More MSPA Claims 1 Cases Dismissed for Standing

Medicare Advantage, Medicare Set-Aside Blog, MSP Litigation, MSP News on November 27, 2017 | Posted by Jennifer Jordan, JD, MSCC

The U.S. District Court for the Central District of California dismissed the attempted class action against Mercury General on November 2, 2017. As with the other attempted national actions, standing was the fatal flaw in the pleadings as the plaintiffs fail to state who the alleged participating MAOs are. In order to demonstrate standing “[i]n an action involving an assignment, a court must ensure that the plaintiff-assignee is the real party in interest with regard to the particular claim involved by determining: (1) what has been assigned; and (2) whether a valid assignment has been made.” Plaintiffs have not named the MAOs in any of its suits filed throughout the country let alone pled any of the details of the contracts of assignment, therefore it is impossible for the courts to conclude that MSPA Claims 1 is a real party in interest.

Another common trend among the many lawsuits filled by plaintiffs throughout the country is pleading minimal demonstrative claims. In another action dismissed in California on November 20, 2017, plaintiffs pled reimbursements for only four Medicare beneficiaries residing in Florida to allege claims against 11 separate Farmers defendants throughout the nation. While it is not necessary to plead a claim against each defendant, “what is required is that for every named defendant there be at least one named plaintiff who can assert a claim directly against that defendant.” Because plaintiffs did not even identify which of the 11 potential defendants were involved in those four claims, the court found insufficient facts to confer standing. Plaintiffs alleged that they have valid assignment agreements from the MAOs, but they plead no facts supporting that legal conclusion. Plaintiffs failed to allege the identity of the MAOs whose reimbursement rights they claim to own, the dates of the assignments, or any essential terms. Accordingly, the Court found insufficient facts to allow it to infer the validity of the purported MAO assignments.

It is encouraging to see the Courts in California recognizing that more facts are needed to substantiate these claims. If reimbursements are due, plaintiffs actually need to know what those are and make valid claims. Insurance policies are governed by insurance laws and contracts and the MSP does not render all of those legal requirements moot. While some elements of federal preemption may apply, this is not an absolute preemption situation and the MSP does not create a greater payment obligation than otherwise already exists. Perhaps these cases are an indication that the courts are likely to allow the desired fishing expedition and actually require the plaintiffs to make claims for what they can prove they are owed.

MAO-MSO RECOVERY II, LLC, MSP RECOVERY, LLC, MSPA CLAIMS 1, LLC, Plaintiffs, v. MERCURY GENERAL, Defendant.
Case Nos. CV 17-02525-AB (AJWx),CV 17-2557-AB (FFMx)
UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA
2017 U.S. Dist. LEXIS 193874
November 2, 2017

MAO-MSO RECOVERY II, LLC, ET AL. v. FARMERS INSURANCE EXCHANGE, ET AL.
2:17-cv-02522-CAS(PLAx),2:17-cv-02559-CAS(PLAx)
UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA
2017 U.S. Dist. LEXIS 192880
November 20, 2017