Florida Federal District Court Again Dismisses MAP PCA Due to Lack of Evidence of Responsibility

Article by
Rafael Gonzalez, Esq.
Vice President, Strategic Solutions, HELIOS

On August 28, 2015, the United States District Court for the Southern District of Florida published its opinion on MSPA Claims 1, LLC v. IDS Property Casualty Insurance Company, concluding that because Plaintiff’s allegations fail to demonstrate Defendant’s responsibility to pay through “a judgment, a payment conditioned upon the recipient’s compromise, waiver, release, or by other means,” the Amended Complaint must be dismissed without prejudice to Plaintiff to reassert its claim after Defendant’s responsibility to pay under section 1395y(b)(3)(A) has been demonstrated.

Plaintiff MSPA Claims 1, LLC is an assignee of Florida Healthcare Plus (FHCP), a Health Maintenance Organization (HMO) and a Medicare Advantage Plan participant (MAO). Defendant IDS Property Casualty Insurance Company was a primary payer obligated to pay for medical services for one of FHCP’s insureds. On February 20, 2015, Plaintiff sent a letter to Defendant demanding reimbursement of medical services and treatment charged to FHCP (pursuant to the Medicare Secondary Payer Act (MSP)). Defendant failed to provide the appropriate reimbursement to Plaintiff.

As a result, Plaintiff filed this lawsuit seeking reimbursement of said payments, asserting five causes of action. Count I seeks a “Declaratory Judgment as to Defendant’s obligation to Reimburse Medicare Benefits;” Count II asserts a “Private Cause of Action for Double Damages” under the MSP, 42 U.S.C. § 1395y(b)(3)(A); Count III asserts an “Action for Accounting,” seeking an equitable accounting of the amounts Defendant owes as a primary payer; Count IV asserts a claim for “Breach of Contract pursuant to Section 627.736, Florida Statutes,” seeking PIP benefits pursuant to an insurance contract which allegedly provided coverage to FHCP’s insured; and Count V asserts a claim for “Equitable Subrogation,” seeking double damages “under the private cause of action established by 42 U.S.C. § 1395y(b)(3)(A).”

In response, Defendant filed a Motion to Dismiss alleging that the Complaint fails federal pleading standards and should be dismissed, under Rule 12 of the Federal Rules of Civil Procedure, for failure to state a claim upon which relief can be granted. Fed. R. Civ. P. 12. Rule 8 requires that a complaint include a “short and plain statement” demonstrating that the claimant is entitled to relief. Fed R. Civ. P. 8. To survive a Rule 12(b)(6) motion, a complaint must include “enough facts to state a claim to relief that is plausible on its face.” Allegations absent supporting facts are not entitled to this presumption of veracity.

When evaluating a motion to dismiss, the Court must take all of the well-pled factual allegations as true. However, “threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” And, the Court’s duty to accept the factual allegations in the complaint as true does not require it to ignore specific factual details “in favor of general or conclusory allegations.” In other words, “the Court must dismiss a complaint that does not present a plausible claim demonstrating entitlement to relief.”

The Court explains that the private right of action section 1395y(b)(3)(A) provides for MAOs is conditioned upon a “demonstrateion that such primary plan has or had a responsibility to make payment .” 42 U.S.C. § 1395y(b)(2)(B)(ii); Glover v. Ligget Grp., Inc., 459 F.3d 1304, 1308 (11th Cir. 2006). This “demonstration” is a condition precedent to bringing suit. Glover, 459 F.3d at 1309.

In the case at bar, the Court finds that Plaintiff’s allegations fail to demonstrate Defendant’s responsibility to pay through “a judgment, a payment conditioned upon the recipient’s compromise, waiver, or release (whether 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.” See 42 U.S.C. § 1395y(b)(2)(B)(ii). Accordingly, the Court concludes that the Amended Complaint must be dismissed without prejudice to Plaintiff to reassert its claim after Defendant’s responsibility to pay under section 1395y(b)(3)(A) has been demonstrated.

This is the third strike from the Southern District Court in Florida holding that in order to bring a private right of action pursuant to section 1395y(b)(3)(A), the party bringing such action must demonstrate that the primary plan has or had a responsibility to make payment. Strike one was handed down on April 2, 2015, on MSP Recovery, LLC v. Progressive Select Insurance Company. Strike two came down on July 22, 2015, on MSPA Claims 1, LLC, v. Liberty Mutual Insurance. And now on August 28, 2015, strike three on MSPA Claims 1, LLC v. IDS Property Casualty Insurance Company.

Responsibility can be demonstrated through a judgment, a payment conditioned upon the recipient’s compromise, waiver, or release (whether 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. Failure to prove responsibility in such a manner, at least in the USDC Southern District of Florida, means strike three, you are out!

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