Florida Federal Court Dismisses MAP Private Cause of Action Due to Lack of Demonstration of Responsibility

RG Helios Professional Pictures (2)On April 2, 2015, the United States District Court for the Southern District of Florida published its opinion on MSP Recovery, LLC v. Progressive Select Insurance Company, finding that since Plaintiff did not allege that Defendant’s responsibility to pay had been demonstrated by settlement, judgment, award, or any other means, the court granted Defendant’s motion to dismiss, dismissing the claim without prejudice, thereby allowing Plaintiff to reassert its claim after Defendant’s responsibility to pay under Section 1395y(b)(3)(A) has been demonstrated. The court followed the findings of the 11th Circuit in Glover v. Liggett Group and Phillip Morris, USA, in which that court concluded that a primary plan has a duty to reimburse a secondary payer MAO for conditional payments only “if it is demonstrated that such primary plan has or had a responsibility to make payment.”

Florida Healthcare Plus (FHCP) is a Medicare Advantage Organization (MAO). On February 20, 2014, one of its members, who had opted into FHCP’s Medical Advantage Plan (MAP), sustained injuries during a car accident. Though this member was also insured under a personal injury protection (PIP) policy issued by Defendant Progressive Select Insurance, FHCP conditionally paid for the cost of medical expenses associated with the accident. Notwithstanding the fact that Defendant’s PIP policy is a primary plan, Defendant refused to provide reimbursement.

On December 9, 2014, MSP Recovery, LLC, Plaintiff, who was assigned FHCP’s right to reimbursement, filed suit against Defendant in the County Court of the Eleventh Judicial Circuit in and for Miami-Dade County, Florida to recover under 42 U.S.C. §1395y(b)(3)(A), a private right of action created by the Medicare Secondary Payer Act (MSP Act). Defendant removed the action to federal court on January 20, 2015, and then moved to dismiss.

Defendant moved to dismiss, arguing that Plaintiff lacked standing, that the Court lacked subject-matter jurisdiction, and that Plaintiff has failed to state a claim upon which relief may be granted.

As to standing, Plaintiff alleged that FHCP assigned its right to reimbursement to La Ley Recovery, and that La Ley Recovery then assigned that right to Plaintiff. Defendant asserted that this allegation is insufficient to establish standing for two reasons. First, Defendant argued that the allegation is conclusory because it is not supported by documentary evidence. Second, Defendant argued that the allegation is inadequate because the record contains contradictory evidence. Defendant’s arguments failed as the allegations in the complaint must be taken as true for purposes of the motion to dismiss.

As to subject-matter jurisdiction, Defendant argued that the Court lacks federal question subject-matter jurisdiction because 42 U.S.C. § 1395y(b)(3)(A), under which Plaintiff sues, does not provide a right of action for Medicare Advantage Organizations (MAO) seeking reimbursement for conditional payments from primary  plans. The Court disagreed with Defendant’s assertion and found that Section 1395y(b)(3)(A) extends to MAOs. See, e.g., In re Avandia Mktg., Sales Practices & Products Liab. Litig., 685 F.3d 353, 357-67 (3d Cir. 2012) (holding that Section 1395y(b)(3)(A) provides a private right of action to MAOs).

As to failure to state a claim, while Section 1395y(b)(3)(A) provides a private right of action to MAOs, the court points out that a primary plan has a duty to reimburse a secondary-payer MAO for conditional payments only “if it is demonstrated that such primary plan has or had a responsibility to make payment.” 42 U.S.C. § 1395y(b)(2)(B)(ii); Glover v. Liggett Grp., Inc., 459 F.3d 1304, 1308 (11th Cir. 2006). The Eleventh Circuit has interpreted this provision to require a prior “demonstration” of a primary plan’s responsibility to pay as a condition precedent to bringing suit under Section 1395y(b)(3)(A). Glover, 459 F.3d at 1309 (“Until Defendants’ responsibility to pay for a Medicare beneficiary’s expenses has been demonstrated (for example, by a judgment), Defendants’ obligation to reimburse Medicare does not exist under the relevant provisions.”).

Under the statute, “a primary plan’s responsibility for payment may be demonstrated by a judgment, a payment conditioned upon the recipient’s compromise, waiver, or release (whether or not there is a determination or admission of liability) of payment for items or services included in a claim against the primary plan or the primary plan’s insured, or by  other means.” 42 U.S.C. § 1395y(b)(2)(B)(ii). Here, Plaintiff did not allege that Defendant’s responsibility to pay has been demonstrated by any means. Therefore, the court granted Defendant’s motion to dismiss, dismissing the claim without prejudice, thereby allowing Plaintiff to reassert its claim after Defendant’s responsibility to pay under Section 1395y(b)(3)(A) has been demonstrated.

After a number of opinions from federal courts throughout the country allowing MAPs to use the MSP private cause of action provision to collect double damages without proving the primary payer was in fact responsible for such payments, this decision re-awakens the 11th Circuit’s 2006 opinion in Glover v. Liggett Group that found that in order for a MAP to seek reimbursement under the MSP private cause of action, the MAP, or other party/entity seeking reimbursement, must prove that the primary payer is responsible for such payments as a result of a settlement, judgment, award, or other means. As the only MSP vendor to have a specific team dedicated to resolution of MAP conditional payments, Helios continues to monitor both federal and state court opinions interpreting the MSP private cause of action to be able to provide all of our clients the very latest and most sound options and choices in appropriately, timely, and responsibly handling resolution of such conditional payments.

With 30 years experience in the areas of workers compensation, liability, social security, Medicare, Medicaid, set asides, and special needs trusts, Rafael Gonzalez, Esq. is currently vice president of strategic solutions at Helios, serving as a thought leader on all aspects of Medicare and Medicaid compliance issues, including mandatory insurer reporting, conditional payment resolution, Medicare set aside allocations, CMS approval, and MSA and SNT professional administration. He can be reached at rafael.gonzalez@helioscomp.com or 813.390.1645.

Leave a Reply