Ocean Harbor Cas. Ins. v. MSPA Claims, 1,

261 So.3d 637

OCEAN HARBOR CASUALTY INSURANCE, etc., Appellant,

v.MSPA CLAIMS, 1, etc., Appellee.

No. 3D17-392

District Court of Appeal of Florida, Third District.

Opinion filed September 26, 2018

Conroy Simberg, and Shannon P. McKenna and Hinda Klein and Dale L. Friedman (Hollywood), for appellant.

MSP Recovery Law Firm, and Frank C. Quesada, John H. Ruiz, Arlenys Perdomo, Gino Moreno, and Shayna Hudson, Miami, for appellee.

Russo Appellate Firm, P.A., and Elizabeth Russo, Miami, for Property Casualty Insurers Association of America and Personal Insurance Federation of Florida, as amici curiae; Shutts & Bowen LLP, and Suzanne Youmans Labrit, B.C.S. (Tampa); William W. Large (Tallahassee), for Florida Justice Reform Institute, as amicus curiae.

Before SALTER, LOGUE, and LUCK, JJ.

LOGUE, J.

MSPA Claims 1, LLC ("MSPA") asserts it is an assignee of Florida Healthcare Plus, Inc., a defunct Medicare Advantage Organization ("MAO"). MSPA filed a class action seeking to represent other MAO's to prosecute a private cause of action for double damages under the Medicare Secondary Payer Act, 42 U.S.C. § 1395y(b)(3)(A), against Ocean Harbor Casualty Insurance Company, a Florida no-fault automobile insurer.¹ In its complaint, MSPA seeks reimbursement for the medical bills of Ocean Harbor's no-fault insureds which were paid by MSPA's alleged assignor under Medicare, but which should have been paid by Ocean Harbor. The trial court certified the class and Ocean Harbor appealed.

The appropriateness of the class certification turns largely on whether issues common to the class will predominate. Modern Medicare requires beneficiaries to exhaust available private insurance before Medicare pays any medical bills. Moreover, if a private insurer (deemed a "primary plan" in Medicare parlance) wrongfully fails to pay a bill it should have paid, Congress provided a private cause of action for double damages. The nature of proof required under this private cause of action is at the heart of this class certification.

Significantly, MSPA intends to demonstrate Ocean Harbor's responsibility as the primary plan, not by reference to pre-existing settlements by Ocean Harbor as was done in earlier cases, but by insurance contracts entered into under Florida no-fault statutes. MSPA's proof to establish liability therefore will necessarily devolve into a series of mini-trials under Florida no-fault law. § 627.736, etseq., Fla. Stat. For this reason, we reverse.

I. BACKGROUND

A. The Class Certification Hearing.

The hearing on class certification below revealed MSPA brought suit for a class action on behalf of itself and similarly situated entities against Ocean Harbor. The complaint alleged that Ocean Harbor failed to pay covered medical bills on behalf of certain insureds in violation of federal and state law. This failure caused Florida Healthcare Plus to make conditional payments under Medicare for those bills, thereby triggering a right to bring a private cause of action for double damages under 42 U.S.C. § 1395y(b)(3)(A).

MSPA contended class action was appropriate because some or all of the thirty-seven MAO's in Florida might be in a similar situation. Common issues will predominate, it asserted, because its right to payment from Ocean Harbor is "automatic." Proof of liability involves little more than establishing that (1) its assignor made a payment under Medicare to an enrollee or his or her provider, (2) the enrollee was also insured by Ocean Harbor, and (3) Ocean Harbor failed to pay or reimburse the payment. Any other issues as to liability were waived or can be ascertained based on a proprietary algorithm that its lead attorney, John H. Ruiz, developed in consultation with various experts. The algorithm analyzes police reports of accidents and other records that Ocean Harbor must make and report under federal and state law. MSPA asserted that the class-wide damages can be derived from statistical models.

Ocean Harbor countered that MSPA's characterization of its right to reimbursement as "automatic" is based upon Humana Med. Plan, Inc. v. W. Heritage Ins. Co., 832 F.3d 1229, 1232 (11th Cir. 2016), wherein the private insurer's responsibility to pay medical bills was demonstrated by a pre-existing tort settlement in which coverage was admitted and the amount due held in trust. Here, in contrast, Ocean Harbor argued, MSPA does not intend to demonstrate Ocean Harbor's responsibility to pay the medical bills at issue by pre-existing settlements reached by Ocean Harbor. Instead, MSPA intends to demonstrate Ocean Harbor's responsibility by other means, namely, Ocean Harbor's obligations under Florida's no-fault statutes and its' enrollees' no-fault policies with Ocean Harbor. Therefore, Ocean Harbor contended, MSPA's proof to establish liability will necessarily devolve into a series of mini-trials under Florida no-fault law.

B. The Trial Court's Certification Order.

The trial court agreed with MSPA. In regard to the proof required at trial, it held that "Medicare's Recovery Rights are Automatic." Order Granting Pl. MSPA's Mot. for Class Cert., MSPA Claims 1, LLC v. Ocean Harbor Cas. Ins., Case No. 2015-1946-CA-06, 2017 WL 477124 (Fla. 11th Cir. Ct. Feb. 2, 2017). "Moreover, once Medicare or an MAO pays as a secondary payer, there is no law that would penalize Medicare or an MAO, even if it paid in error, since the payment was supposed to be made by the primary payer." Id. at 22. Therefore, the trial court ruled, the required proof of liability consists only of "(1) the defendant's status as a primary plan; (2) the defendant's failure to provide for primary payment or appropriate reimbursement; and (3) the damages amount." Id. at 67.

The trial court found that all of Florida's thirty-seven MAOs were potential class members and, pursuant to Florida Rule of Civil Procedure 1.220(b)(3), certified a class to include:

entities that contracted directly with the Centers for Medicare and Medicaid Services ("CMS") and/or its assignee pursuant to Medicare Part C, including but not limited to, MAO's and other similar entities, to provide Medicare benefits through a Medicare Advantage plan to Medicare beneficiaries for medical services, treatment, and/or supplies as required and regulated by HHS and/or CMS as a direct payer of medical services/supplies and/or drugs on behalf of Medicare beneficiaries either for parts A, B and/or D, all of which pertain to the same medical services and/or supplies that were the primary obligation of the Defendant;

have made payment(s) for medical services, treatment and/or supplies subsequent to January 29, 2009, whereby the MAO, or its assignee, as a secondary payer, has the direct or indirect right and responsibility to obtain reimbursement for covered Medicare services, for which the Defendant, as the primary payer pursuant to Defendant's contract covering the Medicare enrollee pursuant to Florida No-Fault law ( section 627.736(4), Florida Statutes ), was/is financially responsible to a Medicare beneficiary for medical bills incurred as a result of the use, maintenance or operation of a motor vehicle; and

where the Defendant failed to properly pay for medical bills on behalf of its insureds and has otherwise failed to reimburse the MAO's or its assignees for their payment(s) as calculated pursuant to the recognized Current Procedure Terminology ("CPT") codes based on the fee-for-service by the primary payer, as delineated by section 627.736, Florida Statutes, for medical services and/or supplies for their damages.

MSPA, slip op. at 6.

C. The Appeal.

Ocean Harbor timely appealed. Among other matters, it contends the trial court erred in finding numerosity, commonality, adequate representation, predominance, and superiority. We address only predominance and do not reach the other issues.

II. ANALYSIS

A. Requirements of a Class Action.

This case involves the intersection of the law of Florida class actions, Federal Medicare, and Florida no-fault insurance. We examine each area in turn.

"[A]n appellate court reviews a trial court's grant of class certification for an abuse of discretion." Sosa v. Safeway Premium Fin. Co., 73 So.3d 91, 102 (Fla. 2011). Of course, that discretion is to be applied within the structure of rule 1.220. Id. at 103. At the class certification stage, the inquiry does not focus on whether the class representatives will prevail at trial. Id. at 105. "Instead, the focus is on whether a litigant's claim is suited for class certification and whether the proposed class provides a superior method for the fair and efficient adjudication of the controversy." Porsche Cars N. Am., Inc. v. Diamond, 140 So.3d 1090, 1095 (Fla. 3d DCA 2014) (quotations and citation omitted).

"However, if consequential to its consideration of whether to certify a class, a trial court may consider evidence on the merits of the case as it applies to the class certification requirements." Sosa, 73 So.3d at 105. The prerequisites to class certification are well known: numerosity; commonality; typicality; and adequate representation. Fla. R. Civ. P. 1.220(a). In addition to meeting these threshold requirements, the class must fall within one of the three different types of class actions established in rule 1.220(b). Sosa, 73 So.3d at 106 ; Diamond, 140 So.3d at 1095.

The trial court certified this class under subsection (b)(3). "In a (b)(3) class action, not all issues of fact and law are common, but common issues predominate over individual issues." Diamond, 140 So.3d at 1095–96 (citing Fla. R. Civ. P. 1.220(b)(3) ). This occurs "when, considering both the rights and duties of the class members, the proof offered by the class representatives will necessarily prove or disprove the cases of the absent class members." Id. at 1096.

The class representative's case must not merely raise a common question; the proof of the class representative's case must also "answer the question." Id. (citing Sosa, 73 So.3d at 111 ). As the United States Supreme Court st...