Alert June 27, 2012

Recent Health Care Action

Class of Health Care Providers Rejected for Lack of Common Proof That Claims Should Have Been Paid

The U.S. Court of Appeals for the Eleventh Circuit recently affirmed the denial of class certification in an action against State Farm. DWFII Corp. v. State Farm Mut. Auto. Ins. Co., 2012 U.S. App. LEXIS 6183 (11th Cir. Mar. 27, 2012). DWFII challenged, on behalf of a class of Florida health care providers, State Farm’s decisions concerning claims they had submitted for payment.

The Eleventh Circuit affirmed the denial of class certification on several grounds. First, it found that DWFII could not satisfy the typicality requirement of Rule 23(a) because even if State Farm had wrongly failed to pay the entire amount of the invoices on the challenged grounds, each medical service provider would still have to demonstrate an entitlement to reimbursement for the disputed charges, which would require individualized fact finding. For instance, a class member would have to show that the benefits of the insurance plan had not been exhausted at the time of the procedure, the recipient of the medical services had valid insurance coverage with State Farm and the medical service provider actually performed the services for which it charged. Because each class member’s claim would depend upon proof of a unique set of facts and be subject to individualized defenses, a class could not be certified. 

The court also found that the plaintiff could not satisfy Rule 23(b)(2), under which money damages must be incidental to the requested equitable relief. If the proposed class could establish liability, each class member would be entitled to varying amounts of money depending on the services provided, amounts billed and reimbursements made by State Farm. Thus, monetary relief was not incidental to the requested injunctive or declaratory relief, and the class could not be certified under Rule 23(b)(2).

Finally, the court held that certification was improper under Rule 23(b)(3), which requires that “questions of law or fact common to class members predominate over any questions affecting only individual members.”  Because each class member would have to introduce individualized  evidence about the denied claims and the services that had been provided in order to establish liability and damages, the adjudication of these individual fact questions would predominate over the litigation of any common issues. The court denied class certification for this reason as well.