MSPA Claims 1, LLC v. Liberty Mut. Fire Ins. Co.

• Decision Date: 31 July 2018
• Docket Number: Case No. 17-22539-CIV-WILLIAMS
• Citation: 322 F.Supp.3d 1273
• Parties: MSPA CLAIMS 1, LLC, et al., Plaintiffs, v. LIBERTY MUTUAL FIRE INS. CO., Defendant.
• Court: U.S. District Court — Southern District of Florida

322 F.Supp.3d 1273

MSPA CLAIMS 1, LLC, et al., Plaintiffs,

v.LIBERTY MUTUAL FIRE INS. CO., Defendant.

Case No. 17-22539-CIV-WILLIAMS

United States District Court, S.D. Florida.

Signed July 31, 2018

Filed August 1, 2018

Frank Carlos Quesada, John Hasan Ruiz, MSP Recovery Law Firm, Miami, FL, Alan H. Rolnick, Andres Rivero, Rivero Mestre LLP, Coral Gables, FL, for Plaintiffs.

David Barry Krouk, Matthew John Lavisky, Butler Weihmuller Katz Craig LLP, Tampa, FL, for Defendant.

ORDER GRANTING MOTION TO DISMISS

KATHLEEN M. WILLIAMS, UNITED STATES DISTRICT JUDGE

THIS MATTER is before the Court on Defendant Liberty Mutual Fire Insurance Company's ("Defendant") motion to dismiss the Plaintiffs' ("Plaintiffs") third amended complaint for lack of subject matter jurisdiction and failure to state a claim (DE 51), to which Plaintiffs filed a response in opposition (DE 58), and to which Defendant filed a reply (DE 60). For the reasons set forth below, Defendant's motion to dismiss (DE 51) is GRANTED WITH PREJUDICE¹ and this case is DISMISSED for lack of subject matter jurisdiction.

I. BACKGROUND

This lawsuit arises under the Medicare Secondary Payer ("MSP") provisions of the Medicare Act, 42 U.S.C. § 1395y et seq. Plaintiffs' class action complaint against Defendant is one of numerous similar actions filed by Plaintiffs in courts across the country.² Plaintiffs are a collection of entities "whose business model involves obtaining assignments from Medicare Advantage Organizations [ ("MAOs") ], first-tier entities, and downstream entities to recover reimbursement for payments made for the medical expenses of Medicare beneficiaries that should have been made by a private insurer pursuant to the Medicare Secondary Payer Act (MSPA)." Auto-Owners , 2018 WL 1953861, at *1 (citing 42 U.S.C. § 1395y(b) ). Plaintiffs filed this class action as the assignee of three separate entities—Florida Healthcare Plus ("FHCP"), Health First Administrative Plans, Inc. ("HFAP") and Interamerican Medical Center Group, LLC ("IMCG")—to seek reimbursement from Defendant pursuant to the MSPA. Thus, as the Court in Auto-Owners noted, the threshold issue this Court must consider is whether these entities "ha[ve] standing under the private cause of action in the MSPA, § 1395y(b)(3)(A)." Auto-Owners , 2018 WL 1953861, at *1.

Defendant argues, among other things, that Plaintiffs lack standing to bring this case because (a) "the Complaint does not allege that any of the putative assignors are (1) a Medicare beneficiary; (2) an MAO; or a (3) direct healthcare provider to the Medicare beneficiary;" (b) the "original plaintiff, MSPA Claims I, LLC ("MSPA [Claims]"), lacked standing when the lawsuit was filed ... [and] cannot amend to add new plaintiffs;" and (c) "the Complaint does not support that Plaintiffs have standing under the putative assignments because, among other reasons, the agreements are not assignments." (DE 51 at 2). Defendant also presents several other arguments as to why Plaintiffs have failed to state a claim under Federal Rule of Civil Procedure 12(b)(6) but, because this case must be dismissed for lack of subject matter jurisdiction, we need not address the merits of Defendant's other arguments.

As the alleged assignee of FHCP, HFAP, and IMCG (the "Assignors"), Plaintiffs bring three representative claims. (DE 49 at 5-7). B.T., M.H., and ST. were Medicare beneficiaries (the "Beneficiaries") who were enrolled in Medicare Advantage plans managed by FHCP, FHAP, and IMCG, respectively. Id. Plaintiffs further allege that the Assignors paid for the Beneficiaries' respective medical expenses and that Defendant, as a primary payer, should have paid for the expenses or reimbursed the Assignors for the expenses, but failed to do so. Id. Plaintiffs allege that the Assignors each assigned their rights to recover conditional payments made on behalf of Medicare beneficiaries to Plaintiffs. Id.

The recovery agreements and assignment documents filed with Plaintiffs' third amended complaint—pursuant to which the Assignors purportedly assigned their claims to Plaintiffs—contain boilerplate language identical to the documents filed by Plaintiffs in other suits describing each of the Assignors broadly as a "Health Maintenance Organization, Maintenance Service Organization, Independent Practice Association, Medical Center, and/or other health care organization and/or provider ...." (DE 49-H; DE 49-L; DE 49-N). These documents are similar, if not identical, to the documents provided in similar cases, including Auto-Owners , 2018 WL 1953861, State Farm , 2018 WL 2392827, and MSPA Claims 1, LLC v. United Auto. Ins. Co. , 204 F.Supp.3d 1342 (S.D. Fla. Aug. 29, 2016).

Plaintiffs seek double damages under Section 1395y(b)(3)(A) because of Defendant's alleged failure to reimburse Plaintiffs' purported Assignors and damages for breach of contract for "failure to pay PIP benefits." (DE 49 at 30-31).

II. STANDARD OF REVIEW

a. Subject Matter Jurisdiction

A challenge to subject matter jurisdiction under Rule 12(b)(1) of the Federal Rules of Civil Procedure may be presented as either a facial or factual attack. McElmurray v. Consol. Gov't of Augusta-Richmond Cty. , 501 F.3d 1244, 1251 (11th Cir. 2007). Facial attacks challenge subject matter jurisdiction based on the allegations in the complaint, which the district court takes as true when considering the motion. Lawrence v. Dunbar , 919 F.2d 1525, 1529 (11th Cir. 1990). In contrast, factual attacks challenge the existence of subject matter jurisdiction in fact, and in such cases "no presumptive truthfulness attaches to plaintiff's allegations." Id. The Eleventh Circuit has held that "the party invoking the court's jurisdiction bears the burden of proving, by a preponderance of the evidence, facts supporting the existence of federal jurisdiction." McCormick v. Aderholt , 293 F.3d 1254, 1257 (11th Cir. 2002). Because standing is "not [a] mere pleading requirement[ ] but rather an indispensable part of the plaintiff's case, [it] must be supported in the same way as any other matter on which the plaintiff bears the burden of proof, i.e. , with the manner and degree of evidence required at the successive stages of the litigation." Lujan v. Defs. of Wildlife , 504 U.S. 555, 559-60, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992).

Article III standing has three elements: "[t]he plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision." Spokeo, Inc. v. Robins , ––– U.S. ––––, 136 S.Ct. 1540, 1547, 194 L.Ed.2d 635 (2016), as revised (May 24, 2016) (citing Lujan , 504 U.S. at 560-61, 112 S.Ct. 2130 ) ). To satisfy the first "injury" element, the plaintiff must demonstrate that the injury affects the plaintiff in a personal and individual way. Id. at 1548 ; Valley Forge Christian College v. Americans United for Separation of Church and State, Inc. , 454 U.S. 464, 472, 102 S.Ct. 752, 70 L.Ed.2d 700 (1982) (standing requires that the plaintiff "personally has suffered some actual or threatened injury"). Here, to demonstrate injury in fact, Plaintiffs must plead facts showing (1) that each Assignor itself suffered an injury in fact (i.e. , the Assignor was not reimbursed for its enrollees' medical expenses by defendant who was responsible for primary payment under the MSPA); and (2) that the alleged Assignor validly assigned its rights of recovery to Plaintiffs. See MAO–MSO Recovery II, LLC v. Boehringer Ingelheim Pharm., Inc. , 281 F.Supp.3d 1278, 1282 (S.D. Fla. 2017).

"Article III standing must be determined as of the time at which the plaintiff's complaint is filed." Focus on the Family v. Pinellas Suncoast Transit Auth. , 344 F.3d 1263, 1275 (11th Cir. 2003) ; see also Lujan v. Defenders of Wildlife , 504 U.S. 555, 570, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) ("[S]tanding is to be determined as of the commencement of suit."); MSPA Claims 1, LLC v. Covington Specialty Ins. Co. , 212 F.Supp.3d 1250, 1258 (S.D. Fla. 2016), appeal dismissed, No. 17-11273-JJ, 2017 WL 4386453 (11th Cir. Sept. 19, 2017) ; MSPA Claims 1, LLC v. Infinity Auto Ins. Co. , 204 F.Supp.3d 1346, 1348 (S.D. Fla. 2016) (noting that "standing cannot be created after a complaint has been filed; it must exist at the time of the filing of the complaint"); MAO-MSO Recovery II, LLC v. Boehringer Ingelheim Pharm., Inc. , 281 F.Supp.3d 1309 (S.D. Fla. 2017) (dismissing the case on the grounds that plaintiffs lacked standing when the suit was filed).

b. The Medicare Secondary Payer Act ("MSPA") and Medicare Advantage Organizations

The Court in Auto-Owners set forth a thorough history of the MSPA:

Congress enacted the Medicare Act in 1965 to establish a health insurance program for the elderly and disabled. At that time, Medicare paid for medical expenses even when Medicare beneficiaries were also enrolled in third-party insurance policies that covered those same costs. See MSP Recovery, LLC v. Allstate Ins. Co. , 835 F.3d 1351, 1354 (11th Cir. 2016). In an effort to reduce costs, Congress passed the MSPA in 1980 which made Medicare the secondary payer, rather than the primary payer, for medical services provided to its beneficiaries when they are covered for the same services by a private insurer. See § 1395y(b)(2). Thus, the private insurer becomes the primary payer, as defined by the statute, for medical services. However, when a primary payer cannot be expected to make a payment for a service promptly, Medicare may make conditional payments. § 1395y(b)(2)(B)(i). Once notified of its responsibility for a payment, a primary payer must reimburse Medicare for any payment made within 60 days. § 1395y(b)(2)(B)(ii). In an effort to enforce this scheme, the MSPA created a private cause of action for double damages when a primary plan fails to provide payment. See § 1395y(b)(3)(A).

Auto-Owners , 2018 WL 1953861, at *1. Further, Part C of the Medicare Act allows...