A recent decision on class certification by a New Jersey federal court addressed commonality and predominance in a manner that may have significant implications for health insurance class actions generally, and its impact could extend more broadly to other insurance class actions.  Franco v. Connecticut General Life Insurance Company, Case No. 07-cv-6039 (SRC) (PS), 2013 U.S. Dist. LEXIS 6482 (D.N.J. Jan. 16, 2013) is one of a number of class actions that have challenged how health insurers pay for services rendered by out-of-network providers, and how “reasonable and customary” charges for such services are determined.  The case focuses on the use of an Ingenix computer database in assessing reasonableness of medical charges.  Analogous issues have been raised in class actions against auto insurers involving Medpay and personal injury protection (PIP) benefits.  The court here denied certification, finding commonality satisfied, but predominance not satisfied: 

  • Commonality:  Under the Supreme Court’s test from Wal-Mart v. Dukes, a plaintiff seeking to establish commonality must “demonstrate that the proposed classwide proceeding is capable of generating ‘common answers apt to drive the resolution of the litigation.’”  Id. at *23.  In Franco, the court found this test satisfied because “Plaintiffs allege, and will attempt to prove at trial, that the Ingenix database was so flawed as to be completely incapable of generating any reliable data concerning what most providers in a relevant geographical area would charge for a health care service.  Their claim that [out-of-network] benefits were improperly denied depends on the common question of whether the Ingenix data was significantly inaccurate or faulty.  . . . Plaintiffs have demonstrated, as required by Dukes, that a common answer to the factual question of whether the Ingenix database was significantly and pervasively flaws will advance the resolution of the entire class’s claims.”  Id. at *23-25.  This type of focus on and contention about the use of a computer database in evaluation of insurance claims is typical in a wide range of insurance class actions, and thus the finding of commonality here may be of concern to insurers (although predominance was not satisfied).  One strategy that a defendant might use in challenging commonality in this kind of case is to urge the court to delve more deeply into the merits with respect how the database was actually used by claim professionals, how the database was populated, etc., and how even if there were a broad-based flaw in the database it would not advance resolution of the case because of individualized issues. 
  • Predominance:  On predominance, the court focused on the “arbitrary and capricious” standard that a court applies under ERISA in reviewing an administrator’s decision.  The court also found it particularly significant that the plaintiff had failed to show that the benefit plans at issue had a uniform or consistent definition of “reasonable and customary” charge.  In fact, Cigna demonstrated significant variation in such definitions.  Id. at *38-41.  The court concluded that, even if this variation in definitions could be addressed in some fashion by narrowing the class or using subclasses, the “arbitrary and capricious” standard for an ERISA violation could not be shown on a classwide basis.  Id. at *43-44.  The court also concluded that, under Third Circuit law, damages must be provable on a classwide basis.  The plaintiffs contended that damages could be calculated simply based on the difference between the amount billed and the amount paid by Cigna.  The court rejected this contention because the policy language would require paying the “normal charge” rather than the billed charge, and those charges might differ for a variety of reasons, which would require individualized proof.  Id. at *49-50.  The court also cited to the rejection of “trial by formula” in Wal-Mart v. Dukes.  The court explained that to allow the plaintiff’s proposed method of calculating damages “would deprive Cigna [of] the opportunity for an accurate analysis of the amount necessary to make each class member whole and would threaten to modify the parties’ rights under ERISA.”  Id. at *56.  The Supreme Court’s rejection of “trial by formula” continues to be critical in lower courts’ analysis of class certification issues.  The subject of how the need for an individualized determination of damages factors into a class certification decision may be addressed further by the Supreme Court in Comcast Corp. v. Behrend (for more on this case, see my November 9, 2012 blog post about the oral argument, and June 26, 2012 blog post about the grant of certiorari). 
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Photo of Wystan Ackerman Wystan Ackerman

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you…

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you have something to say.  For those looking for my detailed law firm bio, click here.  If you want a more light-hearted and hopefully more interesting summary, read on:

People often ask about my unusual first name, Wystan.  It’s pronounced WISS-ten.  It’s not Winston.  There is no “n” in the middle.  It comes from my father’s favorite poet, W.H. (Wystan Hugh) Auden.  I’ve grown to like the fact that because my name is unusual people tend to remember it better, even if they don’t pronounce it right (and there is no need for anyone to use my last name because I’m always the only Wystan).

I grew up in Deep River, Connecticut, a small town on the west side of the Connecticut River in the south central part of the state.  I’ve always had strong interests in history, politics and baseball.  My heroes growing up were Abraham Lincoln and Wade Boggs (at that time the third baseman for the Boston Red Sox).  I think it was my early fascination with Lincoln that drove me to practice law.  I went to high school at The Williams School in New London, Connecticut, where I edited the school newspaper, played baseball, and was primarily responsible for the installation of a flag pole near the school entrance (it seemed like every other school had one but until my class raised the money and bought one at my urging, Williams had no flag pole).  As a high school senior, my interest in history and politics led me to score high enough on a test of those subjects to be chosen as one of Connecticut’s two delegates to the U.S. Senate Youth Program, which further solidified my interest in law and government.  One of my mentors at Williams was of the view that there were far too many lawyers and I should find something more useful to do, but if I really had to be a lawyer there was always room for one more.  I eventually decided to be that “one more.”  I went on to Bowdoin College, where I wrote for the Bowdoin Orient and majored in government, but took a lot of math classes because I found college math interesting and challenging.  I then went to Columbia Law School, where I was lucky enough to be selected as one of the minions who spent their time fastidiously cite-checking and Blue booking hundred-plus-page articles in the Columbia Law Review.  I also interned in the chambers of then-Judge Sonia Sotomayor when she was a relatively new judge on the Second Circuit, my only connection to someone who now has one-ninth of the last word on what constitutes the law of our land.  I graduated from Columbia in 2001, then worked at Skadden Arps in Boston before returning to Connecticut and joining Robinson+Cole, one of the largest Connecticut-based law firms.  At the end of 2008, I was elected a partner at Robinson+Cole.

I’ve worked on class actions since the start of my career at Skadden.  Being in the insurance capital of Hartford, we have a national insurance litigation practice and I was fortunate to have the opportunity to work on some prominent class actions arising from the 2004 hurricanes in Florida and later Hurricane Katrina, including cases involving the applicability of the flood exclusion, statutes known as valued policy laws, and various other issues.  My interest and experience in class actions gradually led me to focus on that area.

In Connecticut courts I’ve defended various kinds of class actions that go beyond insurance, including cases involving products liability, securities, financial services and consumer contracts.

My insurance class action practice usually takes me outside of Connecticut.  I’ve had the pleasure of working on cases in various federal and state courts and collaborating with great lawyers across the country.  While class actions are an increasingly large part of my practice, I don’t do exclusively class action work.  The rest of my practice involves litigating insurance coverage cases, often at the appellate level.  That also frequently takes me outside of Connecticut.  A highlight of my career thus far was working on Standard Fire Ins. Co. v. Knowles, the U.S. Supreme Court’s first Class Action Fairness Act case.  I was Counsel of Record for Standard Fire on the cert petition, and had the pleasure of working with Ted Boutrous on the merits briefing and oral argument.

I started this blog because writing is one of my favorite things to do and I enjoy following developments in class action law, writing about them and engaging in discussion with others who have an in interest in this area.  It’s a welcome break from day-to-day practice, keeps me current, broadens my network and results in some new business.

When I’m not at my desk or flying around the country trying to save insurance companies from the plaintiffs’ bar, or attending a conference on class actions or insurance litigation (for more on those, see the Seminars/Programs page of this blog), I often can be found playing or reading with my young daughter, helping my wife with her real estate and mortgage businesses, reading a book about history or politics, or watching the Boston Red Sox (I managed to find bleacher seats for Game 2 of the 2004 World Series when Curt Schilling pitched with the bloody sock).  When the weather is good I also love to take the ferry to Block Island, Rhode Island and ride a bike or walk the trails there. If you go, I highly recommend the Clay Head Trail.