Mspa Claims 1, LLC v. First Acceptance Ins. Co.

• Decision Date: 06 May 2019
• Docket Number: Case No: 8:18-cv-2277-T-30CPT
• Citation: 380 F.Supp.3d 1235
• Parties: MSPA CLAIMS 1, LLC, Plaintiff, v. FIRST ACCEPTANCE INSURANCE COMPANY, INC., Defendant.
• Court: U.S. District Court — Middle District of Florida

380 F.Supp.3d 1235

MSPA CLAIMS 1, LLC, Plaintiff,

v.FIRST ACCEPTANCE INSURANCE COMPANY, INC., Defendant.

Case No: 8:18-cv-2277-T-30CPT

United States District Court, M.D. Florida, Tampa Division.

Filed May 6, 2019

James Louis Ferraro, James Louis Ferraro, Jr., Janpaul Portal, The Ferraro Law Firm, Miami, FL, Louise R. Caro, Napoli Shkolnik, PLLC, Coconut Grove, FL, for Plaintiff.

Kathy J. Maus, Butler Weihmuller Katz Craig LLP, Tallahassee, FL, Matthew J. Lavisky, Butler Weihmuller Katz Craig LLP, Tampa, FL, for Defendant.

ORDER

JAMES S. MOODY, JR., UNITED STATES DISTRICT JUDGE

THIS CAUSE comes before the Court upon Defendant's Motion to Dismiss (Dkt. 14), Plaintiff's Response (Dkt. 17) and Notice (Dkt. 18), Defendant's Reply (Dkt. 24), and Plaintiff's Notice of Supplemental Authority (Dkt. 25). After a review of the filings and the record, the Court will defer ruling on Defendant's Motion to Dismiss until after an evidentiary hearing. As discussed below, issues about Plaintiff's standing must be resolved before the Court can assess the sufficiency of Plaintiff's Complaint.

BACKGROUND

This lawsuit is based on alleged violations of the Medicare Secondary Payer ("MSP") provisions of the Medicare Act ("MSP Act"). See 42 U.S.C. § 1395y(b)(2)(A). Of relevance, Part C of the Medicare Act authorizes Medicare enrollees to obtain their Medicare benefits from private insurers instead of the government. This insurance is secondary to a primary insurance plan.¹ And by law, these private insurance entities² are "secondary payers" for certain medical expenses typically covered under an insured's primary coverage.

If a primary plan "has not made or cannot reasonably be expected to make payment" for covered medical expenses, Medicare insurers are authorized to make a conditional payment as a secondary payer. Id. at § 1395y(b)(2)(B)(i). The primary plan must then reimburse the Medicare insurance "if it is demonstrated that such primary plan has or had a responsibility to make payment with respect to such item or service." Id. at § 1395y(b)(2)(B)(ii). The MSP provisions contain a private cause of action against a primary plan when the primary plan does not timely reimburse a secondary payer for its conditional payments.

Plaintiff MSPA Claims I, LLC ("MSPA") alleges entities that administer Medicare benefits assigned to MSPA their legal rights to recover reimbursement of conditional payments made on behalf of Medicare beneficiaries. MSPA alleges Defendant First Acceptance Insurance Company, Inc. ("FAIC") is a primary plan that failed to reimburse entities for their conditional payments under the MSP Act. FAIC issues motor vehicle policies with no-fault/personal injury protection benefits and/or medical payments to cover medical expenses arising from motor vehicle accidents.

MSPA illustrates the process of Medicare insurance coverage and secondary payments by referring to the situation of "D.W." MSPA explains that D.W. was involved in a motor vehicle accident. At the time of the accident, FAIC provided coverage to D.W. through her automobile insurance policy. D.W. was also a Medicare Part C beneficiary enrolled in an insurance plan administered by Florida Healthcare Plus, Inc. ("FHCP").³ D.W. received medical services and treatment for her injuries, and her medical providers sent a bill to FHCP. FHCP paid for D.W.'s expenses, totaling $ 19,079.00. According to MSPA, FHCP assigned its legal rights to recover reimbursement to MSPA. MSPA alleges that FAIC failed to pay D.W.'s expenses and then, timely reimburse MSPA for FHCP's conditional payment.

MSPA asserts two causes of action in its class complaint: one under the private cause of action for the Medicare Act, and another for breach of contract under 42 C.F.R. 411.24(e). MSPA brings its lawsuit on behalf of FHCP and the following class members:

All Medicare Advantage Organizations, First Tier, Downstream and Related entities, or their assignees, that provide benefits under Medicare Part C, in the United States of America and its territories, who made conditional payments for a Medicare beneficiary's medical expenses resulting from injuries arising out of the ownership, maintenance, or use of a motor vehicle (the "accident-related medical expenses"), where Defendant:

(1) is the primary payer by virtue of having issued a motor vehicle insurance policy that offers no-fault/personal injury protection benefits ("PIP") and/or medical payments ("Med Pay") coverage for accident-related medical expenses to a Medicare beneficiary enrolled in a Medicare Advantage plan; and

(2) failed to reimburse the Medicare Advantage Organizations, First Tier, Downstream and Related entities, or their assignees, that made conditional payments on behalf of Medicare beneficiaries for their accident-related medical expenses.

This class definition excludes (a) Defendant, its officers, directors, management, employees, subsidiaries, and affiliates; and (b) any judges or justices involved in this action and any members of their immediate families.

(Dkt. 1, p. 32).

MSPA's alleged chain of assignment also bears mentioning. According to MSPA, FHCP, a secondary payer under the MSP Act, contracted with Centers for Medicare and Medicaid Services and provided Medicare benefits to its enrollees and participants. FHCP entered into an assignment agreement with La Ley Recovery Systems, Inc. ("La Ley"). The agreement noted that "any rights conferred to [FHCP] by Medicare Advantage plans either by statute, contract and/or any other reason whatsoever will be administered by La Ley Recovery." Dkt. 1-1. The agreement also required FHCP's approval of any subsequent assignee.⁴

Almost a year after FHCP's assignment to La Ley, La Ley assigned its rights to MSPA. Later, the Florida Department of Financial Services (FHCP's receiver) executed a settlement agreement with La Ley and MSPA confirming that "all rights, title and interest to recover payments made by FHCP on behalf of FHCP members pursuant to ... incidents recoverable pursuant to the Medicare Secondary Payer Act ... were and continue to be irrevocably assigned to La Ley." Dkt. 1-3. The settlement agreement noted that "the Assigned Claims may be assigned by ... La Ley," and "... any assignment of the rights ... [by] La Ley occurring prior to the execution of this Settlement Agreement shall be valid and enforceable." Id. MSPA alleges this settlement confirmed that La Ley validly assigned MSPA its rights under the MSP Act, including the right to recover reimbursement from primary insurers like FAIC.

MOTION TO DISMISS STANDARD

Attacks on subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1) come in two forms. Meszaros ex rel. Meszaros v. United States , Case No. 8:05CV1214T30TGW, 2006 WL 1528939, at *1-2 (M.D. Fla. June 2, 2006) (Moody, J.); Lawrence v. Dunbar , 919 F.2d 1525 (11th Cir. 1990). "Facial attacks" on the complaint "require the court to merely look and see if the plaintiff has sufficiently alleged a basis of subject matter jurisdiction, and the allegations in the complaint are taken as true for the purposes of the motion." Lawrence , 919 F.2d at 1529. "Factual attacks," on the other hand, challenge "the existence of subject matter jurisdiction in fact, irrespective of the pleadings, and matters outside the pleadings, such as testimony and affidavits, are considered." See id.

With a facial attack, Federal Rule of Civil Procedure 12(b)(6) allows a court to dismiss a complaint when it fails to state a claim upon which relief can be granted. The Court must construe a complaint's factual allegations in the light most favorable to the plaintiff. Hunt v. Aimco Properties, L.P. , 814 F.3d 1213, 1221 (11th Cir. 2016) (internal citation omitted). To withstand a motion to dismiss, the complaint must include "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). 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). Pleadings that offer only "labels and conclusions," or a "formulaic recitation of the elements of a cause of action," will not do. Twombly, 550 U.S. at 555, 127 S.Ct. 1955.

With a factual attack, "no presumptive truthfulness attaches to [a] plaintiff's allegations, and the existence of disputed material facts will not preclude the trial court from evaluating for itself the merits of jurisdictional claims." Id. The Eleventh Circuit has cautioned that a district court "should only rely on Rule 12(b)(1) ‘[i]f the facts necessary to sustain jurisdiction do not implicate the merits of plaintiff's cause of action.’ " Morrison v. Amway Corp. , 323 F.3d 920, 925 (11th Cir. 2003) (citing Garcia v. Copenhaver, Bell & Associates, 104 F.3d 1256, 1261 (11th Cir.1997) ). If they do, the district court should treat the motion as a motion for summary judgment under Rule 56 and refrain from deciding disputed factual issues. Id. If a motion to dismiss asserts a lack of subject matter jurisdiction, the plaintiff bears the burden of showing that it has properly invoked the court's jurisdiction. Dominican Energy Ltd., Inc. v. Dominican Republic , 903 F.Supp. 1507, 1511 (M.D. Fla. 1995).

DISCUSSION

FAIC moves to dismiss MSPA's complaint or in the alternative, strike portions of the pleading. The Court will address FAIC's arguments related to MSPA's lack of standing. As discussed below, some of these issues require an evidentiary hearing.

Improper Pre-Suit Notice

FAIC argues MSPA lacks standing because it did not comply with § 627.736, Florida Statutes' pre-suit notice requirements. The Court will first address whether pre-suit notice was required here, and then, after concluding it was, whether MSPA met the pre-suit notice requirements.

Section 627.736 encompasses...