In Stalley v. Mountain States Health Alliance, 2011 U.S. App. LEXIS 13895, No. 10-5211.5212 (6th Cir. Jul. 8, 2011), a unanimous panel of the Sixth Circuit affirmed a decision from the Eastern District of Tennessee, awarding $276,589.00 in sanctions against a plaintiff and his attorneys, who had sued various health care entities claiming violations of the Medicare Secondary Payer Act ("MSP"), 42 U.S.C. § 1395y(b).  Plaintiff had claimed that the MSP was a qui tam statute, allowing private attorneys general to sue on behalf of the United States to enforce the statute.

In affirming the district court's decision, the Sixth Circuit noted that Plaintiff had previously filed scores of identical lawsuits throughout the country despite the fact that no judicial decision, law review article, or "even a passing reference" in the MSP's legislative history supported the conclusion that the MSP was in fact a qui tam statute.  Based on the sheer number of cases filed by Plaintiff and the absence of a legal basis for pursuing the MSP claims, the Sixth Circuit agreed that Plaintiff's suits were “utterly frivolous” and pursued for an improper purpose.

Going forward, Stalley is likely to have a significant effect on the willingness of plaintiffs to file qui tam suits on behalf of the United States in the absence of some identifiable legal basis for doing so.  Plaintiffs who ignore Stalley now face the prospect of significant sanctions.