United States District Court, Central District of Illinois, DanvilleUrbana Division
November 17, 2000
AMANDA SKILLINGS AND ROBERT MONTS, PLAINTIFFS,
THE STATE OF ILLINOIS, ANN PATLA, INDIVIDUALLY AND IN HER CAPACITY AS THE DIRECTOR OF THE STATE OF ILLINOIS DEPARTMENT OF PUBLIC AID, JUDY BARR TOPINKA, INDIVIDUALLY AND IN HER CAPACITY AS TREASURER OF THE STATE OF ILLINOIS, AND CITIBANK, N.A., AS ESCROW AGENT UNDER THE CIGARETTE MASTER SETTLEMENT AGREEMENT AND THE SMOKELESS TOBACCO MASTER SETTLEMENT AGREEMENT, DEFENDANTS.
The opinion of the court was delivered by: Baker, District Judge.
In November 1998, the State of Illinois, along with forty-five
other states, entered into a settlement agreement with various
tobacco companies. This settlement, known as the Master
Settlement Agreement ("M.S.A."), covered a wide variety of
claims. As part of its recovery, the State was reimbursed for
money it spent to treat its public aid recipients'
The plaintiffs are Medicaid recipients. They seek a portion of
the State's recovery under the M.S.A., alleging that they are
entitled to share in potential future proceeds of the settlement
to the extent those proceeds exceed expenditures on their behalf.
Specifically, Count I alleges that Illinois officials Ann Patla
and Judy Barr Topinka violated 42 U.S.C. § 1983, the Fifth and
Fourteenth Amendments to the United States Constitution, and
42 U.S.C. § 1396. Count II alleges that the State of Illinois has
deprived the plaintiffs of due process of law in violation of the
Fifth and Fourteenth Amendments. Counts III and IV allege common
law breach of contract. Finally, Count V alleges that the State
violated Title XIX of the Social Security Act.
This matter is before the court on the defendants' motions to
dismiss the plaintiffs' complaint (# 89 & # 97). In their
motions, the defendants argue that the Eleventh Amendment bars
the plaintiffs' suit, and alternatively, that the plaintiffs are
not entitled to any portion of the M.S.A.'s proceeds. In
response, the plaintiffs assert that a question of fact regarding
the particulars of Illinois' settlement with the tobacco
companies precludes dismissal of the case at this point.*fn1 To
that end, the plaintiffs also filed a Motion for Leave to Amend
Complaint Instanter to Join as Additional Defendants Herein the
Tobacco Companies that Entered into the Master Tobacco Settlement
Agreements (# 96).
The Seventh Circuit recently rejected a similar claim of
entitlement to the proceeds of the M.S.A. by Wisconsin Medicaid
recipients in Floyd v. Thompson, 227
1237 F.3d 1029 (7th Cir. 2000). Under federal Medicaid law, recipients
must assign to the state Medicaid administrator all claims
against third parties who might be responsible for paying their
medical expenses. The statute and regulations governing
assignment of claims require the state to turn over to the
individual Medicaid recipient any recovery from a third party
that exceeds the amount expended by the state on the individual's
behalf. Floyd, 227 F.3d at 1032 (citing
42 U.S.C. § 1396(k)(b); 42 C.F.R. § 433.154). The plaintiffs brought suit
against Wisconsin officials alleging that under these provisions,
they are entitled to a portion of the M.S.A. proceeds that
exceeded Wisconsin's Medicaid expenditures on their behalf.
The Seventh Circuit affirmed the district court's dismissal of
this action. In doing so, it bypassed the complex Eleventh
Amendment issue and instead examined the terms of the M.S.A. in
light of the statutes and regulations governing the assignment of
claims. The court found that Medicaid recipients had assigned
only their right to recover the amounts paid by the state
Medicaid program. They had not, however, assigned their right to
recover any excess damages. Thus, the M.S.A. provided no recovery
for damages in excess of what belonged solely to the state. In
reaching this conclusion, the court noted that the language of
the M.S.A. released claims of individuals "only insofar as they
are acting for the state and suing on general injuries, not
insofar as they are seeking `solely . . . private or individual
relief for separate and distinct injuries.'" Floyd, 227 F.3d at
1037 (quoting M.S.A. § para. II(pp)(2)(a)). Moreover, the
M.S.A. distinguished between recovery that an entity of the state
might receive for health-care expenses, and the type of recovery
an individual might seek. The court read this distinction "to
indicate that the M.S.A. . . . itself recognized that the
assignments the states received might not include all claims
related to health-care expenses and that it did not purport to
extinguish the claims of individual persons who were not part of
the settlement process." Floyd, 227 F.3d at 1037.
Likewise, in this case, the plaintiffs are public aid
recipients seeking a portion of the M.S.A.'s proceeds.
Accordingly, this court as well may bypass the question of
Eleventh Amendment immunity and examine the issue under the terms
of the M.S.A. In Floyd, the Seventh Circuit determined that the
only assigned claims settled by the M.S.A. were claims for money
the states actually expended to provide medical services to
recipients of public aid. Because a recipient of public aid would
not be entitled to money a state has expended on his or her
behalf, that recipient has no claim to any portion of the
Nevertheless, the plaintiffs argue that the reasoning of
Floyd does not resolve this dispute because Illinois' statutory
scheme governing the assignment of public aid recipients' claims
confers on the State more authority than the State of Wisconsin
derives under its scheme. In so arguing, the plaintiffs correctly
point out that the court did look to Wisconsin law in assessing
whether the plaintiffs had a right to a portion of the M.S.A.'s
proceeds. Specifically, the court discussed statutory limitations
on Wisconsin's authority to recover from a third party on behalf
of a public aid recipient to support its conclusion that the
M.S.A. resolved only those rights belonging solely to the states.
The court noted that under its statutes, Wisconsin could recover
on behalf of its public aid recipients only money it actually
expended for their care. That restriction on Wisconsin's
authority in negotiating the M.S.A., in light of the language of
the M.S.A. as to precisely which claims were released, led the
Seventh Circuit to conclude the M.S.A. could not have resolved
any claims belonging to Wisconsin's public aid recipients.
Floyd, 227 F.3d at 1036. Thus, although Wisconsin's statutes
provided a reference for interpreting the terms of the M.S.A.,
the ultimate issue was not one of Wisconsin law. Rather, the
issue was whether
public aid recipients are entitled to any portion of the M.S.A.,
and that question turned on the terms of the M.S.A. itself. That
Wisconsin was limited in its authority to resolve the claims of
public aid recipients reinforced the court's interpretation of
the limited scope of the released claims, but that does not mean
that the terms of the M.S.A. would have different meanings in
The plaintiffs also assert that the original complaints filed
by Illinois and Wisconsin against the tobacco companies likely
pleaded different claims. This court must consider Illinois'
original claims, they argue, before determining the extent of the
M.S.A.'s impact on the rights of Illinois public aid recipients.
This court does not agree that this inquiry is relevant. The
original complaint is not the final word on the rights of the
parties to the tobacco litigation; the M.S.A. is. See Floyd,
227 F.3d at 1036 (noting that although "[s]ome of the states may
have included assigned or subrogated claims in their initial
litigation, . . . [a]t this point, the only relevant document is
the M.S.A. § itself. . . ."). Whatever the State of Illinois may
have intended to resolve originally does not alter the fact that
the M.S.A. ultimately resolved only those claims belonging
exclusively to the states.
Finally, the court must address the plaintiffs' motion to join
the tobacco companies as additional defendants. Under the Seventh
Circuit's decision in Floyd, the M.S.A. does not extinguish
individuals' potential claims against the tobacco companies.
Floyd, 227 F.3d at 1037. Those claims, however, would be
distinct from those settled by the M.S.A. Yet the plaintiffs do
not allege any new claims, they merely seek to add the tobacco
companies as defendants to the claims they have alleged against
the State. Moreover, the plaintiffs misconstrue the issue
regarding the scope of the claims settled by the M.S.A. as one of
fact on which they need discovery from the tobacco companies.
However, as explained above, the court in Floyd has already
resolved that question by examining the terms of the M.S.A.
itself. Thus, the court will not allow the plaintiffs to amend
their complaint to add the tobacco companies.
The court GRANTS both the State of Illinois defendants'
Supplemental Motion to Dismiss Plaintiffs' Second Amended
Complaint with Further Amendment (# 89), and Citibank's Motion to
Dismiss Plaintiffs' Second Amended Complaint with Further
Amendment (# 97). The court thereby finds the State's Motion to
Dismiss Second Amended Complaint with Further Amendment (# 70),
and Motion to Supplement Defendants' Motion to Dismiss (# 86)
MOOT. Finally, the court DENIES the plaintiffs' Motion for Leave
to Amend Complaint Instanter to Join as Additional Defendants
Herein the Tobacco Companies that Entered into the Master Tobacco
Settlement Agreements (# 96). This case is TERMINATED.