- MSP Recovery’s qui tam complaint seeks to
recover billions of dollars for claims auto insurers should have
paid but didn’t.
- Defendants include related entities of
insurance groups Auto Club Enterprises Insurance Group, Auto Owners
Group, Berkshire Hathaway Group, CSAA Insurance Group, Erie
Insurance Group, Farmers Insurance Group, Kemper Corporation Group,
Liberty Mutual Group, National General Group, Nationwide
Corporation Group, Progressive Group, State Farm Group, Travelers
Group and United Services Automobile Association Group.
MSP Recovery, LLC (“MSP Recovery”) and its affiliates, 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 that it has filed what may be
one of the largest whistleblower lawsuits in U.S. history. The 315
auto insurance companies named in the lawsuit include related
entities of insurance groups ranging from Berkshire Hathaway Group
and Farmers Insurance Group to Liberty Mutual Group and Nationwide
Corporation Group.
The qui tam complaint – under seal until now after being filed
two years ago in U.S. District Court for the Eastern District of
Michigan, Southern Division (“U.S. District Court”) on behalf of
the U.S. government and multiple states (“Subject Jurisdictions”) –
seeks to recover billions of dollars for the federal and certain
state governments from these auto insurers for claims they should
have paid but didn’t because they deliberately filed false reports
that failed to acknowledge their obligations as required by federal
law.
The action was filed by MSP Recovery Law Firm (“MSP Law”), and
Akeel & Valentine, PLC on behalf of MSP WB, LLC (“MSP WB”), a
subsidiary of MSP Recovery. MSP Law is a separate legal entity from
MSP Recovery.
On Aug 12, the U.S. District Court unsealed the qui tam
complaint, thus allowing MSP WB to proceed with the complaint
against the auto insurers on behalf of the U.S. and the Subject
Jurisdictions.
As of Jan 1, 2009, Section 111 of the Medicare, Medicaid and
SCHIP Extension Act of 2007 (“MMSEA”), required that auto insurers
report certain information to Medicare to help the Medicare Trust
Fund by preventing Medicare’s wrongful payment of expenses that
should be paid by auto insurers. The Medicare Trust Fund, a part of
Social Security, is funded by taxpayers through payroll taxes.
In its whistleblower suit on behalf of the federal government
and the Subject Jurisdictions, MSP Recovery alleges that the auto
insurers intentionally developed a scheme through the filing of
known false reports. MMSEA requires insurers to file quarterly
reports with the Centers for Medicare & Medicaid Services
(“CMS”) when, in their capacity as “Primary Payers”, they have an
obligation to pay or reimburse Medicare and the Subject
Jurisdictions. The scheme involves the intentional systematic
filing of reports that failed to contain the insurers’ true
responsibility of when debts were owed to the Medicare Trust Fund
as well as the Subject Jurisdictions.
“This case is based on what MSP Recovery has seen over the last
seven years as auto insurers knowingly and willfully turn a blind
eye and evade their obligations to Medicare,” said John H. Ruiz,
founder of MSP Recovery and MSP Law and the lead attorney
representing MSP Recovery. “They do so despite having knowledge
that they are reporting falsely to CMS,” added Mr. Ruiz.
The complaint alleges that the named auto insurers cannot
satisfy the federally mandated reporting requirements because the
procedures they have in place are intentionally set up to fail. The
defendants did nothing to obtain the information from their
insureds necessary to enable them to accurately and properly
report, according to the complaint. This included the omission of
critical data fields, such as the insured party’s Social Security
number without which the named auto insurers cannot fulfil their
reporting obligations. The defendants have known for years that
they reported falsely, and even after having been advised directly
by MSP Recovery, failed to do anything to report properly,
according to the complaint.
The Centers for Medicare & Medicaid Services (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.
“Considering that CMS spends more than $1.4 trillion annually,
years of such behavior by the auto insurance industry is an
enormous financial drain upon CMS and taxpayers,” said Michigan
attorney Shereef Akeel, one of the lawyers working on the
lawsuit.
Today’s news follows MSP Recovery’s major victory in a court
ruling earlier this month against auto insurer IDS Property
Casualty (“IDS”). Judge David C. Miller of the Circuit Court of the
Eleventh Judicial Circuit in Florida sanctioned IDS for not
complying with his order to provide identifying data of its
insureds and found that MSP Recovery had demonstrated that IDS
willfully failed to comply with state and federal reporting laws,
such as MMSEA.
Any amounts recoverable by MSP Recovery in this case are in
addition to the amounts recoverable in connection with 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 in
violation of 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.
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.
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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version on businesswire.com: https://www.businesswire.com/news/home/20210818005281/en/
For Media: ICR, Inc. Tom Vogel Tom.Vogel@icrinc.com
For Investors: ICR, Inc. Marc Griffin
Marc.Griffin@icrinc.com
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