256 F.R.D. 437 (D.N.J. 2009), Civ. 04-4362 (SRC), Agostino v. Quest Diagnostics Inc.

Docket Nº:Civ. 04-4362 (SRC).
Citation:256 F.R.D. 437
Opinion Judge:CHESLER, District Judge.
Party Name:Denise AGOSTINO, et al., Plaintiffs, v. QUEST DIAGNOSTICS INC., et al., Defendants.
Attorney:Lisa J. Rodriguez, Trujillo, Rodriguez & Richards, LLP, Haddonfield, NJ, for Plaintiffs. Diane A. Bettino, Mark S. Melodia, Reed Smith, LLP, Princeton, NJ, James S. Murphy, Peter Cipparulo, Garrity, Graham, Favetta & Flinn, PC, Montclair, NJ, Sean X. Kelly, Marks, O'Neill, O'Brien & Courtney, PC,...
Case Date:February 11, 2009
Court:United States District Courts, 3th Circuit, District of New Jersey

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256 F.R.D. 437 (D.N.J. 2009)

Denise AGOSTINO, et al., Plaintiffs,

v.

QUEST DIAGNOSTICS INC., et al., Defendants.

Civ. No. 04-4362 (SRC).

United States District Court, D. New Jersey.

February 11, 2009

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Lisa J. Rodriguez, Trujillo, Rodriguez & Richards, LLP, Haddonfield, NJ, for Plaintiffs.

Diane A. Bettino, Mark S. Melodia, Reed Smith, LLP, Princeton, NJ, James S. Murphy, Peter Cipparulo, Garrity, Graham, Favetta & Flinn, PC, Montclair, NJ, Sean X. Kelly, Marks, O'Neill, O'Brien & Courtney, PC, Pennsauken, NJ, for Defendants.

OPINION

CHESLER, District Judge.

This matter comes before the Court on Plaintiffs' motion for class certification pursuant to Federal Rule of Civil Procedure 23. Plaintiffs seek certification of a class of all persons in the United States who allege they have been improperly billed by Quest or its outside debt collection agencies, as well as certification of four subclasses: two subclasses seeking injunctive and declaratory relief, and two subclasses seeking monetary remedies. Plaintiffs also argue that the New Jersey Consumer Fraud Act should be applied to the class and all subclasses. As discussed more fully below, the Court finds that the proposed class and subclasses do not meet the requirements of Rule 23 and therefore denies Plaintiffs' motion for class certification.

I. BACKGROUND

Plaintiffs 1 initiated this putative class action on September 3, 2004, alleging that Defendant Quest Diagnostics, Inc. (" Quest" ),

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the nation's leading provider of diagnostic and clinical testing, and its outside debt collection agencies 2 improperly bill consumers at full list price when Quest has unanswered questions concerning consumers' insurance information or when insurance providers do not timely respond to a claim or respond without adjudicating a claim due to incorrect patient information. Plaintiffs further allege Defendants improperly bill Medicare Part B beneficiaries.

In the First Amended Class Action Complaint, Plaintiffs asserted eight separate causes of action. However, by Opinion and Order dated October 6, 2005 (hereinafter the " Lifland Opinion" ), the Honorable John C. Lifland, U.S.D.J., dismissed Plaintiff Mark Smaller's claim against CCS pursuant to the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. (" ERISA" ), Smaller's claim pursuant to the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq. (" FDCPA" ) against CCS, and all claims that refer to violations of the FDCPA against any Defendant that occurred before September 3, 2003.

The following claims remain: Count I: violations of the Racketeer Influenced and Corrupt Organizations Act (" RICO" ); Count II: violations of the FDCPA that occurred on or after September 3, 2003, as to all Defendants other than Quest and CCS; Count III: violations of ERISA, as to all Defendants other than CCS; Count IV: violations of the New Jersey Consumer Fraud Act (" NJCFA" ), N.J.S.A. § 56:8-1, et seq., and similar laws of other states; Count V: violations of consumer protection laws of states other than New Jersey; Count VI: breach of contract; Count VII: common law unjust enrichment; and Count VIII: common law fraud.

Subsequent to the motion to dismiss, the Honorable Mark Falk, U.S.M.J., appointed Interim Class Counsel pursuant to Rule 23(g)(2), and the parties began the discovery process.

Plaintiffs now seek certification of a class 3 (" the Class" ) defined as:

All natural persons in the United States of America and its territories who are members, participants, subscribers or beneficiaries of a Health Maintenance Organization (" HMO" ) or health insurance plan provided by an insurance provider or its Third Party Administrator (" TPA" ) with whom Quest has a participating provider contract that includes a hold harmless provision or where a hold harmless provision is imposed by law, or who are participants or beneficiaries of Medicare Part B.

Plaintiffs also seek certification of four subclasses. Plaintiffs propose two subclasses under Rule 23(a) and (b)(2), seeking equitable and/or statutory remedies. Plaintiffs title and define the proposed equitable and statutory subclasses as follows:

i. Refund Interest Subclass

All natural persons in the United States of America and its territories who are members, participants, subscribers or beneficiaries of a HMO or health insurance plan provided by an insurance provider with whom Quest had a participating provider contract that includes a hold harmless provision, or participants or beneficiaries of Medicare Part B, and to whom Quest or its outside debt collectors paid a refund without interest as a result of such person being billed at an amount in excess of the stated patient responsibility on an Explanation of Benefits (" EOB" ) provided by an insurance provider or TPA at any time from September 3, 1998, through the present; and

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ii. Equitable Remedy Subclass

All natural persons in the United States of America and its territories who are members, participants, subscribers or beneficiaries of a HMO or health insurance plan provided by an insurance provider or its TPA with whom Quest had a participating provider contract that includes a hold harmless provision, or participants or beneficiaries of Medicare Part B, and who since September 3, 1998, were billed or dunned by Quest or its outside debt collectors and paid an amount in excess of the stated patient responsibility on an EOB provided by their insurance provider or TPA or who was billed or dunned after their insurance provider or administrator filed for bankruptcy or were deemed insolvent.

Plaintiffs also seek certification of the following two additional subclasses under Rule 23(a) and (b)(3), seeking damages:

iii. Medicare Part B Subclass

All natural persons in the United States of America and its territories who are participants or beneficiaries of Medicare Part B, and who since September 3, 1998, paid any portion of bills or dunning demands by Quest or its outside debt collectors when Quest did not have a signed Advanced Beneficiary Notice (" ABN" ) and a determination of patient responsibility from Medicare Part B or its administrators; and

iv. Debtor Subclass

All natural persons in the United States of America and its territories who received demands for payment from Quest or its outside debt collectors since September 3, 1998, or since September 3, 2003, for FDCPA violations, which demands for payment did any of the following: i) added fees or charges to the debt; ii) made threats the collector was either not authorized and/or not intending to pursue; iii) falsely representing that debts were owed; iv) representing that minors were personally responsible to pay debts.

Plaintiffs propose two methods to identify members of the Subclasses. Under Plaintiffs' proposed plan, Defendants would first be required to review their available records to identify members of the Rule 23(b)(2) and Rule 23(b)(3) Subclasses. Then, upon a finding of liability, Subclass members would be permitted to submit a claim form with supporting documentation entitling them to relief. A claims process, following notice, would be used to adjudicate those claims.

II. FACTS

In this case, Plaintiffs are challenging Quest's billing procedures. Quest is the nation's leading provider of diagnostic and clinical testing. Quest performs these diagnostic and clinical testing services upon the orders of physicians, physicians assistants, and registered nurses. (Declaration of Dr. Hugh Long, (" Long Dec." ) at 9.) Specimens are either obtained by physicians and sent to Quest for testing, or the patient is sent " ‘ to a Quest Diagnostic Patient Service Center with an order to have the specimen drawn.’ " (Declaration of Thomas McGuire filed in support of Plaintiff's motion (" McGuire Dec." ) at 31, ¶ 38) (quoting " Assurance of Discontinuance," issued in In re Quest Diagnostics, Inc., Attorney General of the State of New York, June 13, 2002 (" AOD" )). Physicians order the tests in writing, using either Quest's test requisition form, or the physician's prescription pad. ( Id. ) If the patient goes to a Quest Service Center, Quest obtains the patient's personal and billing information directly from the patient. ( Id. )

As stated above, Plaintiffs' claims challenge the billing practices of Quest and the Debt Collection Defendants as improper and unconscionable. The named Plaintiffs assert that they " represent a cross-section of consumers injured by the Defendants' billing and collection practices." (Plaintiffs Brief at 14.) Some of the named Plaintiffs have private health insurance plans, while others are covered by Medicare Part B.

In addressing the motion to dismiss, Judge Lifland summarized Plaintiffs' claims as follows:

In the Complaint, Plaintiffs allege that the Defendants injured the Plaintiffs and the Class in three ways: (1) by subjecting Plaintiffs to " Defendants unlawful and repetitive demands to pay debts for laboratory testing not owed or in amounts above the actual amount owed" ; (2) by forcing

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the Plaintiffs " to endure deceptive, misleading, abusive and fraudulent debt collection practices and threats to their credit ratings, records, scores and reports; and (3) by demanding and collecting monies from ‘ some Plaintiffs and many class members ... that were not owed or in amounts above the amount owed[.]’ "

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Plaintiffs specifically...

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