The Illinois Appellate Court recently issued a decision reversing a class certification in Bemis v. Safeco Insurance Company, which involved medical payments under auto insurance policies.  The case was filed by a chiropractor who claimed that Safeco used computer software to improperly reduce the cost of services, in breach of the contract requirement to pay “the usual and customary charges incurred for reasonable and necessary medical *** expenses because of bodily injury caused by an accident.”

The court held that the trial court abused its discretion in certifying a class on this issue, and its decision highlighted the problem with certification in many proposed insurance class actions:

Bemis argues that the predominant issue in this case is whether the computer database utilized by Safeco is inaccurate and whether the use of the database justifies a limitation of payment under the medical payments provision of the policy. However, if Bemis is successful in proving this, it does not follow that all the other class members submitted usual and customary charges representing reasonable and necessary medical expenses. Whether the usual and customary charge for a class member’s reasonable and necessary medical expenses went unpaid is not a common question but is an individual question that will have to be answered for each claimant. Because proof that the usual and customary charge for one class member’s reasonable and necessary medical expenses went unpaid would not establish a right of recovery for any other class member, common issues do not predominate.

This decision is particularly useful to insurers because insurance class actions commonly allege that the use of computer software in some respect in analyzing claims was improper, and was done across-the-board in a manner that could be appropriate for class treatment.  Some of those cases have been successful.

The concurring judge, however, suggested that perhaps the case could be appropriate for class treatment with certain expert testimony:

In this case, Safeco used expert testimony to determine the amount it paid to Bemis and the other potential class members. Its decision to reimburse according to “UCR 80th” percentile data was not arrived at by an individual analysis of each class member’s bill. On remand, Bemis should be allowed to make a showing that he can present expert testimony, based on data relied on by experts in the field, that would establish that Safeco did not pay the reasonable or usual and customary charges for treatments he and the other class members provided to their patients. Bemis should be allowed to prove reasonableness in the same fashion Safeco determined reasonableness.

The concurrence highlights another important lesson for insurers — be careful about how you frame your expert testimony, because what is good for the goose may be good for the gander.