Associated Medical Networks, Ltd. v. Lewis

• Court: Indiana Supreme Court
• Writing for the Court: DICKSON, Justice.
• Citation: Associated Medical Networks, Ltd. v. Lewis, 824 N.E.2d 679 (Ind. 2005)
• Decision Date: 31 March 2005
• Docket Number: No. 49S05-0310-CV-435.,49S05-0310-CV-435.
• Parties: ASSOCIATED MEDICAL NETWORKS, LTD., Associated Insurance Companies, Inc., and Anthem Health Systems, Inc., Appellants (Defendants below), v. Dr. William R. LEWIS, Dr. Darryl Fortson and Wabash Avenue Medical Center, and all others similarly situated, Appellees (Plaintiffs below).

824 N.E.2d 679

ASSOCIATED MEDICAL NETWORKS, LTD., Associated Insurance Companies, Inc., and Anthem Health Systems, Inc., Appellants (Defendants below), v. Dr. William R. LEWIS, Dr. Darryl Fortson and Wabash Avenue Medical Center, and all others similarly situated, Appellees (Plaintiffs below).

No. 49S05-0310-CV-435.

Supreme Court of Indiana.

March 31, 2005.

David R. Frick, Anthem Insurance Co., Inc., Thomas G. Stayton, John Joseph Tanner, Daniel R. Roy, Baker & Daniels, Indianapolis, IN, Attorneys for Appellants.

Irwin B. Levin, David J. Cutshaw, Cohen & Malad, LLP, Indianapolis, IN, Attorneys for Appellees.

ON PETITION TO TRANSFER FROM THE INDIANA COURT OF APPEALS, NO. 49A05-0203-CV-122.

DICKSON, Justice.

This appeal challenges the trial court's determination that the predominance and superiority requirements of Indiana Trial Rule 23(B)(3) were satisfied for purposes of maintaining a class action. Concluding that predominance was not established, we reverse the class certification.

The plaintiffs, Dr. William R. Lewis, Dr. Darryl Fortson, and Wabash Avenue Medical Center (collectively, "the Providers"), brought this action to compel the defendants, Associated Medical Networks, Ltd., Associated Insurance Companies, Inc., and Anthem Health Systems, Inc. (collectively, "Anthem"), for payment of medical expenses under assignments executed by patients, and for certification as a class to proceed on behalf of all other similarly situated health care providers.

The class certification was preceded by rather extensive litigation in both the state and federal courts, as more fully described in the opinion of the Court of Appeals. This interlocutory appeal is based on the trial court's Order Certifying Plaintiff Class, which made the following findings with respect to T.R. 23(B)(3), the focus of this appeal:

The elements of Rule 23(B)(3) are satisfied in the present matter because common questions predominate over individual ones and a class action is superior to other available methods for the fair and efficient adjudication of this controversy. The Court notes that individual class members do not appear to wish to control the prosecution of separate actions, that no other litigation concerning this controversy has been commenced, that it is desirable to concentrate this litigation in a single forum, and that no difficulties are likely to be encountered in the management of this action as a class action. Defendants' common course of conduct in paying patients of non-Network health care providers directly is a predominant factual and legal issue.

Appellants' Appendix at 15. The court then defined and certified the following plaintiff class:

Any and all health care providers in the State of Indiana, who have ever had restrictions placed on their license to practice medicine by the Health Professions Bureau, including their professional associations, corporations, partnerships, associates, and partners, or who, for any reason, were not preferred health care providers or network providers, and to which Defendants and their predecessors failed to forward checks for medical services rendered to patients insured by Defendants or their predecessors (under health insurance contracts which are not governed by ERISA or which are specifically exempted from ERISA pursuant to 29 U.S.C. sec. 1003¹) directly to the health care provider, or otherwise include said health care provider as a payee on said checks, and who were damaged thereby.

Id. at 15-16 (footnote added). Anthem sought and received permission from the trial court and the Court of Appeals to bring this interlocutory appeal of the class certification order. The Court of Appeals affirmed the class certification. Assoc. Med. Networks Ltd. v. Lewis, 785 N.E.2d 230 (Ind.Ct.App.2003). We granted transfer. 804 N.E.2d 752 (Ind.2003).

As its sole contention in this interlocutory appeal, Anthem asserts that the trial court erroneously found that the Providers satisfied the "predominance" and "superiority" requirements of T.R. 23(B)(3). The relevant language of T.R. 23(B) provides:

(B) Class actions maintainable. An action may be maintained as a class action if the prerequisites of subdivision (A) are satisfied, and in addition:

(1) * * *

(2) * * *; or

(3) the court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. The matters pertinent to the findings include:

(a) the interest of members of the class in individually controlling the prosecution or defense of separate actions;

(b) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class;

(c) the desirability or undesirability of concentrating the litigation of the claims in the particular forum;

(d) the difficulties likely to be encountered in the management of a class action.

For purposes of this opinion, the language of subsection (B)(3) stating the requirement that certain questions "predominate over any questions affecting only individual members" is referred to as the "predominance requirement." And the language requiring that "a class action is superior to other available methods for the fair and efficient adjudication of the controversy" is referred to as the "superiority requirement."

The determination of whether an action is maintainable as a class action is "committed to the sound discretion of the trial court." Northern Ind. Public Service Co. v. Bolka, 693 N.E.2d 613, 615 (Ind.Ct. App.1998), trans. denied. Appellate courts reviewing a class certification employ an abuse of discretion standard. Id. The trial court's certification determination will be affirmed if supported by substantial evidence. Id. A misinterpretation of law, however, will not justify affirmance under the abuse of discretion standard. McCullough v. Archbold Ladder Co., 605 N.E.2d 175, 180 (Ind.1993).

Predominance

As to the predominance requirement, Anthem principally contends that the requirement is met only if the main issues in the case can be resolved on a class-wide basis with generalized evidence. Anthem does not dispute that it commonly pays health insurance claims directly to patients of physicians that are not a member of one of Anthem's networks of preferred health care providers. Appellants' Br. at 21. But it argues that finding a common course of conduct alone does not satisfy the predominance requirement, and that any such finding must have "value" in adjudicating the individual claims of class members. Anthem asserts that the generalized evidence here fails to prove any of six essential elements² of the Providers' breach of contract claim based on assigned insurance benefits, and thus each class member will have to separately prove each element of the member's claim at trial. Because the questions common to the class will not predominate over the individual issues at trial, Anthem urges that the predominance requirement is not satisfied.

In response, the Providers primarily contend that, under Indiana case law, merely showing a common course of conduct will establish predominance. Asserting that Anthem admits "it engaged in a common course of conduct: it does not pay non-participating health care providers who have obtained assignment of benefits from their patients, but instead, pays their patients directly in derogation of the assignments," Appellees' Br. at 13, the Providers urge that the trial court was correct to thus find that a "common course of conduct permeated each member's claim and predominated." Id. at 13-14. The Providers argue that the existence of a common course of conduct is sufficient to establish predominance without needing to prove all or a major portion of the elements of each class member's claim. The Providers do not dispute the existence of any of the six specific issues of fact urged by Anthem, but assert that these do not defeat predominance and may be handled in a claims process after the legal issues are resolved.

The Providers additionally emphasize that predominance can be satisfied by either "questions of law or fact common to the members of the class," T.R. 23(B)(3), and assert that predominance is satisfied by two common legal issues that permeate all the class members' claim: (a) "whether a physician can sue a health insurer directly when the insurer pays a patient over an assignment of benefits," and (b) "whether a non-assignment clause in Anthem's identical health insurance policies can legally prevent direct recovery by the health care provider against the health insurance company." Appellee's Br. at 14.

Anthem replies that the trial court, in its class certification order, does not find predominance from, or even mention, either of the two legal issues urged by the Providers. As to "whether a physician can sue a health insurer directly," Anthem argues that this is not an issue in the case because the Providers' complaint asserts "nothing more than a breach of contract claim." Appellants' Reply Br. at 14-15. Anthem points out that when it filed its motion for summary judgment, it did not challenge the legal viability of the Providers' assignment of benefits theory. Anthem further contends that the Providers' second alleged issue, regarding an alleged non-assignment provision in its contracts, is not a common issue because "only some of Anthem's health plans contain non-assignment provisions" and that this question is therefore an individual rather than a common issue. Id. at 15. Anthem emphasizes that "[a]lthough Anthem does not dispute the [Providers'] legal theory, each class member still has to prove every element of that cause of action with his or her own evidence." Id.

We believe that the parties' arguments essentially present two questions as to the issue of predominance under T.R. 23(B)(3):

(1)

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