US District Court for MA rules that a MAP assignee has standing

August 10, 2023 / 20 min read

In a new Medicare Advantage recovery case, the United States District Court for Massachusetts in MSP Recovery Claims Series 44, LLC v. Bunker Hill Insurance Company, 2023 WL 4744739 (D. Massachusetts, July 25, 2023)^[1]addressed the following two main questions: (1) whether a Medicare Advantage Plan’s assignee had standing to sue an insurer under the Medicare Secondary Payer (MSP)’s private cause of action (PCA) statute and, if so, (2) whether the claim was barred by the statute of limitations.

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Case Summary

Medicare Recovery Claims Series 44, LLC (“MSPRC 44”) brought this action as the assignee of Blue Cross & Blue Shield of Massachusetts (“BCBSMA”), a Medicare Advantage Plan (MAP). MSPRC 44 sued the defendant insurer for “double damages” alleging that the insurer failed to reimburse BCBSMA for medical expenses it provided one of its enrollees in connection with a settlement the insurer reached with the enrollee arising out of a motor vehicle accident.

The insurer moved to dismiss MSPRC 44’s claim for lack of standing arguing that an insurer’s Section 111 reporting was insufficient to establish proper standing to assert a MSP PCA claim. The court, however, denied the insurer’s motion finding that the insurer’s Section 111 reporting was sufficient to establish standing in this instance when considered in conjunction with the other facts alleged by MSRPC 44 in its complaint. In this regard, the court’s ruling in this case can be distinguished from the recent decisions in MSP Recovery Claims, Series LLC v. Hereford Ins. Co., 66 F.4th 77 (2d Cir. 2023), MSP Recovery Claims Series 44, LLC v. Arbella Mut. Ins. Co., 2023 WL 3481496 (D. Mass. May 16, 2023), and MSP Recovery Claims, Series LLC v. Travelers Indemnity Company, 2023 WL 4744753 (D. Connecticut, July 6, 2023) where the courts in those cases found that the plaintiff’s attempts to establish standing based mainly on an insurer’s Section 111 reporting was insufficient to establish standing.

In addition, the insurer also argued that MSPRC 44’s claim was barred by the statute of limitations (SOL). On this question, the court first had to determine the applicable SOL that it believed governed PCA claims. For the reasons discussed more fully below, the court, agreed with the recent decision from the United States Court of Appeals for the Eleventh Circuit in MSPA Claims 1, LLC v. Tower Hill Prime Ins. Co., 43 F.4^th 1259 (11^th Cir. 2022), concluding that the four-year statute of limitations per 28 U.S.C. § 1658 governed MSPRC 44’s PCA claim.

From there, the court had to determine how to calculate when the four-year limitations period starts running. On this point, the court, deviating from the Eleventh Circuit’s approach, ruled that the four-year limitations period under 28 U.S.C. § 1658(a) commences “on the date the plaintiff discovered or should have discovered the cause of action.’”^[2] In this regard, the court, as more fully explained below, indicated that the SOL would start to run based off an insurer’s reporting of a settlement as part of its Section 111 reporting stating “that the statute of limitations starts running when primary payers report their status to CMS and the information becomes discoverable by MAO’s [Medicare Advantage Organizations].”^[3]

After outlining its SOL analysis, the court was unable to determine, based on the facts before it, whether MSPRC 44’s claim would be barred under the four-year SOL. On this point, the court noted that “[i]n order to determine whether the claims are timely brought, this Court would need to know when the Section 111 reporting was complete. From the face of the complaint, all that is clear is that Section 111 reporting was completed, but the date is not specified.”^[4]

Going forward, we will now need to monitor what may happen next as this case proceeds. Key items to watch include whether MSPRC 44 will be able to ultimately prove entitlement for “double damages,” or whether the court will find that its claim is barred by the statute of limitations. The author will monitor events and provide updates as warranted.

For those interested in a more detailed overview of this decision, the following is presented:

MSPRC 44 sues the insurer for “double damages”

This case arises from a 2017 motor vehicle accident from which an individual, who was enrolled in a Blue Cross/Blue Shield Medicare Advantage Plan, sustained injuries. As a result of this accident, Blue Cross paid $1,438.05 to its enrollee’s medical providers. The enrollee filed a claim against the defendant’s insured tortfeasor. The defendant insurer allegedly “’indemnified their insured tortfeasor and made payments pursuant to a settlement.’”^[5] Blue Cross assigned its rights to recover payments to MSPRC 44 through a series of assignments.^[6]

In October 2022, MSPRC 44 sued the defendant insurer for “double damages” under the MSP’s private cause action statute for the insurer’s alleged failure to “’make appropriate and timely reimbursement of conditional payments [to Blue Cross]” for their enrollee’s accident-related medical expenses.^[7] In addition, MSPRC 44 sought declaratory relief requesting, in part, “’an accounting of all instances where [Bunker Hill or Plymouth] settled a tort claim under a third-party insurance policy or accepted coverage under a first party insurance policy.’”^[8]

Insurer moves to dismiss MSPRC 44’s claims

The defendant insurer moved to dismiss MSPRC 44’s action for lack of subject matter jurisdiction asserting the following bases: (1) MSPRC 44, as an assignee, lacked standing to sue; (2) even if assignment rights were “actionable” they were not assignable to MSPRC 44; (3) MSPRC 44 had not sufficiently alleged that its assignor properly assigned the representative enrollee’s claim.^[9]

Standing Issue

Court rules insurer’s Section 111 reporting was sufficient to establish standing when considered with the other alleged facts asserted by MSPRC 44.

As part of its motion to dismiss, the insurer argued that MSPRC 44 lacked standing as “’[the] Section 111 reporting does not provide standing to Plaintiff as a matter of plain language statutory interpretation, mandating dismissal,’” citing in support the recent decision by the United States Court of Appeals for the Second Circuit in MSP Recovery Claims, Series LLC v. Hereford Ins. Co., 66 F.4th 77 (2d Cir. 2023), and the District Court for Massachusetts’s decision in MSP Recovery Claims Series 44, LLC v. Arbella Mut. Ins. Co., 2023 WL 3481496 (D. Mass. May 16, 2023).^[10]

However, the court rejected this argument stating that “[g]iven the facts alleged here, this line of reasoning is inapplicable at the motion to dismiss stage.”^[11]The court commented further that the insurer’s “contention that its motion to dismiss be granted because standing relies solely on the Section 111 reporting is here wide of the mark.”^[12]

On this latter point, the court pointed out that “[w]hile the complaint here does refer to Section 111 reporting, this is only a part of the method the complaint alleges demonstrates knowledge and responsibility,”^[13]noting that MSPRC 44 in its complaint also states that “‘MSPRC 44 uncovers MSP Act noncompliance through data analytics, which requires cross-referencing unreimbursed, accident-related conditional payments in listed assignors’ claims data with instances where insurers reported to CMS under Section 111 that they were responsible for the accidents.’”^[14] In this regard, the court noted “[t]he contrast between simply claiming liability through a Section 111 report and a more robust analysis …”^[15]

As part of its analysis, the court referenced “that Section 111 reporting and other information has been carefully addressed in MSP Recovery Claims, Series LLC v. Nationwide Mut. Ins. Co., 594 F. Supp. 3d 947, 956–57 (S.D. Ohio 2022)”^[16] noting that the United States District Court for the Southern District of Ohio in that case stated “’Section 111 reports, without more, may be insufficient to establish an insurer’s status as the primary plan for a claim covered by an MAO.’” (court’s emphasis).^[17] In reviewing the Nationwide decision, the court noted that what qualified as “’more’” in Nationwide “was the plaintiffs going beyond the Section 111 reporting, ‘listing either Defendants’ no fault insurance policy that should have covered injuries a beneficiary received in an accident or Defendants’ liability insurance policy that, per a settlement agreement, should have covered injuries a beneficiary received,’ and the detail of the ‘medical treatment that should have been covered under the applicable insurance policy but that was instead covered by the MAO.’”^[18]

Similar to the facts in Nationwide, the court noted that “[a]ll the information to which reference is made in that case is present in MSPRC 44’s complaint here.”^[19] Specifically, the court noted that MSPRC 44 in its complaint included the following allegations: “’L.P. was injured in an accident. As a direct and proximate result of the accident, L.P. sustained injuries that required medical items and services.”^[20]‘Defendants’ insured responsible for the incident was insured under policy numbers 352701322727 and BHH00001059739.’^[21] ‘Following L.P.’s claim against Defendants’ insured, Defendants indemnified their insured tortfeasor and made payments pursuant to a settlement with L.P.’”^[22]

From this analysis, the court concluded that “[w]hen construed together, the reporting and the accompanying facts state a plausible claim.”^[23] Accordingly, the court denied the insurer’s motion to dismiss stating that “construing the complaint in the light most favorable to MSPRC 44, as this Court must at this stage, MSPRC 44 has plausibly alleged that Bunker Hill is a primary plan responsible for reimbursement to BCBSMA.”^[24]

Statute of Limitations

Court rules MSP private cause of action claims are governed by a four-year SOL per 28 U.S.C. § 1658.

After addressing standing, the court next turned its attention to determining the applicable statute of limitations (SOL) regarding MSPRC 44’s private cause of action (PCA) claim. To start, the court noted that the MSP statute is silent as to the SOL regarding MSP PCA claims, and that there was no controlling authority on the issue from the United States Court of Appeals for the First Circuit.^[25] Thus, the court explained that in situations where there is no applicable federal statute of limitations, courts typically must “’borrow’ the most suitable statute or other rule of timeliness from some other source.’”^[26]

As part of this analysis, the court stated it agreed with the United States Court of Appeals for the Eleventh Circuit’s recent decision in MSPA Claims 1, LLC v. Tower Hill Prime Ins. Co., 43 F.4^th 1259 (11^th Cir. 2022) which applied a four-year statute of limitations per 28 U.S.C. § 1658.^[27]

With respect to 28 U.S.C. § 1658, the court noted that this statute, provides, in pertinent part, that “[e]xcept as otherwise provided by law, a civil action arising under an Act of Congress enacted after [December 1, 1990] may not be commenced later than 4 years after the cause of action accrues.”^[28] In applying this statute, the court noted that the Eleventh Circuit reasoned that while the PCA statute was enacted before 1986, which was before Section 1658 was enacted, the Eleventh Circuit concluded that “’Medicare Part C – which created MAO’s and granted them a statutory right to seek reimbursable fees, thereby empowering them to sue under the private cause of action – wasn’t enacted until 1997.’”^[29] From this, the District Court for Massachusetts explained that “[t]he Eleventh Circuit therefore determined section 1658(a)’s catch-all provision applied to the private cause of action brought by MAO’s”^[30]and that “[t]his Court concurs with the Eleventh Circuit’s determination.”^[31]

“Discovery rule” applies to determine when the four-year SOL starts running under 28 U.S.C. § 1658.

While the court agreed with the Eleventh Circuit that the 28 U.S.C. § 1658’s four-year SOL governed MSP PCA claims, it disagreed with the Eleventh Circuit regarding when an action “accrues” in terms of calculating the four-year period.^[32] On this point, the court noted that 28 U.S.C. § 1658(a) requires that a claim be brought no “later than 4 years after the cause of action accrues.” (court’s emphasis).^[33]

On this point, the court noted, in general, that the 11^th Circuit applied the “occurrence rule” in determining how to calculate the four-year SOL which “’begins the limitations period on the date that the violation of the plaintiff’s legal right occurred.’”^[34]

However, the court rejected the “occurrence rule” stating: “This Court disagrees with a rule that provides that the cause of action accrues when the MAO pays the medical fees and becomes entitled to reimbursement. At that moment the MAO would have no reason to know that it was entitled to any reimbursement and that it had a claim against a responsible primary payer.”^[35]

Instead, the court ruled that it would apply the “discovery rule” in calculating the four-year limitations period under 28 U.S.C. § 1658(a) which it noted “’commences the limitations period on the date the plaintiff discovered or should have discovered the cause of action.’”^[36]

As part of its analysis regarding the “discovery rule,” the court noted that under the government’s cause of action it is the “notice of settlement” that triggers the start of the claim, citing 42 U.S.C. 1395y(b)(2)(B)(iii) which the court noted states: “An action may not be brought by the United States under this clause with respect to payment owed unless the complaint is filed not later than 3 years after the date of the receipt of notice of a settlement, judgment, award, or other payment made pursuant to paragraph (8) relating to such payment owed.”^[37] Further, the court stated that “under the private cause of action, the MSP Act requires defendants to file a section 111 reporting to CMS” and that “[s]uch reports are made ‘after the claim is resolved … through a settlement, judgment, award, or other payment (regardless of whether or not there is a determination or admission of liability.’”^[38]

In addition, the court noted that Medicare Advantage Plans “are not owed any type of notice under the private cause of action, so the only way they can be made aware that there exists a primary plan are the reports submitted to CMS that put them on notice.”^[39] Thus, from the court’s view, “[a]llowing the ‘occurrence rule’ that the Eleventh Circuit has adopted would encourage primary payers to delay reporting their claims to CMS, which would defeat the purpose of the Act itself, which is to allow Medicare to recover claims for which it conditionally paid, and for which it ultimately is not responsible.”^[40] Thus, based on this analysis, the court held “that the statute of limitations starts running when primary payers report their status to CMS and the information becomes discoverable by MAO’s.”^[41]

The court needs more information to determine whether MSPRC 44’s claim is barred under the four-year SOL.

After outlining its SOL analysis, the court noted that it was unable, based on the facts before it, to determine at this time whether MSPRC 44’s claims would be barred under the four-year SOL. On this point, the court noted that “[i]n order to determine whether the claims are timely brought, this Court would need to know when the Section 111 reporting was complete. From the face of the complaint, all that is clear is that Section 111 reporting was completed, but the date is not specified.”^[42]

Court’s Ruling

Based on the foregoing, the court denied the insurer’s motion to dismiss for failure to state a claim stating: “At this stage of the proceedings, dismissal for lack of injury-in-fact and failure to state a claim would be premature. MSPRC 44’s complaint alleges sufficient facts to support count I, which asserts a private cause of action under 42 U.S.C. § 1395y(b)(3)(A), to recover double damages from Bunker Hill for its failure to make appropriate and timely reimbursement of conditional payments to BCBSMA for beneficiaries’ accident-related medical expenses.”^[43] The court further noted the insurer was “free to re-raise this issue at summary judgment.”^[44]

What’s Next?

Going forward, we will now need to monitor what may happen next as this case proceeds. Now that the court has found MSPRC 44 has standing to assert its private cause of action claim, key items to watch include whether MSPRC 44 will be able to ultimately prove entitlement for “double damages” against the insurer, or whether the court will find that their claim is barred by the statute of limitations. The author will monitor events and provide updates as warranted.

Questions?

Please do not hesitate to contact the author if you have any questions or would like to learn how Verisk can help you address CMS conditional payment, Treasury, or Medicare Advantage/Part D claims.

[1] The author notes that the style of this case also includes “Plymouth Rock Home Assurance Corporation” as a named defendant. In this regard, the United States District Court for Massachusetts, in footnote 3 of its decision, noted, that according to the Massachusetts Corporations Division website Bunker Hill Insurance Company changed its name to Plymouth Rock Home Assurance Corporation. In relation to this, the court noted that it would refer to the defendants solely as “Bunker Hill in the present Memorandum & Order.” MSP Recovery Claims Series 44, LLC v. Bunker Hill Insurance Company, 2023 WL 4744739, footnote 3 (D. Massachusetts, July 25, 2023). Based on this, the author in this article, for the sake of simplicity, has listed Bunker Hill as the defendant and refers to the defendant at various points in this article in the singular as “insurer.”

[2] MSP Recovery Claims Series 44, LLC v. Bunker Hill Insurance Company, 2023 WL 4744739, at *7 (D. Massachusetts, July 25, 2023), citing MSPA Claims 1, LLC v. Tower Hill Prime Ins. Co., 43 F.4^th 1259, 1265 (11^th Cir. 2022) and SCA Hygiene Prods. Aktiebolag v. First Quality Baby Prods., LLC, 580 U.S. 328, 137 (2017).

[3] MSP Recovery Claims Series 44, LLC v. Bunker Hill Insurance Company, 2023 WL 4744739, at *8 (D. Massachusetts, July 25, 2023).

[4] Id. at *9.

[5] Id. at *3.

[6] Id at *6.

[7] Id. at *1.

[8] Id. *1.

[9] Id. at *4.

[10] MSP Recovery Claims Series 44, LLC v. Bunker Hill Insurance Company, 2023 WL 4744739, at *4 (D. Massachusetts, July 25, 2023). In addition, the insurer cited MSP Recovery Claims, Series LLC & MSP Recovery Claims Series 44, LLC v. Safeco Ins. Co. of Am., LM Gen. Ins. Co., & Liberty Mut. Ins. Co., No. 22-CV-10809, 2023 WL 3481586 (D. Mass. May 16, 2023).

[11] MSP Recovery Claims Series 44, LLC v. Bunker Hill Insurance Company, 2023 WL 4744739, at *4 (D. Massachusetts, July 25, 2023).

[12] Id. at *5.

[13] Id. at *5.

[14] MSP Recovery Claims Series 44, LLC v. Bunker Hill Insurance Company, 2023 WL 4744739, at *5 (D. Massachusetts, July 25, 2023), citing MSPRC 44’s complaint at ¶ 24.

[15] MSP Recovery Claims Series 44, LLC v. Bunker Hill Insurance Company, 2023 WL 4744739, at *5 (D. Massachusetts, July 25, 2023).

[16] Id.

[17] MSP Recovery Claims Series 44, LLC v. Bunker Hill Insurance Company, 2023 WL 4744739, at *5 (D. Massachusetts, July 25, 2023), citing MSP Recovery Claims, Series LLC v. Nationwide Mut. Ins. Co., 594 F. Supp. 3d 947, 956–57 (S.D. Ohio 2022).

[18] MSP Recovery Claims Series 44, LLC v. Bunker Hill Insurance Company, 2023 WL 4744739, at *5 (D. Massachusetts, July 25, 2023), citing MSP Recovery Claims, Series LLC v. Nationwide Mut. Ins. Co., 594 F. Supp. 3d 947, 957 (S.D. Ohio 2022).

[19] MSP Recovery Claims Series 44, LLC v. Bunker Hill Insurance Company, 2023 WL 4744739, at *5 (D. Massachusetts, July 25, 2023).

[20] MSP Recovery Claims Series 44, LLC v. Bunker Hill Insurance Company, 2023 WL 4744739, at *5 (D. Massachusetts, July 25, 2023), citing MSPRC 44’s complaint at ¶ 40.

[21] MSP Recovery Claims Series 44, LLC v. Bunker Hill Insurance Company, 2023 WL 4744739, at *5 (D. Massachusetts, July 25, 2023), citing MSPRC 44’s complaint at ¶ 41.

[22] MSP Recovery Claims Series 44, LLC v. Bunker Hill Insurance Company, 2023 WL 4744739, at *5 (D. Massachusetts, July 25, 2023), citing MSPRC 44’s complaint at ¶ 44.

[23] MSP Recovery Claims Series 44, LLC v. Bunker Hill Insurance Company, 2023 WL 4744739, at *6 (D. Massachusetts, July 25, 2023).

[24] Id.

[25] Id.

[26] MSP Recovery Claims Series 44, LLC v. Bunker Hill Insurance Company, 2023 WL 4744739, at *6 (D. Massachusetts, July 25, 2023), citing, DelCostello v. Int’l Bhd. of Teamsters, 462 U.S. 151, 158, 76 L. Ed. 2d 476 (1983).

[27] MSP Recovery Claims Series 44, LLC v. Bunker Hill Insurance Company, 2023 WL 4744739, at *6 (D. Massachusetts, July 25, 2023).

Regarding 28 U.S.C. § 1658, this statute states in full as follows:

1658. Time limitations on the commencement of civil actions arising under Acts of Congress

(a) Except as otherwise provided by law, a civil action arising under an Act of Congress enacted after the date of the enactment of this section may not be commenced later than 4 years after the cause of action accrues.

(b) Notwithstanding subsection (a), a private right of action that involves a claim of fraud, deceit, manipulation, or contrivance in contravention of a regulatory requirement concerning the securities laws, as defined in section 3(a)(47) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(47)), may be brought not later than the earlier of-

(1) 2 years after the discovery of the facts constituting the violation; or

(2) 5 years after such violation.

[28] MSP Recovery Claims Series 44, LLC v. Bunker Hill Insurance Company, 2023 WL 4744739, at *6 (D. Massachusetts, July 25, 2023).

[29] MSP Recovery Claims Series 44, LLC v. Bunker Hill Insurance Company, 2023 WL 4744739, at *6 (D. Massachusetts, July 25, 2023), citing MSPA Claims 1, LLC v. Tower Hill Prime Ins. Co., 43 F.4^th 1259, 1264(11^th Cir. 2022).

[30] MSP Recovery Claims Series 44, LLC v. Bunker Hill Insurance Company, 2023 WL 4744739, at *6 (D. Massachusetts, July 25, 2023), citing MSPA Claims 1, LLC v. Tower Hill Prime Ins. Co., 43 F.4^th 1259, 1264-65 (11^th Cir. 2022).

[31] MSP Recovery Claims Series 44, LLC v. Bunker Hill Insurance Company, 2023 WL 4744739, at *6 (D. Massachusetts, July 25, 2023).

[32] Id. at *7

[33] Id.

[34] MSP Recovery Claims Series 44, LLC v. Bunker Hill Insurance Company, 2023 WL 4744739, at *7 (D. Massachusetts, July 25, 2023), citing MSPA Claims 1, LLC v. Tower Hill Prime Ins. Co., 43 F.4^th 1259, 1265 (11^th Cir. 2022) and SCA Hygiene Prods. Aktiebolag v. First Quality Baby Prods., LLC, 580 U.S. 328, 137 (2017).

[35] MSP Recovery Claims Series 44, LLC v. Bunker Hill Insurance Company, 2023 WL 4744739, at *8 (D. Massachusetts, July 25, 2023).

[36] MSP Recovery Claims Series 44, LLC v. Bunker Hill Insurance Company, 2023 WL 4744739, at *7 (D. Massachusetts, July 25, 2023), citing MSPA Claims 1, LLC v. Tower Hill Prime Ins. Co., 43 F.4^th 1259, 1265 (11^th Cir. 2022) and SCA Hygiene Prods. Aktiebolag v. First Quality Baby Prods., LLC, 580 U.S. 328, 137 (2017).

[37] MSP Recovery Claims Series 44, LLC v. Bunker Hill Insurance Company, 2023 WL 4744739, at *8 (D. Massachusetts, July 25, 2023).

[38] MSP Recovery Claims Series 44, LLC v. Bunker Hill Insurance Company, 2023 WL 4744739, at *8 (D. Massachusetts, July 25, 2023), citing 42 U.S.C. 1395y(b)(8)(C).

[39] MSP Recovery Claims Series 44, LLC v. Bunker Hill Insurance Company, 2023 WL 4744739, at *8 (D. Massachusetts, July 25, 2023), citing 42 U.S.C. 1395y(b)(8)(C).

[40] MSP Recovery Claims Series 44, LLC v. Bunker Hill Insurance Company, 2023 WL 4744739, at *8 (D. Massachusetts, July 25, 2023).

[41] Id.

[42] Id at *9.

[43] Id.

[44] Id.

United States District Court for Massachusetts rules that a MAP assignee has standing

Case Summary

Standing Issue

Statute of Limitations