Opinion
Case No. 1:17–cv–21996–UU
10-10-2017
MAO–MSO RECOVERY II, LLC, et al., Plaintiffs, v. BOEHRINGER INGELHEIM PHARMACEUTICALS, INC., et al., Defendants.
Frank Carlos Quesada, John Hasan Ruiz, MSP Recovery Law Firm, Miami, FL, Andres Rivero, Amanda Marie McGovern, Rivero Mestre LLP, Coral Gables, FL, for Plaintiffs. Cheryl Zak Lardieri, Goodell De Vries Leech & Dann LLP, Boston, MD, Michael Daniel Begey, Christian Tiblier, Lena Marguerite Mirilovic, Rumberger Kirk & Caldwell, Orlando, FL, Robert A. Limbacher, Goodell, DeVries, Leech & Dann, LLP, Philadelphia, PA, Aaron Stenzler Weiss, Carlton Fields Jorden Burt, P.A., Miami, FL, for Defendants.
Frank Carlos Quesada, John Hasan Ruiz, MSP Recovery Law Firm, Miami, FL, Andres Rivero, Amanda Marie McGovern, Rivero Mestre LLP, Coral Gables, FL, for Plaintiffs.
Cheryl Zak Lardieri, Goodell De Vries Leech & Dann LLP, Boston, MD, Michael Daniel Begey, Christian Tiblier, Lena Marguerite Mirilovic, Rumberger Kirk & Caldwell, Orlando, FL, Robert A. Limbacher, Goodell, DeVries, Leech & Dann, LLP, Philadelphia, PA, Aaron Stenzler Weiss, Carlton Fields Jorden Burt, P.A., Miami, FL, for Defendants.
ORDER
URSULA UNGARO, UNITED STATES DISTRICT JUDGETHIS CAUSE comes before the Court upon Defendant Boehringer Ingelheim Pharmaceuticals, Inc.'s Motion to Dismiss Amended Class Action Complaint (D.E. 46) and Providio Defendants' Motion to Dismiss Plaintiffs' Amended Complaint (D.E. 47).
THE COURT has considered the Motions, the pertinent portions of the record and is otherwise fully advised in the premises. For the reasons set forth below, the Court concludes that Plaintiffs lack standing to pursue their claims. Because standing is a jurisdictional issue, the Court does not reach Defendants' other bases for dismissal. See Stalley ex rel. United States v. Orlando Reg'l Healthcare Sys., Inc. , 524 F.3d 1229, 1232 (11th Cir. 2008) ("Because standing is jurisdictional, a dismissal for lack of standing has the same effect as a dismissal for lack of subject matter jurisdiction under Fed. R. Civ. P. 12(b)(1).").
FACTUAL ALLEGATIONS
The following facts are taken from Plaintiffs' Amended Class Action Complaint (D.E. 40) (the "Amended Complaint").
I. The Parties
Plaintiffs are three companies that are assignees of various unidentified Medicare Advantage Organizations ("MAOs"). D.E. 40, ¶¶ 3–5. As assignees of these MAOs, Plaintiffs have the right to recover Medicare payments made by the MAOs, and for which the MAOs have a right of recovery against third parties. Id.
Defendant, Boehringer Ingelheim Pharmaceuticals, Inc. ("Boehringer, Inc.") is a pharmaceutical company based in Connecticut. Id. ¶ 7. Defendants, Boehringer Ingelheim Pharma GMBH & Co. KG, Boehringer International GMBH, and Bidachem S.P.A., are pharmaceutical companies based in Germany and Italy. Id. ¶¶ 8–10. Together these four defendants manufactured, distributed, marketed, labeled, or sold a blood-thinning drug called Pradaxa. Id. ¶ 48. Collectively, all four of these defendants are the "Pharmaceutical Defendants." Of the Pharmaceutical Defendants, only Boehringer, Inc. is presently involved in this litigation; Plaintiffs have not served the international defendants.
Defendants, Providio Medisolution, LLC, and Providio Lien Counsel, LLC, (together the "Providio Defendants"), are administrators of a multi-district-litigation settlement fund (the "Settlement Fund"). Id. ¶ 74. The Settlement Fund was created by the Pharmaceutical Defendants to settle claims related to Pradaxa. Id. ¶¶ 69, 74.
II. The Allegations of the Amended Complaint
A. An Overview
Plaintiffs allege that Defendants violated the Medicare Secondary Payer Act ("MSPA"), 42 U.S.C. § 1395y(b), which is an amendment to the Medicare Act. Id. ¶¶ 13, 27. They allege that individuals who were injured by Pradaxa incurred medical costs treating those injuries. Id. ¶ 59. A "large volume" of those costs were paid for by MAOs. Id. ¶ 61. Pursuant to the MSPA, Defendants have an obligation to repay the MAOs for those costs. Id. ¶ 72. The MAOs assigned their rights to collect those costs to Plaintiffs. Id. ¶ 60. Accordingly, Plaintiffs allege that Defendants owe Plaintiffs—and a class of similarly situated entities—the medical-service costs incurred by individuals injured by Pradaxa. Id. ¶ 14.
B. The Legal Framework
The Medicare Act is divided into several parts; part C is relevant here. Id. ¶ 20. Medicare Part C permits individuals eligible for Medicare to elect to receive their benefits through enrollment in an MAO. Id. The MAOs contract with the Centers for Medicare and Medicaid Services ("CMS") to administer Medicare benefits to Part–C enrollees. Id. ¶ 23. CMS delegates to the MAOs the obligation to administer, pay, and assume all Medicare economic risk for the benefits provided to Part–C enrollees. Id.
Pursuant to the MSPA, any payment made by an MAO is "conditional" or "secondary" whenever there is a "primary plan." Id. ¶ 28. A tortfeasor that self-insures and "carries its own risk" for liability is a primary plan under the MSPA. Id. A primary plan must either pay for the enrollee's medical services or later reimburse the MAO for their secondary payments. Id.
A primary plan's obligation to reimburse the MAO is demonstrated by, among other things, a waiver and release of liability whether or not there is a determination or admission of liability. Id. ¶ 29. Thus, a tort settlement in favor of a Medicare enrollee triggers the tortfeasor's reimbursement obligation. Id.
MAOs have the right to charge primary plans, such as tortfeasors, to recover secondary payments. Id. ¶ 30–32. The MSPA provides a private right of action by which a secondary payer, like an MAO, can recover from a primary plan that fails to fulfill its reimbursement obligation. Id. ¶ 37–38. The private right of action is codified at 42 U.S.C. § 1395y(b)(3)(A) and allows a secondary payer to collect double damages. Id. A primary plan's liability under this statute can be established by a settlement agreement. Id. ¶ 39.
C. The Conduct at Issue
1) The Pharmaceutical Defendants' Conduct
The Pharmaceutical Defendants manufactured a blood-thinning drug called Pradaxa. Id. ¶ 48. Defendants introduced the drug to North American markets in 2010. Id. ¶ 49. Patients who used Pradaxa experienced an increased risk of developing life-threatening internal bleeding. Id. ¶ 53. As a result, numerous lawsuits were brought against the Pharmaceutical Defendants, and the cases were consolidated into multi-district-litigation ("MDL") proceedings in the Southern District of Illinois. Id. ¶ 64.
Plaintiffs identify five Part–C individuals, by initials only, who suffered injuries from Pradaxa. Id. ¶ 58. These individuals' MAOs paid the medical bills incurred to treat the individuals' Pradaxa-related injuries. Id. ¶ 61. The individuals each filed a lawsuit against the Pharmaceutical Defendants. Id. ¶ 66. Several of these enrollees were members of an MAO that assigned its reimbursement rights to Plaintiffs. Id. ¶ 60.
In May, 2014, the Pharmaceutical Defendants settled the MDL proceedings. Id. ¶ 69. By virtue of the settlement, the Pharmaceutical Defendants became primary plans under the MSPA. Id. ¶ 72. Accordingly, they are obligated to reimburse MAOs for secondary payments paid on behalf of individuals to cover the costs of their Pradaxa-related injuries. Id. ¶ 73. Because Plaintiffs are the assignees of MAOs, Plaintiffs are entitled to collect the reimbursements. Id. ¶¶ 79–80.
At the time of the settlement, the Pharmaceutical Defendants were aware, or should have been aware, that they were obligated to reimburse the medical costs incurred by Medicare enrollees to treat the injuries they sustained from Pradaxa. Id. ¶ 69. Additionally, on or about June 1, 2016, Plaintiffs notified the Pharmaceutical Defendants of their reimbursement rights. Id. ¶ 75, Ex. B. Despite receiving Plaintiffs' notice, the Pharmaceutical Defendants failed to reimburse Plaintiffs. Id. ¶ 76. Accordingly, Plaintiffs allege that they are entitled to recover double damages from the Pharmaceutical Defendants under the MSPA. Id. ¶ 80.
2) The Providio Defendants' Conduct
In August, 2014, three months after the Pharmaceutical Defendants settled the MDL proceedings, the MDL Court appointed the Providio Defendants to administer the Settlement Fund. Id. ¶ 74. Plaintiffs notified the Providio Defendants of their reimbursement rights and demanded that the secondary payments to which they are entitled be repaid from the Settlement Fund. Id. ¶ 75, Ex. B. Despite receiving Plaintiffs' notice, the Providio Defendants failed to reimburse Plaintiffs, claiming that the settlement proceeds had been distributed. Id. ¶ 76. Accordingly, Plaintiffs allege that they are entitled to recover double damages from the Providio Defendants under the MSPA. Id. ¶ 80.
PROCEDURAL HISTORY
Plaintiffs filed their first complaint on May 27, 2017. D.E. 1. On July 14, Boehringer, Inc. filed a motion to dismiss for lack of standing and failure to state a claim. D.E. 27. On August 3, Plaintiffs filed their Amended Complaint. D.E. 40. On August 18, Boehringer, Inc. and the Providio Defendants filed motions to dismiss the Amended Complaint for lack of standing and failure to state a claim. D.E. 46, 47. Additionally, the Providio Defendants argue that they are not subject to personal jurisdiction in Florida.
LEGAL STANDARD
I. Standing
Article III standing is jurisdictional and, therefore, a threshold inquiry. Stalley ex rel. United States v. Orlando Reg'l Healthcare Sys., Inc. , 524 F.3d 1229, 1232 (11th Cir. 2008) ("Because standing is jurisdictional, a dismissal for lack of standing has the same effect as a dismissal for lack of subject matter jurisdiction under Fed. R. Civ. P. 12(b)(1).") (internal quotations omitted). To establish standing, a plaintiff must show that he suffered an "injury in fact"—an invasion of a legally protected interest which is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical. Id. Second, there must be a causal connection between the injury and the conduct complained of; the injury has to be fairly traceable to the challenged action of the defendant, and not the result of the independent action of some third party not before the court. Third, it must be likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision. Id. at 560–61, 112 S.Ct. at 2136.
A defendant can make either a facial or factual challenge to a plaintiff's standing. "A facial attack on the complaint requires the court merely to look and see if the plaintiff has sufficiently alleged a basis of subject matter jurisdiction, and the allegations in his complaint are taken as true for the purposes of the motion." McElmurray v. Consol. Gov't of Augusta–Richmond Cnty. , 501 F.3d 1244, 1251 (11th Cir. 2007). "Factual attacks on the other hand, challenge the existence of subject matter jurisdiction in fact, irrespective of the pleadings, and matters outside the pleadings, such as testimony and affidavits are considered." Id. (internal quotations omitted).
Here, Defendants make a facial challenge to the Amended Complaint. To survive this facial challenge to standing, the Amended Complaint must include "general factual allegations of injury resulting from the defendant's conduct. Florida Pub. Interest Research Grp. Citizen Lobby, Inc. v. E.P.A. , 386 F.3d 1070, 1083 (11th Cir. 2004) (citing Lujan v. Defenders of Wildlife , 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) ); see also Bischoff v. Osceola Cty., Fla. , 222 F.3d 874, 878 (11th Cir. 2000) ("Moreover, each element of standing ‘must be supported in the same way as any other matter on which plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the successive stages of the litigation.’ ")(quoting Lujan , 504 U.S. at 561, 112 S.Ct. 2130 ).
ANALYSIS
Defendants first argue that Plaintiffs fail to show that they have valid assignments. For example, Plaintiffs have not alleged who the purported assignors are, whether Plaintiffs have a single assignment from a single MAO or multiple assignments from multiple MAOs, or whether one or all three Plaintiffs received assignments. Second, even if the assignments are valid, Defendants argue that Plaintiffs fail to show that the purported assignors suffered an injury in fact. Plaintiffs do not allege: (1) the identity of the assignor, (2) the identity of the assignor's enrollee, (3) the type of treatment paid for on the enrollee's behalf, (4) the specific amount of medical bills paid by the assignor, (5) that the enrollee was a party to the MDL settlement, (6) that the Defendants knew of the assignor's payments at the time it paid the funds into the Settlement Fund, and (7) that the assignors requested that Defendants reimburse them and that Defendants refused.
Plaintiffs respond that their allegations are sufficient. Their allegations (1) that they own multiple assignments to pursue the recovery rights of MAOs that made secondary payments for treatment of Pradaxa-related harm, and (2) that Defendants failed to reimburse them are sufficient to plead injury in fact. Plaintiffs argue that the law does not require them to plead all the information Defendants claim is missing, and that the Health Insurance Portability and Accountability Act ("HIPAA") forbids them from pleading some of that information.
To establish an "injury in fact," Plaintiffs must show that Defendants violated a legally protected interest. See American United Life Ins. Co. v. Martinez , 480 F.3d 1043, 1068 n.16 (11th Cir. 2007) (citing Lujan v. Defenders of Wildlife , 504 U.S. 555, 112 S.Ct. 2130, 2136, 119 L.Ed.2d 351 (1992) ). The injury must be "concrete and actual" not "conjectural or hypothetical." Stalley ex rel. U.S. v. Orlando Reg'l Healthcare Sys., Inc. , 524 F.3d 1229, 1232 (11th Cir. 2008) (quoting Parker v. Scrap Metal Processors, Inc. , 386 F.3d 993, 1003 (11th Cir. 2004) ). Here, the allegedly violated protected interest is the right to be reimbursed for secondary payments made by MAOs on behalf of Medicare enrollees who settled with the Pharmaceutical Defendants. To establish standing, therefore, Plaintiffs must show: (1) that the MAOs suffered an injury (i.e., were not reimbursed when they were entitled to be), and (2) that the MAOs assigned their reimbursement rights to Plaintiffs.
Plaintiffs have established the first requirement. Plaintiffs allege that the MAOs' enrollees suffered injuries from using Pradaxa, and that the MAOs paid for treatment of those injuries. D.E. 40, ¶¶ 58–59. Plaintiffs then allege that the enrollees sued the Pharmaceutical Defendants, and that the Pharmaceutical Defendants settled pending Pradaxa litigation. Id. ¶¶ 67, 69. Finally, Plaintiffs allege that the Pharmaceutical Defendants have not reimbursed the MAOs for the cost of then enrollees' treatment. Id. ¶ 68. Accordingly, Plaintiffs have shown that the MAO's incurred reimbursable costs and were not reimbursed.
Plaintiffs have not, however, shown that the MAOs assigned the right to recover those costs to Plaintiffs. As stated above, when considering a facial challenge to standing, the Court must accept as true the factual allegations of the complaint. Florida Pub. Interest Research Grp. Citizen Lobby, Inc. v. E.P.A. , 386 F.3d 1070, 1083 (11th Cir. 2004) (citing Lujan v. Defenders of Wildlife , 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) ). The Court does not, however, accept legal conclusions. FW/PBS, Inc. v. City of Dallas , 493 U.S. 215, 231, 110 S.Ct. 596, 107 L.Ed.2d 603 (1990) ("standing cannot be inferred argumentatively from averments in the pleadings" but rather it is the plaintiff's burden "clearly to allege facts demonstrating that he is a proper party to invoke judicial resolution of the dispute.") (internal quotations and citations omitted); See also Young Apartments v. Town of Jupiter , 529 F.3d 1027, 1038 (11th Cir. 2008) (standing is established with "general factual allegations of injury."); Alcocer v. Bulloch Cty. Sheriff's Office , No. CV 615-94, 2017 WL 227793, at *3 (S.D. Ga. Jan. 18, 2017) (Allegations supporting standing "must be specific factual allegations and not merely conclusory statements."). The existence and validity of a contract are legal conclusions not facts. Almanza v. United Airlines, Inc. , 851 F.3d 1060, 1068 (11th Cir. 2017) ("But since Defendants do not allege facts showing that this alleged agreement actually exists, their allegations simply recite a legal conclusion—the existence of an agreement. So they are inadequate for pleading purposes."); In re Summit United Serv., LLC, No. ADV. 03–6247, 2005 WL 6488106, at *4 (Bankr. N.D. Ga. Sept. 19, 2005) ("the validity of a contract is not a fact, but rather, a legal conclusion").
Here, Plaintiffs allege that they have valid assignment agreements from the MAOs, but they plead no facts supporting that legal conclusion. Plaintiffs fail to allege the identity of the MAOs whose reimbursement rights they claim to own, the dates of the assignments, or the essential terms. See Vega v. T–Mobile USA, Inc. , 564 F.3d 1256, 1272 (11th Cir. 2009) (holding that to prove the existence of a contract, a plaintiff must plead, among other things, "sufficient specification of the essential terms."); PNCEF, LLC v. Highlander Enterprises, LLC , No. 09-80974-CIV, 2010 WL 11504754, at *3 (S.D. Fla. Mar. 2, 2010) (ruling that allegations that a valid contract existed were insufficient where defendant failed to plead facts showing mutual asset, the parties to the agreement, or the date it was entered into). Plaintiffs have failed to show that they have suffered an injury in fact, and therefore they lack standing. Accordingly, it is hereby
Although not required, the Court strongly suggests that Plaintiffs attach the assignment agreement(s) to their second amended complaint.
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ORDERED AND ADJUDGED that Defendant Boehringer Ingelheim Pharmaceuticals, Inc.'s Motion to Dismiss Amended Class Action Complaint (D.E. 46) and Providio Defendants' Motion to Dismiss Plaintiffs' Amended Complaint (D.E. 47) are GRANTED as to standing. It is furtherORDERED AND ADJUDGED that the Amended Class Action Complaint (D.E. 40) is DISMISSED WITHOUT PREJUDICE for lack of standing. Plaintiffs SHALL file their Second Amended Complaint, if they wish, to correct the deficiencies addressed in this Order no later than Friday, October 20, 2017 . Failure to comply with this Order will result in dismissal of this case without further notice. It is further
ORDERED AND ADJUDGED that the Initial Planning and Scheduling Conference in this matter is re-set to Friday, November 10, 2017, at 10:30 A.M.
DONE AND ORDERED in Chambers at Miami, Florida, this ___ day of October, 2017.