United States District Court, C.D. Illinois
MAO-MSO RECOVERY II, LLC, MSP RECOVERY LLC, MSP RECOVERY CLAIMS, SERIES LLC, & MSPA CLAIMS 1, LLC, Plaintiffs,
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant.
ORDER & OPINION
BILLY McDADE UNITED STATES SENIOR DISTRICT JUDGE
matter is before the Court on Plaintiffs' Motion to Stay
or Deny Defendant's Motion for Summary Judgment (Doc.
184). Defendant has responded (Doc. 194). Plaintiffs have
requested to file a reply (Doc. 202)-Defendant opposes the
request (Doc. 203)-but for the reasons stated herein, the
Court denies leave to file. Therefore, this matter is ripe
Medicare Secondary Payer (MSP) provisions of the Medicare
Act, 42 U.S.C. § 1395y et seq., “make[ ]
Medicare insurance secondary to any ‘primary plan'
obligated to pay a Medicare recipient's medical expenses,
including a third-party tortfeasor's automobile
insurance.” Parra v. PacifiCare of Ariz.,
Inc., 715 F.3d 1146, 1152 (9th Cir. 2013) (citing §
1395y(b)(2)(A)). Medicare generally does not pay medical
expenses when a primary plan will cover the costs, but where
such payment is unlikely, conditional payments may be made,
with the primary insurer to reimburse Medicare. §
of the Medicare Act allows Medicare enrollees to obtain
Medicare benefits through private insurers, Medicare
Advantage Organizations (MAOs), rather than the government.
42 U.S.C. § 1395w-21(a). “An MAO may sue a primary
plan . . . that fails to reimburse it for conditional
payments made” under the private right of action
provided in § 1395y(b)(3)(A). (Doc. 86 at 2).
are corporate entities which have been assigned rights of
recovery under the MSP by numerous MAOs, among others. (Doc.
184 at 4). The basic theory of their case is members of the
assignor-MAOs who were also insured under no-fault automobile
insurance policies issued by Defendant were involved in car
accidents requiring medical services; Plaintiffs allege
Defendant failed to pay for the medical services or reimburse
the assignor-MAOs for conditional payments issued. (Doc. 86
action was commenced on February 23, 2017, in the Southern
District of Illinois. (Doc. 1). Following a motion to dismiss
for lack of subject matter jurisdiction on Article III
standing grounds and for failure to plead sufficient facts
under Rule 8 (Doc. 26), Plaintiffs filed a First Amended
Complaint (Doc. 32). Defendant moved to transfer the case
under 28 U.S.C. § 1404(a) (Doc. 28) and the case was
transferred to this District (Doc. 57). In the interim,
Defendant filed a second motion to dismiss (Doc. 34)
asserting the amendments did not cure the issues identified
in the original motion to dismiss. This Court denied as moot
Defendant's original motion to dismiss (Doc. 26) but
granted Defendant's second motion to dismiss (Doc. 34),
holding Plaintiffs had failed to sufficiently allege an
injury in fact, as necessary for Article III standing. (Doc.
59 at 8-9).
timely filed a Second Amended Complaint (Doc. 63) on January
30, 2018. In the Second Amended Complaint, Plaintiffs
provided additional details about an accident resulting in
medical fees for two Medicare beneficiaries, which they
allege Defendant failed to pay or reimburse. (Doc. 63 at
3-9). The two beneficiaries were identified as O.D. and C.S.
(Doc. 63 at 3). Defendant again moved to dismiss on standing
grounds, inter alia. (Doc. 68). The Court held the
O.D. allegations were sufficient to survive a motion under
Rule 12(b)(1) to dismiss for lack of standing, but the C.S.
allegations were not; the assignment of the claim related to
C.S. occurred after the lawsuit was filed. (Doc. 86 at 6,
parties differed on the discovery schedule. Defendant
requested discovery be bifurcated between discovery on the
merits and discovery on class certification as well as a
deadline for amendment of the pleadings and joinder of
additional parties, which Plaintiff opposed; Defendant also
noted in its potential plan to file a motion for summary
judgment on the named Plaintiffs' individual claims.
(Doc. 90). Magistrate Judge Jonathan E. Hawley accepted
Defendant's plan. (Doc. 91). Plaintiffs did not file an
undersigned referred the case to Magistrate Judge Tom
Schanzle-Haskins for a report and recommendation concerning
class certification. (Docket Entry dated
01/04/2019). Shortly before the briefing on class
certification was completed, Defendant filed a motion for
summary judgment, arguing the O.D. allegations did not
provide Plaintiffs with standing. (Doc. 172). A previously
set hearing, the report and recommendation, and a decision on
class certification were put on hold pending resolution of
the motion for summary judgment. (Docket Entry dated
08/07/2019). Plaintiffs then filed the instant motion,
requesting Defendant's summary judgment motion be stayed
or denied under Rule 56(d)(1). (Doc. 184). Further briefing
on the summary judgment motion was postponed pending
resolution of the Rule 56(d)(1) motion. (Docket Entry dated
related case was also before the Court between these parties.
MAO-MSO Recovery II, LLC v. State Farm Mut. Auto. Ins.
Co., No. 17-cv-1541, 2018 WL 2392827, at *1 (C.D. Ill.
May 25, 2018) (describing this action as “a separate
but related case pending before this Court-another putative
class action with slightly different facts, but consisting of
virtually identical allegations under the law.”). To
reduce a fairly complex story, “the question of
standing [was] hotly disputed” in that case.
MAO-MSO Recovery II, LLC v. State Farm Mut. Auto. Ins.
Co., F.3d, Nos. 18-2377 and 18-2463, 2019 WL 3822156, at
*3 (7th Cir. Aug. 15, 2019).
procedural backgrounds are parallel to a large extent;
“State Farm . . . moved to dismiss the initial
complaint for lack of Article III standing (among other
grounds), [and] the plaintiffs responded by filing an amended
complaint to put more meat on the bone.” Id.
But, as in this case, dismissal of the First Amended
Complaint was warranted because “plaintiffs could not
demonstrate an ‘injury in fact' for purposes of
Article III standing.” Id. (describing this
Court's reasoning). A Second Amended Complaint was
dismissed on standing grounds as well. Id. at *3-*4.
The Seventh Circuit agreed with this Court's disposition
of the standing issue in that case, modifying that holding
only to correct this Court's “use of the phrase
‘with prejudice' to signal that it would permit no
more amendments.” Id. at *4-5.
Federal Rule of Civil Procedure 56(d), when a nonmovant
facing a motion for summary judgment demonstrates it cannot
yet present facts “essential to justify its opposition,
” the court may defer or deny the motion for summary
judgment. “A party seeking relief under Rule 56(d) must
show by affidavit or declaration specific reasons discovery
should be extended, which requires more than a fond hope that
more fishing might net some good evidence.” Smith
v. OSF HealthCare Sys., 933 F.3d 859, 864 (7th Cir.
2019). Although “[a]ppellate courts often remand a
denial of additional time for discovery when the motion for
summary judgment is filed before the close of discovery,