SIMS v. PMA INSURANCE COMPANY

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

CATHY MONROE SIMS, )

)

Plaintiff, )

)

v. )

)

PMA INSURANCE COMPANY d/b/a/ ) 1:20-cv-249

PMA INSURANCE GROUP, PMA )

MANAGEMENT CORP., )

MANUFACTURERS ALLIANCE )

INSURANCE COMPANY, and PMA )

COMPANIES, INC., )

)

Defendants. )

MEMORANDUM OPINION AND ORDER

THOMAS D. SCHROEDER, Chief District Judge.

This is a putative class action seeking recovery for the

alleged failure of private insurers to make timely conditional

payments for Medicare services. Before the court is the motion of

Defendants PMA Insurance Company d/b/a PMA Insurance Group, PMA

Management Corp., Manufacturers Alliance Insurance Company, and

PMA Companies, Inc.1 to dismiss pursuant to Federal Rule of Civil

Procedure 12(b)(1) or, in the alternative, Rule 12(b)(6). (Doc.

16.) Plaintiff Cathy Monroe Sims has responded in opposition.

(Doc. 25.) For the reasons stated herein, Defendants’ motion will

1 Defendants state that PMA Insurance Company is not a valid corporate

entity. (Doc. 18 at 7 n.1.) They also state that PMA Companies, Inc.

has not been served (id.), although it appears that a summons for PMA

Companies, Inc. was issued on October 23, 2020 (Doc. 28). Regardless,

because Defendants do not rely on these defects in the present motion,

the court does not consider them here.

be granted and the amended complaint will be dismissed.

I. BACKGROUND

The facts alleged in the complaint, viewed in the light most

favorable to Sims, show the following:

In 2011, Sims was employed as a certified nursing assistant

by Century Care Management. (Doc. 14 ¶ 33.) On June 16, 2011,

she suffered a lower back injury in the course of her work. (Id.)

On January 13, 2012, Defendants filed an N.C. Industrial

Commission Form 63 that indicated that Defendants agreed to pay

Sims’s medical expenses connected to the work-related injury

without prejudice to denying the compensability of her workers’

compensation claims. (Id. ¶ 35.) On September 13, 2012,

Defendants filed an N.C. Industrial Commission Form 60 in which

they admitted Sims’s right to compensation, including medical

expenses, for her work-related injury. (Id. ¶ 37.)

On February 1, 2014, Sims became eligible to receive Medicare.

(Id. ¶ 39.)

On May 15, 2015, following Defendants’ failure to pay for

certain treatments relating to Sims’s back injury, the Full

Commission of the North Carolina Industrial Commission issued an

opinion and award that concluded Sims was entitled to ongoing

medical care for her back injury. (Id. ¶ 42.) After evaluating

the requested care, the Full Commission ordered Defendants to

authorize treatment for Sims’s back injury as recommended by her

authorized treating physician. (Id.; Doc. 11-6 at 14–25.)

On August 5, 2015, the Centers for Medicare and Medicaid

Services (“CMS”) sent the parties a Rights and Responsibilities

letter that indicated Defendants’ responsibility to reimburse

Medicare for payments made for treatment of Sims’s back injury.

(See Doc. 14 ¶ 47.)

On August 11, 2015, CMS sent Defendants a conditional payment

letter with an enclosed list of conditional payments. (Id. ¶ 49.)

The letter stated, “Medicare has identified $4552.87 in

conditional payments that we believe are associated with your

claim.” (Id.; Doc. 11-1.) The letter also indicated that Medicare

was “still investigating this case file” and the enclosed listing

of conditional payments was “not a final list and w[ould] be

updated.” (Doc. 11-1 at 3.) The letter prominently featured the

statement, “This is not a bill. Do not send payment at this time.”

(Id. at 2.) The letter also told Defendants that they should

“refrain from sending any monies to Medicare prior to . . . receipt

of a demand/recovery calculation letter.” (Id. at 2–3.) Although

the letter asked Defendants to review the enclosed listing of

conditional payments and inform Medicare if they disagreed with

the inclusion of any claim, the letter did not indicate a timeframe

in which Defendants were required to respond.2 (Id.)

2 Unlike a conditional payment notification, a conditional payment letter

On September 3, 2015, CMS sent Defendants another conditional

payment letter. (Doc. 14 ¶ 49.) This letter was identical to the

first, except the conditional payment amount was revised downward

to $2,397.39. (Id. ¶ 51; Doc. 11-2.)

Following receipt of these letters, Sims alleges, Defendants

neither repaid the conditional payments nor disputed any of the

claims. (Doc. 14 ¶ 51.)

On March 15, 2017, CMS sent Defendants a third conditional

payment letter. (Id. ¶ 52; Doc. 11-3.) This letter stated that

Medicare “identified a claim . . . for which you have primary

payment responsibility and Medicare has made primary payment.”

(Doc. 11-3 at 2.) The letter identified $6,166.31 in conditional

payments. (Id. at 3.) The letter also stated that Medicare was

“still investigating the case file to obtain any other outstanding

Medicare conditional payments; therefore, the enclosed listing of

current conditional payments is not final.” (Id.) As with the

prior two letters, the letter indicated that Defendants should

inform Medicare if they believed that the enclosed listing was

has no required time period in which a primary payer must respond. See

Medicare’s Recovery Process, CMS (May 7, 2020),

https://www.cms.gov/Medicare/Coordination-of-Benefits-and-

Recovery/Beneficiary-Services/Medicares-Recovery-Process/Medicares-

Recovery-Process. In contrast, a conditional payment notification

requires a primary payer to submit a dispute within 30 days. Id. If

no dispute is submitted in response to a conditional payment

notification, a recovery demand letter is issued. Id. The recovery

demand letter advises a primary payer of the amount owed and how to repay

the debt. Id.

inaccurate, but it did not include a date by which Defendants were

required to respond. (Id.)

On February 8, 2018, Defendants submitted a conditional

payment dispute to CMS challenging most of the payments included

in the March 15, 2017 letter. (Doc. 14 ¶ 55; Doc. 11-4.)

On March 1, 2018, CMS sent a letter indicating that it

partially agreed with the dispute and adjusted the amount of

conditional payments identified downward to $4,779.73. (Doc. 14

¶ 56.) CMS issued Defendants a fourth conditional payment letter

that reflected the adjusted amount. (Id.; Doc. 11-5.) In all

other ways, the March 1, 2018 conditional payment letter was

identical to the March 15, 2017 letter, including indicating that

the enclosed listing of conditional payments was “not final” and

instructing Defendants to inform Medicare if they believed the

listing was inaccurate. (See Doc. 11-5 at 2-3; Doc. 11-3 at 2-

3.)

On April 6, 2018, Defendants submitted another conditional

payment dispute to CMS challenging the conditional payments

identified in the March 1, 2018 letter. (Doc. 14 ¶ 61; Doc. 11-

6.) CMS appears to have made no response to that dispute.

On March 16, 2020, Sims filed the present lawsuit against

Defendants for violation of the Medicare Secondary Payer Act

(“MSPA”), 42 U.S.C. § 1395 et seq., and sought certification as a

class action. (Doc. 1.)

On April 15, 2020, CMS sent Defendants a fifth conditional

payment letter. (Doc. 14 ¶ 64; Doc. 11-7.) This letter was

identical to the third and fourth letters, except in that the

conditional payment amount increased to $10,859.34. (See Doc. 11-

7 at 2–3.) As with the prior letters, the letter indicated that

the enclosed listing of conditional payments was “not final” and

instructed Defendants to inform Medicare if they believed the

listing was inaccurate. (Id. at 3.)

On April 23, 2020, Defendants submitted a conditional payment

dispute to CMS challenging the conditional payments identified in

the April 15, 2020 letter. (Doc. 14 ¶ 65; Doc. 11-8.) CMS

responded on May 4 with a letter to Defendants indicating that it

agreed with the dispute and adjusted the amount of identified

conditional payments downward to zero.3 (Doc. 14 ¶ 66; Doc. 11-

3 The amended complaint refers to the May 4 letter but alleges only that

in it CMS “announc[ed] that Defendants’ dispute had been allowed.” (Doc.

14 ¶ 66.) Although the amended complaint does not expressly acknowledge

it, the effect of the letter was to reduce Defendants’ alleged

responsibility for reimbursement to zero, which is expressly stated in

the letter. (Doc. 11-9 at 4.) Where a document is considered integral

to a complaint because the document has an independent legal significance

to a plaintiff’s claims, or where the complaint relies upon a document’s

terms and effects, the court may properly consider it at this stage.

See Goines v. Valley Cmty. Servs. Bd., 822 F.3d 159, 166 (4th Cir. 2016).

Here, the letter is expressly referenced in the amended complaint, and

Sims’s claims are based upon the legal effect (or lack of legal effect)

of this letter compared to CMS’s earlier letters. The amended complaint

alleges that “Defendants have failed to reimburse Medicare for

conditional payments Medicare asserts it made on behalf of Plaintiff”

(Doc. 14 ¶ 89) and, as indicated by Sims’s opposition, Sims would have

the court consider “the effects of CMS’s 2018 decision, PMA’s choice not

to seek further review, and the impact, if any, of the unexplained May

9.) CMS included with the letter a revised payment summary form

that identified the total conditional payments owed as $0.00.

(Doc. 11-9 at 4.)

On June 12, 2020, Defendants filed a motion to dismiss based

on lack of subject matter jurisdiction or, in the alternative,

failure to state a claim. (Doc. 10.) Sims requested and received

an extension of time to reply. (Doc. 13.) On August 5, 2020,

without the consent of Defendants or leave of the court, Sims filed

an amended complaint.4 (Doc. 14.) The amended complaint alleges

Defendants violated the MSPA and seeks certification as a class

action. (Id.) Defendants again filed a motion to dismiss based

on lack of subject matter jurisdiction or, in the alternative,

failure to state a claim. (Doc. 16.) The motion is now fully

briefed and ready for resolution. (See Docs. 18, 25, 27.)

II. ANALYSIS

A. Legal Standards

1. Subject Matter Jurisdiction

“Federal courts are courts of limited jurisdiction and are

empowered to act only in those specific instances authorized by

4, 2020 letter.” (Doc. 25 at 8.) As such, the May 4, 2020 letter is

integral to the complaint and will be considered by the court.

4 Although Defendants acknowledge that Sims’s amended complaint is

improper, they argue that the case as a whole should be dismissed, even

taking into account the amended complaint, because the amended complaint

“does not cure the fundamental defects in her case that warrant immediate

dismissal.” (Doc. 18 at 12.) Because Defendants do not rest on this

procedural defect, the court does not either.

Congress.” Goldsmith v. Mayor & City Council of Balt., 845 F.2d

61, 63 (4th Cir. 1988) (citation omitted). Whether a court has

subject matter jurisdiction is a “threshold matter” that a court

must consider prior to addressing the merits of a claim. Steel

Co. v. Citizens for a Better Env't, 523 U.S. 83, 94–95 (1998);

Sucampo Pharms., Inc. v. Astellas Pharma, Inc., 471 F.3d 544, 548

(4th Cir. 2006).

A party may contest the court’s subject matter jurisdiction

— including challenging timeliness and standing — pursuant to

Federal Rule of Civil Procedure 12(b)(1). See, e.g., White Tail

Park, Inc. v. Stroube, 413 F.3d 451, 459 (4th Cir. 2005); Miller

v. Brown, 462 F.3d 312, 316 (4th Cir. 2006). When a Rule 12(b)(1)

motion challenges the validity of the factual basis for subject

matter jurisdiction, the burden of proving subject matter

jurisdiction is on the plaintiff. Richmond, Fredericksburg &

Potomac R.R. Co. v. United States, 945 F.2d 765, 768 (4th Cir.

1991). However, where the challenge is not based on the accuracy

of the facts alleged but rather on the complaint’s failure “to

allege sufficient facts to support subject matter jurisdiction,

the trial court must apply a standard patterned on Rule 12(b)(6)

and assume the truthfulness of the facts alleged.” Kerns v. United

States, 585 F.3d 187, 193 (4th Cir. 2009); see also 24th Senatorial

Dist. Republican Comm. v. Alcorn, 820 F.3d 624, 629 (4th Cir. 2016)

(allowing dismissal at the pleading stage under Rule 12(b)(1)

“where the issue before the court is ‘purely a legal question that

can be readily resolved in the absence of discovery.’”

(quoting Blitz v. Napolitano, 700 F.3d 733, 739 (4th Cir. 2012)).

Ordinarily, subject matter jurisdiction is assessed at the time

the original complaint is filed. Mollan v. Torrance, 22 U.S. 537,

539 (1824). But “when a plaintiff files a complaint in federal

court and then voluntarily amends the complaint, courts look to

the amended complaint to determine jurisdiction.” Rockwell Int’l

Corp. v. United States, 549 U.S. 457, 473–74 (2007).

2. Failure to State a Claim

Federal Rule of Civil Procedure 8(a)(2) provides that a

complaint must contain “a short and plain statement of the claim

showing that the pleader is entitled to relief.” Fed. R. Civ. P.

(8)(a)(2). Under Federal Rule of Civil Procedure 12(b)(6), “a

complaint must contain sufficient factual matter . . . to ‘state

a claim to relief that is plausible on its face.’” Ashcroft v.

Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 570, (2007)). A claim is plausible “when

the plaintiff pleads factual content that allows the court to draw

the reasonable inference that the defendant is liable for the

misconduct alleged.” Id. In considering a Rule 12(b)(6) motion,

a court “must accept as true all of the factual allegations

contained in the complaint,” Erickson v. Pardus, 551 U.S. 89, 94

(2007) (per curiam), and all reasonable inferences must be drawn

in the plaintiff’s favor, Ibarra v. United States, 120 F.3d 472,

474 (4th Cir. 1997). However, the court “need not accept the legal

conclusions drawn from the facts.” Spaulding v. Wells Fargo Bank,

N.A., 714 F.3d 769, 776 (4th Cir. 2013) (quoting E. Shore Mkts.,

Inc. v. J.D. Assocs. Ltd. P'ship, 213 F.3d 175, 180 (4th Cir.

2000)). “[L]egal conclusions, elements of a cause of action, and

bare assertions devoid of further factual enhancement fail to

constitute well-pled facts,” and a court does not consider

“unwarranted inferences, unreasonable conclusions, or arguments”

when evaluating the legal sufficiency of a complaint on a 12(b)(6)

motion. Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc., 591

F.3d 250, 255 (4th Cir. 2009); see also Iqbal, 556 U.S. at 678

(explaining that mere legal conclusions are not accepted as true,

and “[t]hreadbare recitals of the elements of a cause of action,

supported by mere conclusory statements, do not suffice”

(alteration in original) (quoting Twombly, 550 U.S. at 555)). In

reviewing a 12(b)(6) motion, the court may “consider documents

attached to the complaint, see Fed. R. Civ. P. 10(c), as well as

those attached to the motion to dismiss, so long as they are

integral to the complaint and authentic.” Philips v. Pitt Cnty.

Mem’l Hosp., 572 F.3d 176, 180 (4th Cir. 2009).

B. Subject Matter Jurisdiction

Before considering the merits of any claim, the court must

first determine that it has subject matter jurisdiction over it.

Defendants challenge the court’s subject matter jurisdiction on

two grounds. First, they argue that the case is not ripe for

adjudication. Second, they contend that Sims lacks standing

because she has not suffered an injury-in-fact.

Because Defendants do not contest the veracity of the facts

underlying Sims’s claim to subject matter jurisdiction but rather

argue that the facts alleged in the amended complaint are not

sufficient to establish the court’s subject matter jurisdiction,

the court “must apply a standard patterned on Rule 12(b)(6) and

assume the truthfulness of the facts alleged.” Kerns, 585 F.3d at

193. However, under this standard, the court “need not accept the

legal conclusions drawn from the facts.” Spaulding, 714 F.3d at

776.

With this standard in mind, the court turns to Defendants’

challenges to subject matter jurisdiction.

1. Ripeness

Defendants contend that Sims’s claim is not ripe for

adjudication because at the time the complaint was filed,

Defendants were in discussions with CMS regarding the accuracy of

the identified conditional payments. Defendants further contend

that since that time, CMS has found that Defendants do not

currently owe any reimbursement. “Although [Sims] might assert an

injury in the future if Medicare determined [Defendants] w[ere]

responsible for reimbursing payments on her behalf and if

[Defendants] failed to do so,” Defendants argue, this claim is

dependent on future uncertainties and therefore is not ripe for

adjudication. (Doc. 18 at 14.) Sims responds that her claims are

not dependent on future uncertainties but rather depend “on an

assessment of past events.” (Doc. 25 at 7.) She contends that

this action “concern[s] [Defendants]’[] historical pattern of

delay in making payments as obligated” and that the key issues in

this case — “the effect of CMS’s 2018 decision, [Defendants]’[]

choice not to seek further review, and the impact, if any, of the

unexplained May 4, 2020 letter” — are final and ripe for

adjudication. (Doc. 25 at 8–9.)

“The doctrine of ripeness prevents judicial consideration of

issues until a controversy is presented in ‘clean-cut and concrete

form.’” Miller, 462 F.3d at 318–19 (quoting Rescue Army v. Mun.

Court of L.A., 331 U.S. 549, 584 (1947)). To determine whether a

case is ripe for judicial consideration, courts balance “‘the

fitness of the issues for judicial decision’ [with] the ‘hardship

to the parties of withholding court consideration.’” Franks v.

Ross, 313 F.3d 184, 194 (4th Cir. 2002) (quoting Ohio Forestry

Ass'n v. Sierra Club, 523 U.S. 726, 733 (1998)). “A case is fit

for judicial decision when the issues are purely legal and when

the action in controversy is final and not dependent on future

uncertainties.” Miller, 462 F.3d at 319; see also Texas v. United

States, 523 U.S. 296, 300 (1998) (“A claim is not ripe for

adjudication if it rests upon contingent future events that . . .

may not occur at all.” (internal quotation marks omitted)). To

determine hardship to the parties, courts consider “the difficulty

the parties will face if the court does not weigh in.” Great W.

Cas. Co. v. Packaging Corp. of Am., 444 F. Supp. 3d 664, 673

(M.D.N.C. 2020); see also Miller, 462 F.3d at 319.

The amended complaint bases its claim for relief on the

allegations that “Medicare made conditional payments on behalf of”

Sims, “Defendants are primary payers under the MSPA,” “Defendants

have a demonstrated responsibility under [the MSPA] . . . to

reimburse Medicare for conditional payments,” and “Defendants have

failed to reimburse Medicare for conditional payments.” (Doc. 14

¶¶ 86–89.) These allegations demonstrate that the action in

controversy is Defendants’ alleged failure to properly reimburse

Medicare as required by the MSPA — not Defendants’ history of

delayed payments, as Sims contends.5 This interpretation is

consistent with the statutory provision under which Sims brings

5 Although the amended complaint outlines a number of alleged procedural

violations of the MSPA, including Defendants’ history of allegedly

delayed payments (see, e.g., Doc. 14 ¶¶ 44–45, 69–73), the private cause

of action within the MSPA is limited and applies only to cases in which

a primary plan with a demonstrated responsibility for payment fails to

reimburse Medicare as required. See 42 U.S.C. § 1395y(b)(3)(A). The

MSPA does not create a private cause of action for all possible

violations of the MSPA, such as Defendants’ history of allegedly delayed

repayments. See MSP Recovery, LLC v. Allstate Ins. Co., 835 F.3d 1351,

1362 n.3 (11th Cir. 2016) (the MSPA does not provide for a qui tam

action); Woods v. Empire Health Choice, Inc., 574 F.3d 92, 101 (2d Cir.

2009) (same).

the present action. Pursuant to the MSPA, a private right of

action exists solely “in the case of a primary plan which fails to

provide for primary payment (or appropriate reimbursement) in

accordance with” the MSPA. 42 U.S.C. § 1395y(b)(3)(A). Therefore,

the court must determine whether Sims has plausibly alleged that

Defendants’ failure to reimburse Medicare is final and not

dependent on future uncertainties.

Sims maintains that Defendants’ obligation to reimburse

Medicare became final after CMS responded to Defendants’ February

2018 dispute of the March 15, 2017 letter. (See Doc. 25 at 7–8.)

However, CMS’s response to that dispute undermines Sims’s

position. On March 1, 2018, CMS sent Defendants a letter

indicating that it partially agreed with the February 2018 dispute

and adjusted the amount of identified conditional payments

downward. (Doc. 14 ¶ 56; Doc. 11-5.) That same day, CMS sent

Defendants a new conditional payment letter that reflected the

adjusted amount and stated that CMS “is still investigating . . .;

therefore, the enclosed listing of current conditional payments is

not final.” (Doc. 11-5 at 3 (emphasis added).) The letter also

indicated that Defendants should alert CMS if they believed that

the listing was inaccurate. (Id.) And, in fact, Defendants did

so. On April 6, 2018, Defendants submitted a dispute letter

challenging the March 1, 2018 letter.6 (Doc. 14 ¶ 61; Doc. 11-6.)

Taken together, the ongoing communications between Defendants and

CMS show that Defendants’ obligation to reimburse Medicare did not

become final based on the February 2018 dispute.

Subsequent developments provide further support for this

conclusion. Following the March 1, 2018 letter, CMS did not

correspond with Defendants again until April 15, 2020, at which

time CMS sent Defendants another conditional payment letter

identifying $10,859.34 in conditional payments. (Doc. 14 ¶ 64;

Doc. 11-7.) The letter indicated that the conditional payments

identified were “not final” and allowed Defendants to submit

disputes to those payments. (Doc. 11-7 at 2-3.) And in response,

Defendants submitted a dispute. (Doc. 11-8.) CMS ultimately

agreed with the dispute and revised the amount of conditional

payments identified to $0.00. (Doc. 11-9.) This correspondence

and dispute process, coupled with CMS’s revisions to the

conditional payments owed, indicate that Defendants’ failure to

reimburse Medicare was not final. Defendants’ requirement to

reimburse Medicare remains contingent upon it being determined

with appropriate finality that Defendants owe Medicare

reimbursement (for example, by CMS issuing a demand recovery

6 Although Sims contests the propriety of this dispute letter (see Doc.

14 ¶ 61), the March 1, 2018 conditional payment letter expressly

permitted the dispute. (See Doc. 11-5 at 3.) It is not the court’s

place to question CMS’s procedures.

letter), and Sims’s suit remains contingent upon Defendants

failing to do so after that occurs. As such, Sims’s claim is not

currently fit for judicial decision. See Sullivan v. Farm Bureau

Mut. Ins. Co. of Mich., No. 1:10-CV-909, 2011 WL 1231264, at *3

(W.D. Mich. Apr. 1, 2011) (“Plaintiff's original Complaint

attempts to simultaneously litigate his [MSPA] claim with the

underlying claim. The [MSPA] claim is accordingly premature.”);

Geer v. Amex Assurance Co, No. 09-11917, 2010 WL 2681160, at *6

(E.D. Mich. July 6, 2010) (“While the parties have settled prior

claims, those settlements were for specific time periods and

amounts . . . . The Court finds no justification to . . . proceed

with [the] [MSPA] claim before liability has been established on

the underlying dispute. The Court therefore finds Plaintiff's

[MSPA] claim to be premature.”); Fresenius Med. Care Holdings,

Inc. v. Brooks Food Grp., Inc., No. CIV.A. 3:07CV14-H, 2007 WL

2480251, at *8 (W.D.N.C. Aug. 28, 2007) (“[T]here has clearly been

no finding at this time of the Defendants' responsibility for the

contested payments. If and when such a determination is made,

. . . [if] the Defendants fail to reimburse the appropriate funds,

then the MSPA allows for a private cause of action for double

damages.” (emphasis in original)).

Given that Defendants have not yet breached their duty to

reimburse CMS under the MSPA, Sims will suffer no hardship if the

court does not weigh in. If and when that occurs, Sims will be

able to bring her claim. As such, Sims’s claim should be dismissed

as premature.

2. Injury-in-fact

Defendants also challenge subject matter jurisdiction on the

basis that Sims lacks standing to bring this claim because she has

not suffered an injury-in-fact. In response, Sims contends that

she was injured when Defendants failed to pay for her medical care

as required under law. (Doc. 25 at 9–10.) Because injury-in-fact

is a close cousin of ripeness, see Miller, 462 F.3d at 319, and

Sims’s arguments in support of ripeness overlap with those in

support of an injury-in-fact, the court will also address whether

Sims has sufficiently alleged an injury-in-fact as an alternative

basis for dismissal.

“Article III of the Constitution confines the federal courts

to adjudicating actual ‘cases' and ‘controversies.’” Doe v. Obama,

631 F.3d 157, 160 (4th Cir. 2011) (quoting Allen v. Wright, 468

U.S. 737, 750 (1984)). “[S]tanding is an essential and unchanging

part” of that case-or-controversy requirement. Lujan v. Defs. of

Wildlife, 504 U.S. 555, 560 (1992). To satisfy that constitutional

requirement, a plaintiff must demonstrate that (1) she has suffered

an “injury in fact” that is (a) concrete and particularized and

(b) actual or imminent, not conjectural or hypothetical; (2) the

injury is fairly traceable to the challenged action of the

defendant; and (3) the injury is likely to be redressed by a

favorable decision. Friends of the Earth, Inc. v. Laidlaw Envtl.

Servs. (TOC), Inc., 528 U.S. 167, 180–81 (2000). Although distinct

from the ripeness inquiry, the question of whether a party has

standing bears similarities to that inquiry. Miller, 462 F.3d at

319.

Under the MSPA, a plaintiff suffers an injury-in-fact when

she is the beneficiary of a primary plan and the primary plan fails

to reimburse Medicare as required by the statute. See O'Connor v.

Mayor & City Council of Balt., 494 F. Supp. 2d 372, 374 (D. Md.

2007). No additional showing of injury is necessary. Id. Sims

argues that the facts alleged in the amended complaint demonstrate

that she has suffered an injury-in-fact. Relying on Netro v.

Greater Balt. Med. Ctr., Inc., 891 F.3d 522, 526 (4th Cir. 2018),

she claims that the allegations indicate that Defendants had a

legal obligation to reimburse Medicare under the MSPA and failed

to do so. (Doc. 25 at 9–10.) In response, Defendants contend

that, notwithstanding the allegations of the amended complaint,

Sims “cannot assert an injury based on [Defendants]’[] alleged

failure to pay Medicare an amount that Medicare has not said

[Defendants] owe[].” (Doc. 27 at 13.)

Sims is correct that, at the present stage, the court must

accept the facts as alleged in the amended complaint. Kerns, 585

F.3d at 193. However, the court need not accept the legal

conclusions drawn from those facts. Spaulding, 714 F.3d at 776.

Sims’s contention that Defendants were required to reimburse

Medicare, such that their failure to do so constitutes an injury-

in-fact, is a conclusion of law that is not afforded a presumption

of truth.

Sims’s alleged facts do not support her contention. Unlike

the plaintiff in Netro, Sims does not have “a concrete private

interest in the outcome of the suit” because CMS does not stand to

receive any compensation. Cf. 891 F.3d at 526–27 (finding

plaintiff suffered an injury because the government’s injury was

“beyond doubt” and the plaintiff had a concrete interest in

recovering the amount that the Medicare provider would recover, if

successful). Sims acknowledges that CMS eventually reported that

Defendants owe no reimbursement. (See Doc. 14 ¶ 66.) Despite

this, Sims asks the court to find that Defendants owe CMS

reimbursement, such that she has suffered an injury-in-fact, based

on the March 1, 2018 conditional payment letter. (Id. ¶ 67.)

Without citing authority, Sims contends that “Defendants’ failure

to exhaust their administrative remedies precludes Defendants from

arguing in federal court that they are not responsible for

conditional payments set forth in the March 1, 2018 conditional

payment letter.” (Id.) However, there is no indication from the

March 1, 2018 conditional payment letter that Defendants were

obligated to pursue any specified administrative remedy. The

letter provided for a dispute process, which Defendants pursued.7

On these facts, there appears to be no basis for the court to

consider Defendants as having tacitly accepted, either through

waiver or preclusion, their responsibility to reimburse Medicare

based on the March 1, 2018 letter. Without facts to indicate that

Defendants failed to reimburse Medicare when they were required to

do so, Sims has not plausibly alleged that she has suffered an

injury-in-fact under the MSPA.

This conclusion is consistent with the recovery structure

within the MSPA. Under the MSPA, in order for a plaintiff to

recover in a private cause of action, a primary payer must have a

demonstrated responsibility to reimburse Medicare for given

services and the primary payer must have failed to do so. 42

U.S.C. § 1395y(b)(3)(A); see also Glover v. Liggett Grp., Inc.,

459 F.3d 1304, 1308–09 (11th Cir. 2006). In that case, the primary

payer is subjected to double damages — not only is the primary

payer required to reimburse Medicare, but the primary payer is

also liable to the private plaintiff for that same amount. 42

U.S.C. § 1395y(b)(3)(A); see also Liggett Grp., 459 F.3d at 1309.

Were the court to infer an injury-in-fact based on Defendants’

7 Although there was a period of two years between Defendants’ April 2018

dispute letter and CMS’s next communication with Defendants in April

2020, it is not clear that this delay was due to any fault of Defendants.

Defendants suggest that the delay may be related to Sims’s name change

in the intervening period. (Doc. 27 at 13 n.4.)

failure to reimburse CMS, despite CMS’s clear indication that

Defendants owe no reimbursement, Defendants would automatically be

exposed to double damages without any opportunity to avoid those

penalties by reimbursing CMS. See also Liggett Grp., 459 F.3d at

1309 (“[Under] a private cause of action against alleged . . .

tortfeasors whose responsibility for payment of medical costs has

not been previously established[,] . . . an alleged tortfeasor

that is sued under the [MSPA] . . . could not contest liability

without risking the penalty of double damages: defendants would

have no opportunity to reimburse Medicare after responsibility was

established but before the penalty attached.” (emphasis in

original)); Fresenius, 2007 WL 2480251, at *7 (explaining that the

MSPA “makes it a condition precedent to reimbursement that there

be a ‘demonstrated responsibility’ to pay for items or services”

and “to hold otherwise would open a primary insurer to double

damages each time it contests a claim, rather than only when it

fails to pay after responsibility has been established”).

As Sims has failed to allege that she has suffered an injury-

in-fact, she lacks standing to pursue her claim.

3. Dismissal on the merits

Having found it lacks subject matter jurisdiction over Sims’s

claim, the court need not consider Defendants’ motion to dismiss

pursuant to Rule 12(b)(6).8

III. CONCLUSION

For the reasons stated, therefore,

IT IS ORDERED that Defendants’ motion to dismiss (Doc. 16) is

GRANTED and the amended complaint is DISMISSED WITHOUT PREJUDICE.

/s/ Thomas D. Schroeder

United States District Judge

February 3, 2021

8 It is noteworthy that the merits analysis would turn on the same factors

affecting the jurisdictional analysis and thus would face the same

hurdles. The private cause of action under the MSPA requires three

elements: (1) a primary plan, (2) that is responsible to pay for an item

or service, and (3) that failed to make the appropriate payment to

Medicare for the item or service. MAO-MSO Recovery II, LLC v. Gov't

Emps. Ins. Co., No. PWG-17-711, 2018 WL 999920, at *9 (D. Md. Feb. 21,

2018) (citing Glover v. Philip Morris USA, 380 F. Supp. 2d 1279, 1290

(M.D. Fla. 2005), aff'd sub nom. Liggett Grp., 459 F.3d 1304). As

indicated by the May 4, 2020 conditional payment letter, Defendants are

not responsible to pay for any items or services, nor have they failed

to make an appropriate payment as required by the MSPA. (See Doc. 14

¶ 66; Doc. 11-9 (showing Defendants owe $0.00 in conditional payments).)