Tinman v. Blue Cross and Blue Shield

• Decision Date: 09 February 2005
• Docket Number: Docket No. 243652.
• Citation: 692 N.W.2d 58,264 Mich. App. 546
• Parties: Tzvih TINMAN, a minor, by his next friend(s) Ilene Tinman and/or Michael Tinman, on behalf of himself and all other similarly situated, Plaintiff-Appellee, v. BLUE CROSS AND BLUE SHIELD OF MICHIGAN, Defendant-Appellant.
• Court: Court of Appeal of Michigan — District of US

692 N.W.2d 58

264 Mich. App. 546

Tzvih TINMAN, a minor, by his next friend(s) Ilene Tinman and/or Michael Tinman, on behalf of himself and all other similarly situated, Plaintiff-Appellee, v.BLUE CROSS AND BLUE SHIELD OF MICHIGAN, Defendant-Appellant.

Docket No. 243652.

Court of Appeals of Michigan.

Submitted June 15, 2004, at Detroit.

Decided December 7, 2004, at 9:05 a.m.

Released for Publication February 9, 2005.

Elwood S. Simon & Associates, P.C.(by Elwood S. Simon, Michael G. Wassman, and Lance C. Young), Birmingham, and Lebenbom & Pernick, LLP(by Stuart Lebenbom), Detroit, for the plaintiffs.

Bodman, Longley & Dahling LLP(by James J. Walsh, Julie A. Lawson, and G. Christopher Bernard), Ann Arbor, and Joseph W. Murray and Colleen C. Cohan, Detroit, for the defendant.

Before: MARKEY, P.J., and WILDER and METER, JJ.

WILDER, J.

In this class action, defendant appeals by leave granted the trial court's denial of defendant's motion to decertify the class action.We reverse.

I

At all times relevant to this appeal, plaintiff, Tzvih Tinman, was provided health care coverage through the contract (also known as a "certificate") between his father, Michael Tinman, and defendant, Blue Cross and Blue Shield of Michigan (BCBSM).On June 14, 1999, plaintiff's mother, Ilene Tinman, took plaintiff, then eleven years old, to the emergency room at William Beaumont Hospital in Detroit because he was vomiting and had a fever.Plaintiff, who suffers from a debilitating illness, had undergone surgery to correct scoliosis a few days before visiting the emergency room.Hospital personnel treated plaintiff and released him to the care of his home nurse.Subsequently, plaintiff's health care providers billed defendant for plaintiff's emergency room care.Although defendant paid the laboratory component of the facility charge resulting from plaintiff's visit, defendant denied payment for the remainder of the facility charge, including charges from the pharmacy and for medical supplies, and the physician charge.Defendant then sent plaintiff an explanation of benefits (EOB) form that, with regard to a portion of the claim, explained that

[t]his service is not payable because the diagnosis reported on the claim does not meet our criteria for a medical emergency.

However, if you believe the patient's signs and symptoms could have resulted in serious bodily harm or death, please contact your physician to be sure those symptoms were reported, or call the BCBSM Customer Service number at the top of the first page of this statement.

Regarding the other charges for which defendant denied coverage,¹ the EOB stated that "[a] portion of this service isn't payable because your contract covers it only when the condition treated is either life threatening or it is the result of an accidental injury caused by an outside force."Although the EOB stated that it was not a bill, plaintiff's father immediately paid the hospital the balance remaining for the charges for which the EOB indicated a denial of coverage.

Shortly thereafter, on October 8, 1999, plaintiff filed a complaint in the Wayne Circuit Court on behalf of himself and other similarly situated individuals, alleging in count one that defendant systematically violates MCL 550.1418² by denying coverage for emergency health care services on the basis of the insured's final diagnosis.Plaintiff asserted that because a federal law requires health care facilities to screen patients upon entry to an emergency department to determine whether the patient suffers from an "emergency medical condition," by the time the patient has been admitted, the hospital has determined that a medical emergency exists.Therefore, plaintiff alleged, because the definition of "emergency medical condition" in the federal law mirrors the description in MCL 550.1418, defendant must provide coverage for emergency health care services rendered from the time of the federally mandated assessment until the point of patient stabilization.

Plaintiff also asserted in count one that, by allegedly denying coverage on the basis of the final diagnosis, defendant violates MCL 550.1402.MCL 550.1402(1)(a) prohibits health care corporations from "[misrepresenting] pertinent facts or certificate provisions relating to coverage" and MCL 550.1402(1)(d) prohibits "[refusal] to pay claims without conducting a reasonable investigation based upon the available information."³In count two, plaintiff asserted that defendant's conduct in denying coverage for emergency health care services on the basis of the final diagnosis constitutes a breach of its contracts with its subscribers.In lieu of filing an answer, defendant filed a motion for summary disposition in which it asserted, among other things, that the right of action described in MCL 550.1402(11)⁴ does not encompass the right of plaintiff to sue defendant for alleged violations of MCL 550.1418.After defendant moved for summary disposition, but before the trial court ruled on defendant's motion, plaintiff filed a motion requesting class-action certification.Regarding the "commonality" requirement of MCR 3.501(A)(1)(b),⁵plaintiff asserted that "the single predominate question common to the Class is whether BCBSM violates Michigan law and its Certificates when it denies health care benefits for emergency health care services based on the final diagnosis."

The trial court, Judge Sharon Tevis Finch, granted defendant's motion in part and denied it in part.In its written opinion, the trial court concluded that, while MCL 550.1418 does not permit a private cause of action, MCL 550.1402 nevertheless permits a cause of action for violations of that statute.The trial court stated that

the subject conduct embraced by MCL 550.1418(i.e. denial of benefits based on final diagnosis) provides the predicate for an action under one or more of the listed prohibited types of conduct under MCL 550.1402(1)(a)-(m).The fact that MCL 550.1418 does not provide a remedy does not bar plaintiff from an akin [sic] suit under MCL 550.1402.[Emphasis added.]

The trial court also granted plaintiff's motion to certify a class action.With regard to the "commonality" requirement, the trial court stated:

Contrary to the tenor of defendant's argument, the rule does not require that all questions necessary for resolution be common, rather that there be "a common question of law or fact," ....Here, the predominant issue is whether defendant violates statutory law (i.e. MCL 550.1402) and its certificates if and when it denies benefits for emergency services based upon a final diagnosis.The [c]ourt finds the rule satisfied.

Consequently, as plaintiff requested, the trial court certified a class consisting of

all persons who, during the period from June 9, 1998, through the present, were, are[,] and will be entitled to receive health care benefits from Blue Cross & Blue Shield of Michigan (BCBSM) for emergency health care services, but were, or will be, denied health care benefits for emergency health care services by BCBSM based on the final diagnosis of their medical condition (excluding any officers or directors of BCBSM, and their family members).

The trial court did not separately address the propriety of certifying each count of plaintiff's complaint, but determined that, as a whole, plaintiff's suit merited class-action certification.Defendant subsequently removed plaintiff's suit to federal court, claiming that certain claims of potential class members were governed by the Employee Retirement Income Security Act (ERISA),29 U.S.C. 1001 et seq., which provided federal question jurisdiction.In federal court, defendant requested summary judgment and decertification of the class action.The federal district court dismissed the potential claims affected by ERISA because the class members had not complied with ERISA's requirement that they exhaust their administrative remedies.Tinman v. Blue Cross & Blue Shield of Michigan, unpublished memorandum opinion and order of the United States District Court, Eastern District of Michigan, issued January 31, 2002(Docket No. 00-CV-72327-DT).Because the federal court dismissed the ERISA-related claims, it remanded plaintiff's remaining state law claims to the Wayne Circuit Court.The federal court also stated that, in light of its remand, defendant's motion to decertify the class action was moot and could be renewed in state court.On remand, this case was assigned to Judge Warfield Moore, Jr., as successor to Judge Finch.

On March 27, 2002, defendant filed a motion in the trial court to decertify the class action.⁶Defendant argued that plaintiff's class definition was inadequate and that plaintiff's action did not meet the requirements for class-action certification.Relevant to this appeal, defendant claimed that the class definition was deficient because each potential class member's medical records would need to be examined to determine whether an individual was "eligible to receive health care benefits... for emergency health care services."Defendant also asserted that the commonality requirement was not satisfied because of the highly individualized questions presented in this case and the fact that the common question identified does not advance the litigation.Plaintiff responded that defendant's practice of rejecting claims on the basis of the final diagnosis, in and of itself, violates the law, and that individualized inquiries are not necessary.

Without conducting oral argument, the trial court issued an opinion denying defendant's motion for decertification.In its opinion, the trial court first analyzed defendant's motion as if it were a motion for reconsideration of the order certifying the class action, pursuant to MCR 2.119(F).The trial court denied defendant's motion, deciding that it was not a timely filed motion for reconsideration and that it presented issues that had been previously decided or should have been previously...