As many may recall, earlier this year the United States Court of Appeals for the Second Circuit[1] in MSP Recovery Claims, Series LLC v. Hereford Ins., 66 F.44th 77 (2d Cir. 2023) ruled that an insurer’s Section 111 reporting did not provide standing for a claim under the Medicare Secondary Payer statute’s private cause of action (PCA) provision.[2] This question recently resurfaced before the United States District Court for Massachusetts (hereinafter “District Court for Massachusetts”).[3] Regarding this issue, the District Court for Massachusetts, finding the Hereford decision persuasive, has now also ruled that an insurer’s Section 111 reporting alone does not establish standing for a PCA suit.
The below outlines this new development, and related claims considerations, as follows.
Summary
In MSP Recovery Claims Series 44, LLC v. Arbella Mutual Insurance Company, 2023 WL 3481496 (D. Mass. May 16, 2023) the plaintiff, MSP Recovery, as an assignee of unnamed Medicare Advantage Plans [MAP], sued the defendant no-fault insurer for “double damages” under the MSP’s PCA statute for the insurer’s alleged failure to reimburse MAP payments.[4] As part of its claim, MSP Recovery asserted that the defendant had admitted its responsibility for paying the representative beneficiaries’ medical expenses based on its Section 111 reporting and, therefore, was obligated to reimburse the MAP.[5] The defendant moved to dismiss.
The United States District Court for Massachusetts rejected MSP Recovery’s argument and granted the defendant’s motion to dismiss (without prejudice). In reaching this decision, the court noted it was persuaded by the recent ruling from the United States Court of Appeals for the Second Circuit in MSP Recovery Claims, Series LLC v. Hereford Ins., 66 F.44th 77 (2d Cir. 2023).
In the Hereford case, as discussed more fully in the author’s recent article, the Second Circuit, in a very detailed opinion, concluded, in main part, that an insurer’s Section 111 reporting alone did not establish standing to sue (or liability) under the MSP’s private cause of action provision based on its interpretation of the text of Section 111 statute (42 U.S.C. 1395y(b)(8)(A)) and CMS’s Section 111 User Guide.[6] In this regard, and in relation to MSP Recovery’s argument before the District Court for Massachusetts, the court noted that the Second Circuit in Hereford “recently decided that this theory is without merit”[7] and found that the defendant’s Section 111 reporting in that case “’[did] not amount to an admission of liability,”’ in part because the plain text of the statute requires ‘a primary plan [to] report claims covered by the [Medicare Secondary Payer statute] without considering its liability for those claims.’”[8]
As such, the District Court for Massachusetts, finding the Hereford decision “persuasive,” ruled that MSP Recovery’s claim failed for lack of standing.[9] Accordingly, the court granted the defendant’s motion and dismissed MSP Recovery’s claim (without prejudice).[10] The court also granted MSP Recovery’s motion for leave to file reply and notice of supplemental authority.[11] Thus, the court is allowing MSP Recovery to file additional pleadings, if it so elects. Also, it is possible the MSP Recovery may seek to appeal this decision to the United States Court of Appeals for the First Circuit, which has jurisdiction to hear appeals from the District Court for Massachusetts.[12] We will now need to monitor this case going forward to see what may transpire next.
Of note, on the same day the District Court for Massachusetts rendered its decision in MSP Recovery Claims Series 44, LLC v. Arbella Mutual Insurance Company as discussed above, the court in the case MSP Recovery Claims, Series LLC v. Safeco Insurance Company of America, et. al., 2023 WL 3481586 (D. Mass., May 16, 2023) issued a virtually identical decision based on similar facts and allegations.
Claims Considerations
The District Court for Massachusetts’ ruling marks the second court this year which has rejected the argument that an insurer’s Section 111 reporting alone is sufficient to establish standing (or liability) for a “double damages” claim under the MSP’s private cause of action. Interestingly, although the District Court for Massachusetts was not bound by the Second Circuit’s ruling in Hereford, it was persuaded by the Second Circuit’s rationale.
Looking ahead, it will be interesting to see if MSP Recovery appeals this issue to the United States Court of Appeals for the First Circuit, which, as noted above, has jurisdiction over the District Court for Massachusetts, and, if so, whether the First Circuit would agree with the court’s ruling in this case, and the Second Circuit’s opinion in Hereford. If MSP Recovery appeals, and the First Circuit were to render a contrary opinion, this would create a split in authority between the First and Second Circuits which may then provide the basis for an appeal to the U.S. Supreme Court to request that the Court resolve the Circuit split.[13] However, the author cautions that we are a long way off from this possibility, and it is unknown if subsequent developments would even lead us to a possible situation where there is a potential basis for an appeal to the Supreme Court. Rather, in the immediate term, the focus is on what may happen next. On this point, as noted above, MSP Recovery is being allowed to file a reply and supplemental authority, if it so elects. Thus, we will need to monitor whether they file additional pleadings with the District Court for Massachusetts to advance their claim in that action, or if they decide to appeal to the First Circuit Court of Appeals. We will simply need to see how this all plays out going forward.
Questions?
The author will continue to monitor developments on this front and provide updates. In the interim, 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 Second Circuit has jurisdiction over the U.S. District Courts for Connecticut, New York, and Vermont. See, https://www.ca2.uscourts.gov/about_the_court.html
[2] The MSP’s private cause of action section, codified at 42 U.S.C. § 1395y(b)(3)(A), states as follows: “There is established a private cause of action for damages (which shall be in an amount double the amount otherwise provided) in the case of a primary plan which fails to provide for primary payment (or appropriate reimbursement) in accordance with paragraphs (1) and (2)(A).”
[3] https://www.mad.uscourts.gov/
[4] MSP Recovery Claims Series 44, LLC v. Arbella Mutual Insurance Company, 2023 WL 3481496, at *1.
[5] MSP Recovery Claims Series 44, LLC v. Arbella Mutual Insurance Company, 2023 WL 3481496, at *1
[6] As noted, the reader may wish to review the author’s recent article on the Hereford ruling which breaks down the Second Circuit’s very detailed decision in greater detail. In the interim, the following excerpt from the Second Circuit’s ruling gives the reader a general idea of the court’s position in that case:
In sum, the plain language of Section 111 tells us that when a no-fault insurance provider such as Hereford reports a claim pursuant to Section 111, it does not thereby admit that it is liable for the claim. The statutory context of the section’s reporting obligation and the purpose of the reporting obligation confirm the correctness of this interpretation. Because MSP’s argument that the payments made by EmblemHealth are reimbursable by Hereford rests entirely on its proposed interpretation of Section 111, MSP has not adequately alleged a “concrete” or “actual” injury or that the injury it alleges is fairly traceable to Hereford. It therefore lacks standing to bring the N.G. exemplar claim … [and] it also lacks standing to bring its Exhibit A and class claims, which rely on the same theories of injury and causation. MSP Recovery Claims, Series LLC v. Hereford Insurance Co., 66 F.44th 77, 89 (2d Cir. 2023).
[7] MSP Recovery Claims Series 44, LLC v. Arbella Mutual Insurance Company, 2023 WL 3481496, at *1, citing Hereford, 66 F.4th 77, 89 (2d Cir. 2023).
[8] MSP Recovery Claims Series 44, LLC v. Arbella Mutual Insurance Company, 2023 WL 3481496, at *2, citing Hereford, 66 F.4th 77, 89 (2d Cir. 2023).
On this point, the District Court for Massachusetts quoted the following from the Second Circuit’s ruling in Hereford:
Because MSP’s argument that the payments made by [the MAO] are reimbursable by Hereford rests entirely on its proposed interpretation of Section 111, MSP has not adequately alleged a “concrete” or “actual” injury or that the injury it alleges is fairly traceable to Hereford. It therefore lacks standing to bring the [ ] exemplar claim. MSP Recovery Claims Series 44, LLC v. Arbella Mutual Insurance Company, 2023 WL 3481496, at *2, citing Hereford, 66 F.4th 77, 89 (2d Cir. 2023).
It is also noted that in reaching its decision the District Court for Massachusetts also referenced the United States Circuit Court of Appeals for the Seventh Circuit’s decision in MAO-MSO Recovery II, LLC v. State Farm Mut. Auto. Ins. Co., 994 F.3d 869, 873 (7th Cir. 2021) in which the court noted, without any further elaboration, that the Seventh Circuit in that case “affirm[ed] a district court’s grant of summary judgment for lack of standing.” Id. While a breakdown of the Seventh Circuit’s ruling is beyond the scope of this article, from the author’s review of that decision it is noted, generally, that the question regarding standing in that case involved issues or allegations unrelated to Section 111 reporting. Thus, the author is unclear as to why the District Court for Massachusetts referenced the Seventh Circuit’s decision in MAO-MSO Recovery, other than perhaps in general reference to another case where the court dismissed a Medicare Advantage PCA claim on standing grounds.
[9] MSP Recovery Claims Series 44, LLC v. Arbella Mutual Insurance Company, 2023 WL 3481496, at *2.
[10] MSP Recovery Claims Series 44, LLC v. Arbella Mutual Insurance Company, 2023 WL 3481496, at *2
[11] MSP Recovery Claims Series 44, LLC v. Arbella Mutual Insurance Company, 2023 WL 3481496, at *2.
[12] The United States Court of Appeals for the First Circuit hears appeals from the United States District Courts for the Districts of Maine, Massachusetts, New Hampshire, Puerto Rico, and Rhode Island. See, https://www.ca1.uscourts.gov/about-court
[13] See generally, https://www.law.cornell.edu/wex/circuit_split