Med. Ass'n of Ga. v. Wellpoint, Inc. (In re Care)

• Decision Date: 18 June 2014
• Docket Number: No. 12–14013.,12–14013.
• Citation: 756 F.3d 1222
• Court: U.S. Court of Appeals — Eleventh Circuit
• Parties: In re MANAGED CARE, et al. Medical Association of Georgia, California Medical Association, et al., Plaintiffs–Appellants, v. WellPoint, Inc., Defendant–Appellee.

756 F.3d 1222

In re MANAGED CARE, et al.

Medical Association of Georgia, California Medical Association, et al., Plaintiffs–Appellants,

v.WellPoint, Inc., Defendant–Appellee.

No. 12–14013.

United States Court of Appeals,

Eleventh Circuit.

June 18, 2014.

Robert J. Axelrod, D. Brian Hufford, Pomerantz LLP, Edith M. Kallas, Joe R. Whatley, Jr., Whatley Drake & Kallas, LLC, New York, NY, Raymond P. Boucher, Helen Zukin, Kiesel Boucher Larson LLP, Beverly Hills, CA, William Tucker Brown, Whatley Drake & Kallas, LLC, Birmingham, AL, Kenneth S. Canfield, Doffermyre Shields Canfield & Knowles LLC, Atlanta, GA, William C. Wright, Wright Law Offices, PA, West Palm Beach, FL, for Plaintiff–Appellant.

Peter R. Bisio, Audrey J. Anderson, E. Desmond Hogan, Craig A. Hoover, Mary Helen Wimberly, Hogan Lovells U.S. LLP, Washington, DC, for Defendant–Appellee.

Appeal from the United States District Court for the Southern District of Florida. D.C. Docket No. 1:00–md–01334–FAM.

Before MARTIN and JORDAN, Circuit Judges, and BAYLSON,^* District Judge.

BAYLSON, District Judge:

I. INTRODUCTION

The issue before us is whether the District Court abused its discretion in finding Appellants in contempt for violating the terms of a prior Settlement Agreement.

Underlying this overarching issue is a complex, twelve-year-old, multidistrict litigation; a related multidistrict litigation pending in another federal district court; and whether the District Court reasonably interpreted the Settlement Agreement in the first action.

A. MDL 1334

In 2000, a number of physicians and physician associations initiated a group of class actions against various providers of health plans, which were consolidated into a multidistrict litigation and assigned to the Southern District of Florida (“District Court”). In re Managed Care Litig., No. 1:00–md–01334 (S.D.Fla. Apr. 17, 2000) (“MDL 1334”). The parties settled that lawsuit in 2005, resulting in a Settlement Agreement and an Order issued by the Southern District of Florida approving that Settlement Agreement.

B. The UCR MDL

In 2009, another group of physicians and physician associations—including Appellants—filed multiple lawsuits against, Appellee, WellPoint, Inc. (“WellPoint”), which were consolidated into a multidistrict litigation in the Central District of California. In re WellPoint, Inc. Out–of–Network “UCR” Rates Litig., No. 2:09–ml–02074 (C.D.Cal. Aug. 20, 2009) (“UCR MDL”).

C. The Present Dispute

The present dispute involves the propriety of the District Court's Order holding Appellants in contempt and imposing sanctions for the violation of an injunction. An earlier Order from the District Court barred Appellants from pursuing their claims in the UCR MDL, because the District Court found that the claims had been released by the Settlement Agreement reached by the parties in MDL 1334. When Appellants refused to withdraw those claims as directed, the District Court held Appellants in contempt and imposed sanctions.

For the reasons stated below, we affirm the judgment of the District Court in large part, but vacate the Injunction as to Appellants' ERISA claims insofar as they hinge on the denial or underpayment of benefits following the Settlement Agreement's Effective Date (as defined below), and remand to the District Court for a determination of which ERISA claims can proceed in view of this opinion and for reconsideration of the imposition of sanctions.

II. PROCEDURAL HISTORY

A. MDL 1334

1. MDL 1334 Allegations

In 2000, physicians and physician associations initiated an action in the Southern District of Florida against a group of healthcare insurance companies, including WellPoint, on behalf of a nationwide class of physicians. This action was later consolidated into a multidistrict litigation in April 2000. The class representatives alleged that these insurance companies engaged in a conspiracy by means of mail and wire fraud to inflate profits by systematically denying, delaying, and diminishing payments due to them and that “the conspiracy was conducted through and implemented by” several means, including “the development and utilization of automated and integrated claims processing and other systems such as those generated by” the company Ingenix.¹ MDL 1334 D.E. 1607 ¶ 120.²

2. Settlement Agreement

In 2005, WellPoint settled the MDL 1334 claims on a national, class-wide basis, agreeing to pay $198 million to the class and class counsel and promising to make a wide range of changes to its business practices, including changes to the method used to determine usual, customary, and reasonable (“UCR”) rates. MDL 1334 D.E. 4321 (“Settlement Agreement”) §§ 7, 8.1, 8.2, 9.1, 16. WellPoint specifically “agree[d] that, to the extent it uses Physician charge data to determine the usual, reasonable, and customary amount to be paid for services performed by Non–Participating Physicians, it will not use any internal claims database” that systematically underprices claims. Settlement Agreement § 7.14(d).

In exchange, the class agreed to release all claims related to the allegations underlying MDL 1334 once the Settlement Agreement took effect. Section 13.1(a) of the settlement agreement defines a “released claim” and provides:

[Released Parties shall be released] from any and all causes of action, judgments, liens, indebtedness, costs, damages, obligations, attorneys' fees, losses, claims, liabilities and demands of whatever kind or character (each a “Claim”), arising on or before the Effective Date, that are, were or could have been asserted against any of the Released Parties by reason of, arising out of, or in any way related to any of the facts, acts, events, transactions, occurrences, courses of conduct, representations, omissions, circumstances or other matters referenced in the Actions....

Id. § 13.1(a). The next subsection, applicable only to claims against the Blue Cross Blue Shield Association (“BCBSA”), further provided that:

The Releasing Parties further agree to forever abandon and discharge any and all Claims that exist nor or that might arise in the future against BCBSA ..., which Claims arise from, or are based on, conduct by any of the Released Parties that occurred on or before the Effective Date and are, or could have been, alleged in the Complaints, whether any such Claim was or could have been asserted by any Releasing Party on its own behalf or on behalf of other Persons.

Id. § 13.1(b).

The Settlement Agreement further provides:

Each Class Member who has not validly and timely requested to Opt–Out of this Agreement and each Signatory Medical Society may hereafter discover facts other than or different from those which he, she or it knows or believes to be true with respect to the claims which are the subject matter of the provisions of § 13, but each such Class Member and each Signatory Medical Society hereby expressly waives and fully, finally and forever settles and releases, upon the entry of Final Order and Judgment, any known or unknown, suspected or unsuspected, contingent or non contingent claim with respect to the subject matter of provisions of § 13, whether or not concealed or hidden, without regard to the discovery or existence of such different or additional facts.

Id. § 13.5(b).

3. Notice to Class Members

The District Court preliminarily approved the settlement, MDL 1334 D.E. 4336, and notice was mailed to potential class members in August 2005. The notice stated:

IF YOU ARE A PHYSICIAN WHO PROVIDED COVERED SERVICES TO ANY INDIVIDUAL ENROLLED IN OR COVERED BY CERTAIN HEALTH CARE PLANS AT ANY TIME BETWEEN AUGUST 4, 1990 AND JULY 15, 2005 ... PLEASE READ THIS NOTICE CAREFULLY.

MDL 1334 D.E. 4608 at 62.

In the section describing the claims released against WellPoint, the notice stated that they consisted of claims “arising on or before the date that the Court's order approving the settlement becomes final, that are, were or could have been asserted.” Id. at 65. The next sentence added that certain “claims that exist now or that might arise in the future” are waived against the Blue Cross and Blue Shield Association (“BCBSA”). Id. The notice also stated that the District Court would hold a hearing in which it “will consider whether to enter orders that would prevent members of the Class and certain other persons, including the Defendants in the Actions other than WellPoint, from asserting certain claims against WellPoint in the future.” Id. at 66. The notice further described how to obtain additional information about the proposed settlement.

4. Approval of Settlement Agreement

In November 2005, one month after the deadline for filing objections or opting out of the class, the parties filed a joint motion for the court's final approval of the settlement. MDL 1334 D.E. 4608. Among other things, the joint motion: (1) recited the obligation of the insurance companies to change their business practices, id. at 10–17; (2) asked the District Court to overrule the limited objections filed by class members, id. at 29–49; and (3) advised the District Court that one objector was “simply wrong that the release [was] too broad,” id. at 44.

The District Court approved the Settlement Agreement in an Amended Order issued on January 3, 2006. MDL 1334 D.E. 4684 (the “Injunction”). The Order enjoined the class members—“Released Parties” under the Settlement Agreement—from participating in lawsuits “arising out of or relating in any way to the Released Claims.” Id. ¶¶ 2, 5, 18. Generally tracking the language in the class notice, the amended order approving the settlement noted that the agreement released claims “that exist now or that might arise in the future against BCBSA,” id. ¶ 6, and released claims against WellPoint “that are, were or could have been asserted against any of the Released Parties by reason of, arising out of, or in any way related to” the facts at issue in MDL 1334. Id. ¶ 5. The District Court retained jurisdiction on “all matters relating to (a) the interpretation,...