MSPA Claims 1, LLC v. Halifax Health, Inc.
Filing
73
ORDER granting 60 motion to stay of discovery pending resolution of motion to dismiss. Signed by Judge Gregory A. Presnell on 12/20/2017. (ED)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION
MSPA CLAIMS 1, LLC,
Plaintiff,
v.
Case No: 6:17-cv-1790-Orl-31DCI
HALIFAX HEALTH, INC,
Defendant.
ORDER
This matter comes before the Court without a hearing on the Motion to Stay Proceedings
or, in the Alternative, for Order Setting Scheduling Conference (Doc. 60) filed by the Defendant,
Halifax Health, Inc. (henceforth, “Halifax”), the response in opposition (Doc. 64) filed by the
Plaintiff, MSPA Claims 1, LLC (“MSPAC”), and the reply (Doc. 68) filed by Halifax.
I.
Background
MSPAC filed this purported class action as the assignee of Florida Healthcare Plus, Inc.
(“FHCP”), a Medicare Advantage Organization (“MAO”). In its Complaint (Doc. 22-1 at 7-29),
originally filed in state court and subsequently removed, MSPAC alleges that one of FHCP’s
enrollees 1 incurred $32,000 in medical bills for treatment from Halifax. The enrollee also had
medical coverage through 21st Century Preferred Insurance Company (“21st Century”), which
was the primary payer for that enrollee. MSPAC contends that Halifax billed both FHCP – which
was secondarily liable – and 21st Century the full amount of the enrollee’s bill. 21st Century paid
its $10,000 policy limit, and FHCP paid the entire $32,000.
1
The enrollee’s name is being kept confidential.
In Count I of the Complaint, MSPAC seeks to recover the $10,000 overpayment (as
FHCP’s assignee) pursuant to the Medicare Secondary Payer Act (the “MSP Act”), 42 U.S.C.
§ 1395y(b). MSPAC also argues that Halifax’s failure to reimburse FHCP was a violation of
Florida’s Deceptive and Unfair Trade Practices Act, Fla. Stat. §501.201 et seq. (Count II) and
constituted unjust enrichment (Count III). Halifax has filed a motion to dismiss (Doc. 16),
arguing inter alia that MSPAC lacks a legal basis for pursuing those claims. That motion is ripe
for review. In the instant motion, Halifax requests a stay to avoid incurring discovery costs
before the motion to dismiss has been resolved.
II.
Analysis
Congress passed the MSP Act in 1980 to reduce the costs of Medicare. Glover v. Liggett
Grp., Inc., 459 F.3d 1304, 1306 (11th Cir. 2006). Prior to the passage of the MSP Act, Medicare
often acted as a primary payer, paying for an enrollee’s medical expenses even when the enrollee
carried other insurance that covered those expenses or when some third party had an obligation to
pay for them. MSP Recovery, LLC v. Allstate Insurance Company, 835 F.3d 1351, 1354-55 (11th
Cir. 2016). The MSP Act changed this, making Medicare only secondarily liable – meaning that
if payment has been or is reasonably expected to be made by another entity, Medicare does not
have to pay. 42 U.S.C. § 1395y(2)(A); Cochran v. U.S. Health Care Fin. Admin., 291 F.3d 775,
777 (11th Cir. 2002). To accommodate its beneficiaries, however, Medicare does make payments
for covered services, even when another source is obligated to do so, if the other source is not
expected to pay promptly. 42 U.S.C. § 1395y(2)(B)(i); Cochran at 777. These payments are
conditioned on reimbursement to Medicare, 42 U.S.C. § 1395y(2)(B)(i), and are referred to as
“conditional payments”. Section 1395y(3)(A) of the MSP Act provides a private cause of action
for double damages “in the case of a primary plan which fails to provide for primary payment (or
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appropriate reimbursement)” in accordance with the provisions of 42 U.S.C. § 1395y(1) and 42
U.S.C. §1395y(2)(A). It is this private right of action that MSPAC seeks to utilize against
Halifax in Count I.
Halifax does not dispute that MSPAC is entitled to recover the $10,000 paid by FHCP that
had also been paid by 21st Century. But Halifax makes several legal arguments that MSPAC
cannot proceed under the MSP Act’s private right of action to do so. In particular, Halifax argues
that the $10,000 at issue was simply a mistaken overpayment, rather than a conditional payment,
and that the MSP Act’s private right of action only applies in regard to conditional payments. In
addition, Halifax notes that, by its terms, 42 U.S.C. § 1395(y)(3)(A) provides for suit being
brought against “a primary plan which fails to provide payment (or appropriate reimbursement),”
not a provider such as Halifax.
In its initial discovery request in this putative class action, MSPAC seeks, inter alia,
financial records for every Medicare recipient treated at Halifax in the past seven years. Thus,
discovery in this case is likely to be highly burdensome. Facial challenges to the legal sufficiency
of a claim or defense, such as a motion to dismiss for failure to state a claim, should be resolved
before discovery begins. Chudasama v. Mazda Motor Corp., 123 F.3d 1353, 1367 (11th Cir.
1997). Accordingly, the Court will grant Halifax’s request for a stay of discovery pending
resolution of its motion to dismiss.
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III.
Conclusion
In consideration of the foregoing, it is hereby
ORDERED that the Motion to Stay Proceedings or, in the Alternative, for Order Setting
Scheduling Conference (Doc. 60) is GRANTED as set forth above. Discovery in this matter is
STAYED indefinitely pending resolution of the Defendant’s motion to dismiss (Doc. 16).
DONE and ORDERED in Chambers, Orlando, Florida on December 20, 2017.
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