United States District Court, D. Montana
PETER BYORTH and ANN McKEAN, on behalf of themselves and all those similarly situated, Plaintiffs and Appellees,
USAA CASUALTY INSURANCE COMPANY, and JOHN DOES I-X, Defendants and Appellants.
Submitted on Briefs: August 24, 2016
FROM: District Court of the Thirteenth Judicial District, In
and For the County of Yellowstone, Cause No. DV-15-0511
Honorable Gregory R. Todd, Presiding Judge
Appellants: Ian McIntosh, Kelsey E. Bunkers, Crowley Fleck,
PLLP, Bozeman, Montana
Jessica G. Scott, Wheeler Trigg O'Donnell LLP, Denver,
Appellees: John Heenan, Colette B. Davies, Bishop &
Heenan, Billings, Montana
Patricia Cotter, Justice.
case was a review of the order/judgment of the District
ORDERED by the Supreme Court in an opinion, that the decision
of the District Court is Reversed and Remanded.
appeal record is hereby returned to the Clerk of District
Court of Yellowstone County District, Court.
certify that the attached is a true and correct copy of the
opinion filed by the Supreme Court on November 22, 2016.
USAA Casualty Insurance Company (USAA) appeals from an order
of the Thirteenth Judicial District Court in Yellowstone
County certifying a class action pursuant to M. R. Civ. P.
23. We reverse the order of the District Court and remand for
The question on appeal is whether the District Court abused
its discretion in certifying the class pursuant to M. R. Civ.
P. 23. Following the structure of Rule 23, we divide this
question into two issues:
1. Did the District Court abuse its discretion in
certifying the class lender M. R. Civ. P. 23(a)?
2. Did the District Court abuse its discretion in
certifying the class under M. R. Civ. P. 23(b)(3)?
In September 2011, Peter Byorth was struck by a motor vehicle
while riding his bicycle. He was insured at the time by USAA
under an auto insurance policy that i provided $10, 000 in
medical payment coverage. Byorth submitted medical payment
claims totaling $85, 000, which USAA then sent to Auto Injury
Solutions (AIS) for review. Due to an alleged coding error in
the paperwork AIS required Byorth's physician to
complete, USAA initially denied Byorth's claims as
medically unnecessary. However, USAA eventually paid policy
limits to Byorth.
Ann McKean was also insured under a USAA auto insurance
policy that provided medical payments coverage. In February
2014, McKean was injured in a motor vehicle
: i accident and incurred damages far
greater than her policy limits. McKean submitted her medical
bills to USAA, and USAA forwarded them to AIS for review. AIS
allegedly determined several procedures McKean underwent were
not medically necessary, and USAA subsequently denied
On April 24, 2015, Byorth and McKean filed a complaint
against USAA alleging breach of fiduciary duties, breach of
contract, and violations of the Unfair Trade Practices Act,
§33-18-201, MCA (UTPA). Plaintiffs argued USAA's
practice of sending medical claims to AIS was "an
improper cost containment scheme designed to wrongfully
deprive Montana consumers of their first-party medical pay
benefits." Plaintiffs sought to recover actual and
punitive damages and to enjoin USAA from submitting future
claims to AIS for review.
On June 11, 2015, USAA removed the matter to federal court.
While the case was before the federal court, USAA filed its
answer, wherein USAA denied all allegations relating to
AIS's role in adjusting medical claims. The federal court
ultimately determined that it lacked subject matter
jurisdiction, and the case returned to the District Court. On
November 19, 2015, Plaintiffs filed a motion to certify the
proposed class. Six days later, USAA filed a motion to strike
the class allegations from Plaintiffs complaint. On December
15, 2015, USAA filed its response in opposition to I
certification. The District Court issued its order certifying
the class two weeks later, on December 29.
Plaintiffs' motion and brief in support of class
certification recited many of the allegations of their
complaint. In its motion to strike the class allegations from
the complaint, USAA argued that the class was
unascertainable, that individual issues predominated over
common issues, and that a class action was not the superior
method of litigation. USAA reasoned that no amount of
discovery would ever show that Plaintiffs' class could
overcome these deficiencies and satisfy the requirements of
In response to USAA's motion to strike, Plaintiffs
repeated their allegations regarding AIS's role in
reviewing medical claims. To support these allegations,
Plaintiffs appended two exhibits to their brief. First,
Plaintiffs provided an August 6, 2009, National Association
of Insurance Commissioners (NAIC) memorandum (hereinafter the
NAIC memo) discussing the status of Norton v. USAA
Casualty Ins. Co., No. CV-06-02810-PHX-DGC (D. Ariz.), a
class action alleging USAA relied on AIS payment
recommendations to pay less than the full amount owed on
medical claims. Plaintiffs also provided an excerpt from a
proposed settlement agreement dated May 27, 2008, wherein
USAA denied the Morton class allegations but
stipulated to a class for settlement purposes. The NAIC memo
indicates the parties were scheduled to file an amended
settlement agreement by November 6, 2009. Plaintiffs did not
provide evidence of a final settlement in Horton.
Second, Plaintiffs provided the District Court with an
undated excerpt from a Washington Superior Court's order
approving a class settlement in MySpine, PS v. USAA
Casualty Ins. Co., No. 12-2-32635-5 SEA (Wash.
Super. Ct). The settlement class in MySpine included
USAA insureds who had medical claim payments reduced due to I
certain "Reason Codes." The excerpt does not
mention AIS, nor does it explain what a "Reason
Code" is or if the codes were used erroneously.
In its December 15 brief in opposition to class
certification, USAA provided medical payment logs for Byorth
and McKean and the results of an AIS review of one of
McKean's claims. The payment logs list the dates USAA
received claims from Byorth and McKean, as well as the dates
USAA issued payments under the respective insurance;
policies. The logs indicate USAA did not pay many of the
claims submitted, but they do not include any reason for the
denials. The AIS review relates to coverage of an MRI McKean
received. The review is signed by a physician who reviewed