Take 2: MAO Class Action Fails on Second Amended Complaint

Medicare Advantage, Medicare Set-Aside Blog, MSP Litigation, MSP News on January 4, 2018 | Posted by Jean S. Goldstein, JD

As you may recall, several weeks ago we reported on a new spin in the Medicare Advantage Organizations (MAO) class action realm.  At the root of this latest private cause of action, is a multi-district ligation (MDL) suit involving a blood-thinning drug called Pradaxa.  The MDL settled in May, 2014, and by way of the settlement, the Defendants in this latest action became primary payers.[1]

As a quick refresher, the original filed complaint included the Plaintiffs (MAO-MSO Recovery II, LLC, MSP Recovery, LLC, and MSPA Claims 1, LLC) and alleged that the Defendants ((Boehringer Ingelheim Pharmaceuticals, Inc. (“Boehringer, Inc.”) and Providio Medisolution, LLC, and Providio Lien Counsel, LLC, (the “Providio Defendants”)) were obligated to repay all medical costs that were paid by MAOs for treatment of any injuries associated with the medication, Pradaxa.  Plaintiffs alleged they had valid assignment agreements from these MAOs.  In October 2017, the Court dismissed the first Amended Class Action for lack of standing because “Plaintiffs fail[ed] to allege the identity of the MAOs whose reimbursement rights they claim[ed] to own, the dates of the assignments, or the essential terms.” MAO-MSO RECOVERY II, LLC v. Boehringer Ingelheim Pharm., Inc., No. 1:17-cv-21996-UU, 2017 U.S. Dist. LEXIS 174940, at 13 (S.D. Fla. Oct. 10, 2017).  In dismissing the Complaint, the Court suggested that the Plaintiffs attach any assignment agreements to their Second Amended Complaint. Id. at 14 n.1.

Plaintiffs subsequently filed a Seconded Amended Complaint, to include Plaintiff, MSP Recovery Claims, Series LLC.  MSP Recovery Claims, Series LLC became a player here because Plaintiffs identified one Part-C individual who did in fact suffer injuries from use of Pradaxa. This individual’s MAO paid for treatment related to the Pradaxa, which allowed the Plaintiffs to assert an argument that Defendants were obligated to repay the costs paid (in an amount double the amount paid).  The MAO assigned its reimbursement rights to MSP Recovery, LLC, one of the original named Plaintiffs.  However, MSP Recovery, LLC assigned its recovery rights to MSP Recovery Claims, Series, LLC, the added Plaintiff in the Seconded Amended Complaint.

Yet, again, the Court opined that the Plaintiffs failed to show they have standing.[2] The Court found that although the newly added Plaintiff had an assignment right, the right was acquired one month after the instant matter commenced.  The Court agreed with the Defendants’ argument that “..if a Plaintiff lacks standing at the commencement of the suit, it cannot then add a new Plaintiff who does have standing. In simple terms, a Plaintiff who lacks standing to sue lacks standing to add additional Plaintiffs.” (Recovery v. Boehringer Ingelheim Pharm., No. 1:17-cv-21996-UU, 2017 U.S. Dist. LEXIS 213726, 13 (S.D. Fla. Dec. 12, 2017) Citing to Summit Office Park, Inc. v. U.S. Steel Corp., 639 F.2d 1278 (5th Cir. 1981). The original Plaintiffs failed to show they suffered in injury in fact, and therefore lacked standing to amend the complaint to add a Plaintiff who did in fact have standing to bring the cause of action.  For this reason, the Court dismissed and closed the case, but not before indicating that the Plaintiff, MSP Recovery Claims, Series, is free to file a new complaint based on their assignment contract, should they wish to do so.  There is certainly little doubt that we will see a new complaint filed by MSP Recovery Claims in the very near future, as they continue to challenge all things MSP related.

[1] The Medicare Secondary Payer Act provides a right of action by which a secondary payer, including an MAO, can recover from a primary plan and allows a secondary payer to collect double damages against any payer. 42 U.S.C. § 1395y(b)(3)(A).  A primary payer’s liability is triggered by the obligation to pay, and can be triggered by a settlement.

[2] In order to show standing, there must be alleged an injury in fact.  An interest unrelated to injury in fact is insufficient to give a plaintiff standing. See Stalley v. Orlando Reg’l Healthcare Sys., 524 F.3d 1229, 1231 (11th Cir. 2008).