66 F.4th 77
2d Cir.2023Background
- MSP Recovery Claims, Series LLC (MSP), an assignee of MAOs including EmblemHealth, sued Hereford Insurance alleging Hereford failed to reimburse MAOs under the Medicare Secondary Payer (MSP) Act for conditional payments.
- MSP’s exemplar claim involved beneficiary N.G.: EmblemHealth paid certain medical bills after N.G.’s 2014 accident; Hereford (a no-fault insurer) reported those claims to CMS under Section 111 and did not reimburse EmblemHealth.
- MSP alleged that Section 111 reporting amounted to an admission of Hereford’s liability, giving MSP Article III standing to sue for double damages under the MSP Act and to pursue a putative class.
- The district court dismissed MSP’s amended complaint for lack of standing, holding MSP failed to plead injury-in-fact or causation and rejecting the contention that Section 111 reporting is an admission of liability; it also denied further leave to amend for repeated failure to cure.
- On de novo review the Second Circuit affirmed: Section 111 reporting does not admit liability; MSP therefore failed to allege a concrete, fairly traceable injury and lacked standing; the denial of leave to amend was not an abuse of discretion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether MSP has Article III standing (injury-in-fact and causation) | Section 111 reporting is an admission Hereford was primary payer and thus EmblemHealth’s payments were reimbursable, producing a concrete, traceable injury to MSP’s assignors | Section 111 requires reporting of claims involving Medicare beneficiaries "regardless of whether or not there is a determination or admission of liability," so reporting is not an admission and does not establish reimbursability or causation | No standing: reporting does not admit liability; MSP failed to plead a concrete injury fairly traceable to Hereford, so claims dismissed |
| Whether denial of leave to amend was improper | MSP should be allowed to amend to cure pleading defects | MSP repeatedly filed similar complaints in multiple suits and failed to cure deficiencies; denial was justified | Affirmed: district court did not abuse its discretion in denying further leave to amend for repeated failure to cure |
Key Cases Cited
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (standing requires injury-in-fact, causation, redressability)
- Marietta Mem’l Hosp. Emp. Health Benefit Plan v. DaVita Inc., 142 S. Ct. 1968 (2022) (context on Medicare payer structure)
- Aetna Life Ins. Co. v. Big Y Foods, Inc., 52 F.4th 66 (2d Cir. 2022) (discussing MSP Act and MAO secondary-payer framework)
- Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA, 846 F.3d 492 (2d Cir. 2017) (use statutory scheme to interpret text)
- MSP Recovery Claims, Series LLC v. ACE Am. Ins. Co., 974 F.3d 1305 (11th Cir. 2020) (contrary Eleventh Circuit view that Section 111 reporting shows primary-payer knowledge)
- Ruotolo v. City of New York, 514 F.3d 184 (2d Cir. 2008) (repeated failure to cure is a basis to deny leave to amend)
- Foman v. Davis, 371 U.S. 178 (1962) (standard for granting leave to amend)