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Byorth v. USAA Casualty Insurance Co.

United States District Court, D. Montana, Billings Division

August 20, 2018

PETER BYORTH and ANN McKEAN, on behalf of themselves and all those similarly situated, Plaintiffs,
v.
USAA CASUALTY INSURANCE COMPANY and JOHN DOES I-X, Defendants.

          ORDER DENYING PLAINTIFFS' MOTION TO REMAND

          TIMOTHY J. CAVAN UNITED STATES MAGISTRATE JUDGE

         Plaintiffs filed this putative class action in the Montana Thirteenth Judicial District Court, Yellowstone County, Montana on April 24, 2015, alleging Defendant USAA Casualty Insurance Company (“USAA”) engaged in an improper cost containment scheme designed to wrongfully deprive Montana consumers of first-party medical payment benefits. (Doc. 5.) Plaintiffs assert claims for breach of fiduciary duty, breach of contract and unfair trade practices. (Id.)

         USAA filed a Notice of Removal on November 17, 2017, invoking jurisdiction under the Class Action Fairness Act of 2005 (“CAFA”), 28 U.S.C. §§ 1332, 1453. (Doc. 1.) Presently before the Court is Plaintiffs' Motion to Remand. (Doc. 25.) USAA has filed an opposition, and Plaintiff has replied. (Docs. 30, 33.) USAA has also filed a Motion to Strike Plaintiffs' reply. (Docs. 34, 36, 37.) These motions are fully briefed and ripe for the Court's review.

         The Court finds this matter is suitable for determination on the papers. Having considered the parties' submissions, IT IS HEREBY ORDERED that Plaintiff's Motion to Remand is DENIED.

         I. BACKGROUND

         On April 24, 2015, Plaintiffs filed this action in state court. (Doc. 5.) Plaintiffs alleged “USAA created artificial barriers and obstacles for its insured to prevent them from collecting their med pay benefits.” (Id. at ¶ 8.) Plaintiffs claimed USAA wrongfully denied med pay benefits on the basis of “sham ‘file reviews'” and “coding errors.” (Id. at ¶¶ 7, 8, 12, 25.) In the original Complaint, Plaintiffs defined the class as:

(a) all Montana consumers who (b) were insured by USAA for med pay benefits and (c) who submitted a claim for med pay benefits within the applicable statute of limitations, and (d) had their claim wrongfully denied in whole or in part following a “file review” by AIS or because of an asserted “coding error.”

(Id. at ¶ 28 (emphasis added).)

         The Complaint did not specify the No. of class members or the amount of damages sought. (Id.)

         USAA removed the original Complaint to this Court on the basis of diversity jurisdiction on June 10, 2015. (See Byorth v. USAA Casualty Ins. Co., No. 1:15-cv-51-BMM, Notice of Removal, Doc. No. 1 (D. Mont. June 10, 2015).) USAA claimed the amount in controversy for individual Plaintiff McKean exceeded $75, 000 based on an estimation that included post-removal attorneys' fees. (Id.) The Court determined the post-removal fees should not be included in the amount in controversy. (Byorth, No. 1:15-cv-51-BMM, Order Adopting Findings and Recommendations, Doc. No. 32.) Without the post-removal fees, the amount in controversy did not meet the jurisdictional threshold, and therefore, the Court remanded the case. (Id.)

         Thereafter, the case proceeded in state court for the next two years. (Doc. 4.) During that time, the parties litigated discovery disputes and class certification issues. (Id.)

         On October 20, 2017, Plaintiffs filed a First Amended Complaint (“FAC”). (Doc. 18.) In the FAC, Plaintiffs allege USAA had adopted an illegal scheme to “uniformly deny and reduce medical claims submitted by insureds relating to a covered accident or occurrence for which insureds seek medical coverage.” (Id. at ¶ 11.) The FAC amended the class definition to include:

(a) all Montana consumers who (b) were insured by USAA for Med Pay benefits and (c) who submitted a claim for Med Pay benefits within the applicable statute of limitations, and (d) had their claim processed by AIS, resulting in any rejection or reduction or delay.

(Id. at ¶ 50 (emphasis added).)

         Again, the FAC did not specify the number of class members or the ...


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