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Butler v. Unified Life Insurance Co.

United States District Court, D. Montana, Billings Division

September 30, 2019

CHARLES M. BUTLER, III and CHOLE BUTLER Plaintiffs,
v.
UNIFIED LIFE INSURANCE COMPANY; HEALTH PLANS INTERMEDIARIES HOLDINGS, LLC, doing business as Health Insurance Innovations, Inc.; ALLIED NATIONAL, INC.; NATIONAL BROKERS OF AMERICA, INC.; THE NATIONAL CONGRESS OF EMPLOYERS, INC.; and DOES 1-10 Defendants.

          ORDER

          SUSAN P. WATTERS UNITED STATES DISTRICT JUDGE

         Before the Court are United States Magistrate Judge Timothy Cavan's findings and recommendation filed August 8, 2019. (Doc. 226). Judge Cavan recommends the Court deny Plaintiffs' motion to certify a class action. (Doc. 93).

         I. Standard of review

         Plaintiffs filed timely objections to the findings and recommendation. (Doc. 232). Plaintiffs are entitled to de novo review of those portions of Judge Cavan's findings and recommendation to which they properly object. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b)(3).

         II. Factual summary

         The proposed class action concerns Defendant Unified Life Insurance Company's systematic practice of paying healthcare bills based on what providers have previously accepted rather than what providers charge. The Court has already determined as a matter of law that Unified's systematic practice breaches insurance contracts containing the Reasonable and Customary Charge clause. The Reasonable and Customary Charge clause states, in effect, that Unified will pay the lesser of either the billed charges or the usual charge for a comparable service in the geographic area. Because Unified pays what providers previously accepted rather than what providers either actually or usually charged, it's a breach of the insurance contract.

         The class action complaint alleges Unified's practice has subjected proposed class members to balance billing. Balance billing occurs when a healthcare provider charges a certain amount for a service, Unified pays an amount based on what a healthcare provider may have previously accepted for the service, the healthcare provider accepts Unified's payment, but the healthcare provider does not agree Unified's payment fully satisfies the charge. The healthcare provider then asks the insured to pay the remaining balance. The class seeks damages equal to the difference between what Unified paid and what the healthcare providers actually or usually charged for a comparable service in the geographic area.

         III. Plaintiffs' Objections

         Judge Cavan recommended denying certifying the class because common class issues did not predominate over class members' individual issues, namely the computation of damages. The Plaintiffs argue this was error, and the Court agrees.

         IV. Discussion

         Class certification is governed by Federal Rule of Civil Procedure 23. A party seeking to maintain a class action must demonstrate that each of the following prerequisites of Rule 23(a) are satisfied:

(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 of the class.

         The party must also meet at least one of the three criteria listed in Rule 23(b). These are: (1) that there is a risk of prejudice from separate actions; (2) that declaratory or injunctive relief is appropriate as to the class; or (3) that common questions of law or fact predominate, and a class action is superior to other methods of adjudication. Fed.R.Civ.P. 23(b)(l-3).

         Judge Cavan found Rule 23 (a)'s prerequisites were satisfied but that none of the criteria in Rule 23(b) were met. In regard to Rule 23(b)(3), Judge Cavan found damages would have to be determined on an individualized basis, considering several factors that would vary from insured to insured. Judge Cavan concluded common questions therefore did not predominate and that a class action was not a superior method of litigating the claims. The ...


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