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.
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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.
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Cautionary Note Regarding Forward Looking Statements
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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. 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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. 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