Banks v. Allstate Fire & Cas. Ins. Co.

• Decision Date: 13 April 2020
• Docket Number: Civil No. 3:19-CV-01617
• Parties: Janine BANKS, et al., Plaintiffs, v. ALLSTATE FIRE AND CASUALTY INSURANCE COMPANY, and Allstate Insurance Company, Defendants.
• Court: U.S. District Court — Middle District of Pennsylvania

454 F.Supp.3d 428

Janine BANKS, et al., Plaintiffs,

v.ALLSTATE FIRE AND CASUALTY INSURANCE COMPANY, and Allstate Insurance Company, Defendants.

Civil No. 3:19-CV-01617

United States District Court, M.D. Pennsylvania.

Signed April 13, 2020

Charles Thomas Kannebecker, Charles Kannebecker, Weinstein Schneider Kannebecker & Lokuta, Milford, PA, Christopher Michael Placitella, Cohen, Placitella & Roth, PC, Red Bank, NJ, Michael Coren, Robert L. Pratter, Cohen, Placitella & Roth, Philadelphia, PA, for Plaintiffs Janine Banks, Spine Surgery Associates.

Charles Thomas Kannebecker, Charles Kannebecker, Weinstein Schneider Kannebecker & Lokuta, Milford, PA, Christopher Michael Placitella, Cohen, Placitella & Roth, PC, Red Bank, NJ, Robert L. Pratter, Cohen, Placitella & Roth, Philadelphia, PA, for Plaintiff Ambulatory Surgical Center of Somerset.

Anupama Prasad, Andrea Cortland, Cozen O'Connor, Philadelphia, PA, Laura Bea Dowgin, Melissa F. Brill, Cozen O'Connor, New York, NY, for Defendants.

MEMORANDUM

JENNIFER P. WILSON, United States District Court Judge

This is a putative class action regarding the payment of personal injury benefits under Pennsylvania car insurance policies. Plaintiffs—an insured individual from Pennsylvania and two New Jersey medical providers—allege that Defendant insurance companies wrongfully applied a New Jersey fee schedule to claims made under Pennsylvania insurance policies so as to underpay the claims. The case is presently before the court on Defendants’ motion to dismiss. For the reasons that follow, the motion is granted in part and denied in part.

PROCEDURAL HISTORY

This case was originally filed via a complaint in New Jersey state court on November 12, 2018. (Doc. 1-1.) On December 12, 2018, Defendants removed the case to the United States District Court for the District of New Jersey. (Doc. 1.) Defendants moved to dismiss the complaint on February 28, 2019, after which Plaintiffs filed an amended complaint. (Docs. 6, 9.) Defendants again moved to dismiss on April 4, 2019, and the court granted the motion on May 14, 2019, dismissing the amended complaint without prejudice and allowing Plaintiffs to file a second amended complaint within 30 days. (Docs. 15, 29.)

Plaintiffs filed a second amended complaint on June 13, 2019. (Doc. 30.) Defendants filed a motion to dismiss the second amended complaint on July 10, 2019, arguing that the court should dismiss the second amended complaint for failure to state a claim upon which relief may be granted and for improper venue, or, in the alternative, transfer the case to the Middle District of Pennsylvania. (Doc. 32.) The court granted the motion in part on September 18, 2019, transferring the case to this district and deferring consideration of the motion to dismiss for failure to state a claim to the transferee court. (Docs. 44–45.) The motion to dismiss and all associated briefs were accordingly refiled with this court following the transfer from the District of New Jersey. (See Docs. 47–50.)

Upon being transferred, the case was initially assigned to United States District Judge Robert D. Mariani. Judge Mariani set case management deadlines to govern the case on October 28, 2019. (Doc. 60.) The case was then reassigned to the undersigned pursuant to a verbal order from Chief United States District Judge Christopher C. Conner on November 15, 2019. Following the reassignment, the court vacated the previously scheduled case management deadlines and specified that new deadlines would be set, if necessary, upon the resolution of the Defendants’ motion to dismiss. (Doc. 65.)

FACTUAL BACKGROUND

According to the allegations in the amended complaint, Plaintiff Janine Banks ("Banks") is a resident of Pennsylvania who maintained a car insurance policy with the Defendants in Pennsylvania. (Doc. 30 ¶¶ 9–19.) The policy¹ provided that the Defendants would pay first-party benefits for medical expenses, which were defined as follows:

9. "Medical expenses" means reasonable and necessary charges incurred for:

a) medical treatment, including but not limited to:

(1) medical, hospital, surgical, nursing and dental services;

(2) medications, medical supplies and prosthetic devices; and

(3) ambulance;

b) medical and rehabilitative services, including but not limited to:

(1) medical care;

(2) licensed physical therapy, vocational rehabilitation and occupational therapy;

(3) osteopathic, chiropractic, psychiatric and psychological services; and

(4) optometric services, speech pathology and audiology;

c) nonmedical remedial care and treatment rendered in accordance with a recognized religious method of healing.

(Doc. 48-2 at 27 (emphasis in original).) The policy provided further guidance on the payment of medical expenses in the "Customary Charges for Treatment" section, which stated:

The amount we will pay a person or institution providing treatment, accommodations, products or services to an eligible person for an injury covered by medical expense benefits shall not exceed the amount the person or institution customarily charges for like treatment, accommodations, products and services in cases involving no insurance.

(Id. at 30 (emphasis in original).)

Banks was involved in a car accident while she was covered by the policy and suffered physical injuries. (Doc. 30 ¶ 21.) Following the accident, she received treatment for her injuries from Plaintiff Spine Surgery Associates and Plaintiff Ambulatory Surgical Center of Somerset (collectively referred to as "Provider Plaintiffs"), both of which are New Jersey professional corporations. (Id. ¶¶ 10–11, 23.) No member of either professional corporation is licensed to practice in Pennsylvania. (Id. ¶¶ 10–11.)

After receiving treatment from the Provider Plaintiffs, Plaintiff Banks filed a claim with the Defendants for medical benefits under her insurance policy. (Id. ¶ 24.) Defendants applied a New Jersey fee schedule to Banks's claim, which reduced the amount of money Defendants had to pay for the claim. (Id. ¶¶ 5, 25.) As a result of Defendants applying the New Jersey fee schedule to Banks's claim, Banks was forced to pay $74,618.14 that she would not otherwise have had to pay, Spine Surgery Associates received $44,837.13 less than it would have otherwise received, and Ambulatory Surgical Center of Somerset received $29,781.01 less than it would have otherwise received. (Id. ¶¶ 34–36.) The second amended complaint alleges that, rather than applying the New Jersey fee schedule, Defendants were obligated to pay Banks's "reasonable and necessary medical expenses as customarily charged by medical care providers for like treatment, accommodations, products, and services in cases involving no insurance." (Id. ¶ 20.)

Plaintiffs purport to represent two classes of similarly situated plaintiffs.² First, Plaintiffs assert that Plaintiff Banks represents a class of Pennsylvania residents ("the insured class") that (1) were insured under car insurance policies issued by Defendants in Pennsylvania, (2) injured in car accidents in Pennsylvania, (3) received medical treatment for their injuries from medical providers outside of Pennsylvania who were not licensed to practice in Pennsylvania, and (4) had the payment of their claims reduced when the Defendants applied "auto medical payment fee schedules." (Id. ¶ 40.) Second, Plaintiffs assert that the Provider Plaintiffs represent a class of medical providers ("the health care provider class") that (1) treated at least one individual meeting the definition of the insured class, (2) were not licensed to practice in Pennsylvania, (3) filed a claim for benefits arising from the treatment of a member of the insured class, and (4) had the amount of the claim reduced by the Defendants’ "application of an auto medical payment fee schedule." (Id. )

The second amended complaint raises eight counts: counts for breach of contract, breach of the implied covenant of good faith and fair dealing, violation of Pennsylvania's Unfair Trade Practices and Consumer Protection Law ("UTPCPL"), and violation of Pennsylvania's Insurance Bad Faith Act on behalf of Banks and the other members of the insured class; three counts for "payment of medical billing" on behalf of the Provider Plaintiffs and the other members of the health care provider class; and one count for unjust enrichment on behalf of the Provider Plaintiffs and the other members of the health care provider class. (Id. ¶¶ 57–143.)

JURISDICTION

This court has jurisdiction under 28 U.S.C. § 1332, which allows a district court to exercise subject matter jurisdiction where the parties are citizens of different states and the amount in controversy exceeds $75,000.

Here, the citizenship requirement of § 1332 is met because the named Plaintiffs are citizens of Pennsylvania and New Jersey and the Defendants are citizens of Illinois. As for the amount in controversy requirement, the amount in controversy in a case that is removed from state court on the basis of diversity jurisdiction is based on "the sum demanded in good faith in the initial pleading." 28 U.S.C. § 1446. Here, Plaintiffs’ initial complaint alleged that Banks suffered damages in the amount of $74,618.14 and sought treble damages under the UTPCPL. (Doc. 1-1 ¶¶ 30, 64.) Treble damages are available under the UTPCPL, see Nexus Real Estate, LLC v. Erickson , 174 A.3d 1, 4 (Pa. Super. Ct. 2017), and are properly considered in computing the amount in controversy for purposes of diversity jurisdiction. See Samuel-Bassett v. KIA Motors Am., Inc. , 357 F.3d 392, 401 (3d Cir. 2004). Accordingly, the amount in controversy requirement is met because Plaintiffs’ initial complaint demanded damages of $74,618.14 and treble damages in good faith.³

STANDARD OF REVIEW

In order "[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting ...