Allen v. United Servs. Auto. Ass'n

• Decision Date: 22 December 2020
• Docket Number: NO. 01-20-00305-CV,01-20-00305-CV
• Parties: STEPHANIE ALLEN, MARK ALLEN, AS INDIVIDUALS, AND ABSOLUTE LIFE WELLNESS CENTER, INC., A TEXAS PROFESSIONAL SERVICES CORPORATION, ON BEHALF OF THEMSELVES AND FOR ALL OTHERS SIMILARLY SITUATED, Appellants v. UNITED SERVICES AUTOMOBILE ASSOCIATION, USAA CASUALTY INSURANCE COMPANY, USAA GENERAL INDEMNITY COMPANY, GARRISON PROPERTY AND CASUALTY INSURANCE COMPANY, AND USAA COUNTY MUTUAL INSURANCE, Appellees
• Court: Texas Court of Appeals

STEPHANIE ALLEN, MARK ALLEN, AS INDIVIDUALS,

AND ABSOLUTE LIFE WELLNESS CENTER, INC.,A TEXAS PROFESSIONAL SERVICES CORPORATION,ON BEHALF OF THEMSELVES ANDFOR ALL OTHERS SIMILARLY SITUATED, Appellants v. UNITED SERVICES AUTOMOBILE ASSOCIATION, USAA CASUALTY INSURANCE COMPANY,

USAA GENERAL INDEMNITY COMPANY, GARRISON PROPERTY AND

CASUALTY INSURANCE COMPANY, AND

USAA COUNTY MUTUAL INSURANCE, Appellees

NO. 01-20-00305-CV

Court of Appeals For The First District of Texas

December 22, 2020

On Appeal from the 345th District Court

Travis County, Texas¹

Trial Court Case No. D-1-GN-17-000155

MEMORANDUM OPINION

Appellants, Stephanie Allen and Mark Allen (the "Allens"), and Absolute Life Wellness Center, Inc. ("Absolute") (collectively, "appellants"), challenge the trial court's order ruling that they lacked standing to bring suit, both individually and on behalf of classes of other policyholders and health care providers, against United Services Automobile Association, USAA Casualty Insurance Company, USAA General Indemnity Company, Garrison Property and Casualty Insurance Company, and USAA County Mutual Insurance (collectively, "USAA"), for breach of contract and violations of the Texas Insurance Code and the Deceptive Trade Practices Act ("DTPA").² In two issues, appellants contend that the trial court erred in concluding that they lack standing to bring their claims against USAA.

We modify the trial court's order and affirm as modified.

Background

In their second amended petition, appellants allege that in March 2018, the Allens were insured under a standard USAA "Texas Auto Policy" with Personal Injury Protection ("PIP") coverage. According to appellants, the policy provides "coverage for all 'reasonable' and 'necessary' expenses" of up to $5,000 for each insured "that result from a covered automobile collision—without regard to the fault of the collision." Under the policy, "USAA promises to—or have someone on their behalf—review and investigate, by audit or otherwise, 'claims for benefits under this coverage to determine whether fees and expenses were reasonable and whether treatment was medically necessary and appropriate.'" USAA also "promises to pay for the medically 'necessary' and 'reasonable' charges."

Appellants further allege that on March 8, 2016, the Allens were injured in a car accident. They authorized their health care providers to file claims under their PIP policies with USAA. The reimbursable amount of the Allens' claims for payment of all reasonable and necessary treatment was reduced based on coded fee reductions. Appellants state that USAA makes such deductions with a computer database that it "has arbitrarily set . . . to automatically reduce PIP claims that exceed the [eightieth] percentile of Medicare charges for a given year plus $9.99." USAA then provides, with a fee reduction, an explanation that "[t]he charge exceeds a reasonable amount for the service provided." And it requests additionaldocumentation "to support the reasonableness of the charge" from the health care provider if that provider is not willing to "accept the recommended amount stated on th[e] [Explanation of Reimbursement] as payment in full . . . ."

According to appellants, the Allens also received a request for additional documentation from USAA with an accompanying appeal document. Appellants allege that USAA's appeal process "is designed to delay and deny the claim" and violates its obligation to "conduct a 'reasonable' investigation" because a request for additional documentation by USAA "always . . . results in a $0.00 reimbursement amount." The Allens concede that "the[ir] claims were ultimately paid" by USAA but maintain that "they were still injured by the delay and deception that took place prior to payment."

On behalf of themselves and a class of USAA's PIP policyholders, the Allens bring a "Bad Faith/DTPA" claim against USAA, alleging that USAA used "false, misleading, and/or deceptive . . . procedures when handling PIP claims," including: (1) "failing to promptly provide to a policy holder a reasonable explanation of the basis in the policy, in relation to the facts or applicable law, for the insurer's denial of a claim or offer of a compromise settlement of a claim"; (2) "refusing to pay a claim without conducting a reasonable investigation with respect to the claim"; and (3) "committing unconscionable acts by committing acts or practices which, to aconsumer's detriment, take advantage of the lack of knowledge, ability, experience, or capacity of the consumer to a grossly unfair degree."

The Allens also bring a breach-of-contract claim under Texas Insurance Code sections 1952.156 and 1952.157³ and the common law, alleging that USAA failed to conduct a reasonable investigation of the Allens' PIP claims and refused to reimburse the Allens for the reasonable and necessary medical expenses incurred pursuant to the terms of the PIP provisions of USAA policies as a direct and proximate result of the procedures for handling the claims.

Absolute, a health care provider, alleges that it has also experienced unlawful reductions, denials, and delays in "hundreds of PIP claims" it has billed to USAA.⁴ And on behalf of itself and other similarly situated health care providers, it brings the same claims against USAA as the Allens based on "equitable assignments" from the patients it has treated who have PIP coverage from USAA.⁵

Appellants allege that, as a result of USAA's arbitrary fee reductions and unreasonable investigation procedures, they and the putative class members have been injured and "suffered damages in the form of economic loss, loss of the benefit of the applicable insurance coverage, delay in payments, and administrative or other out of pocket costs associated with the reductions and denials to the bills submitted on USAA . . . PIP claims." According to appellants, USAA is "required to pay [appellants and the putative class members] . . . all unpaid but owed amounts, reasonable attorney's fees, a 12% penalty, and interest at the legal rate." Appellants further seek for themselves and the putative class members "a declaration from the [trial] [c]ourt that there is full coverage under the PIP coverage as provided in the insurance contract, which [USAA] breached by denying benefits owed as a direct and proximate result" of those practices.

USAA answered, generally denying the allegations in appellants' second amended petition and asserting that the Allens lack standing to bring suit against the USAA entities that did not issue an insurance policy to them and Absolute lacks standing to bring suit under the DTPA because it is not a "consumer." And Absolute cannot claim standing based on any policyholder's alleged assignment of rights, because the insureds' claims under the DTPA and Texas Insurance Code chapter 541.060 for unfair settlement practices are non-assignable. USAA also argued thatAbsolute lacks standing under the statute governing PIP⁶ and cannot bring suit for breach of contract "because it is not in privity with [USAA] and the statute is not intended to extend contract rights to medical providers."

In May 2018, appellants filed their first motion for class certification under Texas Rule of Civil Procedure 42.⁷ They amended that motion in July 2018, and USAA filed its response in August 2018. In its response, USAA argued, in part, that the Allens lack standing to bring their "reasonable fee reduction," and "request for documentation" claims because neither of the Allens "claim[] to have been 'balance-billed' by their providers or otherwise [to have] sustained any legally cognizable damages as a result of any action by [USAA]."

In March 2019, the trial court issued its first certification order, denying appellants' first amended motion for class certification. The trial court stated in its order that it "[wa]s persuaded that all three of [appellants'] proposed classes satisfy the numerosity, commonality, typicality, predominance, and superiority requirements" of Texas Rule of Civil Procedure 42. But it denied the amended motion because the "record and filings before [the trial court] [we]re insufficient" to formulate a trial plan.⁸

Appellants then amended and supplemented their motion for class certification, to which USAA responded, asserting, among other things, that appellants lack standing to bring their claims against USAA.

On February 28, 2020, the trial court issued its second certification order, denying appellants' supplemented and amended motion for class certification. In doing so, the trial court made certain findings of fact:

• The Allens do not allege that they were subjected to any delay;

• Neither of the Allens was "balance-billed" by their health care providers, and no treatment was withheld, so they have no actual damages caused by any of the billing practices allegedly implemented by USAA;

• Stephanie's claim was paid in full after her provider submitted the necessary information;

• The Allens admit that after they filed suit, USAA resubmitted and paid the original claims to the in-network provider; and

• Absolute alleges that it has received untimely explanations of benefits from USAA but does not allege that the delay caused a loss of benefits to which it was entitled.

The trial court also concluded that Absolute lacks standing because it is not a party to an insurance contract with USAA and DTPA and Texas Insurance Code claims are non-assignable. Ultimately, the trial court, "though largely persuaded that the proposed classes satisf[ied] the . . . requirements of [Texas] Rule [of CivilProcedure] 42," concluded that "there is no standing among [appellants]" and, accordingly, denied appellants' supplemented and amended motion for class certification.

Appellate Jurisdiction

As a threshold matter, we must consider USAA's argument that we lack jurisdiction over this appeal because the notice of appeal was untimely filed.

"[C]ourts always have jurisdiction to determine their own jurisdiction."...