MSP Recovery Claims v. Endurance American Specialty Insurance Company

Background

Medicare beneficiaries may receive benefits through private Medicare Advantage organizations, or MAOs. The Medicare Secondary Payer Act makes a liability insurer primarily responsible when an insured’s illness or injury is also covered by the insurer; the MAO is secondary. If an MAO pays a claim first, it may seek reimbursement from the liability insurer.

MSP Recovery Claims, Series LLC said it purchased reimbursement rights from AvMed, Inc. Its amended complaint alleged that AvMed assigned claims against Endurance American Specialty Insurance Company to MSP, a dedicated lot, or one of MSP’s subsidiaries. MSP brought two claims: one seeking an unspecified amount allegedly owed as the MAO’s assignee, and another seeking an accounting identifying insureds, payments, and amounts allegedly owed.

Court’s Analysis

The court held that both claims were inadequately pleaded. The amended complaint did not clearly identify the assignment chain, the rights assigned, the dates, amounts, or circumstances of the claims, or which of MSP’s legal entities owned particular assigned claims. The court said these omissions prevented Endurance from adequately admitting or denying the allegations and failed to show that MSP was the real party in interest.

A real party in interest is the person or entity legally entitled to enforce the asserted right. The court also addressed constitutional standing, which requires an injury caused by the defendant that a court can remedy. It concluded that MSP lacked standing and was not the real party in interest. The court rejected MSP’s reliance on an example claim to overcome the broader pleading deficiencies.

The court also found that the amended complaint did not adequately identify the legal bases of the assigned claims. During oral argument, MSP described a situation in which a defendant’s insurer paid the injured person while the person’s medical insurer or MAO had already advanced medical expenses. The court reasoned that the injured person would then repay the medical insurer or be subject to its lien, and that the liability insurer could not be expected to pay twice. The court rejected MSP’s argument that the law required such double payment. It also rejected MSP’s contention that Endurance’s reports, or its failure to make reports required by the Act, constituted an admission of liability.

Ruling

Judge Alvin K. Hellerstein granted Endurance’s motion to dismiss the amended complaint. The court permitted MSP to file a second amended complaint by March 22, 2024, and directed the Clerk to terminate ECF Nos. 26 and 32.