MSPA Claims 1, LLC v. Covington Specialty Insurance Co.
212 F. Supp. 3d 1250
S.D. Fla.2016Background
- FHCP was a Medicare Advantage HMO (a secondary payer) that paid $15,825.43 for medical care for enrollee F.C.; FHCP entered receivership on December 10, 2014.
- FHCP had a one-year contract (renewable) with La Ley Recovery Systems, Inc. (the La Ley Agreement) that required FHCP approval for any assignment by La Ley.
- FHCP (allegedly) assigned its subrogation/reimbursement rights to La Ley, and La Ley in turn purportedly assigned those rights to MSPA Claims 1, LLC (Plaintiff). Plaintiff sued Covington Specialty Insurance Co. for failure to reimburse under the Medicare Secondary Payer Act (MSP Act) and related state-law claims.
- Covington moved to dismiss for lack of standing, arguing the assignments were invalid or ineffective; the Receiver repudiated the La Ley Agreement and notified parties that La Ley was not authorized to pursue recoveries for FHCP.
- The court found (a) the Amended Complaint did not allege FHCP approval of the La Ley-to-MSPA assignment as required by the La Ley Agreement, and (b) the Receiver had rejected the La Ley Agreement before suit, rendering any downstream assignment ineffective.
- The court dismissed the Amended Complaint without prejudice for lack of Article III standing, denied Plaintiff’s motion for reconsideration and leave to amend, and closed the case.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to sue as assignee of FHCP’s MSP Act claim | MSPA was validly assigned FHCP’s reimbursement/subrogation rights (via La Ley) before suit | Assignments were invalid/ineffective: FHCP approval was not alleged and Receiver repudiated the La Ley Agreement | Dismissed for lack of standing: no valid assignment existed when suit was filed |
| Effect of Receiver’s repudiation of La Ley Agreement | Any vested rights survived repudiation or were restored by later settlement; Plaintiff could amend to plead pre-filing assignment | Receiver’s written rejection canceled executory contracts; repudiation rendered assignments ineffective | Repudiation defeated Plaintiff’s standing; later settlement (post-filing) cannot cure pre-filing lack of standing |
| Judicial notice of post-filing settlement between Receiver and La Ley | Settlement shows La Ley validly assigned rights to Plaintiff | Settlement occurred after filing and cannot create Article III standing that did not exist at filing | Court judicially noticed the settlement date but held post-filing developments cannot confer standing at filing |
| Motion to amend / reconsider under Rule 59(e) | Leave to amend to add allegation of pre-filing assignment; Rule 59(e) relief warranted | Plaintiff could and should have raised facts/arguments earlier; new arguments are untimely | Denied: Rule 59(e) not a vehicle to raise arguments/evidence available earlier; no clear error or intervening controlling law affecting the court’s core ruling |
Key Cases Cited
- Stalley ex rel. United States v. Orlando Reg'l Healthcare Sys., Inc., 524 F.3d 1229 (11th Cir. 2008) (standing is jurisdictional; Rule 12(b)(1) governs challenges to standing and may be facial or factual)
- Humana Med. Plan, Inc. v. W. Heritage Ins. Co., 832 F.3d 1229 (11th Cir. 2016) (MSP Act permits MAOs to sue primary payers but only where the plaintiff has suffered an injury in fact)
- McElmurray v. Consolidated Gov't of Augusta–Richmond County, 501 F.3d 1244 (11th Cir. 2007) (distinguishing facial and factual Rule 12(b)(1) attacks)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (Article III standing must exist at the commencement of suit)
- Focus on the Family v. Pinellas Suncoast Transit Auth., 344 F.3d 1263 (11th Cir. 2003) (standing is assessed as of the time the complaint is filed)
- Arthur v. King, 500 F.3d 1335 (11th Cir. 2007) (Rule 59(e) relief is limited to newly discovered evidence or manifest errors of law or fact)