Health Reform WK-EDGE Representatives no longer have same claims as putative class, certification denied
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Friday, November 18, 2016

Representatives no longer have same claims as putative class, certification denied

By Kayla R. Bryant, J.D.

Consumers formerly enrolled in Blue Shield of California and Blue Shield of California Life & Health Insurance Company (Blue Shield) plans that were subsequently closed were properly denied class certification, as individualized issues in the group dominate common ones. In an unpublished opinion, the Court of Appeal of the State of California noted that not only did the consumers fail to show that class liability could be easily calculated, the interests of the two named plaintiffs would not coincide with the claims of the class they sought to represent (Martin v. California Physicians’ Service, November 8, 2016, Dondero, R.).

Facts. The consumers alleged that Blue Shield closed certain health plans, which required them to enroll in other plans with higher health care expenditures or prevented them from enrolling in new plans at all. Some had preexisting medical conditions and could not find comparable coverage due to these conditions. Blue Shield allegedly closed plans in three rounds: two in 2010 and one in 2012. The closed plans were not pooled with the open plans. The company grandfathered many policies following implementation of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148).

The consumers sought restitution and disgorgement of all money extracted from them by Blue Shield’s failure to offer adequate coverage and/or create a consumer risk pool of plans in the manner required by statute. They also sought injunctive relief in order to prevent the company from harming sick and elderly consumers.

Class certification. Blue Shield opposed the motion for class certification, arguing that the two consumers involved were inadequate class representatives. One was no longer a member of the class, and the other was pursuing atypical claims. This argument was supported by an expert witnesses’ testimony showing that economic damage incurred by consumers could not be determined without making such an analysis for each individual person. He estimated that 2,500 trained analysts would be required to work full-time for six months to make these determinations. The consumers’ expert disagreed and opined that the restitution could be calculated using Blue Shield’s automated rate calculation methodology.

Pooling issue. The trial court found that the consumers failed to satisfy their burden to show how the court could determine classwide liability because they did not provide any reliable discussion or evidence showing how the court could determine whether the closed plans had been appropriately pooled with open plans. On appeal, the consumers failed to challenge this point, and on reply they asserted that this issue is a merits issue and is not appropriate for consideration during class certification. The appeals court disagreed, finding not only that the consumers failed to supply adequate evidence, but also that the trial court did not abuse its discretion in ruling that the two consumers were inadequate class representatives because the named plaintiffs would not have any interest in the relief sought for the class.

The case is No. A145374.

Attorneys: Alan McQuarrie Mansfield (Whatley Kallas LLP) for Robert Martin. Amy Baird Briggs (Manatt, Phelps & Phillips, LLP) for California Physicians’ Service.

Companies: California Physicians’ Service

Cases: CaseDecisions NewsFeed EnrollmentNews InsurerNews CaliforniaNews

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