The Eighth Circuit recently addressed class certification in an insurance class action involving medpay and personal injury protection (PIP) coverage.  The case involved the use of third-party bill reviewers and the application of a guideline comparing charges for medical services to the 80th percentile of such charges in the geographic area.  The court applied the Supreme Court’s recent decision in Comcast v. Behrend, and reversed certification on the grounds that common issues of law and fact did not predominate because individual analysis of each claim payment was required.  The court also stressed that each putative class member must have standing to sue, an important principle of class action law that can be quite useful in defending insurance class actions.

In Halvorson v. Auto Owners Insurance Company, No. 12-1716, 2013 U.S. App. LEXIS 13580 (8th Cir. July 3, 2013), the plaintiffs brought a putative class action against Auto-Owners Insurance Company and its subsidiary, Owners Corporation, for breach of contract and bad faith.  The district court certified a putative class of policyholders in North Dakota who made claims for medical expenses under medpay or PIP coverage, and received less than the amount sought after a percentile-based review of their claim.  Id. at *4-5.  The policy required payment of the “reasonable charges incurred.”  Auto-Owners employed third-party bill reviewers who determined pricing for particular medical services within a geographic area, and identified charges submitted exceeding the 80th percentile of charges in the area.  Id. at *2-3.  There was testimony that adjusters were expected to limit amounts paid to the 80th percentile, although Auto-Owners asserted that adjusters had discretion.  Id. at *7.  The district court certified the class because it concluded that whether the bill review process was in compliance with the insurance policies was a common question that predominated.  Id. at *8.

The Eighth Circuit reversed, finding that the district court abused its discretion.  The Eighth Circuit concluded that the commonality requirement was satisfied based on the common question of “whether the routine and relatively rigid use of the 80th percentile cutoff for claims breach the contract or constituted bad faith.”  Id. at *17-18 n.2.  The predominance requirement, however, was not satisfied.  Applying Comcast, the court explained that “individual inquiries regarding what is ‘usual and customary’ for each class member will predominate over whether Auto-Owner’s process was reasonable and ‘overwhelm questions common to the class.’”  Id. at *14-15. 

The Eighth Circuit also explained that “[a] district court may not certify a class . . . if it contains members who lack standing.”  Some members of the putative class would not have standing because, for example, “[i]f a health-care provider accepted Auto-Owners’ payment at the 80th percentile as payment in full (or if Auto-Owners settled the dispute without involving the plaintiff), the plaintiff was not injured.”  Id. at *15-16.

The Eighth Circuit’s ruling on standing grounds is one that I see of broader importance in defending insurance class actions.  It is frequently the case that the class is defined in a manner that would encompass people who were not injured, or would not want the requested relief (and might even be disadvantaged by the requested relief or implications thereof).  Often it is not possible for the plaintiff to re-define the class in a manner that would only include people who were injured (or who want the requested relief) because such a class is not ascertainable without individualized inquiries into each class member’s circumstance and preferences.  That can be a powerful line of argument in defending these cases, and one that is sometimes overlooked, or not framed in terms of standing.  The Eighth Circuit’s holding here could be applied outside of the context of this case, such as in a class action on property insurance claims, where some putative class members received sufficient payments to make the repairs to their property regardless of the alleged improper practice.  Similarly, this holding could be useful in defending a class action involving underwriting, where some putative class members received the coverage they desired irrespective of the alleged improper practice.

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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.