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MAO-MSO Recovery II, LLC v. USAA Casualty Insurance Co.

United States District Court, S.D. Florida

December 14, 2017

MAO-MSO RECOVERY II, LLC, a Delaware Entity; MSP RECOVERY, LLC, a Florida entity; MSPA Claims 1, LLC, a Florida entity, Plaintiffs,



         This matter is before the Court on USAA Casualty Insurance Company’s (“Defendant”) motion to stay discovery pending the disposition of Defendant’s motion to dismiss against MAO-MSO Recovery II, LLC, MSP Recovery, LLC, and MSPA Claims 1 LLC (“Plaintiffs”).[1] [D.E. 47]. Plaintiffs responded to Defendant’s motion on November 27, 2017 [D.E. 51] to which Defendant replied on December 4, 2017. [D.E. 53]. Therefore, Defendant’s motion is now ripe for disposition. After careful consideration of the motion, response, reply, relevant authority, and for the reasons discussed below, Defendant’s motion to stay discovery is DENIED.

         I. BACKGROUND

         This is a putative class action lawsuit in which Plaintiffs, on behalf of themselves and all others similarly situated, allege that Defendant failed to fulfill its statutorily-mandated duty to reimburse Medicare Advantage Organizations (“MAOs”) for medical expenses related to automobile accidents involving the MAOs’ enrollees where the Defendant settled the enrollee’s claim. MAOs are private organizations that contract with the federal government to provide Medicare benefits to Medicare enrollees in exchange for a flat fee per enrollee. The MAOs, either themselves or through Maintenance Service Organizations (“MSOs”), deliver the Medicare benefits and assume the risks related to insuring the enrollees. Plaintiffs allege that they are three collection agencies and that MAOs have assigned their recovery rights to assert various causes of action. Defendant is an insurance company that allegedly entered into settlement agreements with Medicare beneficiaries.

         On April 5, 2017, Plaintiffs filed their original class action complaint [D.E. 1] alleging, on behalf of themselves and all others similarly situated, that: (1) unidentified MAOs paid unspecified medical expenses related to treatment of unnamed Medicare enrollees arising out of unspecified automobile accidents, (2) “Defendant was responsible for paying those expenses in accordance with MSP Law,” (3) Defendant “failed to make required payments under the MSP provisions and failed to reimburse” MAOs for such medical expenses, and (4) “[n]umerous MAOs have assigned their recovery rights to assert causes of action” to Plaintiffs. [D.E. 29] at ¶¶ 1, 3, 39-41, 74. In the original complaint, Plaintiffs redacted the names of the “representative MAOs” and the “representative Medicare Beneficiaries.” Id. at ¶¶ 48-49. Thereafter, on July 26, 2017, Plaintiffs filed their first amended complaint [D.E. 29] alleging similar causes of action as alleged in the original complaint. The first amended complaint removed the redaction box of two purported “representative” Medicare beneficiaries and replaced it with the alleged beneficiaries’ first and last initials but redacted the identities of the “representative” MAOs who allegedly paid medical expenses on their behalf. Id. at ¶ 50.

         On August 8, 2017, Defendant filed its motion to dismiss because Plaintiffs’ first amended complaint allegedly failed to (1) identify a single bill paid by any MAO for medical treatment of any of enrollee which should allegedly be reimbursed by Defendant, or (2) allege that any specific MAOs assigned their claims to Plaintiffs. Defendant claims that these errors deprive the Court of subject matter jurisdiction and that the first amended complaint fails to state a viable claim. Defendant further believe that the allegations are facially inadequate to establish even the minimum pleading requirements for standing in this action or that Plaintiffs have suffered an injury in fact vis-à- vis this Defendant.

         On October 12, 2017, Plaintiffs served Defendant with Plaintiffs’ first set of interrogatories and Plaintiffs’ first set of requests for production (the “Discovery Requests”). Defendant responded with written objections and suggested that the requests were overly-broad and unduly burdensome in both time frame and subject matter. Plaintiffs allegedly seek more than six years of information and documents, from April 6, 2011 through the present. Yet, Defendant objected because Plaintiffs are purportedly not entitled to discovery dating back six years considering the three-year statute of limitations on claims for reimbursement of conditional payments under Medicare regulations. See 42 U.S.C. 1395y(b)(2)(B)(iii) and (iv); Collins v. Wellcare Health Plans, Inc., 2014 WL 7239426, at *1 (E.D. La. 2014). Because Plaintiffs’ discovery requests are burdensome and this case may soon be resolved in Defendant’s favor, Defendant filed its motion to stay this action pending the disposition of its motion to dismiss.


         The Court “has broad discretion to stay proceedings as an incident to its power to control its own docket.” Clinton v. Jones, 520 U.S. 681, 706 (1997); Landis v. N. Am. Co., 299 U.S. 248, 254 (1936) (“[T]he power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants.”); Chrysler Int’l Corp. v. Chemaly, 280 F.3d 1358, 1360 (11th Cir. 2002) (“At the outset, we stress the broad discretion district courts have in managing their cases.”); Johnson v. Bd. of Regents of Univ. of Georgia, 263 F.3d 1234, 1269 (11th Cir. 2001) (“[W]e accord district courts broad discretion over the management of pre-trial activities, including discovery and scheduling.”). Additionally, “[m]atters pertaining to discovery are committed to the sound discretion of the district court.” Patterson v. United States Postal Serv., 901 F.2d 927, 929 (11th Cir. 1990).

         To prevail on a motion to stay, Defendant must demonstrate reasonableness and good cause. “While overall stays of discovery may be rarely granted, courts have held good cause to stay discovery exists wherein ‘resolution of a preliminary motion may dispose of the entire action.”’ Nankivil v. Lockheed Martin Corp., 216 F.R.D. 689, 692 (M.D. Fla.), aff’d, 87 F. App’x 713 (11th Cir. 2003) (emphasis added) (quoting Association Fe Y Allegria v. Republic of Ecuador, 1999 WL 147716 (S.D.N.Y. Mar. 16, 1999)); see also Patterson, 901 F.2d at 927 (holding district court did not abuse its discretion by staying discovery where pending dispositive motions gave court enough information to ascertain further discovery not likely to produce a genuine issue of material fact); Gibbons v. Nationstar Mortg. LLC, 2015 WL 12840959, at *1 (M.D. Fla. May 18, 2015) (“Overall, stays of discovery are seldom granted, but courts have held that good cause to stay discovery exists when resolution of a dispositive motion may dispose of the entire action.”); Feldman v. Flood, 176 F.R.D. 651 (M.D. Fla. 1997) (holding stay of discovery not appropriate unless pending dispositive motion would dispose of entire action); Spencer Trask Software and Information Services, LLC v. Rpost International Limited, 206 F.R.D. 367 (S.D.N.Y. 2002) (holding good cause for discovery stay exists where dispositive motion has been filed and stay is for short time period that does not prejudice opposing party); Simpson v. Specialty Retail Concepts, Inc., 121 F.R.D. 261 (M.D.N.C. 1988) (setting up balancing test for stays of discovery).

         In the absence of a dispositive motion, courts have also granted motions to stay in consideration of the following factors: “(1) whether the litigation is at an early stage; (2) whether a stay will unduly prejudice or tactically disadvantage the non-moving party; (3) whether a stay will simplify the issues in question and streamline the trial; and (4) whether a stay will reduce the burden of litigation on the parties and on the court.” Grice Eng’g, Inc. v. JG Innovations, Inc., 691 F. Supp. 2d 915, 920 (W.D. Wis. 2010) (citing Tap Pharmaceautical Products, Inc. v. Atrix Laboratories, Inc., 2004 WL 422697, at *1 (N.D. Ill. Mar. 3, 2004); Baxter International, Inc. v. Fresenius Medical Care Holdings, Inc., 2008 WL 4395854, at *3 (N.D. Ill. Sept. 25, 2008)). For instance, one of the circumstances that have sometimes satisfied the aforementioned factors is the possibility of avoiding unnecessary expenses while the parties engage in mediation or settlement discussions that might conserve the parties’ resources and promote judicial economy. See, e.g., ArrivalStar, S.A. v. Blue Sky Network, LLC, 2012 WL 588806, at *2 (N.D. Cal. Feb. 22, 2012) (“The Court concludes that Blue Sky has shown good cause to justify a stay of discovery pending mediation. The Court finds that staying discovery pending mediation will conserve the resources of the parties and will not impose an inequity on any party.”); see also Advanced Bodycare Sols., LLC v. Thione Int’l, Inc., 524 F.3d 1235, 1241 (11th Cir. 2008) (“[D]istrict courts have inherent, discretionary authority to issue stays in many circumstances and granting a stay to permit mediation (or to require it) will often be appropriate.”).

         “In evaluating whether the moving party has met its burden, a court ‘must balance the harm produced by a delay in discovery against the possibility that the [dispositive] motion will be granted and entirely eliminate the need for such discovery.’” Bocciolone v. Solowsky, 2008 WL 2906719, at *2 (S.D. Fla. July 24, 2008) (emphasis added) (quoting McCabe v. Foley, 233 F.R.D. 683, 685 (M.D. Fla. 2006)). This means that courts generally take a “preliminary peek at the merits of [the] dispositive motion to see if it appears to be clearly meritorious and truly case dispositive.” Feldman, 176 F.R.D. at 652-53.

         Furthermore, it is well settled that “[t]he litigant seeking the protective order must articulate the injury with specificity.” United States v. Dentsply Int’l, Inc., 187 F.R.D. 152, 158 (D. Del. 1999) (citations omitted); see also United States v. Garrett, 571 F.2d 1323, 1326 n. 3 (5th Cir. 1978) (finding that a party seeking a protective order must show not just speculative harm but must make a “particular and specific demonstration of fact as distinguished from stereotyped and conclusory statements”) (citations omitted); see also Dentsply Int’l, Inc., 187 F.R.D. at 158 (“‘Broad allegations of harm, unsubstantiated by specific examples,’ do not support a showing for good cause.”) (quoting Cipollone v. Liggett Group, Inc., 785 F.2d 1108, 1121 (3d Cir. 1986)). “In other words, the party seeking the protective order must show good cause by demonstrating a particular need for protection” because “[b]road allegations of harm, unsubstantiated by specific examples or articulated reasoning, do not satisfy the Rule 26(c) test.” Trinos v. Quality Staffing Servs. Corp., 250 F.R.D. 696, 698 (S.D. Fla. 2008) (citing Cipollone v. Liggett Group, Inc., 785 F.2d 1108, 1121 (3d Cir. 1986)); see also Gen. Dynamics Corp. v. Selb Mfg. Corp., 481 F.2d 1204, 1212 (8th Cir. 1973).

         III. ...

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