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LLC v. Century Surety Co.

United States District Court, S.D. Florida

March 15, 2017

MSPA CLAIMS I, LLC, ET AL., Plaintiffs,
v.
CENTURY SURETY COMPANY, Defendant.

          ORDER DENYING IN PART AND GRANTING IN PART DEFENDANT'S MOTION TO DISMISS

          DARRIN P. GAYLES UNITED STATES DISTRICT JUDGE

         THIS MATTER is before the Court on Defendant, Century Surety Company's Motion to Dismiss Amended Complaint [ECF No. 12]. Plaintiff, an assignee of a Medicare Advantage Organization, seeks to recover medical expenses the Medicare Advantage Organization paid on behalf of one of its enrollees from Defendant, a liability insurer that issued a commercial liability insurance policy with a Med-Pay clause. Plaintiff maintains that under the Medicare Secondary Payer Act (MSPA), Defendant is responsible for the payment of the medical expenses. Plaintiff's Amended Complaint [ECF No. 12] alleges five counts seeking reimbursement for the medical expenses under various theories of recovery. This matter is a putative class action and also seeks attorneys' fees pursuant to Florida Statutes, section 627.428. Defendant seeks to dismiss all counts based on Federal Rule of Civil Procedure 12(b)(6). Defendant also seeks to dismiss or strike the class action allegations and the requests for attorneys' fees. Because Plaintiff has adequately alleged its causes of action in Counts I through IV, the motion to dismiss is denied as to those counts. The motion is granted as to Count V with leave to replead. The Court also denies the motion to dismiss the class allegations as premature. The motion to dismiss is granted as to Plaintiff's request for attorneys' fees pursuant to Florida Statutes, section 627.428.

         I. The Amended Complaint

         Plaintiff, MSPA Claims I, LLC, is the assignee of Florida Healthcare Plus (FHCP). FHCP is a Medicare Advantage Organization (MAO) and a participant in the Medicare Program pursuant to a Medicare Advantage Plan. FHCP contracted with the Centers for Medicare & Medicaid Services (CMS) to provide Medicare benefits to eligible members enrolled in FHCP's Medicare Advantage health plan under part C of the Medicare Act. Defendant is an insurance company that issues commercial general liability insurance policies that contain Med-Pay benefits provisions. Med-Pay is no-fault insurance that pays medical expenses for injuries sustained on the insured property or premises. Under the MSPA, Defendant is considered the primary payer for any medical bills arising from an injury incurred by an individual on property insured by Defendant.

         On April 20, 2013, an enrollee in FHCP's Medicare Advantage Plan (Enrollee) was injured in an accident that occurred on property insured by Defendant. At the time of the accident, Enrollee was a member of a Medicare Advantage Plan managed by FHCP. Under the Plan, FHCP's obligations are secondary to other available insurance plans. Enrollee received medical services, treatment, and supplies for the injuries incurred in the April 20, 2013, accident. Despite its status as secondary payer, FHCP was charged for Enrollee's medical services incurred as a result of the accident. After determining that the medical charges submitted were for medically necessary procedures and services, FHCP rendered payments for the treatment and services Enrollee received as a result of the accident. Pursuant to its contract with CMS, FHCP paid a total of $2, 982.00.

         Under the Med-Pay provision of Defendant's policy, Florida law, and the MSPA, Defendant was the primary payer for Enrollee's medical expenses arising from the April 2013 accident. Defendant was aware of its obligations, Enrollee's injuries, and the medical services and supplies provided to Enrollee but failed to pay for the medical services and supplies or to reimburse the secondary payer, FHCP.

         A primary plan's failure to pay for medical expenses for which it is responsible, or its failure to reimburse CMS for any payments made on behalf of a beneficiary, vests CMS with a direct right of action against the primary plan. Plaintiff maintains that FHCP, and now Plaintiff as FHCP's assignee, has the same rights as CMS to pursue recovery from a primary plan. Plaintiff also maintains that it can recover payments from a primary plan based on theories of legal and equitable subrogation and as a third party beneficiary. Thus, Plaintiff brings five causes of action: (1) a private cause of action for double damages under 42 U.S.C. § 1395y(b)(3)(A); (2) breach of contract for failure to pay Med-Pay benefits; (3) breach of contract for failure to pay Med-Pay benefits based on conventional subrogation; (4) breach of contract for failure to pay Med-Pay benefits based on equitable subrogation; and (5) breach of contract for failure to pay Med-Pay benefits based on conventional subrogation arising from third-party beneficiary rights. Each count of the Amended Complaint seeks attorneys' fees pursuant to Florida Statutes, section 627.428. Additionally, Plaintiff alleges a putative class of similarly situated Medicare Advantage Organizations. Defendant's motion seeks to dismiss all counts, the class allegations, and the requests for attorneys' fees.

         II. Motion To Dismiss Standard

         The purpose of a motion to dismiss filed pursuant to Federal Rule of Civil Procedure 12(b)(6) is to test the facial sufficiency of a complaint. The rule permits dismissal of a complaint that fails to state a claim upon which relief can be granted. It should be read alongside Federal Rule of Civil Procedure 8(a)(2), which requires a “short and plain statement of the claim showing that the pleader is entitled to relief.” Although a complaint challenged by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff is still obligated to provide the “grounds” for his entitlement to relief, and a “formulaic recitation of the elements of a cause of action will not do.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).

         When a complaint is challenged under Rule 12(b)(6), a court will presume that all well-pleaded allegations are true and view the pleadings in the light most favorable to the plaintiff. American United Life Ins. Co. v. Martinez, 480 F.3d 1043, 1066 (11th Cir. 2007). However, once a court “identifies pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth, ” it must determine whether the well-pled facts “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A complaint can only survive a 12(b)(6) motion to dismiss if it contains factual allegations that are “enough to raise a right to relief above the speculative level, on the assumption that all the [factual] allegations in the complaint are true.” Twombly, 550 U.S. at 555. However, a well-pled complaint survives a motion to dismiss “even if it strikes a savvy judge that actual proof of these facts is improbable, and ‘that a recovery is very remote and unlikely.'” Twombly, 550 U.S. at 556.

         III. Discussion

         Defendant's motion seeks to dismiss every count of the Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6).[1] Essentially, Defendant seeks to dismiss Counts I through IV on the basis that Plaintiff's theories of recovery are not supported by the law. After briefing was complete on the motion to dismiss, the Eleventh Circuit issued two opinions that resolve the issues raised in Defendant's motion in relation to Counts I through IV. As set out below, those decisions affirm the underlying theories of recovery that form the bases of Counts I through IV and, consequently, the motion to dismiss must be denied as to these counts. Count V, however, while based on a potentially viable theory of recovery, has not been adequately pled and, therefore, must be dismissed with leave to replead. Additionally, Plaintiff's claims for attorneys' fees are not supported by the law and must be dismissed. Finally, the Court denies the motion to dismiss the class allegations in order to have the issues more fully briefed at the class certification stage.

         A. The Motion to Dismiss Count I is Denied

         Defendant seeks to dismiss Count I of the Amended Complaint because Plaintiff has failed to satisfy a condition precedent to a claim for double damages under the MSPA, 42 U.S.C. § 1395y(b)(3)(A). Specifically, Defendant maintains that Plaintiff has failed to demonstrate that Defendant is liable for Enrollee's medical costs. Defendant relies on several district court cases from this district that hold that liability for medical costs can only be demonstrated by a separate adjudication or agreement. However, after the briefing in this case, the Eleventh Circuit addressed this issue and held that “a contractual obligation may serve as sufficient demonstration of responsibility for payment to satisfy the condition precedent to suit under the MSP[A].” MSP Recovery, LLC v. Allstate Insurance Co., 835 F.3d 1351, 1361 (11th Cir. 2016). Consequently, a plaintiff sufficiently pleads satisfaction of the condition precedent if a plaintiff has alleged that the defendant's valid insurance contract renders the defendant responsible for the primary payment of the plaintiff's medical expenses. Id.

         Plaintiff has pled that: Defendant issued a policy of insurance to the owner of the property where Enrollee was injured; Defendant's policy provided Med-Pay benefits; the Med-Pay benefits covered medical services and/or supplies that were provided to the Enrollee; Defendant's policy was in full force and effect at the time of Enrollee's accident; and the policy is the primary insurance coverage for Enrollee's medical expenses arising from the accident. [ECF No. 11 at ¶¶12-13.] Consequently, Plaintiff has sufficiently pled facts to satisfy the condition precedent. Accordingly, Defendant's motion to dismiss Count I is denied.

         B. The Motion to Dismiss ...


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