Franco v. Conn. Gen. Life Ins. Co., Civil Action No. 07-6039 (SRC)
| Decision Date | 14 April 2014 |
| Docket Number | Civil Action No. 07-6039 (SRC) |
| Parties | DARLERY FRANCO, Plaintiff, v. CONNECTICUT GENERAL LIFE INSURANCE CO., et al., Defendants. |
| Court | U.S. District Court — District of New Jersey |
FOR PUBLICATION
APPEARANCES:
Barry M. Epstein, Esq.
Barbara G. Quackenbos, Esq.
EPSTEIN & QUACKENBOS, P.C.
Bruce H. Nagel, Esq.
Randee M. Matloff, Esq.
NAGEL RICE, LLP
James E. Cecchi
CARELLA BYRNE BAIN GILFILLAN
CECCHI STEWART & OLSTEIN, PC
Stephen A. Weiss
Christopher A. Seeger
SEEGER WEISS
Christopher Burke, Esq.
Joseph Guglielmo, Esq.
Amanda Lawrence, Esq.
ATTORNEYS FOR PLAINTIFFS DARLERY FRANCO, DAVID CHAZEN AND CAMILO NELSON
Brian J. McMahon, Esq.
E. Evans Wohlforth, Jr., Esq.
William P. Deni, Jr., Esq.
GIBBONS P.C.
William H. Pratt, Esq.
Frank M. Holozubiec, Esq.
Joshua B. Simon, Esq.
Katherine L. McDaniel, Esq.
Warren Haskel, Esq.
KIRKLAND & ELLIS LLP
ATTORNEYS FOR DEFENDANTS
This matter comes before the Court upon the renewed motion for class certification filed on September 9, 2013 by Plaintiffs Darlery Franco, David Chazen and Camilo Nelson (collectively, "Subscriber Plaintiffs"). Cigna has opposed the motion. The Court denied Subscriber Plaintiffs' first motion for class certification by Order dated January 16, 2013. The Opinion issued by the Court in connection with that Order provides a detailed factual background and defines key terms that likewise apply to this motion, for example "ONET" and "UCR." Because the Court writes for the parties only, it will continue to rely on the samebackground information without repetition here and will also continue to use the same abbreviated terms as defined in the January 16, 2013 Opinion. (The Opinion relating to the first motion for class certification is reported at 289 F.R.D. 121 (D.N.J. 2013) and will hereinafter be referred to as "Franco I.")
In Franco I, the Court found that Subscriber Plaintiffs had adequately demonstrated that the proposed ERISA class satisfied the Rule 23(a) requirements of commonality and typicality but denied certification in large part because Subscriber Plaintiffs did not carry their burden of demonstrating that common questions of law and fact would predominate over individual issues.1 The Court identified three major deficiencies preventing the first motion for class certification from meeting Rule 23(b)(3)'s predominance requirement. In their first motion for class certification, Subscriber Plaintiffs failed to demonstrate (1) that Cigna plan language concerning UCR-based ONET benefits was uniform such that it could be applied to the entire class's claim to recover unpaid benefits; (2) that a violation of plan terms by Cigna under the abuse of discretion standard could be established based on common evidence; and (3) that damages could be calculated based on a standard methodology. The Court also found that class certification was frustrated by a class definition which failed to incorporate the identifyingaspects of membership: Cigna subscribers whose plans entitled them to ONET benefits based on a UCR standard to determine the allowed amount and whose ONET claims were determined using Ingenix data.
Subscriber Plaintiffs assert that this renewed motion for class certification is not, as Cigna has contended, an untimely motion for reconsideration in disguise. The briefs submitted by Subscriber Plaintiffs, however, unequivocally demonstrate that, in large part, Cigna's characterization of the motion is correct. The briefs contain numerous instances in which Subscriber Plaintiffs refer to the Court's conclusions on the prior class certification motion as "incorrect" and "mistaken." (Mot. at 22; Reply at 8 n.3.) Nevertheless, it is clear to the Court that portions of Subscriber Plaintiffs' motion indeed raise new arguments to address the impediments to class certification discussed in Franco I. The Court will, therefore, entertain this renewed motion for class certification pursuant to Federal Rule of Civil Procedure 23(b)(3), concentrating on Subscriber Plaintiffs' revised approach to demonstrating that the redefined classes - an ERISA Class and a RICO Class - meet the (b)(3) requirements.
This motion corrects some of the problems identified in Franco I. Subscriber Plaintiffs inject greater precision into the definitions of their two proposed classes. They also narrow the UCR language to two basic formulations widely used in Cigna plans during the relevant time period.
Even as pared down, however, the classes do not present common liability issues that will predominate over individual ones. As Cigna points out, even plans that use one of the two broad UCR definitions vary as to the information that Cigna may consider in determining ONET benefits. The record shows multiple combinations of the UCR provisions and additional clauses that influence the determination of an appropriate UCR and ONET benefit. For reasons theCourt will discuss, these variations would have a significant impact on a liability analysis. Yet, Subscriber Plaintiffs fail to demonstrate how a classwide trial of the ERISA and RICO claims would cohesively address such combinations and permutations of applicable plan language. Another substantial obstacle to class certification is the lack of any demonstration that injury, an essential component of liability, is capable of classwide proof. The motion makes the erroneous assumption that, if Subscriber Plaintiffs succeed in proving at trial that Ingenix was a flawed database, harm to all members of the redefined ERISA and RICO Classes necessarily follows. In the discussion below, the Court will elaborate on the reasons that Subscriber Plaintiffs' current effort falls short of passing the rigorous analysis that must be applied to ascertain whether the proposed classes actually conform with Rule 23. Marcus, 687 F.3d at 591. Each proposed class will be addressed in turn.
The ERISA Class has been redefined in a manner that makes class membership readily ascertainable. According to this motion, the putative class would consist of:
All CIGNA subscribers from March 1, 1998 through the date of class certification ("Class Period") in a fully-insured or self-insured CIGNA plan in which CIGNA promised to pay reasonable and customary amounts defined as the charge of "most providers" in the "same geographic area" or promised a "maximum reimbursable charge" defined as a "percentile of all providers" in the "same geographic area" and for whom CIGNA used Ingenix data to determine its allowed amount and which allowed amount was less than the non-participating provider's billed charge for any medical service or supply, broadly defined to include medical services and supplies of all kinds, including dental and mental health. The Class excludes CIGNA's MRC2 plans that refer to payment to providers based on the federal Medicare program fee schedule. The Class excludes benefits where CIGNA's allowed amount was zero or which weredetermined under CIGNA's Network Savings Plan ("NSP") policy. The Class also excludes any judge involved in the adjudication of this action and Court personnel.
The revised definition includes objective criteria: specific plan language regarding the problematic UCR standard for ONET coverage, the use of Ingenix to determine the allowed amount on an ONET claim, and an allowed amount less than the provider's billed charge. Thus, in line with Subscriber Plaintiffs' theory of the case, the definition captures what the movants allege to be subscribers' rights under their Cigna plans, Cigna's conduct in violation of those rights and injury. In other words, it tailors the class to the ERISA claims at issue in this case: the alleged underpayment of an ONET claim in a manner contrary to plan language because of Cigna's use of Ingenix to determine UCR. The Court notes that the revised ERISA Class definition addresses the issue, raised in Franco I, presented by situations in which the allowed amount is less than the provider's billed charge for reasons unrelated to Ingenix, for example because Ingenix was not used at all or because the subscriber has not yet satisfied his deductible and thus the allowed amount on the claim is zero.
Rule 23(b)(3) requires that questions common to the class predominate such that the class will "prevail or fail in unison" on its claims. Amgen, Inc. v. Connecticut Retirement Plans and Trust Funds, 133 S. Ct. 1184, 1191 (2013). Predominance is similar to Rule 23(a)(2)'s requirement of commonality in that both are concerned with ensuring that the putative class presents common questions of law of fact. Indeed, the Rule 23(a) commonality requirement is generally regarded as subsumed by the more stringent Rule 23(b)(3) predominance requirement. Sullivan v. D.B. Investments, Inc., 667 F.3d 273, 297 (3d Cir. 2011) (en banc), cert. denied, 132 S.Ct. 1876 (2012). Predominance, however, imposes a "far more demanding standard," as it"tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation." In re Ins. Brokerage Antitrust Litig., 579 F.3d 241, 266 (3d Cir. 2009) (quoting Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 623-24 (1997)). A class of plaintiffs seeking to try claims by representation pursuant to Rule 23(b)(3) may satisfy the predominance requirements only when the plaintiffs demonstrate that the elements of their claim are "capable of proof at trial through evidence that is common to the class rather than individual to its members." In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 311-12 (3d Cir. 2009); cf. Newton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154, 172 (3d Cir. 2001) ().
The Court's Rule 23(b)(3) analysis must not consider whether the merits questions will be answered in a plaintiff's...
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