MSP Recovery Claims, Series LLC v. Actelion Pharmaceuticals US, Inc.

Background

The plaintiffs alleged that Actelion used payments to Caring Voice Coalition, a patient-assistance program, to help Medicare patients pay copayments for Actelion’s pulmonary hypertension drugs. According to the allegations, Actelion received information about patients receiving assistance and used that information when deciding how much to donate to Caring Voice. The United States previously alleged that Actelion’s relationship with Caring Voice and certain pharmacies formed an illegal kickback scheme. Actelion and the United States settled those allegations in December 2018, with Actelion paying the United States over $360 million.

The plaintiffs said they bought claims from health insurers participating in Medicare Advantage and Medicare Part D. They alleged that the insurers paid for Actelion drugs whose prices were inflated or whose sales were induced by illegal kickbacks. The amended complaint asserted federal claims under the Racketeer Influenced and Corrupt Organizations Act, or RICO; a Florida RICO claim; consumer-protection claims under the laws of 11 states; common-law fraud claims under California law; and unjust-enrichment claims under the laws of 10 states.

The amended complaint attached five representative assignment agreements. The court noted that only MSPA Claims 1, LLC, among the eventual recipients at the ends of the assignment chains, was a named plaintiff, while some series entities were not plaintiffs. The plaintiffs alleged that their operating agreements allowed the plaintiff companies to sue on behalf of designated series.

Assignment and Standing

Actelion challenged the plaintiffs’ standing based on the alleged assignments. Standing is the requirement that a plaintiff show a legally sufficient injury and a valid basis for bringing the claim in federal court. In the assignment context, the plaintiffs had to plead facts supporting a reasonable inference that the ultimate assignors suffered actual injuries and that the claims arising from those injuries were validly assigned to the plaintiffs.

The court held that the plaintiffs could not pursue claims for unnamed assignors based on generalized “representative” assignments. The plaintiffs had to identify the assignors whose claims they sought to pursue. The court also found that the named representative assignors did not appear in the claims spreadsheet, and the complaint did not specifically allege that those assignors suffered injuries. The court concluded that the plaintiffs’ scattered and nonspecific allegations did not adequately connect particular assignors, assignments, and injuries.

The court addressed several additional assignment arguments. It rejected Actelion’s argument that an assignment had to use the word “RICO,” explaining that the agreements’ language assigning all claims and causes of action could satisfy an express-assignment requirement. Although the court had concerns about extensive redactions and unclear references to certain Health First entities, the visible terms were enough at this stage to support an inference that assignments existed. The court also found that the plaintiffs plausibly alleged that claims were assigned to Series 44-20-456, a designated series of MSP Recovery Claims Series 44, and that Series 44 could sue on the series’ behalf.

The court did not resolve whether RICO claims are assignable. It noted that other courts had held that they were assignable, while Actelion relied on Ninth Circuit copyright precedent involving a bare right to sue. Because the parties had not adequately addressed those authorities and the court found other standing problems, it deferred the issue.

State-Law Claims and Disposition

The court dismissed the California Unfair Competition Law claim because California law does not allow that type of claim to be assigned. The plaintiffs did not defend the assignability of that claim or certain Puerto Rico claims. For the remaining state consumer-protection claims, the court assumed without deciding that the claims could be assigned, but held that the plaintiffs had not plausibly alleged that the laws of the relevant states applied. The complaint generally asserted that the defendants’ conduct affected each state’s commerce and consumers without providing factual support, such as claims data identifying sales by state. The court dismissed those claims under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal for failure to state a legally sufficient claim.

The court concluded that the identified defects could be corrected in an amended complaint, including by explaining the claims data, identifying the relevant assignors, and providing clearer assignment chains. It therefore granted Actelion’s motion to dismiss. The California Unfair Competition Law claim was dismissed without leave to amend. The other claims were dismissed with leave to amend. The amended complaint was due by September 28, 2023. The court denied as moot Actelion’s motion for leave to file a supplemental request for judicial notice.

Judge Jacquelyn Scott Corley issued the order. The order disposed of Docket Nos. 43 and 63.