MSPA Claims 1, LLC v. Infinity Auto Insurance Company
2016 U.S. App. LEXIS 15984
| 11th Cir. | 2016Background
- The cases are appeals from district-court dismissals by assignees (MSP Recovery LLC and MSPA Claims 1, LLC) of claims under the Medicare Secondary Payer Act (MSP Act) seeking double damages for Medicare Advantage organizations’ conditional payments after automobile accidents.
- Plaintiffs are assignees of Florida Healthcare Plus (FHCP), an HMO/Medicare Advantage Organization that made conditional Medicare payments; defendants are Florida personal-injury-protection (PIP) no-fault insurers alleged to be primary payers under the MSP Act.
- Plaintiffs sued under 42 U.S.C. § 1395y(b)(3)(A), alleging defendants’ insurance contracts created primary-payment obligations; district courts dismissed, relying on this circuit’s Glover decision requiring demonstration of responsibility (via judgment or settlement) separate from the MSP claim.
- Defendants argued (1) assignees lack standing because assignments from Medicare Advantage Organizations might be barred by federal anti-assignment law, and (2) contractual obligations do not satisfy the MSP Act’s “demonstrated responsibility” prerequisite absent a separate judgment/settlement; some defendants also argued policy limits were exhausted.
- The Eleventh Circuit rejected the anti-assignment standing challenge (assignments here transferred statutory claims, not FHCP’s contract rights with the federal government) and held that a contractual obligation can satisfy the MSP Act’s demonstrated-responsibility requirement; judgment/settlement is not always required.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing of assignee (assignment validity) | Assignment of FHCP’s MSP Act claims to assignee is valid; assignee has injury-in-fact | Assignment invalid under federal anti-assignment statute because FHCP’s contract with Medicare cannot be assigned | Assignee has standing: claims are statutory and separate from FHCP’s government contract, §6305 does not bar these assignments |
| Demonstrated-responsibility prerequisite | A defendant’s contractual obligation (insurance policy) is among “other means” to demonstrate responsibility; no separate judgment required | Glover requires a separate adjudication or agreement; contract liability must be reduced to judgment/settlement before MSP suit | A contractual obligation may satisfy the demonstrated-responsibility requirement; judgment/settlement not always required, but plaintiff must plead and later prove that the contract makes defendant responsible for the claimed expenses |
| Effect of CMS regulations | Regulations list contractual obligation as an express means to demonstrate responsibility; support plaintiffs’ view | Regulations cannot override judicial reading that requires separate adjudication | Court gives Chevron weight to CMS regulation and treats contractual obligations as a permissible method under “other means” |
| Policy limits exhausted (alternative defense) | If defendant ever had responsibility, MSP §1395y(b)(2)(B)(ii) liability may still attach even after payment to policy limit | If policy limits were paid, defendant no longer had responsibility to pay and so no MSP liability | Court declined to decide; remanded to district court to address exhaustion/policy-limit defenses in the first instance |
Key Cases Cited
- Glover v. Liggett Grp., Inc., 459 F.3d 1304 (11th Cir. 2006) (held demonstrated-responsibility prerequisite must be met before pursuing MSP private cause of action)
- Cochran v. U.S. Health Care Fin. Admin., 291 F.3d 775 (11th Cir. 2002) (explains Medicare’s conditional-payment and secondary-payer framework)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (establishes Article III standing requirements)
- Chevron U.S.A. Inc. v. Natural Res. Def. Council, 467 U.S. 837 (1984) (deference framework for agency statutory interpretations)
- Corley v. United States, 556 U.S. 303 (2009) (statutory interpretation canon against rendering provisions superfluous)
- Woods v. Empire Health Choice, Inc., 574 F.3d 92 (2d Cir. 2009) (describing scope of MSP Act private cause of action as recovery by private parties who suffered injury)