MSP Recovery Claims, Series LLC v. Nationwide Mut. Ins. Co.
| Decision Date | 28 March 2022 |
| Docket Number | Case No. 2:21-cv-1901 |
| Citation | 594 F.Supp.3d 947 |
| Parties | MSP RECOVERY CLAIMS, SERIES LLC et al., Plaintiffs, v. NATIONWIDE MUTUAL INSURANCE COMPANY, et al., Defendants. |
| Court | U.S. District Court — Southern District of Ohio |
Tracy L. Turner, Law Office of Tracy L. Turner, New Albany, OH, Courtney L. Stidham, Pro Hac Vice, New Orleans, LA, for Plaintiffs.
Matthew A. Kairis, Alexandra Lehman Schill, Matthew C. Corcoran, Jones Day, Columbus, OH, for Defendants Nationwide Mutual Insurance Company, Harleysville Group Inc, Nationwide General Insurance Company, Victoria Fire & Casualty Company.
Aneca E. Lasley, Ice Miller LLP, Columbus, OH, for Defendants Nationwide Affinity Insurance Company of America, Scottsdale Insurance Company.
Defendants move to dismiss Plaintiffs’ Complaint. Defs.’ Mot., ECF No. 16. For the following reasons, Defendants’ motion is DENIED IN PART AND GRANTED IN PART and the Court RESERVES RULING IN PART .
As a preliminary matter, Plaintiffs move for leave to file a sur-reply in opposition to Defendants’ motion to dismiss. ECF No. 25. Sur-replies are typically disfavored absent good cause. Local Rule 7.2 (a)(2). However, the Court finds good cause exists here because the sur-reply allows Plaintiffs the opportunity to reply to arguments Defendants made for the first time in their Reply and does not prejudice Defendants. Geiger v. Pfizer, Inc. , 271 F.R.D. 577, 580 (S.D. Ohio 2010) (). Moreover, given the complexity of the statutory and regulatory schemes at issue in this case, the Court deems this the unusual situation in which a sur-reply is warranted. Accordingly, ECF No. 25 is GRANTED ; the Court considers Plaintiffs’ sur-reply in this Opinion and Order.
MSP Recovery Claims, Series LLC and MSP Recovery Claims Series 44, LLC ("Plaintiffs") sue various Nationwide Companies ("Defendants") on behalf of various Medicare Advantage Organizations ("MAOs"), which assigned Plaintiffs all recovery and reimbursement rights. Plaintiffs assert that Defendants failed to reimburse those MAOs for medical expenses that Defendants were obligated to pay as a primary payer under the Medicare Secondary Payer Act ("MSPA").
Medicare provides federally funded health insurance for individuals with disabilities and those sixty-five years of age or older. Bio-Medical Applications of Tenn., Inc. v. Cent. States Se. & Sw. Areas Health & Welfare Fund , 656 F.3d 277, 281 (6th Cir. 2011). Medicare itself was initially the primary payer of health costs for its beneficiaries, "but in 1980 Congress enacted the Medicare Secondary Payer Act to counteract escalating healthcare costs." Id. The MSPA makes Medicare a secondary payer and prohibits it from making a payment if "payment has been made or can reasonably be expected to be made" by a primary payer. 42 U.S.C. § 1395y(b)(2)(A)(ii). If the primary payer "has not made or cannot reasonably be expected to make payment," Medicare is permitted to make a "conditional payment." 42 U.S.C. § 1395y(b)(2)(B)(i). If such a conditional payment is made, the primary payer then reimburses Medicare. 42 U.S.C. § 1395y(b)(2)(B)(ii).
Although most beneficiaries still receive benefits directly from Medicare, "individuals can elect instead to receive their benefits through private insurance companies that contract with [Medicare] to provide ‘Medicare Advantage’ [ ] plans." In re Avandia Mktg., Sales Pracs. & Prod. Liab. Litig. , 685 F.3d 353, 355 (3d Cir. 2012). These private insurance companies are referred to as Medicare Advantage Organizations ("MAOs"). Instead of being paid on a fee-for-service basis, MAOs receive a fixed payment per beneficiary-enrollee. 42 U.S.C. §§ 1395w-21, 1395w-23. Like Medicare, an MAO is also authorized to charge primary payers for medical expenses the MAO pays on behalf of a beneficiary when the MAO is a secondary payer and an insurance carrier, employer, or other entity is obligated to pay as a primary payer. 42 U.S.C. § 1395w-22(a)(4).
On April 16, 2021, Plaintiffs filed this putative class action Complaint seeking damages from twenty-four insurance companies for their alleged failures to honor their primary payer obligations under the MSPA. Compl. 2, ECF No. 1. Plaintiffs allege that Defendants failed to reimburse the cost of medical expenses resulting from injuries sustained in automobile and other accidents that were instead paid by the MAO assignors. Id. Further, Plaintiffs argue that, by failing to pay, Defendants are in breach of their contracts with the beneficiary, and that by way of subrogation under 42 C.F.R. § 411.24(e), Plaintiffs can bring the breach of contract claims on behalf of their MAO assignor (who itself would be standing in the shoes of the MAO assignor's beneficiary).
The Complaint provides nineteen examples of the claims ("exemplars"). For each exemplar, Plaintiffs allege: the initials of the injured beneficiary, the date of the accident, the medical items and services rendered to the beneficiary, the insurance policy number, the liable defendant(s), the MAO assignor responsible for secondary payment, the diagnosis codes and injuries (attached as an exhibit), the date the services were provided, the amounts billed, the amounts paid, and the dates on which the amount(s) were paid. Pls.’ Resp. 9, ECF No. 20 . In addition, Plaintiffs have attached two exhibits which purport to list thousands of other instances in which Defendants may have failed to properly reimburse conditional payments made by MAO assignors. Compl. Exs. B, C, ECF No. 1.
Defendants move to dismiss Plaintiffs’ claims on several grounds.
A claim survives a motion to dismiss under Rule 12(b)(6) if it "contain[s] sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). "The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. (quoting Twombly , 550 U.S. at 556, 127 S.Ct. 1955 ). This standard "calls for enough fact to raise a reasonable expectation that discovery will reveal evidence of [unlawful conduct]." Twombly , 550 U.S. at 556, 127 S.Ct. 1955. A pleading's "[f]actual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the [pleading] are true (even if doubtful in fact)." Id. at 555, 127 S.Ct. 1955 (internal citations omitted). Although the court must "construe the [pleading] in the light most favorable to the [non-moving party]," Inge v. Rock Fin. Corp. , 281 F.3d 613, 619 (6th Cir. 2002), the non-moving party must provide "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly , 550 U.S. at 555, 127 S.Ct. 1955.
As noted above, Plaintiffs bring a claim for reimbursement of conditional payments under 42 U.S.C. § 1395y(b)(3)(A) and a breach of contract claim by way of subrogation under 42 C.F.R. § 411.24(e). Compl., ECF No. 1. Defendants argue that Plaintiffs’ claims should be dismissed for myriad reasons. The Court will discuss each, in turn.
No party addresses Article III standing, but the Court finds it prudent to briefly consider the issue. The Court focuses this inquiry on only whether named Plaintiffs have standing. Whether putative class members have standing will depend on named Plaintiffs’ Article III standing. Cf. Gooch v. Life Inv'rs Ins. Co. of Am. , 672 F.3d 402, 422 (6th Cir. 2012).
Pursuant to Article III of the United States Constitution, federal jurisdiction is limited to "cases" and "controversies," and standing is "an essential and unchanging part of" this requirement. Lujan v. Defs. of Wildlife , 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). If the plaintiff lacks standing, then the federal court lacks jurisdiction. Va. House of Delegates v. Bethune-Hill , ––– U.S. ––––, 139 S. Ct. 1945, 1951, 204 L.Ed.2d 305 (2019). Thus, standing is "the threshold question in every federal case." Warth v. Seldin , 422 U.S. 490, 498, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975).
Article III standing has three elements. "First, the plaintiff must have suffered an ‘injury in fact’—an invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical." Lujan , 504 U.S. at 560, 112 S.Ct. 2130 (internal quotation marks and citations omitted). Second, the injury must be "fairly traceable to the challenged action of the defendant." Id. (internal alterations omitted). Third, it must be likely that the injury will be "redressed by a favorable decision." Id. at 561, 112 S.Ct. 2130.
Turning first to injury-in-fact, the Supreme Court has instructed that the injury must be "concrete—that is, real, and not abstract." TransUnion LLC v. Ramirez , ––– U.S. ––––, 141 S. Ct. 2190, 2204, 210 L.Ed.2d 568 (2021) (internal quotation marks omitted) (citing cases). The Court has identified several categories of concrete injuries, including "traditional tangible harms, such as physical harms and monetary harms." Id. Here, Plaintiffs allege that Defendants financially harmed Plaintiffs’ MAO assignors by failing to correctly reimburse conditional payments. See, e.g. , Compl. ¶ 54, ECF No. 1. Because the MAO assignors could demonstrate an injury-in-fact with this financial harm, so can Plaintiffs as assignees. See Sprint Commc'ns Co., LP. v. APCC Servs., Inc. , 554 U.S. 269, 289, 128 S.Ct. 2531, 171 L.Ed.2d...
To continue reading
Request your trial