United States of America, ex rel v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, AKA State Farm Insurance Group

This disposition is not appropriate for publication and is not precedent*
except as provided by 9th Cir. R. 36-3.
NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, ex rel,
Plaintiff,
and
EUGENE MASON and PATRICK D.
BROWN,
Plaintiffs - Appellants,
v.
STATE FARM MUTUAL
AUTOMOBILE INSURANCE
COMPANY, AKA State Farm Insurance
Group,
Defendant - Appellee.
No. 09-35819
D.C. No. 1:07-cv-00297-EJL
MEMORANDUM*
Appeal from the United States District Court
for the District of Idaho
Edward J. Lodge, District Judge, Presiding
FILED
OCT 01 2010
MOLLY C. DWYER, CLERK
U .S. C OU R T OF APPE ALS

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The panel unanimously concludes this case is suitable for decision**
without oral argument. See Fed. R. App. P. 34(a)(2).
Because the parties are familiar with the facts of the case, we will repeat1
them here only to the extent necessary to explain our decision.
2
Submitted September 2, 2010**
Seattle, Washington
Before: HAWKINS, McKEOWN, and BEA, Circuit Judges.
Eugene Mason brought suit under the False Claims Act, 31 U.S.C.
§ 3729(a)(7), against State Farm Mutual Automobile Insurance Company. Mason
sought to recover damages on behalf of the U.S. government for an allegedly false
statement caused by State Farm: that Medicare owed the costs of Mason’s
operation to St. Luke’s hospital, when it was really State Farm, not Medicare,
which owed St. Luke’s. Indeed, after St. Luke’s invoiced Medicare, State Farm
withdrew its claim that there was no coverage, and conceded liability for sixty
percent of Mason’s hospital bill.
The district court granted State Farm’s motion to dismiss, with prejudice,
pursuant to Federal Rule of Civil Procedure 12(b)(6). We have jurisdiction over
Mason’s appeal under 28 U.S.C. § 1291. We affirm.1
We review de novo the grant of a Rule 12(b)(6) motion to dismiss. Knievel
v. ESPN, 393 F.3d 1068, 1072 (9th Cir. 2005). “To survive a motion to dismiss, a

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complaint must contain sufficient factual matter, accepted as true, to state a claim
to relief that is plausible on its face.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1948
(2009) (quotations omitted).
Even if State Farm caused St. Luke’s to submit a payment invoice to
Medicare, Mason has not stated a claim that State Farm caused to be made a “false
statement” as required for liability under the False Claims Act. 31 U.S.C.
§ 3729(a)(1)(G). The St. Luke’s invoice was not false, because it was based on a
statutorily-created liability of Medicare. See United States ex rel Hochman v.
Nackman, 145 F.3d 1069, 1075 (9th Cir. 1998) (for False Claims Act purposes, a
statement authorized by statute is not false). Under the Medicare Secondary Payer
statute, 42 U.S.C. § 1395y(b)(2)(B)(i), Medicare is liable as a secondary insurer to a
Medicare service provider when it does not appear the primary insurer will make
payment within 120 days of the service. State Farm—Mason’s primary
insurer—initially contested its liability for Mason’s surgery on the basis that
Mason’s bad back was a pre-existing condition and was not caused by Mason’s auto
accident. Thus, at the time St. Luke’s presented the bill to Medicare, State Farm was
not likely to pay within 120 days. As a result, Medicare was liable to St. Luke’s
under the Medicare Secondary Payer statute. Hence, the invoice was not a false
statement.

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Even if the invoice were false, State Farm cannot be liable under the False
Claims Act, because State Farm had no obligation to reimburse Medicare at the time
St. Luke’s submitted its bill to Medicare. A False Claims Act plaintiff “must
demonstrate that [the government] was owed a specific, legal obligation at the time
that the alleged false record or statement was made[.]” United States v. Bourseau,
531 F.3d 1159, 1169 (9th Cir. 2008) (emphasis added). The obligation “cannot be
merely a potential liability.” Id. Under the Medicare Secondary Payer statute, a
primary insurer—here, State Farm—becomes liable to Medicare only when the
primary insurer’s liability is established by judgment, concession, or other means.
42 U.S.C. § 1395(y)(2)(B)(ii). State Farm conceded liability for sixty percent of
Mason’s bill nine months after St. Luke’s submitted its invoice to Medicare. State
Farm thus had no legal obligation to the government at the time the St. Luke’s
invoice was submitted.
AFFIRMED.

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