure to follow the MSP law is costing the taxpayer billions of dollars.... Studies by the General Accounting Office and the inspector general of the Department of Health and Human Services have repeatedly identified the MSP program as gushing with leaks of Federal tax dollars.”); 135 Cong. Rec. SI 1848-01 (daily ed. Sept. 26, 1989) (statement of Sen. Durenberger) (discussing, in context of FY 1990 appropriations bill for health agencies, inadequacy of expenditures by Medicare intermediaries on MSP recoupment activity). In the 1989 OBRA legislation containing the confusing passage which is the subject of this dispute, Congress simultaneously enacted measures augmenting Medicare’s ability to identify the existence of primary coverage, by giving HHS access to data from the IRS and the Social Security Administration. In so doing, Congress indicated in its statement of intent that "[ujnder current law, HHS is unable to identify all Medicare secondary payer situations, principally because HHS is unable to identify cases in which Medicare beneficiaries have primary coverage through a spouse's plan.” H.R. Rep. 101-247, at 1021, reprinted in 1989 U.S.C.C.A.N. 1906, 2492 (1989). Nothing in the statement of intent indicates a desire to restrict Medicare’s ability to recover conditional payments, or a realization that the 1989 amendments would be so construed.

Suppose, for instance, that a Medicare patient was injured as the result of a multi-party automobile accident in which each motorist carried private insurance, yet each insurer refused to pay until liability could be sorted out among the participants. Even though it was certain that some insurer would ultimately pay — the only question being which— Defendants’ interpretation would deprive Medicare of the ability to lay claim to the insurance proceeds if Medicare made a conditional payment on the basis that private payment was not "promptly” forthcoming.

In Thompson v. Goetzmann, 315 F.3d 457 (5th Cir.2002), the Fifth Circuit originally accepted the premise that the Government’s right of recovery under the MSP was limited to situations in which another primary coverage source had paid or was expected to pay promptly. See id. at 468. Upon the Government's petition for rehearing en banc, however, the panel withdrew its opinion and issued an amended opinion which, while reaching the same ultimate result, no longer relied upon the limited construction of subpara-graph (A) that Defendants advance here. See Thompson v. Goetzmann, 337 F.3d 489 (5th Cir.2003) (amending initial Goetzmann decision). In a preface to the amended opinion, the court stated that, while it remained convinced that the statute's wording supported its original conclusion that the Government may not collect from a primary plan unless such plan is expected to pay promptly, it recognized that its interpretation risked producing an "absurd result ... [that] precludes the right to reimbursement from any disputed or potentially disputed funds,” since a disputed fund could never be expected to pay promptly. See id. at 492. We agree with the most recent Fifth Circuit opinion that the interpretation urged by Defendants, and accepted by the courts cited above, produces an absurd result. Moreover, we point out in the text above that this result is not indicated by the plain language of the statute. Rather, our construction is a much more plausible construction of the plain language of the statute.

The Government concedes that the RSP settlement mechanism, which antedated the Government's Medicare payments, is not a "self-insured plan” as that term is understood in 42 U.S.C. § 1395y(b)(2)(A)(iii). Rather, the Government's theory is that the individual companies were each operating under a plan of self-insurance in which they arranged to purchase third-party liability coverage and self-insure up to the amount of their policies’ deductibles.

However, the second sentence is not inconsistent with the commonly understood practice of self-insuring up to a certain amount, and then covering any excess with insurance, often with no set-aside of funds. A more recent edition of Black's defines "self-insurance” as simply: "A plan under which a business sets aside money to cover any loss.” The same edition defines "self-insured retention” as: "The amount of an otherwise-covered loss that is not covered by an insurance policy and that [usually] must be paid before the insurer will pay benefits.” Black’s Law Dictionary 807, 1365 (7th ed. 1999). This definition, like its predecessor, suggests that self-insurance can be understood both as the practice of setting aside a reserve to pay claims, and the practice of paying a deductible before third-party coverage becomes effective.

To the extent that the district court meant by its term "formal" arrangement something more than that the arrangement must be ex ante and must be an arrangement, albeit oral, to assume legal liability or pay for medical expenses, the district court would have required more than the regulations; we see no warrant for requiring more.

We see no tension between our position and that in the cases cited by Defendants, United States v. Philip Morris, Inc., 116 F.Supp.2d 131 (D.D.C.2000), and Mason v. American Tobacco Co., 212 F.Supp.2d 88 (E.D.N.Y.2002). In each case, the district court dismissed MSP claims seeking Medicare reimbursement from tobacco companies accused of tortiously injuring their customers. In Philip Morris, the Government's claim was found flawed because it merely made the con-clusory allegation that the defendants were "responsible” for payment under the MSP without advancing a basis — and, specifically, without alleging the existence of a coverage plan. Id. at 146. In Mason, the plaintiffs' claim rested solely on the theory that a large corporation without insurance that was accused of inflicting a tortious injury was, by definition, operating a self-insured plan. There was no suggestion that the tortfeasor had purchased supplemental insurance and made arrangements to cover the deductible out of its own funds. See id. at 92. We agree with these courts to the extent that they hold that the MSP requires the existence of some sort of plan as opposed to a mere post hoc assumption of liability.

The Defendants’ suggestion that the word "instead” means that "self-insurance” can exist only in an arrangement including no insurance is wholly without merit. Not only would that be a grudging construction of the language, it would be inconsistent with the thrust of 42 C.F.R. § 411.50(b), which contemplates a combination of insurance policies and deductibles, and with the clear weight of authority that an entity can self-insure for a designated amount and purchase coverage for liability exceeding the designated amount. See, e.g., Black’s Law Dictionary 1220 (5th ed. 1979) (explaining, in defining self-insurance, that “[a] common practice of businesses is to self-insure up to a certain amount, and then to cover any excess with insurance.”).

The following quotations from Goetzmann indicate that these were the facts, thus defining the holding:

The Goetzmann court also rejected the Government’s argument that the statute was ambiguous. Again, however, it appears likely that the court was focusing on the precise facts of the case and its narrow holding — that a discreet settlement by a single tortfeasor out of its own funds would not by itself (that is, without any prearrangement or plan) constitute a self-insured plan. This seems likely because, as discussed above, there is no precise legal meaning of the statutory term sufficiently well-established to rise to the level of rendering it unambiguous with respect to the Goetzmann dicta to the effect that a set-aside of funds and formal procedures are required. In other words, the statute may well be unambiguous with respect to the requirement of a plan or ex ante arrangement, but it is not with respect to the Goetzmann dicta. To the extent the Fifth Circuit intended to hold otherwise, we respectfully disagree.

We note that the Goetzmann court relied heavily on a questionable assumption regarding the interaction of the MSP statute and the aforementioned Medical Care Recovery Act, 42 U.S.C. § 2651. Because the express purpose of the MCRA is to impose liability upon tortfeasors to repay the Government for the reasonable value of health care furnished to a tortiously injured party, the Goetzmann court found that reading tortfeasor liability into the MSP "would, in effect, eliminate the need for the MCRA, or at least condemn some of Congress’ language in the MCRA to the scrap heap of surplusage.” Id. at 465. However, the Goetzmann reasoning does not resolve this perceived conflict, as it would itself render superfluous that portion of the MSP statute imposing liability on an entity "required or responsible” to pay under a "primary plan” of self-insurance — i.e., a self-insured tortfeasor. The Goetzmann view would also render superfluous a substantial portion of the Government's subrogatory right conferred by the MSP statute, because establishing the liability of the patient’s insurer to Medicare necessarily may require bringing a subrogation action against the tortfeasor. Moreover, Goetzmann s perception of an overlap between the coverage of the MCRA and the MSP may be in error. See Philip Morris, Inc., 116 F.Supp.2d at 140-44 (holding, after extensive analysis of statute’s legislative history, that MCRA applies exclusively to federal health care expenditures other than Medicare, such as coverage for military personnel and their dependents); accord In re Diet Drugs, Nos. MDL 1203, CIV.A, 99-20593, 2001 WL 283163 at *7-*8 (E.D.Pa. March 21, 2001).

We discern no merit in the argument pressed by the Steering Committee interve-nors that the RSP Defendants’ payments are excepted from the reach of the MSP statute because they are not directly pegged to the amount of health care expenses incurred by the class members. Courts have uniformly concluded that a settlement agreement that includes a non-itemized element of compensation for a plaintiff's medical care is "for” medical expenses, even if the exact share or amount is indeterminate. See Share Health Plan of Illinois, Inc. v. Alderson, 285 Ill.App.3d 489, 220 Ill.Dec. 798, 674 N.E.2d 69, 72 (1996) (holding that HHS can recover Medicare payments from beneficiary’s lump-sum settlement of tort claim "regardless of whether and how amounts are designated”); see also Wilson v. Washington, 142 Wash.2d 40, 10 P.3d 1061, 1067 (2000) (enbanc) (finding that state Medicaid lien attached to entire amount of patient's medical malpractice settlement, not just amount earmarked for medical expenses); accord Calvanese v. Calvanese, 93 N.Y.2d 111, 688 N.Y.S.2d 479, 710 N.E.2d 1079, 1082 (1999). That interpretation is consistent with HHS’ own understanding. See Medicare Program; "Without Fault” and Waiver of Recovery from an Individual as it Applies to Medicare Overpayment Liability, 63 Fed. Reg. 14506, 14514 (proposed March 25, 1998) ("Since liability payments are usually based on the injured or deceased person’s medical expenses, liability payments are considered to have been made ‘with respect to’ medical services related to the injury even when the settlement does not expressly include an amount for medical services.”).

At the outset, we agree with the district court that dismissal was not warranted on the grounds that the Government failed to plead that it attempted to recoup its duplicate payments from the Medicare beneficiaries in the plaintiff class before seeking recoupment from the Defendants; it was adequately pled. We decline to address the merits of Defendants’ argument that the Government is obligated to seek reimbursement first against each member of the plaintiff class before pursuing reimbursement from the RSP Defendants, because the issue is not necessary to our holding, and because the issue was inadequately addressed by the district court and inadequately briefed on appeal. The Defendants are free to assert this argument on remand, and the district court should address it anew after appropriate development of the record and briefing with respect to the agency's policies and practices, and with respect to the relevant statutes, regulations, and other authorities.

The HIAA definition of constructive knowledge is essentially identical to that proffered by Defendants from the affidavit of HHS administrator Paul J. Olenick, which the Government submitted in HIAA as its statement of when HHS will consider an insurer to have the requisite knowledge to trigger liability under 42 C.F.R. § 411.24(i)(2). See Def. Ex. B ("A third party payer Teams’ of a Medicare conditional primary payment when it receives information which makes it aware, or should make it aware, that Medicare has made a conditional primary payment. This would be the case when the third party payer receives direct information that Medicare has made a conditional payment or when it receives the information necessary to draw the conclusion that Medicare has made a primary payment.”) (emphasis in original).

HHS and Congress have repeatedly flagged Medicare’s inability to ascertain the existence of alternative sources of coverage as a weakness in the secondary payer program. See, e.g., Dept, of Health and Human Serv., Office of the Inspector Gen. ("HHS IG”), Survey of Medicare Payments to Workers' Compensation Recipients in the State of Florida, No. [ A-XX-XX-XXXXX ] (January 2003) at 6 ("Unfortunately, the system as currently structured does not provide a standard procedure that ensures that Medicare is informed of all [workers’ compensation] settlements”); HHS IG, Medicare Prepayment Review: MSP Procedures at Carriers, No. OEI-07-89-01683 (August 1991) at 2 (citing estimate that, based on random sampling of processed by private contractors, "Medicare lost in excess of $600 million in FY 1988 due to unidentified primary payment sources”). Overlapping coverage is particularly difficult to detect where, as here, the Medicare payment and the insurance payment go to different recipients (Medicare’s to the doctor or hospital, and the alleged tortfeasors’ directly to the patient). In light of this well-recognized weakness, it is therefore reasonable for the agency to interpret the MSP, and Congress' subsequent revisions of it, as imposing the risk of loss on the alternative payer for failing to determine whether Medicare has already paid for the same service.

We note that the Federal Rules provide that the defendants' knowledge is an element that "may be averred generally,” thus eschewing the particularity standard that applies to other mental-state elements (fraud, mistake) under Rule 9. See Fed.R.Civ.P. 9(b).

We need not at this stage decide the significance of the facts that might be developed in this regard. However, it is clear that a party should not be able to avoid constructive knowledge and shield itself from statutory liability by consciously avoiding information which would constitute constructive knowledge and result in liability. In addition to facts that might be developed in this regard on remand, the district court might also address the relevance and significance of knowledge in fact obtained during the claims process, and whether such knowledge should be imputed to the RSP Defendants or whether they should be deemed to have consciously avoided same. At this early stage, and without development of the relevant facts, analysis by the district court, or adequate briefing from the parties, we decline to address this issue further. In this regard, the parties have discussed whether an entity standing in the shoes of the RSP Defendants has a duty to investigate for the benefit for the Government to discover Medicare's involvement. The discussion of the parties revolved around 42 C.F.R. § 411.25(a) ("If a third party payer learns that [HHS] has made a Medicare primary payment for services for which the third party payer has made or should have made primary payment, it must give notice to that effect to the Medicare intermediary or carrier that paid the claim.”). In light of our decision that the Government's allegations survive Rule 12(b)(6), and in light of the discovery that will be available to the Government on remand that may reveal to the Government any information that investigation by the Defendants could have yielded, thus possibly mooting the duty-to-investigate issue, we decline to address it at this stage. To the extent that the district court's discussion (see In re Silicone Gel, 174 F.Supp.2d at 1257) constitutes a holding that Medicare cannot interpret § 411.25(a) to require an insurer to inquire into the existence of a prior Medicare payment, we note that the district court did not address whether the agency had interpreted its regulation, or the significance thereof. See, e.g., Medicare Program; Medicare Secondary Payment, 59 Fed. Reg. 4285, 4286 (Jan. 31, 1994) (explaining the statute and regulations concerning third-party payors with primary obligations to which Medicare is secondary, and suggesting pursuant to 42 C.F.R. § 411.25 that where there has been delay in paying by the primary obligor, it should assume that Medicare made a conditional payment: "A beneficiary who is eligible for Medicare files a claim for primary payment with a third party payer, the claim is denied, the beneficiary appeals, and the denial is reversed. (The third party payer should assume that Medicare made a conditional primary payment in the interim.)”). If the duty to investigate issue should become a live one on remand, then the district court should address the issue afresh conducting an appropriate analysis, e.g., ascertaining any relevant agency interpretation and determining the extent of Chevron deference, if any.

In responding to the motion to dismiss, the Government asked the district court for leave to amend its Complaint to plead knowledge with more detail if the court were to find that knowledge was a required element at the pleading stage. The district court denied that motion, having found that the Government had no viable claim under the MSP regardless of how it was pled. Because we reverse the district court's legal determination as to the viability of the Government’s case, the district court’s reason for denying leave to amend is no longer valid and that denial is accordingly vacated.

The text of Part III.B(3) of this opinion has focused only on the Government’s § 1395y(b)(2)(B)(iii) subrogation claim for double payment (relating to the primary obli-gor’s liability to reimburse Medicare even though it has already paid the Medicare beneficiary). In its brief on appeal, the Government also argued, in somewhat summary fashion, that in such situation it also has a direct cause of action for double payment pursuant to § 1395y(b)(2)(B)(ii), and that the "direct action for double payment” is not conditioned upon a determination that the primary obligor paid the Medicare beneficiary even though it knew or should have known that Medicare had already covered relevant expenses. In other words, the Government argues that § 1395y(b)(2)(B)(ii) creates a strict liability "direct cause of action for double payment.” We note that the D.C. Circuit in HIAA, 23 F.3d at 417, apparently rejected this argument, inferring from the language of the statute that the Government had a claim against the "required or responsible” entity until that entity made payment, and thereafter had a claim against the person who received such payment. See 42 U.S.C. § 1395y(b)(2)(B)(ii) ("The United States may bring an action against any entity which is required or responsible under this subsection to pay with respect to such item or service ... under a primary plan ... or against any other entity (including any physician or provider) that has received payment from that entity with respect to the item or service”). The district court, following the D.C. Circuit, rejected the Government's argument on the same ground. We need not in this case decide whether the inference drawn by the D.C. Circuit and the district court is the only reasonable interpretation of the statute, because we reject the Government’s argument in this case on other grounds. The only support for its position proffered by the Government in this case is 42 C.F.R. § 411.24(i), which provides in relevant part: However, we do not believe that the regulation supports the Government's litigation position of strict liability without regard to knowledge or constructive knowledge. The regulation indicates that a third-party payor who pays the patient is still liable for a "double payment” to Medicare in two situations: (1) when the source of the third-party payment is a liability insurance settlement or a disputed claim under group insurance or no fault coverage, or (2) when other circumstances give the third-party payor knowledge or constructive knowledge of Medicare's prior payment. Both the language of the regulation and the explanation provided by HHS in promulgating the regulation suggest that the *904distinction between subparagraphs (1) and (2) is not between strict liability and liability only if there is knowledge or constructive knowledge. Rather, the use of the term “disputed claims” in subparagraph (1) indicates that HHS was singling out cases in which the third party would not pay until after considerable delay — which delay, coupled with the existence of the MSP statute and regulations, HHS apparently deems to be sufficient to constitute constructive knowledge that Medicare will have made a conditional payment. The explanation provided by HHS in promulgating its final version of the rule focuses upon constructive knowledge or "awareness,” and bears out this interpretation: Medicare as Secondary Payer and Medicare Recovery Against Third Parties, 54 Fed. Reg. 41716, 41721 (Oct. 11, 1989) (emphasis added). Thus, neither the language of the regulation nor the official explanation at promulgation supports the Government’s assertion of strict liability in this case. Rather, the regulation and official interpretation indicate that constructive knowledge is required. Having rejected the Government's only authority for imposing strict liability with respect to a “direct cause of action for double payment” under § 1395y(b)(2)(B)(ii), we conclude that this case should proceed with the law of the case being that the Government must prove at least constructive knowledge to prevail in its claim for double payment under either § 1395y(b)(2)(B)(ii) or § 1395y(b)(2)(B)(iii). As we noted in the text with respect to our discussion of the subrogation claim for double payment, we need not at this early stage of the litigation define the precise scope of constructive knowledge that will trigger liability, because constructive knowledge in the form of willful blindness has been amply pleaded in this case. Moreover, the contours of constructive knowledge were not adequately addressed by the district court and have not been adequately addressed in the briefs on appeal. Although the district court opinion, the briefs on appeal, and this opinion have focused on the "double payment” claim, nothing in this opinion precludes the district court on remand from entertaining a Government claim pursuant to the "direct action for single payment,” i.e., where the RSP Defendants have not yet paid or the RSP claimants have not yet received such payment. See 42 U.S.C. § 1395y(b)(2)(B)(ii) (“In order to recover payment under this subchapter for ... an item or service, the United States may bring an action against any entity which is required or responsible ... to pay with respect to such item or service ... under a primary plan ... or against any other entity (including any physician or provider) that has received payment from that entity with respect to the item or service”) (parenthetical in original).

Paragraph (1) pertains to the responsibility of group health plans to assume primary responsibility for the coverage of their Medicare-eligible beneficiaries, and is not implicated here.

In Snapp, we examined a provision in the Fair Labor Standards Act, 29 U.S.C. § 216(b), providing that "[a]ny employer who violates the provisions of section 215(a)(3) of this title shall be liable for such legal or equitable relief as may be appropriate ... including without limitation employment, reinstatement, promotion, and the payment of wages lost and an additional equal amount as liquidated damages.” Applying the principle of ejusdem generis, the Snapp court held that punitive damages were entirely unlike the remedies enumerated in the statute, all of which were intended to compensate the plaintiff rather than punish the defendant; therefore, we held that punitive damages were not intended by Congress as part of the remedial scheme. Id. at 935.

When a potential class member appeals the denial of her claim, the appeal goes first *907to the Claims Administrator and then to the district court, not to the Escrow Agent.

The only case the Government cites supporting its position that a trustee-like entity could be regarded as having "received” the money it handles is King v. United States, 379 U.S. 329, 85 S.Ct. 427, 13 L.Ed.2d 315 (1964). King arose under an entirely different statutory scheme — it evolved out of a Chapter 11 bankruptcy proceeding. The court-appointed "distributing agent” in that case (significantly, the president of the bankrupt company as opposed to a disinterested functionary) was held to be personally liable for having depleted the bankruptcy estate by paying private claims before paying the Government, because of his considerable authority to object to the way the estate was distributed. The King court strictly limited the holding to its facts. See id., 379 U.S. at 339, 85 S.Ct. at 432 ("We are not prepared to articulate any general rule defining the responsibility of distributing agents to make and press ... objections [to a plan of distribution]. We hold only that King, on the facts of this case, did have such a responsibility. As president of the debtor corporation he must have been aware of the Government’s potential claim[.]”). It is a considerable stretch to apply such a limited, fact-specific holding to our entirely different context.

From the comments of counsel for the Government at oral argument, and from the parties’ discussion at the hearing before the district court on May 15, 2000, we discern that the Government’s main interest in laying a claim for reimbursement against the Escrow Agent was to keep the Agent in the case as a party so that he would be subject to any order granting appropriate injunctive relief. We note that Count VII, seeking injunctive relief against the Escrow Agent, is still alive, see Part III.B.(6), infra. Thus, pending further developments in the district court on remand, the Escrow Agent remains a party. In any event, we believe that the district court would retain the ability to direct the Escrow Agent’s management of the settlement funds as required to preserve the Government’s rights, whether or not substantive claims remain against him, either pursuant to the court's supervisory powers, or by retaining him or joining him to afford appropriate relief to the parties.

The references to "a State agency” and "a private insurer” in § 411.24(g) indicate that HHS believes a party can be a recipient of payment even if all it is receiving is reimbursement for its own prior payments, rather than (as with a doctor) a fee for services rendered.

For example, it is not beyond doubt that there may be need of injunctive relief to afford complete relief to the parties.

We suspect that most of the Government’s requests for injunctive relief will be effectively moot in any event. Because we reinstate the bulk of the Government’s substantive claims for damages, discovery can now proceed and the Government will thereby gain access to the information it sought by way of a declaratory or injunctive order. In light of this likely mootness, we do not address the Defendants’ arguments regarding whether, and to what extent, the MSP statute allows for declaratory or injunctive relief as a remedy.

.As noted, the Government has abandoned Counts VIII and IX.

Honorable Richard D. Cudahy, United States Circuit Judge for the Seventh Circuit, sitting by designation.