MSP Recovery Claims, Series LLC v. Grange Ins. Co., Case No. 5:19cv00219

CourtUnited States District Courts. 6th Circuit. United States District Court of Northern District of Ohio
PartiesMSP Recovery Claims, Series LLC, et al., Plaintiffs, v. Grange Insurance Company, Defendant
Docket NumberCase No. 5:19cv00219
Decision Date12 December 2019

MSP Recovery Claims, Series LLC, et al., Plaintiffs,
Grange Insurance Company, Defendant

Case No. 5:19cv00219


December 12, 2019



Currently pending is Defendant Grange Insurance Company's Motion to Dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1) and (6). (Doc. No. 12.) Plaintiffs MSP Recovery Claims, Series, LLC and Series 16-11-509 filed a Brief in Opposition, to which Defendant replied. For the following reasons, Defendant's Motion to Dismiss is GRANTED IN PART and DENIED IN PART.

I. Procedural Background

On January 28, 2019, Plaintiffs MSP Recovery Claims, Series LLC and Series 16-11-509, LLC (hereinafter referred to collectively as "Plaintiffs") filed a Class Complaint1 against Defendant Grange Insurance Company asserting a private cause of action for double damages under the Medicare Secondary Payer Act, 42 U.S.C. § 1395y(b)(3)(A). (Doc. No. 1.) Therein, Plaintiffs allege that Defendant "has repeatedly failed to reimburse payments by Plaintiff's assignors and the Class

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Members on behalf of Medicare beneficiaries enrolled in Part C of the Medicare Act . . .for medical expenses resulting from injuries sustained in an accident." (Id. at ¶ 2.)

Grange filed a Motion to Dismiss pursuant to Fed. R. Civ. P. 12(b)(1) and (6) on April 4, 2019. (Doc. No. 12.) Plaintiffs filed a Brief in Opposition on May 6, 2019 (Doc. No. 17), to which Grange replied on June 3, 2019 (Doc. No. 21.) The parties each subsequently filed Notices of Supplemental Authority. (Doc. Nos. 24, 25.)

This matter was re-assigned to the undersigned on June 28, 2019 pursuant to General Order 2019-13.

II. Factual Allegations

The Class Complaint contains the following factual allegations. On December 26, 2014, E.C. was injured in an accident, as a result of which he/she sustained a variety of injuries and required medical treatment and services. (Doc. No. 1 at ¶¶ 8, 9.) At this time, E.C. was enrolled in a Medicare Advantage Plan2 issued and administered by SummaCare, Inc. (Id. at ¶ 7.) E.C.'s medical providers issued a bill for payment of the accident-related medical expenses to SummaCare in the amount of $8,864.78. (Id. at ¶ 10.) SummaCare paid $786.46. (Id.)

The tortfeasor responsible for the accident was insured by Defendant Grange under a liability insurance policy. (Id. at ¶ 8.) E.C. subsequently made a claim against the tortfeasor, which Defendant settled for the total amount of $13,800. (Id. at ¶ 11.) Plaintiffs allege that, as a result of this

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settlement, "Defendant became a primary payer and subject to liability for E.C.'s accident-related medical expenses." (Id.)

Plaintiffs allege a similar set of facts with respect to claims relating to medical services provided to D.W. and M.K, both of whom were also enrolled in Medicare Advantage Plans issued and administered by SummaCare. Specifically, Plaintiffs allege that, on May 6, 2012 and October 25, 2015, respectively, D.W. and M.K. were injured in accidents caused by tortfeasors insured by Defendant under liability insurance policies. (Id. at ¶¶ 20, 27.) D.W. and M.K. sustained injuries that necessitated medical services and treatment. (Id. at ¶¶ 20-21, 27-28.) D.W.'s medical providers issued a bill for payment of the accident-related medical expenses to SummaCare in the amount of $7,601.13, of which SummaCare paid $2,114.50. (Id. at ¶ 29.) M.K.'s medical providers issued a bill for payment of the accident-related medical expenses to SummaCare in the amount of $218,486.01, of which SummaCare paid $51,393.27. (Id. at ¶ 22.) D.W. and M.K. asserted claims against Defendant's insureds, which Defendant subsequently settled for unspecified amounts. (Id. at ¶¶ 23, 30.) Plaintiffs allege that, as a result of these settlements, Defendant became a primary payer and subject to liability for D.W.'s and M.K.'s accident-related medical expenses. (Id.)

Plaintiffs MSP Recovery Claims, Series, LLC and Series 16-11-509, LLC claim that, as a primary payer, Defendant is legally obligated to reimburse for Medicare payments made by SummaCare with respect to E.C., D.W., and M.K. (Id. at ¶ 3.) Plaintiffs allege that they have the legal right to pursue these claims for reimbursement pursuant to a series of assignment agreements, copies of which are attached to the Complaint. (Id. at ¶ 13.) See also Doc. Nos. 1-5, 1-6. Specifically, Plaintiffs allege that, on May 12, 2017, SummaCare and MSP Recovery, LLC entered into a "Recovery Agreement," in which SummaCare irrevocably assigned all rights to recover

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conditional payments made on behalf of its enrollees to MSP Recovery, LLC.3 (Doc. No. 1-5 at § 4.1) (hereinafter the "Recovery Agreement"). Thereafter, on June 12, 2017, MSP Recovery, LLC assigned all rights under the Recovery Agreement to "Series 16-11-509, LLC, a series of MSP Recovery Claims, Series LLC." (Id. at ¶ 15.) See Doc. No. 1-6. On September 5, 2018, SummaCare sent a letter to MSP Recovery, LLC in which it confirmed that it "has consented to, approved, and ratified the assignment of Recovery Agreement executed on June 12, 2017 by MSP Recovery, LLC, and all rights contained therein, including all claims and reimbursement rights, to and in favor of MSP Recovery Claim Series, LLC or any of its designated series, including but not limited to, Series 16-11-509." (Doc. No. 1-7.)

Meanwhile, on May 10, 2017, MSP Recovery, LLC sent a letter to Defendant regarding SummaCare's payment of E.C.'s medical expenses, in which it placed Defendant "on notice that pursuant to our client's rights as an MAO or a contracted risk provider, to the extent that payment for Medicare health benefits and costs for medical services and/or supplies were made by the Medicare Secondary Payer or at risk provider for which your Company is the primary payer and/or plan, we hereby assert our rights as a Medicare secondary payer, and request that you provide us the information requested below in order to confirm our rights and comply with our coordination of benefits obligations." (Doc. No. 1-4.) The information requested by MSP Recovery, LLC included the insured's contact information, a copy of the policy, the limits of liability, a statement of any policy or coverage defenses, and any copies of documents or checks evidencing any settlements made on behalf of the Medicare beneficiary. (Id.)

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After Defendant failed to submit reimbursement for E.C., D.W. or M.K.'s medical expenses, Plaintiffs MSP Recovery Claims, Series LLC and Series 16-11-509, LLC filed the instant action against Defendant Grange on January 28, 2019. (Doc. No. 1.)

III. Standards of Review

Defendant moves for dismissal on the basis of both lack of subject matter jurisdiction under Fed. R. Civ. P. 12(b)(1), and failure to state a claim under Fed. R. Civ. P. 12(b)(6). The standard of review of a 12(b)(1) motion to dismiss for lack of subject matter jurisdiction depends on whether the defendant makes a facial or factual challenge to subject matter jurisdiction. Wayside Church v. Van Buren County, 847 F.3d 812, 816-17 (6th Cir. 2017). A facial attack "questions merely the sufficiency of the pleading" and requires the district court to "take[ ] the allegations in the complaint as true." Gentek Bldg Prods., Inc. v. Sherwin-Williams Co., 491 F.3d 320, 330 (6th Cir. 2007). To survive a facial attack, the complaint must contain a short and plain statement of the grounds for jurisdiction. See Rote v. Zel Custom Mfg. LLC, 816 F.3d 383, 387 (6th Cir. 2016); Ogle v. Ohio Civil Service Employees Ass'n, AFSCME, Local 11, 397 F.Supp.3d 1076, 1081-1082 (S.D. Ohio 2019).

A factual attack, on the other hand, "raises a factual controversy requiring the district court 'to weigh the conflicting evidence to arrive at the factual predicate that subject-matter does or does not exist.'" Wayside Church, 847 F.3d at 817 (quoting Gentek Bldg. Prods., Inc., 491 F.3d at 330). The plaintiff has the burden of proving jurisdiction when subject matter jurisdiction is challenged. Rogers v. Stratton Indus., 798 F.2d 913, 915 (6th Cir. 1986). The court may allow "affidavits, documents and even a limited evidentiary hearing to resolve disputed jurisdictional facts." Ohio Nat'l Life Ins. Co. v. United States, 922 F.2d 320, 325 (6th Cir. 1990).

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Under Fed. R. Civ. P. 12(b)(6), the Court accepts the plaintiff's factual allegations as true and construes the Complaint in the light most favorable to the plaintiff. See Gunasekara v. Irwin, 551 F.3d 461, 466 (6th Cir. 2009). In order to survive a motion to dismiss under this Rule, "a complaint must contain (1) 'enough facts to state a claim to relief that is plausible,' (2) more than 'formulaic recitation of a cause of action's elements,' and (3) allegations that suggest a 'right to relief above a speculative level.'" Tackett v. M & G Polymers, USA, LLC, 561 F.3d 478, 488 (6th Cir. 2009) (quoting in part Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555-556, (2007)).

The measure of a Rule 12(b)(6) challenge — whether the Complaint raises a right to relief above the speculative level — "does not 'require heightened fact pleading of specifics, but only enough facts to state a claim to relief that is plausible on its face.'" Bassett v. National Collegiate Athletic Ass'n., 528 F.3d 426, 430 (6th Cir.2008) (quoting in part Twombly, 550 U.S. at 555-556). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Deciding whether a complaint states a claim for relief that is plausible is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679.

Consequently, examination of a complaint for a plausible claim for relief is undertaken in conjunction with the "well-established principle...

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