MSPA Claims 1, LLC v. Covington Specialty Ins. Co.

• Decision Date: 30 September 2016
• Docket Number: CASE NO. 16–20338–CIV–LENARD/GOODMAN
• Citation: 212 F.Supp.3d 1250
• Parties: MSPA CLAIMS 1, LLC, a Florida limited liability company, as assignee of Florida Healthcare Plus, on behalf of itself and all other similarly situated Medicare Advantage Organizations in the State of Florida, Plaintiff, v. COVINGTON SPECIALTY INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Southern District of Florida

212 F.Supp.3d 1250

MSPA CLAIMS 1, LLC, a Florida limited liability company, as assignee of Florida Healthcare Plus, on behalf of itself and all other similarly situated Medicare Advantage Organizations in the State of Florida, Plaintiff,

v.COVINGTON SPECIALTY INSURANCE COMPANY, Defendant.

CASE NO. 16–20338–CIV–LENARD/GOODMAN

United States District Court, S.D. Florida.

Signed September 30, 2016

Brian Phillip Cournoyer, Christine Marie Lugo, Eric Michael Fresco, Frank Carlos Quesada, Timothy J. Van Name, MSP Recovery Law Firm, Gino Moreno, La Ley Law Firm, Gustavo Javier Losa, John H. Ruiz, P.A., John Hasan Ruiz, Rebecca Rubin–Del Rio, Law Offices of La Ley Con John H. Ruiz, Miami, FL, for Plaintiff.

Ashley R. Kellgren, Michael Keegan Kiernan, Traub Lieberman Straus & Shrewsberry LLP, St. Petersburg, FL, for Defendant.

ORDER GRANTING MOTION TO DISMISS AMENDED COMPLAINT AND CLASS ACTION ALLEGATIONS (D.E. 25)

JOAN A. LENARD, UNITED STATES DISTRICT JUDGE

THIS CAUSE is before the Court on Defendant Covington Specialty Insurance Company's Motion to Dismiss Amended Complaint and Class Action Allegations, ("Motion," D.E. 25), filed March 23, 2016. Plaintiff MSPA Claims 1, LLC filed a Response on April 15, 2016, ("Response," D.E. 31), to which Defendant filed a Reply on April 21, 2016, ("Reply," D.E. 32).

Also before the Court is Plaintiff's Request for Judicial Notice, (D.E. 39), filed June 16, 2016. Defendant filed a Response to Plaintiff's Request on June 30, 2016, (D.E. 41), to which Plaintiff filed a Reply on July 11, 2016, (D.E. 42). Upon review of the Motions, Responses, Replies and the record, the Court finds as follows.

I. Background

This is an action under the Medicare Secondary Payer Act ("MSP Act"), 42 U.S.C. § 1395y(b)(3)(A), alleging that Defendant failed to reimburse a Medicare Advantage Organization ("MAO") for medical payments made on behalf of an enrollee, F.C.,¹ who was injured as a result of an accident that occurred on property insured by Defendant. (See Am. Compl., D.E. 10 ¶¶ 10–37, 77–88.)

Florida Healthcare Plus ("FHCP") was a Health Maintenance Organization ("HMO") that contracted with the Centers for Medicare and Medicaid Services ("CMS") to provide Medicare benefits to eligible members enrolled in FHCP's Medicare Advantage health plan under Part C of the Medicare Act. (Id. ¶ 6.) Plan members are referred to as "enrollees," and FHCP served the needs of its enrollees through its Medicare and managed care programs, delivered through its network of physicians and health care professionals. (Id. ¶ 6.) FHCP was a "secondary payer" pursuant to the MSP Act. (Id. ¶ 8.)

On December 10, 2014, FHCP went into receivership. (Id. )

According to the Complaint, F.C. was a member of a Medicare Advantage Plan managed by FHCP at the time of the accident. (Id. ¶ 15.) The Plan is considered a "secondary plan" in connection with medical expense coverage for the at-issue accident, and provides FHCP with reimbursement, recovery, and subrogation rights from a "primary plan." (Id. ¶ 17.) FHCP paid for F.C.'s medical expenses, totaling $15,825.43, pursuant to its contract with CMS. (Id. ¶ 19.) The Amended Complaint alleges that Defendant was legally responsible for primary payment of F.C.'s injuries through its no fault Med–Pay insurance policy. (See id. ¶¶ 13, 14, 17.) "As the issuer of the primary plan, Defendant was required to pay for the medical services provided to Enrollee, or to reimburse FHCP for all payments it made on behalf of Enrollee to satisfy such medical bills; however, Defendant failed to do either and continues to do so." (Id. ¶ 26.) Plaintiff alleges that FHCP assigned all of its subrogation claims, recovery, and reimbursement rights to Plaintiff; as such, Plaintiff asserts standing to sue Defendant for the medical claims, bills, and expenses FHCP provided on behalf of F.C. (Id. ¶¶ 52, 55.)

On March 9, 2016, Plaintiff filed its Amended Class Action Complaint for Damages. (D.E. 23.) Count I alleges a violation of the MSP Act, 42 U.S.C. § 1395y(b)(3)(A), (id. ¶¶ 77–88); Count II alleges breach of contract for failure to pay Med–Pay benefits, (id. ¶¶ 89–97); Count III is for conventional subrogation, (id. ¶¶ 98–104); Count IV is for equitable subrogation, (id. ¶¶ 105–111) and Count V is for conventional subrogation arising from third-party beneficiary rights, (id. ¶¶ 112–118). The Amended Complaint also contains class allegations, purporting to bring suit on behalf of a class of MAOs similarly situated to Plaintiff. (Id. ¶¶ 56–76.)

On March 23, 2016, Defendant filed the instant Motion to Dismiss. (D.E. 25.) It argues that (1) Plaintiff lacks standing to sue Defendant as a purported assignee of FHCP; and, (2) even if Plaintiff had standing to sue, the claims fail to state a claim upon which relief can be granted. (Id. at 1–2.) Defendant also moves to strike the class allegations. (Id. at 17.) Because the Court agrees that Plaintiff lacks standing, it will confine its discussion to that issue.

II. Legal Standard

To the extent Defendant challenges Plaintiff's standing to pursue FHCP's claims, Federal Rule of Civil Procedure 12(b)(1) applies. Stalley ex rel. United States v. Orlando Reg'l Healthcare Sys., Inc. , 524 F.3d 1229, 1232 (11th Cir.2008). " ‘Because standing is jurisdictional, 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)." Id. (quoting Cone Corp. v. Fla. Dep't of Transp. , 921 F.2d 1190, 1203 n. 42 (11th Cir.1991). "A defendant can move to dismiss a complaint under Rule 12(b)(1) for lack of subject matter jurisdiction by either facial or factual attack." Id. (citing McElmurray v. Consol. Gov't of Augusta – Richmond Cnty. , 501 F.3d 1244, 1251 (11th Cir.2007) ). " ‘A facial attack on the complaint requires the court merely to look and see if the plaintiff has sufficiently alleged a basis of subject matter jurisdiction, and the allegations in his complaint are taken as true for the purposes of the motion.’ " Id. at 1232–33 (citing McElmurray , 501 F.3d at 1251 ). "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." McElmurray , 501 F.3d at 1251 (citations and internal quotation marks omitted). "A dismissal for lack of subject matter jurisdiction is not a judgment on the merits and is entered without prejudice." Stalley , 524 F.3d at 1232 (citing Crotwell v. Hockman – Lewis Ltd. , 734 F.2d 767, 769 (11th Cir.1984) ).

III. Discussion

Defendant argues that Plaintiff lacks standing to sue Defendant because Plaintiff suffered no injury, and the purported assignments were either invalid, ineffective, or have expired. (Mot. at 5.) Plaintiff argues that FHCP assigned its rights of reimbursement to La Ley Recovery Systems, Inc., and that, in turn, La Ley assigned its rights to Plaintiff. (See Resp. at 2–8.)

The Eleventh Circuit recently held that the private cause of action under the MSP Act, 42 U.S.C. § 1395y(b)(3)(A), permits a MAO—like FHCP—to sue a primary payer—like Defendant—that refuses to reimburse the MAO for a secondary payment. Humana Med. Plan, Inc. v. W. Heritage Ins. Co. , 832 F.3d 1229, 1231, 1237–38 (11th Cir. 2016). It emphasized, however, that Paragraph (3)(A) "is not a qui tam statute but is instead available only when the plaintiff has suffered an injury in fact." Id. at 1237–38 (citing Stalley , 524 F.3d at 1234 ).

After reviewing the relevant documents and exhibits, the Court agrees with every other court in this district to have addressed the matter and finds that Plaintiff lacks standing to assert FHCP's claims because it has not been validly assigned the right to do so. See MSPA Claims 1, LLC v. Infinity Auto Ins. Co. , 204 F.Supp.3d 1346, 1347 (S.D.Fla. 2016) ; MSPA Claims 1, LLC v. United Auto. Ins. Co. , 204 F.Supp.3d 1342, 1344 (S.D.Fla. 2016) ; MSPA Claims 1, LLC v. First Acceptance Ins. Co. , Case No. 16–20314–CIV–WILLIAMS, 2016 WL 4523850, at *2 (S.D.Fla. Aug. 29, 2016) ; MSPA Claims 1, LLC v. Nat'l Specialty Ins. Co. , Case No. 16–20401–Civ–COOKE/TORRES, 2016 WL 4479372, at *2 (S.D.Fla. Aug. 25, 2016) ; MSPA Claims 1, LLC. v. Tower Hill Prime Ins. Co. , CASE #: 1:16–cv–20460–KMM, 2016 WL 4157593, at *1 (S.D.Fla. Aug. 3, 2016) ; MSPA Claims 1, LLC v. Tower Hill Prime Ins. Co. , CASE #: 1:16–cv–20459–KMM, 2016 WL 4157592, at *1 (S.D.Fla. Aug. 3, 2016) ; MSPA Claims 1, LLC v. Kingsway Amigo Ins. Co. , CASE NO. 16–20212–CIV–KING, 2016 WL 4154266, at *2 (S.D.Fla. July 28, 2016).

The first purported assignment was from FHCP to La Ley Recovery Systems, Inc. (See Resp. at 2–3.) The agreement between FHCP and La Ley, dated April 15, 2014, is attached to Defendant's Motion and states, in relevant part

1.2 Term: The term of this Agreement shall be for (1) year from the date of execution herewith, with an automatic renewal for an additional one (1) year period unless terminated at any time by the parties with ninety (90) day prior written notification. La Ley Recovery may assign the Agreement in whole or in part but the assignee must be approved by [FHCP] .

("La Ley Agreement," D.E. 25–2 at 8.) The Amended Complaint alleges that La Ley subsequently "assigned its FHCP subrogation claims, recovery, and reimbursement rights to Plaintiff." (Am. Compl. ¶ 54.)

First, the Court finds that Defendant's facial challenge to Plaintiff's standing is meritorious because the Amended Complaint, (D.E. 23 ¶¶ 52–54), does not allege that FHCP approved the assignment from La Ley to Plaintiff. See Infinity Auto Ins. Co. , 204 F.Supp.3d at 1347 ; United Auto. , 204 F.Supp.3d at 1344 ; First Acceptance Ins. Co. , 2016 WL 4523850, at *2 ; Nat'l Specialty Ins. Co. , 2016 WL 4479372, at *2 ; Tower Hill Prime Ins. Co , 2016 WL 4157593, at *1 ; Tower Hill Prime Ins. Co. , 2016 WL 4157592, at *1 ; Kingsway Amigo Ins. Co. , 2016 WL 4154266, at *2.

Second, the Court finds that Defend...