Maryland Supreme Court upholds contingent assignments in Medicare reimbursement litigation

The Court rejected arguments that such arrangements violate Maryland public policy, clearing a critical legal hurdle for legal finance providers and healthcare entities seeking to enforce payment obligations under federal law.

A clear endorsement of commercial assignments

In GEICO v. MAO-MSO Recovery II, LLC, the Court addressed whether Maryland law prohibited Medicare Advantage Organizations (MAOs) from assigning their reimbursement rights under the Medicare Secondary Payer (MSP) statute to third-party entities—such as MSP Recovery—for enforcement via litigation. GEICO, the defendant, urged the Court to invalidate the assignments under Maryland’s common law doctrines of champerty and barratry, relying heavily on the Fourth Circuit’s 2002 decision in Accrued Financial Services v. Prime Retail.

The Court answered with a definitive no, affirming that such assignments are neither illegal nor contrary to public policy.

In a detailed opinion authored by Justice Biran, the Court held that:

“Maryland public policy does not prevent sophisticated parties like Plaintiffs and the assignors from striking a bargain they both deem valuable. Put another way, Plaintiffs’ assignments are not sufficiently ‘officious’ as to warrant invalidation. And it certainly is not the case that litigation designed to recover reimbursement of Medicare payments is useless.”

The Court emphasized several key points:

·         MSP Recovery was asserting its own rights as a valid assignee—not soliciting litigation on behalf of others.

·         Maryland has not voided a contract on grounds of champerty or maintenance in over a century.

·         The practice of funding litigation or receiving a contingent interest in claims does not, in itself, violate Maryland public policy.

Defendants have long challenged legal finance by invoking champerty and barratry—centuries-old concepts developed to curb the encouragement of frivolous or vexatious lawsuits by disinterested parties—arguing that third-party involvement in litigation undermines the justice system. But courts, including Maryland’s, increasingly recognize these doctrines as outdated in the context of modern, arms-length legal finance arrangements that support claim enforcement rather than promote frivolous lawsuits.

The Court’s decision acknowledged the commercial realities of modern litigation. By declining to extend Maryland’s barratry statute—which prohibits certain personal-gain-driven litigation solicitations—to the plaintiffs’ conduct, the Court recognized that MSP Recovery and similar entities are engaged in legitimate business practices. These entities acquire claims through assignment and litigate in their own names, providing a mechanism to enforce rights that might otherwise go without redress.

Importantly, the Court reaffirmed that an assignee of a claim is a real party in interest, entitled to pursue recovery under both federal and state law.

A milestone for healthcare recovery and legal finance

This ruling provides a strong foundation for legal finance-backed healthcare recovery efforts in Maryland and beyond. As MSP Recovery noted in its own public statements, the decision "clears the path for the continued recovery of billions of dollars owed to Medicare Advantage Organizations" and sends a signal to primary insurers that non-compliance with federal reimbursement obligations carries consequences.

For legal finance providers, it is further affirmation that legal finance arrangements—particularly those involving claim assignments and contingency recoveries—are increasingly recognized by courts as a legitimate and essential component of the commercial litigation ecosystem.

A modern view of legal finance

By declining to revive archaic doctrines or impose rigid restrictions on assignment-based litigation models, the Maryland Supreme Court has taken a modern and commercially grounded approach—one that aligns with national trends toward embracing litigation finance as a tool for increasing access to justice and enabling sophisticated parties to manage legal risk.

The ruling places Maryland alongside a growing number of jurisdictions that have moved away from outdated concerns about “stirring up litigation,” and instead acknowledge the value that legal finance brings in enforcing statutory rights and holding wrongdoers to account.