Anderson v. Lab. Corp. of Am. Holdings
| Decision Date | 13 February 2023 |
| Docket Number | 1:17cv193 |
| Parties | SHERYL ANDERSON, MARY CARTER, ROBERT HUFFSTUTLER, RAMZI KHAZEN, CHAIM MARCUS, LILY MARTYN, JONAH MCCAY, HOLDEN SHERIFF, MICHELLE SULLIVAN, SHONTELLE THOMAS, and JOSEPH WATSON, individually and on behalf of all, Plaintiff, v. LABORATORY CORPORATION OF AMERICA HOLDINGS, Defendant. |
| Court | U.S. District Court — Middle District of North Carolina |
This putative class action challenging the billing practices of Defendant Laboratory Corporation of America Holdings (“LabCorp,” although sometimes intermittently referred to by the parties as “Labcorp”) returns to the court on Plaintiffs' motion for class certification pursuant to Federal Rule of Civil Procedure 23(b)(2) and 23(b)(3). (Doc. 99.) The motion is fully briefed, and the record is voluminous. (Docs. 111, 126, 190 191, 192, 194, 213, 214.) Plaintiffs and LabCorp also filed a joint motion to seal materials relating to class certification. (Docs. 196, 197.) Plaintiffs filed an objection to the joint motion (Doc. 198), and LabCorp filed a reply (Doc. 199). On November 8, 2022 the court heard oral argument on the pending motions. (Doc 210.) For the reasons set forth below, the joint motion to seal will be granted and the motion for class certification will be denied.
The 138-page amended complaint, complete with a table of contents, contains extensive factual allegations about LabCorp, its “business model,” and Plaintiffs' various claims. The key allegations are as follows, while more detailed allegations relevant to the analysis are set out later in this opinion.
LabCorp provides laboratory testing services to healthcare recipients internationally. (Doc. 42 ¶ 1.) It has more than 115 million patient encounters annually and has “generated more revenue from clinical lab testing services than any other company in the world.” (Id.) Its “LabCorp Diagnostics” segment is an independent clinical laboratory business that provides the services that are the subject of Plaintiffs' amended complaint. (Id. ¶¶ 44-45.) LabCorp's customers are managed care organizations, biopharmaceutical companies, governmental agencies, physicians and other healthcare providers, hospitals, employers, patients, and consumers. (Id. ¶ 47.)
LabCorp routinely charges different customers different rates for the same services. These rates include an undiscounted retail rate, which Plaintiffs variously term the “fee schedule rate,” “list price” (or “PLP”), and “chargemaster rate” (hereinafter, “list price”); the discounted rates LabCorp has negotiated with certain third-party payors, such as insurers; a standardized rate for Medicare clients; and rates that LabCorp negotiates with certain uninsured or underinsured individuals. (Id. ¶¶ 41, 4849, 70-71, 87, 211.) These rates vary greatly, but the list prices tend to be much higher than the other rates. (Id. ¶¶ 5, 469.)
There are eleven Plaintiffs seeking class certification.[1](Id. ¶¶ 23-36.) Their common complaint is that they were provided services by LabCorp for which they were charged LabCorp's list price, which they allege is grossly too high and without any prior agreement. Some Plaintiffs — Michelle Sullivan, Mary Carter, and Chaim Marcus — arranged for their diagnostic testing at a LabCorp facility, presumably in their states of residence, California, Maryland, and New Jersey, respectively.[2] (Id. ¶¶ 24, 28, 33, 149, 227, 323.) Others, including Shontelle Thomas (resides in Tennessee), and Lily Martyn (resides in New York but had services performed in North Carolina), authorized their physicians to order laboratory testing without knowing what lab would do the work.
(Id. ¶¶ 29, 34, 240-42, 345-47.) Still others, including Sheryl Anderson (resides in Alabama) and Ramzi Khazen (resides in Texas), had blood drawn by their health care providers who sent the specimens to LabCorp without advising either Plaintiff that the sample was being sent to any laboratory testing company. (Id. ¶¶ 23, 27, 121-25, 203-05.) At the time the services were rendered, none of these Plaintiffs had an express agreement with LabCorp to pay the list prices LabCorp subsequently charged. Most Plaintiffs had health insurance, but the relevant testing performed by LabCorp was not covered by their policies; Martyn and Thomas were uninsured. (Id. ¶¶ 122, 148, 167, 176, 203, 225-26, 239, 253, 278, 297, 322, 344, 360, 379.) As a result, Plaintiffs were charged LabCorp's list prices. Some Plaintiffs paid the charges under protest, while others have refused to pay.
Plaintiffs filed an eight-count complaint on March 8, 2017. (Doc. 1.) On March 28, 2018, the court granted LabCorp's motion to dismiss the original complaint in a memorandum opinion and order finding that the allegations failed to state a claim upon which relief could be granted. See Sullivan v. Laboratory Corp. of America Holdings, No. 1:17cv193, 2018 WL 1586471 (M.D. N.C. Mar. 28, 2018). On August 10, 2018, after the court granted leave, Plaintiffs filed an amended complaint. (Doc. 42.) The amended complaint contains eleven claims, each on behalf of a putative class. In Count I, Plaintiffs seek a declaratory judgment that they never contractually assented to LabCorp's list prices, and therefore that LabCorp's right of recovery against them for the relevant laboratory testing services is limited to an implied-contract recovery of the “reasonable value” of the services rendered. (Id. ¶¶ 466-68.) Further, Plaintiffs seek a declaration that LabCorp's list prices exceed the “reasonable value” of its services. (Id. ¶ 470.) In Count II, as to all Plaintiffs who paid LabCorp's list prices, Plaintiffs seek to recoup the amounts they paid above the “reasonable value” of the services rendered. (Id. ¶¶ 480-82.) In Counts III-XI, Plaintiffs allege that LabCorp's billing practices violate various consumer protection statutes prohibiting unfair or deceptive trade practices in North Carolina, Alabama, California, Florida, Maryland, New Jersey, Tennessee, and Texas. (Id. ¶¶ 483-555.)
On August 16, 2019, this court granted LabCorp's subsequent motion to dismiss the amended complaint in part, dismissing Count II and any claim in Counts III-XI based on nondisclosure of CPT codes, and denied in part as to all other claims. (Doc. 55.) Following discovery, Plaintiffs filed the present class certification motion (Doc. 99), which is fully briefed (Docs. 111, 126, 190, 191, 192, 194, 213, 214, 218, 219, 220, 223) and ready for decision.[3] The court also held extensive oral argument on the claims on November 8, 2022.
Plaintiffs move to certify one class and three subclasses under Federal Rule of Civil Procedure 23: the nationwide “Common Law Class” under Count I, composed of “Labcorp patients in the United States who, without any express contract with Labcorp that establishes the amount of fees to be paid to Labcorp, were charged based on [the list price] in excess of the reasonable market rate for the clinical lab testing services Labcorp performed” (Doc. 111 at 25);[4] the “Misleading Estimate Subclass” under Counts III, IV, VII, VIII, IX, X, and XI, composed of “Labcorp patients who were provided a written statement describing potential charges not based on [the list price], but were charged based on [the list price] in excess of the reasonable market rate for the clinical lab testing services Labcorp performed” (id. at 25-26); the “Urine Testing Subclass,” composed of LabCorp patients in the United States “who were overbilled for urine testing” done “in violation of industry practice” (id. at 26, 36); and the “Select Silver Subclass,” composed of LabCorp patients “who were out-of-network with certain [BlueCross Blue Shield of Alabama] insurance plans” and charged the list price (id.) .[5] Plaintiffs also move for appointment of class counsel under Rule 23(g). (Id. at 37; Doc. 99-1 at 2.) LabCorp opposes certification, challenging whether several of the prerequisites to certification have been met. (Doc. 190.)
“The class action is an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only.” Comcast Corp. v. Behrend, 569 U.S. 27, 33 (2013) (citation and internal quotation marks omitted). To be certified, a party seeking class certification must “establish by a preponderance of the evidence that the action complies with each part of Rule 23.” Brown v. Nucor Corp., 785 F.3d 895, 931 (4th Cir. 2015) (Agee, J., dissenting) (citing cases). First, a plaintiff must satisfy the four requirements set out in Rule 23(a): “(1) numerosity of parties; (2) commonality of factual and legal issues; (3) typicality of claims and defenses of class representatives; and (4) adequacy of representation.” Gunnells v. Healthplan Services, Inc., 348 F.3d 417, 423 (4th Cir. 2003); see Thorn v. Jefferson-Pilot Life Insurance Co., 445 F.3d 311, 317 (4th Cir. 2006) (citation and alterations omitted) (“Plaintiffs bear the burden of demonstrating satisfaction of the Rule 23 requirements and the district court is required to make findings on whether the plaintiffs carried their burden.”)
Next the proposed class must show that it is one of the three types of classes described in Rule 23(b). See Thorn, 445 F.3d at 318. Here, Plaintiffs seek to certify their Common Law Class pursuant to Rule 23(b)(2), which provides that a class action is appropriate if “the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a...
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