U.S. Seeks Reimbursements from $300 Million PCB Settlement in Alabama

By | March 3, 2010

The federal government is seeking Medicare reimbursements from lawyers, manufacturers and insurers that were involved in a $300 million settlement over widespread PCB contamination in the east Alabama city of Anniston.

A lawsuit filed by the Justice Department against 18 attorneys, law firms and companies seeks repayment for payments made on behalf of 907 Medicare beneficiaries who were part of the massive agreement.

Filed in December, the federal lawsuit doesn’t seek a specific amount. Justice Department spokesman Charles Miller declined comment Monday on whether the government had determined how much money was at stake.

“The complaint speaks for itself,” he said.

The defendants have filed court papers saying they shouldn’t have to pay the money. They contend the claims are too old for a court to consider and that the government hasn’t specified which Anniston-area residents had their bills paid by Medicare.

An attorney representing key lawyers who were involved in the settlement, including former U.S. Sen. Donald Stewart of Anniston, didn’t immediately return a message seeking comment.

The dispute stems from a 2003 settlement involving about 20,000 claims by people who sued over what they said was contamination from a plant that manufactured polychlorinated biphenyls, or PCBs, a now-banned chemical that was made in Anniston for decades.

The government lawsuit involves a $300 million portion of the settlement that included about 3,500 people who live in and around Anniston, where the old Monsanto Co. operated the PCBs factory for more than four decades ending in 1971.

Of the $300 million, $129 million went to lawyers and $171 million went to plaintiffs, the lawsuit said.

Medicare paid for health care for some of the people involved in the lawsuit and should have been reimbursed, according to the lawsuit, but no one involved in the settlement notified the government of the agreement or made reimbursement payments.

Aside from plaintiff’s lawyers and law firms that were involved in the settlement, the lawsuit named Monsanto Co., Solutia Inc. and Pharmacia Corp., which all were involved in the settlement.

The government also sued two insurance companies that helped pay the settlement, Travelers Cos. Inc. and AIG.

People living around the Anniston plant have blamed numerous health problems on PCBs, which were banned by the government in 1979. The government has said the chemical probably causes cancer, but the companies argued there was no evidence PCBs hurt anyone.

The New York-based Chadbourne & Parke law firm, which isn’t involved in the case, said in an alert to clients that the lawsuit provides “valuable insight” about how the government plans to enforce a law governing Medicare secondary payers.

Among other things, the government showed it plans to seek twice the amount of money for any conditional Medicare payments made in cases where the government isn’t properly notified of liability settlements, Chadbourne & Parke said.

If the government wins, insurance carriers could be forced to pay double for such settlements going back as far as six years, the firm’s analysis said.

Topics Lawsuits USA Alabama

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