Florida Pure Bill of Discovery and the Medicare Secondary Payer Act

This post is from the non-Butler Snow side of the blog.

When a news article starts with “Florida man…” you know you are in for a bit of crazy.  Usually crazy and funny, but in a smack-my-head kinda way.

The lawsuit resulting in the decision in MSP Recovery Claims, Series LLC v. Ethicon Inc., et al., Case No. 1:19-CV-650-RWS, 2024 U.S. Dist. LEXIS 145933, 2024 WL 3811994 (N.D. Ga. Aug. 13, 2024), started in Florida, and involves two odd things:  the Florida pure bill of discovery procedure, and the Medicare Secondary Payer Act (“MSP Act”), 42 U.S.C. § 1395y, et seq. 

It is a bit crazy, and in a smack-my-head kinda way, so we tried to come up with a “Florida man/Florida lawsuit”-type title for this post.  But this is a legal blog and the opinion falls short on the funny, so we gave up and now will go straight to the issues.

As noted, today’s case started in Florida state court as a “pure bill of discovery” action, before it was removed to federal court and transferred to an MDL. 

The Florida pure bill procedure, codified in Fla. Stat. § 26.01(2), is an anachronism, a hold-over from olden, code-pleading times, and something that probably should no longer be on the books but unfortunately still is.

“Although a pure bill of discovery remains part of [Florida’s] legal system, its use and usefulness diminished greatly when Florida relaxed its pleading requirements to authorize liberal discovery.”  Venezia Lakes Homeowners Ass’n v. Precious Homes at Twin Lakes Prop. Owners Ass’n, 34 So. 3d 755, 758 (Fla. 3d DCA 2010) (internal quotations and citation omitted).

“The pure bill of discovery originated in equity as a mechanism for obtaining ‘the disclosure of facts within the defendant’s knowledge, or deeds or writings or other things in his custody, in aid of the prosecution or defense of an action pending or about to be commenced.’”  Vorbeck v. Betancourt, 107 So. 3d 1142, 1145 (Fla. 3d DCA 2012) (citation omitted).

In theory, “[u]nder the current state of the law, the filing of a bill of discovery is justified only in ‘narrow and limited circumstances.’” Id. at 1145.  The cases also tell us that a pure bill is not supposed to substitute for filing a valid complaint and seeking ordinary discovery, and it is not a “mechanism to determine whether a cause of action exists or as a ‘fishing expedition.’”  Trak Microwave Corp. v. Culley, 728 So. 2d 1177, 1178 (Fla. 2d DCA 1998). 

But where a mechanism for obtaining the disclosure of facts within the defendant’s knowledge ends and a fishing expedition begins probably depends on the day of the week and whether your assigned judge had a good breakfast or got up on the wrong side of the bed.

This particular Florida pure bill was filed by entities called “MSP Recovery Claims, Series LLC; MSPA Claims 1, LLC; and MAO-MSO Recovery II LLC, Series PMPI”, which the court described as “a group of companies that specialize in acquiring and pursuing Medicare Secondary Payer claims.”   

One court described such MSP Recovery entities as filings complaints that “read as if plaintiffs began with a conclusion that defendants owed them money and simply worked backwards to construct a legal theory that would support the conclusion.”  MAO-MSO Recovery II, LLC v. Am. Fam. Mut. Ins. Co., No. 17-cv-175, 2018 U.S. Dist. LEXIS 23146, 2018 WL 835160, at *6 (W.D. Wis. Feb. 12, 2018).   

In this case, the MSP Recovery plaintiffs sought information they hoped would allow them to file claims against medical device manufacturers using the MSP Act.  According to the plaintiffs, they had been assigned MSP Act claims by certain Medicare Advantage Organizations.  These assignments supposedly permitted them to seek reimbursement of money the Medicare Advantage Organizations had paid for their insureds’ medical care, because the defendant manufacturers should have paid for that medical care instead (purportedly because the medical device was defective and allegedly caused the insureds to need the medical care).

What information did these plaintiffs seek, you may ask?  Merely an order directing the defendant manufacturers of a medical device, Physiomesh, to produce, without notice to or consent by the affected individuals, some pretty highly confidential personal information, namely:

“(1) full name of each Physiomesh recipient; (2) Social Security, health insurance claim number, or Medicare beneficiary identifier for each Physiomesh recipient; (3) the date of birth of each Physiomesh recipient; and (4) the address of each Physiomesh recipient.”

According to the plaintiffs, they needed the pure bill of discovery to learn these personal details who had received the medical device, so they would know who to sue and what Medicare claims were at issue.

Whether a medical device manufacturer would have this information is questionable, unless the FDA ordered tracking to the patient level for the device.  See Medical Device Tracking: Guidance for Industry and Food and Drug Administration Staff (March 27, 2014), available at https://www.fda.gov/media/71205/download.

By contrast, one would think that plaintiffs actually assigned valid MSP Act claims by Medical Advantage Organizations already would have this information, or access to this information through the insurers that assigned them the claims.  These Medical Advantage Organizations surely would have access to their own insureds’ insurance and medical records, and those records should reveal which insureds had been implanted with the medical device, whether the Medical Advantage Organization had paid for any post-implant care related to the device, and other such information. 

One thus would think that plaintiffs’ Florida pure bill action against medical device manufacturers would not be necessary.  (And one would be right:  See MSP Recovery Claims, Series, LLC, et al., v. Bristol West Ins. Co., Case No. 19-32-CA-01 (Fla. 11th Cir. Ct. May 25, 2020) (pure bill of discovery not allowed where the plaintiffs “already [knew] the hoped-for cause of action and the identity of the intended defendant” and the pure bill of discovery sought “protected private medical and financial information about individual Medicaid recipients who are not parties or clients of Plaintiffs’ counsel”).)

But the litigation strategies of the MSP Recovery entities (now apparently sometimes known as LifeWallet) are passing strange.  See, e.g., MSP Recovery Claims, Series LLC v. USAA Gen. Indem. Co., No. 18-cv-21626, 2018 WL 5112998, at *10, *13 (S.D. Fla. Oct. 19, 2018) (describing plaintiff as having “played fast and loose with facts, corporate entities, and adverse judicial rulings”); MAO-MSO Recovery II, LLC v. State Farm Mut. Auto. Ins. Co., No. 1:17-cv-01541, 2018 WL 2735106, at *4–5 (C.D. Ill. June 7, 2018) (imposing Rule 11 sanctions for “misstatements” and “inaccurate allegations” about assignments).

At this point, you may be ready to exclaim, “WTF?” (meaning, of course, “What The Florida?”).  Fortunately, the court dismissed this case, on personal jurisdiction grounds.   

Turning to the Florida long-arm statute, the court recognized that in the specific jurisdiction context, Florida “requires a closer nexus” (or “connexity”) between the state and the activity in question than would be required by the federal Due Process Clause.

Here, defendants were non-Florida businesses that manufactured the medical device in question.  If those devices allegedly injure a Florida patient, the connection between the manufacturer and Florida might (or might not) be enough for Florida to exercise personal jurisdiction over the manufacturer for product liability purposes.  But when the case involves a pure bill of discovery premised on Medicare payment obligations, an out-of-state defendant definitely does not have a close enough connection to Florida just because it manufactured a medical device.  Following MSP Recovery Claims v. Coloplast Corp., 353 So. 3d 705 (Fla. 3d DCA 2023), the court recognized that the plaintiffs’ pure bill of discovery action did not relate to any “injury to persons” or tort in Florida, nor to any business the defendants were carrying on in Florida. The case thus failed for lack of personal jurisdiction over the defendants.  

If this odd case had survived the personal jurisdiction challenge, it may well have been dismissed on other grounds, such as standing, questionable validity of the assignments the plaintiffs purported to have, and so on. 

In sum, despite the myriad problems with the MSP Recovery plaintiffs’ whole litigation scheme and the Florida pure bill of discovery procedure, this MSP Recovery Claims, Series LLC case was bounced on a very important foundational ground: personal jurisdiction.  A good result, and one we are happy to see, whatever the basis.