22-80 MSP v. Hereford
In the United States Court of Appeals For the Second Circuit ______________
August Term, 2022
(Argued: September 27, 2022 Decided: April 19, 2023)
Docket No. 22-80 ______________
MSP RECOVERY CLAIMS, SERIES LLC, A DELAWARE ENTITY,
Plaintiff-Appellant,
–v.–
HEREFORD INSURANCE COMPANY, A NEW YORK COMPANY,
Defendant-Appellee. ______________
B e f o r e:
CHIN, CARNEY, and BIANCO, Circuit Judges. ______________
Plaintiff-Appellant MSP Recovery Claims, Series LLC, appeals from a judgment of the United States District Court for the Southern District of New York (Ramos, J.) dismissing for lack of standing its putative class action against Defendant-Appellee Hereford Insurance Company and denying leave to amend. MSP Recovery Claims, Series LLC v. Hereford Ins. Co., No. 20-cv-4776, 2022 WL 118387 (S.D.N.Y. Jan. 11, 2022). On de novo review, we conclude that MSP lacks standing because its allegations do not support an inference that it has suffered a cognizable injury or that the injury it claims is traceable to Hereford. We also conclude that the district court did not abuse its discretion when it denied MSP leave to amend based on MSP’s repeated failures to cure. Accordingly, we affirm the judgment of the district court.
AFFIRMED. ______________
FRANCESCO ZINCONE (Jorge A. Mestre, on the brief), Rivero Mestre LLP, New York, NY, for Plaintiff-Appellant.
MICHAEL F. PERLEY, Hurwitz & Fine, P.C., Buffalo, NY, for Defendant-Appellee. ______________
CARNEY, Circuit Judge:
This appeal stems from one of numerous lawsuits that MSP Recovery Claims,
Series LLC (“MSP”), has brought around the country seeking to recover from insurance
companies that allegedly owe payments to Medicare Advantage Organizations
(“MAOs”) under the Medicare Secondary Payer Act (the “MSP Act”). In the putative
class action brought here, MSP charges Hereford Insurance Company (“Hereford”)
with “deliberate and systematic avoidance” of Hereford’s reimbursement obligations
under the MSP Act. Jt. App’x 33 (Am. Compl. ¶ 7). The district court dismissed MSP’s
amended complaint for lack of standing and denied further leave to amend. MSP
Recovery Claims, Series LLC v. Hereford Ins. Co., No. 20-cv-4776, 2022 WL 118387 (S.D.N.Y.
Jan. 11, 2022). MSP now challenges that ruling.
On de novo review, we conclude that MSP does not have standing under Article
III because it has failed to establish either injury-in-fact or causation. We also conclude
that the district court did not abuse its discretion in denying MSP leave to amend based
on its repeated failures to cure. Accordingly, we AFFIRM the judgment of the district
court.
2 BACKGROUND
I. Statutory Background
A. The Medicare Secondary Payer Act
Medicare is a government health insurance program that provides coverage for
individuals who are 65 or older and for those who have certain disabilities. In 1965,
when Medicare was first launched, it “acted as the first payer for many medical
services, regardless of whether a Medicare beneficiary was also covered under another
insurance plan.” Marietta Mem’l Hosp. Emp. Health Benefit Plan v. DaVita Inc., 142 S. Ct.
1968, 1971 (2022). In 1980, however, in part because of the program’s rising costs,
Congress enacted the MSP Act, restructuring Medicare’s relationship with private
insurers of Medicare beneficiaries. See Medicare and Medicaid Amendments of 1980,
§ 953, 94 Stat. 2647 (codified as amended at 42 U.S.C. § 1395y). In the MSP Act’s current
iteration, Medicare is a “secondary payer” for certain medical services in relation to a
beneficiary’s private insurance plan, which the MSP Act refers to as the “primary
plan.” 1 See 42 U.S.C. § 1395y(b)(2)(A); see also Medicare and Medicaid Amendments of
1981, § 2146, 95 Stat. 800. The primary plan typically has a duty to pay first on covered
claims. In this way, the MSP Act transformed Medicare into “a back-up insurance plan
to cover that which is not paid for by a primary insurance plan.” Aetna Life Ins. Co. v. Big
Y Foods, Inc., 52 F.4th 66, 69 (2d Cir. 2022) (internal quotation marks omitted).
The MSP Act thus provides that Medicare may not pay, in the first instance, for
medical services received by a Medicare beneficiary when “payment has been made or
1Medicare remains the primary payer, however, for certain beneficiaries, including, for example, those who are not concurrently covered by other insurance plans. See Medicare Secondary Payer, Ctrs. for Medicare & Medicaid (Dec. 1, 2021), https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Coordination-of- Benefits-and-Recovery-Overview/Medicare-Secondary-Payer/Medicare-Secondary-Payer.
3 can reasonably be expected to be made” by a “primary plan.” 42 U.S.C.
§ 1395y(b)(2)(A). For these purposes, the term “primary plan” means a group or large
group health plan, a workers’ compensation law or plan, an automobile or liability
insurance policy or plan, or no-fault insurance. See id.
When a primary plan “has not made or cannot reasonably be expected to make
payment” for a particular service “promptly,” however, Medicare may make a
conditional payment for the medical service in anticipation of being reimbursed by the
primary plan. Id. § 1395y(b)(2)(B)(i) (“Authority to make conditional payment”). 2
Medicare is permitted to pay first in these limited circumstances so that beneficiaries
need not pay for their medical services out-of-pocket and depend on reimbursement by
the primary plan. The MSP Act makes Medicare’s payment “conditional,” however,
because the primary plan may ultimately be responsible for the payment. When
Medicare has made such a conditional payment and “it is [later] demonstrated that [a]
primary plan has or had a responsibility to make payment with respect to such item or
service,” the primary plan—or the individual or entity that has already received
payment from the primary plan—must reimburse Medicare. Id. § 1395y(b)(2)(B)(ii)
(“Repayment required”). 3
Finally, the MSP Act establishes a private cause of action for double damages “in
the case of a primary plan which fails to provide for primary payment (or appropriate
reimbursement)” in accordance with the statute. Id. § 1395y(b)(3)(A).
2The applicable regulation defines “promptly” as within 120 days after a primary plan receives the claim. 42 C.F.R. § 411.21.
3In certain limited circumstances, the individual Medicare beneficiary may be determined to be primarily responsible for payment, but those circumstances are relevant here only as described further below.
4 B. The Medicare Advantage Program
The Medicare Advantage (“MA”) Program, established in 1997 by the addition of
Part C of Medicare, permits Medicare beneficiaries to choose to receive their health care
benefits from certain private insurers called Medicare Advantage Organizations,
instead of directly from the federal government. 4 42 U.S.C. §§ 1395w-21 to -29; see also
Aetna, 52 F.4th at 70. The MA Program is designed to “allow [Medicare] beneficiaries to
have access to a wide array of private health plan choices in addition to traditional fee-
for-service Medicare” and to “enable the Medicare program to utilize innovations that
have helped the private market contain costs and expand health care delivery options.”
H.R. Rep. No. 105-217, at 585 (1997).
Under Medicare Part C, MAOs contract individually with the Centers for
Medicare and Medicaid Services (“CMS”) within the Department of Health and Human
Services for CMS to pay the MAO a fixed amount for each Medicare beneficiary who
enrolls with the MAO, and for the MAO, in return, to provide at least the same benefits
and services that the enrollee would receive under Medicare. See 42 U.S.C. § 1395w-
22(a). Increasingly since the debut of the MA Program, Medicare beneficiaries have
elected to receive their Medicare benefits through MAOs. 5
4Part C was enacted as “Medicare+Choice” but was renamed “Medicare Advantage” in 2003. See Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Pub. L. 108-173, § 201(b), 117 Stat. 2066; see also First Med. Health Plan, Inc. v. Vega-Ramos, 479 F.3d 46, 48 n.1 (1st Cir. 2007); Do Sung Uhm v. Humana, Inc., 620 F.3d 1134, 1148 n.19 (9th Cir. 2010).
5As of March 2023, over 31 million individuals had elected to enroll with an MAO, substantially more than the 6.5 million who had enrolled by July 2006. See Monthly Contract and Enrollment Summary Report, Ctrs. for Medicare & Medicaid Servs., https://www.cms.gov/Research- Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MCRAdvPartDEnrolData/Monthly- Contract-and-Enrollment-Summary-Report (last visited Mar. 20, 2023); see also Aetna, 52 F.4th at 70.
5 The MA Program imports many MSP Act provisions into the MAO context. As
relevant here, the MA Program adopts the MSP Act’s secondary payer regime. See 42
U.S.C. § 1395w-22(a)(4). In the MAO context, the MAO (instead of Medicare) is the
secondary payer. If a primary plan “has not made or cannot reasonably be expected to
make” prompt payment, the MAO may conditionally pay for the enrollee’s medical
services in expectation of reimbursement by the primary payer. Id. § 1395y(b)(2)(B)(i);
see also id. § 1395w-22(a)(4). When a primary plan is ultimately determined to be
responsible for a cost but fails to reimburse an MAO for the MAO’s conditional
payment, the MAO may sue the primary plan for damages under the MSP Act’s private
cause of action. Aetna, 52 F.4th at 73–75; see also 42 U.S.C. § 1395y(b)(3)(A).
C. The Section 111 Reporting Requirement
In a provision often known simply as Section 111, 6 the MSP Act requires that
primary plans report to CMS certain claims they receive so that CMS may “make an
appropriate determination concerning coordination of benefits, including any
applicable recovery claim.” 42 U.S.C. § 1395y(b)(8)(B)(ii). If a primary plan violates
Section 111, it is exposed to liability for “a civil money penalty of up to $1,000 for each
day of noncompliance with respect to each claim.” Id. § 1395y(b)(8)(E)(i).
6Because 42 U.S.C. § 1395y(b)(8) was added into the MSP Act by Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007, it is often referred to as “Section 111.” The parties have done so in their briefing, and we do so here.
6 Section 111 provides in relevant part:
(8) Required submission of information by or on behalf of liability insurance (including self-insurance), no fault insurance, and workers’ compensation laws and plans
(A) . . . [A]n applicable plan shall—
(i) determine whether a claimant (including an individual whose claim is unresolved) is entitled to benefits under the program under this subchapter on any basis; and
(ii) if the claimant is determined to be so entitled, submit the information described in subparagraph (B) with respect to the claimant to the Secretary in a form and manner (including frequency) specified by the Secretary.
(B) Required information . . . —
(i) the identity of the claimant for which the determination under subparagraph (A) was made; and
(ii) such other information as the Secretary shall specify in order to enable the Secretary to make an appropriate determination concerning coordination of benefits, including any applicable recovery claim.
...
(C) Timing
Information shall be submitted under subparagraph (A)(ii) within a time specified by the Secretary after the claim is resolved through a settlement, judgment, award,
7 or other payment (regardless of whether or not there is a determination or admission of liability).
(G) . . .
(i) . . . The Secretary may share information collected under this paragraph as necessary for purposes of the proper coordination of benefits.
II. Factual Background
As alleged in the amended complaint, the facts are as follows. 7
Hereford provides no-fault insurance to its policyholders. When a policyholder
is a Medicare beneficiary, Hereford’s no-fault policy is a primary plan under the MSP
Act. MSP is a litigation and technology firm that “own[s] and pursu[es] claims” arising
under government healthcare programs on behalf of healthcare organizations and
providers, including MAOs. Jt. App’x 66. MSP is not itself an MAO, but its assignors
are. 8 Health Insurance Plan of Greater New York, an EmblemHealth company
(“EmblemHealth”) and an MAO, is alleged to be one of MSP’s assignors.
MSP seeks double damages in this putative class action for what it describes as
Hereford’s “deliberate and systematic avoidance of payment and/or reimbursement
obligations” under the MSP Act. Id. at 33 (Am. Compl. ¶ 7). It contends that Hereford
failed to reimburse EmblemHealth and the proposed class of MAOs for conditional
7 Except for its conclusory allegations, which do not bind us, for present purposes we accept as true all of the complaint’s factual allegations and draw all reasonable inferences in favor of MSP as plaintiff. Carter v. HealthPort Techs., LLC, 822 F.3d 47, 56–57 (2d Cir. 2016); see also Hirsch v. Arthur Andersen & Co., 72 F.3d 1085, 1092 (2d Cir. 1995).
8Specifically, MSP alleges that the MAOs for which it brings this action have assigned certain recovery and reimbursement rights to MSP’s Series LLCs and that the Series LLCs have, in turn, assigned these rights to MSP. Jt. App’x 39–41 (Am. Compl. ¶¶ 35–38).
8 payments made by the MAOs for medical expenses incurred by Medicare beneficiaries
enrolled with the MAOs and that Hereford, as the primary plan, was required to pay
under its no-fault insurance policies.
MSP now identifies only one set of facts that it asserts exemplifies this
“deliberate and systematic avoidance”: that of the Medicare beneficiary “N.G.” 9 It
alleges that on October 14, 2014, N.G. was injured in an accident and required medical
care as a result. At the time of the accident, N.G. was enrolled in an MA plan issued by
the MAO EmblemHealth. N.G. was also covered by a no-fault policy issued by
Hereford. For medical services provided to N.G. between October 14 and October 18,
EmblemHealth was billed $9,085.15 and paid $2,694.15. Hereford reported N.G.’s
medical services to CMS under Section 111. By reporting these services to CMS, MSP
alleges, Hereford admitted “that it should have paid for N.G.’s accident-related injuries
in the first instance.” Id. at 43 (Am. Compl. ¶¶ 54–55). To date, Hereford has not
reimbursed EmblemHealth for the amounts EmblemHealth paid.
MSP seeks to recover expenses associated with not only the medical services that
N.G. received, but also amounts associated with the 63 claims listed in Exhibit A of its
Amended Complaint—medical services that Medicare beneficiaries who enrolled with
EmblemHealth as their MAO allegedly incurred, that EmblemHealth paid, and that
Hereford reported to CMS under Section 111. MSP’s double-damages claim also
extends to costs for claims that it extrapolates on behalf of a putative class of all MAOs
(and their assignees) that paid for a Medicare beneficiary’s accident-related medical
9 MSP’s amended complaint describes two exemplar claims: those of Medicare beneficiaries identified for privacy purposes as “N.G.” and “A.B.” Jt. App’x 42–44 (Am. Compl. ¶¶ 47–65). In its opposition to Hereford’s motion to dismiss, MSP gave notice that it would not proceed with its A.B. claim. MSP Recovery Claims, 2022 WL 118387, at *3 n.4.
9 services from March 2015 to March 2021 and for which Hereford, as the primary plan,
should have reimbursed the MAOs or paid in the first instance.
III. Procedural History
MSP sued Hereford in June 2020. After Hereford moved to dismiss, MSP
amended its complaint. Hereford again moved to dismiss for lack of subject matter
jurisdiction, see Fed. R. Civ. P. 12(b)(1), and for failure to state a claim, see Fed. R. Civ. P.
12(b)(6). The district court granted Hereford’s motion, concluding that MSP did not
have standing to bring its N.G., Exhibit A, or class claims. MSP Recovery Claims, 2022
WL 118387, at *1.
As to standing, the district court ruled first that MSP failed adequately to plead
injury. In the district court’s view, MSP alleged that EmblemHealth paid and was not
reimbursed for N.G.’s medical expenses, but MSP failed to allege that these payments
were reimbursable to EmblemHealth. Id. at *6–7, 9. The court rejected MSP’s argument
that when Hereford reported these expenses to CMS under Section 111, Hereford in
effect admitted that it, not EmblemHealth, bore primarily responsibility for paying for
N.G.’s medical expenses. Id. at *7.
Turning to causation, the court reasoned that although MSP alleged that N.G.
has a no-fault insurance policy with Hereford and that the policy covered certain of
N.G.’s medical expenses, MSP did not plausibly allege that the particular medical
services for which EmblemHealth paid were for injuries covered by N.G.’s policy. Id. at
*9. 10 In other words, the court ruled, even if EmblemHealth suffered a financial injury of
10In concluding that MSP failed adequately to allege causation, the district court also relied on the Affidavit of Samuel Rubin, submitted by Hereford in support of its Rule 12(b)(1) motion. MSP Recovery Claims, 2022 WL 118387, at *9–10. A Rule 12(b)(1) motion challenging subject matter jurisdiction can be either facial, i.e., “based solely on the allegations of the complaint and exhibits attached to it,” or fact-based, i.e., after considering evidence beyond the pleadings first offered by the defendant then offered by the plaintiff. Carter, 822 F.3d at 56–57. Because we
10 some kind when it paid for N.G.’s medical expenses, MSP failed to adequately allege
that any such injury was fairly traceable to Hereford. Id. at *11. The district court
concluded, for substantially the same reasons, that MSP failed to establish its standing
to assert either its Exhibit A or class-wide claims. Id.
Finally, the district court declined to grant MSP further leave to amend its
complaint. Id. It explained that MSP had already amended its complaint once. It also
highlighted the substantially similar cases that MSP has filed across the country and
reasoned from the reception accorded many of those cases that MSP was “on notice
from the outset that the issue of standing would be front and center.” Id. (quoting MAO-
MSO Recovery II, LLC v. State Farm Mut. Auto. Ins. Co., No. 17-cv-1537, 2019 WL 6311987,
at *9 (C.D. Ill. Nov. 25, 2019), aff’d, 994 F.3d 869 (7th Cir. 2021)). Observing that leave to
amend may be “properly denied for ‘repeated failure to cure deficiencies,’” the court
rejected MSP’s request. Id. at *11–12 (quoting Ruotolo v. City of New York, 514 F.3d 184,
191 (2d Cir. 2008)).
MSP timely appealed.
DISCUSSION
We review de novo a district court’s grant of a motion to dismiss. Carter v.
HealthPort Techs., LLC, 822 F.3d 47, 56–57 (2d Cir. 2016).
I. Standing
Article III, Section 2 of the United States Constitution authorizes federal courts to
adjudicate “Cases” or “Controversies,” a grant of broad but circumscribed authority.
U.S. Const. art. III, § 2. A plaintiff’s standing to pursue a claim is “an essential and
conclude that MSP’s complaint was facially insufficient to show standing, we need not address the fact-based challenge, which relied in part on this Affidavit.
11 unchanging” element of the bedrock cases-or-controversy requirement. Lujan v. Defs. of
Wildlife, 504 U.S. 555, 560 (1992).
Constitutional standing has three elements: (1) injury-in-fact, i.e., “an invasion of
a legally protected interest [that] is (a) concrete and particularized and (b) actual or
imminent, not conjectural or hypothetical,” (2) causation, i.e., “a causal connection
between the injury and the conduct complained of,” and (3) redressability, i.e., “it must
be likely, as opposed to merely speculative, that the injury will be redressed by a
favorable decision.” Id. at 560–61 (internal quotation marks omitted). The party
invoking federal jurisdiction—here, MSP—bears the burden of establishing all three
elements. Id. at 561.
In some cases, a plaintiff may adequately allege injury-in-fact but not the
requisite causal link. In other cases, the opposite may be true. Here, however, MSP’s
theories of injury-in-fact and causation are closely related: both rest on the premise that
when a primary plan reports a claim to CMS under Section 111, it admits its own
liability for the claim.
MSP alleges that: (1) EmblemHealth, an MAO and MSP’s assignor, paid for
certain medical expenses incurred by N.G.; (2) when those expenses were incurred,
N.G. was insured by a no-fault policy issued by Hereford; (3) Hereford reported to CMS
that N.G. received these medical services, and, by doing so, admitted that Hereford was
primarily responsible for those costs; and (4) Hereford did not reimburse
EmblemHealth. Appellant’s Br. 19 (discussing injury), 39–40 (discussing causation)
(both quoting Jt. App’x 42–43 (Am. Compl. ¶¶ 47–55)). 11
MSP advises that it has constructed and uses its own special system to identify claims for 11
which Hereford allegedly “failed to honor its primary payer responsibility.” Jt. App’x 36 (Am. Compl. ¶ 20). MSP says that its system:
12 Regarding injury-in-fact, MSP contends that EmblemHealth suffered economic
injury because as a secondary payer it paid—but “was not supposed to” pay—for
N.G.’s medical expenses, rendering its payment reimbursable under the MSP Act. Id. at
19. As to causation, MSP asserts that its injury as payer is fairly traceable to Hereford
because, in light of N.G.’s no-fault policy with Hereford, Hereford—not
EmblemHealth—was “supposed to” pay for N.G.’s medical services. Both theories rely
on the notion that, when Hereford reported information about N.G.’s medical services
to CMS under Section 111, Hereford conceded that it, and not EmblemHealth, was
responsible as primary payer. Inseparable from that concession, it alleges that Hereford
was responsible for reimbursing EmblemHealth, which had made a conditional
payment under the MSP Act in relation to N.G.’s services. Jt. App’x 43 (Am. Compl.
¶ 55). EmblemHealth therefore had a cognizable loss, and that loss was demonstrably
caused by Hereford, according to MSP.
Other than the damage and causation-related inferences that it urges based on
Hereford’s Section 111 report, MSP has provided no basis for concluding either that
EmblemHealth was denied reimbursement to which it was entitled (that is, that it
suffered an economic injury), or that Hereford owed MSP that reimbursement (that is,
matches the health care claims data from its Assignors to the publicly available reporting data from CMS and police crash reports available in limited jurisdictions, as well as the claims data made available by primary payers like Defendant, either voluntarily through a coordination of benefits process or by judicial compulsion in a data matching process that has proven successful in identifying primary payers’ wrongdoing, to automate the process of identifying instances in which primary payers like Defendant fail to honor their obligations under the MSP [Act].
Id. at 33 (Am. Compl. ¶ 9). It continues, “Plaintiff’s Assignors and the Class Members have each suffered an injury-in-fact as a result of Defendant’s failure to meet its statutory payment and reimbursement obligations.” Id. at 33–34 (Am. Compl. ¶ 10).
13 that any economic injury EmblemHealth suffered is traceable to Hereford). Thus, as
pleaded, injury-in-fact and causation rise and fall together. A plaintiff’s showing of
injury-in-fact and of causation for that injury need not always be interdependent in
cases regarding reimbursement obligations under the MSP Act, of course. We conclude
that they are in this case only because MSP alleges that it made payments that were
reimbursable specifically by Hereford, and the only fact it alleges to justify that its
payments were both reimbursable generally and reimbursable by Hereford in particular
was that Hereford reported the claims to CMS under Section 111. In sum, if MSP has
adequately alleged injury, it has adequately established causation. We thus consider the
two issues together and turn to the pivotal interpretive question: what does reporting
under Section 111 entail and signify?
In MSP’s view, whenever a primary plan reports a claim to CMS under Section
111, it admits liability for the claim because Section 111 imposes “a clear and
unambiguous” duty on primary plans to report medical services received by Medicare
beneficiaries. Appellant’s Br. 30. MSP points out that subsection (A) of
section 1395y(b)(8) expressly provides that a primary plan’s reporting requirement is
triggered only by the determination that a claimant for coverage is a Medicare
beneficiary. In addition, subsection (C) requires a primary plan to report to CMS only
“after the claim is resolved.” 42 U.S.C. § 1395y(b)(8)(C). MSP thus advances the theory
that, by reporting N.G.’s claim to CMS, Hereford demonstrated its knowledge that N.G.
was a Medicare beneficiary; therefore, Hereford must also have known that it was the
primary payer with respect to coverage for the specific medical services reportedly
provided to N.G.
14 MSP points to commentary on Section 111 published in the CMS User Guide on
Section 111 (the “User Guide”) as adopting its interpretation. 12 As understood by MSP,
the User Guide “requires no-fault and liability insurers to report their ‘ongoing
responsibility for medicals,’” a reporting responsibility that “arises after the primary
payer ‘exercise[s] due diligence’ and determines its responsibility to pay for a Medicare
beneficiary’s medical expenses.” Appellant’s Br. 33 (quoting CMS User Guide: Chapter
III, at 6-10) (alteration in original). 13 Requiring a primary plan to report simply because
a Medicare beneficiary has submitted a claim to that plan, MSP suggests, “would cause
Medicare to waste taxpayer money prematurely, chasing unreimbursed conditional
payments that never become secondary, because a liability insurer was not responsible
as a primary payer.” Id. at 33–34.
For the reasons set forth below, we disagree. Hereford’s contrary analysis,
paralleling that adopted by the district court, is more faithful to the text of the statute
and the purposes of the reporting program.
When interpreting a statute, we begin, as always, “by giving effect to the plain
meaning of the text—and, if that text is unambiguous, our analysis usually ends there
as well.” Williams v. MTA Bus Co., 44 F.4th 115, 127 (2d Cir. 2022) (internal quotation
12The 2023 version of the User Guide is published at: https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Mandatory-Insurer- Reporting-For-Non-Group-Health-Plans/NGHP-User-Guide/NGHP-User-Guide. MSP’s brief cites the 2021 version. We are aware of no substantive difference in the relevant text. The document’s full title is “MMSEA Section 111 Medicare Secondary Payer Mandatory Reporting; Liability Insurance (Including Self-Insurance), No-Fault Insurance, and Workers’ Compensation User Guide.” Chapters I and III are titled “Introduction and Overview” and “Policy Guidance” respectively.
Although MSP purports to quote from the User Guide, on our read, the phrase “exercise[s] 13
due diligence” does not appear anywhere in Chapter III.
15 marks omitted). “Plain meaning draws on the specific context in which that language is
used.” Id. (internal quotation marks omitted). If, upon examination, the text is
ambiguous, we look to traditional canons of statutory construction, the broader
statutory context, and the provision’s history to help resolve the ambiguity. Id.
Upon examination, we conclude that the text of Section 111 is not ambiguous and
that a report filed under its provisions does not amount to an admission of liability.
Section 111 provides that, if a no-fault insurer determines that “a claimant (including an
individual whose claim is unresolved) is entitled to benefits under [the MSP Act] on any
basis,” it must “submit[]” certain information specified by the statute to CMS “within a
time specified by the Secretary after the claim is resolved through settlement, judgment,
award, or other payment (regardless of whether or not there is a determination or admission of
liability).” 42 U.S.C. § 1395y(b)(8)(A)(i), (C) (emphasis added).
We agree with MSP that, when a primary plan correctly reports a claim under
Section 111, the report evidences the plan’s determination that the claimant is entitled to
benefits under the MSP Act. See id. § 1395y(b)(8)(A). But the triggering determination is
that the claimant is entitled to benefits “on any basis.” “On any basis” can mean benefits
to be paid by a primary plan, by Medicare itself, by an MAO, or by another source: all
such payments may be obligations owed “under” the MSP Act. Moreover, as
highlighted above, Section 111 requires the MAO to submit the specified information
“regardless of whether or not there is a determination or admission of liability.” A
standard contemporary dictionary defines “regardless” as “[w]ithout taking account of”
or “irrespective of.” Regardless, Oxford Eng. Dictionary,
https://www.oed.com/view/Entry/161197. When used in subsection (C) of section
1395y(b)(8) to modify “submit,” the word “regardless” signals unmistakably that a
primary plan must report claims covered by the MSP Act without considering its
liability for those claims: claims for which it is liable and claims for which it is not liable,
16 alike, must be reported. MSP’s proposed construction would render the words
“regardless of whether or not there is a determination or admission of liability”
superfluous because there would be no circumstance when a primary plan is not liable
for a claim it reports. In sum, we reject MSP’s reading and conclude that an insurer’s
report under Section 111 does not admit the insurer’s liability for the claim reported.14
The statutory scheme reinforces the correctness of this interpretation. See Catskill
Mountains Chapter of Trout Unlimited, Inc. v. Env’t Prot. Agency, 846 F.3d 492, 513 (2d Cir.
2017) (“A statutory provision’s plain meaning may be understood by looking to the
statutory scheme as a whole and placing the particular provision within the context of
that statute.” (internal quotation marks omitted)). Section 111 requires primary plans to
report more than the claims they are responsible for and fewer than all the claims they
receive. For example, they need not report claims made by individuals covered under a
no-fault policy but who, because of their youth (for instance), are ineligible for
Medicare. But, as noted above, they must report claims made by individuals who may
be eligible for coverage under the MSP Act “on any basis,” even if the plan is ultimately
not responsible for paying for those claims. 42 U.S.C. § 1395y(b)(8)(A)(i). 15
The MSP Act establishes steep penalties for failures to report and for untimely
reporting. The violator may be assessed a penalty of “up to $1,000 for each day of
noncompliance with respect to each claimant.” Id. § 1395y(b)(8)(E)(i). These penalties
align with the notion that Section 111 incentivizes over-reporting and early reporting, to
14We note that, as reflected in the record in this case, insurers regularly report large volumes of claims for coverage of medical services. In addition, although MSP focuses on the phrase “after the claim is resolved,” see Reply Br. 2 (quoting 42 U.S.C § 1395y(b)(8)(C)); Appellant’s Br. 32, this language bears on only timing—not liability.
A primary plan’s reporting obligation is further limited by date restrictions and payment 15
amount thresholds, neither of which is at issue here. See User Guide, Chapter III, at 6-19.
17 further the purposes of the reporting requirement more generally: “to enable the
Secretary to make an appropriate determination concerning coordination of benefits,
including any applicable recovery claim.” Id. § 1395y(b)(8)(B)(ii) (emphasis added); see also
id. § 1395y(b)(8)(G) (noting that the collected information may be shared “as necessary”
for “the proper coordination of benefits”). A “recovery claim” is a claim initiated by
CMS seeking reimbursement from a primary plan or from any entity that has received a
primary payment for conditional payments CMS has made. See 42 C.F.R. § 411.24(b). 16
The highlighted language—“any applicable recovery claims”—reinforces the notion
that a “recovery claim” is a mere subset of the claims that a primary plan must report,
not all, as MSP contends. To coordinate benefit payments, Medicare logically needs data
about any claims that it may have to pay, i.e., any claims made by Medicare
beneficiaries.
The CMS User Guide, cited by MSP for the contrary position, when properly
used, confirms the construction that we adopt. The User Guide explains that primary
plans must report any claims made by a Medicare beneficiary “for both Medicare claims
processing and for MSP [Act] recovery actions, where applicable.” User Guide: Chapter I,
at 6-1 (emphasis added); see also User Guide: Chapter III, at 4-1 (explaining that the data
from reporting is used to process “claims billed to Medicare for reimbursement” and
“for MSP [Act] recovery efforts, as appropriate” (emphasis added)), 5-1 (explaining that
the data from reporting is used “to enable an appropriate determination concerning
coordination of benefits, including any applicable recovery claim” (emphasis added)), 6-
22 (explaining that primary plans “must report settlements, judgments, awards, or
other payments regardless of whether or not there is an admission or determination of liability”
16See Attorney Services, Ctrs. for Medicare & Medicaid (Dec. 1, 2021), https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Attorney- Services/Attorney-Services.
18 and “with either partial or full resolution of a claim” (emphasis in original)). The
limiting phrases italicized above reflect an acknowledgment that data collected from
Section 111 reporting is not intended to establish the liability of any prospective payer.
In other words, a primary plan like Hereford is responsible for reporting any claim
received by it that to its knowledge involves a Medicare beneficiary—not just the claims
it should have paid as a primary payer or for which it may have to reimburse another
payer. CMS acknowledges that the breadth of the reporting responsibility imposed by
Section 111 is informed by its purpose not only to “help[] CMS determine primary
versus secondary payer responsibility,” but also “to enable CMS to pay appropriately
for Medicare covered items and services furnished to Medicare beneficiaries.” User
Guide: Chapter I, at 6-1; see also 42 U.S.C. § 1395y(b)(8)(G) (explaining that reporting is
necessary for “the proper coordination of benefits”). 17 To allow Medicare to coordinate
benefits correctly, then, it is essential for Medicare to be advised not only that it is
entitled to seek reimbursement from a primary plan but also that it may have to pay a
claim in whole or in part without contribution from the primary plan.
MSP’s gloss on the CMS commentary is unpersuasive. As described above, it
advances the view that the User Guide resolves any interpretive ambiguity in favor of
finding that an insurer’s Section 111 report admits liability because the User Guide
requires certain primary plans to report their “ongoing responsibility for medicals.”
Appellant’s Br. 33. “Such a report,” it argues, “demonstrates the primary payer’s
‘responsibility to pay, on an ongoing basis, for the injured party’s (Medicare
beneficiary’s) medicals associated with the claim.’” Id. (quoting User Guide: Chapter III,
17As to the portions for which the no-fault insurance provider is not liable, “Medicare pays first, but only pays for the Medicare-covered services.” How Medicare Works with Other Insurance, Medicare, https://www.medicare.gov/supplements-other-insurance/how-medicare-works-with- other-insurance. The claimant is responsible for the rest. Id.
19 at 6-10). The language relied on by MSP, however, does no more than define the phrase
“ongoing responsibility for medicals.” See User Guide: Chapter III, at 6-10; see also id. at
2-2. When read in context, the User Guide makes clear that “ongoing responsibility for
medicals” is merely one of several types of claim liabilities that primary plans must
report. 18 This strengthens our conclusion that Section 111 reporting does not admit
liability. 19
In sum, the plain language of Section 111 tells us that when a no-fault insurance
provider such as Hereford reports a claim pursuant to Section 111, it does not thereby
admit that it is liable for the claim. The statutory context of the section’s reporting
obligation and the purpose of the reporting obligation confirm the correctness of this
interpretation. Because MSP’s argument that the payments made by EmblemHealth are
reimbursable by Hereford rests entirely on its proposed interpretation of Section 111,
MSP has not adequately alleged a “concrete” or “actual” injury or that the injury it
alleges is fairly traceable to Hereford. It therefore lacks standing to bring the N.G.
exemplar claim. Accordingly, it also lacks standing to bring its Exhibit A and class
18In full, the User Guide explains that “ongoing responsibility for medicals” refers to “the [responsible reporting entities’] responsibility to pay, on an ongoing basis, for the injured party’s (the Medicare beneficiary’s) medicals associated with the claim. This often applies to no- fault and workers’ compensation claims, but may occur in some circumstances with liability insurance (including self-insurance).” User Guide, Chapter III, at 6-10; see id. at 2-2 (using the same language in the context of defining “ongoing responsibility for medicals”).
19We recognize that our interpretation of Section 111 is in tension with the result reached by the Eleventh Circuit in MSP Recovery Claims, Series LLC v. ACE American Insurance Co., 974 F.3d 1305 (11th Cir. 2020). In ACE, the Eleventh Circuit reasoned that because the MSP Act “obligates insurers like Defendants [primary payers] to report the claims for which they are primary payers,” a Section 111 report of a claim demonstrates “Defendants’ knowledge that they owed primary payments, including the payments for which Plaintiffs seek reimbursement.” Id. at 1319. In ACE, the interpretive question bore on whether primary plans had “knowledge that they owed a primary payment.” Id. The court considered this question only in passing, disposing of it in a paragraph with little discussion. See id. Respectfully, we are not persuaded.
20 claims, which rely on the same theories of injury and causation. 20 See Appellant’s Br. 49–
52.
II. Denial of Leave to Amend
Federal Rule of Civil Procedure 15(a) provides that if a party has already
“amend[ed] its pleading once as a matter of course,” as MSP has here, it “may amend
its pleading only with the opposing party’s written consent or the court’s leave.” Fed. R.
Civ. P. 15(a)(1)–(2). A court should “freely give leave when justice so requires,” id., but
it may, in its discretion, deny leave to amend “for good reason, including futility, bad
faith, undue delay, or undue prejudice to the opposing party,” Bensch v. Est. of Umar, 2
F.4th 70, 81 (2d Cir. 2021) (internal quotation marks omitted); see also Foman v. Davis, 371
U.S. 178, 182 (1962) (noting that “repeated failure to cure deficiencies by amendments
previously allowed” can constitute a reason to deny leave to amend). We generally
review a district court’s denial of leave to amend for abuse of discretion. Empire Merchs.,
LLC v. Reliable Churchill LLLP, 902 F.3d 132, 139 (2d Cir. 2018); see, e.g., United States ex
rel. Ladas v. Exelis, Inc., 824 F.3d 16, 28–29 (2d Cir. 2016) (reviewing denial of leave to
amend due to “repeated failure to cure” for abuse of discretion). If, however, “the
denial was based on an interpretation of law, such as futility,” we review de novo that
legal conclusion. Empire Merchs., 902 F.3d at 139 (citation omitted).
20 In its opening brief, MSP argues that when Hereford reported N.G.’s claims, it “admi[tted] that it should have paid for” these claims. See Appellant’s Br. 19 (quoting Jt. App’x 43 ¶ 55). In its reply brief, MSP belatedly attempts to recast its argument and insists that it argues only that “Section 111 reporting is an admission that Hereford is a primary-payer,” and not that “Section 111 reporting is . . . an admission of liability.” Reply Br. 3. Even if we understand MSP’s argument to be the revised version it furthers in its reply brief, it fails. The mere fact that Hereford is “a” primary payer is insufficient to establish injury-in-fact to the MAO or causation because this fact tells us nothing about Hereford’s obligation to pay for the specific medical expenses that N.G. incurred and for which EmblemHealth paid.
21 In denying MSP’s request for further leave to amend, the district court cited
MSP’s “repeated failure to cure.” MSP Recovery Claims, 2022 WL 118387, at *11–12
(quoting Ruotolo, 514 F.3d at 191). We identify no abuse of discretion in the district
court’s conclusion. 21
MSP has brought numerous lawsuits against insurance companies across the
country to collect funds allegedly owed to MAOs under the MSP Act. District courts in
this Circuit have seen at least seventeen such suits on their dockets and as of this
writing have dismissed five for lack of standing. See Hereford, 2022 WL 118387, at *12;
MSP Recovery Claims, Series LLC v. AIG Prop. Cas. Co., No. 20-cv-2102, 2021 WL 1164091,
at *1 (S.D.N.Y. Mar. 26, 2021); MSP Recovery Claims, Series LLC v. Tech. Ins. Co., No. 18-
cv-8036, 2020 WL 91540, at *3–4 (S.D.N.Y. Jan. 8, 2020); MSP Recovery Claims, Series LLC
v. N.Y. Cent. Mut. Fire Ins. Co., No. 19-cv-211, 2019 WL 4222654, at *5–6 (N.D.N.Y. Sept.
5, 2019); MSP Recovery Claims, Series LLC v. Hartford Fin. Servs. Grp., No. 20-cv-305, 2022
WL 3585782, at *1 (D. Conn. Aug. 22, 2022). The complaints in each of these dismissed
cases are substantially similar and yet MSP has made no meaningful efforts of which we
21We disagree with MSP that the district court denied leave to amend based on futility. Although one sentence in its decision referenced futility, the full sentence states: “Because the Plaintiff has had plenty of trial runs and has already amended its complaint against these Defendants once, the Court declines to grant leave to amend again as it would be futile.” MSP Recovery Claims, 2022 WL 118387, at *12 (emphasis added) (quoting MSP Recovery Claims, Series LLC v. AIG Prop. Cas. Co., No. 20-cv-2102, 2021 WL 1164091, at *15 (S.D.N.Y. Mar. 26, 2021)). Reading this language in context, coupled with the knowledge that this language quotes AIG, a similar case involving MSP that was dismissed based on failure to adequately allege standing, we understand the district court to have denied leave to amend based fundamentally on MSP’s repeated failures to cure. Even if we accept that the district court denied leave on both bases, we need not—and decline to—address futility; rather, we affirm the district court’s denial based on MSP’s repeated failure to cure. See, e.g., Banco Safra S.A.-Cayman Islands Branch v. Samarco Mineracao S.A., 849 F. App’x 289, 295–96 & n.5 (2d Cir. 2021) (summary order).
22 are aware to amend its standing allegations either in the complaint or the amended
complaint filed in this case.
In these circumstances, we can see no reason to find any abuse of discretion in
the district court’s denial of leave to amend. See Denny v. Barber, 576 F.2d 465, 471 (2d
Cir. 1978) (affirming the district court’s denial of leave to amend because the appellant
was not “unaware of the deficiencies in his complaint when he first amended it” and
was “on the plainest notice of what was required” to avoid dismissal); see also City of
Pontiac Policeman’s & Fireman’s Ret. Sys. v. UBS AG, 752 F.3d 173, 188 (2d Cir. 2014)
(upholding leave to amend because “it is unlikely that the deficiencies” to the amended
complaint “were unforeseen by plaintiffs when they amended” and because “plaintiffs
have identified no additional facts or legal theories—either on appeal or to the District
Court—they might assert if given leave to amend”).
MSP’s argument that, without an explicit opportunity to amend, the district
court’s “order was a de facto dismissal with prejudice” has no merit. Appellant’s Br. 52.
A dismissal for lack of jurisdiction is by its nature a dismissal without prejudice: it
“does not preclude another action on the same claims.” Harty v. W. Point Realty, Inc., 28
F.4th 435, 445 (2d Cir. 2022) (internal quotation marks omitted). In contrast, “a dismissal
with prejudice is ‘a ruling on the merits’ that precludes a plaintiff ‘from relitigating—in
any court, ever again—any claim encompassed by the suit.’” Id. (quoting MAO-MSO
Recovery II, LLC v. State Farm Mut. Auto. Ins. Co., 935 F.3d 573, 581 (7th Cir. 2019)).
The district court committed no error in denying leave to amend.
CONCLUSION
For the reasons stated above, we AFFIRM the district court’s judgment of
dismissal.