MSP Recovery Claims, Series LLC v. ACE Am. Ins. Co., No. 18-12139
| Decision Date | 04 September 2020 |
| Docket Number | No. 18-13312, No. 18-13049, No. 18-12149,No. 18-12139 |
| Citation | 974 F.3d 1305 |
| Parties | MSP RECOVERY CLAIMS, SERIES LLC, Plaintiff - Appellant, v. ACE AMERICAN INSURANCE COMPANY, Defendant – Appellee. MSP Recovery Claims, Series LLC, a Delaware entity, Plaintiff - Appellant, v. Auto-Owners Insurance Company, a foreign profit corporation, Defendants - Appellees, MSP Recovery Claims, Series LLC, a Delaware entity, Plaintiff - Appellant, v. Owners Insurance Company, a foreign profit corporation, Defendant - Appellee. MSP Recovery Claims, Series LLC, a Delaware entity, Plaintiff - Appellant, v. Southern-Owners Insurance Company, a foreign profit corporation, Defendant - Appellee. MSP Recovery Claims, Series LLC, a Delaware entity, Plaintiff - Appellant, v. Auto-Owners Insurance Company, a foreign profit corporation, Defendant - Appellee. MSP Recovery Claims, Series LLC, a Delaware entity, Plaintiff - Appellant, v. Travelers Casualty and Surety Company, a foreign profit corporation, Defendant - Appellee. MSPA Claims 1, LLC, a Florida profit corporation, Plaintiff - Appellant, v. Liberty Mutual Fire Insurance Company, a Foreign profit corporation, Defendant - Appellee. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
Frank Carlos Quesada, John H. Ruiz, MSP Recovery Law Firm, Miami, FL, Francesco Antonio Zincone, Arturo Alvarez, Eduardo Enrique Bertran, Natalia Marrero, Armas Bertran Pieri, Miami, FL, Andres Rivero, Jorge A. Mestre, Alan H. Rolnick, Charles E. Whorton, Rivero Mestre LLP, Miami, FL, for Plaintiff - Appellant
Nancy A. Copperthwaite, Ari H. Gerstin, Valerie Greenberg, Jonathan Dov Lamet, Akerman, LLP, Miami, FL, Jeffrey Benjamin Pertnoy, Akerman, LLP, West Palm Beach, FL, Stacy Jaye Rodriguez, Akerman, LLP, Fort Lauderdale, FL, for Defendant - Appellee
Michael Menapace, Attorney, Wiggin & Dana, LLP, New Haven, CT, Ivana D. Greco, Attorney, Robinson & Cole, LLP, Hartford, CT, Scott A. Hiaasen, Coffey Burlington, PL, Miami, FL, for Amici Curiae American Property Casualty Insurance Association, Personal Insurance Federation of Florida
Robert Phillip Charrow, Kelly Cleary, Department of Health & Human Services, Office of General Counsel, Washington, DC, for Amicus Curiae U.S. Department of Health and Human Services
Dana Kaersvang, U.S. Attorney General's Office, Washington, DC, Daniel Tenny, U.S. Department of Justice, Civil Division, Appellate Staff, Washington, DC, for Amicus Curiae United States of America
Before JORDAN, JILL PRYOR, and WALKER,* Circuit Judges.
MSP Recovery Claims, Series LLC (MSPRC), and MSPA Claims 1, LLC (MSPA), collection agencies and Plaintiffs here, appeal from dismissals with prejudice of their claims against ACE American Insurance Company, Auto-Owners Insurance Company, Southern-Owners Insurance Company, Owners Insurance Company, Travelers Casualty and Surety Company, and Liberty Mutual Fire Insurance Company (collectively, Defendants). Plaintiffs sought double damages against Defendants under the Medicare Secondary Payer Act. Plaintiffs alleged that actors within the Medicare Advantage system, including Medicare Advantage Organizations (MAOs) and various "downstream actors" that contracted with MAOs, had assigned their Medicare Secondary Payer Act claims to Plaintiffs for collection. The district court dismissed Plaintiffs’ cases, now consolidated on appeal, after finding that (1) some of Plaintiffs’ alleged assignments, including those from MAOs, were invalid and (2) Plaintiffs’ downstream-actor assignors fell outside the ambit of the Medicare Secondary Payer Act's private right of action and thus could not confer statutory standing on Plaintiffs through an assignment. On appeal, Plaintiffs primarily argue that their downstream-actor assignors could access the private right of action and had rights to assign under the Medicare Secondary Payer Act. MSPRC individually argues that the district court erred in dismissing its claims based on an alleged assignment from an MAO with prejudice because dismissals based on defects in an assignment are not decisions on the merits and must be entered without prejudice. And MSPA argues that all of its assignments were valid. We agree with Plaintiffs on all issues.
Accordingly, we VACATE the dismissals of Plaintiffs’ claims based on assignments from downstream actors, REMAND those claims for further proceedings consistent with this opinion, and MODIFY the dismissals of MSPRC's claims based on its alleged assignment from an MAO to be without prejudice.
I
Plaintiffs are collection agencies that specialize in recovering funds on behalf of various actors in the Medicare Advantage system. By way of background, the Medicare Advantage system is a public-private health insurance system that runs parallel to Medicare. The Medicare Advantage system allows Medicare beneficiaries to opt into private health insurance plans offered by Medicare Advantage Organizations (MAOs) that provide coverage in excess of the coverage provided by Medicare. To operate more nimbly and to better compete with Medicare, some MAOs contract with smaller organizations, like independent physician associations, that have closer connections to local healthcare providers. These smaller organizations, or "downstream" actors, are also a part of the Medicare Advantage system and are central to the present case.
Plaintiffs’ primary tool for recovering funds is the Medicare Secondary Payer Act. Generally speaking, the Act established that Medicare—and, as an extension of Medicare, the Medicare Advantage system—should not bear the costs of medical procedures that are already covered by a "primary payer," or other insurer such as a provider of workers’ compensation insurance or automobile insurance. (Plaintiffs allege that Defendants are all primary payers.) Under the Act, Medicare and MAOs still can, as a stopgap measure, make a "conditional payment" to cover their beneficiaries’ medical bills when the primary payer "cannot reasonably be expected to make payment with respect to such item or service promptly." 42 U.S.C. §§ 1395y(b)(2)(B)(i), 1395w-22(a)(4). If Medicare or an MAO has made a conditional payment, and the primary payer's "responsibility for such payment" has been "demonstrated," as by a judgment or settlement agreement, the primary payer is obligated to reimburse Medicare or the MAO within 60 days. 42 U.S.C. §§ 1395y(b)(2)(B)(ii), 1395w-22(a)(4). When a primary payer fails to do so, Medicare can seek "double damages," or twice the amount of the conditional payment, from the primary payer under the Medicare Secondary Payer Act's right of action for the government at 42 U.S.C. § 1395y(b)(2)(B)(iii). In Humana Med. Plan v. Western Heritage Insurance Co. , this circuit held that MAOs (and their assignees) likewise can seek double damages under 42 U.S.C. § 1395y(b)(3)(A), the Medicare Secondary Payer Act's private right of action. 832 F.3d 1229 (11th Cir. 2016). Humana and this circuit's other case law to date, however, are silent on whether downstream actors that contract with MAOs, and in effect make conditional payments pursuant to those contracts, can seek double damages under the Act's private right of action.
Here, Plaintiff MSPRC alleged that it held an assignment of Medicare Secondary Payer Act claims against several of the defendants from an MAO. And both Plaintiffs alleged that they held assignments of claims against others of the defendants from various contractors of MAOs. Plaintiffs alleged that these downstream assignors had contracted with MAOs to fully cover beneficiaries’ costs in exchange for a set capitation fee. Pursuant to these contracts, Plaintiffs’ downstream actors allegedly directly made conditional payments for MAOs or reimbursed MAOs for their conditional payments.
The following took place before the district court:
A. ACE Claims
As is relevant to this appeal, MSPRC presented two representative claims in its case for reimbursement against ACE American Insurance Company (ACE). These claims were for medical expenses that MSPRC alleged were directly charged to and paid by Hygea and Health Care Advisor Services, management services organizations that contract with MAOs to assist in providing healthcare and administrative services to beneficiaries. MSPRC's third amended complaint alleged that these downstream actors, pursuant to their contracts with MAOs, "made conditional payments on behalf of [beneficiaries] to cover accident-related expenses" that should have been covered by ACE as the primary payer. ACE D.E. 36 at 2.
The district court (Patricia A. Seitz, J .) dismissed MSPRC's claims against ACE after concluding that non-MAO downstream actors, like Hygea and Health Care Advisor Services, cannot access the Medicare Secondary Payer Act's private right of action that allows MAOs to seek double damages. MSP Recovery Claims, Series LLC v. ACE Am. Ins. Co. , No. 17-cv-23749, 2018 WL 1547600, at *8 (S.D. Fla. Mar. 9, 2018). Having allowed MSPRC to amend its complaint numerous times, the district court entered its dismissal with prejudice.
B. Auto-Owners Claims
MSPRC presented five representative claims for reimbursement in its case against Auto-Owners Insurance Company, Southern-Owners Insurance Company, and Owners Insurance Company (collectively, Auto-Owners). These claims were for medical expenses allegedly paid by Health First Administrative Plans, Inc. (HFAP) and Verimed IPA, LLC (Verimed).
MSPRC alleged that HFAP is an MAO, even though Health First Health Plans, Inc. (Health First), a related company that is not HFAP, contracted directly with Medicare to be a part of the Medicare Advantage system. In support of its allegation, MSPRC submitted an affidavit from Michael Keeler, the Chief Operating Officer of both HFAP and Health First. The Keeler affidavit explained that "HFAP had and continues to have authority to manage and act on behalf of Health First Health Plan, Inc. with respect to all financial assets, including the Assigned Claims." Auto-Owners D.E. 60-1 at 1....
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