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MAO-MSO Recovery II LLC v. Infinity Property & Casualty Group

United States District Court, N.D. Alabama, Southern Division

March 9, 2018

MAO-MSO RECOVERY II LLC, a Delaware entity, et al., on behalf of themselves and others similarly situated Plaintiffs,
v.
INFINITY PROPERTY & CASUALTY GROUP, an Alabama company, Defendant.

          MEMORANDUM OPINION

          KARON OWEN BOWDRE CHIEF UNITED STATES DISTRICT JUDGE

         This matter is before the court on Defendant Infinity Property & Casualty Corporation's motion to dismiss the amended complaint or, alternatively, motion for a more definite statement.[1] (Doc. 15).

         Plaintiffs are MAO-MSO Recovery II, LLC; MSP Recovery, LLC; and MSPA Claims 1, LLC, and Defendant Infinity is a car insurance company that offers coverage for “any automobile accident-related medical expenses.” (Doc. 26 at 1-2). Plaintiffs allege that Infinity insured Medicare beneficiaries who incurred medical costs for injuries received in car accidents. According to Plaintiffs, Infinity failed to pay those medical costs, causing certain Medicare Advantage Organizations to pay them instead. And although Infinity was statutorily required to reimburse the Medicare Advantage Organizations, Infinity failed to do so. Plaintiffs allege that they have standing to seek reimbursement from Infinity because the Medicare Advantage Organizations assigned their rights of recovery to Plaintiffs.

         The court WILL DENY the motion to dismiss the amended complaint because the court finds that Plaintiffs adequately allege that Medicare Advantage Organizations assigned their rights to Plaintiffs and that the amended complaint sets out facts that, if true, show that Infinity is required to reimburse Plaintiffs. But the court WILL GRANT the alternative motion for a more definite statement.

         I.BACKGROUND

         This case arises under the Medicare Secondary Payer statute. (Doc. 26); see 42 U.S.C. § 1395y(b). Under the statute, Medicare is the “secondary payer” after all other sources of coverage. 42 U.S.C. § 1395y(b)(2). In the words of the Medicare Secondary Payer statute, “if a primary plan . . . has not made or cannot reasonably be expected to make payment with respect to [an] item or service promptly, ” the secondary payer-Medicare-may make a conditional payment. 42 U.S.C. § 1395y(b)(2)(B)(i)-(ii). But if Medicare does pay for a service that a primary payer should have covered, it can seek reimbursement from the primary payer or from the recipient of the payment, and damages if the primary payer fails to reimburse it. 42 U.S.C. § 1395y(b)(3)(A) (“There is established 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) . . . .”); United States v. Baxter Int'l, Inc., 345 F.3d 866, 875 (11th Cir. 2003).

         Intersecting with the Medicare Secondary Payer statute is the existence of private insurers called Medicare Advantage Organizations. (Doc. 2 at 5). Medicare Advantage Organizations, “either themselves or through Maintenance Service Organizations . . . deliver the Medicare benefits and assume the risks related to insuring the [Medicare] enrollees.” MAO-MSO Recovery II, LLC v. USAA Cas. Ins. Co., 2017 WL 6411099 (S.D. Fla. Dec. 14, 2017); 42 U.S.C. § 1395w-21(a)(1)(B); (see also Doc. 26 at 5 n.4). The Medicare Secondary Payer statute extends to Medicare Advantage Organizations, which means that like Medicare itself, Medicare Advantage Organizations are secondary payers. 42 C.F.R. § 422.108(f). As a result, if a Medicare Advantage Organization and another insurance company provide overlapping coverage for a Medicare beneficiary, the other insurance company becomes the primary payer and the Medicare Advantage Organization is the secondary payer; if the insurance company fails to make a required payment and the Medicare Advantage Organization makes a conditional payment, the Medicare Advantage Organization may sue the insurance company for damages. See 42 U.S.C. § 1395y(b)(3)(A).

         Plaintiffs assert that Infinity provided car insurance, which included coverage for medical payments “for any automobile accident-related medical expenses, ” to “[n]umerous Medicare beneficiaries” who were members of the assignor Medicare Advantage Organizations. (Doc. 26 at 2, 13). They allege that the Medicare beneficiaries were involved in car accidents and incurred medical expenses, and that Infinity was aware of the accidents and even assigned claim numbers. (Id. at 14). But, according to Plaintiffs, Infinity “failed to pay and/or properly reimburse” the Medicare Advantage Organizations. (Id.). Plaintiffs explain that, although they are not themselves Medicare Advantage Organizations, “[n]umerous” Medicare Advantage Organizations “have assigned their recovery rights to assert the causes of action alleged in this Complaint.” (Id. at 12-13).

         In this putative class action, Plaintiffs assert two claims: (1) a claim under 42 U.S.C. § 1395y(b)(3)(A) for double damages because Infinity failed to make the required primary payments or reimbursements to the assignor Medicare Advantage Organizations; and (2) direct right of recovery, under 42 C.F.R. § 411.24(e), for Infinity's breach of contract with its insureds. (Id. at 17, 19). They provide two “representative” claims with two named Medicare Advantage Organizations, one Maintenance Service Organization, and the initials of two Medicare beneficiaries.

         After Infinity moved to dismiss the amended complaint, the court ordered Plaintiffs to “submit the document or documents purporting to assign the two representative Medicare Advantage Organizations' rights of recovery and reimbursement to Plaintiffs.” (Doc. 34). Plaintiffs responded to the show cause order with several sets of assignment agreements assigning a Medicare Advantage Organization's and a Maintenance Service Organization's rights to Plaintiff MSPA Claims 1. (See Docs. 35 to 35-6).

         II. DISCUSSION

         Infinity moves to dismiss the amended complaint under Federal Rule of Civil Procedure 12(b)(1), for lack of standing, and under Rule 12(b)(6), for failure to state a claim. (Doc. 15 at 13, 17). In the alternative, it moves for a more definite statement, under Rule 12(e). (Id. at 23). The court addresses the issue of standing first because standing “is a threshold jurisdictional question which must be addressed prior to and independent of the merits of a party's claims.” DiMaio v. Democratic Nat. Comm., 520 F.3d 1299, 1301 (11th Cir. 2008).

         1. Standing

         Federal Rule of Civil Procedure 12(b)(1) permits a district court to dismiss for “lack of subject-matter jurisdiction.” Fed.R.Civ.P. 12(b)(1); In re Weaver, 632 F.2d 461, 463 n.6 (11th Cir. 1980). “A defendant can move to dismiss a complaint under Rule 12(b)(1) for lack of subject matter jurisdiction by either facial or factual attack.” Stalley ex rel. United States v. Orlando Reg'l Healthcare Sys., Inc., 524 F.3d 1229, 1232 (11th Cir. 2008). “At the pleading stage, general factual allegations of injury resulting from the defendant's conduct may suffice, for on a motion to dismiss we presume that general allegations embrace those specific facts that are necessary to support the ...


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