MSP Recovery LLC New Discovery Strategy Implicates Possible Medicaid TPL Angle
Roy Franco
February 19, 2019

The following article was co-written by: Roy Franco, Chief Client Officer and Matthew Newman, Associate Compliance Counsel

A U.S. District Court’s ruling regarding MSP Recovery LLC’s recent filings in State Court has raised concerns about a possible Medicaid Third Party Liability recovery strategy.  The situation involves an archaic discovery mechanism (“bill of pure discovery”) that would allow MSP Recovery LLC to conduct limited discovery against potential defendants for a potential suit.  Plaintiffs sought discovery from defendants under this process to determine if it had basis to file a lawsuit.  Defendants requested removal to the U.S. District Court fearing the bill of pure discovery was a guise to conduct unfettered discovery against defendants about Medicare Secondary Payer reimbursement claim litigation pending in Florida U.S. District Courts.  The U.S. District Court ultimately held that the bill of pure discovery could move forward in State Court because it did not implicate a Federal Question or trigger Diversity Jurisdiction as there was no amount in controversy.  Nonetheless, MSP Recovery LLC was issued a stern warning that sanctions would issue if in fact the action turned out  be an end-run around federal courts’ jurisdiction.  Thus the question, if the bill of pure discovery is not related to Medicare Secondary Payer, what is its purpose?  The short answer – Medicaid Third Party Liability.

It’s the logical conclusion.  Medicaid liens have existed long before Medicare conditional payments were of any concern to parties settling a liability claim.  Florida Statute §409.901(27) requires any entity legally responsible for payment of a claim or a health care item or service, as a condition of doing business in the state or providing coverage to residents of this state, to provide notice of that responsibility to the State.  In Florida, that requires defendants to inform the State’s Medicaid Third Party Liability recovery contractor so that they may produce a lien.  Penalties for non-compliance are not clear, but presumably since notification is a condition of doing business in Florida, the loss of that ability would be an option, if the State Attorney General so chooses.

This situation would allow MSP Recovery LLC to discover information about settled claims.  It will attempt to discover whether any steps were taken to identify or learn of Medicaid status to notify the state of possible losses so that recovery could be pursued.  Of course Medicaid owns those claims, so why would such a tact be pursued, and the simple answer is that, with enough discovery, MSP Recovery LLC could seek an assignment from the Medicaid Third Party Liability Recovery contractor.   A logical result predicted by recent history, as MSP Recovery LLC’s Medicare claims are based on assignments by active and defunct Medicare Advantage Plans.

Medicaid Third Party Liability reimbursement responsibility falls to the beneficiary and his or her attorney.  However, use of this bill of discovery gives us pause as it may be necessary for P&C carriers to begin thinking about processes to identify and reimburse Medicaid.


Roy Franco, Chief Client Officer

Matthew Newman, Associate Compliance Counsel