MSP Recovery Claims, Series LLC v. Hereford Insurance Company
- Edgardo Ramos
- 1:20-cv-04776
- U.S. District Court · Southern District of New York
- 27
In MSP Recovery Claims v. Hereford Insurance, Judge Ramos dismissed the action without prejudice because MSP did not adequately plead standing.
MSP Recovery Claims, Series LLC’s putative class action, including the N.G. claim, the 63 claims listed in Exhibit A, and the class-wide claims, was dismissed without prejudice. Hereford Insurance Company obtained dismissal of its motion under Rule 12(b)(1); the court did not reach its remaining dismissal arguments.
What happened
MSP Recovery Claims, Series LLC sued Hereford Insurance Company in a proposed class action under the Medicare Secondary Payer Act. MSP alleged that Hereford failed to pay or reimburse accident-related medical expenses that Medicare Advantage Organizations had paid, and sought double damages.
The court found that MSP had not adequately alleged that its assigned claims involved costs Hereford was required to reimburse. For the example involving N.G., the allegations did not sufficiently connect the medical services to an accident covered by Hereford or show that the reported claims were reimbursable. The allegations about 63 additional claims and the proposed class were even more conclusory.
Judge Edgardo Ramos granted Hereford’s motion to dismiss for lack of subject-matter jurisdiction under Rule 12(b)(1), declined to consider Hereford’s remaining arguments, and dismissed the amended complaint without prejudice. The court also declined to allow another amendment and closed the case.
The detailed version
- MSP Recovery Claims, Series LLC v. Hereford Insurance Company · No. 1:20-cv-04776
- Edgardo Ramos
- Jan. 11, 2022
Background
MSP Recovery Claims, Series LLC ("MSP") brought a putative class action against Hereford Insurance Company ("Hereford") under the Medicare Secondary Payer Act. MSP alleged that Hereford was a primary payer for medical expenses arising from automobile and other accidents but failed to pay or reimburse expenses that Medicare Advantage Organizations ("MAOs") had paid. MSP asserted a private claim under 42 U.S.C. § 1395y(b)(3)(A) seeking double damages.
MSP alleged that MAOs assigned recovery and reimbursement rights to MSP’s Series LLCs and that MSP was authorized to sue on behalf of those entities. It relied on a data-matching system, one example involving N.G., 63 claims listed in an exhibit, and generalized allegations about proposed class claims.
Hereford moved to dismiss under Federal Rule of Civil Procedure 12(b)(1) for lack of subject-matter jurisdiction and under Rule 12(b)(6) for failure to state a claim. Hereford argued that MSP had not alleged a concrete injury caused by Hereford and that MSP’s allegations did not establish Hereford’s payment responsibility.
Standing for the N.G. claim
Article III standing requires an injury in fact, a connection between that injury and the defendant’s conduct, and a likelihood that the requested relief would remedy the injury. The court identified four factual allegations MSP needed for the N.G. claim: that the MAO incurred accident-related expenses; that it paid those expenses without reimbursement from Hereford; that the MAO assigned the reimbursement claim to an MSP Series LLC; and that MSP had the right to sue for that Series LLC.
The court found that MSP adequately alleged that EmblemHealth incurred medical expenses for N.G. and that the claim was assigned to an MSP Series LLC. For purposes of the motion, the court also assumed that MSP had the right to sue on behalf of the designated Series LLC, without deciding the underlying Delaware-law issue.
The court nevertheless found the injury allegations inadequate. MSP treated Hereford’s reporting of the accident to the Centers for Medicare and Medicaid Services ("CMS") as an admission that Hereford was responsible for reimbursing the expenses. The court rejected that premise, explaining that insurers must report claims involving Medicare beneficiaries even when liability has not been determined or admitted. MSP did not provide enough factual support to show that the reported expenses were reimbursable by Hereford. The court therefore found no more than speculation that the MAO had suffered a compensable loss.
The court also found that MSP had not adequately pleaded causation. Although Hereford had issued a no-fault policy connected to N.G.’s accident and had paid for some of N.G.’s treatment, MSP did not sufficiently allege that the medical services at issue were related to injuries covered by that policy. The complaint and its exhibits did not describe the accident or the medical care in enough detail to connect the services to the accident. The court noted that the treatment dates alone and diagnosis and procedure codes were insufficient.
Other claims
The court dismissed the claims listed in Exhibit A because the exhibit did not connect particular patients to particular accidents, injuries, or medical services. It also dismissed the class-wide claims because MSP provided only conclusory allegations and no information showing that those claims involved expenses Hereford was required to pay or reimburse.
Disposition
Because MSP had not adequately alleged standing, the court concluded that it lacked subject-matter jurisdiction. Judge Ramos granted Hereford’s motion to dismiss under Rule 12(b)(1) and declined to decide Hereford’s remaining arguments, including the Rule 12(b)(6) arguments. The court declined to grant MSP leave to amend again because MSP had already amended once and, in the court’s view, had repeatedly been on notice of the standing issue. The amended complaint was dismissed without prejudice, and the Clerk was directed to terminate the motion and close the case.
Read the full 27-page opinion on CourtListener, the free public archive maintained by the Free Law Project.