MSP Recovery, LLC v. Allstate Ins. Co.

• Decision Date: 20 April 2017
• Docket Number: Civil Action No. 15–20732–Civ–Scola
• Citation: 276 F.Supp.3d 1311
• Parties: MSP RECOVERY, LLC, Plaintiff v. ALLSTATE INSURANCE COMPANY, Defendant
• Court: U.S. District Court — Southern District of Florida

276 F.Supp.3d 1311

MSP RECOVERY, LLC, Plaintiff

v.ALLSTATE INSURANCE COMPANY, Defendant

Civil Action No. 15–20732–Civ–Scola

United States District Court, S.D. Florida.

Signed April 20, 2017

Frank Carlos Quesada, MSP Recovery Law Firm, Gustavo Javier Losa, John Hasan Ruiz, Law Offices of La Ley con John H. Ruiz, Miami, FL, Jorge Antonio Lopez, Lopez & Associates, Coral Gables, FL, for Plaintiff.

Rachel Marie La Montagne, Shutts & Bowen LLP, Miami, FL, for Defendant.

Order on the Defendant's Motion to Dismiss

Robert N. Scola, Jr., United States District Judge

This matter is before the Court on Defendant Allstate Insurance Company's motion to dismiss the Plaintiff's Third Amended Complaint. (ECF No. 56). For the reasons set forth below, the Court grants the Defendant's motion to dismiss.

1. Background

In January 2013, an enrollee in the Medicare Advantage program (the "Enrollee") was in a car accident. (See Third Am. Compl. ¶¶ 19–20, ECF No. 55.) The Medicare Advantage program was managed by Florida Healthcare Plus ("FHCP"), which contracted with the Centers for Medicare and Medicaid Services ("CMS") to administer Medicare benefits for beneficiaries who elect to enroll in the Medicare Advantage program. (Id. ¶¶ 4, 27.) The Plaintiff alleges that the Medicare Advantage plan's obligations are secondary to other available insurance plans, and that FHCP has reimbursement, recovery and subrogation rights from any primary insurance coverage. (Id. ¶¶ 29, 31.)

As a result of the car accident, the Enrollee suffered injuries to his neck and back and incurred expenses for medical services, treatment, and/or supplies. (Id. ¶ 20, 23.) FHCP paid for the Enrollee's medical expenses. (Id. ¶¶ 22, 33, 36.) However, the Plaintiff asserts that Defendant Allstate Insurance Company ("Allstate") had issued a policy of insurance to the Enrollee that was in effect at the time of the accident and provided primary insurance coverage for the Enrollee's medical expenses. (Id. ¶¶ 24–25, 32.) The Plaintiff alleges that Allstate failed to satisfy its obligations under the insurance policy to cover the Enrollee's medical expenses and/or reimburse FHCP for the payments it made on the Enrollee's behalf. (Id. ¶¶ 26, 39.)

The Complaint alleges that on April 15, 2014, FHCP assigned its recovery and reimbursement rights against any liable primary payer to La Ley Recovery Systems, Inc. ("La Ley"). (Id. at ¶ 5.) On August 29, 2014, La Ley assigned the recovery and reimbursement rights that it received from FHCP to the Plaintiff, MSP Recovery, LLC ("MSP"). (Id. at ¶ 7.) MSP alleges that FHCP's executives and officers approved and consented to the assignment from La Ley to MSP in a series of communications between April and September 2014. (Id. ¶ 8.) Accordingly, MSP asserts that it possesses all of FHCP's rights to recover expenses that FHCP paid on behalf of the Enrollee from any liable primary payer. (Id. ¶ 10.)

MSP filed this lawsuit in state court on December 22, 2014, asserting that Allstate violated the Medicare Secondary Payer Act ("MSP Act") and state law. (See Notice of Removal, ECF No. 1.) Allstate removed the case to this Court on February 23, 2015. (Id. ) The Court granted the Defendant's motion to dismiss the federal claim in the Plaintiff's Second Amended Complaint, and remanded the remaining state law claims to state court. (ECF Nos. 36–37.) The Plaintiff appealed the dismissal, and the Eleventh Circuit vacated the Court's judgment and remanded for further proceedings. (ECF No. 50.) Accordingly, the Court reopened this case and the Plaintiff filed its Third Amended Complaint (ECF No. 55).

The Third Amended Complaint asserts a single cause of action under 42 U.S.C. § 1395y(b)(3)(A), which provides a private cause of action for double damages in the event that a primary plan fails to provide primary payment or appropriate reimbursement to a secondary payer. (Third Am. Compl. ¶ 48–59.) Allstate moved to dismiss the complaint, asserting that MSP lacks standing to bring this action and that the Third Amended Complaint fails to state a claim upon which relief can be granted. (ECF No. 56.)

2. Legal Standard

Because the question of Article III standing implicates subject matter jurisdiction, it must be addressed as a threshold matter prior to the merits of any underlying claims. Palm Beach Golf Ctr.–Boca, Inc. v. John G. Sarris, D.D.S., P.A. , 781 F.3d 1245, 1250 (11th Cir. 2015). Article III of the Constitution grants federal courts judicial power to decide only actual "Cases" and "Controversies." U.S. Const. Art. III § 2. The doctrine of standing is a "core component" of this fundamental limitation that "determin[es] the power of the court to entertain the suit." Hollywood Mobile Estates Ltd. v. Seminole Tribe of Fla. , 641 F.3d 1259, 1264–65 (11th Cir. 2011) (quoting Lujan v. Defenders of Wildlife , 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) ; Warth v. Seldin , 422 U.S. 490, 498, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975) ). The "irreducible constitutional minimum" of standing under Article III consists of three elements: (1) the plaintiff must have suffered an actual or imminent injury, or a concrete "invasion of a legally protected interest"; (2) that injury must have been caused by the defendant's complained-of actions; and (3) the plaintiff's injury or threat of injury must likely be redressable by a favorable court decision. Lujan , 504 U.S. at 560–61, 112 S.Ct. 2130 ; see also Hollywood Mobile Estates Ltd. , 641 F.3d at 1265 (stating same).

"[A] dismissal for lack of standing has the same effect as a dismissal for lack of subject matter jurisdiction under Fed.R.Civ.P. 12(b)(1)." Stalley ex rel. U.S. v. Orlando Reg'l Healthcare Sys., Inc. , 524 F.3d 1229, 1232 (11th Cir. 2008) (citing Cone Corp. v. Fla. Dep't of Transp. , 921 F.2d 1190, 1203 n. 42 (11th Cir. 1991) ). Motions to dismiss a complaint for lack of subject matter jurisdiction can consist of either a facial or factual attack on the complaint. Id. (citing McElmurray v. Consol. Gov't of Augusta—Richmond Cnty , 501 F.3d 1244, 1250 (11th Cir. 2007) ). A facial attack requires the court to "merely look and see if the plaintiff has sufficiently alleged a basis of subject matter jurisdiction," whereas a factual attack "challenges the existence of subject matter jurisdiction using material extrinsic from the pleadings, such as affidavits or testimony." Id. at 1233–34 (citing McElmurray , 501 F.3d at 1251 ). "A dismissal for lack of subject matter jurisdiction is not a judgment on the merits and is entered without prejudice." Id. at 1232 (citations omitted).

3. Analysis

The Defendant asserts a factual challenge to the Court's subject matter jurisdiction, arguing that the Plaintiff does not have standing to bring this suit because the assignment to the Plaintiff of FHCP's rights to recovery and reimbursement was not valid. (Mot. to Dismiss at 4, ECF No. 56.)

According to the Third Amended Complaint, FHCP's rights to reimbursement and recovery were assigned to La Ley on April 15, 2014. (Third Am. Compl. ¶ 5, ECF No. 55.) The Plaintiff attached a copy of the agreement between FHCP and La Ley to the Third Amended Complaint. (Id. at Ex. A.) The agreement was valid for one year, with an automatic renewal for an additional one year unless terminated at any time by the parties with ninety days' notice. (Id. ¶ 1.2.) The agreement stated that La Ley could assign the agreement in whole or in part, but that the assignee must be approved by FHCP. (Id. )

The Plaintiff alleges that on August 29, 2014, La Ley assigned its recovery and reimbursement rights for the Enrollee's claim to MSP. (Third Am. Compl. ¶ 7, ECF No. 55.) The Plaintiff attached a copy of the assignment to the Third Amended Complaint. (Id. at Ex. B.) The Plaintiff alleges that FHCP executives and officers "communicated to La Ley Recovery via a series of communications between April and September 2014 that FHCP accepted, acknowledged, approved and consented to any subsequent assignment from La Ley Recovery to any then-existing or future La Ley Company, including the La Ley Recovery–Plaintiff Agreement." (Id. ¶ 8.) The Plaintiff asserts that the term "La Ley Company" refers to the Plaintiff, among other entities. (Id. at 3 fn 2.)

On December 10, 2014, the Second Judicial Circuit Court in and for Leon County, Florida appointed the Florida Department of Financial Services ("DFS") as receiver for FHCP and authorized it to liquidate FHCP's assets. (Mot. to Dismiss at Ex. A, ECF No. 56–1.) The court's order cancelled all executory contracts to which FHCP was a party and stated that the contracts "stand cancelled unless specifically adopted by the Receiver within ninety (90) days of the date of this Order or from the date of the Receiver's actual knowledge of the existence of such contract, whichever is later." (Id. at 13.) The order imposed an automatic stay prohibiting "any act to obtain possession of property of the insurer." (Id. at 19.)

The Plaintiff filed this lawsuit on December 22, 2014. (Notice of Removal, ECF No. 1.) On February 5, 2015, DFS sent La Ley a letter stating that "[t]he Receiver has determined that your services are not necessary to the continued administration of the Receivership estate and hereby reject any and all contracts, addendums and/or assignments between FHCP and La Ley Recovery Systems, Inc. and/or any of its affiliates and/or subsidiaries." (Mot. to Dismiss Ex. B at 12, ECF No. 56–2.) On March 30, 2015, DFS sent an email to MSP's counsel, John Ruiz, stating that DFS had formally rejected the contract between La Ley and FHCP, and that "La Ley and any of its affiliated companies, such as MSP Recovery LLC, are no longer authorized to pursue recoveries on behalf of FHCP." (Id. at 35.) On April 23, 2015, DFS sent a letter to Mr. Ruiz, requesting again that MSP "stop all collection activity on behalf of FHCP pending the Receiver's receipt and opportunity to examine and evaluate the additional information." (Id. at 40.) On ...