MSP Recovery, Inc. (NASDAQ:MSPR) Q3 2022 Results Conference Call November 9, 2022 8:00 AM ET
Company Participants
Alexandra Plasencia – General Counsel
John Ruiz – Founder and CEO
Chris Miranda – Chief Information Officer
Calvin Hamstra – Chief Financial Officer
Conference Call Participants
Josh Siegler – Cantor Fitzgerald
Kyle Bowser – Lake Street
Ben Haner – Alliance Global
Operator
Good day, ladies and gentlemen. And welcome to the MSP Recovery’s 2022 Third Quarter Earnings Conference Call. You can view the video webcast presentation by accessing the link at the MSP recovery Web site under the investor events section [Operator Instructions]. As a reminder, this call may be recorded. I would now like to begin today’s earnings presentation.
Alexandra Plasencia
Good morning, everyone. And welcome to MSP Recovery’s third quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. Before we begin, please note that statements made during this presentation, which state the Company’s or management’s intentions, beliefs, expectations or predictions of the future are forward-looking statements within the meaning of the Private Securities Litigation Reform Act and actual results could differ in a material manner. Additional information about factors that could cause results to differ from those in the forward-looking statements is contained in the Company’s SEC filings. This includes, but is not limited to, risk factors contained MSP Recovery’s SEC filings and in the news release issued earlier today. A copy of these materials can be found in the Investors section at msprecovery.com. Non-GAAP financial measures are included in our comments today and in our presentation slides. The reconciliation of these non-GAAP measures to the corresponding GAAP measures is included at the end of the presentation slides, and can be found in the Investors section of the MSP Recovery Web site. The participants on today’s call will be Founder and CEO of MSP Recovery, John H. Ruiz; Chief Information Officer, Chris Miranda; and Chief Financial Officer, Calvin Hamstra.
I would now like to turn the call over to John H. Ruiz.
John Ruiz
Good morning, everyone. I’m John H. Ruiz, CEO of MSP Recovery. Welcome to our earnings call. Today, we will share MSP Recovery’s third quarter 2022 highlights, earnings and an overview of recoveries. I will provide some quarterly highlights while Chris Miranda, our CIO, will discuss data matching, and Calvin Hamstra, our CFO, will walk you through our quarterly financials. Now I’d like to discuss some of our third quarter highlights regarding MSP’s recovery efforts and the LifeWallet platform. As announced on October 13, 2022, MSP negotiated a $63 million debt reduction with Brickell Key Investments by entering into a new warrant agreement. In addition, this transaction is expected to save about $40 million in interest expense year-over-year until such time as recoveries would have otherwise covered the debt. On our recovery efforts, our paid value of potentially recoverable claims continues to grow. As of September 30th, we have $89.2 billion in paid value of potentially recoverable claims. This balance of potential recoverable claims exceeds our projections by three and one half times. We continue to make progress in our recovery efforts towards larger settlements. Notably, we recently settled an accident related case in which we collected $1.75 million at 2 times the recovery multiple and a Group Health Plan recovery for $1.15 million. The accident related settlement is consistent with our projected recovery multiple, and the Group Health Plan recovery represents a recovery that was not identified within our PVPRC. As mentioned previously, we continually seek to find new potential recovery paths and this represents a recovery that was never funneled or identified within our reported PVPRC, which is $89.2 billion. Unfunneled recoveries are not included in our projection of potential recoveries. This represents an important opportunity within our recovery rates, which can provide an upside to recoveries.
During our second quarter, MSP announced the implementation of a new strategy that would enable primary payers to make their required payments prior to engaging in litigation. Thus far, we have sent over 22,000 demand letters and have received payment on approximately 130 of those demands at a recovery multiple of 2.1 times. I will highlight responses and the process further in Slide 8 when I update on recoveries being sought. This quarter, we had some notable court orders. First, the Second Circuit affirmed a district court order that granted summary judgment in favor of Aetna, a Medicare Advantage organization, solidifying the right for a Medicare Advantage organization to sue primary payers under the MSP Act in the Second Circuit. MSP recovery filed an amicus brief in support of Aetna in that particular case. Further, the 11th Circuit ruled in favor of Tower Hill Prime Insurance Company and found that MSP’s claim in that case was barred by the statute of limitations. In that case, the 11th Circuit held that the applicable statute of limitations to a claim under the MSP private cause of action was four years from the date the primary payer violated the act. Lastly, MSP had a significant win before the 11th Circuit and MSP versus Metropolitan Insurance Company, in which the court held that MSP’s allegations within the complaint were sufficient to survive motions to dismiss, which are often filed by defendants in our cases. This decision solidifies our legal strategy and has paved the way for us to file a significant amount of cases in the remainder of 2022 and going forward. As it pertains to LifeWallet, we entered into a one time licensing agreement fee of $7.5 million and then a $1 million fee per year in servicing for 2023. We also announced the Formation of LifeWallet Legal Referral Services. We expect to roll out the legal referral services between the end of 2022 and the first quarter of 2023.
I want to take a moment to highlight some factors significant to our continued growth. Even though we started 2022, having exceeded our projected value of potentially recoverable claims by more than 3 times at a figure of $86.6 billion as opposed to the expected $21 billion, during 2022, we continue to grow with new [assignor] clients as well as new recovery rights assigned by existing [assignor] clients. During 2022, 89% of our growth and potentially recoverable rights came from existing [assignor] clients. As we have stated previously, we are engaged in data matching with over 10 auto insurance carriers. Through this process, we have identified over $5 billion in possible accident related treatments paid by our [assignor] clients. During the quarter via litigation settlements, we received $1.9 million in recoveries at 2.1 times recovery multiple. Chris Miranda, our CIO, will provide a presentation with an overview of data matching. We believe data matching is an important tool in developing recoveries to identify specific recovery rates. In 2022, we deployed a new strategy utilizing demand letters that will enable primary payers to make required payments outside of the purview of litigation. To date, we have sent out over 22,000 demand letters. We have already received over 130 payments at a recovery multiple of 2.1 times with the first party liability claims at 1.8 times and the third party liability claims at 4.4 times. Of the 22,000 demand letters, we have only received 3,342 responses. The remaining are still pending. Most of the replies simply requested additional information from MSP in order to process these claims.
During the nine months ended September 30, 2022, through consolidated, unconsolidated and affiliate entities of MSP, MSP reported $7.9 million of claim recovery income. Of that $7.9 million in claim recovery income, 51% or $4 million of those recoveries were from previously identified recovery opportunities as represented within our paid value of potentially recoverable claims. The remaining 49% of our recoveries came from recoveries that had not been previously identified in the paid value of potentially recoverable claims. We believe this is significant as it highlights the upside in our recoveries. As noted in this table, the initial recoveries are above our projected recovery multiple and including these unfunneled recoveries, our overall recovery multiple would be 3.7 times the PVPRC. Although, we have not yet publicized an overall recovery multiple in our KPIs at this time, our initial recovery efforts are above our projected figures. The 2022 guidance was developed as part of our business combination. As of September 30, 2022 we surpassed our 2022 guidance as it relates to the paid value of potentially recoverable claims by 3.5 times the previous projection. Our revenue guidance is dependent on the completion of data matching and achieving settlements in our cases. We feel comfortable that there is progress being made toward meaningful settlements in our recovery efforts. For our 2022 guidance with respect to total gross recoveries, we expected total gross recoveries to be approximately $992 million.
While we anticipate that the amount of those total gross recoveries will be achieved due to various factors, including but not limited to, cases that have been appealed, we expect that a portion of those recoveries may spill over onto 2023. However, unlike many other businesses, because recovery rights are liquidated damages, which is an amount that is known as it relates to the amount that is being claimed, these potential recoveries pursuant to law accrue interest. Because of the multiple being achieved, the interest rate would likely be 2.11 times the legal rate of interest as the interest is calculated from the collected amount versus the PVPRC amount. The guidance provided was and is an estimate based on management’s current knowledge and various assumptions. The nature of the company’s business and the timing and amount of total gross recoveries that will be achieved are inherently unpredictable and the company cannot provide assurances regarding the timing of or the amount of total gross recoveries that will ultimately be achieved.
Now I’d like to turn things over to Chris Miranda, our CIO, to explain the process of data matching.
Chris Miranda
Thank you, John. MSP Recovery regularly data matches with primary payers through both court orders and party agreements. Deposition testimony reveals that primary payers lack the data elements to comply with federally mandated Section 111 reporting requirements. MSP Recovery’s data and experience demonstrate that primary payers report less than 10% of the time, which is why data matching is a critical component in maximizing the identification of reimbursements. Data matching is the association of a record in one data set with a record in another data set. When both sets have consistent unique identifiers such as social security numbers, certain techniques are used but oftentimes those key identifiers are missing, in which case additional methods have to be employed. MSP Recovery has developed data matching techniques, which take into consideration missing or fragmented data sets and other variables, whether they be human error, such as typographical errors, unknowns or other invalid entries, or the differences in variations of data storage. MSP utilizes numerous data matching techniques, both deterministic and probabilistic, which have been tested, including techniques utilized by the Centers for Medicare & Medicaid Services amongst others. Unlike the data relied on by CMS, data matching provides a direct pipeline to primary payers that is not reliant on voluntary reporting by responsible parties. This has allowed MSP to discover a significant amount of previously unidentified recoveries.
The process of data matching between two data sets at the highest level involves the following, producing, inspecting and cleaning, prepping, applying the algorithms and reviewing and exchanging the results. All of the steps in this process are automated, allowing for maximized speed, efficiency and scalability. Currently, MSP utilizes 76 different data matching techniques, which have been developed in collaboration with primary payers through prior experience and testing that has improved over time. The process for claims submission and review includes examination in which the parties evaluate the results and collect key data points of interest, such as payments rendered and the policy limits. Then there’s an exchange of valuable information, a determination of the matches at issue, an exchange of claims data, a reconciliation of payments and the resolution of any disputes. To date, MSP Recovery has engaged in data matching with over 13 different primary payers, representing approximately 28% of the addressable auto liability market. These primary payers include some of the nation’s largest auto insurers. This process has yielded hundreds of thousands of potentially recoverable instances previously not identified through other methods, putting MSP in a unique position to facilitate meaningful and effective settlements on behalf of its healthcare clients.
I’ll now turn it over to our Chief Financial Officer, Calvin Hamstra.
Calvin Hamstra
Thank you, Chris. Good morning, everyone. I’ll be giving a brief overview of our quarter three 2022 financials. To start, I’d like to cover some highlights of our financials for the quarter. As noted previously, our management team was able to renegotiate debt that resulted in a gain of $63 million for the quarter. Not only does this clean up our balance sheet, but also will reduce interest expense that would’ve been incurred by approximately $40 million per year. On the asset side, we had non-cash amortization on our $2.1 billion of intangible assets of $66 million for the quarter. This reduction to assets was offset by purchases of intangible assets of $48 million during the quarter. These purchases continue to build on our unique portfolio of claim assets and will continue to build our amount of potentially recoverable claims. Our income statement for the period again has the gain on debt extinguishment, and we are also starting to see claims recovery income increase. While still minimal compared to our overall potential recoveries from our assets, the recoveries from the quarter did show upside as the recovery multiple was above our projection, and also noted previously we obtained recoveries that were outside of our funneled potential recovery amounts. Many of the drivers on the expense side were non-cash items, such as claims amortization and paid in kind interest. But for the interest, as noted, it will be reduced in the fourth quarter as part of the debt reduction.
In order to reiterate and better describe the impact of these assets, we are providing a breakdown of our revenue streams and how these would be recognized. First, for claims recovery income, this is recognized through ASC 450 or the gained contingency model. This means that the company doesn’t recognize revenue on these recoveries until there is a settlement or cash has been received. This method requires a known amount and timing before recognition. We have outlined in the table the amount recognized under this method for both the three and nine months ended September 30, 2022. We have also outlined claims recovery income that has been achieved in portfolios that aren’t recognized in the company’s financial statements, as these are not currently held by MSP but that MSP has rights to future recoveries if certain thresholds are met. In addition, we have outlined the recoveries being sought under this recognition method. This includes the paid amount shown in Slide 8 for accident related claims of greater than $5.3 billion, fraud and misconduct claims of nearly $5.3 billion and group health plan claims of $2 million. Next, the company also recognizes revenue through claims recovery service income. This is recognized through ASC 606 and is recognized as performance obligations are completed. For the quarter and year to date, this is equated to approximately $5.7 million and $17.8 million of revenue. We anticipate through a licensing agreement that has been executed to have an additional $7.5 million in revenue when the performance obligations are complete on this agreement.
Similar to the prior quarter, in order to help look past some of the noise and the financials related to the business combination, we have highlighted the one time or non-cash items that are flowing through the financial statements. This is a non-GAAP measure, but we feel it is important in order to understand what we would anticipate in expenses going forward. Within the income statement for the three months ended September 30, 2022, there were one time non-cash items related to changes in the fair value of warrants and derivative liabilities related to the Cantor facility, which was disclosed in previous filings of $2.7 million and non-cash items for the period related to the claims amortization expense, gain on debt extinguishment and paid in kind interest. For the nine months ended September 30, 2022, there were one time non-cash items related to a share grant to non-employees of $20.1 million and changes in the fair value of warrants and derivative liabilities related to the Cantor facility, which was disclosed in previous filings of $11.7 million. These, along with the one time items noted, totaled $13.4 million for the three months and $95.7 million for the nine months. Excluding these one time and non-cash items, our net loss was approximately $13.7 million for the three months and approximately $22.4 million for the nine months.
Next, I’d like to provide the overall balance sheet. Just to highlight here, our non-current liabilities decreased from $348.5 million as of June 30, 2022 to $298.1 million as of September 30, 2022. While we continue to see growth in the historical claims held within the intangible assets and investment in rights to claim recovery cash flows, our management team continues to develop our Chase to Pay platform through LifeWallet that will allow us to address the issues in billing noted in our historical claims real time. Addressing these billing issues as they happen will not only reduce the expenses, time and litigation costs to require to collect on these claims, but will also provide a revenue stream that is more consistent and predictable. On the income statement, as previously noted, the main drivers of our quarter and year to date losses are one time or non-cash. Much of the continuing costs outside of these non-cash items are expenses related to maximizing the value and timing of realization on our historical claims and as mentioned previously, the development of the additional revenue sources such as Life Wallet. We continue to be laser focused on not only extracting the value from our historical portfolio, but growing these assets through acquisition of new data. At the same time, as we push these assets closer to realization of cash flows, we are complementing this effort with the Chase to Pay or LifeWallet platform that could be a true industry disruptor when it comes to healthcare data. We anticipate both of these revenue streams to begin to provide tangible returns and push strong cash flows from operations as we reach the end of 2022 and into 2023. Thank you all for joining us today.
Question-and-Answer Session
Operator
Thank you [Operator Instructions]. Our first question comes from Josh Siegler with Cantor.
Josh Siegler
I’d love some additional color on LifeWallet, specifically how is the adoption trended over the quarter. Can you provide some more color around the recent new client wins?
John Ruiz
So LifeWallet was developed because as we found all these recovery opportunities, and this dated back all the way to 2014, we developed a system called Claims to Med, which essentially provides the transition from what I call somewhat of hieroglyphics, very difficult to understand claims data, if anybody’s ever received something from an insurance company, it’ll tell you what the diagnosis code was and the CPT code, and it was difficult for even our internal teams to read that. So what we did is we transitioned and created our own system to be able to provide our staff with the ability to read through these claim records quickly and identify what essentially provided to be the historical records of a person and what happened. If you look at what we’ve done as it relates to our particular business, we’ve gone through all of the diagnosis codes. They changed from ICD 9s to ICD 10s a couple years ago. And what we do is that we sort of flag the ones that are atypical or asymptomatic, people that don’t normally have fractures unless there’s an event, and obviously we carve out for osteoarthritis and things like that. But the bigger picture that LifeWallet provides is that there’s a disconnect in the entire medical industry, and we have very good doctors, very good medications, and very good medical devices. But the healthcare system has a horrible way of ingesting data, highlighting exactly what should be absorbed, normalized and how that connects one with the other.
So if you think sort of like more from a layperson’s perspective, imagine getting a bill and that bill has an invoice number with line items on it, that’s the bill that a payer receives. When that payer adjudicates that bill, they have to adjudicate the number of the bill with the line items. Every line item represents a different reason why payment can and won’t be made. What LifeWallet does with our new biometric technology, as well as blockchain technology is that we are able to, and according to experts that we’ve discussed with, specifically the Polygon platform, we now have the fastest blockchain system in the world as it relates to medical bills and claims of this nature. What LifeWallet does is in a real-time process, when a person goes to the doctor, because we connect through what’s called APIs, we are able to sort of intercept that encounter by that patient immediately at the same time, we can identify who the proper payer is supposed to be. Our business primarily focuses around proper payers. Obviously, since we’ve indicated and prevailed that Medicare is a payer last resort as well as Medicaid, the real question becomes who is supposed to pay a bill, at what rate and at what interval. LifeWallet does this sort of real time as opposed to this historical fashion of receiving flat files.
And what it does essentially is we intercept the 837 form, that’s probably a lot more technical than anybody wants to listen to, but if somebody’s really taking down notes, we intercept the 835, we’re able to blockchain that, we then receive the — we block — the 837 — and then we get the adjudication, which is the 835, we piece them together and we’re able to put the smart contracts of payers, we’re able to put the smart contracts of primary payers, which are the auto insurers as opposed to the Medicare Advantage organizations. And also, this prevents fraud because our biometric technology embeds the 2,200 points that we capture of a patient together with the 837 bill. A lot of fraud that occurs in the United States of America is as a result of doctors or other medical facilities that submit bills when the patient actually hasn’t received the treatment. If you look at the details of Medicare, they review two tenths of 1% of bills. So most bills go undetected. So what LifeWallet does to kind of recapture and tell you why we know that this is so powerful is that the LifeWallet processing system does away with waste, it does away with fraud, it identifies a proper payer a much quicker, it allows for the providers and payers to more quickly identify what their actual responsibility is. And instead of going through this historical analysis, which is what we’ve been doing for many, many years, we now have that — as a real time solution.
And then you asked another question. So all of our clients, we have many of them that are right now in the process of reviewing it, some pilot programs have been established like with Cano Health, some others have already paid licensing fees. We feel that this is a very powerful tool. And moving forward, we believe that our blockchain technology, because it’s real time and everything gets captured, it’ll fix a lot of the data issues. So we feel that the blockchain technology, together with LifeWallet, is a solution that would apply to patients, providers, as well as payers, and accelerates the ability of MSP to identify recoveries much quicker. So that’s essentially the nuts and bolts of LifeWallet. If you have any follow-up, I’m happy to respond.
Josh Siegler
And separately, I know you touched on this in your prepared remarks and of course it’s still early stages. But I was curious if you’re starting to see any initial signs of success on the demand letter initiative? Is it working as intended and how does that transform the business as far as it comes to predictable revenue streams?
John Ruiz
So one of the nuances that I believe is important to capture in what we do, and I’ll give it to you as an example, assume that you had a hundred apples and that you claim that those hundred apples should be paid. And you’re dealing with an opposite party that you’re claiming that other party owes you for those hundred apples. Because of the accounting treatment that we have under 606 and under gain contingency, we cannot show any recoveries until such time as we have a complete resolution of all of those particular apples that will or will not be paid, and everything needs to have been signed off on. That presents, in our opinion, sort of a very unique situation where we know that out of the hundred apples, we’ve already solidified a certain number of those that are payable and even the corresponding party may as well. The data matching process, which Chris Miranda spoke about, has made significant progress. In fact, just yesterday we received a lot of the information that we were waiting for some of the bigger, bigger carriers. This gives us a vantage point as to the future revenues. Anybody that’s ever been involved in litigation knows that mammoth cases take a long time. A lot of times you see these as bell curved recoveries. So I’ve been in litigation for 31 years. If you look at any litigation historically, whether it’s asbestos, whether it’s now the Roundup case, a lot of these cases that historically we’ve seen, even opioids that you see now, some of these cases take a while before they settle.
Our ability to see and have the insight into what the connectivity is between the claims we’ve paid and those that are owed by primary payers has increased significantly. That is the reason why we can give better projections. And obviously what we’re looking for, which I think we’re making great strides in, is to sort of smooth out how we receive revenue and make it more consistent and more predictable. So management is well aware of sort of — I’m not going to say it’s a necessity, but something that the market would want to know to be able to establish a more consistent view and pattern as it relates to revenues. From our vantage point, because of one of the particular data points that we described, and I think this becomes very important and even the question that you asked, is that if you look at the recoveries we’ve made thus far, 51% of those recoveries were ones that we were able to identify and detect by reviewing data and using our protocols. An alarming 49%, in a very good way, which was to my surprise, were from recoveries that we had not detected and were unable to detect. And the reason why those are unable to be detected and the LifeWallet process may give us more clarity with that is because when we look at data, we look at fields and we look at populated data cells within those fields. Only that which comes within the data can we then create rules and algorithms to detect.
So for example, if somebody was exposed to Roundup, there is no claim line field that will provide us with the basis that somebody was exposed to Roundup. However, there is a claim line field that somebody may have taken a particular medication. So if I compared a medication causing cancer with Roundup causing cancer, I would be able to detect the medication, but I would not be able to detect the Roundup first time around. And these are cases, for example, with medical malpractice, with smokers and cases, talcum powder, cases that we detect because people are pursuing them and then they come back to us for purposes of resolving those [needs].
Operator
And our next question comes from Kyle Bowser with Lake Street.
Kyle Bowser
So maybe the first one on LifeWallet. Clearly is becoming an important new intermediary or clearing house, if you will, to really help keep the primary payers honest. How have you been driving adoption with this tool and how do you and kind of the commercialization team size up the market here initially?
John Ruiz
So that’s a very interesting question, because we have found that the understanding of LifeWallet is a much quicker process than explaining what MSP is. Therefore, it’s gotten incredible, incredible attention. I don’t think that there’s any entity, whether it’s a provider, a hospital or a payer that isn’t essentially overwhelmed with positiveness as to what LifeWallet does. We find that it’s very unique in the marketplace. And I think the reason for that is because we believe from an MSP/LifeWallet perspective that there’s nobody in the country that unites the understanding of data, the understanding of healthcare, together with legal components. We sit in a very unique position from the point that we’re looking at health claim data, but we’re matching it with legal liabilities, together with data analysts, that are looking to detect what the flaws were. When we look at the flaws, like they always say garbage in, garbage out. Well, many of the systems is not — most of the systems simply try to correct some of what I would call garbage data instead of attacking the very essence of it.
So for example, we before would take flat files. We are now changing that and asking for raw data, which are these 837 and 835s. What that does is we’re able to detect if the health plans or anybody in the industry made a mistake, and we have found an enormous number of mistakes. From a statistical point of view, we know that coding is not being done properly. Ironically, one of the ways that our system works is that it captures the diagnosis code well, the majority of the diagnosis codes are not captured properly. And one of the reasons for that is that the Medicare Advantage world, their revenue stream comes from 80 different medical conditions. So to give you an example, if somebody has a fractured ankle as a result of a slip and fall, those types of diagnosis generally are pushed back, because that is not one of the basis for which a Medicare Advantage would collect more premium for their beneficiary. So the system is sort of lopsided. You would want to detect if the person had an accident or not, because your recovery multiple’s going to be much higher, but the industry has been trained to do it differently. People have also been addressed in the nation, and if you listen to the commercials of any auto insurer, what is it that they push? If you don’t have a claim, you’re going to get a better rate. So when the Medicare beneficiary goes to use their insurance, they’re going to pull out their Medicare card as opposed to their car insurance. And that’s where these situations occur.
That to us is understanding granularly the entire process and issue in the entire marketplace. We believe that we’ve built the tools between blockchain technology, the LifeWallet process, and there’s actually a lot more that goes into the LifeWallet process. We’ve built a very unique ecosystem that is able to absorb police reports, fire rescue reports, information on OTCs, which is over the counter medications or natural substances that people take. So we’re starting to grow that in a way that allows us to detect more. We also now establish LifeWallet legal referral systems. We’ve applied to the different states that require approval before you can start with the LifeWallet referral system. In Florida, we’ve gotten approval, there’s only about three or four states that require that. The rest you can actually start marketing towards that, because we have very good relationships and contacts with lawyers all over the country. Our platform will be that lawyers will pay us to market, process all their cases and have the very unique system to resolve liens, to get them information on their particular accident cases, and that’ll work for auto cases, slip and falls, workers’ compensation, medical devices, pharmaceutical products, everything and anything.
Look, because of my experience over 31 years practicing law, and I used to do a huge amount of auto accident cases, and I’ve been involved in just about every major case. The last one was the tower collapse cases here in Miami Beach in a very unfortunate situation. I think most people know about that. We’ve been able to understand what our collective team, between medical team that we have, with our Chief Medical Officers, with our data scientists and specialists, we understand everything that needs to happen the right way for all this to be solved. And I think we’ve made a huge impact on the market to go back. I know it’s a little long winded, but your initial question was how do I see LifeWallet panning out. We have enormous amount of people and providers that want the product. Obviously, it takes a while to install it, to be able to walk through all the HIPAA concerns with data and data breaches and APIs. But we feel that this — rest of this quarter will make some impact fourth quarter, and then for next year, I think, that’s going to be a big part of what we do, and that’s just going to grow our new cases or new recoverability together with revenue from other streams.
Kyle Bowser
And then my follow-up, more broadly, I guess, as the possibility of a recession looms. How might, if at all, the claims rights value become impacted? And I’m thinking in particular about collectability during a market turned down or downturn. Do we anticipate things changing at all as a result of that?
John Ruiz
That’s actually a great question. We’ve circulated that in turn, the one thing about legal cases and healthcare that doesn’t get better or worse, whether the economy’s booming or doing bad or interest rates are higher or lower. The one thing that it could do in a positive way is when interest rates are higher, the interest rate that states and/or the federal government uses changes depending on the interest rate that’s out in the marketplace. So I think that that would have a positive effect from a liquidity — liquidated damages sort of claim that can grow by interest. Our business is pretty much, to the extent from our view, whether it’s recession proof or proof versus a bull market, the market could be doing spectacular, we’re not going to do any better. The market could be doing terrible and we’re not going to do any better, not from a share price perspective, because that’s a different set of tools that people look into, I’m talking about from a pure business. Legal claims are legal claims. These claims it’s black and white. You’re either owed it or you’re not. Most of the claims that we have primarily deal with law, meaning black letter law as opposed to factual differences. Yes. Can there be discrepancies as to whether an insurer takes a position that a particular claim from a patient is payable or not? It could be. But 99% of all claims in the United States of America get paid without contestation. If that wasn’t the case, it’d be bottleneck.
So the truth of the matter is that as we look for these real time flows, it gets better and better, which is the reason why we are very happy and comfortable with what we’re doing. And I think we really have an internal team. And one of the things that I can say is that we’ve met, I mean probably just about everybody in the country that has systems similar to what we would have. And this may sound a little conceited on our part, but our system blows every other system that I’ve ever seen. And I think the reason why that’s true is because we have that legal advantage of understanding and having tried cases as it relates to what happens in a court of law and the level of detail that one would need. And obviously, we’ve been very successful at the appellate court and being able to show that the law provides the support for all the claims that we’ve been pushing. I don’t know the exact record, but I think we may have lost maybe two and one, eight or nine, I don’t know the exact number, but it’s significantly higher. And the ones that we’ve lost, one of them was you can’t use the MSP law to do what you’re trying to do, which doesn’t really change the substantive nature of it. And the other one was a statute of limitations, which we don’t feel has a very big impact of any at all because statute of limitations has to do with when you file lawsuit, and our lawsuits have been filed from way before. So it doesn’t really impact our inventory of collectable or approachable claims to a large degree.
Operator
[Operator Instructions] Our next question comes from Ben Haner with Alliance Global.
Ben Haner
First for me on LifeWallet and the lawyer referral information services offering. Can you kind of give us a little bit more color there? Kind of an potential, an example of what an agreement might look like, the economics for you guys, who are the typical decision makers you’re selling to, how long do they take to make a decision? You know, that kind of funneled — those sort of funneled type questions?
John Ruiz
So we have Puerto Rico and then we have all the states within the United States. And obviously there’s lawyers everywhere, I think people are probably well aware that lawyer advertising is very significant in every state. And if anybody’s been watching any TV at all, you’ve probably heard a commercial on Camp Lejeune, if not once, a hundred times. These lawyers spend probably over a billion dollars a year marketing, if not more. And the way that they market is still a very historical sort of old fashioned way. Because of the tools that we have to be able to ingest potential new cases, siphon that information and the data, we provide these lawyers with the ability to reduce their labor costs substantially. We also provide the platform that we’ve been able to achieve and almost ironically because of the name, image and lightness platform, we’ve received national recognition for the LifeWallet app, and that tool in specific. So everybody in the country that follows college sports knows what LifeWallet is. So we think we’ve done a fantastic job in branding. So much so that I think that was one of the pivotal points in getting some of these agreements that we’ve gotten for people to actually pay licensing fees for LifeWallet.
The way that the LifeWallet referral services system works is we are dividing Puerto Rico and we’re dividing the entire states within and obviously, all 50 states, to have different sort of areas of concentration of lawyers. We’re starting off with the personal injury side, car accidents, slip and falls, workers’ compensation, medical devices and pharmaceuticals, antitrust cases. And all of these lawyers that are currently advertising, we’re pretty confident we can raise a million or more per state per month in revenue once this is all up and running. We have a significant number of lawyers that we already work with, because all these major multi-district litigation cases, all these lawyers end up receiving thousands and thousands of cases. And those cases are received because of the marketing, because we’re able to market and brand as one brand, we’re already experiencing an influx of calls and contacts for cases. We also opened up some channels already where we answer legal questions for individuals of all different types and sizes. Historically I did, you know, Spanish speaking program for 13 years live. And at the top of the market, in 2009, we did 2.8 million calls. That was only in Dayton, Broward County. We know that we can expand that substantially. So I think it’s going to take, you know, some time in terms of getting all these law firms on board. But law firms, if you get them a result, which we have the inventory to bring in, they’ll pay because you give them marketing, you give them the tools.
And we also have a system that we created that’s about 20 years old now, it stemmed away from before MSP, that lets you really process the cases in a way that no other system exists from a litigation standpoint, from lean resolution, from being able to understand medical records, medical claims, everything that one would need to try to be able to resolve a case. A lot of these larger cases require plaintiff fact sheets, right, and then resolution of that. That requires many, many times for law firms to have hundreds of employees. And we can reduce that labor cost substantially, increase efficiency and resolve a lot of the issues that people have, which the clients that have these types of cases become anxious in getting information. And that’s what we strive to do, process information and have it at people’s fingertips with dashboards and other ways. You all may know already that we’re working closely with Palantir, we’re working off of a founding platform, which we feed them the information, and they’re probably the most revolutionary in the marketplace from what we found. So we have all these connections. A gentleman that piece together a blockchain technology is Marco DeMello, he comes from Microsoft. He was one of the core people creating Hotmail. And he has one of the most downloaded security apps probably ever, which is over 60 million. So we feel we have the right people in place and we keep building upon that.
Ben Haner
And then on the economics of it though. Are you charging kind a monthly fee plus some of the advertising that gets done, or how’s the contract structure?
John Ruiz
It is. So we’re looking at some major firms. These firms will pay upwards of a $100,000 a month per firm to be on this platform, because it provides a lot of tools. But mainly, when I was doing this with my own law firm back 12, 13 years ago, I was spending $600,000, $700,000 a month in marketing. So it’s not foreign to any of these law firms to spend hundreds of thousands of dollars a month. I mean, that’s within their budget already. So we don’t think that’s a hard sale. It becomes an easy sale for us, because we give them a lot more than what they otherwise get by doing it in the way that they’re doing it. And not only do they get a lot more, but I think the spread, right, between their overhead and what they bring in from a gross revenue perspective becomes bigger, because we’re going to be able to really save them on the expense side substantially.
Ben Haner
And then just lastly from me on the mechanics of intercepting the 837 form. Where do you guys need to plug in there? I mean, do you need to be connected to the healthcare provider, as well as the insurer, or is the patient having the [indiscernible] enough and being plugged into their provider? How does that mechanically work and what access do you need there to intercept that form?
John Ruiz
So that’s a great question, very technical one. But I can answer it, because together with our CIO, we pretty much talk about this every day and develop strategies around it with the rest of our IT team. So the goal obviously is to get the raw data, right? We don’t want something that was processed by somebody else, because that’s where we have found that when you do that, and this is the best way to describe it, if you had a bunch of ingredients to cook something, we don’t want it cooked. We want the raw ingredients so that we can cook it ourselves. So we’re going to intercept that, either before it gets to the payer and then the 835, which is what comes as the adjudication from the payer. So we can tap into either the provider, because the provider’s sending and receiving, the payer’s receiving and sending. But at the end of the day, it’s the same information. The beauty of it is that as it grows, if you get the provider and you get the payer, you can actually intercept issues that they either have when they’re sending stuff out. And obviously, this is very beneficial for patients because one of the laws that was developed recently was transparency for the patient as it relates to what am I being billed for, what my policy cover, those kinds of things, why am I paying X copay? And those things also become very transparent for the patient.
It is not a difficult thing to do. You just need to obviously have the right documentation like NDAs, BAAs, which is Business Associate Agreement, so that we have the protection of the healthcare data. And then as this continues to occur, it becomes easier also for people that are trying to utilize their health records, from the portability point of view. So we can transport information from payer to provider and patient and otherwise in a much quicker way than is happening right now in the industry. We also have tackled the registration process. All of us have sat either ourselves or with a loved one or with a friend at the doctor’s office filling out these forms and handwriting them. The transition between that process and taking it to the people that are entering it into a system is where a lot of data errors occur. So if I asked anybody information about themselves, it is our view that the person knows more about themselves as far as first name, last name, date of birth, social security, where I live and where I’ve lived before. But they know, less than the doctor about their healthcare. If you ask the doctor, they know more about your healthcare, but they don’t know as much if they have the right information. Do they have the right social? Somebody may have taken it in the wrong way. Did you have an alias? And that’s the bigger problem in the — not just the healthcare industry, but in the data industry as a whole, which you have all these different databases with no relational tie-in.
We have fixed that because the biometrics is like a DNA or a fingerprint, that’s the — we’re transitioning all of our systems so that everybody uses biometrics. We have very unique biometrics. And that means that it’s not a picture so people don’t get scared, it’s 2,200 points that we store, and the system captures those 2,200 points and it knows if you’re a live person or if you’re faking the system with some other identification. That is the solution to data, in general, but it is definitely the solution to healthcare when you’re able to walk into the doctor’s office and with a 1080 camera, it’ll detect who you are right away and it knows who you are. And it can bring the medical records that you have to that doctor so that that doctor knows right away, that’s the reason why we develop this for first responders. So that if somebody calls 911 and rescue goes to you, they don’t know who you are right now. We take away that 20, 25 minute gap and what we call the golden hour to provide medical information for first responders to save lives or help reduce other injuries that may occur by not attending to that person quickly enough.
Operator
Thank you. I’m not showing any further questions. Ladies and gentlemen, thank you for participating in today’s conference. This concludes today’s program. You may now disconnect. Everyone, have a great day.
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