MSP Recovery and its law firm, MSP Recovery Law Firm, Score Major Blows Against the Insurance Industry

It should be of no surprise defendants prefer federal courts. Favorable procedural rules, offers of judgment, and unavailability of interlocutory appeals are just some of the reasons why defendants would conclude that a federal court in essence affords them a “home field advantage.” As a result, defense attorneys tirelessly seek removal.

In a massive attack against the insurance industry to recover billions of dollars in claims that entitle Medicare Advantage Organizations (“MAO”) and their assignees reimbursement, MSP Recovery has kept the insurance companies on their heels.

To date MSP Recovery has prevailed against the insurance industry on all significant issues that address the carrier’s obligation to reimburse MAOs. Per order of a federal judge, MSP Recovery Law Firm’s class action lawsuit against Allstate for breach of contract was remanded to the Circuit Court of the Eleventh Judicial Circuit

On June 30, Judge Robert N. Scola Jr. of the U.S. District Court for the Southern District Court of Florida sent MSP Recovery’s breach of contract suit back to state court, citing an improper removal to the District Court by the defense given the case at bar is based solely on state law claims that are not completely preempted.

MSP Recovery, an assignee of Florida Healthcare’s recovery rights, filed a four-count complaint in Miami Dade County against Allstate for violating Florida Statute section 627.736, and failing to pay no-fault personal-injury-protection benefits.

Nonetheless, on February 8, Allstate filed a Notice to Remove based on federal-question jurisdiction despite MSP Recovery’s exclusive reliance on the Florida statute and the PIP policy.

In its Notice Allstate asserted, “it is obvious that a federal question is presented on the face of Plaintiff’s Compliant.” By contrast, Judge Scola in the Order Granting Motion to Remand wrote, “[w]hile the federal question might be “obvious” and “clear” to Allstate, Allstate has not carried its burden on demonstrating to the Court that MSPA’s complaint, on its face, actually “relies on a federal cause of action.””

Allstate unequivocally mischaracterized MSP Recovery’s claims. The mere fact MSP Recovery referred to federal law in its complaint to explain a MAO’s obligations under the Medicare Secondary Payer Act, without more, is insufficient to confer federal-question jurisdiction.

Furthermore, Judge Scola found Allstate’s reliance on 42 U.S.C. §1395w-26(b)(3) as a basis for complete preemption unavailing.

Allstate pointed to Humana Med. Plan v. Reale to support its complete preemption argument, but failed to recognize Reale never actually addressed complete preemption. Thus, 42 U.S.C. §1395w-26(b)(3) does not completely preempt state-law claims.

This ruling follows Senior Judge James Lawrence King’s decision in a separate MSP Recovery Motion to Remand in which he found, “[t]he Compliant raises four counts for common law breach of contract, and does not raise any claim for damages based on an alleged violation of a federal statute; or state any facts demonstrating federal jurisdiction” before the court remanded that defendant’s second attempt at removal with prejudice to “[d]efendant attempting a third removal in the future.”

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