MSP Recovery Claims, Series LLC v. Phx. Ins. Co.

Decision Date12 December 2019
Docket NumberCase No. 5:19cv00436
Citation426 F.Supp.3d 458
CourtU.S. District Court — Northern District of Ohio

Edward J. Kelley, III, James L. Ferraro, John M. Murphy, William D. Mason, Jr., Kelley & Ferraro, Cleveland, OH, for Plaintiffs.

Bryce L. Friedman, Simpson, Thacher & Bartlett, New York, NY, Paul D. Eklund, Collins, Roche, Utley & Garner, Westlake, OH, for Defendant.


Currently pending is Defendant Phoenix Insurance Company's Motion to Dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1) and (6). (Doc. No. 7.) 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 February 27, 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 Phoenix 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.) The Complaint alleges that Plaintiffs' assignors and the putative Class Members made conditional Medicare payments for medical expenses incurred by its enrollees resulting from injuries sustained in accidents with Defendant's insureds. (Id. at ¶ 2.) Plaintiffs allege that Defendant Phoenix became a primary payer responsible for Plaintiffs' assignors and the Class Members enrollees' medical expenses under the MSP Act upon entering into settlements with the enrollees but has "repeatedly failed" to reimburse payments made by Plaintiffs' assignors relating to its enrollees' accident-related medical expenses. (Id. at ¶¶ 2-3.)

Phoenix filed a Motion to Dismiss pursuant to Fed. R. Civ. P. 12(b)(1) and (6) on May 20, 2019. (Doc. No. 7.) Plaintiffs filed a Brief in Opposition on June 19, 2019 (Doc. No. 11), to which Phoenix replied on July 3, 2019 (Doc. No. 12.)

This matter was re-assigned to the undersigned on June 24, 2019 pursuant to General Order 2019-13.

II. Factual Allegations

The Class Complaint contains the following factual allegations. On September 22, 2015, J.R. 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, J.R. was enrolled in Medicare through a plan issued and administered by SummaCare, Inc.2 (Id. at ¶ 7.) J.R.'s medical providers issued a bill for payment of the accident-related medical expenses to SummaCare in the amount of $49,924.27. (Id. at ¶ 10.) SummaCare paid $7,437.34. (Id. )

The tortfeasor responsible for the accident was insured by Defendant Phoenix under a liability insurance policy. (Id. at ¶ 8.) J.R. subsequently made a claim against the tortfeasor, which Defendant settled for an undisclosed amount in exchange for a release of all claims. (Id. at ¶ 11.) Plaintiffs allege that, as a result of this settlement, "Defendant became a primary payer and subject to liability for J.R.'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 conditional Medicare payments made by SummaCare with respect to J.R. (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 ¶ 14.) See also Doc. Nos. 1-4, 1-5. Specifically, Plaintiffs allege that, on May 12, 2017, SummaCare and MSP Recovery, LLC entered into an "Assignment" and "Recovery Agreement," in which SummaCare irrevocably assigned all rights to recover conditional payments made on behalf of its enrollees to MSP Recovery, LLC.3 (Doc. No. 1-4 at § 4.1) 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 ¶ 16.) See Doc. No. 1-5.

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. 1-6.)

After Defendant failed to submit reimbursement for J.R's medical expenses, Plaintiffs MSP Recovery Claims, Series LLC and Series 16-11-509, LLC filed the instant action against Defendant Phoenix on February 27, 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).

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 Gunasekera 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, 127 S.Ct. 1955, 167 L.Ed.2d 929 (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, 127 S.Ct. 1955 ). "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, 129 S.Ct. 1937, 173 L.Ed.2d 868 (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, 129 S.Ct. 1937.

Consequently, examination of a complaint for a plausible claim for relief is undertaken in conjunction with the "well-established principle that Federal Rule of Civil Procedure 8(a)(2) requires only a short and plain statement of the claim showing that the pleader is entitled to relief.’ Specific facts are not necessary; the statement need only ‘give the defendant fair notice of what the...claim is and the grounds upon which it rests.’ " Gunasekera , 551 F.3d at 466 (quoting in part Erickson v. Pardus , 551 U.S. 89, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007) ) (quoting Twombly, 127 S.Ct. at 1964 ). Nonetheless, while " Rule 8 marks a notable and generous departure from the hyper-technical, code-pleading regime of a prior does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions." Iqbal, 556 U.S. at 679, 129 S.Ct. 1937.

IV. Analysis

Defendant argues Plaintiffs' claim should be dismissed for several reasons. First, Defendant argues that Plaintiffs are estopped from bringing the instant action because four federal courts have decided that Plaintiffs do not have standing to assert a claim under 42 U.S.C. § 1395y(b)(3)(A) on behalf of a Medicare Advantage Organization ("MAO"). (Doc. No. 7.) Second, Defendant asserts that the May 12, 2017 Recovery Agreement is too vague and contradictory to demonstrate that Plaintiffs have standing as a matter of law. (Id. ) Third, Defendant argues that the Complaint should be dismissed because MAOs do not have a private right of action under the MSP Act for recovery of conditional payments. (Id. ) Fourth, Defendant maintains the Complaint fails to state a claim upon which relief may be granted because Plaintiffs fail to allege facts showing that SummaCare made a conditional payment that...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT