MSPA Claims 1, LLC cases Remanded Back to State Court

Commentary, Medicare Set-Aside Blog, MSP Litigation on July 15, 2016 | Posted by Jennifer Jordan, JD, MSCC

In the ongoing pursuit of PIP reimbursements with double damages under the Medicare Secondary Payer Act, two MSPA Claims 1 cases have been remanded back to state court. Because early cases failed in federal court on the basis of plaintiff being required to actually demonstrate responsibility before filing suit, MSPA Claims 1 moved its efforts against Allstate, Liberty and Direct General Insurance over to state court and specifically plead only state law actions such as (1) Breach of Contract for Failure to Pay PIP Benefits (Direct Right of Recovery Pursuant to 42 C.F.R. § 411.24(e)), (2) Breach of Contract for Failure to Pay PIP Benefits (Conventional Subrogation), (3) Breach of Contract for Failure to Pay PIP Benefits (or in the Alternative, Equitable Subrogation), and (4) Breach of Contract for Failure to Pay PIP Benefits (Conventional Subrogation Arising from Third Party Beneficiary Rights). Defendants successfully removed the cases to federal court on the basis of federal question since the claims arise under the Medicare Act, but the federal court did not agree. Because MSPA Claims 1 specifically plead these cases with only state law actions related to PIP benefits under Florida Statute § 627.736 in order to attempt to keep the action in state court, the federal court did not find any federal claims on the face of the complaint to give them federal jurisdiction. There is also no diversity and if considered individually and limited to the state PIP limit of $10,000 for each policy holder, the amount in controversy would be insufficient as well. Therefore the court found that removal was improper and the cases were all remanded.

But in an interesting turn, because claims were specifically not pled under the MSP, the court noted that whether plaintiff would be entitled to double damages under the MSP was a question for the state court to decide. The two cases decided yesterday rely upon the Allstate ruling last month in which the court noted:

Lastly, Allstate also points to MSPA’s pursuit of double damages as support for a finding of federal jurisdiction. According to Allstate, double damages are only available under the MSP Act, and not under state law. Whether MSPA can establish its entitlement to double damages in the state forum, however, is a question for the state court—MSPA’s remedy request alone cannot by itself raise federal question jurisdiction. The fact remains that MSPA’s causes of action rely only state law. That MSPA has sought damages that are perhaps not in fact available to it under state law bears on the merits of MSPA’s state-law claims and not on whether a federal question has been presented. MSPA will need to establish that the damages it seeks are available under state law; determining this will not require an analysis of whether the damages are available under federal law. See Campbell v. General Motors Corp., 19 F. Supp. 2d 1260, 1270–71 (N.D. Ala. 1998) (finding a similar argument “unpersuasive for several reasons”).

 

MSPA Claims 1, LLC v. Allstate Property and Casualty Insurance Company, Case No. 16-cv-20443-RNS, ECF No. 49 (S.D. Fla. Jun. 29, 2016).

So plaintiff’s desperately avoiding the MSP may actually be the saving grace of the many insurers being simultaneously pursued by MSPA Claims 1. It is 42 U.S.C. 1395y(b)(3)(A) that establishes “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).” This is a claim available under federal law which would make any claim for double damages a federal question.  If the cases stay in state court, plaintiffs may only be able to recover amounts actually paid. If claims for double damages send the cases back to federal court, then plaintiffs need to actually demonstrate liability for reimbursement pursuant to the many cases that have already been dismissed there and class certification impossible without specifically identifying the numerous alleged related conditional payments in question. Either way benefits the many defendants egregiously being pursued by this collection agency with its questionable claims irresponsibly burdening both state and federal courts in Florida trying to find the right way to manipulate the MSP so that it and its investors can make a profit. While not ideal that these cases remain ongoing and continue to seek class certification, these three cases being sent back to state court could indicate a positive turn for the defendants. Now the ball lies in the Eleventh Judicial Circuit in and for Miami-Dade County. Stay tuned…

Claims v. Direct Gen. Ins. Co.
United States District Court for the Southern District of Florida, Miami Division
2016 U.S. Dist. LEXIS 91611
July 14, 2016, Decided; July 14, 2016, Entered on Docket
Case No. 16-20901-CIV-GAYLES/TURNOFF

 

Claims v. Liberty Mut. Fire Ins. Co.
United States District Court for the Southern District of Florida, Miami Division
2016 U.S. Dist. LEXIS 91612
July 14, 2016, Decided; July 14, 2016, Entered on Docket
Case No. 16-20271-CIV-GAYLES/TURNOFF