Supreme Court hears arguments on securities fraud, Medicaid

[JURIST] The US Supreme Court [official website] heard oral arguments Tuesday in two cases [JURIST report]. In Gabelli v. Securities and Exchange Commission [transcript, PDF] the court heard arguments on the statute of limitations under 28 USC § 2462 [text] and whether it begins tolling when the government can first bring an action against a penalty. The attorney for the Gabelli Global Growth Fund (GGGF) argued that since the SEC is not attempting to recoup for a victim, the government should be forced to acknowledge the violation when it occurs. "[I]t doesn't concern a common law fraud claim; it doesn't concern a claim where there's even any element of deception that's required. It's a breach of fiduciary duty. What the [International Assets Advisory] says is that the government can sue when the violation occurs." The SEC argued the contrary, although the Justices were incredulous that there had never been a case where the government had exceed the 5-year limitation in 28 USC § 2462. Justice Stephen Breyer asked for examples. "And until 2004 I haven't found a single case in which the government ever tried to assert the discovery rule where what they were seeking was a civil penalty, not to try to make themselves whole where they are a victim, with one exception, a case called Maillard in the 19th century where they did make that assertion. They were struck down by the district court, and the attorney general in his opinion said: The district court's absolutely right; of course, the government cannot effectively abolish the statute of limitations where what they're trying to do is to gather something that's so close to a criminal case. [...] I'd say for 200 years there is no case. The only case, as far as I have been able to discover, which is why I am asking, is that what created the problem of recent vintage is that the Seventh Circuit, I guess, or a couple of other circuits decided that this discovery rule did apply to an effort by the government to assert a civil penalty. That's what created the problem. Before that there was no problem; it was clear the government couldn't do it."

In Delia v. EMA [transcript, PDF] the court heard arguments on whether NC Gen. Stat. § 108A-57 is preempted by the Medicaid Act's anti-lien provision, 42 USC §§ 1396a(a)(25), 1396k(a) [texts], as it was understood in Arkansas Department of Health & Human Services v. Ahlborn [opinion text]. States have a right to recover Medicaid benefits. The North Carolina statute automatically takes a one-third interest in any settlement or judgment from a tort as reimbursement, unless that would exceed one-third of what a person has received in Medicaid benefits. However, one-third of minor EMA's tort recovery is much greater than the Medicaid funds she has used. An attorney for the Department of Heath and Human Services for North Carolina [official website] argued that the statute gives the state a right to tort proceeds before the plaintiff has them, thus overriding a jury verdict or stipulation between parties. The attorney for EMA argued that since the statute ignores the facts of an individual case by applying a set proportion to a settlement, it violates Ahlborn.

 

About Paper Chase

Paper Chase is JURIST's real-time legal news service, powered by a team of 30 law student reporters and editors led by law professor Bernard Hibbitts at the University of Pittsburgh School of Law. As an educational service, Paper Chase is dedicated to presenting important legal news and materials rapidly, objectively and intelligibly in an accessible format.

© Copyright JURIST Legal News and Research Services, Inc., 2013.