MSPA Claims/MSP Recovery Not Successful in Eleventh Circuit Appeal – MSP Act Does Not Preempt Insurance Policy or State Law

Lawyer writing in a book sitting on a desk with a gavel, books, and scales

by J. Mislanovich

Recently, the Eleventh Circuit ruled against MSPA Claims/MSP Recovery (MSPR) in MSP Recovery Claims, Series LLC v. United Auto. Ins. Co.[1], finding that the Medicare Secondary Payer (MSP) Act does not preempt insurance policy time limits or the pre-suit notice requirement by Florida state law. MSPA Claims/MSPR were assignees of Medicare Advantage Organizations (MAO) who filed complaints against private insurers. MSPA and MSPR sought to recover medical expenses the MAOs had made on behalf of Medicare beneficiaries, asserting that the private insurers qualify as primary payers under the MSP Act.

In two consolidated claims, Defendants (United Automobile Insurance Company and Covington Specialty Insurance Company) argued that MSPA and MSPR’s claims were barred due to failing to satisfy procedural requirements. The Plaintiffs countered that the procedural requirements were preempted by the MSP Act. The appellate court affirmed that the procedural requirements were not preempted. In the first of the two matters consolidated for the appellate court, the insurance policy in question had a one-year deadline for filing claims versus the MSP Act’s three-year period for filing claims. Covington argued that MSPA did not report the alleged medical expenses for reimbursement within one year of the date of the accident as the insurance policy required. MSPA countered that the policy deadline was preempted by the MSP Act, which provides a three-year period for filing claims. The district court agreed with Covington and rejected MSPA’s argument. The Eleventh Circuit affirmed this decision, as it did not find a basis in the MSP Act for it to infer that the provision preempts a claims-filing deadline in a no-fault or general liability policy. In short, the MSP Act does not preempt the claims-filing deadline found in the insurance policy.

In the second consolidated matter, United Auto asserted that MSPR was required under Florida law to send them a pre-suit demand letter, which MSPR admits it did not do. Florida statute requires that a prospective plaintiff send a notice of intent to litigate to the insurer and guarantees the insurer a 30-day cure period before it can be sued. As noted by the appellate court, in Florida, all automobile-liability policies are “deemed to incorporate the provisions of the Florida Motor Vehicle No-Fault Law”.[2] As mentioned, MSPR admitted they did not provide this 30-day notice period but argued that the MSP Act preempts the Florida law and does not require them to provide a notice period. Again, the Eleventh Circuit found that the MSP Act does not expressly preempt the state law, stating that the Florida statute “d[id] not prevent or meaningfully impede the reimbursement of Medicare Advantage Organizations that Congress sought to facilitate” through the MSP Act.

MSPR has taken quite the aggressive stance in attempting to seek double damages on behalf of Medicare Advantage plans. With this decision however, we see that their power to utilize the MSP Act for private actions is not without limits. Defendants coming under the MSPR line of fire should take notice of this decision in planning their future defenses.

IMPAXX continues to recommend that parties determine if there are any potential Part C or D lienholders prior to settlement to avoid recoveries and potential double damages in the future. IMPAXX partners with carriers, self-insureds, and third-party administrators, to confirm that Part C and Part D plans are notified of potential reimbursement opportunities. To learn more, please contact our settlement consulting team at [email protected]

[1] U.S. App. LEXIS 4200 (February 22, 2023)
[2] Fla. Stat. § 627.7407(2)