Creveling v. GEICO

• Decision Date: 03 July 2003
• Docket Number: No. 64
• Citation: 828 A.2d 229,376 Md. 72
• Parties: ASHLEIGH CREVELING v. GOVERNMENT EMPLOYEES INSURANCE COMPANY. Sharon Ferguson-Owens, et al., v. State Farm Mutual Automobile Insurance Company.
• Court: Maryland Court of Appeals

828 A.2d 229

376 Md. 72

ASHLEIGH CREVELING v. GOVERNMENT EMPLOYEES INSURANCE COMPANY.

Sharon Ferguson-Owens, et al., v. State Farm Mutual Automobile Insurance Company.

Nos. 64, Sept. Term 2002, .

Court of Appeals of Maryland.

July 3, 2003.

Kieron F. Quinn and Martin E. Wolf (Quinn, Gordon & Wolf, Chtd. of Towson, Robert K. Jenner of Janet, Willoughby, Gershon, Getz & Jenner, LLC of Baltimore, and Bruce M. Plaxen of Plaxen & Adler, P.A., of Columbia), all on briefs for appellant/cross-appellee.

George M. Church (Laura A. Cellucci, Scott M. Richmond, Evelyn Becker of Church Loker & Silver, P.A., on brief), of Baltimore, for appellee/cross-appellant.

BELL, C.J., and ELDRIDGE, RAKER, WILNER, CATHELL, HARRELL and BATTAGLIA, JJ.

RAKER, Judge.

Appellants Ashleigh Creveling, Sharon Ferguson-Owens, and Michael Pettiford filed suit against appellees Government Employees Insurance Company (GEICO) and State Farm Mutual Automobile Insurance Company (State Farm), alleging breach of contract for the companies' failure to pay the full amount of their Personal Injury Protection (PIP) insurance claims. The overarching question presented by these consolidated cases is whether the trial court properly denied class certification. We shall hold that the Circuit Court of Baltimore City did so, and accordingly, shall affirm.

I. Facts

A. Creveling v. GEICO

Appellant Ashleigh Creveling was injured in an automobile accident on November 15, 1997. As a result of her injuries, she sought medical treatment. On November 9, 2000, Creveling's attorney submitted a PIP claim¹ for $363.00, an amount reflecting expenses paid by her health maintenance organization (HMO), Kaiser Permanente. Her insurer, appellee GEICO, did not pay the claim. Instead, on December 1, 2000, a GEICO claims examiner responded with a short letter noting: "We have received the medical billing presented for your client. Under Maryland Personal Injury Protection (PIP), we will consider expenses that are incurred by the patient. Please provide documentation of payments made by Ms. Creveling for her care with Kaiser. Once we receive this information, we will consider these invoices." Her claim was denied because a collateral source—her HMO— had incurred the costs of treatment.

Creveling filed a class action complaint in the Circuit Court for Baltimore City on April 19, 2001, to recover PIP benefits she previously had been denied. The Second Amended Complaint alleged one count— breach of contract—and prayed for class certification, monetary damages, injunctive and declaratory relief. The complaint alleged that GEICO's refusal to pay her PIP claim in full constituted a breach of the insurance contract. Creveling asserted the claim on behalf of herself and a class of persons for whom GEICO denied or reduced PIP benefits "as a consequence of payments allegedly made by any collateral source or as a consequence of limiting such payments to the sum actually paid, or lost, by the covered person." On July 23, 2001, Creveling filed a Motion for Class Certification pursuant to Maryland Rule 2-231(b)(3). While the motion was pending in the trial court, GEICO tendered to Creveling the full amount of her PIP claim plus interest.² Creveling rejected the tender and pursued her individual claim and class certification.

B. Ferguson-Owens v. State Farm

On May 26, 2000, appellant Sharon Ferguson-Owens was injured in an automobile accident. After seeking medical treatment for her injuries, Ferguson-Owens filed a PIP claim with her insurer, appellee State Farm, that included a $30.00 bill from her HMO, University Care. State Farm reimbursed Ferguson-Owens for $10.00, the amount of her co-payment, but, without comment, did not pay the remainder of the claim.

On July 20, 2000, appellant Michael Pettiford suffered an injury in an automobile accident. Pettiford submitted a PIP claim to his insurer State Farm in the amount of $499.50 for medical treatment provided by his HMO, Kaiser Permanente. On January 16, 2001, State Farm denied PIP benefits sought on his behalf by Kaiser Permanente in a letter that explained the company's then current policy that predated our decision in Dutta v. State Farm, 363 Md. 540, 769 A.2d 948 (2001). State Farm noted that

"the HMO, and not State Farm, is solely liable to the health care provider for the covered services provided to the HMO insured.

"Pursuant to the plain language of the PIP statute, State Farm's liability for a health care charge arises only if and when the HMO insured `incurs' or becomes personally liable for the expense."

In short, State Farm denied liability on the basis that PIP insurance coverage excluded expenses incurred by entities other than the insured.

Ferguson-Owens filed a class action complaint against State Farm in the Circuit Court for Baltimore City on the same date as Creveling—April 19, 2001—seeking reimbursement for the portion of her PIP claim previously denied. Her complaint alleged breach of contract and requested class-action status, monetary damages, injunctive and declaratory relief. The complaint proposed the same class as the Creveling complaint: persons whose PIP benefits were denied or reduced because of collateral source payments. Before Ferguson-Owens moved for class certification, State Farm tendered full payment of her PIP claim, with interest. Ferguson-Owens rejected the payment; nevertheless, State Farm moved to dismiss the complaint on the grounds that its tender had rendered her individual claim moot. The Circuit Court denied the motion. A few days after the tender, July 27, 2001, Ferguson-Owens filed a Motion for Class Certification. In response to the tender, she filed a Second Amended Complaint on September 5, 2001, to add appellant Pettiford as a named plaintiff; State Farm tendered full payment to him as well.

C. The Trial Court

Following individual hearings on each Motion for Class Certification, the Circuit Court for Baltimore City denied the motions. In both cases, the trial court found that the proposed class satisfied the numerosity, typicality, and adequacy of representation requirements of Rule 2-231(a) but that the proposed class did not satisfy the commonality requirement. The court reasoned that the cases presented many liability issues requiring individual inquiry unique to each class member, including whether the medical treatment received was accident related, whether the treatment was necessary in light of the injury sustained, and whether the amount sought reflects a reasonable cost for the services provided. The trial court ruled that class certification was inappropriate under Rule 2-231(a) because the plaintiffs failed to satisfy the requirement that there be questions of law or fact common to the class. Following these decisions, defendants again tendered to plaintiffs the unpaid portion of their PIP claims.

Plaintiffs then moved for summary judgment on their individual claims. Defendants opposed these motions on mootness grounds; State Farm filed a counter-motion for summary judgment or dismissal, and GEICO filed a motion to dismiss. The trial court granted plaintiffs' motions for summary judgment.

Plaintiffs noted timely appeals of the class certification denials to the Court of Special Appeals, and defendants filed timely cross-appeals to that court seeking review of the denial of their motions. Pursuant to Rule 8-302, plaintiffs petitioned this Court for writs of certiorari before the Court of Special Appeals entertained the appeals. We granted certiorari and ordered that argument in the two cases be heard together. Ferguson-Owens v. State Farm, 371 Md. 261, 808 A.2d 806 (2002); Creveling v. GEICO, 371 Md. 68, 806 A.2d 679 (2002).

The primary issue presented in this appeal is the propriety of the trial courts' denial of class certification. Appellants also ask this court to determine the appropriate standard of review for a denial of class status and whether an insurance company, by denying a claim on one ground, waived or is estopped from reevaluating claims during the remediation process and arguing other grounds for denial of coverage. Appellees' cross-appeal raises the question whether the tender of the full amount of appellants' PIP claims, prior to and after the denials of class certification, rendered the actions moot. We hold that the trial court properly denied the Motions for Class Certification.³

II. Dutta v. State Farm

Appellants filed suit against appellees following this Court's recent decision, Dutta v. State Farm, 363 Md. 540, 769 A.2d 948 (2001). In that case, Dr. Sisir Dutta, injured in an automobile accident, submitted a PIP claim seeking reimbursement for medical treatment. Id. at 543-44, 769 A.2d at 950. His insurer, State Farm, refused to reimburse the portion of his hospital bill that had been paid originally by Dutta's HMO and only paid him the amount of his co-payment. Dutta filed suit, alleging that State Farm wrongly denied his PIP claim under Maryland insurance law. We considered whether the cost of Dutta's treatment was an incurred expense for which he was entitled to recover even though his HMO actually incurred the costs. Id. at 547, 769 A.2d at 952. We held that, under Maryland Code (1997 Repl.Vol.) § 19-505 of the Insurance Article, insurers must pay PIP benefits to an insured regardless of the fact that a collateral source such as an HMO incurred the expense. Id. at 563-64, 769 A.2d at 961-62.

Prior to Dutta, appellees interpreted Maryland law as requiring insurers to pay for medical expenses incurred by the insured, not including expenses paid for by a third party such as an HMO. Appellants' purportedly seek to enforce the holding of Dutta. Nine days after we filed Dutta, appellants initiated these actions to obtain reimbursement for PIP claims denied because of collateral source payments. Around the same time, appellees changed their policy prospectively to comply with Dutta and initiated a "remediation" program to reimburse...