974 F.3d 1305
11th Cir.
2020
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Background

  • Plaintiffs are MSP Recovery Claims, Series LLC (MSPRC) and MSPA Claims 1, LLC (MSPA), collection firms suing primary insurers under the Medicare Secondary Payer Act (MSP Act) for double damages on claims they say were assigned to them.
  • Assignments came from Medicare Advantage Organizations (MAOs) and from downstream contractors (e.g., IPAs, management services orgs) that allegedly paid or reimbursed MAOs’ conditional payments under contractual arrangements.
  • District courts dismissed the complaints with prejudice, holding (1) downstream non-MAO assignors cannot access the MSP Act private cause of action (§ 1395y(b)(3)(A)) and (2) some assignments (e.g., FHCP/IMC) were invalid or cancelled. MSPRC’s HFAP-related claims were also dismissed for lack of a valid MAO assignment.
  • On appeal the Eleventh Circuit reversed: it held downstream actors who actually paid or reimbursed conditional payments can bring (or assign) claims under § 1395y(b)(3)(A); it vacated dismissals based on that categorical bar and remanded for further proceedings.
  • The court also held that dismissals grounded in the absence of a valid assignment implicate Article III standing and thus cannot be entered with prejudice when the plaintiff reasonably pled a plausible assignment; the HFAP dismissals were modified to be without prejudice.
  • The court rejected defendants’ alternative arguments (contracts were mere contingency arrangements, plaintiffs’ pre-suit notice failures, and chain-of-title defects at the pleading stage).

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Whether downstream (non-MAO) actors who paid or reimbursed conditional payments may sue or assign the MSP Act private cause of action Downstream actors that actually paid or reimbursed conditional payments suffered the same injury as MAOs and can sue or assign § 1395y(b)(3)(A) claims Only MAOs (not downstream contractors) may access § 1395y(b)(3)(A); downstream payments are contractual risk-shifting, not statutory conditional payments Downstream actors who paid or reimbursed conditional payments can bring or assign claims under § 1395y(b)(3)(A)
Effect of a putative assignor lacking or failing to convey MAO rights (HFAP/Health First issue) MSPRC reasonably pleaded that HFAP acted on behalf of MAO (Health First) and conveyed rights; dismissal with prejudice was improper Defendants argued HFAP was not an MAO and assignment conveyed nothing Absence of a valid assignment is an Article III standing defect; dismissal based on that ground must be without prejudice when the pleading was not frivolous
Validity/effect of FHCP receiver action and purported cancellation of assignment to La Ley/MSPA FHCP irrevocably assigned claims to La Ley, which irrevocably assigned to MSPA; receiver cancellation did not claw back vested, irrevocable assignments Receiver’s cancellation voided the assignment, so MSPA lacked rights The irrevocable assignment vested rights that the receiver could not rescind; MSPA sufficiently pleaded consent for assignments (FHCP and IMC)
Whether plaintiffs’ contracts are mere contingency/collection agreements or true assignments Contracts are labeled and drafted as assignments (irrevocable assignment language) and transfer rights even if recovery sharing exists Contracts are contingent/collection-only arrangements, not true assignments Contracts at issue are properly pleaded as assignments; recovery-sharing/termination clauses do not convert them into mere contingency agreements
Pre-suit notice and knowledge requirement Plaintiffs plausibly alleged defendants had actual or constructive knowledge (HHS reporting, settlements) so double damages are available Plaintiffs failed to send required recovery-demand notices; no knowledge -> no double damages Plaintiffs pleaded facts supporting actual or constructive knowledge; pre-suit notice argument rejected at pleading stage

Key Cases Cited

  • Humana Med. Plan v. Western Heritage Ins. Co., 832 F.3d 1229 (11th Cir. 2016) (held MAOs and their assignees may recover double damages under § 1395y(b)(3)(A))
  • Stalley v. Catholic Health Initiatives, 509 F.3d 517 (8th Cir. 2007) (allowed plaintiffs connected to conditional payments to sue under MSP Act to help reimburse Medicare)
  • Stalley ex rel. U.S. v. Orlando Reg'l Healthcare Sys., Inc., 524 F.3d 1229 (11th Cir. 2008) (endorsing Stalley and explaining limits on qui tam-style suits under MSP Act)
  • Netro v. Greater Baltimore Med. Ctr., Inc., 891 F.3d 522 (4th Cir. 2018) (permitting plaintiffs with a connection to a conditional payment to vindicate MSP Act claims)
  • Michigan Spine & Brain Surgeons, PLLC v. State Farm Mut. Auto. Ins. Co., 758 F.3d 787 (6th Cir. 2014) (medical providers who paid bills could seek double damages and repay Medicare from recovery)
  • MAO-MSO Recovery II v. State Farm Mut. Auto. Ins. Co., 935 F.3d 573 (7th Cir. 2019) (assignment defects implicate Article III standing; dismissal with prejudice improper if not frivolous)
  • Sprint Commc'ns Co. v. APCC Servs., Inc., 554 U.S. 269 (2008) (treats validity of assignment as affecting Article III standing)
  • Buckner v. Fla. Habilitation Network, Inc., 489 F.3d 1151 (11th Cir. 2007) (affording Skidmore deference to agency interpretations)
  • Skidmore v. Swift & Co., 323 U.S. 134 (1944) (standard for persuasive weight of agency interpretations)
  • United States v. Baxter Int'l, Inc., 345 F.3d 866 (11th Cir. 2003) (settlement agreements can establish a primary payer's constructive knowledge under MSP Act)
  • MSP Recovery Claims, Series LLC v. QBE Holdings, 965 F.3d 1210 (11th Cir. 2020) (vacating dismissal with prejudice of related MSP recovery claims)
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