US District Court: Contractual Obligation Does not Demonstrate Primary Payer Responsibility

In MSPA Claims 1, LLC v. Liberty Mut. Ins., No. 1:15-cv-21417-UU, 2015 U.S. Dist. LEXIS 99188 (S.D. Fla. July 22, 2015), an individual was injured in a motor vehicle accident. The individual had personal injury protection (PIP) insurance through Liberty Mutual Insurance and a secondary policy through Florida Healthcare Plus (FHCP), a Medicare Advantage Organization (MAO). FHCP conditionally paid for the insured’s medical expenses and later assigned its right to reimbursement to MSPA Claims 1, LLC. MSPA Claims 1 brought the present action requesting a declaratory judgment that Liberty Mutual is obligated to reimburse Medicare and a private cause of action for double damages under the Medicare Secondary Payer Act (MSPA).

Liberty Mutual filed a motion to dismiss, providing several arguments for why dismissal was appropriate in this case, including that MSPA Claims 1 had not properly demonstrated the defendant’s primary payer responsibility. In deciding the case, the District Court looked to the Eleventh Circuit’s decision in Glover v. Liggett Grp., Inc., 459 F.3d 1304 (11th Cir. 2006), where the Court held that demonstration of primary payer responsibility is a condition precedent to bringing a claim under the MSPA. The Court reasoned that without such a condition precedent, the federal court’s jurisdiction would be drastically expanded, and the primary payer would be unable to contest liability without the risk of a double damages penalty. Although Glover involved a tortfeasor, the reasoning in Glover is also applicable in cases where the responsibility to pay arises out of a contractual obligation. Here, the Court noted that even where there is a contractual obligation, the insurer should be able to contest liability without being subject to double damages. As such, the Court held that while a contractual obligation can be part of the demonstration of responsibility, that contractual obligation alone does not establish a responsibility to pay. Thus, because the plaintiff’s sole evidence of primary payer responsibility was the contractual obligation, the District Court held that primary payer responsibility had not been demonstrated. The plaintiff’s claim was dismissed with leave to re-file once the plaintiff can establish the condition precedent by pursuing a subrogation or breach of contract claim in state court.

The defendant also argued that a claim under the MSPA is not assignable and that the MSPA does not create a private cause of action for MAOs. However, because the Court dismissed the cause of action for failure to state a claim, these arguments could not be addressed.

We will continue to monitor this case and will keep you informed of any new developments.