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Invalid Assignments Continue to Thwart Conditional Payment Claim Recovery Attempts

The Eleventh Circuit weighed in on the series of proposed class-action cases brought around the country by MSP Recovery, LLC. (MSP Recovery Claims v. Qbe Holdings, 2020 U.S. App. LEXIS 21970). In the lower court, MSP Recovery filed suit to recover conditional payments based on an assignment agreement between MSP Recovery and Health First Health Plans, Inc., (HFHP) a Medicare Advantage Organization.

As you know, Medicare Advantage Organizations, like Medicare itself, are considered secondary payers under the Medicare Secondary Payer Act (MSPA). Given the status of HFHP as an MAO, MSP Recovery, its purported assignee, sought to recover conditional payments from defendant QBE Holdings, Inc., et al., (collectively QBE) a no-fault insurer qualifying as a primary payer under the MSPA.

Problems arose in MSP Recovery’s initial suit when its purported recovery agreement with HFHP came under scrutiny. After review, the court discovered that the assignment agreement MSP Recovery entered into was with Health First Administrative Plans, Inc. (HFAP), a separate company that provides administrative functions for HFHP.

The recovery agreement allowed MSP Recovery to recover conditional payments on behalf of HFAP, the administrative company, rather than HFHP, the Medicare Advantage Organization. Despite attempts by MSP Recovery and HFHP to cure this error via addendum to the agreement with HFAP, the District Court for the Middle District of Florida granted QBE’s motion to dismiss the suit for lack of standing, holding that MSP Recovery could not establish standing based on HFHP’s retroactive assignment.

MSP Recovery appealed the decision to the Eleventh Circuit. The circuit court upheld the lower court’s dismissal, rejecting the addendum as impermissible evidence extrinsic to the original agreement, which was unambiguous on its face. This series of cases illustrates the importance of any assignment that an MAO may enter into with a third party. A failure to ensure that the assignment is valid may create barriers to recovery under the MSPA.


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