Sangwin v. State

• Decision Date: 13 December 2013
• Docket Number: No. DA 12–0712.,DA 12–0712.
• Citation: 373 Mont. 131,315 P.3d 279
• Parties: Steve SANGWIN and Amy Sangwin Wicks, Individually and For the Benefit of Their Minor Daughter, M.S., Plaintiffs and Appellees, v. STATE of Montana and Blue Cross and Blue Shield of Montana, Inc., Defendants and Appellants.
• Court: Montana Supreme Court

373 Mont. 131

315 P.3d 279

Steve SANGWIN and Amy Sangwin Wicks, Individually and For the Benefit of Their Minor Daughter, M.S., Plaintiffs and Appellees,

v.STATE of Montana and Blue Cross and Blue Shield of Montana, Inc., Defendants and Appellants.

No. DA 12–0712.

Supreme Court of Montana.

Submitted on Briefs Aug. 14, 2013.

Decided Dec. 13, 2013.

For Appellants: Maxon R. Davis; Davis, Hatley, Haffeman & Tighe, P.C.; Great Falls, Montana (for State of Montana), Michael F. McMahon; Stefan T. Wall; Bernard F. Hubley; McMahon, Wall & Hubley, PLLC; Helena, Montana (for Blue Cross and Blue Shield of Montana).

For Appellees: Alexander (Zander) Blewett, III; Anders Blewett; Hoyt & Blewett, PLLC; Great Falls, Montana.

Justice PATRICIA COTTER delivered the Opinion of the Court.

¶ 1 Steve Sangwin is an employee of the State of Montana and a qualified subscriber and beneficiary of the State of Montana Employee Benefits Plan (Plan). Blue Cross and Blue Shield of Montana, Inc. (BCBS) administers the Plan. McKinley Sangwin, the daughter of Steve Sangwin and Amy Sangwin Wicks, is also a beneficiary under the Plan. This case arises out of a dispute over the denial of a preauthorization request for a medical procedure for McKinley on the grounds that the procedure was “experimental for research.” The State appeals the order of the Eighth Judicial District Court, Cascade County, granting the Sangwins' motion for class certification. We affirm the court's order defining the class, but reverse and remand with respect to the question certified for class treatment.

ISSUES

¶ 2 A restatement of the issues on appeal is:

¶ 3 1. Did the District Court abuse its discretion in certifying the class under Rule 23(a), Montana Rules of Civil Procedure?

¶ 4 2. Did the District Court abuse its discretion in certifying the class under Rule 23(b), Montana Rules of Civil Procedure, and specifying for class treatment the question of whether the State breached its contract of insurance with the plaintiffs?

FACTUAL AND PROCEDURAL BACKGROUND

¶ 5 Steve Sangwin is a teacher at the Montana School for the Deaf and Blind in Cascade County, Montana. As an employee of the State, Steve is a qualified subscriber and beneficiary of the Plan. Steve and Amy's daughter, McKinley, is also a beneficiary under the Plan. McKinley was diagnosed with a severe degenerative disk disease, and when she was sixteen years old, her physicians recommended that she undergo artificial disk replacement surgery. The Sangwins requested preauthorization for the procedure from BCBS, the Plan administrator. BCBS denied the request in an October 8, 2009 letter and explained that, because McKinley was a minor, BCBS considered the operation “investigational.” The Plan expressly excluded investigational procedures. The letter contained a reference to the exclusions and limitations section of the Employee Benefits Summary Plan Document, which stated: “The following services and expenses are not covered: Services or procedures that are experimental procedures, as defined in Chapter 9, which are for research.” ¹ Under Chapter 9, an experimental procedure or service is defined as a procedure or service that “is experimental, investigational, unproven, or not a generally acceptable medical practice in the predominate [sic] opinion of independent experts utilized by the administrator of each plan.”

¶ 6 The Sangwins appealed the decision to the BCBS Medical Review Staff. In a December 8, 2009 letter, BCBS explained that the Medical Review Staff and Associate Medical Director had reviewed the documentation related to the preauthorization request and had decided to uphold the original denial. The Associate Medical Director further clarified that artificial disks were not Food and Drug Administration approved for patients under the age of 18. The Sangwins then filed an appeal with the State of Montana. After a meeting of the Health Care and Benefits Division appeals committee on May 6, 2010, the State upheld the denial, stating that there was “no documentation from the Food and Drug Administration showing this procedure is appropriate for someone under the age of 18.” Thus, the State considered it an experimental or investigational procedure that was specifically excluded under the Plan. After the denial, the Sangwins nonetheless proceeded with the proposed surgery, which was successful, incurring medical bills exceeding $55,000.

¶ 7 On June 8, 2010, the Sangwins initiated this action by filing a complaint in the Eighth Judicial District Court, Cascade County. The Sangwins filed an amended complaint in November 2010 and set forth five counts. The only relevant count for the purposes of this appeal is the request for certification of a class action. The Sangwins alleged that McKinley's artificial disk replacement surgery was not experimental or for research. They further alleged that BCBS and the State “have been denying the claims of participants and beneficiaries based on the experimental exclusion for research for years and years when the surgeries and other procedures were in no way meant for research and when, at best, the experimental exclusion for research is ambiguous and must be construed against Defendants.” The Sangwins defined class members as “other participants and/or beneficiaries of any such Plan in Montana which have had their employee benefits denied by the State of Montana based on the experimental exclusion for research” in the past eight years.

¶ 8 On September 20, 2012, the District Court granted the Sangwins' motion for class certification. On November 23, 2012, the District Court entered an order defining the class as:

“All persons who were participants, subscribers and/or beneficiaries of the State of Montana Employee Health Plan, including the State of Montana's Blue Cross Blue Shield Managed Care Plan, the Traditional Indemnity Plan and any other health plan affiliated with the State of Montana, who have had medical benefits denied by BCBS and/or the State of Montana based on the contention that the benefits were experimental, investigational, unproven, or not generally acceptable medical practice under the language of the State of Montana Employee Benefits Summary Plan Document unless such medical benefits were ‘for research’ from January 1, 2003, through December 18, 2011. The class includes those individuals whose claims were denied prior to medical benefits being rendered as well as those individuals whose claims were denied after the medical benefits were rendered.”

The District Court certified four claims for class treatment, including whether the State breached its contract, whether BCBS acted as an agent of the State and acted wrongfully, whether BCBS intentionally interfered with the contract between the State and Plaintiffs, and whether BCBS acted with malice. The District Court's order directed BCBS and the State to provide the Sangwins' counsel with the names and last known addresses of every potential class member.

¶ 9 On September 19, 2012, the District Court granted the Sangwins' motion for partial summary judgment and determined the Sangwins could pursue general tort damages against the State if they prevailed on their claim for breach of the covenant of good faith and fair dealing. That ruling is not subject to this interlocutory appeal. BCBS filed its notice of appeal on November 28, 2012, but later entered into a settlement with the Sangwins. BCBS is therefore not a party to this appeal. This being so, of the four issues certified for class treatment, the sole issue remaining so certified is whether the State breached its contract. The State filed its notice of appeal on December 6, 2012. The State challenges the District Court's order certifying the class.

STANDARD OF REVIEW

¶ 10 We review a district court's decision on a motion for class certification for an abuse of discretion. Chipman v. N.W. Healthcare Corp., 2012 MT 242, ¶ 17, 366 Mont. 450, 288 P.3d 193. The question is not whether this Court would have reached the same decision, but whether the district court acted arbitrarily without conscientious judgment or exceeded the bounds of reason. Chipman, ¶ 17 (quotation marks omitted). When reviewing a decision on class certification, we afford the trial court the broadest discretion because it “is in the best position to consider the most fair and efficient procedure for conducting any given litigation.” Jacobsen v. Allstate Ins. Co., 2013 MT 244, ¶ 25, 371 Mont. 393, 310 P.3d 452 (quoting Chipman, ¶ 17).

DISCUSSION

¶ 11 1. Did the District Court abuse its discretion in certifying the class under Rule 23(a), Montana Rules of Civil Procedure?

¶ 12 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, ––– U.S. ––––, ––––, 133 S.Ct. 1426, 1432, 185 L.Ed.2d 515 (internal citation omitted). Departure from the usual rule is justified if the class representative is part of the class and has the same interest and injury as the class members. Jacobsen, ¶ 27. “[C]lass action suits save the resources of courts and parties by permitting an issue potentially affecting every [class member] to be litigated in an economical fashion....” Jacobsen, ¶ 27 (internal citation omitted).

¶ 13 The propriety of a class action is governed by Rule 23 of the Montana Rules of Civil Procedure. Because the Montana version of Rule 23 is identical to the corresponding federal rule, federal authority on the issue of class certification is instructive. Chipman, ¶ 43.Rule 23(a) sets forth four prerequisites necessary to sustain a class action:

(1) the class is so numerous that joinder of all members is impracticable;

(2) there are questions of law or fact common to the class;

(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and

(4) the representative parties will fairly and adequately protect the interests...