- Ruling certifies a class action, enters judgment for entire
class and sanctions IDS for willfully violating court’s order.
- Ruling also confirms effectiveness of MSP Recovery’s systems
and data analytics in identifying that IDS, the defendant and a
Primary Payer, failed to report its Primary Payer obligations to
the government.
Data analytics company, MSP Recovery, LLC and its affiliates
(“MSP Recovery”), a Medicare, Medicaid, commercial, and secondary
payer reimbursement recovery leader that recently announced a
planned business combination with Lionheart Acquisition Corporation
II (Nasdaq: LCAPU, LCAP, LCAPW), today announced a major legal
victory in its continuing disruption of the antiquated healthcare
reimbursement system by discovering payments made by Medicare
Secondary Payers that should have been paid by Primary Payers.
The action was filed by MSP Recovery Law Firm (“MSP Law”), on
behalf of MSPA Claims 1 LLC (“MSPA”), a subsidiary of MSP Recovery.
MSP Law is a separate legal entity from MSP Recovery.
Judge David C. Miller of the Eleventh Judicial Circuit of
Florida ruled there was at least “willful indifference” by IDS
Property Casualty Insurance Company (“IDS”) in not complying with
his August 6, 2018 order which required IDS to provide identifying
data of its insureds, including names, dates of birth and Social
Security numbers. IDS is required by federal law and state statutes
to maintain these data points to identify Medicare beneficiaries.
However, IDS “failed to ascertain whether their insured was
entitled to Medicare benefits” and “knowingly and willfully turned
a blind eye and evaded its primary obligation when it received the
Medicare enrollee’s medical bills,” according to the Court.
Judge Miller imposed sanctions upon IDS for “willfully”
violating his court order and also certified a class action on
behalf of all Florida Medicare Advantage Organizations, downstream
providers and their assignees, and a summary judgment in favor of
the entire class.
John H. Ruiz, founder of MSP Recovery and MSP Law and the lead
attorney representing MSPA, argued that IDS had the primary
obligation to cover these items and services but failed to do so.
Mr. Ruiz further argued that IDS was required to maintain data that
would allow it to determine which claimants were Medicare
beneficiaries as required by federal law to prevent losses to the
Medicare Trust Fund.
Mr. Ruiz argued that IDS’s auto insurance arm is the primary
responsible party when someone insured by IDS is involved in a car
accident and incurs medical expenses from the accident. However, as
MSP Law has shown – using MSP Recovery’s system and data analytics
– the Secondary Payer and the Medicare Payers often end up paying
the medical bills. Mr. Ruiz said MSP proved that IDS was aware of
this, but still allowed the Medicare Payers to pay the claims. As a
result, Medicare Trust Funds were wasted.
MSP Law used MSP Recovery’s data systems to show IDS willfully
withheld data from MSP Law and the Court. MSP Law showed that there
was more data relevant to Judge Miller’s request than IDS had
produced, a point IDS was unable to rebut. Insurance Services
Office, which works with many property and casualty insurers in the
U.S., provided this additional data.
“This win confirmed that IDS’s system did not comply with
federal laws. Systems with these failures cause Medicare Payers to
pay for medical bills that insurers should be paying, which we
estimate could cost taxpayers billions of dollars each year. MSP
Recovery’s system and data analytics to discover and recover these
losses are necessary and well-positioned to aid in righting the
wrongs impacting the Medicare Trust Fund,” said Mr. Ruiz. According
to Ruiz, “this flaw isn’t limited to just Medicare, Medicaid and
Commercial payers also end up paying claims they don’t owe.”
The ruling is the first time in any case brought by MSP Recovery
that a judge has imposed these penalties on a primary payer in
connection with finding specific instances of willful violation of
a court order and finding significant flaws in the primary payer’s
data. The ruling paves the way for MSP Recovery to pursue double
damage penalties as allowed by federal law.
“The ruling demonstrates how applying MSP Recovery’s proprietary
data analytics and legal strategies can help to obtain
reimbursements from parties which should have paid the claims in
the first place,” said Mr. Ruiz.
The Court held that the software system used by MSP Recovery was
able to demonstrate specific instances of IDS’s failure to
coordinate benefits as required by law, and further noted:
“Plaintiffs’ ability to capture data in large volumes, and to
simultaneously, categorize, normalize, and utilize the captured
data, along with data from outside sources, is a common, reasonable
and very effective methodology for generalized proof of class-wide
impact for Plaintiffs and its potential class members. Plaintiffs
utilized the MSP Recovery System in this case and was able to
identify that IDS’s production to Plaintiffs did not comply with
the Court’s Order.”
The Court found that the MSP Recovery’s System had uncovered and
provided uncontested evidence that IDS had a reporting rate as low
as 2% of claims made to them under policies of insurance based on
the records it provided. This reporting is required under MMSEA
Section 111 for Primary payers such as IDS. Based on the evidence
that it provided, IDS could never have reported properly in 38% of
the claims made to them under policies of insurance because IDS did
not have the proper information to comply with its reporting
obligations. The Court also found that when IDS did have the data,
IDS would not have been able to correctly report in 21% of those
claims because of the collection of incorrect data points that did
not correspond to government records. Taken together, between
situations where IDS failed to collect any information or where it
gathered incorrect information, IDS would not have been able to
properly report approximately 59% of the claims.
“The findings in this case are consistent with what MSP Law has
been arguing for the last 7 years,” said Mr. Ruiz. “MSP Law – using
MSP Recovery’s data analytics -- has found that a major flaw exists
in the methodology used by some primary payers,” said Mr. Ruiz.
The Court imposed sanctions against IDS because it found that
the data produced by IDS in response to the Court’s order
“reflected, at least a willful indifference to comply with the
compelled production of data, or a willful decision to do so.”
According to the Court: “[t]his data, as established by Plaintiffs,
is required for the Defendant to be able to comply with its legal
responsibility to comply with federal and state laws in having to
report and pay claims as a primary payer.”
CMS reviews less than two tenths of a percent of the more than
one billion claims Medicare receives a year, so there is a high
frequency of improper payments
The billed amounts being pursued by MSP Law on behalf of MSP
Recovery’s MSPA are part of the more than $50 billion MSP Recovery
owns in billed amounts against insurance companies that have
primary payment responsibility as well as medical and
pharmaceutical manufacturers that either caused the expenditure of
medical treatment or inflated their prices against the law.
About MSP Recovery
Founded in 2014, MSP Recovery has become a Medicare, Medicaid,
commercial, and secondary payer reimbursement recovery leader,
disrupting the antiquated healthcare reimbursement system with
data-driven solutions to secure recoveries against responsible
parties, while providing the industry with comprehensive compliance
solutions. For more information, visit: www.msprecovery.com
About Lionheart Acquisition Corporation II
Lionheart Acquisition Corporation II (Nasdaq: LCAPU, LCAP,
LCAPW), is a blank check company formed for the purpose of
effecting a merger, capital stock exchange, asset acquisition,
stock purchase, reorganization or similar business combination with
one or more businesses. For more information, visit:
www.LCAP2.com.
Important Information and Where to Find It
In connection with the potential business combination (the
“proposed business combination”), a registration statement on Form
S-4 (the “Form S-4”) is expected to be filed by Lionheart
Acquisition Corporation II (“Lionheart”) with the U.S. Securities
and Exchange Commission (the “SEC”). The Form S-4 will include a
preliminary proxy statement / prospectus to be distributed to
holders of Lionheart’s common stock in connection with Lionheart’s
solicitation of proxies for the vote of its stockholders in
connection with the proposed business combination and other matters
as described in the Form S-4, as well as a prospectus relating to
the offer and sale of securities to be issued in connection with
the completion of the business combination. This document does not
contain all the information that should be considered concerning
the proposed business combination and is not intended to form the
basis of any investment decision or any other decision in respect
of the proposed business combination. Lionheart and MSP Recovery,
LLC (and related entities, “MSP”) urge investors, stockholders and
other interested persons to read, when available, the Form S-4,
including the proxy statement/prospectus included therein and the
amendments thereto as well as any other documents filed with the
SEC in connection with the proposed business combination as these
materials will contain important information about MSP, Lionheart
and the proposed business combination. After the Form S-4 has been
filed and declared effective, the definitive proxy
statement/prospectus will be mailed to Lionheart’s stockholders as
of the record date established for voting on the proposed business
combination. Lionheart’s stockholders will also be able to obtain
copies of such documents, without charge, once available, at the
SEC’s website at www.sec.gov, or by directing a request to:
Lionheart Acquisition Corporation II, 4218 NE 2nd Avenue, Miami,
Florida 33137.
INVESTMENT IN ANY SECURITIES DESCRIBED HEREIN HAS NOT BEEN
APPROVED OR DISAPPROVED BY THE SEC OR ANY OTHER REGULATORY
AUTHORITY NOR HAS ANY AUTHORITY PASSED UPON OR ENDORSED THE MERITS
OF THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED
THEREIN.
Participants in the Solicitation of Proxies
This communication is not a solicitation of a proxy from any
investor or securityholder. Lionheart, MSP, and their respective
directors, executive officers and other members of their management
and employees, including John Ruiz and Frank Quesada, may, under
SEC rules, be deemed to be participants in the solicitation of
proxies of Lionheart’s stockholders in connection with the proposed
business combination. Investors and securityholders may obtain more
detailed information regarding the names, affiliations and
interests of Lionheart’s directors and executive officers in
Lionheart’s Annual Report on Form 10-K filed with the SEC on March
31, 2021, as amended, and other reports filed with the SEC.
Additional information regarding the participants will also be
included in the Form S-4 that includes the proxy
statement/prospectus, when it becomes available. When available,
these documents can be obtained free of charge from the sources
indicated above.
No Offer or Solicitation
No offer or offering of equity interests or securities of any
kind is being made, conducted or extended at this time. This
communication is for informational purposes only and does not
constitute or include an offer to sell, or a solicitation of an
offer to purchase or subscribe for, equity interests or securities
of any kind or a solicitation of any vote of approval, nor shall
there be any sale, issuance or transfer of any such securities in
any state or jurisdiction in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the
securities laws of such jurisdiction. Any such offer or
solicitation will be made only in connection with the delivery of a
prospectus meeting the requirements of the Securities Act of 1933,
as amended (“Securities Act”), or exemptions therefrom.
Cautionary Note Regarding Forward Looking Statements
This communication includes forward looking statements within
the meaning of the safe harbor from civil liability provided for
such statements by the Private Securities Litigation Reform Act of
1995 (set forth in Section 21E of the Securities Exchange Act of
1934, as amended (“Exchange Act”) and Section 27A of the Securities
Act, which include information relating to future events, future
financial performance, strategies, expectations, competitive
environment, regulation and availability of resources and involve
known and unknown risks, uncertainties and other factors which may
cause our actual results, performance or achievements to be
materially different from any future results, performances or
achievements expressed or implied by the forward-looking
statements. These statements are often accompanied with or by words
such as “expects”, “plans”, “ projects”,” forecasts”,” estimates”,”
intends”, “expects”, “anticipates”, “seeks”, “ targets”,
“continues”, “ believes”, “opinion”, “will”, “could”, “future”,
“growth”, or “may” (or the negatives thereof) or other similar
expressions that predict or indicate future events or trends or
that are not statements of historical matters. These forward
looking statements include, but are not limited to, statements
regarding MSP’s plans, goals and objectives, forecasts, budgets or
projections and any related assumptions, statements and projections
regarding projected MSP claims by paid amounts, projected recovery
percentages, forecasts relating to key revenue drivers, earnings
growth, gross and cumulative recoveries and the implied enterprise
value and Lionheart’s and MSP’s expectations with respect to future
performance and anticipated financial impacts of the proposed
business combination, the satisfaction or waiver of the closing
conditions to the proposed business combination, and the timing of
the completion of the proposed business combination. There is no
guarantee that prospects or results or the timing of events
included or referred to in this communication will be achieved or
that MSP will be able to implement successfully its investment
strategy or achieve its investment objectives or return targets.
Accordingly, we caution you against relying on forward-looking
statements. Forward looking statements also are subject to a number
of significant risks and uncertainties that could cause the actual
results to differ materially, and potentially adversely, from those
express or implied in the forward-looking statements. These
statements are based on various assumptions, whether or not
identified in this communication, and on the current expectations
of management and are not predictions of actual performance. Actual
events and circumstances are difficult or impossible to predict and
may differ from assumptions, and such differences may be material.
Many actual events and circumstances are inherently subject to
significant business, economic and competitive uncertainties and
contingencies, and are beyond the control of MSP and Lionheart and
are difficult to predict. These forward-looking statements are
provided for illustrative purposes only and are not intended to
serve as, and must not be relied on by any investor as, a
guarantee, an assurance, a prediction or a definitive statement of
fact or probability. Factors that may cause such differences
include, but are not limited to, the occurrence of any event,
change, or other circumstances that could give rise to the
termination of the Membership Interest Purchase Agreement (the
“Agreement”); the outcome of any legal proceedings that may be
instituted against Lionheart or MSP or affiliated companies
following the announcement of the proposed business combination;
the inability to complete the proposed business combination on the
expected time frame or at all, including due to failure to obtain
approval of Lionheart’s stockholders, certain regulatory approvals,
or the satisfaction of other conditions to closing in the
Agreement; the occurrence of any event, change, or other
circumstance that could give rise to the termination of the
Agreement or could otherwise cause the proposed business
combination to fail to close; the inability to obtain or maintain
the common stock listing on the Nasdaq Stock Market following the
proposed business combination; a delay or failure to realize the
expected benefits of the proposed business combination; the risk
that the proposed business combination disrupts current plans and
operations as a result of the announcement and consummation of the
proposed business combination; the ability to recognize the
anticipated benefits of the proposed business combination, which
may be affected by, among other things: future economic, financial,
lending, competitive and market conditions, including healthcare
spending fluctuations; future costs of and returns on capital;
leverage and lending costs and terms; operating costs and future
business, investment, holding and sale decisions and costs; the
risks associated with MSP’s business, including, among others,
MSP’s ability to capitalize on its assignment agreements and
recover monies that were paid by the assignors; litigation results;
the validity of the assignments of claims to MSP; a determination
that MSP’s claims are not reasonable, related or necessary; the
failure of MSP’s clients to renew their agreements with MSP (or
terminate those agreements early); MSP’s claims being within
applicable statutes of limitations; the inability to successfully
expand the scope of MSP’s claims or obtain new data and claims from
MSP’s existing assignor base or otherwise; the limited number of
MSP’s assignors and the associated concentration of MSP’s current
and future potential revenue; internal improvements to claims and
retail billing processes by MSP’s clients that reduce the need for
and revenue generated by MSP’s products and services; healthcare
spending fluctuations; programmatic changes to the scope of
benefits and limitations to payment integrity initiatives that
reduce the need for MSP’s services; delays in implementing MSP’s
services to its claims; system interruptions or failures;
cyber-security breaches and other disruptions that could compromise
MSP’s data; MSP’s failure to maintain or upgrade its operational
platforms; MSP’s failure to innovate and develop new solutions, or
the failure of those solutions to be adopted by MSP’s existing and
potential assignors; MSP’s failure to comply with applicable
privacy, security and data laws, regulations and standards,
including with respect to third party providers; changes in
legislation related to healthcare programs and policies; changes in
the healthcare market; negative publicity concerning healthcare
data analytics and payment accuracy; competition; successfully
protecting MSP’s intellectual property rights; the risk that third
parties may allege infringement of their intellectual property;
changes in the healthcare regulatory environment and the failure to
comply with applicable laws and regulations or the increased costs
associated with any such compliance; failure to manage MSP’s
growth; the inability to attract and retain key personnel; MSP’s
reliance on its senior management team and key employees and the
loss it could sustain if any of those employees separated from the
business; the failure of vendors and providers to deliver or
perform as expected, or the loss of such vendors or providers;
MSP’s geographic concentration; MSP’s relatively limited operating
history, which makes it difficult to evaluate its current or future
business prospects; the impact of the ongoing COVID-19 pandemic;
and the risk that MSP may not be able to develop and maintain
effective internal controls. The foregoing list of factors is not
exhaustive. If any of these risks materialize or MSP’s assumptions
prove incorrect, actual results may differ materiality from the
results implied by these forward-looking statements. There may be
additional risks that we do not presently know or currently believe
are immaterial that could also cause actual results to differ from
those contained in the forward-looking statements. The foregoing
list of factors is not exclusive. Additional information concerning
certain of these and other risk factors is contained in Lionheart’s
most recent filings with the SEC and will be contained in the Form
S-4, including the proxy statement/prospectus, to be filed with the
SEC in connection with the proposed business combination. This
communication speaks only as of the date indicated, and the
statements, expressions, information and data included therein may
change and may become stale, out-of-date or no longer applicable.
We do not have, and do not undertake, any obligation to update,
amend or revise this communication (or to provide new, amended or
revised materials), including with respect to any forward-looking
statements, whether as a result of new information, future events,
changed plans or circumstances or any other reason, except as
required by law. The communication should not be relied upon as
representing our assessments as of any date subsequent to the date
of this communication. Accordingly, undue reliance should not be
placed upon the communication, including the forward-looking
statements.
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