Florida Federal District Court Again Allows Assignees to Bring MSP PCA and Again Dismisses Case as No Evidence of Responsibility Shown

Rafael Gonzalez, Esq.
Vice President, Strategic Solutions

Stethoscope and GavelOn September 22, 2015, the United States District Court for the Southern District of Florida published its opinion on MSP Recovery, LLC v. Allstate Insurance Company, concluding that before a private cause of action exists under the Medicare Secondary Payer Act, a plaintiff must demonstrate the defendant’s responsibility to pay a patient’s medical costs. Because MSP Recovery put the cart before the horse and sued Allstate under the Act before establishing Allstate’s obligation to reimburse certain medical expenses, the Court grants Allstate’s Motion to Dismiss as it relates to MSP Recovery’s claims.

Medicare Enrollee is covered by Florida Healthcare Plus, a Medicare Advantage Plan (MAP). In January 2013, Medicare Enrollee was in a car accident. As a result of the accident, the Enrollee suffered bodily injuries and incurred expenses for medical care. Florida Healthcare Plus made “prompt conditional payments to Enrollee’s healthcare providers.”

As has been the case with several similar cases recently filed and decided by the Southern District Court of Florida, sometime thereafter Florida Healthcare Plus assigned its Medicare Secondary Payer right of reimbursement to La Ley Recovery Systems, Inc., which also owns MSP Recovery, LLC. All three parties are mentioned as the plaintiffs in this matter.

After making the medical payments, “Plaintiff learned of the existence of Enrollee’s no fault coverage” from Allstate. MSP Recovery alleged in its Second Amended Complaint, “Allstate issued a policy of insurance to Enrollee, which provided personal injury protection benefits, medical, and extended medical expense coverage,” and was in full force and effect when the accident occurred. The Medicare Advantage Plan, administered by FHP and under which Enrollee’s medical expenses were paid, “was the secondary plan.”

MSP Recovery sued Allstate in Florida state court for Allstate’s alleged refusal to reimburse the medical payments made on Enrollee’s behalf. Allstate removed to this Court. Now, in its Second Amended Complaint, MSP Recovery raises the following claims: Count I: Declaratory Judgment; Count II: Private Cause of Action for Double Damages; Count III: Accounting; Count IV: Breach of Contract; and Count V: Equitable Subrogation. MSP Recovery’s first two causes of action rely on the Medicare Secondary Payer Act; its final three are state law claims.

Allstate argues that MSP Recovery lacks standing to bring this lawsuit and, further, each of its claims fails as a matter of law. The Court finds that MSP Recovery’s allegations–accepted as true for the purpose of a motion to dismiss–establish its standing to bring this lawsuit. However, the Court also finds that until MSP Recovery demonstrates Allstate’s liability for the Enrollee’s medical expenses, MSP Recovery cannot bring claims under the Medicare Secondary Payer Act. And without its claims under the Act, MSP Recovery’s remaining claims must be remanded to state court.

MSP Recovery’s standing arises from a series of assignments. First, FHP, a Health Maintenance Organization and Medicare participant, assigned its claims to recover amounts owed to it to La Ley Recovery Systems, Inc. After taking assignment from FHP, La Ley Recovery Systems, Inc. assigned its rights to MSP Recovery. Though Allstate argues there “are simply no non-conclusory allegations whatsoever to support the existence of any assignment of rights related to the claimed amounts for services provided to the patient at issue,” at this stage, the Court must accept MSP Recovery’s allegations concerning the assignments as true. See MSP Recovery, LLC v. Progressive Select Ins. Co., Case No. 15-20213-UNGARO (S.D. Fla. Apr. 3, 2015) (finding Plaintiff’s allegations regarding standing sufficient in a nearly identical case involving the same parties and assignments); MSP Recovery, LLC v. Progressive Select Ins. Co., Case No. 15-20208-UNGARO (S.D. Fla. Apr. 1, 2015) (citing Edwards v. Prime, Inc., 602 F.3d 1276, 1291 (11th Cir. 2010)). Having found that MSP Recovery adequately alleged its standing, the Court must consider whether MSP Recovery’s claims may proceed.

The Medicare Secondary Payer Act creates “a private cause of action for damages (which shall be in an amount double the amount otherwise provided) in the case of a primary plan which fails to provide for primary payment (or appropriate reimbursement) in accordance with paragraphs (1) and (2)(A).” Glover v. Ligett Group, Inc., 459 F.3d 1304, 1308 (11th Cir. 2006) (citing 42 U.S.C. § 1395y(b)(3)) (emphasis added). The Eleventh Circuit recognizes that there is a private right of action under the Act but only once liability is established by a separate adjudication or agreement. Glover, 459 F.3d at 1310; see also MSP Recovery, LLC v. Progressive Select Ins. Co., Case No. 15-20616-MORENO (S.D. Fla. May 18, 2015); MSP Recovery, LLC v. Progressive Select Ins. Co., Case No. 15-20213-UNGARO (S.D. Fla. Apr. 3, 2015); MSP Recovery, LLC v. Progressive Select Ins. Co., Case No. 15-20208-UNGARO (S.D. Fla. Apr. 1, 2015).

The crux of MSP Recovery’s claims is that Allstate is liable for medical payments made on Enrollee’s behalf. But Allstate’s liability has not yet been established. Though MSP Recovery states that “as the primary insurer in this case, Allstate, being the no fault carrier pursuant to its insurance contract with Enrollee is responsible for payment of Enrollee’s claims resulting from the accident,”, this allegation is a legal conclusion that the Court need not accept as true when considering a motion to dismiss. Until MSP Recovery demonstrates–by judgment or other agreement–Allstate’s obligation to pay Enrollee’s medical expenses, MSP Recovery cannot proceed with claims under the Medicare Secondary Payer Act. Thus, MSP Recovery’s Count I for declaratory relief and Count II for double damages, must be dismissed.

Having found that MSP Recovery’s claims under the Medicare Secondary Payer Act fail, its only remaining claims are Count III: Accounting; Count IV: Breach of Contract; and Count V: Equitable Subrogation. As MSP Recovery notes, the Court has only “supplemental jurisdiction over” those claims. Independent of MSP Recovery’s federal claims, the Court does not have jurisdiction over its final three claims. Because the Court has disposed of MSP Recovery’s federal claims, it declines to retain jurisdiction over its remaining claims and remands them to state court, where they originated.

As in previous similar cases, although the Court once again finds that MSP Recovery has not, by way of judgment or other agreement, established Allstate’s liability for the Enrollee’s medical expenses, as prior to allowing MSP Recovery to pursue claims against Allstate arising from the Medicare Secondary Payer Act, there should be a primary showing of Allstate’s liability to pay the Enrollee’s medical costs, the Court settles the issue as to whether MSP Recovery has standing to bring this lawsuit. By finding that entities which have been assigned such reimbursement rights such as La Ley Recovery Systems, Inc., or MSP Recovery, LLC, the Court may have officially given birth to a cottage industry which will focus on assisting MAPs and other secondary payers chase after reimbursement from primary payers. So, primary payers beware! In addition to Medicare, the Medicare beneficiary, medical providers, and Medicare advantage plans, add entities assigned such reimbursement rights to the growing long list of folks who may be chasing after primary payers for double damages under the Medicare Secondary Payer private cause of action.

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