MSP Recovery Claims Series 44, LLC v. Bunker Hill Ins. Co.

683 F.Supp.3d 172

MSP RECOVERY CLAIMS SERIES 44, LLC, Plaintiff, v. BUNKER HILL INSURANCE COMPANY andPlymouth Rock Home Assurance Corporation, Defendants.

CIVIL ACTION No. 22-11681-WGY

United States District Court, D. Massachusetts

Signed July 25, 2023

Laura Anne Godly, Milberg Coleman Bryson Phillips Grossman, PLLC, Raleigh, NC, Mark E. Silvey, Pro Hac Vice, Milberg Coleman Bryson Phillips Grossman, PLLC, Knoxville, TN, Mercedes Rodriguez, Milberg Coleman Bryson Phillips Grossman, Miami, FL, Natalie Rico, Pro Hac Vice, Milberg Coleman Bryson Phillips Grossman, PLLC, Coral Gables, FL, Alex R. Straus, Milberg Coleman Bryson Phillips Grossman, PLLC, Beverly Hills, CA, for Plaintiff.

John J. Cloherty, III, Pierce, Davis & Perritano, LLP, Boston, MA, for Defendants.

MEMORANDUM & ORDER

YOUNG, UNITED STATES¹ DISTRICT JUDGE

I. INTRODUCTION

The plaintiff, MSP Recovery Claims Series 44, LLC ("MSPRC 44"), a Delaware entity, on behalf of its Designated Series, brings this action against the defendants Bunker Hill Insurance Company ("Bunker Hill") and Plymouth Rock Home Assurance Corporation (collectively "Bunker Hill")² and asserts two causes of action. MSPRC 44's claims in this lawsuit stem from its assignment agreement with Blue Cross & Blue Shield of Massachusetts ("BCBSMA"), a Medicare Advantage Organization ("MAO").

Count I asserts a Private Cause of Action under 42 U.S.C. § 1395y(b)(3)(A) "to recover double damages from Bunker Hill for its failure to make appropriate and timely reimbursement of conditional payments [to BCBSMA] for beneficiaries' accident-related medical expenses." Pl.'s Compl. ("Compl.") ¶ 64, ECF No. 1.

Count II seeks Declaratory Relief pursuant to 28 U.S.C. § 2201, requesting "an accounting of all instances where [Bunker Hill or Plymouth] settled a tort claim under a third-party insurance policy or accepted coverage under a first party insurance policy." Id. ¶ 82. The requested accounting, at a minimum, should entail the disclosure of "the identity of each claimant for whose benefit BCBSMA provided or paid for items or services." Id.

A. Procedural History

MSPRC 44 commenced this action on October 3, 2022. Compl. Bunker Hill moved to dismiss on January 31, 2023 and amended its Memorandum in Support of the Motion on February 1, 2023. Defs.' Mot. Dismiss ("Defs.' Mot."), ECF No. 14, and Mem. Law for Defs.' Mot. Dismiss ("Defs.' Mem."), ECF No. 18. MSPRC 44 filed an opposition to the motion to dismiss on February 20, 2023. Pl.'s Mem. Opp'n to Defs.' Mot. Dismiss ("Pl.'s Opp'n"), ECF No. 21. Bunker Hill has not filed a reply. On March 28, 2023, the Court heard oral argument. It granted the motion to dismiss count II, the count seeking broad declaratory relief, and took under advisement the motion to dismiss count I as to the appropriate statute of limitations. See Clerk's Notes, ECF No. 29.

B. Statutory Framework

Medicare initially acted as the primary payer of health costs for its beneficiaries. But in 1980 Congress enacted the Medicare Secondary Payer Act ("MSPA") to "counteract escalating healthcare costs," Bio-Medical Applications of Tenn., Inc. v. Cent. States Se. & Sw. Areas Health & Welfare Fund, 656 F.3d 277, 281 (6th Cir. 2011), making Medicare a secondary payer and prohibiting it from making a payment if "payment has been made or can reasonably be expected to be made" by a primary payer. 42 U.S.C. § 1395y(b)(2)(A)(ii). If the primary payer "has not made or cannot reasonably be expected to make payment," Medicare is permitted to make a "conditional payment." Id. § 1395y(b)(2)(B)(i). If such a conditional payment is made, the primary payer then reimburses Medicare. Id. § 1395y(b)(2)(B)(ii).

"In 1986, in an effort to 'encourage private parties to bring actions to enforce Medicare's rights' under the MSPA and thereby reduce instances of primary payers failing to cover costs or to reimburse [the Center for Medicare Services ("CMS")], Congress created the MSPA's private cause of action." MSP Recovery Claims, Series LLC & Series 17-04-631 v. Plymouth Rock Assurance Corp., Inc., 404 F. Supp. 3d 470, 476 (D. Mass. 2019) (Burroughs, J.) (citing United Seniors Ass'n v. Philip Morris USA, 500 F.3d 19, 22 (1st Cir. 2007)).

Although most beneficiaries still receive benefits directly from Medicare, "individuals can elect instead to receive their benefits through private insurance companies that contract with [Medicare] to provide 'Medicare Advantage' . . . plans." In re Avandia Mktg., Sales Practices & Prods. Liab. Litig., 685 F.3d 353, 355 (3d Cir. 2012). These private insurance companies are referred to as MAOs. See MSP Recovery Claims, Series LLC v. Nationwide Mut. Ins. Co., 594 F. Supp. 3d 947, 949-50 (S.D. Ohio 2022). "Instead of being paid on a fee-for-service basis, MAOs receive a fixed payment per beneficiary-enrollee." Id. at 950 (citing 42 U.S.C. §§ 1395w-21, 1395w-23). "Like Medicare, an MAO is also authorized to charge primary payers for medical expenses the MAO pays on behalf of a beneficiary when the MAO is a secondary payer and an insurance carrier, employer, or other entity is obligated to pay as a primary payer." Id. (citing 42 U.S.C. § 1395w-22(a)(4)).

"[G]roup health plans, workers' compensation plans, and no-fault and liability insurers . . . submit information regarding Medicare beneficiaries' claims on a quarterly basis. See 42 U.S.C. § 1395y(b)(7)-(8)." Id. at 956. This is commonly referred to as "Section 111 Reporting." Id. This information "must be reported 'regardless of whether or not there is a determination or admission of liability.' 42 U.S.C. § 1395y(b)(8)(C); but see 42 U.S.C. § 1395y(b)(8)(A) ('[A]n applicable plan shall—(i) determine whether a claimant . . . is entitled to benefits under the program . . . and (ii) if the claimant is determined to be so entitled, submit [the required information] to the Secretary . . . .')." Id.

C. Factual Allegations

The following facts are drawn from the complaint, the well-pleaded allegations of which are taken as true for the purposes of evaluating the motion to dismiss. See Ruivo v. Wells Fargo Bank, N.A., 766 F.3d 87, 90 (1st Cir. 2014) (citing A.G. ex rel. Maddox v. Elsevier, Inc., 732 F.3d 77, 80 (1st Cir. 2013)).

1. Bunker Hill's Duties to Medicare and MAOs

Bunker Hill is a "property and casualty insurer" which collects "premiums in exchange for taking on the risk that their insureds will be injured" for which they will be "contractually obligated to pay for their insured's accident-related medical care." Compl. ¶ 5. MSP alleges that Bunker Hill falls "within the [MSPA's] definition of a 'primary plan,' which includes 'an automobile or liability insurance policy or plan (including a self-insured plan) or no-fault insurance.' 42 U.S.C. § 1395y(b)(2)(A)," and further that "[a]s a primary plan, [Bunker Hill is] charged with two duties under the [MSPA]: (1) to notify the secondary payer (whether it be Medicare or an MAO) of [Bunker Hill's] primary payer status, and (2) to repay the secondary payer within 60 days. 42 U.S.C. §§ 1395y(b)(2)(B)(ii), 1395w-22(a)(4)." Id. ¶ 6.

2. Standing Allegations

Noncompliance with the MSPA may be uncovered through data analytics which "requires cross-referencing unreimbursed, accident-related conditional payments in listed assignors' claims data with instances where insurers reported to CMS under Section 111 that they were responsible for the accidents." Id. ¶ 24. MSPRC 44 alleges that these Section 111 reports make insurers such as Bunker Hill "primary payers under the [MSPA] as matter of law." Id. MSPRC 44 doesn't have direct access to these Section 111 reports but is able to obtain the reports through a subscription service with CMS which provides copies of the reports that primary payers make to CMS. Id. The result is that the "only way to fully identify all secondary payments that auto insurers failed to reimburse is by comparing an MAO's and an auto insurer's claims data." Id. ¶ 25.

MSPRC 44 and BCBSMA have an assignment agreement dating from December 18, 2018, wherein "BCBSMA irrevocably assigned to MSP Recovery, LLC any and all of its rights to recover payments made on behalf of its Enrollees." Id. ¶ 28. "On April 10, 2019, MSP Recovery, LLC assigned the rights it had acquired in the BCBSMA Assignment to Series 15-11-388, a designated series of MSP Recovery Claims, Series LLC ('Series Assignment')." Id. ¶ 30. "Further, on October 22, 2020, Series 15-11-388 entered into an assignment agreement with Series 44-20-388, a designated series of Series 44, whereby it irrevocably assigned all rights it acquired through its assignment agreement with MSP Recovery, LLC." Id. ¶ 31. MSPRC 44 now "seeks recovery for claims BCBSMA has assigned to MSPRC 44 through its Designated Series (Series 44-20-388)." Id. ¶ 35.

MSP sets forth one representative beneficiary, "L.P.", who was enrolled in a Medicare Advantage Plan issued by BCBSMA. Id. ¶ 39. L.P. was involved in an accident that occurred on December 14, 2017, and sustained injuries that required medical items and services as a direct and proximate result of the accident. Id. ¶ 40. Those medical services were allegedly rendered on December 14, 15, and 29, 2017. Id. ¶ 43. "The medical providers billed and charged BCBSMA $4,714.12 for L.P.'s accident-related medical expenses, of which BCBSMA paid $1,428.05". Id. L.P brought a claim against Bunker Hill's insured and Bunker Hill "indemnified their insured tortfeasor and made payments pursuant to a settlement with L.P." Id. ¶ 44.

MSPRC 44 contends -- and this is the core issue with regard to standing -- that "[b]y virtue of entering into that settlement and obtaining a release of all claims, [Bunker Hill] became a primary payer responsible for payment and/or reimbursement of L.P.'s accident-related medical expenses." Id. Particularly, MSPRC 44 claims that through the Section 111 report that Bunker Hill made to CMS which included "the accident, the name of the reporting entity, and the type of insurance policy...