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A notorious class-action troll took it on the chin in MSP Recovery Claims, Series LLC v. Exactech, Inc., 2023 WL 4066635 (E.D.N.Y. June 14, 2023) (“MSPRC”).  The troll’s modus operandi is to claim it has assignments of rights from certain fellow-traveling Medicare Advantage Organizations (“MAOs”) and try to turn those into class actions against targeted defendants – usually primary insurers.  A search for this plaintiff’s name (MSP) appearing in the same opinion as this assignor (Summacare) pulled up no fewer than 23 hits on Westlaw.

In MSPRC, however, this prolific litigant tried to branch out beyond its usual Medicare Secondary Payor claims into more general third-party payor (“TPP”) litigation.  That didn’t turn out well for the troll.  Indeed, MSPRC looks like the litigation equivalent of the troll being knocked out with its own club.

The occasion for MSPRC was a recall of certain of the defendant’s polyethylene implant components due to “out-of-specification” antioxidant packaging.  2023 WL 4066635, at *1.  Oxidation of polyethylene could “cause premature failure and necessitate revision surgery.”  Id.  MSP turned to its faithful sidekick, Summacare, for an assignment of rights “against anyone for payments made on behalf of its enrollees.” Id. at *3 (citation and quotation marks omitted).  Despite its complaint relying on a study that these devices “had a revision rate between 8.5% and 10.2% after ten years” – meaning that “approximately 90% of [these] replacement devices did not require revision within that timeframe,” id. at *2 – MSP claimed it (and the class of TPPs it purported to represent) were entitled to recover every penny ever spent on these implants, whether or not they actually required revision surgery.  Id. at *3 (plaintiff “asserts that the devices were worthless” and class members “would not have paid for the devices”), at *8 (“compensatory damages consisting of:  the difference between the value of Defective Devices as warranted (their prices) and their actual values at the time of purchase or lease ($0.00)”) (quoting complaint).

Although MSP had opposed, MSPRC was transferred to an MDL that had been created concerning the same recalled devices.  Id.  The JPMDL’s transfer order took the unusual step of recommending “that due to the ‘serious questions about the ability of [plaintiff] to bring its claims … the transferee judge may find it prudent to engage in threshold motion practice.’”  Id. (quoting order).  That’s precisely what happened.

As to the basic question of subject matter jurisdiction, MSPRC held that CAFA’s “low bar of a reasonable probability” of meeting the $5 million jurisdictional amount was satisfied, given that nearly 150,000 surgeries had been performed.  2023 WL 4066635, at *7.  So the action stayed in federal court.

In a far more useful holding for defendants, MSPRC rejected as frivolous the plaintiff’s alternative claim of federal question under the Magnuson-Moss Warranty Act (“MMWA”).  No MMWA claim was “colorable” because this statute is “inapplicable to any written warranty the making or content of which is otherwise governed by Federal law.”  15 U.S.C. §2311(d).  The FDCA is “other” federal law that precludes a MMWA action.

[L]egal authority that the MMWA does not provide a private remedy regarding warranties of medical devices regulated under the FDCA indeed exists . . . .  Accordingly, the court concludes that [plaintiff’s MMWA] claim is wholly insubstantial and frivolous or possibly made solely for the purpose of obtaining jurisdiction, and therefore cannot support federal question jurisdiction.

2023 WL 4066635, at *5 (footnote omitted).  The opinion collects numerous cases for this proposition.

But what really KOed this troll was standing.  “[I]n a suit for damages, the mere risk of future harm, standing alone, cannot qualify as a concrete harm” unless the risk “itself causes a separate concrete harm.”  MSPRC, 2023 WL 4066635, at *7 (quoting TransUnion LLC v. Ramirez, 141 S. Ct. 2190, 2210-11 (2021)) (emphasis original).  “[H]ighly attenuated” possibilities aren’t enough; rather “imminent injury” that is “certainly impending” is essential to standing.  Id.

Plaintiff MSP “allege[d] no facts regarding any such revisions” that any TPP purportedly had to pay for.  Id. at *8.  If the devices had “a higher risk of failure,” as alleged, that risk certainly wasn’t “imminent” or “impending.”  Plaintiff’s “conclusory” damages allegations were baseless and inflated.

The knee systems at issue in the Complaint are listed as having ten-year revision rates of between 8.5% and 10.2%, depending on the model, and fifteen-year rates of 12.5%.  Although the report does not include data of a similar timeframe, [defendant’s] hip system has a 4.7% revision rate at five years.  Nowhere in the Complaint nor the Opposition does [plaintiff] attempt to explain why the approximately 90% of prostheses which last a decade or longer are worthless.  The court is unsure whether any plausible explanation exists.

2023 WL 4066635, at *8 (citations and footnotes omitted).  “[T]here is no device, over any listed timeframe (which are as short as two years) with a revision rate of 0%.”  Id.  Since plaintiff’s “assignors were paying full price for a device with a non-zero expected rate of failure, the court cannot puzzle out why a higher actual rate of failure would reduce the value of those products to $0.00 in all cases.”  Id.

Since mere risk cannot confer standing, id., the MDL court looked to the only other potential source of injury – was any plaintiff TPP “forced to pay additional amounts due to the defects, for instance in revision surgeries”?  Id. (footnote omitted).  But nothing in the complaint supported any such damages.

Nowhere in the Complaint does [plaintiff] allege more than conclusions that its assignors paid for revision surgeries or other treatment; the only facts alleged regarding any payments made or expected to be made by the assignors is a table of thirteen surgeries paid for by Summacare, with no explanation as to whether these were primary or revisionary procedures.

2023 WL 4066635, at *9.  Even if there had been revision-related costs, the cookie-cutter complaint failed to allege causation:

[J]ust as the Complaint fails to specify any revision surgeries for which [plaintiff’s] assignors paid, it fails to allege any facts regarding such surgeries that would allow the court to infer they were attributable to [defendant’s] conduct. . . .  [D]evice failure and revision surgery could be attributable to a variety of causes.

Id.  Having pleaded no facts about “the patients for whose surgeries [plaintiff’s] assignors paid,”  the complaint was devoid of facts that any such payments were made or, if so, why.

None of the cases plaintiff relied on were on point.  Some involved products that required mandatory (100%) replacement.  Id. at *10.  That certainly wasn’t this case.  Nor did complaint allege that any TPP made reimbursements based on direct misrepresentations from the defendant.  Id. at *11.  MSP’s baseless claims were therefore dismissed.   Id.

Finally, MSPRC did not let plaintiff get away with a boilerplate motion to amend.  It could not amend as of right.  Having “opted to” fight dismissal, it let the period for unconditional amendment lapse.  Id.  Leave of court came with judicial recognition of plaintiff’s trollish behavior.  “In light of [MSP’s] extensive recent history as a litigant − and in particular its record of cases being dismissed for failure to allege standing” – the MDL court required it to file a full-blown motion for leave.  Id. at *12 (footnote listing multiple dismissal decisions omitted).  The court made clear that it would examine, upon receipt of the motion, “whether any proposed amended complaint could cure the defects discussed herein, or whether amending would be futile.” Id.

Thus, the plaintiff’s prior filing of multiple meritless complaints in similar situations became the club that likely to knock this troll out of this case.