Allegedly Wrongful Denial of Insurance Policy Benefits Satisfies Commonality and Typicality Requirements for Class Action Treatment, and While Rule 23(b)(1) and (b)(2) Classes Would not be Certified, Louisiana Federal Court Holds that Rule 23(b)(3) Class Action Treatment was Warranted
Plaintiff filed a breach of contract class action against her health insurer arising out of the denial of insurance benefits allegedly due and owing under a cancer insurance policy. Doiron v. Conseco Health Ins. Co., 240 F.R.D. 247, 249 (M.D. La. 2007). The class action complaint alleged that the cancer policy required the insurer to pay benefits directly to the insured if certain terms and conditions of the policy were met. Id. Plaintiff’s husband was diagnosed with cancer in March 2001 and underwent treatment, but he died in December 2001. Plaintiff submitted documentation to the insurer, but it only paid a portion of the insured’s claim. Id. Plaintiff filed as a putative class action on the grounds that “she, and the members of the Sub-Classes she seeks to represent, were and will continue to be denied claims for benefits for certain charges they commonly and typically incurr(ed), and which claims Conseco consistently deny(ied), for their radiation treatment and/or chemotherapy treatment.” Id. Plaintiff moved the court to certify the lawsuit as a class action; defense attorneys objected to class action treatment insisting that case-by-case inquiries would be required, thus defeating commonality and typicality, and that none of the subparts of Rule 23(b) could be satisfied. The district court concluded that Rule 23(a) had been satisfied, and that a Rule 23(b)(3) class could be certified.
With respect to numerosity, defense conceded that the class consisted of at least 200 members, and the district court observed that in the Fifth Circuit a class of 100-150 members is generally deemed sufficient to satisfy the numerosity requirement; accordingly, the court found that Rule 239(a)(1) had been satisfied. Doiron, at 251.
With respect to commonality, plaintiff urged that the insurer engaged in a “common course of conduct” in that its corporate policy was “to deny charges for: office visits and consultations; treatment planning; treatment management; simulation; dosimetry; treatment devices; medical radiation physics; isodose plan; radiation special services; and supportive and protective drug charges, incurred as a part of the policyholder’s radiation treatment,” and that the insurer’s corporate policy also was “to deny claims submitted for all: office visits; medical supplies; solution charges; procedure charges; and supportive and protective drug charges, incurred as a part of a policyholder’s chemotherapy treatment.” Doiron, at 251. Among the “common issues of fact” were (1) each class member was diagnosed with cancer; (2) each class member received radiation or chemotherapy treatment; (3) each class member “incurred a named charge for their radiation (or chemotherapy) treatment and submitted charges to Conseco for payment under the Radiation/Chemotherapy Benefit provision of their ‘ZH’ policy;” and (4) the insurer denied the claims under the Radiation/Chemotherapy Benefits portion of the class members’ policies. Id. Common issues of law included whether insurer breached the insurance policy, the validity of the insurer’s affirmative defenses, the meaning of certain terms (viz., “chemotherapy treatment,” “radiation treatment” and “x-ray radiation treatment”) under the policy, and the scope of radiation and chemotherapy benefits available under the policy. Id.
Defense attorneys insisted that claims adjustments are unique to each individual claim for benefits, and that the factual issues presented in this case would require a case-by-case inquiry because “Different people may require different cancer treatment regimens so specific patient analysis will be required to determine the validity of each reimbursement.” Doiron, at 251-52. The defense further contested the existence of common issues of law, arguing that “review of the policy language is not enough and determinations must be made as to whether the claim was timely submitted, whether there was complete proof of loss, and whether the policyholder was eligible for the benefits.” Id., at 252. The district court disagreed with the defense because “the allegation is that Conseco’s policy was uniform in that it never paid for benefits for items such as office visits for radiation or chemotherapy treatment irrespective of the individual differences in the plaintiffs” and minor differences among the proposed class members does not preclude class certification. Id. In finding the commonality requirement satisfied, the court explained at page 252:
In this case, each member of the proposed class shares a common factual circumstance: they were allegedly denied benefit(s) for costs incurred as part of radiation and/or chemotherapy treatment. Further, the class members rely upon a common legal theory: the ZH policy required payment for certain costs associated with their radiation and chemotherapy treatment under the Radiation/Chemotherapy provision, yet these charges were and continue to be systematically denied by Conseco.
Based in large part on its commonality analysis, the district court easily concluded that plaintiff’s claims were typical of the claims by the class. Doiron, at 252-53. The federal court also concluded that plaintiff and her counsel would fairly and adequately represent the class, thereby satisfying Rule 23(a)(4), id., at 253.
Turning to Rule 23(b), plaintiff argued that a (b)(2) class could be certified because the class action complaint sought “declaratory relief determining the scope of coverage under the policies of insurance, and injunctive relief requiring Conseco to cease committing the wrongful acts complained of herein.” Doiron, at 253 and n.11. Defense attorneys argued that Rule 23(b)(2) did not apply because the class action primarily seeks monetary rather than injunctive relief. Id., at 253. The district court agreed with the defense because in the Fifth Circuit “‘monetary relief may be obtained in a (b)(2) class action so long as the predominant relief sought is injunctive or declaratory.’” Id., at 254 (quoting Allison v. Citgo Petroleum Corp., 151 F.3d 402, 411 (5th Cir. 1998)). The court found that while the class action complaint prayed for injunctive and declaratory relief, “this relief is only incidental to the monetary relief.” Doiron, at 254. Accordingly, the court refused to certify a (b)(2) class, id.
The court also refused to certify a (b)(1)(A) class – appropriate if “the prosecution of separate actions by or against individual members of the class would create a risk of inconsistent or varying adjudications with respect to individual members of the class which would establish incompatible standards of conduct for the party opposing the class,” FRCP Rule 23(b)(1)(A) – because the plaintiff provided “scant support” for the motion and because “any relief obtained would vary based on individual injuries and is not a class wide recovery.” Doiron, at 254-55. And the court refused to certify a (b)(1)(B) class – appropriate if the case presents the risk of “adjudications with respect to individual members of the class which would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests,” FRCP Rule 23(b)(1)(B). Id., at 255. As the defense argued, (b)(1)(B) class actions generally involve limited fund cases, where there may be insufficient funds to cover the claims of all class members if the actions are prosecuted individually. Id.
However, the district court agreed with plaintiff that a (b)(3) class action should be certified because the court agreed that common questions of law or fact predominate and that class action treatment would be superior to other methods of adjudication. Doiron, at 255-56. First, the court agreed with plaintiffs that the predominance test had been satisfied, holding that the common issues will be a “significant part” of the litigation. The federal court explained at page 256:
It is true that the proposed class is comprised of policyholders of varying ages who have been diagnosed with different types of cancer and who have accumulated various charges relating to radiation and/or chemotherapy treatment. However, the allegation made by the class is that irrespective of the type of cancer or demographics of the policyholder, the defendant had in place a company policy in which it denied payment for certain Chemotherapy and Radiation treatments. This court recognizes that some individuated issues exist. However, this court finds that the common issues are a significant part of the individual cases and therefore predominate.
Next, the district court found that the superiority requirement also had been satisfied, accepting plaintiff’s argument that absent class treatment “the potential exists for over one hundred individual suits that would each rely on identical proof of liability.” Doiron, at 256. The court held that “for reasons of fairness and judicial economy, a class action is the superior method of adjudicating these claims.” Id. Accordingly, the court certified a Rule 23(b)(3) class, id., at 257.