A new opinion was just released out of the U.S. District Court for the Southern District of Florida, MSPA Claims 1, LLC v. IDS Property Casualty Insurance Company (August 28, 2015). This case involved MSPA Claims 1, LLC (“MSPA Claims”), as an assignee and on behalf of Florida Healthcare Plus (FHCP), a Medicare Advantage Plan (MAP), pursuing Property Casualty Insurance Company (PCIC) for the following five causes of action in its Complaint: Count I seeks a “Declaratory Judgment as to Defendant’s obligation to Reimburse Medicare Benefits;” Count II asserts a “Private Cause of Action for Double Damages” under the MSP, 42 U.S.C. § 1395y(b)(3)(A); Count III asserts an “Action for Accounting,” seeking an equitable accounting of the amounts Defendant owes as a primary payer; Count IV asserts a claim for “Breach of Contract Pursuant to Section 627.736, Florida Statutes,” seeking PIP benefits pursuant to an insurance contract which allegedly provided coverage to FHCP’s insured; and Count V asserts a claim for “Equitable Subrogation,” seeking double damages “[u]nder the private cause of action established by 42 U.S.C. § 1395y(b)(3)(A).”
MSPA Claims alleged that it sent a letter to PCIC demanding reimbursement for medical services that FHCP provided for one of FHCP’s insureds under a PIP policy and that PCIC failed to pay. PCIC motioned to dismiss the suit for failure to state a claim. The Southern District of Florida held that there was no demonstration of responsibility to pay and PCIC’s Motion to Dismiss was granted. More specifically, MSPA Claims’ allegations fail to demonstrate PCIC’s responsibility to pay through “a judgment, a payment conditioned upon the recipient’s compromise, waiver, or release (whether there is a determination or admission of liability) of payment for items or services included in a claim against the primary plan or the primary plan’s insured, or by other means.” See 42 U.S.C. § 1395y(b)(2)(B)(ii).
Franco Signor Commentary: The interesting component of the outcome of this case is that had the Complaint been plead differently, the outcome may have been different. Had MSPA Claims alleged that responsibility was demonstrated by “other means,” or in other words, PCIC’s agreement to provide benefits under the PIP policy to it insured, the Complaint may have survived PCIC’s Motion to Dismiss. Recently, the Holmes v. Farm Bureau case out held that a PIP contract of insurance was considered “demonstration of responsibility” and that there need not be a settlement, judgment or award. For our prior blog on the Holmes case, please click here.
Word to the wise: The private cause of action is at the forefront of MSP case law as of lately, particularly with beneficiaries enrolled in Medicare Advantage Plans. While PCIC got off the hook in this case, it is likely that Plaintiffs such as MSPA Claims will wise up quickly on how to properly plead these cases and we may start to see different results in future case law, as occurred in the Holmes case. The MSP is vague on the private cause of action and its usage and our courts are interpreting it in a manner most favorable to the Medicare Trust Fund and its solvency. It is imperative for payers to be responsive to any correspondence requesting reimbursement for Medicare conditional payments, particularly those asserted by Medicare Advantage Plans.
Heather Schwartz Sanderson
Chief Legal Officer
Franco Signor LLC