11th Circuit Revives Investor-Funded Medicare Secondary Payer Act Lawsuit Against Insurers

A Miami-area collections company backed by litigation-funding investors has won another appellate court victory over insurers, persuading a panel of the 11th Circuit Court of Appeals to reinstate Medicare Secondary Payer Act claims that were rejected by the trial court.

The panel ruled Monday that MSP Recovery and its affiliates had adequately pleaded claims that units of the Metropolitan Insurance Group had failed to reimburse Medicare Advantage Organizations for medical treatment that should have been paid by their auto insurers. MSP said in a press release that the ruling marks the fourth time that the 11th Circuit had reversed District Court decisions to dismiss its claims.

“This is yet another example of MSP Recovery overcoming obstacles,” stated MSP Chief Legal Officer Frank C. Quesada. “The original dismissal of this case did not deter us from pushing forward and once again reversing a lower court decision. Case by case, we continue to establish and solidify the law relating to reimbursements under the Medicare Secondary Payer Act.”

The Medicare Secondary Payer Act allows the government, Medicare Advantage plan insurers and medical providers to sue for double damages if they prove they provided medical care that should have been paid by a primary insurer. Medicare Advantage plan insurers assign their collection rights to MSP Recovery and its affiliates for a fee.

The company was founded by Coral Gables, Florida attorney John H. Ruiz, who told the Claims Journal in 2020 that he spent $150 million in investor money to develop an algorithm that he uses to identify beneficiaries who received care from Medicare or Medicaid that should have been paid by auto, workers’ compensation and liability insurers.

The company went public as a special-purpose acquisition company last October and announced that Virage Capital Management has agreed to pay $3 billion for the right to collect 50% of future awards against insurance carriers.

Judges with the US District Court for the Southern Florida, however, haven’t always been receptive to MSP Recovery’s efforts to collect. US District Court Judge Robert N. Scola refused to accept the method that MSP Recovery used to state its claims. The company submitted as an exhibit to its a complaint a spreadsheet that contained data about hundreds of Medicare beneficiaries who had settled claims with the Metropolitan insurers yet still sought treatment through their Medicare providers. MSP stated that it knows Medicare payments were made because it compared the assignor’s claims data with a database that lists settlements that the Metropolitan insurers had reported to the Centers for Medicare and Medicaid Services.

Judge Scola was not enough to show that payments made by the assignors was for care that could have been provided by Metropolitan and ruled that the exhibit could not “serve as a substitute for factual allegations.” The 11th Circuit panel disagreed.

The panel’s opinion says the court ruled in 2014 that documents attached to a complaint can be considered when ruling on motions to dismiss. Other decisions have established that a plaintiff in Medicare Secondary Payer Act cases can establish that an insurer is liable for medical treatment by showing that it had entered into a settlement agreement with a beneficiary.

“A defendant’s responsibility can be shown in many ways, including by having a contractual obligation to pay and entering into a settlement agreement with a beneficiary for accident-related medical expenses,” the opinion says.

MSP Recovery said in its press release that the decision has “broader implications” because several other judges in the Southern Florida district have dismissed, or partially dismissed, its claims in other pending lawsuits.

“MSP Recovery believes that this latest ruling from the Eleventh Circuit will likely impact the scope of the claims being litigated in those actions,” the press release says.