Health Law Daily Medicare payment recovery services must allege sufficient facts to support standing
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Thursday, January 9, 2020

Medicare payment recovery services must allege sufficient facts to support standing

By Jeffrey H. Brochin, J.D.

Although the assignee of conditional Medicare payment claims may assert the injury in fact suffered by the assignor, they nevertheless have the burden of alleging sufficient facts to support standing.

A federal district court in New York has granted the motion to dismiss filed by Technology Insurance Company, Inc., after determining that the plaintiff, MSP Recovery Claims, Series LLC, (MSP) did not plead sufficient facts to establish that the assignment agreement between them and a New York Medicare Advantage Organization (MAO) authorized the claims brought in their complaint. Although representative cases were recited, the complaint did not specify the date on which the MAO paid for any charges, and without that information, the court could not assess whether any of the representative claims actually fell within the scope of the assignment, and therefore, whether MSP had standing to sue (MSP Recovery Claims, Series, LLC. v. Technology Insurance Company, Inc., January 8, 2020, Torres, A.).

Conditional Medicare payment reimbursement. MSP represents MAOs in the collection of conditional Medicare payments that are alleged to be due to the MAO from primary payors, pursuant to the Medicare Secondary Payor Act (MSPA). In the instant case, MSP’s complaint recited 16 representative claims that presumably demonstrated their client’s right to recover for failure of the primary payor to meet its reimbursement obligations under the MSPA. The MAO assigned its rights to reimbursement payment to MSP which then ‘stood in its shoes’ for the purposes of collecting reimbursement under the MSPA. However, the primary payor challenged MSP’s Article III standing via a motion to dismiss, which, for the reasons stated below, the court granted.

Terms of assignment agreement. The court noted that in certain cases, an assignee of a claim has standing to assert the injury in fact suffered by the assignor, in which case, the assignee replaces the assignor with respect to the claim or the portion of the claim assigned, and thereby stands in the assignor’s stead with respect to both injury and remedy. However, the assignee still bears the burden of alleging sufficient facts to support standing.

The court reviewed the assignment agreement between the assignor and the assignee, and found that the MAO’s assignment did not assign all of their Medicare recovery claims to MSP, but rather MSP received rights only to claims that (1) were rendered and paid for by the MAO during the six year period beginning September 29, 2011 and ending September 29, 2017, and (2) were not assigned to and/or are being pursued by other recovery vendors.

Representative cases doubtful. MSP included 16 representative claims in its complaint, however, the court focused on only two of those for the purpose of weighing standing. In one case, MSP alleged that an insured was enrolled in an MAO plan, was injured in an accident on September 26, 2017, and that the MAO paid for the insured’s accident-related expenses. However, because MSP did not allege when the MAO paid for those services, the court was unable to determine whether the MAO’s payment was made between September 29, 2011 and September 29, 2017, and therefore, whether MSP had even been assigned the rights to recover conditional payments made by the MAO with respect to that insured; and, the court found it highly unlikely that the MAO received and paid a bill for the insured’s services within three days of the last day of the covered time period.

Furthermore, the complaint did not specify the date on which the MAO paid for any charges, and without that information, the court could not assess whether any of the representative claims actually fell within the scope of the assignment, and therefore, whether MSP had standing to sue.

For the forgoing reasons, the motion to dismiss for lack of standing was granted, but without prejudice.

The case is No. 1:18-cv-08036-AT-BCM.

Attorneys: James L. Ferraro (The Ferraro Law Firm) for MSP Recovery Claims, Series LLC and Series 16-08-483. Benjamin Robert Nagin (Sidley Austin LLP) for Technology Insurance Co., Inc. and AmTrust Financial Services, Inc. Theodore R. Scarborough, Jr. (Sidley Austin Brown & Wood LLP) for AmTrust North America Inc.

Companies: MSP Recovery Claims, Series LLC; Technology Insurance Co., Inc.; AmTrust Financial Services, Inc.; AmTrust North America Inc.

MainStory: TopStory CaseDecisions CMSNews MSPNews NewYorkNews

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