United States District Court, S.D. New York
MSP RECOVERY CLAIMS, SERIES LLC, a Delaware limited liability company, and Series 16-08-483, a designated series of MSP Recovery Claims, Series LLC, Plaintiffs,
TECHNOLOGY INSURANCE COMPANY, INC., a Delaware corporation; AMTRUST FINANCIAL SERVICES, INC., a Delaware corporation, Defendants.
ANALISA TORRES UNITED STATES DISTRICT JUDGE
MSP Recovery Claims, Series LLC and Series 16-08-483 (a
designated series of MSP Recovery Claims, Series LLC), bring
this putative class action under 42 U.S.C. § l395y,
otherwise known as the Medicare Secondary Payer Act
("MSPA"), to recover conditional Medicare payments
against Defendants Technology Insurance Company, Inc.
("TIC"), Amtrust Financial Services, Inc.
("AMFSI''), and Amtrust North America, Inc.
("Amtrust"). Compl., ECF No. 33. Defendants move to
dismiss this action for lack of subject matter jurisdiction
under Federal Rule of Civil Procedure 12(b)(1) and for
failure to state a claim under Rule 12(b)(6). ECF No. 46. For
the reasons stated below, Defendants' motion to dismiss
for lack of subject matter jurisdiction is GRANTED.
Part C of the Medicare Act, "Medicare enrollees may
elect to receive their benefits from private insurers, called
[Medicare Advantage] organizations, rather than from the
government." Potts v. Rawlings Co., LLC, 897
F.Supp.2d 185, 189 (S.D.N.Y. 2012). The MSPA “requires
that entities known as ‘primary payers,' such as
insurance companies, must reimburse Medicare (or, as in this
case, a Medicare Advantage Organization . . . for payments
for medical items and services that were covered by the
insurance company's policy.” MSP Recovery
Claims, Series LLC v. QBE Holdings, Inc., No. 18 Civ.
1458, 2019 WL 1490531, *1 (M.D. Fla. Apr. 4, 2019).
“Medicare generally may not pay for any item or service
if ‘payment has been made, or can reasonably be
expected to be made, with respect to the item or service'
under a primary plan.” Woods v. Empire Health
Choice, Inc., 574 F.3d 92, 95 (2d Cir. 2009) (quoting 42
U.S.C. § 1395y(b)(2)(A)(i)). Where “the relevant
primary plan ‘has not made or cannot reasonably be
expected to make payment with respect to such item or service
promptly,' Medicare may make the necessary payment,
” also known as a conditional payment. Id.
(quoting 42 U.S.C. § 1395y(b)(2)(B)(i)). The primary
plan must, however, reimburse the Medicare Advantage
Organization (“MAO”) for such a payment “if
it is demonstrated that such primary plan has or had a
responsibility to make payment with respect to such item or
service.” 42 USC § 1395y(b)(2)(B)(ii).
standing is challenged on the basis of the pleadings, we
‘accept as true all material allegations of the
complaint, and must construe the complaint in favor of the
complaining party.'” United States v.
Vazquez, 145 F.3d 74, 81 (2d Cir. 1998) (quoting
Warth v. Seldin, 422 U.S. 490, 501 (1975)).
Plaintiffs bring this suit under the MSPA alleging
“Defendants' systematic and uniform failure to
reimburse conditional Medicare payments.” Compl. ¶
1. According to the complaint, Defendants, insurance
companies,  have repeatedly failed to reimburse
payments made on behalf of enrollees “for medical
expenses resulting from injuries sustained in an
accident.” Id. ¶ 2; see also Id.
¶¶ 129-130. Defendants are “primary
plan[s]” under § 1395y(b)(2)(A) because
“[they] are  liability insurer[s].” Compl.
have designed and developed a software system (the “MSP
System”), that allows Plaintiffs to “capture,
compile, synthesize, and funnel large amounts of data to
identify claims class-wide.” Id. ¶ 122.
“The MSP System captures data from different sources to
identify the [c]lass [m]ember enrollees' medical expenses
incurred as a result of an accident and which should have
been reimbursed for by Defendants after they entered into a
settlement.” Id. Plaintiffs then “merge
the Defendants' data with the information available on
the MSP System to discover and identify a Medicare eligible
person for whom reimbursement of secondary medical payments
should have been made, along with any information stored as
to potential class members.” Id. ¶ 123.
The MSP System utilizes medical diagnosis and procedure codes
“to identify and obtain any information regarding an
enrollee's claim, such as the type of injury suffered,
the circumstances that caused the injury, whether the listed
primary insurance provider made payment, and whether the
insurance carrier was a liability provider.”
Id. ¶ 124.
complaint sets forth 16 representative claims that
“demonstrate Plaintiffs' right to recover for
Defendants' failure to meet its reimbursement obligations
under the” MSPA. Compl. at 6; see also Id.
¶¶ 7-98. Plaintiffs describe “Defendants'
failure to reimburse conditional payments” with respect
to a number of individuals enrolled in a Medicare Advantage
plan issued and administered by MAO Health Insurance Plan of
Greater New York (“HIP”), id. ¶ 7,
and “how that failure caused an injury in fact to an
MAO, which subsequently assigned its recovery rights to
Plaintiffs.” Id. ¶ 6. The Court
highlights two representative claims for discussion purposes:
• The M.P.1. claim: Between December 8, 2015, and April
11, 2018, M.P.1. was injured in an accident and the
tortfeasor was insured by Defendant Amtrust, which did not
pay for M.P.1.'s accident-related injuries. Id.
at ¶¶ 14, 18.
• The D.P. claim: On September 26, 2017, D.P. was
injured in an accident and the tortfeasor was insured by
Defendant Amtrust, which did not pay for D.P.'s
accident-related injuries. Id. at ¶¶ 74,
are not MAOs. Rather, they are assignees of HIP, an MAO.
See Compl. ¶¶ 100-101; see also
Assignment Agreement, ECF No. 33-56. The assignment agreement
attached as Exhibit Q to the complaint provides in part:
W[hereas], [a]ssignor has certain legal and equitable rights
to seek reimbursement and/or recover payments from primary
payers . . . [a]ssignor hereby irrevocably assigns,
transfers, conveys, sets over and delivers to [a]ssignee, and
any of its successors and assigns, any and all of
[a]ssignor's right, title, ownership and interest in and
to all [a]ssigned Medicare [r]ecovery [c]laims . . . .
Agreement at 2-3. The assignment agreement assigns only those
rights concerning “Medicare [h]ealth [c]are [s]ervices
that were rendered and paid for by [HIP] during the six . . .
year period beginning September 29, 2011 and ending September
29, 2017.” Id. No assignment is made for