In Re Dow Corning Corp.

OPINION ON JOINT MOTION OF DOW CORNING CORPORATION AND THE OFFICIAL COMMITTEE OF TORT CLAIMANTS FOR SUMMARY JUDGMENT DISALLOWING UNITED STATES’ CLAIMS

ARTHUR J. SPECTOR, Chief Judge.

This matter is before the Court on the Debtor’s and the Official Committee of Tort Claimants’ (the “Movants”) Joint Motion for Summary Judgment Disallowing United States’ Claims (the “Motion”). The Movants’ primary assertion is that the United States’ claims are either defective, incomplete or undocumented and, therefore, are incapable of being proven as a matter of law. Secondary grounds include the Movants’ contention that one of the Government’s proofs of claim was filed on behalf of the wrong party and that the applicable statute of limitations bars substantial portions of the Government’s claims. The Motion further seeks summary judgment on the Movants’ request to disallow, pursuant to 11 U.S.C. § 502 (e), and subordinate, pursuant to § 509, those claims of the Government that are not disallowed by the Court. Resolution of this matter constitutes a core proceeding within the jurisdiction of the Court. 28 U.S.C. §§ 1334 , 157(a), (b)(2)(B). For the reasons which follow, the Motion is granted in part and denied in part.

I. Background

A. Nature of Claims Filed by the United States and Objections Thereto

On January 14, 1997, the United States filed proofs of claim on behalf of four federal agencies: Department of Defense (“DoD”); Department of Veterans Affairs (“VA”); Indian Health Services division of Department of Health and Human Services (“IHS”); and Health Care Financing Administration (“HCFA”). The claims seek to recover the costs of medical care either provided or paid for by these agencies as a result of injuries allegedly caused by breast implants manufactured by or containing materials supplied by the Debt- or. The HCFA claim is based on the Medicare Secondary Payer Act (“MSPA”), 42 U.S.C. § 1395y. The IHS, VA and DoD claims are based on the Federal Medical Care Recovery Act (“MCRA”), 42 U.S.C. §§ 2651-2653 .

The proof of claim filed on behalf of HCFA originally sought reimbursement for an unstated amount of Medicare payments for medical care provided to 10,879 unidentified individuals.

Movants’ Ex. I: Declaration of Linda A. Ruiz of HCFA in Support of Proof of Claim (“Decl. of Ruiz

”) at 11. It was clear from this declaration, however, that the Government intended to expand the scope and amount of its HCFA proof of claim beyond these unidentified individuals.

Id.

at 11-12 . The proof of claim filed on behalf of DoD was for $58,710,039.

Movants’ Ex. J: Declaration of Mark B. Barta in Support of DoD Proof of Claim

at 4-5. This amount consisted of an estimated $9,406,039 of medical care provided to 4,123 unidentified individuals as well as a $49,304,000 estimate for the costs of breast-implant-related medical care that DoD expected to provide post-confirmation.

Id.

at 4-5 . The VA proof of claim was for $1,091,834 for services provided to 135 unidentified individuals and an unknown amount of medical care expected to be provided post-confirmation.

Movants’ Ex. K: Declaration of Nancy Howard in Support of VA Proof of Claim

at 2-5. The IHS claim was for an unstated amount for services provided to 58 unidentified individuals as well as anticipated post-confirmation medical care.

Movants’ Ex. L: Declaration of Leo J. Nolan in Support of IHS Proof of Claim

at 6-7.

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The Government’s original proofs of claim were woefully inadequate, a point never seriously disputed by the Government.

See Transcript,

February 5, 1998 at 101-04 (counsel for the United States stating that it did not yet know the identities of the federal beneficiaries underlying its claims but that it was in the process of gathering additional information);

Transcript,

July 16, 1998 at 85 (counsel for the United States acknowledging that its proofs of claim were “incomplete”);

Transcript,

August 6, 1998 at 213 (counsel for the United States explaining that it intended to supplement its proofs of claim). Some nine months after filing the proofs of claim, the Government still had not amended them to be in compliance with Official Form 10. On October 29, 1997, the Debt- or filed its objections.

For each of the Government’s claims, the Debtor argued that the United States’ right of recovery was dependent upon its ability to establish the Debtor’s tort liability to the individual breast implant claimants who form the basis of its claim. The Debtor maintained that, among other things, this would require the Government to identify each of these individual breast implant claimants. And, as the Debtor noted, not one federal beneficiary was identified in the United States’ proofs of claim. The Debtor also asserted that, as an entity co-liable with the Debtor on the primary claims, the United States’ claims were subject to disallowance pursuant to Bankruptcy Code § 502(e)(1). Finally, the Debtor argued that those claims not otherwise subject to disallowance were subject to mandatory subordination pursuant to Bankruptcy Code § 509(c).

See, e.g., Claim Objection No.U First Amended Objection to the Medicare Claim of the United States

at 6.

The United States responded to the Debtor’s objections on January 22, 1998. It argued that HCFA’s ability to obtain reimbursement from the Debtor pursuant to the MSPA was not predicated on a finding that the Debtor was liable in tort to the individual breast implant claimants underlying its claims. It also asserted that § 502(e)(1) and § 509(c) were not applicable to any of its claims because the Government was not an entity co-liable with the Debtor within the meaning of those Code sections. In the event that the Court found otherwise, however, the Government argued that its claims should not be disallowed pursuant to § 502(e)(1)(B) because they are not contingent. The United States would then be able to pursue allowance of its claim under either §§ 502 or 509(c). But the Government maintained that it would not be in a position to make such an election until it had been able to identify the nature of its claims. Problematically though, it stated that it could identify the nature of its claims only by analyzing the proofs of claim filed by individual breast implant claimants, something that it was being prevented from doing due to this Court’s order sealing such information.

See, e.g., Claim Objection No.

J:

Initial Response of the United States of America to the Medicare Claim Objection

at 6.

The Official Committee of Tort Claimants (“TCC”) joined the fray when it filed four adversary proceedings against the United States on March 12, 1998. But for the fact that each of the adversary proceedings asserted a cause of action seeking to equitably subordinate the Government’s claims pursuant to Bankruptcy Code § 510(c), the TCC’s substantive and procedural objections were essentially identical to those raised by the Debtor.

To avoid confusion and unnecessary duplication of effort, the Court bifurcated from the adversary proceedings all issues raised therein, save for the issue of equitable subordination, and joined those issues with the Debtor’s objections.

Order Bifurcating and Consolidating Issues for Trial,

August 20, 1998.

1

The next day the

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Court entered a scheduling order for the trial of the Movants’ now-joint objection to the United States’ claims.

See, e.g., Claim Objection No. 5 Scheduling Order

(“Scheduling Order”), August 21, 1998. The Scheduling Order provided that all discovery, other than discovery pertaining to expert witnesses and the issue of tort causation, was to be completed by March 5, 1999.

2

Id.

At the request of the Movants, this deadline was later extended to April 29, 1999.

Transcript,

April 15, 1999 at 51-55. Finally, on stipulation of the Movants and the Government, the deadline was again extended, this time to May 30, 1999.

Order to Revise Discovery and Dispositive Motion Deadlines

(entered May 7, 1999).

B. Orders Sealing Certain of the Claims Databases

After filing for relief under chapter 11, the Debtor sought permission to file certain portions of its schedules containing the names of breast implant claimants under protective seal.

First Amended Expedited Motion for Authority to File Certain Portions of the Schedules, the Matrix and Certain Certificates of Service Under Protective Seal

(“Matrix Motion”), filed June 21, 1995. The names of breast implant claimants covered by this request came from two sources. One source was the Implant Information Center (“IIC”) operated by the Debtor during the four years prior to its filing for bankruptcy. The primary mission of the IIC was to “respond and provide current information to women with Dow Corning silicone gel-filled breast implant devices.”

Id.

at 2. Women who contacted the IIC frequently expressed concern over the issue of confidentiality. As a result, the Debtor began making a formal confidentiality statement to all callers.

Id.

at 3.

The second source was a legal proceeding in which the Debtor participated prior to bankruptcy — the silicone-gel breast implant multidistrict litigation pending at that time before the Honorable Sam Pointer in federal district court in Alabama (“MDL 926”). A tentative global settlement was reached in those proceedings and notice of the settlement was sent to approximately 600,000 breast implant claimants. The notice specifically provided that women who registered with the global settlement would have their names and addresses kept confidential.

Id.

at 4. Some 400,000 women registered.

Upon filing for bankruptcy, the Debtor was required to schedule the names of all known breast implant claimants. 11 U.S.C. § 521 (1). It could not file the names in the IIC database, however, without violating the confidentiality agreements reached with the women whose names were contained therein unless such data could be filed under protective seal. A similar problem existed with respect to the global settlement database because Judge Pointer would release the names of the 400,000 registrants only on the condition that confidentiality would be continued.

Matrix Motion

at 4-5.

Concluding that the relief requested by the Debtor was appropriate, the Court entered an order to this effect on June 22, 1995.

Order Authorizing Debtor to File Certain Portions of the Schedules, the Matrix and Certain Certificates of Service Under Protective Seal

(“Matrix Order”). The order also provided “that upon notice, hearing, and a showing of good cause, any party-in-interest may request access to any portion of the documents subject to

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this Order, or may move the Court to withdraw the protective seal as to any portion or all of the documents subject to this Order.”

Id.

The Government did not oppose the requested relief, nor did it appeal the Court’s order granting such relief.

On August 8, 1996, the Court entered an order establishing, among other things, a bar date for the filing of proofs of claims against the Debtor and approving a specialized proof of claim form to be used by claimants in this case.

Order Regarding Debtor’s Renewed Motion for Order (1) Setting Bar Date for Filing Proofs of Claim; [and] (2) Approving Alternative Proof of Claim

Forms.... (“Bar Date Order”). The specialized proof of claim form required the personal injury claimant to provide certain information — such as the claimant’s social security number and date of birth — that is not asked for on the official proof of claim form.

See Ex. h to Bar Date Order; see also Official Bankruptcy Form 10

— Proof

of Claim.

At the request of the TCC, the Bar Date Order provided that the implant proofs of claim would be filed in confidence.

Bar Date Order

¶ 11. But the order further explained that the maintenance of this confidentiality was neither indefinite nor absolute:

[T]he Court rules that the information in the Implant Proof of Claim Form will not become public unless the Court determines that the class of Implant Claimants may be entitled to receive payment on their claims, or otherwise modifies the confidentiality provisions of this Order. In such event, the information shall become public without further notice to the individual claimants. Moreover, during the pendency of this bankruptcy case, the Debtor and its professionals, the official committees representing various creditor groups and their professionals, and the docketing agent will be allowed to use the information contained therein on a confidential basis for proceedings in this bankruptcy case, as will other parties in the bankruptcy case who receive permission from the Court.

Id.

The implant proof of claim form provided to claimants contains almost identical language.

Ex. U to Bar Date Order.

The Government did not object to the confidentiality provision of the Bar Date Order. It did, however, request and receive permission to file its proofs of claim on Official Form 10.

See Bar Date Order

¶ 9 (“Notwithstanding anything herein to the contrary, the United States government and any of its agencies may file claims on Official Form 10.”).

Thus, there are two confidentiality orders in this case. One protects the identities of implant claimants listed on the Debtor’s schedules (the “Matrix Order”) and the other protects the information submitted by implant claimants on their proofs of claim (the “Bar Date Order”) (jointly, the “Confidentiality Orders”).

C. Discovery Process

From the beginning, the Government has maintained that to prove its case against the Debtor, it must have access to the information sealed by the Confidentiality Orders.

See Motion of the United States for Relief from Confidentiality Orders of the Bankruptcy Court (“Motion for Relief

”) at 2-3 (filed March 12, 1998) (“The United States needs to know the identity of the women who have brought lawsuits, asserted claims ..., or have otherwise advised the Debtor of injuries arising from breast implants ... in order to calculate the amount of its claim against the Debtor.”). And its attempts to access such information began prior to entry of the Scheduling Order.

See U.S. Ex. 32

(letter from counsel for United States to counsel for the Debtor, dated August 15, 1995, stating that Debtor needed to provide it with information protected by the Matrix Order before meaningful settlement negotiations could begin)!

The Government stated that it “anticipated receiving this information from [the

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Debtor] cooperatively because, under the MSP [Act], [the Debtor] has an affirmative obligation to identify to the United States persons who have or may reasonably expect to receive payment from a products liability settlement.”

U.S. Opposition to Motion

at 5. In support of this statement, the Government quoted the following regulation: “If Medicare is not reimbursed as required ..., the third party payer must reimburse Medicare even though it has already reimbursed the beneficiary or other party.”

Id.

at 5 n. 1 (quoting 42 C.F.R. § 411.24 (i)(2)). The affirmative obligations that the MSPA places upon an entity such as the Debtor are discussed in greater detail below. Suffice it to say at this point, however, that this provision does not place an entity in the untenable position of having to violate a court order, particularly one granting a request for relief which the United States chose not to oppose. Quite properly, then, since complying with the Government’s request would have required the Debtor to violate this Court’s Confidentiality Orders as well as the confidentiality order entered by Judge Pointer in connection with MDL 926, the Debtor declined to do so.

Almost three years after the petition date, the United States finally sought permission from the Court, as is explicitly required by the Confidentiality Orders, to access the confidential databases.

See Motion for Relief.

The United States argued that it needed access to the confidential information so that it could: identify all of the federal beneficiaries who form the basis of its claim; establish that a Dow Corning breast implant was involved in the medical care provided to those beneficiaries; and “calculate the amount of its claim against the Debtor.”

Id.

at ¶ 7 ;

see also, e.g., Transcript,

August 6, 1998 at 195 and 204. The Government also stated that it would undertake to maintain the confidentiality of the information with two exceptions: it would not waive its right to use the information to obtain reimbursement directly from the beneficiaries; and to the extent that it was required to disclose the information pursuant to the Freedom of Information Act, 5 U.S.C. § 552a, it could not promise to keep the information confidential.

The first hearing on the United States’ Motion for Relief was conducted July 16, 1998. The Confidentiality Orders both anticipated that any party seeking access would be required to demonstrate a need for the information before such access would be granted.

See Matrix Order

(providing that access to the information would be granted “upon notice, hearing, and a showing of good cause”);

Bar Date Order

at ¶ 11 (stating that a party-in-interest would be granted access to the information only upon “receiving] permission from the Court”). At the hearing, the Government failed to proffer any evidence in support of its motion and, as a result, the Court declined to rule on the matter.

Transcript,

July 16, 1998 at 120 (“[0]n your motion for lifting of the confidentiality, ... I will require proofs.... So I’m not about to decide that now.”).

When the matter came before the Court again on August 6, 1998, the Government announced for the first time that it intended to call a witness in support of its motion.

Transcript,

August 6, 1998 at 171. The Movants, not having had an opportunity to depose this witness, objected.

Id.

at 171-73. The Court sustained the objection, but offered to adjourn the hearing so that the deposition could be conducted.

Id.

at 177. This offer was declined by the Government. Instead it offered, without objection, the depositions of two Government employees.

Id.

at 178-82. As it turned out, the deposition testimony appeared to cut both ways and the Court expressed skepticism as to whether the Government had made a sufficient showing of need.

Id.

at 188-92, 197-200 and 225-26. And while the Government softened its stance somewhat during the hearing,

see id.

at 215, the Court remained troubled by the conditions the Government sought

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to place on its receipt of the confidential information.

Id.

at 282-83.

In the end, the Court did not rule on the United States’ motion, suggesting instead two alternatives which were felt to be preferable. One alternative was for the Government to approach Judge Pointer and request that he modify or lift his confidentiality order.

Id.

at 293. The thought was that if the Government could prevail on such a request, then this Court would be in a position to lift, or at least substantially modify, the Matrix Order.

Id.

at 206-08.

The second suggestion was for the United States to provide the Movants with a list of all federal beneficiaries forming the basis of its claims. The Movants would then cross-match the list against their confidential databases and provide the results to the Government.

Id.

at 224 and 289. At that time, the United States allegedly possessed a list of about 15,195 federal beneficiaries whom it had identified as having undergone some type of breast-implant-related surgery. But the intent was to have the Government augment this list before submitting it to the Movants by expanding its internal search to retrieve the names of federal beneficiaries who had received treatment for a broader range of illnesses, such as lupus and scleroderma.

Id.

at 289.

Presumably, the second alternative would have enabled the Government to reduce its subsequent internal search of medical' records to a more manageable size.

Compare U.S. Opposition to Motion

at 15 (asserting that it would be impracticable to search the underlying medical files for identified DoD beneficiaries because, due to the Debtor’s share of the breast implant market, less than “half of these records could ... be expected to yield any ... references” to the Debtor)

with Transcript,

August 6, 1998 at 226-27 (counsel for the United States stating that, if the Government knew which of the federal beneficiaries thus far identified had also filed proofs of claim against the Debt- or, it would be able to

“go

back to [its] records and pull ... all ... relevant medical [files].”). Approaching the problem in this manner would have also eliminated lingering concerns about the conditions that the Government wanted to place on its receipt of the confidential information.

Transcript,

August 6,1998 at 282-83. The Movants appeared to be amenable to this approach.

Id.

at 247-48. But the Government initially balked, stating that its agencies would hesitate to provide such a list to the Movants due to concerns that doing so could violate the Privacy Act.

Id.

at 263-64.

3

By the end of the hearing, however, the Government appeared to have acquiesced.

Id.

at 289. Thus, the hearing concluded with the understanding that the parties would cooperate to implement the Court’s suggestions.

4

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Unfortunately, this was never done. And the blame for this inertia rests squarely on the Government. There is no indication that the Government ever approached Judge Pointer to obtain relief from his confidentiality order. As for the Court’s second suggestion, it appears that the Government did nothing. Court records show that the Government made no attempt to construct a fully comprehensive list of all the federal beneficiaries potentially underlying its claim.

See, e.g., Transcript,

June 17, 1999 at 52-5B.

5

Nor did it return to the Court in a timely manner seeking to fashion some other form of relief. Instead, it sat idle for the next four months. Then, on December 3, 1998, it propounded formal discovery requests upon the Movants seeking, in large part, the exact same information protected by the Confidentiality Orders. Not surprisingly, the Movants objected to this portion of the Government’s discovery request. Six months later, on May 28, 1999, the Government filed its

Motion to Compel and Renewed Motion for Relief From Confidentiality Orders.

A hearing on this motion was conducted June 17,1999.

At the hearing on that motion it was revealed that the Government had finally amended its proofs of claim to actually identify 15,048 federal beneficiaries.

See Transcript,

June 17, 1999 at 30-48. From this it was apparent that the Government had done little more than impart the identities of the federal beneficiaries who formed the basis of its original proofs of claim filed in January of 1997.

6

The

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Debtor’s bankruptcy case was four years old by this time and the discovery period had expired. There had been ample opportunity for the Government to expand the scope of its claim beyond these approximately 15,000 beneficiaries, but it had inexplicably refused to do so, apparently operating under the odd and incorrect assumption that it was not responsible for documenting its own claims. As a result, the Court held that the Government’s claims were limited to the 15,048 beneficiaries that it had thus far identified.

See Order on Motion to Compel,

dated October, 27, 1999;

In re Dow Corning Corp.,

244 B.R. 705, 718-18 (Bankr.E.D.Mich.1999).

The Court further ruled that the Government could provide the Debtor with a list containing the names of these federal beneficiaries and that the Debtor would then be required to match those names against the confidential databases.

Order on Motion to Compel.

This matching process yielded a list of approximately 4,908 federal beneficiaries.

Transcript,

September 2, 1999 at 89 and 107. While the breakdown is not clear from the record, it appears that 2,370 of these federal beneficiaries allege that their breast implants were manufactured by Dow Corning whereas most of the others assert that their implant was made with materials purchased from Dow Corning.

Id.

at 108 (statement by counsel for the United States);

U.S. Opposition to Objection to Evidence

at 6. Approximately 4,288 of these federal beneficiaries are allegedly Medicare beneficiaries. The remaining 620 or so beneficiaries are. part of either the VA, IHS or DoD proofs of claim. In addition, the Court announced that it would, at some point, enter an order lifting confidentiality in its entirety before any payments could be made under the Joint Plan.

See Transcript,

October 21, 1999 at 24-27.

The Movants likewise sought discovery from the Government. They conducted depositions of representatives of HCFA and the VA on June 24-25, 1998. The TCC served interrogatories and a document request on each of the four federal agencies on September 8, 1998. About this same time, the Debtor propounded its own discovery request upon the Government.

The original due date for responses to the TCC’s discovery request was October 9, 1998. At the request of the United States, the TCC voluntarily granted it two extensions. As the second deadline of November 28, 1998 approached, the Government asked the TCC for yet another extension. This time the TCC refused and the Government filed a motion with the Court requesting that it be given until December 22, 1998 to respond to the discovery requests. The Government also filed objections to the TCC’s discovery requests on December 22, 1998. At a hearing conducted that same day, the Court held that, by failing to timely file its objections to the TCC’s discovery request, the Government had waived those objections.

Order Granting, in Part, and Denying, in Part, the Motion of the United States for Extension of Time to Respond to Discovery Propounded by the Official Committee of Tort Claimants,

entered January 7, 1999. But the Court did grant the United States a

nunc pro tunc

extension

of time to

December 22 to respond to the TCC’s propounded discovery.

Id.

The Government timely served its responses to the TCC’s interrogatories on December 21 and 22 of 1998. The Government’s responses to the interrogatories, however, were incomplete. Moreover, the Government failed to comply with the TCC’s document request.

See U.S. Ex. 26

(letter from counsel for United States to counsel for TCC acknowledging incom

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pleteness of discovery response dated January 28, 1999). Accordingly, the TCC requested that the Government supplement its responses in compliance with the Court’s ruling.

See Movants’ Ex. P

(letter from counsel of TCC to counsel for United States dated December 24, 1998). Once again the Government delayed, stating that it could not respond to the supplemental discovery requests until the parties entered into a stipulation resolving certain concerns that it had with respect to the Privacy Act.

U.S. Ex. 26

(correspondence from counsel for United States addressing Privacy Act issues). The Movants acquiesced and a stipulated order enabling them to access, on a confidential basis, information that the Government said was protected by the Privacy Act was entered by the Court on February 22, 1999.

U.S. Ex. 37.

Nonetheless, the United States’ recalcitrance in complying with Court-ordered discovery continued. It made no efforts to supplement its admittedly incomplete interrogatory responses or to provide the documents requested by the TCC.

Brief in Support of Motion

at 10-11. And significantly, this was so despite the fact that the deadline for completing all discovery on matters other than expert witnesses and tort causation, March 5, 1999, was fast approaching.

See Scheduling Order

¶¶2 and 3.

On February 25, 1999, the TCC served notice of its intent to depose certain Government employees on March 9,10 and 11. The United States resisted this effort as well, filing a motion to quash the depositions on March 8, 1999.

See United States’ Motion to Quash [TCC] Deposition Notices and Subpoenas Duces Tecum, or, in the Alternative, for a Protective Order.

Somewhat ironically, the United States argued that the depositions should be quashed since they were scheduled to take place after the deadline for completing discovery.

Id.

at 3 (“The United States seeks protection from the discovery because it is untimely.”).

The Movants filed a motion to compel discovery on March 22, 1999.

Motion to Compel Adequate Responses to Discovery.

A hearing was scheduled to be heard on the matter three weeks later on April 15, 1999.

Just prior to the April 15th hearing, the Government provided the TCC certain supplemental information. On April 13, 1999, it produced a list containing the names of 11,614 HCFA beneficiaries. In addition to the individuals’ names, the list contained the beneficiaries’ health insurance claim numbers, the dates services were provided, the amounts paid by Medicare, and the procedures and diagnosis codes.

U.S. Opposition to Motion

at 21;

U.S. Ex. 38

at 8. The following day, April 14, 1999, the United States produced comparable lists containing the names of 257 VA beneficiaries and 27 IHS beneficiaries.

U.S. Opposition to Motion

at 21;

U.S. Ex. 39.

It also produced a similar list containing the names of 3,150 DoD beneficiaries on April 29, 1999.

U.S. Ex. 28

at 3, ¶ 3.

At the hearing, the Court confirmed its previous ruling that the Government had waived its objections to the TCC’s discovery requests.

Order on Discovery Disputes

(dated May 6, 1999) (“[S]ubject to the terms of [the] stipulated order dated February 22, 1999 regarding the Privacy Act of 1974, ... the objections raised by the United States in ... [its] Response to the [TCC’s] Interrogatories and Request for Production served on December 21, 1998[and] ... December 22, 1998 are waived and therefore overruled based upon the United States’ failure to timely raise the objections as previously found under Order dated January 7, 1999.”). The Court further ordered that “the United States ... shall produce for inspection, documents responsive to the [TCC’s] interrogatories and requests for production on April 29, 1999...”

Id.; see also Transcript,

April 15, 1999 at 51-55.

7

The

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Court’s directive clearly informed the Government as to the potential consequences of noncompliance: “[April 29] will be the day to put up or shut up.... Because I very well will say, whatever it is [the TCC] see[s on that day] is all that will be allowed to be produced at trial.”

Transcript,

April 15, 1999 at 51-54.

When that day arrived, however, the United States produced files for a mere two-to-three-hundred VA and IHS beneficiaries.

8

On May 28, 1999, the Government disclosed to the TCC the locations where records pertaining to DoD beneficiaries are stored.

U.S. Opposition to Motion

at 22. The locations to which the TCC was directed for purposes of inspecting additional documents — documents which should have been made available on April 29, 1999 — were not only numerous, but were situated in various localities around the world.

Id.; see also U.S. Opposition to Motion

at 4 (noting the difficulty the Government itself would have reviewing the medical treatment records of the approximately 15,000 beneficiaries identified, in part, because of “the number and location of medical facilities involved”).

About this same time, the United States, at long last, amended its proofs of claim. On April 12, 1999, the Government amended the HCFA proof of claim. The amendment identifies 11,614 beneficiaries and estimates the United States’ claim to be, at a minimum, $32,588,197.02. The IHS proof of claim was amended on May 25, 1999 to identify 27 actual beneficiaries. It was amended for a second time on June 10, 1999 to state that the Government estimated the amount of the IHS claim at $227,-800.84. The Government amended the VA proof of claim on May 26, 1999 to identify 257 beneficiaries. And although the number of beneficiaries is almost doubled by the amendment, the Government retained the estimated amount of the claim at $1,091,834. Lastly, the DoD proof of claim was amended June 15, 1999 to identify 3,150 beneficiaries. Curiously, while the DoD amendment reduced the number of beneficiaries by nearly 1,000, it did not change the original demand of the claim— $58,710,039.00.

The motion for summary judgment was filed by the Movants on May 28, 1999. A hearing on the matter was scheduled for September 2. On July 9, the Government responded with a brief accompanied by 49 voluminous exhibits. The Movants’ reply to the Government’s opposition brief asserted that the Government’s exhibits were “largely inadmissible.”

Joint Reply in Support of Motion

at 4. Then, just one week before the hearing, the Movants filed an

Objection to Evidence Proffered by the United States in its Response to Joint Motion for Summary Judgment Disallowing United States Claims (“Objection to Evidence

”). The Government’s response to the Movants’ latest volley was filed the morning of the September 2nd hearing.

United States’ Opposition to ... Objection to Evidence Proffered by the United States to Defeat Summary Judgment Motion (“Opposition to Objection to Evidence”).

II. Movants’ Objection to Evidence Proffered by the United States

In this part, the Court addresses three evidentiary matters. The first is the Mov-ants’ Objection to Evidence and their renewal of certain of these objections at the hearing. The next matter is the Movants’ assertion that the Government’s amend

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ments to its proofs of claim are impermissible. Lastly, the Court addresses the current status of the discovery process as it pertains to the Government’s proofs of claim.

The Movants’ Objection to Evidence asserts that 45 of the Government’s 49 exhibits submitted in response to the Movants’ request for summary judgment should be stricken.

Objection to Evidence

at 3. Included among these'45 exhibits are: the Government’s amended proofs of claim; certain redacted HCFA, VA and IHS documents; declarations by Government personnel; depositions of employees of the Debtor and the Government; copies of correspondence authored by counsel for the United States and the Movants; copies of transcripts from previous hearings before this Court; copies of motions, accompanying briefs and responses pertaining to the United States’ attempts to gain relief from the Confidentiality Orders and to compel discovery from the Movants; copies of the Confidentiality Orders; and a copy of an exhibit to the Movants’ jointly-proposed plan of reorganization purportedly reflecting breast implant market share data. For the following reasons, the Objection to Evidence is overruled.

The Movants raise a multitude of objections to the exhibits in question including: improper amendments to proofs of claim; violation of discovery orders; lack of relevance; hearsay; unsubstantiated summaries; violation of the best evidence rule; and improper testimony by a lay witness. For the most part, these objections are made in broad, general terms and fail to direct the Court to the offending portions of each exhibit. Due to this lack of specificity, the Court is unable to address these objections on their merits.

See, e.g.,

1

Weinstein’s Federal Evidence

§ 103.12 (observing that an objection to evidence must be made with sufficient specificity).

At the summary judgment hearing, the Movants renewed their objection to the admissibility of the documentation accompanying the amended proofs of claim submitted on behalf of HCFA and the DoD. The HCFA documentation includes the names of 11,614 Medicare beneficiaries as well as the beneficiaries’ Health Insurance Claim number, date of birth, date of treatment, and the procedure or diagnosis codes for such treatment.

U.S. Opposition to Motion

at 11-12. The DoD documentation contains the names of 3,150 federal beneficiaries along with the beneficiary’s social security number and the name of the military installation where treatment was provided.

See Transcript,

September 2, 1999 at 61.

Both the HCFA and DoD documentation were obtained from computer databases maintained by the Government. The databases were constructed using information culled from the underlying medical treatment files. In the ease of HCFA at least, the information was originally input into the databases of private health care providers and then transferred through a series of contracting intermediaries before finally being input into the United States’ computer systems.

Id.

at 109-10 (counsel for United States discussing process by which HCFA compiles its databases). None of the underlying medical treatment files for HCFA or DoD have been produced. Therefore, it has not been possible for the Movants to verify the accuracy of this information.

The Movants argued that such documentation constitutes inadmissible hearsay. There is no question that it is hearsay because the documentation is an out-of-court statement offered for the truth of the matter asserted.

See

5

Weinstein’s Federal Evidence

§ 801.02[1], In fact, the documentation submitted for both HCFA and DoD would appear to constitute double hearsay since the medical files themselves are hearsay. Nevertheless, the Court overrules the Movants’ objection. This documentation falls within the hearsay exception for business records, which generally allows for the admissibility of

*318

hearsay evidence if such evidence constitutes a “report ... of ... events ... made at or near the time by, or from information transmitted by, a person with knowledge, if kept in the course of a regularly conducted business activity, and if it was the regular practice of that business activity to make ... [such a] report.” FRE 803(6).

As long as a proper foundation is laid, computer generated data may qualify as a report for purposes of FRE 803(6).

United States v. Moore,

923 F.2d 910, 914-15 (1st Cir. 1991);

United States v. Briscoe,

896 F.2d 1476, 1494 (7th Cir.1990);

United States v. Hayes,

861 F.2d 1225, 1228 (10th Cir.1988);

United States v. Young Bros., Inc.,

728 F.2d 682, 693 (5th Cir.1984). The process by which HCFA and DoD created the computer database qualifies as a business activity.

See United States v. Hernandez,

913 F.2d 1506, 1512-13 (10th Cir.1990) (Immigration and Naturalization Service computer records reflecting alien’s application for amnesty constituted business activity); 5

Weinstein’s Federal Evidence

§ 803.11[3] at 803-68 (observing that governmental record-keeping activities generally qualify as a business activity). This business activity was conducted on a regular basis by HCFA and DoD.

See, e.g., U.S. Ex. 19: Deposition of Lisa Vriez en for HCFA (“Dep. of Vriezen

”) at 34-35 (stating that HCFA’s computer database is updated every quarter). There is nothing in the record to suggest that these computer-generated reports are untrustworthy.

See, e.g., id.

(supporting document titled “Claims and Utilization Data” explaining HCFA’s quality assurance system);

see also

5

Weinstein’s Federal Evidence

§ 803.11[3] at 803-68 (stating that governmental reports are generally considered to be reliable). And while a fair amount of time may have elapsed between the time the medical care was provided to the federal beneficiary and the time the treatment data reached the Government’s computers, the record indicates that the process of compiling the data began at or near the time that the medical care was furnished.

See, e.g., U.S. Ex. 19: Dep. of Vriezen

(supporting document titled “Overview of Health Care Financing Administration” explaining that process begins when health care provider sends claim to Medicare carrier).

Business records are generally not self-proving. Therefore, a proper foundation for admissibility must be laid through the testimony of a witness qualified to explain the record-keeping process. 5

Weinstein’s Federal Evidence

§ 803.11[1]. The Movants argue that the Government failed to satisfy this requirement. The Court disagrees. In deposition testimony that is part of the record of this proceeding, employees of HCFA and DoD explained the process by which the data contained in the databases is collected and stored.

See U.S. Ex. 19: Dep. of Vriezen and U.S. Ex. 17: Declaration of Teresa M. Foley in Support of Amended DoD Proof of Claim (“Decl. of Foley

”). Such testimony is sufficient to lay a proper foundation for the proffered documentation.

See United States v. Hathaway,

798 F.2d 902, 906-07 (6th Cir.1986) (testimony is sufficient to lay a proper foundation if it demonstrates that the witness was familiar with the record-keeping system). Therefore, this objection is overruled.

The Movants also asserted that the documentation accompanying the amendments to the proofs of claim were produced in violation of discovery orders and therefore should not be allowed.

Brief in Support of Objection to Evidence

at 11-14. This argument, too, is rejected. The record indicates that each of the Government’s proofs of claim was amended prior to the extended discovery deadline. And it appears from the record that the information used to amend the DoD, VA and IHS proofs of claim was timely provided to the Movants on April 13 and 14.

See U.S. Exs. 28, 38 and 39.

A related issue was raised by the Movants prior to their Objection to Evidence. In their joint reply brief, the Mov-

*319

ants argue that, regardless of the admissibility of the supporting documentation, the amended proofs of claim are impermissible and should not be allowed.

Joint Reply to U.S. Opposition to Motion

at 4-6. While neither the Bankruptcy Code nor the Bankruptcy Rules address the permissibility of amendments to proofs of claim, the general rule is that amendments intended to correct defects or mistakes are liberally allowed.

In re Meade Tool & Die Co.,

164 F.2d 228, 230 (6th Cir.1947);

United States v. International Horizons, Inc. (In re International Horizons, Inc.),

751 F.2d 1213, 1216 (11th Cir.1985); 9

Collier on Bankruptcy

¶ 3001.04[1] (15th ed. rev.2000). Under certain circumstances, however, some courts have placed limitations on a creditor’s right to amend when that amendment occurs post-bar date or post-confirmation.

Id.

One of those situations is when the amendment actually constitutes the filing of an entirely new claim against a debtor.

Int’l Horizons,

751 F.2d at 1216-19 . In

Int’l Horizons,

the court suggested that a new claim was one that does “not aris[e] out of the same occurrence or transaction as the timely filed proofs of claim[ ].”

Id.

at 1216 (quoting opinion of the lower court).

Here the Government’s amended proofs of claim cannot be characterized as new. Like the original proofs of claim, the amendments seek to recover for medical care provided to federal beneficiaries that was allegedly necessitated by their use of a Dow Corning product. And like the original proofs of claim, the amendments assert that the Government’s right of recovery stems from the MCRA and the MSPA. The original proofs of claim stated that the Government was seeking to recover for all federal beneficiaries who had received such medical care. The amendments take the necessary step of actually identifying those beneficiaries. The original proofs of claim were clearly incomplete. But it is equally clear that the amended proofs of claim are just that, amendments, and not entirely new claims.

Some courts have also held that a proof of claim amendment should not be allowed when the “need to amend ... [is] the product of bad faith or dilatory tactics on the part of the claimant.”

Gens v. Resolution Trust Corp.,

112 F.3d 569, 575 (1st Cir.1997);

see also In re Dietz,

136 B.R. 459, 468 (Bankr.E.D.Mich.1992) (“[T]he conduct of an amending creditor is relevant insofar as it evidences some improper ulterior motive ... [a]nd for what it’s worth, an argument could be made that a creditor’s ability to amend a defective claim is jeopardized where the creditor’s negligence is particularly blatant.”). The fact that it took the Government over two years to amend its proofs of claim to bring them into compliance with Bankruptcy Rule 3001(f) has certainly been frustrating. And it is fair to characterize the Government’s behavior during the discovery process as recalcitrant. But the Court does not believe that the Government’s actions were so severe that it should be precluded from amending its proofs of claim. Moreover, the Court recognizes that preparing what is in essence 15,048 different proofs of claim is not a task that can be accomplished overnight. Accordingly, the Government’s amended proofs of claim will not be stricken.

9

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Because discovery is now closed, the Government is precluded from relying upon unproduced medical records for the 3,150 DoD beneficiaries that it has identified. As noted above, rather than producing the DoD medical records for inspection as the Court had instructed, the Government “directed the [Movants] to the DoD facilities worldwide where medical records pertaining to approximately 3,150 DoD implant recipients are stored and could be made available for review.”

U.S. Opposition to Objection to Evidence

at 5. F.R.Civ.P. 34(b) provides ground rules for making documents available for inspection. With regard to the place of inspection, the Government argues that Rule 34(b) merely requires the producing party to make the documents available at the place where such documents are kept in the ordinary course of business.

U.S. Opposition to Objection to Evidence

at 15. But this is not what Rule 34(b) provides. The Rule states that the producing party “shall produce [the documents]

as they are kept in the usual course of business

or shall organize and label them to correspond with the categories in the request.” F.R.Civ.P. 34(b) (emphasis added). This statement plainly goes to the manner of production, not the place of production.

See

7

Moore’s Federal Practice,

§ 34.13[3] at 34-77 (This language “was added in 1980 as a result of a concern that parties too often deliberately mixed critical documents with others in an attempt to obscure them importance” and was, thus, intended to “prohibit! ] a party from simply producing a mass of responsive documents in bulk.”).

As for the place of production, Rule 34(b) requires that documents be made available for inspection at a reasonable place.

See

F.R.Civ.P. 34(b) (“The request [for production of documents] shall specify a reasonable time, place, and manner of making the inspection_”). In the present matter, the documents were to be produced pursuant to a court order. The order designated the place of inspection as the office of the United States’ counsel in Washington D.C. Importantly, if the Government had felt this location was not reasonable or was impracticable it could have and should have made its objection known when the designation was made on the record at the April 15, 1999 hearing. But it did not do so.

And as noted, the Government’s alternative offer was to produce the documents for inspection piecemeal at dozens of different DoD medical facilities located around the world. It is beyond question that this offer, as the Government itself unwittingly admitted, was patently unreasonable.

U.S. Opposition to Motion

at 4 (“[A] review of [the beneficiaries’] records ... is not feasible in view of the more than 15,000 federal beneficiaries identified, the number and location of medical facilities involved, and the cost and burden of retrieving and storing massive amounts of minimally useful hard copy data.”);

and id.

at 15 (“DoD cannot feasibly locate, retrieve, examine and copy each of the underlying medical files for the nearly 20,-000 instances of inpatient and outpatient treatments pertaining to breast implants which its search identified.... The inpatient and outpatient admissions records are located at DoD installations and federal facilities throughout the United States and worldwide.”). In short, the Government’s offer was an empty gesture that was not only contrary to this Court’s order but was arguably designed to further frustrate the discovery process. Therefore, the Court precludes the Government from introducing into evidence in this proceed

*321

ing or in any future proceeding pertaining to the Government’s claims against the Debtor, any DoD medical files that were not produced in the manner directed by the Court on or before May 30, 1999.

III. Sufficiency of the Government’s Proofs of Claim

The Movants next argue that the Government’s proofs of claim are insufficiently documented and should be disallowed as a matter of law. A proof of claim that is properly executed and filed in accordance with § 502(a) and Bankruptcy Rule 3001(f) constitutes

prima facie

evidence of the claim’s validity and amount.

Juniper Development Group v. Kahn (In re Hemingway Transp., Inc.),

993 F.2d 915, 925 (1st Cir.1993);

In re Holm (Wright v. Holm),

931 F.2d 620, 623 (9th Cir.1991). A properly executed proof of claim includes: the creditor’s name and address; the basis for the claim; the date the debt was incurred; the classification of the claim; the amount of the claim; and supporting documentation.

Dietz,

136 B.R. at 462 .

Because the United States’ proofs of claim were deficient when originally filed, they were not entitled to be considered as establishing a

prima facie

case. The United States amended its proofs of claim shortly before the Movants filed their Motion for summary judgment. The amendments identify 15,048 federal beneficiaries, contain documentation indicating when the medical care in question was provided to these beneficiaries and the value of such care. The Court concludes that the portions of the Government’s proofs of claim relating to these identified beneficiaries are sufficient and entitled to be accorded Bankruptcy Rule 3001(f)’s low threshold for

prima facie

validity.

10

The Movants now have the burden of overcoming this

prima facie

validity by presenting evidence that is of equal probative force to that underlying the Government’s proofs of claim.

Holm,

931 F.2d at 623 . In practical terms, this means the Movants “must produce evidence which ... would refute at least one of the allegations that is essential to the ... legal sufficiency” of the Government’s proofs of claim.

In re Allegheny Int’l, Inc.,

954 F.2d 167 , 173-74 (3d Cir.1992);

Sherman v. Novak (In re Reilly),

245 B.R. 768, 773 (2d Cir. BAP 2000). If the Movants are successful in this endeavor, the burden of persuasion shifts to the Government, the party that bears the ultimate burden of persuasion on its proofs of claim.

FDIC v. Union Entities (In re Be-Mac Transport Co.),

83 F.3d 1020 , 1025 n. 3 (8th Cir.1996);

Holm,

931 F.2d at 623 .

According to the Movants, the documentation submitted by the United States in support of the DoD proof of claim is riddled with infirmities.

Transcript,

September 2, 1999 at 60-67. The documentation provides the names of the 3,150 DoD beneficiaries, the name of the military facilities where treatment was provided, the beneficiaries’ social security numbers, and the beneficiaries’ medical file numbers.

Id.

at 60;

and U.S. Ex. 17: Decl. of Foley

at 6. The beneficiaries were identified by inputting certain surgical and diagnostic codes relating to breast implant

*322

surgery into the Government’s database.

U.S. Ex. 17: Decl. of Foley

at 2-3. These generalized diagnostic codes are the extent of the information proffered regarding the treatment provided to these beneficiaries. Thus, the Government’s supporting documentation does not identify, with any kind of specificity, the medical care provided to the individual DoD beneficiaries.

Transcript,

September 2, 1999 at 64. The DoD proof of claim asserts that the Government is owed $58,710,039.

11

Movants’ Ex. J: Original DoD Proof of Claim.

But there is no explanation as to how this estimate was arrived at or how it relates to the medical care provided to individual beneficiaries. Most importantly, the Government’s documentation does not identify the manufacturer of the breast implant that allegedly injured the beneficiary.

Transcript,

September 2, 1999 at 64. And the Government acknowledges this latter point.

U.S. Ex. 17: Decl. of Foley

at 3-4 (“DoD’s patient databases do not include data identifying the manufacturer of the medical products, and DoD’s list of potential claims likely includes cases where the implant in question was not manufactured by [the Debtor].”).

The Movants contend that the documentation proffered in support of the HCFA proof of claim suffers from many of the same deficiencies.

Transcript,

September 2, 1999 at 67. The documentation identifies the names of the Medicare beneficiaries who form the basis of the Government’s claim, the beneficiaries’ Health Insurance Claim number, date of birth, the surgical and diagnostic codes used to retrieve these names, the date the surgical event took place and the amounts that HCFA allegedly paid for these procedures.

U.S. Ex. 1: First Decl. of Vriezen

at 7-8;

U.S. Ex. 15: Second Declaration of Lisa Vriezen for HCFA (“Second Decl. of Vriezen

”) at 5-6. Like the DoD proof of claim, specifics as to the medical treatment actually furnished have not been provided. Details as to how the amount of the HCFA claim was calculated are, to say the least, vague.

See First Decl. of Vriezen

at 9-11;

Movants’ Ex. I: Decl. of Ruiz

at 11-13. In addition, the Government has provided no information regarding the identity of the manufacturer of the breast implant that allegedly injured the Medicare beneficiary.

Transcript,

September 2, 1999 at 71;

see also U.S. Opposition to Motion

at 47 (acknowledging that the Government has not produced evidence identifying the manufacturer of the breast implant that allegedly injured the federal beneficiaries).

The above evidence is sufficient of overcome the

prima facie

validity of the HCFA and DoD proofs of claim. The fact that the Government does not know whether a Dow Corning product was even associated with the problems allegedly suffered by the federal beneficiaries is, by itself, sufficient to cast doubt on the validity of its proofs of claim. As a result, the burden of persuasion on the HCFA and DoD proofs of claim reverts to the Government which now has to prove each element of its claims by a preponderance of the evidence.

Allegheny Int’l.,

954 F.2d at 174.

Documentation filed in support of the VA and IHS claims has similar problems.

See U.S. Ex. 3: Amended IHS Proof of Claim, Table II

(listing the names of the 27 IHS beneficiaries, their social security numbers and the IHS medical center where treatment was furnished);

U.S. Ex. 5: Amended VA Proof of Claim, Attached Table

(listing names of the 257 VA beneficiaries, their social security numbers, date of birth, surgical code for treatment provided, and the date treatment was provided). But as explained, the Government

*323

produced medical files for at least some of these beneficiaries during the discovery process. While these medical files undoubtedly will shed light on this portion of the Government’s claims, they are not presently before the Court. Thus, the Court does not make any determinations as to whether the Movants have overcome the

prima facie

validity of this portion of the United States’ proofs of claims.

See also infra

Part VI.E (denying this aspect of the Motion for Summary Judgment without prejudice).

IV. Summary Judgment Standard

Summary judgment is proper when “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed. R.Civ.P. 56(c) (incorporated into bankruptcy through F.R.Bankr.P. 7056);

Celotex Corp. v. Catrett,

477 U.S. 317, 322 , 106 S.Ct. 2548 , 91 L.Ed.2d 265 (1986);

Cox v. Kentucky Dept. of Transp.,

53 F.3d 146 , 149 (6th Cir.1995). The moving party initially carries the burden of proving that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law.

Street v. J.C. Bradford & Co.,

886 F.2d 1472, 1477 (6th Cir.1989). Under circumstances such as those before the Court, the burden can be met by relying solely on evidentiary sources listed in Rule 56(c).

Celotex,

477 U.S. at 324 , 106 S.Ct. 2548 (“In cases ... where the nonmoving party will bear the burden of proof at trial on a dispositive issue, a summary judgment motion may properly be made in reliance solely on the ‘pleadings, depositions, answers to interrogatories, and admissions on file.’ ”);

Cox,

53 F.3d at 149. The burden will be satisfied upon a showing that the nonmoving party has failed to produce evidence that would create a genuine issue of material fact for the trier of fact.

Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 249 , 106 S.Ct. 2505 , 91 L.Ed.2d 202 (1986);

Kain v. Nesbitt,

156 F.3d 669, 671 (6th Cir.1998).

Once the moving party has carried its burden, the nonmoving party “must do more than simply show that there is some metaphysical doubt as to the material facts.”

Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp.,

475 U.S. 574, 586 , 106 S.Ct. 1348 , 89 L.Ed.2d 538 (1986). Rather, “the nonmoving party must come forward with ‘specific facts showing that there is a genuine issue for trial.’ ”

Id.

at 587 , 106 S.Ct. 1348 (quoting Fed.R.Civ.P. 56(e)). Or as the Supreme Court stated in

Celotex:

Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial. In such a situation, there can be “no genuine issue as to any material fact,” since a complete failure of proof concerning an essential element of the nonmoving party’s case necessarily renders all other facts immaterial. The moving party is “entitled to a judgment as a matter of law” because the nonmoving party has failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof.

Celotex,

477 U.S. at 322-23 , 106 S.Ct. 2548 . Accordingly, Rule 56(e) “requires the non-moving party to go beyond the pleadings and by her own affidavits, or by the ‘depositions, answers to interrogatories, and admissions on file,’ designate ‘specific facts showing that there is a genuine issue for trial.’ ”

Id.

at 324 , 106 S.Ct. 2548 . Finally, inferences drawn from the evidence presented must be viewed in favor of the nonmoving party.

Matsushita,

475 U.S. at 587 , 106 S.Ct. 1348 ;

Crabbs v. Copperweld Tubing Products Co.,

114 F.3d 85, 88 (6th Cir.1997).

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V. Elements of Government’s Causes of Action Under the MCRA and MSPA

Before we can determine whether the Movants have established that there is no genuine dispute as to a material fact and that they are entitled to summary judgment as a matter of law, it is necessary to identify the elements that the Government would have to prove at trial.

A. Government’s Cause of Action Under the MCRA

Enactment of the MCRA was a belated response to the Supreme Court’s holding in

United States v. Standard Oil Co. of California,

332 U.S. 301 , 67 S.Ct. 1604 , 91 L.Ed. 2067 (1947).

United States v. Trammel,

899 F.2d 1483, 1486 (6th Cir.1990);

United States v. Fort Benning Rifle and Pistol Club,

387 F.2d 884, 885 (5th Cir.1967).

In

Standard Oil,

a member of the armed services was struck and injured by a truck owned by the defendant.

Standard Oil,

332 U.S. at 302 , 67 S.Ct. 1604 . The Government bore the costs of the soldier’s medical expenses and also continued to provide him his military pay while he recovered.

Id.

The soldier and Standard Oil resolved their dispute in an agreement to which the Government was not a party. The Government then filed suit against Standard Oil, arguing that it was entitled to recover the costs of the medical care and the soldier’s pay. The problem for the Government was that there was no substantive theory of tort liability at that time that would sustain such a claim. Consequently, it argued for the creation of a new federal tort claim — tortious “interference with the government-soldier relation.”

Id.

at 303 , 67 S.Ct. 1604 .

The Court commented at length about the nature of the claim which the United States sought to create. It stated that the claim was “not one for subrogation,” but was rather an independent claim seeking reimbursement for losses incurred in the discharge of the Government’s duty to care for the soldier and for the loss of the soldier’s services.

Id.

at 304 n. 5, 67 S.Ct. 1604 (“[I]n effect, [the proposed claim is one] for tortious interference by a third person with the relation between the Government and the soldier and consequent harm to the Government’s interest, rights and obligations in that relation, not simply to subrogation to the soldier’s rights against the tort-feasors.”). In this way, the Court likened the Government’s proposed cause of action to an employer’s attempt to recover for the loss of an employee’s services or a consortium claim asserted by a parent or spouse.

Id.

at 311-12 , 67 S.Ct. 1604 .

The Court added that the relationship between the Government and a soldier is “distinctly federal in character” and that “the scope, nature, legal incidents and consequences” of such a relationship should be “derived from federal sources and governed by federal authority.”

Id.

at 305-06 , 67 S.Ct. 1604 . And were such a cause of action to be created, the Court stated that it “[knew] of no good reason why the Government’s right to be indemnified in [such] circumstances, or the lack of such a right, should vary in accordance with the different rulings of the several states, simply because the soldier marches ... across state lines.”

Id.

at 310 , 67 S.Ct. 1604 . In the end, however, the Court declined the Government’s request, concluding that granting it would have had the effect of improperly interjecting the judiciary into the role of “determining and establishing ... federal fiscal and regulatory policies.”

Id.

at 314 , 67 S.Ct. 1604 . Such a role, the Court said, belonged to Congress.

Id.

at 314-17 , 67 S.Ct. 1604 .

Congress enacted the MCRA in 1962. And there is no question that

Standard Oil

was the primary impetus behind this Congressional action.

See

H.R.Rep. No. 87-1534 (1962) (stating that the statute was being enacted in response to

Standard Oil’s

holding “that, in the absence of statute, the U.S. Government has no right of

*325

action against a negligent person who injures a serviceman and by reason of such negligence and resulting injuries losses accrue to the Federal Government”);

see also Trammel,

899 F.2d at 1486 (observing that the MCRA’s “primary purpose [is] to enable the government to recoup some of the millions of dollars it expends annually providing medical care to military personnel whose injuries are the result of the tortious conduct of third parties”).

But it must be emphasized that the MCRA was not intended to be a codification of

Standard Oil .

For one thing, legislative history shows that the MCRA was intended to cover more than just the government-soldier relationship. It also applies to non-military direct health care programs furnished by the Government, such as those provided through the VA and the IHS, where recovery difficulties and federal fiscal policy considerations are essentially the same as those pertinent in

Standard Oil. See

S.Rep. No. 87-1945 (“Statutes providing for care by the Department of Defense to military personnel and their dependents, the Public Health Service to Coast Guard personnel and other classes of persons, and the Veterans’ Administration to veterans, either are silent or not specific concerning the Government’s right of action to effect such recovery.”).

In addition, the Government’s recovery under the statute is limited to the costs of the medical care that it paid for or provided to the federal beneficiary.

See

42 U.S.C. § 2651 (a) (“In any case in which the United States is authorized [to furnish medical care] ... to a person who is injured ... under circumstances creating a tort liability upon some third person ..., the United States shall have a right to recover ... the reasonable value of the care ... so furnished.... ”). Therefore, and unlike the theoretical cause of action in

Standard Oil ,

the MCRA does not grant the Government a right to recover for the loss of a federal beneficiary’s services.

See, e.g.,

H.R.Rep. No. 87-1534 (Staff Memorandum) (“The bill is not intended to provide for the recovery of other costs— such as soldier’s pay during a period of illness — that the Government might be subjected to as the natural consequence of a tort-feasor’s negligence.”).

Even more significantly, the cause of action that the Government sought to create in

Standard Oil

was not one for subrogation. As will be explained in greater detail below, however, the right of recovery that Congress has afforded the Government pursuant to the MCRA is subrogatory in character.

See, e.g.,

42 U.S.C. § 2651 (a) (providing that the United States’ right to recover

“shall ... be subrogated

to any right or claim that the injured ... person ... has against such third person to the extent of the reasonable value of care ... furnished”) (emphasis added). For these reasons, it is readily apparent that the MCRA provides the Government with a right of recovery that is distinct from the one that it was seeking to create in

Standard Oil .

1.

Elements of the Government’s Claim

In relevant part, the MCRA provides:

In any case in which the United States is authorized or required by law to furnish or pay ... care and treatment ... to a person who is injured or suffers a disease ... under circumstances creating a tort liability upon some third person ... to pay damages therefor, the United States shall have a right to recover (independent of the rights of the injured or diseased person) from said third person, or that person’s insurer, the reasonable value of the care and treatment so furnished, ... and shall, as to this right be subrogated to any right or claim that the injured or diseased person ... has against such third person to the extent of the reasonable value of the care and treatment so furnished .... The head of the department or agency of the United States furnishing such care or treatment may also require the [federal beneficiary] ... to assign

*326

his claim or cause of action against the third person to the extent of that right or claim.

42 U.S.C. § 2651 (a).

As can be seen, subsection (a) of the MCRA contains two clauses. The first speaks to the Government’s right of subro-' gation; the second refers to an express assignment that the United States can obtain

from

the federal beneficiary. The Government does not contend that any of its rights against the Debtor arise through assignment. Rather, it relies exclusively on the rights afforded to it pursuant to the first clause. And in this regard, it asserts that it “must prove only the following elements to recover on its claims: 1) that IHS, VA or DoD rendered implant-related medical treatment to a federal beneficiary, or made an implant-related medical payment on behalf of a federal beneficiary; and 2) that the medical treatment was rendered under circumstances making a third party responsible for the medical care.”

Opposition to Objection to Evidence

at 9. The Government cites no authority to support its formulation of the MCRA. Moreover, it is clear from the plain language of the statute and the relevant legal authority that this formulation is overly simplistic.

The MCRA provides the Government with a right to recover the costs of medical care provided “to a person.” 42 U.S.C. § 2651 (a). Both logic and the plain language of the statute dictate that the Government must identify this “person.” Such a conclusion is bolstered by the fact that the Government’s recovery will depend upon its ability to prove, pursuant -to the tort laws of the applicable state, that the defendant committed a tort against the beneficiary and that such tort necessitated the medical care in question.

See infra

Parts V.A.2 & 3. It is, therefore, not surprising that the beneficiary or beneficiaries appear to have been known in every published opinion pertaining to the United States’ attempts to recover payment under this statute.

The MCRA requires the Government to establish that it was “authorized or required by law to furnish” the medical care in question as well as the “reasonable value” of such care. 42 U.S.C. § 2651 (a);

cf. United States v. Wall,

670 F.2d 469 (4th Cir.1982) (remanding case to the district court for further proceedings on whether the Government had established the reasonable value of the medical care). From this it follows that the Government must identify the medical care and treatment for which it seeks recovery. The importance of this element was demonstrated by the Government’s own admission that its proofs of claim likely contained claims for some medical care having no relation to a Dow Corning product.

Transcript,

June 17, 1999 at 49 (counsel for the United States stating that “[t]here are a myriad of ways” that the data used by the Government to formulate the estimated amount of its claims could be “incorrect”). This conclusion is reinforced by the fact that the Government’s claim is founded in tort. It is simply inconceivable that the Government could prove that the beneficiary was injured by the actions of the Debtor and establish the amount of damages without identifying the medical care in question. Nor is there any legal authority that would suggest otherwise.

In addition, the Government possesses a right of recovery only when the injuries for which the medical care or treatment were furnished arose under “circumstances creating a tort liability” upon some third party. 42 U.S.C. § 2651 (a). This language unambiguously requires the United States to prove that the third party committed a tort against the beneficiary and that this tort necessitated the medical care in question.

See, e.g., Trammel,

899 F.2d at 1487 ;

Holbrook v. Andersen Corp.,

996 F.2d 1339, 1341 (1st Cir.1993).

2.

Government’s Claim Is Both Independent and Subrogatory

The first clause of the MCRA’s subsection (a) grants the United States an

*327

independent right of recovery against the alleged tortfeasor. 42 U.S.C. § 2651 (a) (“[T]he United States shall have a right to recover ... independent of the rights of the [federal beneficiary]_”).

See also, e.g., Trammel,

899 F.2d at 1487 ;

Commercial Union Ins. Co. v. United States,

999 F.2d 581, 586-87 (D.C.Cir.1993). The statute further provides that, as to this independent right, the Government

“shall ... be subrogated

to any right or claim that the injured or diseased person ... has against such third person.” 42 U.S.C. § 2651 (a) (emphasis added).

But despite the unequivocal wording of the statute, the Government vehemently disagrees with the notion that its independent right of action is also subrogatory in nature.

See U.S. Opposition to Motion

at 51 n.31 (“The United States denies — as it has at every stage of these proceedings, beginning with its Response to the Debt- or’s Claim Objections — that it is merely [a] subrogation-type creditor.”). Instead, it asserts that it possesses two distinct types of claims under the MCRA, an independent claim and a subrogation claim.

Id.

(“The United States has a direct, statutory right to recover from Dow Corning

and

a subrogation remedy.”).

Other than making this assertion, the Government does not explain how this can be so. In what way would the two claims be different? More specifically, what would be the basis of a purely independent claim under the MCRA? If the Government’s claim is not based upon the tort committed against the federal beneficiary, then there is no legal theory that would enable the Government to seek reimbursement from the party sued. Furthermore, the statute provides that an action brought by the United States must be premised upon the tort committed against the beneficiary. 42 U.S.C. § 2651 (a) (providing that an action may be initiated by the Government under the MCRA only when the treatment provided to the federal beneficiary was for an injury that arose “under circumstances creating a tort liability upon some third person”). And the instant the Government attempts to recover based upon the tort committed against the beneficiary, subrogation applies.

See, e.g., United States v. Studivant,

529 F.2d 673 , 676 n. 6 (3d Cir.1976).

Subrogation, after all, simply means “ ‘[t]he substitution of one person in the place of another with reference to a lawful claim ... so that he who is substituted succeeds to the rights of the other in relation to the ... claim.’ ”

Commercial Union,

999 F.2d at 587 (quoting

Black’s Law Dictionary

1279 (5th ed.1979));

United States v. California,

507 U.S. 746, 756 , 113 S.Ct. 1784 , 123 L.Ed.2d 528 (1993);

Executive Jet Aviation, Inc. v. United States,

507 F.2d 508, 516 (6th Cir.1974); Dan B. Dobbs,

Remedies: Damages

— Eq

uity

— Restitution § 4.3, at 251 (1973) (“Subrogation ... means substitution of one person for another; that is, one person is allowed to stand in the shoes of another and assert his rights.”).

The remedy of subrogation, which has its origins in the equity courts of 17th century England, is now broadly available in situations where “the plaintiff has paid the defendant’s obligation or an obligation which, as between the two of them, is regarded as primarily that of the defendant.” 1 George E. Palmer,

Law of Restitution

§ 1.5(b), at 23 (1984); see

also Michigan Hosp. Serv. v. Sharpe,

339 Mich. 357, 363 , 63 N.W.2d 638 (1954) (“Subrogation is an equitable doctrine ... [that] appl[ies] whenever persons, other than mere volunteers, pay a debt or. demand which in equity and good conscience should have been satisfied by another.” (citation omitted)) (Reid, J., dissenting). The primary goal of subrogation is “to prevent the unjust enrichment of the person whose obligation was paid or who was regarded as having the primary liability.” 1 Palmer,

Law of Restitution

§ 1.5(b), at 23; 16

Couch on Insurance 2d

§ 61:18 (rev. ed.1999);

see also Cockerham v. Garvin,

768 F.2d 784, 786 (6th Cir.1985). The right to subrogation may arise by virtue of

*328

an agreement between the subrogee and subrogor, through judicial device

or by statute.

16

Couch on Insurance 2d

at § 61:1.

It is readily apparent that the Government’s MCRA-based claim fits the classic subrogation mold. The Government is required by law to provide medical care to each federal beneficiary.

Wall,

670 F.2d at 470 ;

United States v. Haynes,

445 F.2d 907, 908 (5th Cir.1971);

Dow Corning,

244 B.R. at 714 . And when the medical care is for injuries caused by a third party the Government acquires a right to recover the costs from that third party. 42 U.S.C. § 2651 (a). To prevail on its claim, however, the Government must step into the shoes of the beneficiary and prove that the beneficiary was injured by the third party and that it was this injury which necessitated the medical care furnished by the United States. Moreover, one purpose of the Government’s right of recovery is to prevent the unjust enrichment of the third-party tortfeasor at the expense of the United States.

12

Not surprisingly, courts have had little trouble recognizing the subrogatory nature of the Government’s rights under the MCRA.

Trammel,

899 F.2d at 1487-88 ;

Cockerham,

768 F.2d at 786-87 ;

United States v. York,

398 F.2d 582, 584 (6th Cir.1968);

Commercial Union Ins.,

999 F.2d at 586-87 ;

Thomas v. Shelton,

740 F.2d 478, 485 (7th Cir.1984);

United States v. Dairyland Ins. Co.,

674 F.2d 750, 751 (8th Cir.1982);

Heusle v. National Mut. Ins. Co.,

628 F.2d 833, 837 (3d Cir.1980);

Studivant,

529 F.2d at 676 n. 6;

Haynes,

445 F.2d at 909 (citing

Fort Benning,

387 F.2d at 887 );

United States v. Housing Authority of the City of Bremerton,

415 F.2d 239, 241-43 (9th Cir.1969);

Maddux v. Cox,

382 F.2d 119, 124 (8th Cir.1967).

But see United States v. Greene,

266 F.Supp. 976 (N.D.Ill.1967).

13

*329

Importantly, no conflict arises from the fact that the Government’s subrogation claim is also an independent claim. The purpose of subrogation, after all, is to provide the subrogee with the right to pursue recovery from the party having primary responsibility for the debt in question regardless of what action is taken by the subrogor. Consequently, a subrogation claim typically belongs solely to the subrogee.

See, e.g.,

16

Couch on Insurance 2d

§ 61:37 (“[S]ubrogation results only in a change in the beneficial ownership of the cause and has no effect on the character or underlying basis of the cause of action.”). And it is for this reason that once a party becomes a subrogee by fulfilling its obligation to the subrogor, it generally becomes the real party in interest with an

independent

right to pursue the claim.

See, e.g., Safeway Ins. Co. v. Collins,

192 Ariz. 262 , 963 P.2d 1085, 1089 (App.1998);

Orejel v. York Int’l Corp.,

287 Ill.App.3d 592 , 222 Ill.Dec. 811 , 678 N.E.2d 683, 692 (1997);

Liberty Mut. Ins. Co. v. National Consolidated Warehouses, Inc.,

34 Mass. App.Ct. 293, 609 N.E.2d 1243, 1246 (1993);

Smith v. Travelers Ins. Co.,

50 Ohio St.2d 43 , 362 N.E.2d 264, 265 (1977) (citing cases from multiple jurisdictions to same effect); 16

Couch on Insurance 2d

§ 61:26 (“Real party in interest rules or statutes generally require that the insurer-subrogee, who has paid the loss in full, bring suit in its own name against the tortfeasor or other third person, for the reason that when the insured has been fully indemnified by the insurer so that the latter becomes subro-gated to the insured’s claim against the wrongdoer, the insured no longer has any right of action against such -wrongdoer.”). For this reason, Courts uniformly recognize that the federal beneficiary does not have the authority to release the alleged tortfeasor from its potential liability to the Government.

See, e.g., York,

398 F.2d at 584 (recognizing that “the Government’s recovery [cannot be] denied because the injured person has given a release to the tortfeasor”). But this is not, as the court in

Greene

erroneously concluded, because of a unique right afforded the Government under the MCRA.

Greene,

266 F.Supp. at 979-80 . Rather, it is simply because a subrogor generally is without the ability to defeat the independent subrogation claim of the subrogee.

See

16

Couch on Insurance 2d

§ 61:191.

Legislative history further supports the conclusion that the Government has but one claim under clause (1) of subsection (a) of the MCRA and that such claim is both independent and subrogatory. This is true

*330

despite

United States v. Merrigan,

389 F.2d 21 (3d Cir.1968), wherein the court appears to have concluded that changes were made to the original draft of the MCRA for the purpose of separating the Government’s primary and independent right of recovery from its right of subrogation.

Merrigan,

389 F.2d at 24 . As will be explained,

Merrigan

misunderstood why the original bill was modified.

The original draft of the MCRA stated: “[T]he United States shall be subrogated to any right or claim that the injured ... person ... has against such third person ... with respect to the care ... so furnished....”

See

H.R.Rep. No. 87-1534 (1962) (noting amendments made to original draft of bill). The original draft also provided: “The head of the department or agency of the United States furnishing such care ... may also require the [federal beneficiary] ... to assign his claim or cause of action against the third person to the extent of that right or claim.”

Id.

The proposed bill then referred to the Government’s right of recovery as a right of

“subrogation or assignment” Id.

(emphasis added).

There appears to have been some concern expressed that if the Government’s right was perceived by courts to be one of assignment, as opposed to a pure right of subrogation, its ability to recover could have been significantly curtailed due to the fact that not all states recognized the assignment of personal injury causes of action.

See

H.R.Rep. No. 87-1534 (1962) (letter from Byron R. White, Deputy Attorney General, (later Justice White) to Hon. Emanuel Celler, Chairman of the House Comm, on the Judiciary, August 1, 1961) (“In drafting the [MCRA], consideration was given to the fact that in many jurisdictions an assignment of a cause of action for personal injuries ... is, in varying degree, either not valid at all or not enforcible directly against the third person tort-fea-sor, and that frequently a mere partial assignment is not so recognized, even if a total assignment would be.... ”);

of. id.

(letter from Joseph Campbell, Comptroller General of the United States, to Hon. Emanuel Celler, Chairman of the House Comm, on the Judiciary, August 2, 1961) (“While we understand that some jurisdictions do not recognize an assignment of a right arising from a personal .injury in the absence of a statute so providing, we believe that a Federal statute specifically granting the United States an assignment in such cases as here contemplated would either overcome the local rule or provide the necessary statutory authority. Nevertheless, it is apparent ... that the concept of subrogation conforms with the circumstances contemplated by the proposed legislation far more completely than the concept of assignment.”).

The bill was amended so that clause (1) of subsection (a) provides: “[T]he United States shall

have a right to recover from said third person the reasonable value of the care and treatment so furnished or to be furnished and shall, as to this right

be subrogated to any right or claim that the injured ... person ... has against such third person ... with respect to the care ...so furnished....” H.R.Rep. No. 87-1534 (language added by amendment emphasized). The second clause of subsection (a), which permits the head of the department or agency that furnished the care to obtain an assignment from the beneficiary, was retained. But importantly, the phrase “subrogation or assignment” was deleted.

Id.

The effect of these amendments was to clarify that the Government’s right of sub-rogation is distinct from its right of assignment. Referring to the right of sub-rogation conferred upon the Government pursuant to clause (1) of subsection (a), the legislative history provides: “This amendment makes clear that the United States is granted a distinct right to recover its costs and that this right is to be effectuated through a partial subroga

*331

tion

14

to any right which the [federal beneficiary] ... may have to proceed against the negligent third party.”

Id.

Thus, it was made clear that the Government’s right of subrogation is an independent right of action created by federal statute and that such right is not subject to and cannot be limited by state laws pertaining to the assignment of personal injury claims.

Cf id.

(“Again, by striking out the words ‘subrogation or assignment’ and inserting the [new language in clause (1) of subsection (a) ], it is again emphasized that the remedy of the Government to assert its rights to recover the cost of medical and surgical services is provided by this legislation.”).

Thus

Merrigan

was incorrect when it concluded that Congress amended the original bill so that clause (1) of subsection (a) would confer two distinct claims upon the Government, one independent and the other subrogatory. Not surprisingly,

Mer-rigan

has been abrogated on this point by the Third Circuit’s subsequent decision in

Heusle,

628 F.2d at 837 (“The operation of this statute in the context of a routine negligence case is relatively straightforward; the government simply stands in the position of a favored subrogee to the claim of an injured party against the tort-feasor.”).

15

The plain language of the statute, the established legal authority as well as common sense all belie the Government’s contention that it has two separate claims under the first clause of subsection (a) of the MCRA. An independent, non-subroga-tory claim would be utterly meaningless for the Government and it is reasonable to surmise that Congress granted the Government subrogatory rights under the MCRA so that its otherwise hollow claim would have some teeth. The unavoidable conclusion is that the Government has but one claim, and it is both independent and subrogatory in character.

See York,

398

*332

F.2d at 584 (“[T]he right of the United States is an independent right, subrogated only in the sense that the person sued by the Government must be liable to the injured person in tort.”);

Heusle,

628 F.2d at 837 (“[T]he government simply stands in the position of a favored subrogee to the claim of an injured party against the tort-feasor.”);

Fort Benning,

387 F.2d at 887 (“[Pjroperly construed, the [MCRA] creates in the United States an independent right of recovery. This right, however, is ‘subrogated’ ....”);

In re Orthopedic Bone Screw Products Liability Litig.,

176 F.R.D. 158, 179 (E.D.Pa.1997);

see also Transcript,

August 6, 1998 at 194 (counsel for the United States stating that while it “ha[s] an independent claim against the [D]ebtor,” such claim is also “derivative of [the claimant’s] ... rights”).

3.

Except For Statutes of Limitation, State Law Provides the Rule of Authority

Any lawsuit that the federal beneficiary might initiate against the alleged third party tortfeasor will be governed by the tort law of the pertinent jurisdiction (usually, and hereafter referred to as “state”). Because the Government is subrogated to the rights of the federal beneficiary, logic dictates that its rights under the MCRA will also be governed by state tort law. Comments solicited from the Deputy Attorney General and a Congressional staff report on the MCRA show that when the MCRA was enacted, there was a general understanding that state law would govern any claim brought by the Government under the statute.

See

H.R.Rep. No. 87-1534 (1962) (Deputy Attorney General White’s letter to Congressman Celler) (Clause (1) of subsection (a) of the MCRA “provides simply that ... the United States ‘shall be subrogated to any right or claim the injured person’ may have against the third person ‘with respect to the care and treatment so furnished or to be furnished.’ Accordingly, if under local law the injured person would have no claim on account of such damages the United States would also have none; if he would have such a claim, the United States would become entitled to that claim, but to no more.”);

and id.

(Staff Memorandum) (“[The MCRA] would permit the United States to exercise the rights of the [federal beneficiary].... If an injured person has no right to recover for the costs of hospital and medical care furnished by the United States, the United States, as subrogee ... of that person, would be unable to recover such costs.”).

And every circuit that has encountered the issue, including the Sixth, has at least implicitly reached this same conclusion.

Trammel,

899 F.2d at 1487 (6th Cir.1990) (“The language of the [ ]MCRA ... clearly limits the government’s right of recovery to situations where state law imposes tort liability upon a negligent person.”). See

also Holbrook,

996 F.2d at 1341 ;

United States v. Travelers Indemnity Co.,

729 F.2d 735, 737 (11th Cir.1984);

Thomas,

740 F.2d at 481 ;

Dairyland Ins. Co.,

674 F.2d 750 ;

Heusle,

628 F.2d at 837 (“The MCRA does not purport to create a federal law of negligence, but rather accepts state substantive law in determining when tort liability exists.”);

Studivant,

529 F.2d at 676 n. 6;

Haynes,

445 F.2d at 908-09 ;

Fort Benning,

387 F.2d at 887 (“[T]he United States[’] ... right to recover [under the MCRA] depends upon the determination under state law as to when the circumstances create tort liability in some third person.”).

Cf. Commercial Union,

999 F.2d at 587 (observing that the Government, in asserting its MCRA claim, merely steps into the shoes of the injured federal beneficiary);

Housing Authority of Bremerton,

415 F.2d at 242-43 (implicitly recognizing that the United States’ MCRA-based claim is governed by state law by discussing whether such claim is subject to certain state law defenses). The relevant regulations likewise recognize this fact. 32 C.F.R. § 220.11 (b)(2) (stating that determinations of tort liability under the MCRA are governed by sub

*333

stantive state law).

Cf. U.S. v. California,

507 U.S. at 757 , 113 S.Ct. 1784 (observing that “[t]he traditional rules of subrogation ... do not necessarily apply to the Government” but noting its previous suggestion in

Standard Oil,

332 U.S. at 309 , 67 S.Ct. 1604 , “that state law controls ‘where the Government has simply substituted itself for others as successor to rights governed by state law’ ”).

It follows that the Government’s claims will be subject to substantive state laws which completely negate the existence of a tort cause of action against the alleged third-party tortfeasor.

See, e.g., Trammel,

899 F.2d at 1487-88 ;

Heusle,

628 F.2d at 838 ;

Fort Benning,

387 F.2d at 887 . For instance, no-fault automobile insurance laws that abolish tort liability in particular situations apply to the Government’s claims.

See, e.g., Trammel,

899 F.2d at 1487-90 ;

Travelers Indemnity,

729 F.2d 735 ;

Dairyland Ins. Co.,

674 F.2d at 751 ;

Heusle,

628 F.2d at 838 .

See also Studivant,

529 F.2d 673 (barring the Government’s attempt to recover from a state fund providing relief to victims of financially irresponsible tortfeasors because of its failure to comply with a condition precedent). And though the issue is not presently before the Court, logic suggests that the Government’s claims will also be subject to substantive state law

16

defenses and, with the exception of state

*334

statutes of limitation, procedural state law defenses as well.

17

To summarize the Government’s rights under the MCRA, it must identify the

*335

federal beneficiary underlying its claim and the medical care that was provided to this beneficiary. It must demonstrate that it was authorized by law to provide the medical care in question and the reasonable value of such care. Furthermore, the Government must establish that the medical care was necessitated because of the commission of a tort by a third party against the beneficiary. The Government will be subrogated to the rights of the beneficiary so that its claim will be subject to the tort law of the state.

The United States has not identified which states’ tort laws would govern its MCRA claims against the Debtor. Thus, it is impossible to know with specificity the elements that the Government would have to prove to establish the Debt- or’s tort liability as to each federal beneficiary. At a minimum, however, black letter products liability law would require the Government to establish that one of the Debtor’s products was involved in the medical care provided to each of the federal beneficiaries and that a defect in the product caused an injury which necessitated such care.

See, e.g., Lee v. Baxter Healthcare Corp.,

721 F.Supp. 89, 92 (D.Md.1989) (“Under traditional products liability law, the plaintiff must prove that the defendant manufacturer made the product that caused the plaintiffs injury.”);

Marshall v. Celotex Corp.,

651 F.Supp. 389, 391 (E.D.Mich.1987) (“The threshold requirement of any products liability action is identification of the injury-causing product and its manufacturer.”);'

see also

63 Am. Jur. 2d, Products Liability §§ 4,19 and 73.

B. Government’s Cause of Action Under the MSPA

Medicare was created in 1965 to provide “federally funded health insurance for the aged, the disabled, and people suffering from end-stage renal disease.”

Health Ins. Ass’n of America v. Shalala,

23 F.3d 412, 414 (D.C.Cir.1994);

see also

Social Security Amendments of 1965, Pub.L. No. 89-97, § 1862 (b), 79 Stat. 286 , 325 (“Social Security Amendments of 1965”). Except for worker’s compensation plans, Medicare was made the “primary payer” for the health care claims of federal beneficiaries with the beneficiaries’ other health insurance plans filling in some or all of the coverage gaps.

See

Social Security Amendments of 1965 at 365.

Rising Medicare costs eventually led Congress to enact a series of amendments in 1980 which became known as the MSPA. 42 U.S.C. § 1395y(b). The MSPA was “a cost-cutting measure ... designed to make Medicare a ‘secondary’ payer” when other insurance was available.

Health Ins. Ass’n,

23 F.3d at 414 ;

New York Life Ins. Co. v. United States,

190 F.3d 1372, 1373 (Fed.Cir.1999);

see also Blue Cross & Blue Shield of Texas v. Shalala,

995 F.2d 70 , 72 (5th Cir.1993) (“Congress designed the MSP statute to prevent group health plans from providing that the plan will be the secondary payer if Medicare coverage exists.”).

The first paragraph of the MSPA pertains to “group health plans,” which are “[health insurance] plan[s] ... of, or contributed to by, an employer or employee organization.” 26 U.S.C. § 5000 (b)(1); 42 U.S.C. § 1395y(b)(l).

18

Nothing in the

*336

MSPA obligates employers

and

employee organizations to offer group health insurance to its employees or members.

See Health Ins. Ass’n,

23 F.3d at 414 n. 2;

United States v. Blue Cross and Blue Shield of Michigan, 126

F.Supp. 1517, 1522 (E.D.Mich.1989) (hereafter

“BCBS of Michigan”).

But if group health insurance is offered by one of these entities, the first paragraph of the MSPA sets -forth certain requirements, such as precluding the entity from offering inferior coverage to an employee merely because she is otherwise entitled to receive Medicare benefits. 42 U.S.C. § 1395y(b)(l)(A)(i) & (B);

Health Ins. Ass’n,

23 F.3d at 414 & n. 2.

In the next paragraph, Medicare is expressly made the “secondary payer” with respect to certain types of medical care. 42 U.S.C. § 1395y(b)(2). This is accomplished, in the first instance, by generally prohibiting Medicare from paying for any item or service of medical care for which it otherwise would have been obligated to pay, pursuant to subchapter VIII of the Medicare statute (titled “Health Insurance for Aged and Disabled”), if such medical care has been or can reasonably be expected: to be paid for by a group health insurance plan pursuant to the requirements of paragraph one of the MSPA; or to be paid for “promptly” by a workmen’s compensation plan, automobile or liability insurance plan or a no-fault insurance plan. 42 U.S.C. § 1395y(b)(2)(A);

Health Ins. Ass’n,

23 F.3d at 414 .

19

If Medicare nonetheless pays for such item or service, the payment is conditional and subject to reimbursement. 42 U.S.C. § 1395y(b)(2)(B)(i);

Health Ins. Ass’n,

23 F.3d at 414 . To recover a conditional Medicare payment, “the United States may bring an action against any entity which is

required or responsible

... to make payment with respect to such item or service ... under a

primary plan ...,

or against any other entity ... that has received payment from that entity with respect to the item or service .... ” 42 U.S.C. § 1395y(b)(2)(B)(ii) (emphasis added);

Health Ins. Ass’n,

23 F.3d at 414 .

20

In the discussion that follows, the Court provides a more detailed explanation of the rights afforded the United States under the MSPA.

21

*337

1.

Entities Against Whom, Government May Initiate Recovery Action Under MSPA

Under the MSPA, the United States is limited to pursuing an independent right of recovery against two types of entities: a “primary plan;” or and entity that has received payment from a primary plan. 42 U.S.C. § 1395y(b)(2)(B)(ii);

Perry v. United Food and Commercial Workers Dist. Unions,

64 F.3d 238, 244 (6th Cir.1995) (“ ‘The sole interest of Congress, as far as the statute discloses, was to provide that Medicare would not have to pay ahead of private carriers in certain situations.’” (quoting

Baptist Memorial Hosp. v. Pan American Life Ins. Co.,

45 F.3d 992, 998 (6th Cir.1995)));

United States v. Rhode Island Insurers’ Insolvency Fund,

80 F.3d 616 , 622 n. 5 (1st Cir.1996) (“[T]he MSP [statute] ... limits reimbursement to recoveries from ‘primary plans,’ whose definition lists only entities which are clearly ‘within’ the insurance industry.”);

Health Ins. Ass’n,

23 F.3d at 427 n. * (Henderson, J. concurring) (“[T]he MSP statute plainly intends to allow recovery only from an insurer .... ”);

but see Estate of Foster v. Shalala,

926 F.Supp. 850 , 865 (N.D.Iowa 1996) (disregarding the words “primary plan” and erroneously suggesting that “Congress has provided Medicare with a direct right of action against the tortfeasors pursuant to 42 U.S.C. § 1395y(b)(2)(B)(ii)”).

22

The Gov

*338

ernment has likewise acknowledged that this is the proper construction of the MSPA.

Opposition to Objection to Evidence

at 8 (“Under the MSP statute, the United States must prove ... that Dow Corning is either a primary plan or received payment from a primary plan.”).

23

The statute defines “primary plan” as either “a group health plan,” or, “a workmen’s compensation law or plan, an automobile or liability insurance policy or plan (including a self-insured plan) or no fault insurance.” 42 U.S.C. § 1395y(b)(2)(A). A “self-insured plan” is defined as “a plan under which an individual, or a private or governmental entity, carries its own risk instead of taking out insurance with a carrier.” 42 C.F.R. § 411.50 (b)(2). Nothing in the Joint Motion asks the Court for summary judgment on the ground that the Government has not shown that the Debt- or is a “primary plan.” The Court nevertheless recognizes that the Movants and the Government disagree on what it takes to be a primary plan.

24

2.

Meaning of “Required or Responsible” and Other Relevant Considerations

As explained, when Medicare makes a payment for which a “primary plan” was “required or responsible,” the MSPA affords the Government with a right to recover that payment.

Health Ins. Ass’n, 23

F.3d at 414. In relevant part the statute provides:

(ii) Action by United States — In order to recover payment ... for ... an item or service, the United States may bring an action against any entity which is

*339

required or responsible ... to make payment with respect to such item or service ... under a primary plan ..., or against any other entity ... that has received payment from that entity with respect to the item or service, and may join or intervene in any action related to the events that gave rise to the need for the item or service....

(iii) Subrogation rights — The United States shall be subrogated (to the extent of payment made under this subchapter for such an item or service) to any right under this subsection of an individual or any other entity to payment with respect to such item or service under a primary plan.

42 U.S.C. § 1395y(b)(2)(B)(ii) and (iii).

a.

Tort Liability Required in This Case

The Government interprets the above language to mean that its ability to recover under the statute is dependent upon “the existence of an entity required or responsible to make payment, rather than the existence of a tort.”

Opposition to Objection to Evidence

at 8;

see also id.

(“Nowhere does the MSP statute require the United States to prove a tort” as a condition to recovery.). And it maintains that to recover from the Debtor, it merely needs to prove that “Dow Corning made, or reasonably can be expected to make, payment to a Medicare beneficiary, and that Dow Corning is either a primary plan or received payment from a primary plan.”

Id.

Under the Government’s proffered formulation of the MSPA, there is no need to show any eause-and-effect relationship. It essentially asserts that it could recover from any party that qualifies as a primary plan or received payment from a primary plan and which makes or can reasonably be expected to make a payment to a Medicare beneficiary, even if the payment made or expected to be made by that party is entirely unrelated to the medical care paid for by the Government. The Government’s formulation would add a new twist to the notion of strict liability, and if this Court were sitting in the former Soviet Union perhaps it would have some merit. As it is though, the Government’s asserted formulation borders on the absurd. The United States has offered no authority in support of its formulation. Moreover, its arguments are belied by a common-sense interpretation of the statute.

Congress’ decision to use the phrase “required or responsible,” as opposed to language similar to that found in the MCRA (“circumstances creating a tort liability upon some third person”) is unremarkable when one considers the purpose of the MSPA. Recall that the statute was enacted as “a cost-cutting measure ... designed to make Medicare a ‘secondary’ payer with respect to [primary plans].”

Health Ins. Ass’n,

23 F.3d at 414 ;

New York Life,

190 F.3d at 1373 ;

Blue Cross & Blue Shield of Texas,

995 F.2d at 73. The statute accomplishes this objective by enabling the Government to recover conditional Medicare payments from a primary plan (or an entity that received payment from that primary plan) that was “required or responsible” to make such payment in the first instance.

Health Ins. Ass’n,

23 F.3d at 414 ;

New York Life,

190 F.3d at 1374 . The basis of the Government’s claim, however, will vary depending upon the type of insurance involved.

In some cases, Medicare will be seeking reimbursement from a .primary plan that provides health insurance. The health insurer’s obligations will primarily derive from the insurance agreement between the health insurer and its insured.

See, e.g., Black’s Law Dictionary

805 (defining health insurance as a contract between an insurer and its insured that obligates the insurer to pay for the costs of certain medical care or treatment that was provided to the insured). In the event that the health insurer is a group health plan, the insurance contract will be supplemented by the requirements placed on it pursuant to paragraph one of the MSPA.

Cf. Health Ins. Ass’n.,

23 F.3d at 414 n. 2 (observing

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that the MSPA imposes certain requirements on group health plans); 42 U.S.C. § 1395y(b)(l). As a result, if the medical care is a covered benefit, either under the health insurance plan or as that contract has been supplemented by the MSPA, the health insurer is “required or responsible” to pay for such care. Under these circumstances, the primary plan’s responsibility rests upon contract principles and the question of tort liability is not part of the equation.

The situation is quite different, however, when the primary plan with potential responsibility for the payment of the medical care is a liability insurer. Although there are a wide variety of liability insurance coverages (i.e. products liability insurance, automobile insurance, homeowner’s insurance), they all share the common characteristic of being a contract obligating the insurer to cover a loss that results from its insured’s liability to a third party.

DSC Communications Corp. v. Next Level Communications,

929 F.Supp. 239, 243 (E.D.Tex.1996); (observing that under all liability insurance policies “the insurer has agreed to indemnify the insured from liability to third persons as contrasted with coverage from losses sustained by the insured”);

see also

1

Couch on Insurance 3d

§ 1:34 & n.8.5;

Black’s Law Dictionary

806 (defining liability insurance as “[a]n agreement to cover a loss resulting from one’s liability to a third party”).

A liability insurer, therefore, will not become obligated to pay for a third party’s injuries unless or until its insured is found liable for causing such injuries.

See 1 Couch on Insurance 3d

§ 103:14 (To trigger a liability insurer’s liability to a third party, one “requirement is that the insured be legally liable for the third party’s claim.... The term ‘legal liability,’ as used in a policy of insurance, means a liability such as a court of competent jurisdiction will recognize and enforce between the parties.”);

see also

43

Am. Jwr. 2d,

Insurance, § 712 (noting that “coverage [ junder [a liability insurance policy] attaches when liability attaches”).

Because the insured normally does not have a contractual relationship with the injured third party, the basis of the insured’s liability must come from a source other than contract law. That source is obviously tort law.

See

74

Am. Jur. 2d,

Torts § 1 (“A tort is sometimes defined as a wrong independent of contract, or as a breach of duty which the law, as distinguished from a mere contract, has imposed. To the same general effect, it has been said that the distinguishing feature of torts as applied to legal actions is that they never arise ex contractu.”). Accordingly, the injured third party must first prevail upon a tort action against the insured. Once this has been accomplished, and assuming that the insured’s liability falls within the stated policy coverage, the liability insurer will be responsible for the payment of such liability.

There is nothing in the MSPA that suggests Congress intended to supplant these basic principles of insurance, contract and tort law when it enacted the statute. A fair and logical reading of the statute, therefore, dictates that a liability insurer will be required or responsible to reimburse the Government for a Medicare payment only after it is established that such medical care was necessitated by the commission of a tort against the Medicare beneficiary by the insured. Thus, the Court rejects the Government’s contention that its claim is not founded on tort law.

b.

Agreement to Settle Is Not Equivalent to Admission of Liability

Undoubtedly recognizing the preposterous nature of its “no-tort-required” theory, the Government has suggested an alternative interpretation of “required or responsible” that is likewise intended to eliminate its obligation to establish tort liability. It suggests that a settlement between the liability insurer and the Medicare beneficiary is the legal equivalent of an admission by the insurer that its in

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sured committed a tort against the beneficiary and that this tort caused the injuries paid for by Medicare. Because the Debt- or’s confirmed plan of reorganization contains a settlement offer to breast implant claimants, some of whom are Medicare beneficiaries, the Government reasons that the Debtor has acknowledged that it is required or responsible for the Medicare payments in question.

See, e.g., U.S. Opposition to Objection to Evidence

at 8 (“The Joint Plan of Reorganization itself[, which contains the Debtor’s settlement offer to the breast implant claimants,] provides evidence that Dow Corning can reasonably be expected to make payment to Medicare beneficiaries who are Dow Corning implant recipients for the costs of their medical care.”);

Transcript,

February 5, 1998 at 92 (counsel for the United States stating: “If there has already been a settlement [in connection with an MSPA-based claim], we do not need to re-establish a liability.”). For the reasons stated below, this alternative theory is equally unavailing and is rejected.

There are a number of cases where the Government was reimbursed from the proceeds of a settlement entered into between the Medicare beneficiary and the tortfea-sor’s liability insurer.

Cox v. Shalala,

112 F.3d 151 (4th Cir.1997);

Zinman v. Shalala,

67 F.3d 841 (9th Cir.1995);

Waters v. Farmers Texas County Mut. Ins. Co.,

9 F.3d 397 (5th Cir.1993);

United States v. Sosnowski,

822 F.Supp. 570 (W.D.Wis.1993). Each of these cases involved a contest between the Government and the Medicare beneficiary over their respective rights to settlement proceeds already in the possession of the beneficiary. The liability insurer was not a party to the proceeding. There was no dispute over whether the medical care paid for by Medicare was necessitated by the tortious behavior of the insured. There was no dispute over whether the settlement proceeds were, at least in part, intended to compensate the beneficiary for those same injuries. Thus, it is not surprising that these courts concluded that the Government was entitled to at least some portion of the settlement proceeds. But these cases do not stand for the proposition that an insurer’s agreement to settle with a Medicare beneficiary equates to an admission that its insured is liable in tort for purposes of a prospective lawsuit by the Government.

Moreover, it is a well established rule of law that “[w]hen a person against whom a claim is brought makes a settlement with the claimant, such person does not thereby acknowledge liability.”

Romstadt v. Allstate Ins. Co.,

59 F.3d 608, 615 (6th Cir.1995). This rule is a simple recognition of the fact that a defendant may settle for any number of reasons which have nothing to do with actual tort liability.

See, e.g., Tyler v. Corner Constr. Corp.,

167 F.3d 1202 , 1206 (8th Cir.1999) (observing that it is not uncommon for a defendant to settle a lawsuit which it considers frivolous in order to avoid the costs of litigation);

Caldwell v. Enyeart,

72 F.3d 129 , No. 94-1406, 1995 WL 807110, at *6 (6th Cir.1995) (observing that “parties who believe that they are not culpable, may nonetheless settle for reasons unrelated to liability, such as the avoidance of adverse publicity, a diminution of employee morale, the costs of litigation, or a loss of productivity associated with prolonged litigation”). This rule, in fact, has been codified in Federal Rule of Evidence 408 which expressly bars using evidence of a settlement to prove liability. FRE 408 (“Evidence of ... furnishing ... a valuable consideration in compromising ... a claim which was disputed as to either validity or amount, is not admissible to prove liability for or invalidity of the claim or its amount.”);

Orth v. Emerson Elec. Co., White-Rodgers Div.,

980 F.2d 632, 639 (10th Cir.1992). Congress, if it had been so inclined, presumably could have created an exception to this rule. But the MSPA is devoid of language suggesting that Congress meant to do any such thing. And common sense dictates that if Congress had intended for the MSPA to so signifi

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cantly curtail the rights of liability insurers and to override a well-established rule of law as well as a Federal Rule of Evidence, it would have done so using clear and unequivocal language.

Cf. Hartford Underwriters Ins. Co. v. Union Planters Bank, N.A.,

— U.S. -, 120 S.Ct. 1942, 1947 , 147 L.Ed.2d 1 (2000) (observing that if Congress had intended for 11 U.S.C. § 506 (c) to afford entities other than the trustee a right of recovery it would have said so). Accordingly, the Debtor’s tentative offer to settle with breast implant claimants has no bearing on whether it will be found liable in tort with respect to the Government’s claims.

c.

MSPA Is a “Direct Action” Statute

The “common law rule barring direct tort actions against liability insurers until after judgment is obtained against their insured tortfeasors” is still widely recognized.

United States v. Farm Bureau Ins. Co.,

527 F.2d 564, 566 (8th Cir.1976);

see also, e.g., Canavan v. Lovett, Schefnn and Harnett,

745 A.2d 173, 174-75 (R.I.2000). But, of course, exceptions to this common law prohibition can be, and sometimes are, created by statute.

See, e.g.,

R.I. Gen. Laws § 27-7-2 (1999) (permitting injured party to bring lawsuit directly against liability insurer in certain specified situations); La.Rev.Stat. § 22:655 (providing injured persons with a direct right of action against tortfeasor’s liability insurer). And it is apparent that this is just what Congress intended when it provided the Government with a right to recover directly from a liability insurer, but not its insured.

d.

Government Has a Single Claim That Is Both Independent and Sub-rogatory

Like the MCRA, the MSPA provides the Government with an independent right to bring a direct claim against a liability insurer that is potentially “required or responsible” for the Medicare payment in question. And when the defendant is a liability insurer the claim will be founded upon tort law and the tort in question will be the one allegedly committed by the insured against the Medicare beneficiary. To prevail, the Government must step into the shoes of the Medicare beneficiary and establish the tort. If the beneficiary were to initiate the action, it would be governed by the tort law of the applicable state law. Because the Government’s claim will be premised upon this same tort, it too will be governed by the tort law of the applicable state. In addition, while the MSPA is designed to protect the financial integrity of the Medicare system, the flip side of this policy objective is to prevent the unjust enrichment of the tortfeasor or its liability insurer at the expense of the Government.

These characteristics suggest that an MSPA-based claim is one of subrogation. The MSPA itself buttresses this conclusion for it expressly states that the Government’s right of recovery “shall be subro-gated ... to any right” that an individual (i.e. the Medicare beneficiary) has to payment of the medical care by a liability insurer. 42 U.S.C. § 1395y(b)(2)(B)(iii).

See Health Ins. Ass’n,

23 F.3d at 417-18 ;

Denekas v. Shalala,

943 F.Supp. 1073, 1080 (S.D.Iowa 1996);

Estate of Foster,

926 F.Supp. at 855;

United States v. Geier,

816 F.Supp. 1332, 1337 (W.D.Wis.1993) (all cases holding or implying that the MSPA grants the United States but one claim and that it is subrogatory in character).

But, just as it did with the MCRA, the Government argues that the MSPA furnishes it with two distinct claims, one independent and the other subrogatory.

U.S. Opposition to Motion

at 51 n.31. And there is case law that initially appears to support the Government’s contention.

Cox,

112 F.3d at 154 ;

Zinman,

67 F.3d at 845 ;

Waters,

9 F.3d at 400-01 ;

United States v. Travelers Ins. Co.,

815 F.Supp. 521, 523 (D.Conn.1992);

Provident Life and Accident Ins. Co. v. United States,

740 F.Supp. 492, 501 (E.D.Tenn.1990);

BCBS

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of Michigan,

726 F.Supp. at 1522. When closely scrutinized, however, these cases either do not stand for this proposition or are not persuasive.

In

Cox,

the issue was whether the Government was entitled to a share of the proceeds from a settlement entered into between the Medicare beneficiary and the liability insurer.

Cox,

112 F.3d at 153-54 . The court’s statement that the Government had a direct right of action against the entity responsible for making the primary payment and, “in the alternative,” a right of subrogation against “an individual or entity which has received a payment from the responsible party” was mere dictum. Because the Government was not pursuing a direct claim against the insurer, it was not necessary for the court to address the nature of such an action. Had the Government been pursuing an action against the insurer, the Government would likely have been required to prove that the beneficiary was a tort victim of the insured and that the medical care paid for by the Government was necessitated by that tort.

But more importantly, it is clear that the court’s comments were not intended to be a definitive statement of the Government’s rights under the MSPA. The court simply paraphrased §§ 1395y(b)(2)(B)(ii) and (iii), making no attempt to analyze their meaning. That the court was not focused on the scope and meaning of the Government’s subrogation rights is amply demonstrated by the fact that its paraphrase of § 1395y (b) (2) (B) (iii) inaccurately stated that the Government is subrogated only to the rights of entities that have received payment from the responsible party.

Id.

Subrogation, however, is not dependent upon the subrogor receiving payment from the responsible party. To the contrary, the subrogee, which has paid for an obligation owing to the subrogor, will typically be suing the responsible party directly. Furthermore, it is for the latter scenario that the MSPA provides. It states that “[t]he United States shall be subrogated ... to any right ... of an individual ... to payment.” 42 U.S.C. § 1395y(b)(2)(B)(iii). Thus, there is no requirement that the entity to whose rights the Government is subrogated has actually received payment from the responsible party.

Furthermore,

Cox

involved a Medicare beneficiary who had been injured in an automobile accident. After Medicare paid for approximately $180,000 in medical care, the beneficiary reached an $800,000 settlement with the negligent party’s automobile insurer.

Id.

at 153. In the ensuing declaratory action the court held that the Government was entitled to be reimbursed for its expenditures out of the insurance proceeds.

Id.

at 154. Based upon the court’s view that the Government is subro-gated to the rights of an entity which receives payment from the responsible party, it would appear that it believed the Government’s right to obtain reimbursement from the insurance proceeds was one of subrogation. For these reasons, in our view,

Cox

does not support the Government’s argument that it has two distinct types of claims.

The Fifth Circuit’s decision in

Waters

is similarly unhelpful to the Government. In that case, the Government paid for medical care furnished to a Medicare beneficiary as a result of an automobile accident.

Waters,

9 F.3d at 398 . In an interpleader action between the Government and the other individuals injured in the accident, the Government asserted that its rights to the insurance proceeds were paramount to all others.

Id.

at 399-400 . It argued that there were two separate theories of recovery granting it the priority position: an independent statutory right under § 1395y(b)(2)(B)(ii); and a separate subro-gation right under § 1395y(b)(2)(B)(iii). Without explicitly disagreeing with this contention, the court nevertheless limited the Government to subrogation, saying: “[n]o matter what theory is pursued ...

the government stands exactly in [the Medicare beneficiary’s] shoes when recovering from the available insurance funds.” Id.

at 401 (emphasis added).

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Travelers

and

Provident

are also unavailing to the Government. These cases shared two issues in common: whether the Government has an independent cause of action under the MSPA that is separate from its subrogation rights; and whether the Government was entitled to seek reimbursement from a third party who was administering the self-insured employer group health plan and was not an actual party to the health insurance contract.

Though not explicitly stated by either court, the significance of the first issue stemmed from the fact that Medicare beneficiaries, not having contractual rights against the third-party administrators, did not have the right to bring suit against them.

Cf. Provident,

740 F.Supp. at 501 . Therefore, if the Government were merely subrogated to the rights of the Medicare beneficiaries, then the Government, likewise, would be unable to sue the third-party administrators directly. Both courts nominally accepted the Government’s contention that it had an independent right of recovery as well as a subrogation right of recovery under the statute. As will be explained, however, their reasoning was not persuasive.

The court in

Provident,

after directly quoting the relevant provisions, stated that the “plain language” of the MSPA provides the Government with a right “to recover ... overpayment [from] ... any entity ... responsible for payment ...

or

...

[to] pursue any rights it may have by way of subrogation.” Id.

The court’s plain language interpretation, however, neglected to account for some of the statute’s plain language — the phrase “shall be subrogat-ed.” The court went on to reason, as did the court in

Travelers,

that “[t]o read the statute as solely providing the Government with a right of subrogation would give effect only to the sentence dealing with the right of subrogation.”

Id.; Travelers,

815 F.Supp. at 523 .

Both of these courts appear to have been laboring under the misconception that a subrogation claim cannot also be an independent claim. But as explained

supra

Part V.A.2, a subrogation claim, by its nature, is an independent claim belonging solely to the subrogee. In addition, both courts obviously misunderstood the separate and important functions served by the relevant MSPA provisions. Section 1395y(b)(2)(B)(ii) identifies the entity against whom the Government may pursue recovery under the MSPA — the “primary plan.” And in so doing, the statute affords the Government with a direct right of action against the insurer that would not otherwise be available under the law.

See supra

Part V.B.2.C (The MSPA is a “direct action” statute which overrides the common law rule prohibiting lawsuits against insurers). Section 1395y(b)(2)(B)(iii) then explains how the Government can enforce this direct, independent right of action against the insurer — by standing in the shoes of the Medicare beneficiary. The two provisions work together in a clear and logical manner and no part of either provision renders any part of the other superfluous.

With respect to the second issue, both courts held that the Government does not have a claim against an entity acting solely as a third-party administrator for the group health plan. They reasoned that the MSPA provides the Government with a right of recovery only against the entity with ultimate responsibility for payment of the medical care. And that entity, the courts held, is the insurer and not the third-party administrator.

Travelers,

815 F.Supp. at 523-24 ;

Provident,

740 F.Supp. at 504 . The reason that the insurer is charged with such responsibility is because of its obligations under the health insurance contract. By necessity then, the Government’s right of recovery is dependent upon the health insurance agreement. If the health insurer is obligated to provide coverage under the contract, it will be responsible for payment of the medical care. But if the medical care in question is not covered, there will be no legal basis for allowing the Government to obtain re-

*345

imhnrsement from the insurer/

25

In other words, for the Government to establish that it is entitled to reimbursement under the MSPA, it must step into the shoes of the insured and enforce her contractual rights. Therefore, and regardless of whether these courts were aware of the fact, their holdings with respect to the rights of third-party administrators demonstrate that the Government’s right of recovery is indeed one of subrogation.

In

BCBS of Michigan,

the court stated that “[t]he right of the United States to recover for a breach of [the MSP] provisions is granted by statute. It is an independent right of recovery ... [that is] separate and distinct from a right of sub-rogation which arises out of a contractual relationship.”

BCBS of Michigan,

726 F.Supp. at 1522. If not read carefully, this statement could be misconstrued as standing for the proposition that the Government has two separate rights of recovery under the MSPA.

See U.S. Opposition to Motion

at 51 n.31. When placed in context, however, it does not support this contention.

The case involved the Government’s attempt to recover Medicare payments for medical services that allegedly should have been paid for by Blue Cross pursuant to health insurance policies which it had issued.

BCBS of Michigan,

726 F.Supp. at 1518. In its defense, Blue Cross noted that the insurance agreements contained provisions that limited the time within which plan participants could file suit to recover plan benefits.

Id.

at 1522. Blue Cross then reasoned that, because the Government was subrogated to the plan participants’ rights under the policies pursuant to § 1395y(b)(2)(B)(iii), it should be subject to the same contractual limitations period. The quotation in question merely states the obvious: that the Government’s MSPA rights are based on statutory sub-rogation, not contractual subrogation. And, as explained

infra

at pp. 350-51, the Government is never barred by a limitations period unless Congress says otherwise. Read properly, then, the court’s statement merely stands for the indubitable proposition that the MSPA provides the Government with an independent statutory right of recovery. It does not support the contention that the Government possesses an independent right of recovery under the statute that is separate from its statutorily-created subrogation right.

In addition, some parts of

BCBS of Michigan

strongly indicate that the court was of the view that the MSPA provides the Government with a single right of recovery that is both independent and subro-gatory.

BCBS of Michigan,

726 F.Supp. at 1522. The court relied on

York,

398 F.2d at 584 , wherein the Sixth Circuit held that the Government’s MCRA-based claim was both independent and subrogatory, suggesting that the court believed the MSPA and the MCRA are parallel in this respect.

See, e.g., Health Ins. Ass’n,

23 F.3d at 419 (recognizing that the MCRA is “a somewhat parallel statute” to the MSPA). In addition, the court held that Blue Cross was not subject to suit under the MSPA while acting in the capacity of a third-party administrator. It reasoned that a third-party administrator is not the insurer that is a party to the health insurance agreement and is, therefore, not responsible to pay for claims made against the policy.

BCBS of Michigan,

726 F.Supp. at 1521. This, too, indicates that the court was cognizant of the subrogatory nature of the Government’s MSPA-based claim.

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In

Zinman

a nationwide class of Medicare beneficiaries obtained a settlement intended to cover a broad range of injuries, some of which were injuries that Medicare had paid to treat.

Zinman,

67 F.3d at 842 . But because the settlement was for an amount less than their total damages, the beneficiaries asserted that the Government’s reimbursement should be reduced

pro rata

in relation to the non-Medicare damages.

Id.

They argued that the Government’s right to the proceeds was one of subrogation pursuant to § 1395y(b)(2)(B)(iii). And because subro-gation is an equitable remedy, the equitable principle of apportionment should also apply.

Id.

at 844. The court rejected this argument, stating that “[t]he MSP legislation does not confine [the Government’s] right of reimbursement to its right of sub-rogation. The statute grants [the Government] an independent right of recovery against any entity that is responsible for payment ... [that] is separate and distinct from [its] right of subrogation....”

Id.

at 844-45. Accordingly, it held that the Government’s independent claim was not limited by the equitable principle of apportionment. Its reasoning, however, was flawed. In concluding that the statute provides the Government with an independent right of recovery that is separate from its subrogation right, the court did no more than adopt the erroneous reasoning of

Provident

and

Travelers. Zinman,

67 F.3d at 845 (citing

Travelers,

815 F.Supp. at 523 ; and

Provident,

740 F.Supp. at 501 ). For the same reasons that these cases are unpersuasive, so is

Zinman .

Of significance also is that the above cases did not involve situations where the primary plan’s liability was in dispute. Only in these situations will the meaning of a purely independent MSPA-based claim become clear. For only then will the Government be required to identify and prove a specific cause of action that would justify imposing liability upon the primary plan. And of course, if there is no basis for imposing liability upon a primary plan, there will be no basis for obtaining reimbursement from a Medicare beneficiary or other entity that has received payment from the primary plan.

The MSPA clearly grants the Government a statutory right of recovery, but it does not provide the Government with a specific cause of action let alone set forth its elements. The elements of the Government’s cause of action must, therefore, be found in some other source of law.

See supra

Part V.B.2.a. (explaining that an MSPA-based claim will be founded upon either contract or tort law). This, then, begs the question: If the Government has an independent claim separate from its subrogation claim, what will its independent cause of action be? An independent contract-based claim against a health insurer would fail for the Government and the insurer are not parties to a contract. An independent tort-based claim against a liability insurer would fail for the Government is not the victim of the tort allegedly committed by the insured. There is simply no cause of action that would enable the Government to successfully pursue an independent claim against a primary plan. In short, a primary plan’s potential liability flows entirely from its obligations to the Medicare beneficiary. The fact that those obligations may have been extended by the existence of the MSPA is irrelevant. Logic, common sense, and the plain language of the statute lead to the ineluctable conclusion that an MSPA-based claim is a single claim that is both independent and subrogatory. No other construction of the MSPA is plausible.

26

The preceding analysis demonstrates that when liability is in dispute, the MSPA essentially mirrors the MCRA.

Cf. Health Ins. Ass’n,

23 F.3d at 419 (observing that

*347

the MSPA and the MCRA are “somewhat parallel”). While no reported case involved a dispute by the defendant-insurer about whether it indeed provided health insurance to the federal beneficiary or liability insurance to the alleged tortfeasor, it is reasonable to conclude that, like the MCRA, the Government’s MSPA-based claim is governed by the substantive law, be it contract or tort, of the applicable state.

27

There is an additional similarity with the Government’s MCRA-based claim. The Government has not identified which states’ substantive tort laws govern its MSPA-based claim against the Debtor. But as with the Government’s MCRAbased claims, black letter products liability law requires the United States to demonstrate that one of the Debtor’s products was involved in the treatment paid for by Medicare and that a defect in that product was the proximate cause of an injury which necessitated such treatment.

3.

Limitation on Government’s Ability to Recover Under the MSPA

In addition to proving the elements dis-. cussed above, the Government must also establish that, with respect to the Medicare payment in question, the party against whom it seeks recovery — Dow Corning — is the primary payer and that Medicare is the secondary payer within the meaning of the MSPA.

Recall that when an eligible federal beneficiary has no other insurance coverage, Medicare is the primary payer and has sole responsibility to pay for that individual’s medical care. But where other insurance coverage is available, the MSPA generally strives to make Medicare the secondary payer. It does this by prohibiting Medicare from making payments in the following situations:

(2) Medicare secondary payer (A) In general — Payment under this subchapter may not be made [by Medicare] ... with respect to any item or service to the extent that—

(i) payment has been made, or can reasonably be expected to be made, with respect to the item or service [by a group health plan or large group health plan], or

(ii) payment has been made or can reasonably be expected to be made promptly (as determined in accordance with regulations) under a workmen’s compensation law or plan of the United States or a State or under an automobile or liability insurance policy or plan (including a self-insured plan) or under no fault insurance.

42 U.S.C. § 1395y(b)(2)(A)(i) & (ii).

Importantly, this prohibition against Medicare paying for medical care that is covered by paragraph 2(A)(i) or 2(A)(ii) is qualified by paragraph 2(B)(i).

See

42 U.S.C. § 1395y(b)(2)(B)(i). Paragraph 2(B)(i) provides that in the event Medicare does make such a payment, it is “conditioned on reimbursement to the appropriate [Medicare] Trust Fund” from the entity that has primary responsibility for such payment under paragraph 2(A)(i) or 2(A)(ii).

Id.; see also Health Ins. Ass’n,

23 F.3d at 419 (observing that paragraph “2(B)(i) provides that any Medicare payment is ‘conditioned on reimbursement’ if it is a payment ... with respect to an item of service to which [ ]paragraph 2(A) applies”). Once Medicare has paid for medical care covered by paragraph 2(A)(i) or 2(A)(ii), thereby rendering such payment conditional under 2(B)(i), it acquires secondary payer status. The United States

*348

then has an independent right of recovery with respect to such payment under paragraph 2(B)(ii). 42 U.S.C. § 1395y(b)(2)(B)(ii);

see also Health Ins. Ass’n,

23 F.3d at 419 .

Of course the opposite also holds true. If a group health plan has not paid and cannot reasonably be expected to pay for certain health care, paragraph 2(A)(i) will not apply.

See id.

at 419 . Paragraph 2(A)(ii) will not apply if one of the entities listed in that paragraph has not paid and cannot reasonably be expected to

promptly

pay for certain health care.

Id.

HCFA regulations provide that “ ‘promptly, when used in connection with third party payments, except ... for payments by liability insurers, means payment within 120 days after receipt of the claim.” 42 C.F.R. § 411.21 . As applied to liability insurers, the term “means payment within 120 days after the earlier of ... (l)[t]he date a claim is filed with an insurer ... [; or] (2)[t]he date the service was furnished. ...” 42 C.F.R. § 411.50 . And when Medicare pays for an item or service to which neither 2(A)(i) nor 2(A)(ii) apply, such payment is not conditional and is not subject to reimbursement under paragraph 2(B)(i). As a result, Medicare would not acquire secondary payer status with respect to such payment and its putative authority to initiate a recovery action under 2(B)(ii) would not arise.

28

Under the facts of this case, the Government will acquire secondary payer status with respect to those Medicare payments for which it can establish that paragraph 2(A)(ii) applies. 42 U.S.C. § 1395y(b) (2)(A) (ii) (pertaining to medical care for which a liability insurer, including an entity that is self-insured, has already paid or can reasonably be expected to be paid promptly).

29

*349

Summarizing the above analysis, to recover payment under the MSPA the Government must, at a minimum: 1) identify the beneficiary to whom the item or service was provided; 2) identify the item or service furnished to the beneficiary and the amount of the payment made by the Government with respect to such item or service; 3) establish that the party against whom recovery is sought is a “primary plan” or received payment from a “primary plan;” 4) prove that the third party against whom it seeks recovery is required or responsible to make payment with respect to the item or service provided; and 5) demonstrate that Medicare is the secondary payer with respect to the payment of such item or service.

VI. Summary Judgment

In their motion for summary judgment, the Movants state four grounds for relief. They contend that “[t]he claim filed by HCFA is improper and filed by the wrong party; [and that] the true creditor[,] ... [which] never filed a claim[,] ... is barred as a matter of law [from doing so].”

Summary Judgment Motion

at 9. They also assert that substantial numbers of the Government’s claims are subject to disal-lowance on statutes of limitations grounds.

Brief in Support of Objection to Evidence

at 20-24. But in any event, they maintain that the United States’ claims “are defective, incomplete and otherwise incapable of being proven as a matter of law.”

Summary Judgment Motion

at 9. The Movants further contend that “[t]he United Statesf] Claims that are not disallowed, if any, should be subordinated as a matter of law pursuant to [§ 509(c) of] the Bankruptcy Code[

1....” Id.

at 10.

A.

Standing of HCFA to File Proof of Claim

The first ground for relief can be disposed of rather quickly. The Movants maintain that the proof of claim filed by HCFA was actually filed on behalf of the wrong party because the reimbursement right afforded under the MSPA does not run to HCFA. To support this argument they rely on a provision of the MSPA which states that reimbursement is to be made “ ‘to the appropriate Trust Fund established by [the statute].’ ”

Brief in Support of Summary Judgment Motion

at 16 (quoting 42 U.S.C. § 1395y(b)(2)(B)). Since the “appropriate Trust Fund” is the only entity entitled to receive reimbursement under the MSPA, the Movants argue that it, and not HCFA, is the party with standing to seek reimbursement from the Debtor. The cases cited by the Movants in support of this argument discuss the effect that the source of government funding (i.e. general revenue fund versus special fund such as social security fund) has on the “collateral source” rule.

Id.

(citing

Berg v. United States,

806 F.2d 978, 985-86 (10th Cir.1986)) and

Siverson v. United States,

710 F.2d 557, 560 (9th Cir.1983). However, these cases do not stand for the proposition that the United States lacks standing to bring suit on behalf of a trust fund created by the Government, operated by the Government and funded by taxpayer dollars.

The fact is, the MSPA expressly provides that “the United States may bring an action” for recovery thereunder. 42 U.S.C. § 1395y(b)(2)(B)(ii). Moreover, the Medicare program is administered by the Secretary of Health and Human Services. And the Secretary delegated the responsi

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bility for promulgating regulations under the MSPA to HCFA. 42 U.S.C. § 1395hh(a)(l); 42 C.F.R. § 411.24 (b) (“HCFA may initiate recovery as soon as it learns that payment has been made or could be made under worker’s compensation, any liability or no-fault insurance, or an employer group health plan.”). Therefore, the HCFA claim was filed by the appropriate entity.

B. Statute of Limitations

As explained, the Government’s rights under the MCRA and the MSPA are subrogated to the state law rights of the federal beneficiary. Nevertheless, the state statute of limitations that would otherwise be applicable to the beneficiary’s claim will generally have no impact on the Government’s claim. This result derives from the fact that the Government represents the collective rights of its citizens. And because these rights belong to the public as a whole, they are not subject to forfeiture due to the carelessness or complacency of a governmental official.

See, e.g., United States v. Thompson,

98 U.S. 486, 489 , 25 L.Ed. 194 (1878). Therefore, claims asserted by the United States are ordinarily immune from any period of limitation unless Congress manifests an intent to the contrary.

United States v. Summerlin,

310 U.S. 414, 416 , 60 S.Ct. 1019 , 84 L.Ed. 1283 (1940);

Board of Comm’rs of Jackson County v. United States,

308 U.S. 343, 350-51 , 60 S.Ct. 285 , 84 L.Ed. 313 (1939);

E.I. Du Pont De Nemours & Co. v. Davis,

264 U.S. 456, 462 , 44 S.Ct. 364 , 68 L.Ed. 788 (1924);

United States v. Nashville, Chattanooga & St. Louis Ry. Co.,

118 U.S. 120, 125 , 6 S.Ct. 1006 , 30 L.Ed. 81 (1886);

Thompson,

98 U.S. at 488-90 .

This rule also applies to an independent claim of the United States that is derivative of the rights of another party.

Summerlin,

310 U.S. at 416 , 60 S.Ct. 1019 (“We are of the opinion that the fact that the claim was acquired by the United States [through assignment] ... does not take the case out of this rule.”);

Nashville, Chattanooga & St. Louis Ry. Co.,

118 U.S. at 125 , 6 S.Ct. 1006 (stating that when the Government became the owner of certain negotiable paper, “[it took] such paper subject to all the equities [then] existing against the person from whom [it] ... acquire[d] ... title,” except that its claim could not be barred by the state limitations period). Accordingly, tort claims asserted by the Government under the MCRA and the MSPA will receive the benefit of this rule in spite of the fact that such claims are subrogatory in character.

See United States v. Gera,

409 F.2d 117, 120-21 (3d Cir.1969).

The one exception to this rule is that if the limitations period otherwise applicable to the subrogor’s or assignor’s claim has already expired at the time it is acquired by the United States, then the claim is acquired subject to this “pre-existing infirmity” and will not be revived by its transfer to the Government.

U.S. v. California,

507 U.S. at 758-59 , 113 S.Ct. 1784 ;

Guaranty Trust Co. v. United States,

304 U.S. 126, 142 , 58 S.Ct. 785 , 82 L.Ed. 1224 (1938);

Nashville, Chattanooga & St. Louis Ry.,

118 U.S. at 125-26 , 6 S.Ct. 1006 ;

United States v. Thornburg,

82 F.3d 886, 889-90 (9th Cir.1996);

FDIC v. Wheat,

970 F.2d 124 , 128 n. 7 (5th Cir.1992).

Therefore, if the federal beneficiary’s claim against the Debtor was time barred on the date that the Government, as subro-gee, asserted its claim against the Debtor, the Government’s claim will likewise be barred. But because this is a bankruptcy proceeding, the question of whether a preexisting infirmity has affixed to one of the Government’s subrogation claims will be determined as of the petition date, not the date that the Government filed its proofs of claim.

See

11 U.S.C. § 362 (a)(1). If there is no pre-existing infirmity,

the

Government’s claims against the Debtor will be subject only to time limitations imposed by Congress. And it is uniformly recognized that Congress has enacted a statute

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of limitation which is applicable to Government claims made pursuant to the MCRA and the MSPA, 28 U.S.C. § 2415 .

See, e.g., Cockerham,

768 F.2d at 787 .

At issue here is whether the Government’s claims against the Debtor are governed by subsection (a) or (b) of this statute. Subsection (a) provides that “every action for money damages brought by the United States ...

which is founded upon any contract

express or implied in law or fact, shall be barred unless the complaint is filed within six years after the right of action first accrues.... ” 28 U.S.C. § 2415 (a). Subsection (b) states that “every action for money damages brought by the United States ...

which is founded upon a tort

shall be barred unless the complaint is filed within three years after the right of action first accrues.... ” 28 U.S.C. § 2415 (b).

The Movants assert that the Government’s claims under both the MCRA and the MSPA are founded on tort and are, therefore, subject to the three-year period of limitation contained in § 2415(b).

Brief in Support of Objection to Evidence

at 20. Accordingly, they maintain that any Government claim arising before May 15, 1992 (three years prior to the date the Debtor filed its bankruptcy petition) is time barred.

The Government acknowledges that its claims under the MCRA are tort claims subject to § 2415(b).

Opposition to Objection to Evidence

at 21. And the Court agrees with this assessment.

See also Gera,

409 F.2d at 120 ;

Card v. American Brands Corp.,

401 F.Supp. 1186, 1188 (S.D.N.Y.1975).

Cf. Garvin,

768 F.2d at 787 (concluding that, under the circumstances of that ease, the Government’s MCRA-based claim was founded in contract, not tort, thereby making the applicable statute of limitations six years).

And logic suggests that the same result should apply to the Government’s MSPA-based claims. After all, recovery on these claims will require the Government to prove that the Debtor committed a tort against the Medicare beneficiary. But the Government disagrees. It notes that case law has uniformly held that claims arising under the MSPA are subject to the six-year period found in § 2415(a).

U.S. Opposition to Objection to Evidence

at 20 (citing

United States v. Beck,

758 F.2d 1553, 1557 (11th Cir.1985);

Provident,

740 F.Supp. at 505 ; and

BCBS of Michigan,

726 F.Supp. at 1522). Based on these cases, the Government argues that its “right to recover is provided by federal statute and falls squarely within the purview of [§ 2415(a) ].”

Opposition to Objection to Evidence

at 20.

The fact that the Government’s rights are created by statute is not a defining or even relevant factor. If it were, the United States’ tort claims under the MCRA would also be subject to § 2415(a). But as the Government itself acknowledges, its MCRA-based claims are subject to § 2415(b). Moreover, the Government’s argument simply ignores the crucial factor common to all of the cases that have applied a six-year limitation period to claims under the MSPA — they were contract actions.

Beck

involved efforts by the Government to recoup excessive Medicare payments made to a physician participating in the Medicare program. Doctors and hospitals are not obligated to participate in the Medicare program; they do so by entering into a contract with the Secretary of Health and Human Services.

See, e.g.,

42 U.S.C. §§ 1395c to 1395i-4

&

1395ec (setting forth parameters for participation in the Medicare program by hospitals and other institutional health care providers); 42 U.S.C. §§ 1395j to 1395w-4 (same for physician participation in the program);

see also Heckler v. Community Health Serv. of Crawford County, Inc.,

467 U.S. 51, 54 , 104 S.Ct. 2218 , 81 L.Ed.2d 42 (1984) (observing that the institutional health care provider in that case had

contracted

with the Secretary to provide services under Medicare). By entering into such a

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contract, a health care provider agrees to comply with the requirements of the Medicare program.

Heckler,

467 U.S. at 64 , 104 S.Ct. 2218 (“As a participant in the Medicare program, respondent had a duty to familiarize itself with the legal requirements for cost reimbursement.”). And when a health care provider fails to comply with these requirements, it violates its contract with the Government. In

Beck ,

the physician had allegedly requested and received payments in excess of what he was entitled to under the Medicare program and the Government was suing for breach of contract. Accordingly, the court applied the six-year limitation period for contract claims.

But there is another, and more fundamental, reason for which

Beck

fails to support the Government’s argument. In

Beck ,

the Government was suing to recover excessive payments that it had made as the primary payer of health care under the Medicare program. That is, it was not seeking to recover conditional payments made as the secondary payer of health care costs for which another insurer had primary responsibility. Thus, the case was not even governed by the MSPA and is therefore not relevant to the present matter.

30

Provident

and

BCBS of Michigan,

on the other hand, were MSPA cases. In both the Government paid for the costs of medical care that had been furnished to certain Medicare beneficiaries who also happened to be covered by a group health plan.

Provident,

740 F.Supp. at 496 ;

BCBS of Michigan,

726 F.Supp. at 1520. Under the MSPA, the Government is deemed the secondary payer and the group health plan the primary payer. And in both cases, the Government sued to recover its expenditures on the ground that the insurer was obligated to make such payments pursuant to the group health insurance plan that it had issued. Because the Government was suing to enforce the health insurance contracts, its claims were contractual in nature and the courts were correct to apply § 2415(a).

Provident,

740 F.Supp. at 505 ;

BCBS of Michigan,

726 F.Supp. at 1522.

But it does not follow that § 2415(a) is applicable to all MSPA-based claims. “The application of a statutory limitation period to a particular cause of action is grounded in logic and reason.”

Cockerham,

768 F.2d at 787 . In any particular ease, a court must, therefore, examine whether the Government’s MSPAbased claim is founded upon a tort or a contract. The determination in this case is truly elementary. As discussed previously,

supra

Part V.B.2.a, to prevail on its MSPA-based claim, the Government must prove that Dow Corning — the alleged tortfeasor — committed a tort. Clearly, the Government can point to no contractual provision binding Dow Corning to pay medical benefits to an implant recipient who also received medical benefits from the Government. Consequently, the Government’s MSPA-based claim is “founded upon tort” and § 2415(b)’s three-year statute of limitations period applies.

This does not entirely resolve the statute of limitations question. For one thing, before the Debtor filed bankruptcy, it, along with other breast implant manufacturers, entered into a tolling agreement with the Government.

Ex. S to U.S. Opposition to Objection to Evidence

(copy of the tolling agreement). Pursuant to this tolling agreement, the Debtor agreed “not to plead any statute of limitations ... defenses to any civil claims ... filed by the United States on or before October 1, 1995, unless such defense would have been available in any action filed on or before February 3, 1995.”

Id.

at 11. The United

*353

States somehow construes this tolling agreement to mean that the Debtor has “expressly waive[d] any statute of limitations defense it might otherwise have.”

U.S. Opposition to Objection to Evidence

at 22. But this statement plainly mischar-acterizes the scope of the agreement. The tolling agreement simply provides that the Debtor cannot raise a statute of limitations defense unless that defense would have been available on or before February 3, 1995.

Furthermore, the Government relies on 28 U.S.C. § 2416 (c), which provides that “[f]or purposes of computing the limitations periods established in section 2415, there shall be excluded all periods during which ... facts material to the right of action are not known and reasonably could not be known by an official of the United States charged with responsibility to act in the circumstances.” 28 U.S.C. § 2416 (c).

We note that the Food and Drug Administration imposed a very well publicized moratorium on the sale of silicone-gel breast implants in May of 1992.

See In re Dow Corning Corp.,

211 B.R. 545, 551 (Bankr.E.D.Mich.1997). The FDA took this action due to concerns over the product’s safety. And considering the publicity the moratorium received, it is unimaginable that the Government was not aware of the FDA’s action and the reasons that such action was taken. Consequently, it would be difficult for the Government to persuasively argue that the period of limitation on its claims did not begin to run on or before the date of the moratorium.

However, this issue has not been fully briefed by the parties nor have all of the facts relevant to the issue come before the Court. Thus, while the Court holds that the three-year statute of limitations period of § 2415(b) applies to all of the Government’s MCRA and MSPA claims against the Debtor, we make no ruling at this time as to whether any portions of the Government’s claims against the Debtor are actually barred by the statute of limitations.

C. Evidence Tending to Prove Government’s Claims

The motion for summary judgment primarily focuses on whether the Government has presented evidence sufficient to prove that a product of the Debt- or’s was involved in the medical treatment provided to the federal beneficiaries.

Motion

at 2;

Brief in Support of Motion

at 7;

Joint Reply in Support of Motion

at 3.

31

It

*354

is well established that product identification is an essential element of every products liability action, regardless of which state’s law governs.

See, e.g., Lee,

721 F.Supp. at 92 ;

Marshall,

651 F.Supp. at 391 ;

Rutherford v. Owens-Illinois, Inc.,

16 Cal.4th 953 , 67 Cal.Rptr.2d 16 , 941 P.2d 1203, 1214 (1997);

Hymowitz v. Eli Lilly & Co.,

73 N.Y.2d 487 , 541 N.Y.S.2d 941 , 539 N.E.2d 1069, 1073 (1989).

As previously indicated, the Scheduling Order provided that discovery pertaining to tort causation would be deferred until further order of the Court. And of course, product identification is an element of causation in products liability cases.

See, e.g.,

63

Am Jur 2d,

Products Liability § 73. In a responsive pleading filed the day of the hearing on the Motion for Summary Judgment, the Government asserted that the “Motion is improper to the extent that it seeks to force the United States to prove causation at this juncture.”

Opposition to Objection to Evidence

at 9-10. Though not entirely clear from this statement, it appears that the Government may be arguing, for the first time, that it should not be required at this point to present evidence pertaining to the element of product identification. But all parties clearly understood that this aspect of causation was not deferred by the Scheduling Order. Consequently, to the extent the Government is making such an assertion, it is rejected.

The Scheduling Order, which was agreed to by the parties and presented to the Court for signature, could have been drafted with more precision. Nevertheless, the deferred discovery related only to issues of product defect in general, and science-related causation issues in particular: “Discovery other than expert witnesses must be completed no later than March 5, 1999 ... Discovery relevant to the issue of tort causation will be deferred until further Order of the Court. Parties can inquire as to why a claim was made, but cannot inquire as to the scientific basis of that claim until further Order of the Court.”

Scheduling Order

at ¶¶ 2 and 3. The final discovery order, extending the discovery deadline to May 30, 1999, contained similar phrasing: “Discovery other than expert witnesses must be completed no later than May 30, 1999, and discovery completed no later than May 30, 1999, and discovery relevant to the issues of tort causation will still be deferred until further order of the Court.” The parties’ stipulation to the entry of the latter order discloses the intendment of the order. It says: “The parties stipulate that the Scheduling Order for Claim Objection Nos. 4-7 is revised to extend discovery, other than expert witnesses, until May 30, 1999, and the time to file dispositive motions, other than those related to tort causation issues, until June 4,1999.” This document

*355

was signed on May 6. The Movants filed their motion for summary judgment asserting the Government’s inability to produce evidence that a Dow Corning product caused the federal beneficiaries the harm alleged 22 days later. Clearly the term “tort causation issues” was imprecise; what was intended — and understood — was scientific issues on whether the Debtor’s products were defective. No experts were necessary on the question of whether the federal beneficiaries even received Dow Corning products.

The record demonstrates that all parties were fully cognizant of the fact that discovery pertaining to product identification was not deferred by the Scheduling Order. The order was formulated at a pre-trial hearing conducted July 16, 1998. That the Movants wanted to defer discovery on what they referred to as issues of “tort causation” was known by the Government and the Court in advance.

See [Proposed] Claim Objection No. 5 Scheduling Order

¶ 4 (“The parties will enter into a stipulation ... that will preclude discovery relevant to the issue of tort causation until further order of the Court.”). At the hearing, there was extensive discussion on the appropriate scope of the initial phase of discovery. On more than one occasion, the Movants stated that the information they were seeking during the initial phase of discovery included not only the identities of the federal beneficiaries underlying the Government’s claims and the amount that the Government sought to recover on behalf of each beneficiary, but, most importantly, whether a Dow Corning product was involved in such treatment.

Transcript,

July 16, 1998 at 78-79, 99 and 104. Not once during this pre-trial hearing did the United States argue that product identification should be excluded from the initial discovery phase.

When the TCC served its discovery request on the Government, it requested evidence pertaining to product identification.

See, e.g., U.S. Ex. 29: VA Responses to Discovery Propounded by TCC,

Interrogatories 4 and 5. The Government objected to this request on the ground that it was too burdensome, but it did not argue that the discovery sought was beyond the scope of the Scheduling Order.

Id. See also U.S. Ex. 30: IHS Responses to Discovery Propounded by TCC

at 29-30;

U.S. Ex. 42: HCFA Responses to Discovery Propounded by TCC

at 25-30;

U.S. Ex. 43: DoD Responses to Discovery Propounded by TCC

at 11-14.

The Debtor also sought information relating to product identification. One of the Debtor’s interrogatories requested that the Government, “[f]or each Underlying Claimant, state the facts upon which [it] reifies] to support fits] claim ... This explanation should also include Debtor’s involvement in the implant, whether as manufacturer, distributor or supplier of a part of the product.”

E.g., U.S. Ex. 46: HCFA Responses to Discovery Propounded by the Debtor

at 12. This portion of the interrogatory clearly goes to product identification. The same interrogatory goes on to ask the Government to explain “exactly what about the Debtor’s conduct was tor-tious.”

Id.

The Government objected to this interrogatory “insofar as it seeks discovery relevant to the issue of tort causation.”

Id.

at 13. When viewed in the context of the Government’s discovery responses to both the TCC and the Debtor, it is reasonable to conclude that this objection pertained only to the latter portion of the interrogatory, the Debtor’s request for an explanation of “what about the Debtor’s conduct was tortious.” After all, the TCC asked for information on product identification as well, and as explained, the Government did not object to that request on the grounds that discovery on causation had been deferred.

32

*356

Even more telling is the fact that the Government also sought information pertaining to product identification during the discovery period.

See U.S. Ex. 36: U.S. First Set of Interrogatories and Request for Production of Documents to TCC,

Request for Production of Documents No. 2;

and U.S. Ex. 36: U.S. First Set of Interrogatories and Request for Production of Documents to Debtor,

Interrogatories No. 6 and 8. And at the August 6, 1998 hearing, the Government openly stated that, as part of the initial discovery process, it sought access to the confidential information because it believed such information to be “relevant to establishing whether or not a Dow Corning product is involved.”

Transcript,

August 6, 1998 at 195;

cf. id.

at 225 (“[O]ur ability to prove an allowed claim, we believe ... will depend on our ability to show a nexus to a Dow Corning product.”). In addition, nowhere in the United States’ Opposition to the Motion for Summary Judgment did it argue that the issue of product identification was deferred by the Scheduling Order and, therefore, not properly before the Court.

It is abundantly obvious that all parties understood that evidence of product identification was fair game during the initial discovery phase. As a result, it was perfectly appropriate for the Movants to seek summary judgment on the basis that the Government has no evidence to show that whatever alleged harm befell a federal beneficiary was caused by a Dow Corning product. Whether the Government has satisfied the product identification element with respect to the 200 to 300 VA and IHS beneficiaries for whom medical files were produced and the approximately 4,500 HCFA and DoD beneficiaries whose names matched with names in the confidential databases will be discussed separately in Part VI.D and E below.

As for the remainder of the Government’s claims, the Movants contend that the Government has completely failed to produce any evidence regarding product identification.

Motion

at 4;

Joint Reply in Support of Motion

at 3. The record supports this assertion.

See Movants’ Ex. E

(excerpt from deposition of Vriezen for HCFA) (Q: “So you don’t know if even one of your claims involves a produc

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