Miami Court Finds IDS Property Insurance Withheld Data on PIP Cases

In a class-action lawsuit that could affect no-fault auto insurance companies around the country, a Miami judge has sanctioned an insurer for willfully failing to turn over data that could show it was inappropriately shifting costs to Medicare.

The auto insurer in the case, IDS Property Casualty Insurance Co., uses the same software, Compass Claims Systems, that many other insurers utilize in determining and reporting who the primary payer should be in no-fault or personal injury protection auto cases, according to court records and news reports.

In MSPA Claims 1 vs. IDS, Miami-Dade Circuit Judge David Miller said that as many as one million records were missing from the insurer’s information supplied to the court. A sampling of the records that IDS did provide, however, showed that the carrier had correctly reported primary payer information to Medicare less than 2% of the time, Miller said.

The IDS data also differed significantly from limited information that was provided by the Insurance Services Office, a subsidiary of Verisk Analytics, the judge noted.

“The Court concludes that IDS did not produce all responsive data from all databases available to it and, in doing so, violated the court’s order,” the order reads. “This 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.”

The plaintiffs in the case, representing Medicare Advantage health plans, allege that the lack of reporting has shifted costs to the health plans and to Medicare, costing the plans and taxpayers millions of dollars. One of the lead plaintiffs’ lawyers in the case is Miami attorney and entrepreneur John Ruiz, who founded MSP Recovery, which specializes in Medicare secondary payment recovery.

A Florida insurance group said the case is another round in a long-running battle between insurers and Ruiz, whose firm essentially became its own client, and that the amounts paid by Medicare in many cases were not significant.

“If you look at who’s being made whole in this, this guy is being made whole-and-a-half,” said William Stander, director of the Florida Property and Casualty Association.

Ruiz has said each of the 37 Medicare Advantage plans plaintiffs now stand to win damages of as much as $10,000 each, according to the Daily Business Review, a South Florida news publication. But the total amount of damages could run into the millions. Ruiz could not be reached Wednesday by the Insurance Journal, but in court filings, the plaintiffs said they had notified more than 638,000 potential class members.

IDS, now part of Ameriprise Financial, and its lawyers in the case also could not be reached Wednesday. But in a response to MSPA’s motion for contempt, filed last summer, IDS attorneys said that the company had, in fact, complied in good faith with the court’s requests. Finding more records would mean manually digging through claims.

A Florida appeals court has already denied class-action certification in similar cases, and MSPA has no standing to demand the data, IDS argued.

The judge, Miller, disagreed and imposed sanctions on IDS. He also certified the case as a class action and found in favor of the plaintiffs. He said he would later determine the dollar amount of damages, court costs and attorney fees that IDS should pay.

The decision will likely be appealed. Insurers and insurance defense attorneys have long complained that Miller, known to be outspoken from the bench, has shown bias against insurance interests and has been seen as too “plaintiff friendly” in many cases. In 2018, a member of one of the largest insurance defense firms in Florida ran against Miller but lost in a contentious election.

Florida’s 3^rd District Court of Appeals has overruled Miller in a number of property insurance cases in recent years. In a case similar to the IDS matter, Ocean Harbor Casualty Insurance vs. MSPA Claims 1, the appeals court in 2018 overturned Miller’s class-action certification. Earlier this month, the court reversed Miller in a homeowner’s claims dispute with People’s Trust Insurance.