Johnson v. Geico Cas. Co.
| Decision Date | 30 December 2009 |
| Docket Number | C.A. No. 06-408-JJF. |
| Citation | 673 F.Supp.2d 255 |
| Parties | Kerry JOHNSON and Sharon Anderson, on behalf of themselves and all others similarly situated, Plaintiffs, v. GEICO CASUALTY COMPANY, Geico General Insurance Company, Geico Indemnity Company, and Government Employees Insurance Company, Defendants. |
| Court | U.S. District Court — District of Delaware |
Richard H. Cross, Jr., Esquire; Christopher P. Simon, Esquire; and Kevin S. Mann, Esquire of Cross & Simon, LLC, Wilmington, DE, John Sheehan Spadaro, Esquire of John Sheehan Spadaro, LLC, Hockessin, DE, for Plaintiff.
George M. Church, Esquire, and Laura A. Cellucci, Esquire, of Miles & Stockbridge P.C., Baltimore, MD, Meloney Cargil Perry, Esquire of Meckler Bulger Tilson Marick & Pearson LLP, Dallas, TX, Paul A. Bradley, Maron Marvel Bradley & Anderson, P.A., Wilmington, DE, for Defendant.
Presently before the Court are the following motions: Defendants' Rule 23 Motion To Deny Class Certification (D.I. 198); Plaintiffs' Motion For Class Certification (D.I. 262); and Plaintiffs' Motion To Stay Consideration Of Defendants' Motion To Deny Class Certification (D.I. 272). Because the Court will consider Defendants' Rule 23 Motion To Deny Class Certification and Plaintiffs' Motion For Class Certification concurrently, Plaintiffs' Motion To Stay Consideration Of Defendants' Motion To Deny Class Certification will be denied. For the reasons discussed, the Court will grant in part and deny in part Defendants' Rule 23 Motion To Deny Class Certification, as well as Plaintiffs' Motion For Class Certification. Specifically, the Court will deny certification of the 30-Day Claims Class. The Court will certify the Passive Modality Class, with Ms. Anderson as class representative, to pursue a class action suit against Defendants as to Counts III, IV, and VI. The Court will certify the Geographic Reduction Class, with Ms. Anderson as class representative, to pursue a class action suit against Defendants as to Counts III, IV, and VI.
Plaintiff Kerry Johnson ("Mr. Johnson") is a Delaware resident and insured of GEICO Indemnity Company. (D.I. 25 § 3.) Mr. Johnson alleges that on or about July 16, 2004, he was involved in an automobile collision in New Castle County, Delaware. (Id. ¶ 27.) He contends that, despite routine submission of his medical records and bills, payment of his PIP benefits claims were delayed and/or denied without reasonable justification. (Id. ¶¶ 29-37.) Plaintiff Sharon Anderson ("Ms. Anderson") is a Delaware resident and insured of Government Employees Insurance Company. (Id. ¶ 4.) Ms. Anderson alleges that she was injured in an automobile collision in New Castle County, Delaware on or about August 3, 2004 (Id. ¶ 42.) She also contends that, despite routine submission of her medical records and bills, payment of her PIP benefits claims were delayed and/or denied without reasonable justification. (Id. ¶¶ 44-52.)
Defendants GEICO Indemnity Company and Government Employees Insurance Company are insurance companies incorporated in Maryland, with their principal places of business in Washington, D.C. (Id. ¶¶ 5, 8.) Defendant GEICO Corporation is a holding company incorporated in Delaware with its principal place of business in Washington, D.C. (Id. ¶ 9.)
Under Delaware law, automobile insurers are required to provide no-fault medical benefit protection known as "Personal Injury Protection," or "PIP" for persons injured while occupying an insured motor vehicle. 21 Del. C. § 2118(a)(2). Insurers must pay, up to the policy's limits, all "reasonable and necessary expenses incurred within 2 years from the date of the accident." Id. Once the insurer is notified by a potential claimant of his/her desire to file an initial claim for benefits under this statute, the insurer must provide a claim form within 10 days. 21 Del. C. § 2118B(b). The insurer must process the claim and either make payments which are due claimant, or provide claimant with an explanation of its denial, within 30 days of receipt of the written claim request. Id. § 2118B(c). The purpose of these timing requirements is to
ensure reasonably prompt payment of sums owed by insurers to their policyholders and other persons covered by their policies pursuant to § 2118 of this title, and to prevent the financial hardship and damage to personal credit ratings that can result from the unjustifiable delays of such payment.
Plaintiffs Kerry Johnson and Sharon Anderson (collectively, "Plaintiffs") initially filed this proposed class action suit on behalf of themselves and all others similarly situated against Defendants GEICO Casualty Company ("GEICO Casualty"), GEICO General Insurance Company ("GEICO General"), and GEICO Indemnity Company ("GEICO Indemnity") (collectively, "Defendants") in the Superior Court for the State of Delaware in and for New Castle County. In a nine count Complaint, Plaintiffs alleged that Defendants committed various statutory and common law violations, including breaches of insurance contracts, bad faith breaches of insurance contracts, breach of the duty of fair dealing, and common law fraud, in connection with Defendants' denial of benefits under Personal Injury Protection ("PIP") coverage issued as part of Defendants' insurance contracts. (D.I. 1, Ex. D ¶¶ 1-2.) On June 27, 2006, Defendants removed this suit from the Delaware Superior Court to this Court pursuant to 28 U.S.C. § 1332 and § 1446. (D.I. 1.)
In a Memorandum Opinion and Order issued on September 27, 2007, 516 F.Supp.2d 351 (D.Del.2007) (D.I. 23, 24), the Court granted Plaintiffs' Motion For Leave To File Amended Complaint to the extent that Plaintiffs sought to supplement the facts alleged and add Government Employees Insurance Company as a defendant. Further, the Court partially granted Defendants' Motion To Dismiss For Failure To State A Claim, dismissing three of the nine counts alleged in the Complaint. In a Memorandum Opinion and Order issued on December 11, 2009, 2009 WL 4799214 (D.I. 314, 315), the Court granted Plaintiffs' Motion For Leave To Amend First Amended Complaint. The Second Amended Class Action Complaint (D.I. 316) added GEICO Corporation as an additional defendant, added a Count VII for tortious interference with contractual relations, and added a claim for injunctive relief. The Second Amended Class Action Complaint also amended the proposed class definitions, and supplemented the causes of action with additional facts. Also in its December 11, 2009 Memorandum Opinion and Order, the Court granted Defendants' Rule 12(b)(1) Motion To Dismiss For Lack Of Standing, dismissing GEICO Casualty and GEICO General as defendants. Accordingly, the following claims remain against Defendants GEICO Indemnity, Government Employees Insurance Company, and GEICO Corporation: Count I, declaratory judgment that Defendants violated 21 Del. C. § 2118 and breached their automobile contracts with Plaintiffs; Count II, breach of contract; Count III, bad faith breach of contract; Count IV, breach of the duty of fair dealing; Count V, common law fraud; Count VI, consumer fraud in violation of 6 Del. C. § 2513; and Count VII, tortious interference with contractual relations.
On April 22, 2009, Defendants filed a Rule 23 Motion To Deny Class Certification. (D.I. 198). On July 20, 2009, Plaintiffs filed a Motion For Class Certification. (D.I. 262.) Plaintiffs also filed a Motion to Stay Defendants' Rule 23 Motion To Deny Class Certification on July 21, 2009. (D.I. 272.) The Court heard oral argument regarding the class certification issue on September 30, 2009.
By its Motion For Class Certification and Answering Brief In Response To Defendants' Rule 23 Motion To Deny Class Certification (D.I. 224), Plaintiffs contend that Defendants are violating Delaware law through their policies and claims processing systems. (Id. at 3.) Plaintiffs contend that, as a general matter, class certification is warranted because Defendants are "perpetuating this wrongful conduct on thousands of Delaware claimants and wrongfully withholding millions of dollars in benefits and penalties." (D.I. 263, at 3.) Specifically, Plaintiffs contend that all four elements of Rule 23(a) are met, and that certification is appropriate under Rule 23(b)(3), 23(b)(1)(A), and /or 23(b)(2). (Id.)
Plaintiffs seek certification of five counts of the Second Amended Class Action Complaint: Counts I, II, III, IV, and VI.1 (Id. at 21-22.) With respect to these claims, Plaintiffs identify three basic categories of alleged wrongful conduct by Defendants:
(1) routine[] fail[ure] to process and pay bills within the 30[day] required statutory period and fail[ure] to pay the required statutory penalty (the "30-Day Claims"); (2) systematic[] den[ial of] payments for passive modality treatments performed more than eight weeks after an accident without performing any investigation as required (the "Passive Modality Claims"); and (3) systematic[] reduc[tion of] payments to an arbitrary 80th percentile without performing any investigation (the "Geographic Reduction Claims").
(Id. at 1.) Specifically, with regard to the Passive Modality Claims, Plaintiffs allege that Defendants employ a computer rule which denies payment for passive modalities based solely on the date of loss, the date of treatment, and treatment code ("CPT code"). (D.I. 263, at 8.) Further, Plaintiffs allege that Defendants have intentionally set this rule to deny payments without the possibility of human review. (Id. at 9.) With regard to the Geographic Reduction Claims, Plaintiffs allege that Defendants are reducing bil...
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