The Florida lawyer and entrepreneur who reportedly made millions by disrupting the auto insurance industry’s Medicare set-aside practices is under federal investigation and may be in financial trouble, according to news reports.
John Ruiz, whose MSP Recovery, now known as LifeWallet, is the target of investigations by the U.S. Securities and Exchange Commission, the FBI and the IRS, according to multiple news outlets. The Miami Herald reported that, in response to a Freedom of Information Act request, the SEC said it could not turn over some records because of law enforcement activities.
The Herald also reported that LifeWallet, once valued at $32 billion, has lost much of its value since going public last year.
Ruiz, of Coral Gables, founded MSP Recovery in 2014. The company filed hundreds of lawsuits around the country against more than 300 auto insurers that MSP said had failed to recognize that Medicare was a secondary payer in many auto accidents and had not properly reported their own primary payer status. The omissions have left Medicare and Medicare Advantage insurance plans with billions of dollars in illegal costs, the MSP suits have charged.
Some of the tort actions alleged that 90% of no-fault auto insurers utilize the same software, produced by the Insurance Services Office, part of Verisk Analytics. It systematically and erroneously reports that Medicare should be the primary payer in many accidents, contrary to federal law, Ruiz told Insurance Journal in 2022.
“If they are aware of the flaws in the software and they’ve done nothing to fix it, it becomes intentional,” Ruiz said.
MSP has won a number of court decisions upholding its legal tactics. A year ago, the 11th U.S. Circuit Court of Appeals held that a lower court had erred when it dismissed a lawsuit brought by MSP Recovery against Metropolitan General Insurance Co. and its sister companies. The defendants are auto and liability insurers and subsidiaries of MetLife Inc.
About that same time, MSP rebranded part of its operations as LifeWallet and went public. Within days of the initial public offering, however, the stock price had fallen significantly, according to news reports.
The investigations may now be looking at how Ruiz represented the company to investors and in tax filings, the Herald reported. A former prosecutor told the newspaper that LifeWallet’s recent financial filings show multiple red flags: The firm was late in filing its annual report and acknowledged that some of its quarterly reports were not accurate.
Ruiz could not be reached for comment Monday and he declined to comment for the recent Herald news reports. In court filings in one Florida case, he said statements that LifeWallet was in poor financial condition were false.
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