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LifeWallet (NASDAQ: LIFW) announced its Q1 2024 financial results, marking its most successful quarter since going public. The company reported total revenue of $6.0 million, up from $4.0 million in Q1 2023. Operating loss was $130.2 million, improved from $140.6 million in the previous year, and net loss was $176.6 million or $1.26 per share.
Two major settlements were achieved with over 28 property and casualty insurers, which could enhance future claims recovery. The company has partnered with Palantir Technologies to streamline data sharing and claims recovery. LifeWallet’s comprehensive clearinghouse platform aims to revolutionize Medicare and Medicaid payment coordination.
Cash reserves totaled $12.0 million as of March 31, 2024. The company has other potential funding options, including a working capital facility and a standby equity purchase agreement with Yorkville.
Positive
- Revenue increased to $6.0 million in Q1 2024 from $4.0 million in Q1 2023.
- Achieved two comprehensive settlements with over 28 property and casualty insurers.
- Partnered with Palantir Technologies for data collaboration, enhancing claims recovery.
- Launched a comprehensive clearinghouse platform to improve Medicare and Medicaid payment coordination.
- Cash reserves stood at $12.0 million as of March 31, 2024.
Negative
- Operating loss was $130.2 million, though improved from $140.6 million in Q1 2023.
- Net loss amounted to $176.6 million or $1.26 per share.
- Liquidity concerns remain, with ongoing potential need to access debt and equity markets.
- The impact of the recent Eleventh Circuit ruling on the statute of limitations could reduce potentially recoverable claims by approximately $8.3 billion.
LifeWallet’s financial results for Q1 2024 provide several key insights for investors. The company reported a total revenue of 6.0 million, a significant increase from 4.0 million in the same period last year. However, the operating loss remains substantial at 130.2 million. This is a decrease from the previous year’s 140.6 million, but it still indicates ongoing challenges in managing operating costs.
Adjusted figures present a slightly better picture with an adjusted operating loss of 8.7 million. This excludes significant non-cash expenses such as claims amortization and share-based compensation. Additionally, the net loss for the quarter was 176.6 million, with an adjusted net loss of 8.5 million when excluding non-cash items.
The company’s cash position is also noteworthy. With 12.0 million in cash, LifeWallet has limited liquidity. The firm mentions other sources of potential funding, but the low cash reserve could be a concern for investors, suggesting a possible need for future capital raises either through debt or equity markets, which could dilute existing shareholders.
Short-term, the company’s significant losses and limited liquidity pose risks. However, long-term, the adjusted financials show efforts to control non-cash expenses, which might eventually lead to profitability if revenue growth continues.
LifeWallet’s recent settlements with over 28 property and casualty insurers (P&C Insurers) are important for understanding future revenue potential and legal strategy. These settlements not only resolve existing claims but also create a streamlined process for addressing future claims, thus offering a predictable revenue stream. The inclusion of data-sharing agreements with Palantir Technologies enhances LifeWallet’s ability to identify parties responsible for unreimbursed medical liens, leading to more efficient claim recoveries.
A significant legal consideration is the impact of the Eleventh Circuit’s decision regarding the statute of limitations for claims under the Medicare Secondary Payer Act. This ruling could potentially render some of LifeWallet’s claims unrecoverable, affecting the Paid Value of Potentially Recoverable Claims (PVPRC). LifeWallet is employing various legal strategies to counteract this, but the uncertainty remains a risk factor for investors.
The legal landscape is complex and evolving, with different jurisdictions potentially applying different statutes of limitations. Investors should be aware of the ongoing legal battles and their potential impact on LifeWallet’s financial health.
Short-term, the settlements provide immediate revenue opportunities. Long-term, the legal uncertainties could pose risks, but successful litigation strategies and expanded settlements could mitigate these risks.
LifeWallet’s strategic initiatives in data analytics and technology partnerships, particularly with Palantir Technologies, highlight the company’s innovative approach to addressing industry-wide issues in healthcare claims adjudication. The development of a comprehensive clearinghouse platform aims to improve coordination between healthcare entities and P&C Insurers, potentially reducing improper payments and enhancing payment integrity.
This platform’s universal applicability and ability to address various types of liens, including Medicare and Medicaid, could significantly enhance LifeWallet’s market position. The platform’s potential to streamline processes and reduce the administrative burden on healthcare providers and insurers represents a substantial value proposition.
Short-term, the successful implementation of this platform could attract more clients and partnerships. Long-term, this could establish LifeWallet as a key player in the healthcare data and reimbursement recovery sector, providing a competitive edge and sustainable revenue growth.
CORAL GABLES, Fla., May 15, 2024 (GLOBE NEWSWIRE) — MSP Recovery, Inc. d/b/a LifeWallet (NASDAQ: LIFW) (“LifeWallet,” or the “Company”), a Medicare, Medicaid, commercial, and secondary payer reimbursement recovery and technology leader, today announced financial results for the quarter ended March 31, 2024.
LifeWallet will host a conference call and live webcast to review the Company’s first quarter 2024 results for investors and analysts at 8:30 a.m. Eastern Time on Thursday, May 16, 2024. To access this call, we encourage you to pre-register using this link: LifeWallet Q1 2024 Earnings Pre-Registration.
A live webcast of the conference call will be accessible from the Investors section of LifeWallet’s website here: LifeWallet Investors.
A replay of the webcast will be archived and accessible here: LifeWallet Investors.
First Quarter Highlights
- The Company achieved its most successful quarter to date since becoming a publicly traded company, as it relates to claims recovery income, achieving two comprehensive settlements.
Comprehensive Settlements
- The Company announced two comprehensive settlements with more than 28 property and casualty insurers (“P&C Insurers”). In addition to settling existing claims, these settlements establish a process to collaboratively and timely resolve future claims that are owed to LifeWallet from the Company’s portfolio of assigned claims. Through collaborative data sharing, these settlements provide the Company with additional data that enhances its ability to identify the parties responsible for unreimbursed medical liens owned by LifeWallet. It also allows the Company to identify any recoverable claims for future business that pertain to the settling counterparties.
- The Company began implementing the terms of its March 2024 settlement by entering into a tri-party data collaboration agreement between LifeWallet, Palantir Technologies (NYSE: PLTR), and the settling counterparties. The collaboration agreement allows for data sharing in order to reconcile potential Medicare liabilities and existing owned claims. This is part of the Company’s initiative to maximize its Chase-to-Pay platform.
- In addition to the settlements described above, the Company continues to progress with settlement negotiations involving other P&C Insurers to resolve pending litigation under the same or similar framework. The Company’s goal is to bring additional P&C Insurers into a similar settlement structure, building a potential revenue stream that is diversified and predictable.
Utilizing First-Quarter Settlements to Identify Additional Recoveries
- By processing historical claims data received from settlements, LifeWallet has been able to match first and/or third-party claimants with specific claims that were paid by LifeWallet’s assignor clients using Medicare Trust funds. As a result, the Company has launched a targeted claims recovery process with third parties.
- The historical claims data enhances LifeWallet’s ability to discover liens and recover payments owed, more quickly than through litigation. It also enables LifeWallet to pursue a diversified number of entities that failed to pay liens or collected twice for the same bills, both from the insurer and LifeWallet’s assignor clients.
- LifeWallet believes additional value lies in the Company’s identification and collection of unreimbursed liens from these other responsible parties. To date, the Company has identified thousands of unreimbursed claims and initiated the collections process. Any additional revenue from these potential collections would be reflected in future filings.
Developing Business Solutions for Medicare Advantage Subrogation and More
- As previously announced, LifeWallet has developed a comprehensive clearinghouse platform with Palantir Technologies, utilizing Palantir Foundry as the foundation of the data ecosystem, enabling healthcare entities and P&C Insurers to efficiently coordinate benefits. The platform was built with LifeWallet’s unique healthcare data industry knowledge and Palantir’s advanced technology, which has universal applications, and can resolve all types of liens, not just Medicare and Medicaid.
- The clearinghouse directly connects healthcare entities and P&C Insurers, reducing the need to subrogate or investigate when or if a Medicare or Medicaid entity is a secondary payer. This system can substantially improve the Medicare and Medicaid payment coordination system, helping eliminate improper payments.
- LifeWallet Founder and CEO, John H. Ruiz, is confident in the Company’s outlook, stating: “We identified an industry-wide problem over a decade ago and these recent settlements prove the need for LifeWallet’s comprehensive solutions, which utilize data analytics and technological innovations to positively impact the U.S. healthcare system. By providing a first-of-its-kind coordination of a benefits clearinghouse, we are revolutionizing healthcare claims adjudication and payment integrity, while creating a repository of information that benefits patients, payers and providers. Our systems help discover historical unpaid medical liens and provide a platform for the reconciliation of future claims owned or processed by LifeWallet. This can be used by lawyers, providers, payers, and beneficiaries alike.”
First Quarter Financial Highlights
- Revenue: Total revenue for the three months ended March 31, 2024 was $6.0 million compared to $4.0 million for three months ended March 31, 2023, out of which $498 thousand pertained to claim recovery service income, which was terminated at the beginning of 2023.
- Operating loss: Operating loss for the three months ended March 31, 2024 was $130.2 million, compared with $140.6 million during three months ended March 31, 2023. Adjusted operating loss for the three months ended March 31, 2024 was $8.7 million, excluding non-cash claims amortization expense of $121.0 million and shared-based compensation of $469 thousand.
- Net loss: Net loss for the three months ended March 31, 2024 was $176.6 million and $157.7 million to controlling members, or net loss per share of $1.26 per share, based on 15,013,881 million weighted average shares outstanding. Adjusted net loss for the three months ended March 31, 2024 was $8.5 million, excluding the non-cash item noted above, change in fair value of warrant and derivative liabilities of $51.3 million, and $98.0 million of non-cash expenses related to paid in kind interest.
- Liquidity: As of March 31, 2024, cash totaled $12.0 million. The Company has in place other sources of potential funding, including its working capital facility and Yorkville standby equity purchase agreement. The Company continually monitors its liquidity, and may in the future access debt and equity markets as necessary in order to meet its ongoing liquidity needs.
Assigned Recovery Rights Claims Paid and Billed Value
The table below outlines the Company’s claims data for the most recent periods. The amounts represent data received from current and new assignors:
| $ in billions | Three Months Ended March 31, 2024 |
Year Ended December 31, 2023 |
Year Ended December 31, 2022 |
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| Paid Amount | $ | 370.0 | $ | 369.8 | $ | 374.8 | |||
| Paid Value of Potentially Recoverable Claims(2) | 86.6 | 88.9 | 89.6 | ||||||
| Billed Value of Potentially Recoverable Claims | 363.8 | 373.5 | 377.8 | ||||||
| Recovery Multiple | N/A(1)(3) | N/A(1) | N/A(1) | ||||||
| Penetration Status of Portfolio | 86.8 | % | 86.8 | % | 85.8 | % | |||
| (1) During the three months ended March 31, 2024, the Company has received total recoveries of $6.1 million with a recovery multiple of 1.53x. However, the settlement amounts do not provide a large enough sample to be statistically significant, and are therefore not shown in the table. (2) On August 10, 2022, the United States Court of Appeals, Eleventh Circuit held that a four-year statute of limitations period applies to certain claims brought under the Medicare Secondary Payer Act’s private cause of action, and that the limitations period begins to run on the date that the cause of action accrued. This opinion may render certain Claims held by the Company unrecoverable and may substantially reduce PVPRC and BVPRC as calculated. As our cases were filed at different times and in various jurisdictions, and prior to data matching with a defendant we are not able to accurately calculate the entirety of damages specific to a given defendant, we cannot calculate with certainty the impact of this ruling at this time. However, the Company has deployed several legal strategies (including but not limited to seeking to amend existing lawsuits in a manner that could allow claims to relate back to the filing date as well as asserting tolling arguments based on theories of fraudulent concealment) that would apply to tolling the applicable limitations period and minimizing any material effect on the overall collectability of its claim rights. In addition, the Eleventh Circuit decision applies only to district courts in the Eleventh Circuit. Many courts in other jurisdictions have applied other statutes of limitations to the private cause of action, including borrowing the three-year statute of limitations applicable to the government’s cause of action; and borrowing from the False Claims Act’s six-year period. The most recent decision on the issue from the District Court of Massachusetts, for example, applies the same statute of limitations as Eleventh Circuit, but expressly disagrees with the Eleventh Circuit’s application of the “accrual” rule and instead adopted the notice-based trigger that the company has always argued should apply. This would mean that the limitations period for unreported claims has not even begun to accrue. This is a complex legal issue that will continue to evolve in jurisdictions across the country. Nevertheless, if the application of the statute of limitations as determined by the Eleventh Circuit was applied to all Claims assigned to us, we estimate that the effect would be a reduction of PVPRC by approximately $8.3 billion. As set forth in our Risk Factors, PVPRC is based on a variety of factors. As such, this estimate is subject to change based on the variety of legal claims being litigated and statute of limitations tolling theories that apply. (3) The Recovery Multiple for the three months ended March 31, 2024 cannot yet be accurately determined as, pursuant recent settlement agreements, in addition to cash payments, we were assigned additional claims to pursue recoveries, for which recovery efforts are ongoing. |
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Non-GAAP Financial Measures
Additional information regarding the non-GAAP financial measures discussed in this release, including an explanation of these measures and how each is calculated, is included below under the heading “Non-GAAP Financial Measures.” A reconciliation of GAAP to non-GAAP financial measures has also been provided in the financial tables included below.
About LifeWallet
Founded in 2014 as MSP Recovery, LifeWallet 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 from responsible parties. LifeWallet innovates technologies and provides comprehensive solutions for multiple industries including healthcare, legal, and sports NIL. For more information, visit: LIFEWALLET.COM
Forward Looking Statements
This press release contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements may generally be identified by the use of words such as “anticipate,” “believe,” “expect,” “intend,” “plan” and “will” or, in each case, their negative, or other variations or comparable terminology. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. As a result, these statements are not guarantees of future performance or results and actual events may differ materially from those expressed in or suggested by the forward-looking statements. Any forward-looking statement made by MSP Recovery, Inc. d/b/a LifeWallet (NASDAQ: LIFW) herein speaks only as of the date made. New risks and uncertainties come up from time to time, and it is impossible for LIFW to predict or identify all such events or how they may affect it. LIFW has no obligation, and does not intend, to update any forward-looking statements after the date hereof, except as required by federal securities laws. Factors that could cause these differences include, but are not limited to, LIFW’s ability to capitalize on its assignment agreements and recover monies that were paid by the assignors; the inherent uncertainty surrounding settlement negotiations and/or litigation, including with respect to both the amount and timing of any such results; the validity of the assignments of claims to LIFW; the ability to successfully expand the scope of LIFW’s claims or obtain new data and claims from LIFW’s existing assignor base or otherwise; LIFW’s ability to innovate and develop new solutions, and whether those solutions will be adopted by LIFW’s existing and potential assignors; negative publicity concerning healthcare data analytics and payment accuracy; and those other factors included in LIFW’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other reports filed by it with the SEC. These statements constitute the Company’s cautionary statements under the Private Securities Litigation Reform Act of 1995.
Contact
Media:
ICR, Inc.
LifeWallet@icrinc.com
Investors:
Investors@LifeWallet.com
| MSP RECOVERY, INC. and Subsidiaries Consolidated Balance Sheets (Unaudited) |
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| March 31, | December 31, | |||||||
| (In thousands except per share amounts) | 2024 | 2023 | ||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | 11,973 | $ | 11,633 | ||||
| Accounts receivable | — | 217 | ||||||
| Affiliate receivable (1) | 1,242 | 1,188 | ||||||
| Prepaid expenses and other current assets (1) | 6,018 | 8,908 | ||||||
| Total current assets | 19,233 | 21,946 | ||||||
| Property and equipment, net | 4,886 | 4,911 | ||||||
| Intangible assets, net (2) | 3,011,882 | 3,132,796 | ||||||
| Right-of-use assets | 315 | 342 | ||||||
| Total assets | $ | 3,036,316 | $ | 3,159,995 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 11,507 | $ | 6,244 | ||||
| Affiliate payable (1) | 19,822 | 19,822 | ||||||
| Commission payable | 924 | 821 | ||||||
| Derivative liability | 190 | 37 | ||||||
| Warrant liability (1) | 33,316 | 268 | ||||||
| Other current liabilities (1) | 17,008 | 19,314 | ||||||
| Total current liabilities | 82,767 | 46,506 | ||||||
| Guaranty obligation (1) | 984,450 | 941,301 | ||||||
| Claims financing obligation and notes payable (1) | 575,021 | 548,276 | ||||||
| Lease liabilities | 204 | 235 | ||||||
| Loan from related parties (1) | 130,328 | 130,709 | ||||||
| Interest payable (1) | 20,047 | 73,839 | ||||||
| Total liabilities | $ | 1,792,817 | $ | 1,740,866 | ||||
| Commitments and contingencies (Note 13) | ||||||||
| Stockholders’ Equity (Deficit): | ||||||||
| Class A common stock, $0.0001 par value; 5,500,000,000 shares authorized; 15,636,062 and 14,659,794 issued and outstanding as of March 31, 2024 and December 31, 2023, respectively | $ | 2 | $ | 1 | ||||
| Class V common stock, $0.0001 par value; 3,250,000,000 shares authorized; 124,067,498 and 124,132,398 issued and outstanding as of March 31, 2024 and December 31, 2023, respectively | 12 | 12 | ||||||
| Additional paid-in capital | 367,079 | 357,928 | ||||||
| Accumulated deficit | (104,433 | ) | (85,551 | ) | ||||
| Total Stockholders’ Equity | $ | 262,660 | $ | 272,390 | ||||
| Non-controlling interest | 980,839 | 1,146,739 | ||||||
| Total equity | $ | 1,243,499 | $ | 1,419,129 | ||||
| Total liabilities and equity | $ | 3,036,316 | $ | 3,159,995 | ||||
| 1. As of March 31, 2024 and December 31, 2023, the total affiliate receivable, prepaid expenses, affiliate payable, other current liabilities, warrant liability, guaranty obligation and loan from related parties balances are with related parties. In addition, the prepaid expenses and other current assets, claims financing obligation and notes payable, and interest payable includes balances with related parties. See Note 15,Related Party Transactions, for further details. 2. As of March 31, 2024 and December 31, 2023, intangible assets, net included $2.1 billion and $2.2 billion, respectively, related to a consolidated VIE. See Note 9,Variable Interest Entities, for further details. |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
MSP RECOVERY, INC. and Subsidiaries Condensed Consolidated Statements of Operations (Unaudited) |
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| Three months ended March 31, | ||||||||
| (In thousands except per share amounts) | 2024 | 2023 | ||||||
| Claims recovery income | $ | 6,001 | $ | 3,497 | ||||
| Claims recovery service income | — | 498 | ||||||
| Total Claims Recovery | $ | 6,001 | $ | 3,995 | ||||
| Operating expenses | ||||||||
| Cost of claim recoveries | 1,673 | 1,021 | ||||||
| Claims amortization expense | 121,014 | 113,469 | ||||||
| General and administrative (1) | 5,566 | 6,855 | ||||||
| Professional fees | 4,420 | 9,728 | ||||||
| Professional fees – legal (2) | 3,467 | 8,551 | ||||||
| Allowance for credit losses | — | 5,000 | ||||||
| Depreciation and amortization | 67 | 9 | ||||||
| Total operating expenses | 136,207 | 144,633 | ||||||
| Operating Loss | $ | (130,206 | ) | $ | (140,638 | ) | ||
| Interest expense (3) | (97,953 | ) | (42,390 | ) | ||||
| Other income (expense), net | 252 | 6,627 | ||||||
| Change in fair value of warrant and derivative liabilities | 51,307 | 2,255 | ||||||
| Net loss before provision for income taxes | $ | (176,600 | ) | $ | (174,146 | ) | ||
| Provision for income tax expense | — | — | ||||||
| Net loss | $ | (176,600 | ) | $ | (174,146 | ) | ||
| Less: Net (income) loss attributable to non-controlling interests | 157,718 | 169,230 | ||||||
| Net loss attributable to MSP Recovery, Inc. | $ | (18,882 | ) | $ | (4,916 | ) | ||
| Basic and diluted weighted average shares outstanding, Class A Common Stock | 15,013,881 | 3,544,381 | ||||||
| Basic and diluted net income per share, Class A Common Stock | $ | (1.26 | ) | $ | (1.39 | ) | ||
- For the three months ended March 31, 2024 general and administrative expenses included $45.1 thousand of related party expenses. See Note 15, Related Party Transactions, for further details. No such related party expenses were present for the three months ended March 31, 2023.
- For the three months ended March 31, 2024 and 2023, Professional Fees—legal included $3.0 million and $4.2 million, respectively, of related party expenses related to the Law Firm. See Note 15, Related Party Transactions, for further details.
- For three months ended March 31, 2024 and 2023, interest expense included $73.4 million and $37.1 million, respectively, related to interest expense due to VRM. See Note 15, Related Party Transactions, for further details.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Non-GAAP Financial Measures
| MSP RECOVERY, INC. and Subsidiaries Non-GAAP Reconciliation |
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| Three Months Ended March 31, | ||||||||
| (In thousands) | 2024 | 2023 | ||||||
| GAAP Operating Loss | $ | (130,206 | ) | $ | (140,638 | ) | ||
| Professional fees paid in stock | 469 | 7,557 | ||||||
| Claims amortization expense | 121,014 | 113,469 | ||||||
| Allowance for credit losses | — | 5,000 | ||||||
| Adjusted Operating Loss | $ | (8,723 | ) | $ | (14,612 | ) | ||
| GAAP Net Loss | $ | (176,600 | ) | $ | (174,146 | ) | ||
| Professional fees paid in stock | 469 | 7,557 | ||||||
| Claims amortization expense | 121,014 | 113,469 | ||||||
| Allowance for credit losses | — | 5,000 | ||||||
| Interest expense | 97,953 | 42,390 | ||||||
| Change in fair value of warrant and derivative liabilities | (51,307 | ) | (2,255 | ) | ||||
| Adjusted Net Loss | $ | (8,471 | ) | $ | (7,985 | ) | ||
In addition to the financial measures prepared in accordance with GAAP, this press release also contains non-GAAP financial measures. We consider “adjusted net loss” and “adjusted operating loss” as non-GAAP financial measures and important indicators of performance and useful metrics for management and investors to evaluate our business’s ongoing operating performance on a consistent basis across reporting periods. We believe these measures provide useful information to investors. Adjusted net loss represents net loss adjusted for certain non-cash expenses set forth in the table above, and adjusted operating loss represents operating loss adjusted for certain non-cash expenses set forth in the table above.
FAQ
What were LifeWallet’s Q1 2024 earnings results?
LifeWallet reported total revenue of $6.0 million and an operating loss of $130.2 million for Q1 2024.
How did LifeWallet’s revenue perform in Q1 2024?
Revenue increased to $6.0 million in Q1 2024 compared to $4.0 million in Q1 2023.
What is the net loss for LifeWallet in Q1 2024?
LifeWallet reported a net loss of $176.6 million or $1.26 per share for Q1 2024.
Has LifeWallet achieved any significant settlements recently?
Yes, LifeWallet achieved two comprehensive settlements with over 28 property and casualty insurers in Q1 2024.
What are LifeWallet’s cash reserves as of March 31, 2024?
LifeWallet’s cash reserves totaled $12.0 million as of March 31, 2024.
What partnerships has LifeWallet formed for data collaboration?
LifeWallet partnered with Palantir Technologies to enhance data sharing and claims recovery.
How might recent legal rulings impact LifeWallet’s claims recovery?
The Eleventh Circuit ruling on the statute of limitations could reduce potentially recoverable claims by approximately $8.3 billion.
