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MSPA Claims I LLC v. Infinity Property & Casualty Group

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

March 18, 2019

MSPA CLAIMS I, LLC, a Florida entity, Plaintiff,
INFINITY PROPERTY & CASUALTY GROUP, an Alabama company, Defendant.



         “Oh! what a tangled web we weave / When first we practice to deceive!” Sir Walter Scott, Marmion, Canto VI, Stanza 17.

         With its tangled web of assignments, receiverships, and fictitious entities, Plaintiff MSPA Claims I, LLC aims not to deceive but rather to catch a lucrative class action lawsuit under the Medicare Secondary Payer statute. But Defendant Infinity now challenges MSPA‘s standing to bring its claims at all, arguing in its motion to dismiss that certain strands of the web cannot withstand the court‘s scrutiny and that the entire structure must fail as a result. (Doc. 49).

         For the reasons discussed below, this court will GRANT Defendant Infinity‘s motion to dismiss MSPA‘s remaining claims as lacking Article III standing. And the court will DISMISS WITH PREJUDICE MSPA‘s entire complaint under Rule 12(b)(1) for lack of subject matter jurisdiction.

         I. Background

         Before 1980, Medicare was the primary payer for all claims except those covered by Workers‘ Compensation, Federal Black Lung benefits, and Veteran‘s Administration benefits. Medicare Secondary Payer, Centers for Medicare & Medicaid Services, (last modified Jan 1, 2014). To promote the Medicare trust fund‘s solvency, Congress passed the Medicare Secondary Payer statute in 1980, making Medicare the “secondary payer” to certain primary plans and shifting costs to private sources of payment. Id.; 42 U.S.C. § 1395y.

         Under the MSP statute, if Medicare pays for a service that a primary payer should have covered-known as a “conditional payment”-it can seek reimbursement from the primary payer or from the recipient of the payment, as well as 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) . . . .”).

         Intersecting with the MSP statute is the existence of insurers called Medicare Advantage Organizations (MAOs), which can also serve as “secondary payers” and “exercise the same rights to recover from a primary plan, entity, or individual that the Secretary exercises under the MSP regulations.” 42 C.F.R. § 422.108(f).

         Plaintiff‘s claims arise under the MSP statute and its implementing regulations, though Plaintiff is not itself an MAO. (Doc. 26 at ¶ 4). Instead, Plaintiff alleges standing as the assignee of the recovery rights of two MAOs-Florida Healthcare Plus, Inc. and Simply Healthcare Plans, Inc. In this putative class action lawsuit, Plaintiff alleges Defendant Infinity failed to make primary payments on the claims of two “exemplar” Medicare enrollees, identified as D.W. and B.G., and failed to reimburse the appropriate secondary payer organization. The court describes each exemplar‘s claim, along with its applicable chain of assignments below.

         Florida Healthcare Plus, Inc. and “D.W.”

         Plaintiff MSPA alleges that Defendant Infinity provided car insurance, which included coverage for medical payments “for any automobile accident-related medical expenses, ” to a Medicare enrollee identified as D.W. (Doc. 26 at ¶ 3, 58, 69). D.W.‘s car was rear-ended in 2013, and Infinity subsequently sent D.W. a letter indicating personal injury protection with a $10, 000 limit and a $1, 000 deductible. (Doc. 49-8). Infinity claims that, to date, it has paid every single medical bill related to D.W.‘s claim as required by the policy and that D.W. still has $488.63 in benefits remaining under his policy. (Docs. 49 at ¶¶ 39-40 and 49-13).

         Plaintiff alleges that Florida Healthcare Plus, an MAO, insured D.W. at all times relevant to the instant action and paid $140.47 on a $1, 468.04 bill in 2013. (Doc. 60 at ¶¶ 99, 119). But Infinity disputes this relationship and asserts that Plaintiff has not produced sufficient evidence to establish any connection between D.W. and FHCP, much less that FHCP “paid a bill that Infinity had an obligation to pay, for which FHCP has not since been reimbursed.” (Doc. 65 at 9- 11). To establish FHCP‘s having paid an amount Infinity should have paid, Plaintiff points to (1) the affidavit of its own data analyst, (doc. 60-1); (2) a summary sheet of D.W.‘s medical expenses, (doc. 60-3); (3) copies of two different claim and coverage summaries from third-party data aggregators, (docs. 60-7 and 60-8); and another affidavit from Plaintiff‘s own data analyst, (doc. 60-14).

         FHCP assigned all its rights of recovery under the MSP statute to La Ley Recovery Systems, Inc. on April 15, 2014. (Doc. 35-3). Per the agreement, La Ley could not assign those recovery rights to a third party without FHCP‘s approval. (Doc. 35-3 at § 1.2). The Florida Department of Financial Services assumed these approval rights when it became receiver of FHCP on December 10, 2014. (Doc. 35-5 at 1).

         La Ley attempted to re-assign FHCP‘s original recovery rights to Plaintiff MSPA on February 20, 2015, without the approval of FHCP‘s receiver. But after challenging and repudiating this attempted assignment, the receiver ultimately agreed to the assignment on June 1, 2016. (Doc. 49 at ¶ 14).

         While earlier pleadings identified yet another attempted transfer between Plaintiff MSPA and former plaintiff MAO-MSO Recovery II, LLC, Plaintiff has since attributed that allegation to scrivener‘s error and moved to dismiss MAO-MSO from this case. (Doc. 60 at 26-27).

         Simply / InterAmerican and “B.G.”

         Plaintiff also brings claims under the MSP statute pursuant to the recovery rights of MAO Simply Healthcare Plans, Inc. and its Management Service Organization (MSO) InterAmerican Medical Center Group, LLC.

         Plaintiff alleges that Infinity provided car insurance that included coverage for automobile-accident-related medical expenses to a Medicare enrollee identified as B.G. (Doc. 26 at ¶ 3, 58, 69). B.G. was injured in a car accident in 2013 and timely reported her claim to Infinity. (Doc. 49 at ¶¶ 58-59). Infinity confirmed receipt of B.G.‘s claim and internally indicated that B.G. had personal injury protection with a $10, 000 limit and a $1, 000 deductible.[1](Docs. 49-19 at 9, 49-23 at 2). Infinity claims that it paid all medical bills related to B.G.‘s claim as required by the policy and that B.G. exhausted her benefits under her policy on July 5, 2013. (Doc. 49 at ¶ 62).

         Plaintiff alleges MAO Simply insured B.G. and contracted with MSO InterAmerican to manage and provide healthcare services for certain enrollees, including B.G. (Doc. 60 at 33).

         According to Plaintiff, the Simply-InterAmerican contract either assigned to InterAmerican Simply‘s MSP statutory recovery rights as to claims InterAmerican serviced under the contract or made InterAmerican a potential secondary payer under the MSP statute. (Doc. 60 at 33-36). But Infinity contends the agreement “is not a clear assignment of any [MSP statute] claim to InterAmerican.” (Doc. 49 at ¶ 47). Regardless, the agreement‘s express language provides that InterAmerican ...

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