United States District Court, D. Maryland, Southern Division
MEMORANDUM OPINION AND ORDER
W. GRIMM, UNITED STATES DISTRICT JUDGE
MAO-MSO Recovery II, LLC, MSP Recovery, LLC, and MSPA Claims
1, LLC have filed two putative class action lawsuits,
MAO-MSO Recovery II, LLC v. Government Employees
Insurance Company, PWG-17-711 (the “No-Fault
Case”), and MAO-MSO Recovery II, LLC v. Government
Employees Insurance Company, PWG-17-964 (the
“Settlement Case”), against Defendant Government
Employees Insurance Company
(“GEICO”). They seek reimbursement for
accident-related medical expenses that Medicare Advantage
Organizations (“MAOs”) paid on behalf of
Medicare-eligible beneficiaries, claiming that GEICO was
statutorily-obligated to pay for the expenses. No-Fault Am.
Compl. ¶¶ 4-5, ECF No. 33 in No-Fault Case; Sett.
Am. Compl. ¶¶ 3-4, ECF No. 28 in Sett. Case. In
both cases, “Plaintiffs assert the rights of MAOs via
assignment of all rights, title, and interest allowing them
to bring these claims.” No-Fault Am. Compl. 2 n.2;
Sett. Am. Compl. ¶ 2.
No-Fault Case, the injured beneficiaries had no-fault
insurance policies through GEICO. No-Fault Am. Compl.
¶¶ 4-5. In the Settlement Case, it was not the
injured beneficiaries who were insured through GEICO; rather,
the beneficiaries were injured in accidents in which the
tortfeasors had insurance through GEICO, and the
beneficiaries entered into settlements with GEICO following
the accidents. Sett. Am. Compl. ¶¶ 3-4. Plaintiffs
allege that, under both circumstances, GEICO “was
responsible for paying those expenses . . . in the first
instance, . . . under the Medicare Secondary Payer
provisions, ” 42 U.S.C. § 1395y(b), and therefore
was obligated to reimburse the MAOs, but failed to do so.
No-Fault Am. Compl. ¶¶ 1- 5; see Sett. Am.
Compl. ¶¶ 1-4. Plaintiffs filed both lawsuits on
behalf of themselves and all others similarly situated.
has moved to dismiss the complaints and specifically the
class allegations in both cases. Because Plaintiffs have
standing and pleaded plausible claims for relief, I will deny
the motions to dismiss. As for GEICO's requests to
dismiss the class allegations, I will deny them without
prejudice to filing motions to strike in each case at the
point of class certification. And, insofar as GEICO's
motions allege that Plaintiffs lack standing, the denials are
without prejudice to renewal at the close of discovery,
should the record support the renewal.
Medicare Secondary Payer Provisions
Medicare Act, 42 U.S.C. §§ 1395-1395hhh, provides
health care coverage, “serv[ing] as a federal health
insurance program benefitting the disabled and persons over
the age of sixty-five.” O'Connor v. Mayor of
Balt., 494 F.Supp.2d 372, 373 (D. Md. 2007). Initially,
it “often acted as a primary insurer, . . . pa[ying]
for enrollees' medical expenses even if there was
overlapping insurance coverage or when a third party had an
obligation to pay for the expenses.” MAO-MSO
Recovery II, LLC v. Farmers Ins. Exch.
(“Farmers”), No. 217CV02522CASPLAX, 2017
WL 5634097, at *2 (C.D. Cal. Nov. 20, 2017). Then, Congress
passed the Medicare Secondary Payer provisions
(“MSPP”), 42 U.S.C. § 1395y, “to
‘reduce Medicare costs by making the government a
secondary provider of medical insurance coverage when a
Medicare recipient has other sources of primary insurance
coverage.'” Brown v. Thompson, 374 F.3d
253, 257 (4th Cir. 2004) (quoting Thompson v.
Goetzmann, 337 F.3d 489, 495 (5th Cir. 2003)); see
Netro v. Greater Balt. Med. Ctr. Inc., No. GLR-16-3769,
2017 WL 5635446, at *2 (D. Md. Apr. 13, 2017) (same);
O'Connor v. Mayor of Balt., 494 F.Supp.2d 372,
373 (D. Md. 2007) (same). The MSPP “shifts
responsibility for medical payments to other group health
plans, workers' compensation, no-fault and liability
insurers, which are considered ‘primary
plans.'” Farmers, 2017 WL 5634097, at *2
(quoting 42 U.S.C. § 1395y(b)(2)).
to the MSPP, Medicare cannot make a payment “with
respect to any item or service to the extent that . . .
payment has been made, or can reasonably be expected to be
made, with respect to the item or service” by a primary
payer; Medicare may, however, make a “conditional
payment” if a primary payer “has not made or
cannot reasonably be expected to make payment with respect to
such item or service promptly.” 42 U.S.C. §
1395y(b)(2)(A)(i), (B)(i). Conditional payments are made
“with the expectation that the primary payer will later
reimburse Medicare if responsible for the cost.”
O'Connor, 494 F.Supp.2d at 373 (citing 42 U.S.C.
§ 1395y(b)(2)(B)). If Medicare makes a conditional
payment, “the primary payer must then reimburse
Medicare . . . ‘if it is demonstrated that such primary
plan has or had a responsibility to make payment with respect
to such item or service.'” Farmers, 2017
WL 5634097, at *2 (quoting 42 U.S.C. §
1395y(b)(2)(B)(ii)). The MSPP permits “private citizens
[to] sue primary payers when a primary payer ‘fails to
provide for primary payment (or appropriate reimbursement),
'” and it provides for double damages.
Netro, 2017 WL 5635446, at *3 (quoting 42 U.S.C.
§ 1395y(b)(3)(A)); see O'Connor, 494
F.Supp.2d at 373.
filed the No-Fault Case on March 15, 2017, Compl., ECF No. 1
in No-Fault Case, and the Settlement Case on April 6, 2017,
Compl., ECF No. 1 in Sett. Case. In both cases, I issued my
customary order relating to the filing of motions. ECF No. 21
in No-Fault Case; ECF No. 15 in Sett. Case. In the No-Fault
Case, GEICO complied with the order, filing a short letter
describing the factual and legal basis for its belief that
Plaintiffs' Complaint was deficient and failed to state a
claim for reimbursement under the MSPP. ECF No. 22. GEICO
also challenged the sufficiency of the class action
allegations and noted that it was “researching other
aspects of the case and . . . may raise other issues
including whether the complaint should be dismissed pursuant
to Rule 12(b)(1) for lack of subject matter
jurisdiction.” Id. I held a conference call,
ECF No. 25, and as agreed during that call, GEICO filed its
motion to dismiss and memorandum in support in the No-Fault
Case, ECF Nos. 30 and 31; Plaintiffs amended their pleadings
in that case, ECF No. 33; and GEICO renewed its request to
move to dismiss, ECF No. 34. It also sought leave to file a
similar motion to dismiss in the Settlement Case. ECF No. 19
in Sett. Case. I struck the original motion to dismiss in the
No-Fault Case, ECF No. 37 in No-Fault Case; permitted
Plaintiffs to amend in the Settlement Case, ECF No. 26 in
Sett. Case; and GEICO filed the motions to dismiss that now
are pending, ECF No. 44 in No-Fault Case; ECF No. 31 in Sett.
Case. Both of these motions challenge the Court's
jurisdiction and argue that Plaintiffs fail to state a claim
or present sufficient class allegations.
filed consolidated Oppositions, docketed as ECF No. 49 in the
No-Fault Case and ECF No. 35 in the Settlement Case; GEICO
filed consolidated Replies, docketed as ECF No. 53 in the
No-Fault Case and ECF No. 39 in the Settlement Case; and the
parties filed summaries of their memoranda and opposition in
both cases, ECF Nos. 55, 56 in No-Fault Case; ECF Nos. 41, 42
in Sett. Case. A hearing is not necessary. See Loc.
R. 105.6. Neither party discusses the jurisdictional issue at
any length but, given that the cases cannot proceed without
subject matter jurisdiction and the Court must consider the
issue sua sponte and dismiss the lawsuit if
jurisdiction is lacking, see Fed. R. Civ. P.
12(h)(3), I will address it first. In a nutshell, if the
Plaintiffs have standing to sue GEICO, then there is subject
matter jurisdiction. If not, there is not.
Court may “adjudicate only actual cases and
controversies.” Zaycer v. Sturm Foods,
Inc., 896 F.Supp.2d 399, 407 (D. Md. 2012) (citing
U.S. Const. art. III, § 2; O'Shea v.
Littleton, 414 U.S. 488, 493 (1974); Bishop v.
Bartlett, 575 F.3d 419, 423 (4th Cir. 2009)). Thus, this
Court only has jurisdiction if
(1) [the plaintiff] has suffered an “injury in
fact” that is (a) concrete and particularized and (b)
actual or imminent, not conjectural or hypothetical; (2) the
injury is fairly traceable to the challenged action of the
defendant; and (3) it is likely, as opposed to merely
speculative, that the injury will be redressed by a favorable
Id. at 408 (quoting Bishop, 575 F.3d at
423). In other words, the plaintiff must have standing.
putative class actions, such as the cases before me, the
Court “analyze[s] standing based on the allegations of
personal injury made by the named plaintiffs. Without a
sufficient allegation of harm to the named plaintiff in
particular, plaintiffs cannot meet their burden of
establishing standing.” Dreher v. Experian Info.
Sols., Inc., 856 F.3d 337, 343 (4th Cir. 2017) (quoting
Beck v. McDonald, 848 F.3d 262, 269-70 (4th Cir.
2017) (citation and internal quotation marks omitted)
(alterations from Dreher removed)). Notably,
“[a]ssignees of a claim . . . have long been permitted
to bring suit, ” because “[l]awsuits by assignees
. . . are ‘cases and controversies of the sort
traditionally amenable to, and resolved by, the judicial
process.'” Sprint Commc'ns Co., L.P. v.
APCC Servs., Inc., 554 U.S. 269, 285-86 (2008) (quoting
Vt. Agency of Nat. Res. v. United States ex rel.
Stevens, 529 U.S. 765, 777-78 (2000) (internal quotation
marks omitted)). Thus, “the assignee of a claim has
standing to assert the injury in fact suffered by the
assignor.” Vt. Agency of Nat. Res., 529 U.S.
contends that this Court lacks subject matter jurisdiction
because Plaintiffs lack standing. Def.'s No-Fault Mem.
7-8, 10; Def.'s Sett. Mem. 7, 9. When a defendant moves
to dismiss pursuant to Fed.R.Civ.P. 12(b)(1) for lack of
subject matter jurisdiction, asserting a facial challenge
that “a complaint simply fails to allege facts upon
which subject matter jurisdiction can be based, ” as
GEICO does here, “the facts alleged in the complaint
are assumed to be true and the plaintiff, in effect, is
afforded the same procedural protection as he would receive
under a 12(b)(6) consideration.” Adams v.
Bain, 697 F.2d 1213, 1219 (4th Cir. 1982); see Lutfi
v. United States, 527 F. App'x 236, 241 (4th Cir.
2013); Fianko v. United States, No. PWG-12-2025,
2013 WL 3873226, at *4 (D. Md. July 24, 2013). Thus,
“the facts alleged in the complaint are taken as true,
and the motion must be denied if the complaint alleges
sufficient facts to invoke subject matter
jurisdiction.” Kerns v. United States, 585
F.3d 187, 192 (4th Cir. 2009); see In re KBR, Inc., Burn
Pit Litig., 925 F.Supp.2d 752, 758 (D. Md. 2013)
(quoting Kerns, 585 F.3d at 192). This Court must
act “on the assumption that all the allegations in the
complaint are true (even if doubtful in fact).”
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56
(2007) (citations omitted). The burden is on the plaintiff to
establish jurisdiction. Sherill v. Mayor of Balt.,
31 F.Supp.3d 750, 763 (D. Md. 2014). (citing Lovern v.
Edwards, 190 F.3d 648, 654 (4th Cir. 1999)).
insists that the Amended Complaints “fail to plead
any facts demonstrating how Plaintiffs or their MAO
assignor(s) suffered an injury in fact.” Def.'s
No-Fault Mem. 10; see Def.'s Sett. Mem. 9. And,
GEICO contends that Plaintiffs' amended pleadings still
fail to allege “whether and when any valid assignments
of rights were made by the MAO to any of the Plaintiffs,
” Def.'s No-Fault Mem. 11; see Id. at 10
n.5 (cross-referencing 12(b)(6) discussion in 12(b)(1)
discussion); Def.'s Sett. Mem. 11. Plaintiffs counter:
Both FACs allege that the underlying MAOs, who assigned their
rights of recovery to the Plaintiffs, suffered an
economic injury as result of making payments GEICO
was statutorily required to pay in the first place, whether
by virture of an underlying no-fault insurance policy or a
settlement agreement. E.g., No-Fault FAC ¶ 4
(“[T]he MAOs paid or otherwise incurred losses for the
medical items or treatment even though the GEICO was
responsible for paying those expenses.”); id.
¶¶ 5, 55, 57, 60-61, 75, 77, 81, 83, 88 (alleging
how GEICO caused economic injury to the underlying MAOs);
Settlement FAC ¶¶ 4, 5, 51, 56, 66, 69, 71, 72
(same). In either case, this quantifiable economic loss is a
real and cognizable injury sufficient to confer standing to
the underlying MAOs and thus, by assignment, to Plaintiffs.
Pls.' Opp'n 8. GEICO disagrees, arguing that
Plaintiffs do nothing more than “[g]enerically
declar[e] that unidentified MAO assignors have made payments
that were not reimbursed by GEICO, ” which, in
GEICO's view, “means nothing because GEICO's
obligation to reimburse does not arise until several
prerequisites are satisfied, ” and Plaintiffs have not
alleged that those prerequisites were satisfied. Def.'s
Reply 1. Thus, to determine whether Plaintiffs have standing,
I must consider whether Plaintiffs sufficiently alleged that
the MAOs suffered an injury in fact, see Bishop, 575
F.3d at 423, that is, that they were not reimbursed when they
should have been, and whether the MAOs assigned their right
to reimbursement to Plaintiffs, see Vt. Agency of Nat.
Res., 529 U.S. at 773. See also MAO-MSO Recovery II,
LLC v. USAA Cas. Ins. Co., No. 17-21289-CIV, 2017 WL
6411099, at *4 (S.D. Fla. Dec. 14, 2017) (noting that these
facts must be alleged to establish standing).
Injury in Fact
v. Mayor of Baltimore, 494 F.Supp.2d 372 (D. Md. 2007),
provides guidance on what constitutes adequate pleading of
injury in fact by a private party seeking to bring a claim
under the MSPP. There, a former firefighter with the
Baltimore City Fire Department contracted mesothelioma and
“incurred significant medical expenses, paid by
Medicare, in treating his disease.” Id. at
372. Finding that the disease resulted from his employment,
the Maryland Workers' Compensation Commission ordered
Baltimore City to pay O'Connor's related medical
bills. Id. When Baltimore City (which, because it is
self-insured, qualified as a primary payer under the MSPP)
failed to pay, O'Connor sued it for damages representing
twice the amount of the medical expenses that Medicare paid
on his behalf, pursuant to the MSPP. Id.
City moved to dismiss, arguing that O'Connor lacked
standing because he had not suffered an injury in fact.
Id. at 373-74. This Court concluded that
O'Connor “ha[d] alleged an injury in fact, ”
In particular, the Complaint avers that the MSP statute
renders the City responsible as a primary payer for
O'Connor's medical expenses and that its refusal to
fulfill this obligation has forced Medicare to make all
mesothelioma-related payments on O'Connor's behalf.
(Compl.¶¶ 5-6, 8, 11-15.) These general allegations
of injury suffice at this early stage of the litigation.
See White Tail Park, 413 F.3d at 459 (citing
Lujan, 504 U.S. at 561, 112 S.Ct. 2130). Moreover,
the MSP statute's citizen suit provision exists to
redress exactly this type of injury. See Manning v.
Utils. Mut. Ins. Co., 254 F.3d 387, 394 (2d Cir.2001)
(“The MSP creates a private right of action for
individuals whose medical bills are improperly denied by
insurers and instead paid by Medicare....”).
Id. at 374.
similarly, in the No-Fault Case, Plaintiffs claim that the
MAOs (their assignors) made conditional payments on behalf of
their beneficiaries following automobile accidents in which
the beneficiaries sustained injuries requiring medical
services and/or supplies. No-Fault Am. Compl. ¶¶
50-54. They also allege that GEICO, as those
beneficiaries' primary insurer, was obligated to make the
payments, but failed to reimburse the MAOs, as it was
required to do by statute. Id. Specifically, they
Plaintiffs have identified medical claims whereby
Plaintiffs' beneficiaries were involved in
automobile-related accidents and experienced medical expenses
as a result. Of those claims, Plaintiffs have been able to
determine that those Medicare beneficiaries possessed
automobile insurance policies with the Defendant containing
no-fault provisions. Thus, there is reasonable evidence of
overlapping coverage and evidence that the payments were made
by a Medicare Part C payer instead of the primary payer, the
Defendant herein. . . .
. . .
. . . for the purposes of illustration alone, and
subject to the collection of additional data through
discovery, Plaintiffs allege, with specificity, the following
representative claim involving payments for medical services
that Defendant was primarily responsible for. A Florida
resident was a receiving [sic] Medicare benefits from the an
[sic] MAO whose right to recover under the MSP act have [sic]
been assigned to Plaintiffs. That person was involved in an
automobile accident on April 25, 2014 that required medical
services arising out of the use, maintenance, and/or
operation of a motor vehicle. Plaintiffs' MAO paid for
those medical expenses. That person, however, at the time of
the accident also possessed a PIP policy with the Defendant,
which required payment of medical expesens [sic] up to the
policy limit of $10, 000. Defendant, however, did not pay or
reimburse the MAOs for those expenses within the required
time frame, as required of a primary payer. Additionally, the
Defendant did not challenge the MAO's payment of those
medical expenses as reasonable and necessary within the
required time frame.
Id. ¶¶ 55, 57. Although Plaintiffs do not
name the “Medicare Beneficiary, . . . the corresponding
MAO, Full Risk Payer and/or their assignee(s), ” they
assert that they will do so “upon execution of a
qualified protective order.” Id. at 15 n.10.
likewise, in the Settlement Case, Plaintiffs claim that GEICO
indemnified their insureds for accidents causing injury to
the MAOs' beneficiaries and made payments pursuant to
settlement agreements but failed to reimburse the MAOs for
the beneficiaries' medical expenses that the MAOs had
covered. Sett. Am. Compl. ¶¶ 47-49, 61-66. They
assert that their allegations are based on their
“review of claims data, ” through which they
“have identified settlements which followed incidents
involving Plaintiffs' beneficiaries and Defendant's
insureds (Tortfeasors) where Plaintiffs' beneficiaries
sustained injuries that required medical treatment.”
Id. ¶ 50. They claim:
Such medical treatment was provided by Plaintiffs' MAOs.
When Tortfeasors and Medicare Beneficiaries entered into
settlements to resolve claims made against Tortfeasors,
Defendant indemnified its insured Tortfeasors by making
settlement payments. The data reviewed by Plaintiffs
indicates that Defendant never reimbursed Plaintiffs'
MAOs for the medical ...