MSPA Claims 1, LLC v. Infinity Auto Insurance Company

Case: 15-14353 Date Filed: 08/30/2016 Page: 1 of 25

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT
________________________

No. 15-14353
________________________

D.C. Docket No. 1:15-cv-21532-JLK

MSP RECOVERY, LLC,
Plaintiff - Appellant,

versus

ALLSTATE INSURANCE COMPANY,

Defendant - Appellee.

________________________

No. 15-12398
________________________

D.C. Docket No. 1:15-cv-20213-UU

MSP RECOVERY, LLC,

Plaintiff - Appellant,

versus

PROGRESSIVE SELECT INSURANCE COMPANY,

Defendant - Appellee.
 Case: 15-14353 Date Filed: 08/30/2016 Page: 2 of 25

________________________

No. 15-12402
________________________

D.C. Docket No. 1:15-cv-20208-UU

MSP RECOVERY, LLC,

Plaintiff - Appellant,

versus

PROGRESSIVE SELECT INSURANCE COMPANY,

Defendant - Appellee.

________________________

No. 15-12403
________________________

D.C. Docket No. 1:15-cv-20616-FAM

MSP RECOVERY, LLC,

Plaintiff - Appellant,

versus

PROGRESSIVE SELECT INSURANCE COMPANY,

Defendant - Appellee.

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________________________

No. 15-14355
________________________

D.C. Docket No. 1:15-cv-21687-JLK

MSPA CLAIMS 1, LLC,
Plaintiff - Appellant,

versus

IDS PROPERTY CASUALTY INSURANCE COMPANY,

Defendant - Appellee.

________________________

No. 15-14356
________________________

D.C. Docket No. 1:15-cv-21504-JLK

MSPA CLAIMS 1, LLC,

Plaintiff - Appellant,

versus

INFINITY AUTO INSURANCE COMPANY,

Defendant - Appellee.

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________________________

No. 15-14790
________________________

D.C. Docket No. 1:15-cv-20732-RNS

MSP RECOVERY, LLC,

Plaintiff - Appellant,

versus

ALLSTATE INSURANCE COMPANY,

Defendant - Appellee.

________________________

Appeals from the United States District Court
for the Southern District of Florida
________________________

(August 30, 2016)

Before ED CARNES, Chief Judge, ANDERSON, Circuit Judge, and TITUS,*
District Judge.

ANDERSON, Circuit Judge:

These seven consolidated 1 cases present the question of whether a

contractual obligation, without more (specifically, without a judgment or

* Honorable Roger W. Titus, United States District Judge for the District of Maryland, sitting by
designation.

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settlement agreement from a separate proceeding), can satisfy the “demonstrated

responsibility” requirement of the private cause of action provided for by the

Medicare Secondary Payer Act (the “MSP Act”). 42 U.S.C. §§ 1395y(b)(2)(B)(ii),

(b)(3)(A). We hold that it can.

I. BACKGROUND

In 1980, Congress passed the MSP Act to reduce the costs of Medicare.

Glover v. Liggett Grp., Inc., 459 F.3d 1304, 1306 (11th Cir. 2006). Prior to the

Act’s passage, Medicare often acted as a primary insurer; that is, Medicare paid for

enrollees’ medical expenses, even when an enrollee carried other insurance that

covered the same costs, or when a third party had an obligation to pay for them.

The MSP Act, as its name suggests, changed that relationship so that Medicare acts

as a secondary payer. “This means that if payment for covered services has been or

1
The following appeals were previously consolidated and set for oral argument before this panel
on June 9, 2016: Nos. 15-14353, 15-14355, 15-14356 and 15-14790. Similarly, the following
appeals were previously consolidated and set for oral argument in a different slot also before this
panel on June 9, 2016: Nos. 15-12398, 15-12402 and 15-12403. We sua sponte consolidate all of
the appeals, and we dispose of all of them in this single opinion. Oral argument in all of these
appeals was continued in two orders of this Court dated June 2, 2016. We unanimously
determine that these appeals will be decided on the briefs without oral argument. See 11th Cir. R.
34-3(f).
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is reasonably expected to be made by someone else, Medicare does not have to

pay.” Cochran v. U.S. Health Care Fin. Admin., 291 F.3d 775, 777 (11th Cir.

2002). The MSP Act prohibits Medicare from paying for items or services if

“payment has been made or can reasonably be expected to be made under a

workmen’s compensation law or plan of the United States or a State or under an

automobile or liability insurance policy or plan (including a self-insured plan) or

under no fault insurance.” 42 U.S.C. § 1395y(b)(2)(A)(ii). If, however, a primary

payer—in the parlance of the statute, a “primary plan”—“has not made or cannot

reasonably be expected to make payment with respect to the item or service

promptly,” Medicare may make a payment on the enrollee’s behalf, conditioned on

reimbursement from the primary plan. Id. § 1395y(b)(2)(B)(i); see also Cochran,

291 F.3d at 777 (“In order to accommodate its beneficiaries, however, Medicare

does make conditional payments for covered services, even when another source

may be obligated to pay, if that other source is not expected to pay promptly.”).

We pause here to note that, though the MSP Act uses the term “primary

plan” to describe entities with a primary responsibility to pay, that term covers

more than just health insurance plans. The law defines a “primary plan” as “a

group health plan or large group health plan, . . . a workmen’s compensation law or

plan, an automobile or liability insurance policy or plan (including a self-insured

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plan) or no fault insurance . . . .” 42 U.S.C. § 1395y(b)(2)(A). 2 Thus, it is clear that

the defendants in this case—which are all personal injury protection no-fault

carriers—are primary plans within the meaning of the MSP Act.

The mechanics of the reimbursement process are set out in the statute as

follows. The law requires a primary plan to reimburse Medicare “if it is

demonstrated that such primary plan has or had a responsibility to make payment

with respect to such item or service.” 42 U.S.C. § 1395y(b)(2)(B)(ii). The statute

proceeds to explain how that responsibility may be demonstrated:

responsibility for such payment may be demonstrated by a judgment,
a payment conditioned upon the recipient’s compromise, waiver, or
release (whether or not there is a determination or admission of
liability) of payment for items or services included in a claim against
the primary plan or the primary plan’s insured, or by other means.

Id. This is the demonstrated responsibility requirement; in other words, Medicare

may obtain reimbursement from a primary plan if it demonstrates that the primary

plan “has or had a responsibility” to pay for the item or service. To facilitate

recovery of these payments, the law provides for a right of action by the United

States, for double damages, against “any or all entities that are or were required or

responsible” to make payment under a primary plan. Id. § 1395y(b)(2)(B)(iii).

2
In 2003, Congress expanded the definition of the term “primary plan” further, to specify that
“[a]n entity that engages in a business, trade, or profession shall be deemed to have a self-insured
plan if it carries its own risk.” 42 U.S.C. § 1395y(b)(2)(A).
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In addition to the right of action by the United States, Congress created a

private cause of action against a primary plan that fails to provide for primary

payment. Id. § 1395y(b)(3)(A). Like the cause of action provided to the United

States, the private cause of action also permits the plaintiff to recover double

damages. Id.3

B. Factual and Procedural History

The seven consolidated cases in this appeal all involve attempts by assignees

of a health maintenance organization (“HMO”) to recover conditional payments

via the MSP Act’s private cause of action. The facts relevant to the issues raised on

appeal are similar in each case. Plaintiffs MSP Recovery LLC (“MSP Recovery”)

and MSPA Claims 1, LLC (“MSPA Claims 1”) are firms that obtain claims for

reimbursement under the MSP Act from HMOs that offer Medicare Advantage

Plans. Defendants are all insurance companies that provide personal injury

protection (“PIP”) no-fault insurance to automobile owners and operators in

Florida. In each case, a person covered by a defendant’s PIP no-fault insurance

policy was injured in an automobile accident. Each such insured was also enrolled

3
However, it is important to note that the private right of action created by subsection (b)(3)(A)
does not provide for a qui tam action, whereby a private person might bring a lawsuit on behalf
of the government. Rather, the MSP Act’s private cause of action “merely enables a private party
to bring an action to recover from a private insurer only where that private party has itself
suffered an injury because a primary plan has failed to make a required payment to or on behalf
of it.” Woods v. Empire Health Choice, Inc., 574 F.3d 92, 101 (2d Cir. 2009).
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in a Medicare Advantage Plan provided by Florida Healthcare Plus (“FHCP”), an

HMO. FHCP made conditional payments on behalf of the injured persons to cover

medical expenses in each accident. FHCP assigned its claims under the MSP Act,

and Plaintiffs are the current assignees. Plaintiffs allege that, under the MSP Act,

FHCP was a secondary payer, and Defendants were primary plans with obligations

to pay some of their insureds’ medical costs. Defendants’ responsibility to pay,

Plaintiffs assert in their complaints, is demonstrated by the insurance contracts the

injured persons entered into with Defendants. Plaintiffs filed suit in the Southern

District of Florida seeking double damages under 42 U.S.C. § 1395y(b)(3)(A).

All of the consolidated cases were dismissed. In each case, the district court

relied on our opinion in Glover v. Liggett Group, Inc. In a case in which the

defendant was an alleged tortfeasor, Glover held that a primary plan’s

responsibility to pay must be demonstrated before the plaintiff files a claim under

the MSP Act. 459 F.3d at 1309. When the primary plan’s responsibility to pay

arises from tort liability, we held in Glover, liability might be demonstrated by a

judgment or settlement, but the tortfeasor’s liability cannot be “demonstrated”

through the MSP Act claim itself. Id. In other words, a federal lawsuit under the

MSP Act cannot serve as a substitute for determining liability via a standard tort

claim; the tortfeasor’s responsibility to pay must be independently established. The

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courts below held that the requirement we established in Glover—that a primary

plan’s responsibility to pay be demonstrated through a judgment or agreement

separate from the MSP claim—applies even when the primary plan’s alleged

responsibility to pay is contractual, as it is in these cases, rather than the result of

tort liability. The primary plan’s alleged responsibility to pay in these cases is

contractual because responsibility to pay is determined by construction of the PIP

no-fault insurance policies issued by Defendants to each insured, whose medical

expenses were conditionally paid by Plaintiffs’ Medicare Advantage Organization

predecessors. Accordingly, because Plaintiffs did not obtain a judgment on the

insurance contracts prior to bringing their MSP Act claims, the district courts

dismissed Plaintiffs’ suits for failure to state a claim. Plaintiffs urge us to hold that

Glover applies only when the responsibility to pay arises from tort, and that

alleging the existence of a contractual obligation to pay suffices to demonstrate a

primary payer’s responsibility under the MSP Act private cause of action.

II. STANDARD OF REVIEW

We review a district court’s decision granting a motion to dismiss de novo.

Hill v. White, 321 F.3d 1334, 1335 (11th Cir. 2003). “To survive a motion to

dismiss, a complaint must state a claim to relief that is plausible on its face,

meaning it must contain factual content that allows the court to draw the
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reasonable inference that the defendant is liable for the misconduct alleged.”

Bishop v. Ross Earle & Bonan, P.A., 817 F.3d 1268, 1270 (11th Cir. 2016)

(internal quotation marks omitted).

III. DISCUSSION

A. Standing

Before proceeding to the merits of this appeal, we address whether Plaintiffs

have standing to bring this suit. The Constitution confines federal courts’

jurisdiction to “cases” and “controversies.” U.S. Const. Art. III, § 2. “[T]he core

component of standing is an essential and unchanging part of the case-or-

controversy requirement of Article III.” Lujan v. Defs. of Wildlife, 504 U.S. 555,

560, 112 S. Ct. 2130, 2136, 119 L. Ed. 2d 351 (1992). Federal courts have an

independent obligation to ensure that subject-matter jurisdiction exists to hear a

case, and dismissal is warranted if a court determines that it lacks jurisdiction. In re

Trusted Net Media Holdings, LLC, 550 F.3d 1035, 1042 (11th Cir. 2008). “[T]he

irreducible constitutional minimum of standing contains three elements.” Lujan,

504 U.S. at 560, 112 S. Ct. at 2136. A plaintiff who invokes the jurisdiction of a

federal court bears the burden to show “(1) an injury in fact, meaning an injury that

is concrete and particularized, and actual or imminent, (2) a causal connection

between the injury and the causal conduct, and (3) a likelihood that the injury will
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be redressed by a favorable decision.” Granite State Outdoor Adver., Inc. v. City of

Clearwater, 351 F.3d 1112, 1116 (11th Cir. 2003). The standing issue in the instant

case concerns the first element: injury in fact.

Defendant IDS Property Casualty Insurance Company (“IDS”) argues that

Plaintiff MSPA Claims 1 lacks standing to bring suit because it has suffered no

legally cognizable injury. IDS points out that any cause of action in the seven

consolidated cases originally belonged to FHCP. MSPA Claims 1 is the assignee of

FHCP’s claims against IDS. IDS argues that the assignments were invalid and that

MSPA Claims 1 therefore suffered no legally cognizable injury. Though IDS was

the only defendant to raise the issue, its argument applies equally in all of these

cases, because similar purported assignments occurred in each case. If IDS is

correct that the assignments of the claims to Plaintiffs were invalid, then we must

dismiss each of these cases for lack of jurisdiction.

MSPA Claims 1’s complaint alleges that the causes of action it asserts

initially belonged to FHCP, and that MSPA Claims 1 obtained the claims through a

series of assignments.4 IDS’s argument that these assignments were invalid relies

on the fact that Medicare Advantage Organizations like FHCP must enter into a

4
Defendants also argue that the private cause of action provided by the MSP Act does not extend
to Medicare Advantage Organizations such as FHCP. Defendants’ argument is foreclosed by our
recent decision in Humana Medical Plan, Inc. v. Western Heritage Insurance Co., __ F.3d __,
No. 15-11436, 2016 WL 4169120, at *6 (11th Cir. Aug. 8, 2016).
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contract with the federal government to offer Medicare Advantage Plans. IDS

points out that federal law generally prohibits assignment of contracts between the

federal government and third parties. Therefore, IDS argues, assignment of the

claim was barred by a federal statute. The anti-assignment statute reads:

The party to whom the Federal Government gives a contract or order
may not transfer the contract or order, or any interest in the contract or
order, to another party. A purported transfer in violation of this
subsection annuls the contract or order so far as the Federal
Government is concerned, except that all rights of action for breach of
contract are reserved to the Federal Government.

41 U.S.C. § 6305(a).

The assumption underlying IDS’s argument appears to be that a Medicare

Advantage Organization’s standing to bring a claim under the MSP Act is

derivative of its contractual relationship with Medicare. It is unclear why IDS

believes that to be the case. Plaintiffs’ MSP Act claims are not claims on FHCP’s

contract with the government, and there is no allegation that anyone has breached

such a contract. The MSP Act’s private cause of action does not require any sort of

relationship (contractual or otherwise) with the government (or anyone else) as a

prerequisite to suit. FHCP’s contract with Medicare simply permits it to provide

insurance plans that offer Medicare benefits. The contract does not provide for any

special right of recovery under the private cause of action of the MSP Act. There is

no allegation that FHCP transferred that contract, or any interest in the contract, to
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MSPA Claims 1. MSPA Claims 1 did not undertake to do anything that FHCP is

obligated to do under its contract with the government, nor did MSPA Claims 1

obtain any rights against the federal government. Rather, FHCP assigned to

Plaintiffs here a claim created by statute, one that is entirely separate from its

contract with Medicare. Because FHCP did not assign its contract with the

government, or any interest therein, the assignment is not prohibited by § 6305,

and IDS’s standing argument must fail.

B. Demonstrated Responsibility

The primary issue in these consolidated cases is the operation of the

demonstrated responsibility provision of the MSP Act. The text of the MSP Act,

however, is remarkably abstruse. Therefore, we begin our discussion of the merits

with a comprehensive review of the structure of the private cause of action before

analyzing the application of that particular provision.

1. Structure of the MSP Act Private Cause of Action

The text of the private cause of action provided for by the MSP Act is

challenging to parse. It reads:

There is established a private cause of action for damages (which shall
be in an amount double the amount otherwise provided) in the case of
a primary plan which fails to provide for primary payment (or
appropriate reimbursement) in accordance with paragraphs (1) and
(2)(A).

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42 U.S.C. § 1395y(b)(3)(A). One difficulty in understanding the text stems from

the fact that a primary plan is only liable when it fails to pay “in accordance with”

paragraphs (1) and (2)(A). The ambiguity arises because the demonstrated

responsibility requirement at the heart of this case is contained in neither of the

paragraphs referenced in the private cause of action provision. That is, the

demonstrated responsibility requirement is not contained in either paragraph (1) or

in paragraph (2)(A). Rather, the demonstrated responsibility requirement is

contained in paragraph (2)(B). However, this lack of clarity in the statute need not

detain us in this case. Our Glover decision has already held that the demonstrated

responsibility requirement is incorporated as a prerequisite to pursuit of the private

cause of action. See Glover, 459 F.3d at 1308–09 (holding that a plaintiff pursuing

the private cause of action must satisfy the demonstrated responsibility

requirement). The Glover court explained that the demonstrated responsibility

requirement was incorporated as a prerequisite because the private cause of action

language references paragraph (2)(A), which in turn references paragraph (2)(B).

See also Humana, __ F.3d __, 2016 WL 4169120, at *6 (“Although paragraph

(2)(A) does not expressly obligate primary plans to make payments, the defined

term ‘primary plan’ presupposes an existing obligation (whether by statute or

contract) to pay for covered items or services. Therefore, a primary plan ‘fails to

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provide for primary payment (or appropriate reimbursement) in accordance with

paragraph[] . . . (2)(A),’ when it fails to honor the underlying statutory or

contractual obligation.”) (internal citation omitted).

We turn, then, to answer the question: Have Plaintiffs adequately

demonstrated Defendants’ responsibility for payment by alleging an obligation

pursuant to the insurance contracts, or must Plaintiffs first obtain a judgment

against Defendants by suing for enforcement of those contracts prior to bringing

suit under the MSP Act?

2. Application of the Demonstrated Responsibility Provision

The MSP Act permits demonstration of a primary plan’s responsibility to

pay “by a judgment, a payment conditioned upon the recipient’s compromise,

waiver, or release (whether or not there is a determination or admission of liability)

of payment for items or services included in a claim against the primary plan or the

primary plan’s insured, or by other means.” 42 U.S.C. § 1395y(b)(2)(B)(ii). The

question before us is whether the phrase “by other means” permits demonstration

of responsibility by a contractual obligation. Defendants argue that it does not; they

urge us to hold that Glover’s demand for a “separate adjudication or agreement”

applies when the defendant’s responsibility derives from contract as well as from

tort. Plaintiffs argue that a contractual obligation is among the “other means” by

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which the statute permits demonstration of responsibility, and that no separate

adjudication or agreement (in addition to the contract) is necessary.

This issue has been addressed in regulations issued by the Centers for

Medicare and Medicaid Services (“CMS”) interpreting the MSP Act. The

implementing regulations specify that a primary payer must reimburse Medicare

“for any payment if it is demonstrated that the primary payer has or had a

responsibility to make payment.” 42 C.F.R. § 411.22(a). The regulations explicitly

list the means by which responsibility for payment may be demonstrated, including

a judgment or “other means, including but not limited to a settlement, award, or

contractual obligation.” Id. § 411.22(b).5 The regulations thus specifically permit

demonstration of responsibility by means of a contractual obligation.

“Generally, considerable weight should be accorded to an executive

department’s construction of a statutory scheme it is entrusted to administer . . . .”

5
That subsection of the regulations reads, in its entirety:

(b) A primary payer's responsibility for payment may be demonstrated by—
(1) A judgment;
(2) A payment conditioned upon the beneficiary’s compromise, waiver, or
release (whether or not there is a determination or admission of liability)
of payment for items or services included in a claim against the primary
payer or the primary payer's insured; or
(3) By other means, including but not limited to a settlement, award, or
contractual obligation.

42 C.F.R. § 411.22(b).
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Chevron U.S.A. Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 844, 104 S. Ct.

2778, 2782, 81 L. Ed. 2d 694 (1984). If a statute is silent or ambiguous with

respect to a certain issue, we proceed to ask whether the executive’s construction

of the statute is permissible. Gulfcoast Med. Supply, Inc. v. Sec’y, Dep’t of Health

& Human Servs., 468 F.3d 1347, 1351 (11th Cir. 2006) (citing Chevron, 467 U.S.

at 842–44, 104 S. Ct. at 2781–82). Here, the statutory phrase “other means” is

ambiguous: it is not apparent from the text of the statute alone which “other

means” Congress intended to allow. And a contractual obligation seems to us to be

an eminently reasonable method of demonstrating responsibility.

Defendants do not claim that the interpretation of the statute provided in the

regulations is unreasonable. Instead, they fall back on their primary argument: that

the existence of a contract does not necessarily demonstrate responsibility. They

point out that PIP insurance contracts do not promise payment or reimbursement

for all medical expenses, and they argue that it is possible that Plaintiffs seek to

recover for injuries not covered under their policies. In other words, Defendants

argue that a contract can demonstrate responsibility, but only once it is reduced to a

judgment or settlement.

We disagree, and our disagreement underscores an important difference

between tort liability and contractual obligations. It is a fundamental principle of

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contract law that a contract imposes enforceable rights and obligations: “The heart

of ‘contract’ is thus found both in its promissory nature and in its

enforceability. . . . [O]nce a contract is entered, the parties’ rights and obligations

are binding under the law . . . .” 1 Williston on Contracts § 1:1 (4th ed.). A contract

imposes obligations on the parties immediately, without any involvement of the

courts. While a lawsuit may be necessary to enforce a contract in the event of a

breach, the obligations created by the contract exist as soon as it is executed. By

contrast, an alleged tortfeasor has no obligations until he is adjudged liable. In a

similar vein, demonstrating responsibility by means of a “judgment” necessarily

presupposes a separate proceeding in which that judgment was obtained. On the

other hand, the term “contractual obligation” in the CMS regulations presupposes

only the existence of a contract.

Moreover, adopting Defendants’ interpretation would render meaningless

the statutory phrase “by other means,” as well as the specific reference to

contractual obligations in the regulation. Defendants’ reading of the law “is thus at

odds with one of the most basic interpretive canons, that a statute should be

construed so that effect is given to all its provisions, so that no part will be

inoperative or superfluous, void or insignificant.” Corley v. United States, 556 U.S.

303, 314, 129 S. Ct. 1558, 1566, 173 L. Ed. 2d 443 (2009) (internal quotation

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marks and brackets omitted). If Defendants are correct that a judgment or

settlement agreement is always a prerequisite to suit under the MSP Act, then there

are no “other means” that may demonstrate responsibility, and that part of the

statute is superfluous. Additionally, Defendants’ preferred interpretation renders

the reference in the regulations to contractual obligations entirely inoperative. If

Defendants are correct that a contract must always be reduced to a judgment, then

a “contractual obligation” can never demonstrate responsibility; only a judgment

can. The regulations envision demonstrating responsibility with a judgment or

settlement from a separate proceeding. If a contractual obligation, absent such a

judgment or settlement, cannot demonstrate responsibility to pay, then the

reference to judgments and settlements would be sufficient. There is no purpose at

all for listing a contractual obligation as a means of demonstrating responsibility.

Requiring that such a contractual obligation be reduced to a judgment renders

superfluous the phrase “by other means.”

This line of reasoning is entirely consistent with Glover. In Glover, we

concluded that responsibility must be demonstrated by “a separate adjudication or

agreement.” 459 F.3d at 1309. An insurance contract is, of course, a separate

agreement, and permitting demonstration of responsibility via a contractual

obligation is therefore consistent with our holding in Glover. Glover was decided

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in the tort context, and the “agreement” the Glover panel likely had in mind was a

settlement agreement. But a settlement agreement is just a type of contract. So if

Defendants are correct that a contractual obligation alone cannot demonstrate

responsibility, then, presumably, even the beneficiary of a settlement agreement

has not demonstrated responsibility until he has sued for breach of the settlement

agreement, prevailed, and obtained a judgment. Given the explicit references in the

text of the law to settlements and waivers as means of demonstrating

responsibility, Congress clearly did not intend the result Defendants request. The

plain language of the MSP Act indicates that at least some contractual

obligations—namely, settlement agreements—are sufficient to demonstrate

responsibility. We see no reason that other types of agreements—such as insurance

contracts—should be treated differently.

We hold that a contractual obligation may serve as sufficient demonstration

of responsibility for payment to satisfy the condition precedent to suit under the

MSP Act. This does not relieve Plaintiffs of their burden to allege in their

complaints, and then subsequently prove with evidence, that Defendants’ valid

insurance contracts actually render Defendants responsible for primary payment of

the expenses Plaintiffs seek to recover. And Defendants may still assert any valid

contract defense in arguing against their liability. We hold only that a contractual

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obligation may satisfy the demonstrated responsibility requirement, not that the

existence of a contractual obligation conclusively demonstrates liability under the

MSP Act’s private cause of action.

3. Policy Maximums

Defendants IDS and Infinity Auto Insurance Company (“Infinity”) argue in

the alternative that, even if Plaintiffs’ insurance contracts are sufficient to

demonstrate Defendants’ responsibility to pay, Plaintiffs’ claims still fail because

their complaints show that Defendants no longer have a responsibility to pay.

Defendants’ argument is grounded in the fact that Plaintiffs’ insurance policies

provided for a maximum of $10,000 in benefits. Defendants claim that any

responsibility they had to pay was exhausted once the policy maximums were

reached, which may have occurred in some of these cases. Plaintiffs respond that

the statute requires repayment whenever a primary plan “has or had a

responsibility to make payment,” 42 U.S.C. § 1395y(b)(2)(B)(ii) (emphasis added),

and that Defendants are therefore liable if they ever had a responsibility to make a

payment, even if they subsequently paid out the maximum benefits available under

the policies.6

6
In their brief, Plaintiffs do concede that they cannot recover more than twice the policy limits.

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The district courts to which these arguments were presented did not reach

them, instead dismissing the cases solely on the grounds that Glover barred

liability. On remand, we leave it to the district courts to decide this issue in the first

instance. 7

C. Remand of State Law Claims

In one of the consolidated cases, MSP Recovery, LLC v. Allstate Insurance

Company, No. 15-14790, the district court remanded Plaintiff MSP Recovery’s

supplemental state law claims after dismissing the MSP Act claim, which was the

only federal claim in the case. MSP Recovery asks that, if we vacate the dismissal

of its MSP Act claim, we reinstate its state law claims. Defendant Allstate

Insurance Company agrees that that is the proper course of action.

An order remanding a case for lack of subject-matter jurisdiction is not

reviewable on appeal. 28 U.S.C. § 1447(d). However, when a district court

remands state law claims after declining to exercise supplemental jurisdiction, the

remand order is not based on a lack of subject-matter jurisdiction. Carlsbad Tech.,

Inc. v. HIF Bio, Inc., 556 U.S. 635, 641, 129 S. Ct. 1862, 1867, 173 L. Ed. 2d 843

(2009). Thus, the remand order in this case is appealable. Additionally, where there

is a basis for federal jurisdiction, the district court must exercise its supplemental

7
IDS has also moved for sanctions on the grounds that some of these appeals are frivolous
because IDS has paid out the policy maximums. IDS’s motion is denied.
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jurisdiction over related state law claims unless a statutory exception applies. See

Palmer v. Hosp. Auth. of Randolph Cty., 22 F.3d 1559, 1569 (11th Cir. 1994).

Accordingly, once Plaintiff’s MSP Act claim is reinstated, the district court is

required to exercise its supplemental jurisdiction over the related state law claims.

Because the dismissal of the MSP Act claim—a claim over which the district court

had federal question jurisdiction—was in error, remand of the supplemental state

law claims was also in error. We therefore vacate the district court’s remand order

as well as the order of dismissal.

For the same reasons, we vacate the implicit discretionary dismissals of the

state law claims in three of the other consolidated cases: MSP Recovery v. Allstate

Insurance Company, No. 15-14353; MSPA Claims 1, LLC v. IDS Property

Casualty Insurance, No. 15-14355; and MSPA Claims 1, LLC v. Infinity Auto

Insurance Company, No. 15-14356. See Snow ex rel. Snow v. City of Citronelle,

420 F.3d 1262, 1271 (11th Cir. 2005) (“Because we reinstate Snow’s federal

claims, we must vacate the discretionary dismissal of the state-law claims, but we

express no opinion on the merits of those claims.”).

III. CONCLUSION

For the reasons discussed above, we hold that a plaintiff suing a primary

plan under the private cause of action in the MSP Act may satisfy the demonstrated
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responsibility prerequisite by alleging the existence of a contractual obligation to

pay. A judgment or settlement from a separate proceeding is not necessary. The

judgments of the district courts in these cases are vacated, and the cases are

remanded for further proceedings not inconsistent with this opinion.

VACATED and REMANDED.

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