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The Commonality Challenge: Recent Rulings Show Path to Class Certification in ERISA Cases 

As class action practitioners know, class certification can be difficult to achieve, particularly in the years since the Supreme Court’s decision in Wal-Mart Stores, Inc. v. Dukes. 

The Court there emphasized the need for a class to challenge a common policy or practice, and held that class claims must depend upon a “common contention” that “must be of such a nature that it is capable of classwide resolution—which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.” Id. at 350.

Obtaining class certification in ERISA cases is no exception. As recent decisions from federal courts in New Jersey and California illustrate, where plaintiff classes seek to challenge decisions by ERISA healthcare plan administrators, commonality is best achieved when the same benefit plan provision is at issue, as well as the same reason for denial of claims. Each of the cases discussed below involved a putative class pursuing claims against health plans based on denials and alleged underpayments for out-of-network services, and the classes in both cases failed to achieve certification.

A federal court in New Jersey recently denied certification to two classes because there was variation in operative ERISA plan provisions applicable to different members of the putative classes. In In re: Aetna UCR Litigation, 2:07-cv-03541, Doc. 1156 (D.N.J. June 30, 2018), two prospective classes composed of plan members and healthcare providers accused Aetna of underpaying for out-of-network services, in violation of ERISA, due to use of a flawed database, Ingenix, to determine payments. The plaintiffs argued that all plans included some version of a “usual and customary rate” (“UCR”) provision, but the court reviewed samples of 47 benefit plans, and concluded that “the varied nature of the terms poses insurmountable odds against class certification.” Id. at 27. There was considerable variation in relevant plan terms, and certain of the plan documents required use of the Ingenix database. The proposed classes did not focus on the plans’ terms and language, as required by ERISA, and the court held that, as a result, the commonality requirement could not be met:

Rule 23(a) charges the plaintiffs with the burden of establishing by a preponderance of the evidence that there are relevant questions that will ‘generate common answers apt to drive the resolution of the litigation,’ and whether Ingenix was based on an unreliable set of numbers does not generate the yes-no answer that will help resolve this case, because it sidesteps the ERISA-mandated primacy of plan terms.

Id. at 31. Accordingly, the court denied the motions for certification under Federal Rule 23(b)(2) and 23(b)(3), respectively. The court held that no common solution existed for either class because the plan members’ individualized benefit plans and issues were not the same; thus, the “case could never be tried in court with common evidence.” Id. at 51.

A California federal court similarly found fault recently with the commonality of a putative class, but because that class, as defined, would include claimants whose claims were denied for a variety of reasons. In Trujillo v. UnitedHealth Group Inc., 5:17-cv-02547, Doc. 74 (C.D. Cal. Sept. 14, 2018), a putative class accused UnitedHealth and two of its subsidiaries of improperly denying claims for prosthetic devices to replace lost upper and lower limbs. The plaintiffs alleged that UnitedHealth violated ERISA by failing to (a) establish and follow reasonable procedures for reviewing and processing claims for prostheses, and (b) justify and explain the bases for claim denials.

The operative plans provided slightly different definitions of prosthetic-device coverage. The court did not find these differences to be material because for all plans, UnitedHealth implemented the same coverage determination guidelines, which limited approval to prosthetic devices that met beneficiaries’ minimum needs. While UnitedHealth denied the plaintiffs’ claims under this provision, it did not identify alternative devices that would meet the beneficiaries’ minimum needs or specify which parts of the proposed prostheses exceeded the minimum-needs coverage. It was not until a subsequent review of previously denied claims in preparation for litigation that United Health attributed the denials to the submission of improper billing codes, which UnitedHealth failed to communicate to the plaintiffs.

The complaint defined the putative class as:

All persons covered under United plans, governed by ERISA, self-funded or fully insured, whose requests for prosthetic arm and leg devices have been denied during the applicable statute of limitations pursuant to United’s Coverage Determination Guideline for Prosthetic Devices, Wigs, Specialized, Microprocessor or Myoelectric Limbs (CDG.018.06), and earlier versions thereof, on the basis that the requested device did not meet the minimum specifications of the person’s needs.

Id. at 5 (emphasis added). But the plaintiffs’ subsequent motion for class certification used a much broader definition:

All persons covered under health plans insured or administered by United Health Group, Inc., through its wholly-owned and controlled subsidiaries, including United Healthcare Insurance Company and United Healthcare Services, Inc., issued to private employers, whose requests for prosthetic arm and leg devices have been denied during the applicable statute of limitations.

Id. The court noted the difference in the class definition included in the motion for class certification—which would include individuals whose claims were denied for any reason—but ultimately determined that either definition could incorporate unrelated claim denials, and as such they were both overbroad. “[I]f the Court accepted either the class definition in the Motion or the Complaint, there would be class members who never submitted coverage requests that included L5999 or L7499 miscellaneous codes, and thus were never subjected to United’s alleged practice of automatically denying coverage for these codes.” Id. at 9. Accordingly, the judge held that both definitions failed to meet the requirements of commonality and typicality under Federal Rule 23(a)(2)–(3).

Despite the denial of certification, the court noted that the plaintiffs had identified uniform practices by UnitedHealth. It declined to redefine the class or create subclasses on its own, but allowed the plaintiffs to file an amended complaint and new motion for certification to remedy the issues identified.

While achieving class certification is a substantial hurdle in any case, the cases above counsel that those seeking to file class actions based on violations of ERISA must ensure that members of the class have been impacted by the same benefit plan language in the same way—and those opposing class certification should object when this is not the case. Plan language is crucial to any ERISA case, and when the individuals in a putative class belong to markedly different plans, the ability of the class to allege common facts and the ability of the court to provide uniform relief are greatly diminished. Ensuring that the individuals in a putative class belong to similar plans, have similar grievances, and seek similar relief is crucial to the success of any ERISA class action.


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