Four Corners Issue or More?

In the MSP Recovery LLC vs Progressive Select Insurance case, 2015 WL 1515222 , decided by the U S  District Court, S.D. Florida on April 2, 2015 , the Court was asked to review Progressive’s motion to dismiss the plaintiff’s complaint for double damages under the MSP’s Private Cause of Action (PCA)  provision. The PCA , set out in Section 1395y(b)(3)(A) establishes “ a private cause of action for damages ( which shall be in an amount double the amount otherwise provided) in the case of a primary plan which fails to provide for primary payment ( or appropriate reimbursement) in accordance with paragraphs (1) and (2)(A)”.

In this case, Florida Healthcare Plus (FHCP), a Medicare Advantage organization (MAO), sought to recover medical payments that it had made on behalf of one of its members. The member’s medical treatment had been provided as a result of injuries sustained in a car accident. FHCP claimed that it was entitled to reimbursement from Progressive since the member had coverage under a Progressive personal injury protection (PIP) policy. Progressive refused to reimburse the FHCP MAO plan resulting in this cause of action brought by MSP Recovery on behalf of FHCP.

Progressive filed a motion to dismiss this claim on three grounds. It challenged: MSP Recovery’s standing to bring the action, the Court’s subject matter jurisdiction over the issue and the existence of a claim upon which relief may be granted. In ruling on the motion to dismiss, the Court noted that its review was limited to the “four corners of the complaint, along with any documents attached to the complaint.” Tellabs, Inc. v. Makor Issues 551 U.S. 308, 322 (2007) It also noted that “conclusory allegations will not suffice to state a claim; the complaint must allege sufficient facts to state a plausible claim for relief.” See Ashcroft v. Iqbal, 556 U.S. 662 (2009) Furthermore, a review of a motion to dismiss assumes that “all plausible factual allegations” in the complaint “must be taken as true”.

In applying this limited review to the issue of standing, the Court noted that although the Plaintiff’s documentary evidence had conflicting information regarding the entity actually assigning it the right of recovery, this did not sufficiently refute the allegations in the Plaintiff’s complaint. Subject matter jurisdiction was found based on the In re Avandia Mktg. Sales Practices and Products Liab. Litig., case 685 F 3d 353, that held MAOs had a private right of action under the MSP laws.

In reviewing Progressive’s third argument that the MSP Recovery complaint failed to state a claim upon which relief may be granted, the Court reviewed the components that were needed in order to state a claim. It noted that Section 1395y(b)(3)(A) provides a private right of action to MAOs for reimbursement from a primary plan when “it is demonstrated that such primary plan has or had a responsibility to make payment….” The Court noted that the Glover v Liggett Grp 459 F.3d 1304 (2006) Eleventh Circuit decision interpreted this provision to require a prior “demonstration of a primary plan’s responsibility to pay as a condition precedent to bringing suit” under the PCA provision. A primary plan’s responsibility to pay is “demonstrated by judgment, a payment conditioned upon the recipient’s compromise, waiver or release (whether or not there is a determination or admission of liability) of payment for items or services included in a claim against the primary plan or the primary plan’s insured or by other means.” 42 U.S.C section 1395 y(b)(2)(B)(ii). In granting Progressive’s motion to dismiss for failure to state a claim, the Court specifically stated “Here, Plaintiff does not allege that Defendant’s responsibility to pay has been demonstrated by any means.” The decision further noted that Plaintiff may reassert its claim after Defendant’s responsibility to pay under Section 1395y(b)(3)(A) has been demonstrated.

Given the Court’s comments that it may only consider the “four corners of the complaint” in reviewing a motion to dismiss , as well as its comments that “conclusory allegations” will not suffice to state a claim, it is important to review the actual MSP Recovery Complaint in order to assess the significance of this Court’s decision. A 23 page amended Complaint was filed on February 10, 2015. Although the Complaint is very detailed in many aspects, its descriptions regarding Progressive’s obligations as the primary payer might be described as “conclusory allegations”. Progressive, the Defendant is described as having “an affirmative duty” to pay and is identified as “the primary insurer” without any allegations outlining the contractual obligation that Progressive has to its insured to make payment for injury related expenses. In light of this, it is unclear if the Court would have reached the same conclusion if the “four corners of the complaint” provided greater detail. We will keep you advised of any further litigation in this matter.

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