A recent certification of a class against CIGNA in the Eastern District of Pennsylvania is a good example of the type of issue on which insurers may continue to have significant class action exposure following the Supreme Court’s decision in Wal-Mart (see my blog post on Wal-Mart).  This decision has received fairly extensive coverage in the media and blogs, including on Insurance Networking News and Insurance Dispatch

In Churchill v. CIGNA Corp., 2011 U.S. Dist. LEXIS 90716 (E.D. Pa. Aug. 12, 2011), the plaintiff alleged that CIGNA improperly denied claims seeking certain types of treatment for autism known as Applied Behavior Analysis and Early Intensive Behavioral Treatment (collectively “ABA”).  The claims were denied under an exclusion for “experimental or investigative” treatment, and CIGNA apparently had a policy of universally denying all such claims on this basis.  Id. at *2.

The court found that the new commonality requirement articulated in Wal-Mart was satisfied because, in contrast to the discretion that Wal-Mart gave store managers over employment decisions, “Cigna indisputably has a national policy of denying coverage for ABA to treat ASD” and “the central question here is whether Cigna’s denial of medical coverage for ABA as a treatment for ASD on the basis that such treatment is investigative or experimental was proper, and the answer to this question will resolve each class member’s individual claim.”  Id. at *12-13.  The court also found that predominance was satisfied because there was no evidence that the policy of denying these claims was any different for any of the ERISA plans managed by CIGNA.  Rather, “Cigna made a class-wide determination that ABA was experimental in all cases.  The propriety of this determination – specifically, whether it violates ERISA – can easily be litigated in a single forum.”  Id. at *22.  The court did not really address some of the individual issues I could see arising in this kind of case, such as whether, assuming the treatment was not “experimental or investigative,” it would be appropriate for particular children based on their condition.

Notably, the court distinguished a Tennessee federal court decision, Graddy v. Blue Cross blue Shield of Tenn., 2010 WL 670081 (E.D. Tenn. Feb. 19, 2010), in which the court found that individualized assessments as to the appropriateness of treatment would be required, and the insurer apparently did not have any across-the-board, universal policy.

The key takeaway I see here is that when an insurer adopts a bright-line rule requiring denial of all claims of a particular type, without any exceptions and without any individualized assessment, while that might in some instances make business sense, that type of policy or practice can in some cases increase the insurer’s class action exposure.  Where some discretion is given to front-line personnel and individual, fact-based determinations are made, there is less chance a class action being certified.