DEMARIA -V- HORIZON HEALTHCARE SERVICES, INC.

Filing 74

OPINION. Signed by Judge William J. Martini on 6/1/15. (gh, )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

ALPHONSE DEMARIA, et al., on their
own behalf and on behalf of all others
similarly situated,

No. 11-7298 (WJM)

OPINION
Plaintiffs,
v.

HORIZON HEALTHCARE SERVICES,
INC. d/b/a BLUE CROSS BLUE SHIELD
OF NEW JERSEY, et al.,
Defendants.

This is a putative class action brought by three chiropractors who treated
patients insured by Horizon Blue Cross Blue Shield of New Jersey and Horizon
HMO (“Horizon” or “Defendants”). The Complaint alleges that Horizon
systematically denied payment to the putative class of chiropractors for certain
services rendered. Before the Court is Plaintiffs’ Motion to Certify a Class pursuant
to Federal Rule of Civil Procedure 23. For the reasons set forth below, the Motion
is GRANTED.
I.

BACKGROUND

According to the Complaint, the putative class members regularly provided
three types of chiropractic treatment: (1) chiropractic manipulative therapy
(“CMT”); (2) evaluation and management services (“E/M”); and (3) ancillary
physical therapy (“PT”). During the class period, Horizon paid the Plaintiffs for
CMT but denied all claims for E/M and PT. Horizon explained that it used a practice
called “bundling” in which it incorporated payments for all chiropractic treatments
into a “global fee” for CMT. Denial of payments for E/M and PT to chiropractors
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was automatic, and denial of all appeals was also automatic. Explanation of Benefit
forms stated that Horizon denied the class members claims for E/M and PT because
chiropractors were not eligible for payment for those services.
In October 2009, the New Jersey Department of Banking and Insurance
(“DOBI”) determined that Horizon’s bundling practice violated New Jersey’s Unfair
Claim Settlement Practices Act, N.J.S.A. 17B:30-13.1. The DOBI issued a cease
and desist order effective April 15, 2010. Plaintiffs seek relief for Horizon’s denial
of E/M and PT claims that they filed before the DOBI’s April 15, 2010 cease and
desist order.
A. Horizon
Horizon offers, underwrites, and administers health benefit plans for more
than 3.6 million people in New Jersey. Horizon provides health care benefits in two
ways: (1) underwriting and administering “fully insured” plans, where Horizon is
both the insurer and the administrator of health care plans, or (2) administering other
“self-funded” plans, where Horizon processes and administers claims ultimately
paid by the self-insured entity. The “self-funded” line of business is also known as
ASO (Administrative Services Only).
Most of the plans operated and/or administered by Horizon are private
employer welfare benefit plans governed by the Employment Retirement Security
Income Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001, et seq., but certain plans are
exempt from ERISA coverage. The parties have stipulated that Horizon tracks
which of its plans are covered by ERISA and which are ERISA-exempt. (Plaintiffs’
Ex. 2 (Sept. 11, 2014 Stipulation at ¶ 5)).
Persons covered by a Horizon Plan (“Horizon Insureds”) receive covered
services either from a network of participating providers (“Par providers”), or
through out-of-network, non-participating providers (“Non Par providers”). Par
providers enter into Provider Agreements with Horizon wherein they agree to treat
Horizon Insureds in return for a fixed fee. Par providers also agree not to bill the
patient for any other charges, other than a Horizon-mandated co-pay or deductible.
Non Par providers have no agreement with Horizon; instead, Horizon pays them for
treating Horizon Insureds at “usual and customary” rates. Non Par providers do not
waive the right to bill their patients for the difference, if any, between Horizon’s
reimbursement and their regular charges.

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Providers create relationships with Horizon Insureds through “Patient Intake
Forms.” (Opp. Br. 12-13). On Patient Intake Forms, Horizon Insureds frequently:
(1) assigned their rights to payment to the provider; (2) agreed to bear the ultimate
financial responsibility for their treatments, regardless of what Horizon agreed to
pay.
All Plaintiffs and class members electronically submitted to Horizon an
industry-standard form (the “Form 1500”) to collect payment. These forms
contained “CPT codes,” a coding system devised by the American Medical
Association and mandated by federal law to be used for insurance reimbursement
claims. Finally, the Form 1500 contained an assignment to the submitting provider
of the Horizon Insureds’ right to payment.
Horizon processed Form 1500s through one of three “claims engines,” i.e.,
sophisticated databases and claims adjudication software. These engines record
various data about each benefit claim, including the CPT codes for the services
rendered, the provider’s network status, the result of the claim, and who was paid,
i.e., the provider or Horizon Insured. (See Plaintiffs’ Ex. 5 (July 18, 2014 Stipulation
Concerning Defendants’ Claims Data ¶ 4 (identifying data fields)). The claims
engines processed a claim to one of three outcomes: (1) pay the claim; (2) deny the
claim; or (3) “pend” the claim. If a benefits claim is paid or denied, that is the end
of the claims processing; if a claim is “pended,” Horizon employees manually
review it to resolve any issues, which can include asking the provider to submit
supporting documentation. (Plaintiffs’ Ex. 6 (Mehroke Dep. 19:16-20:24)).
All Horizon plans covered E/M, PT, and CMT. (Moving Br. 7). However, at
some point in the 1990s, Horizon made a decision to start automatically denying all
claims for PT and E/M submitted by a chiropractor. (Moving Br. 8). Horizon claims
that it started doing this due to the bundling of E/M and PT into the CMT service.
Horizon’s Explanation of Benefits, however, would state that chiropractors were not
a “provider type” eligible for payment for the billing codes designated for PT and
E/M. (See Plaintiffs’ Exs. 11, 13, 14). Moreover, when chiropractors appealed the
denials, they were systematically denied without any meaningful review. (See
Moving Br. 17-21). Plaintiffs have evidence that the systematic denial of their
claims for PT and E/M violated the terms of all Provider Agreements and also the
terms of all the plans held by Horizon’s Insureds. (See Moving Br. 7, 20-21).

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B. The Test Plaintiffs
Plaintiffs are three New Jersey chiropractors subjected to Horizon’s bundling
policy. Dr. DeMaria was a Par provider during the entire Class Period. Dr. Proodian
was a Non Par provider during the entire Class Period. Dr. Probe was a Par provider
for part of the Class Period (until April 3, 2009) and Non Par for the remainder.
Plaintiffs have brought federal ERISA claims (Counts I-II) and state law
claims (Counts III-VI) on behalf of themselves and other chiropractors who were
denied E/M and PT benefits under Horizon plans during the Class Period. Count I
seeks the recovery of benefits due under ERISA-covered plans pursuant to ERISA
§ 502 (a)(1)(B), and Count II seeks an order requiring Horizon to provide a “full and
fair review” of denied benefit claims under ERISA § 502 (a)(3) and 29 C.F.R. §
2560.503-1(h)(2) (claims procedure). Plaintiffs’ ERISA claims allege that
Horizon’s uniform and automated policy of denying benefits for E/M and PT
services violated Horizon plans, which covered those services.
Plaintiffs’ non-ERISA claims sound in breach of contract (Count III), breach
of the covenant of good faith and fair dealing (Count IV), promissory estoppel
(Count V), and unjust enrichment (Count VI). Plaintiffs’ non-ERISA claims allege
that Horizon’s denial of E/M and PT benefits breached various duties Horizon owed
under its plans and Provider Agreements. (See Opinion of July 31, 2013, ECF No.
31 at 3-4 (summarizing state law claims)).
II.

PROPOSED CLASSES

Plaintiffs seek the certification of two classes, each with sub-classes. The two
proposed classes are distinguished by the plan type: ERISA or Non-ERISA. The
two subclasses are distinguished by the provider type: Par providers and Non Par
providers.
The proposed ERISA Class is defined as:
All chiropractors who, during the Class Period, received payment from
Horizon pursuant to an employer benefit plan covered by ERISA for CMT services,
but were denied payment for E/M and/or PT services provided on the same date as
the CMT service. Excluded from this Class are benefit claims submitted by NonParticipating providers under Horizon’s Multi-Plan Liaison (“MPL”) Program. This
Class has two sub-classes: (1) chiropractors who were, at the time they rendered the

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services, participating providers; and (2) chiropractors who were, at the time they
rendered the services, non-participating providers.
The proposed Non-ERISA Class is defined as:
All chiropractors who, during the Class Period, received reimbursement from
Horizon pursuant to an employer benefit plan not covered by ERISA for CMT
services, but were denied reimbursement for E/M and/or PT services provided on
the same date as the CMT service. This Class has two sub-classes: (1) chiropractors
who were, at the time they rendered the services, Participating providers; and (2)
chiropractors who were, at the time they rendered the services, Non-Participating
providers.
III.

LEGAL STANDARD

Class certification is proper if the Court finds that Plaintiffs satisfy all of the
requirements of Federal Rule of Civil Procedure 23(a) and one of the provisions of
Federal Rule of Civil Procedure 23(b). See In re Constar Int’l Inc. Sec. Litig., 585
F.3d 774, 780 (3d Cir. 2009). Rule 23(a) has four requirements: (1) the class must
be so numerous that joinder of all members is impracticable; (2) there must be
questions of law or fact common to the class; (3) the claims or defenses of the
representative parties must be typical of the claims or defenses of the class; and (4)
the representative parties will fairly and adequately protect the interests of the class.
Fed. R. Civ. P. 23(a). These four requirements are referred to, respectively, as
numerosity, commonality, typicality, and adequacy.
In addition to satisfying the four requirements of Rule 23(a), Plaintiffs must
demonstrate that one of the provisions of Rule 23(b) is met. In this case, Plaintiffs
seek certification of the ERISA claims under Rule 23(b)(1) or 23(b)(3) and
certification of the non-ERISA claims under Rule 23(b)(3) only. These portions of
Rule 23 state that a class action may be maintained if:
(1) prosecuting separate actions by or against individual class members
would create a risk of:
(A) inconsistent or varying adjudications with respect to individual
class members that would establish incompatible standards of conduct for
the party opposing the class; or
(B) adjudications with respect to individual class members that, as a
practical matter, would be dispositive of the interests of the other
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members not parties to the individual adjudications or would substantially
impair or impede their ability to protect their interests;
...
(3) the court finds that the questions of law or fact common to class
members predominate over any questions affecting only individual
members, and that a class action is superior to other available methods for
fairly and efficiently adjudicating the controversy. The matters pertinent to
these findings include:
(A) the class members’ interests in individually controlling the
prosecution or defense of separate actions;
(B) the extent and nature of any litigation concerning the controversy
already begun by or against class members;
(C) the desirability or undesirability of concentrating the litigation of
the claims in the particular forum; and
(D) the likely difficulties in managing a class action.
In addition to Rule 23’s explicit requirements, “courts have grafted on to it
two additional criteria, often referred to as the ‘implicit requirements’ of class
certification: that the class be ‘definite’ or ‘ascertainable’ and that the class
representative be a member of the class.” Newberg on Class Actions § 3:1 (5th
ed.); see also Carrera v. Bayer Corp., 727 F.3d 300, 306 (3d Cir. 2013) (“Class
ascertainability is an essential prerequisite of a class action, at least with respect to
actions under Rule 23(b)(3).” (quotation omitted)). Ascertainability means that “the
class must be currently and readily ascertainable based on objective criteria.”
Marcus v. BMW of North Am., LLC, 687 F.3d 583, 593 (3d Cir. 2012) (citations
omitted). “If class members are impossible to identify without extensive and
individualized fact-finding or ‘mini-trials,’ then a class action is inappropriate.” Id.
The Third Circuit has noted that “the requirements set out in Rule 23 are not
mere pleading rules.” In re Hydrogen Peroxide Antitrust Litigation, 552 F.3d 305,
316 (3d Cir. 2009). “The party seeking certification bears the burden of establishing
each element of Rule 23 by a preponderance of the evidence.” Marcus v. BMW of
N. Am., LLC, 687 F.3d 583, 591 (3d Cir. 2012). “Echoing the Supreme Court,” the
Third Circuit has repeatedly “emphasized that actual, not presumed, conformance
with Rule 23 requirements is essential.” Id.

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To determine whether there is actual conformance with Rule 23, a district
court must conduct a “rigorous analysis” of the evidence and arguments put forth.
Id. When doing so, “the court must resolve all factual or legal disputes relevant to
class certification, even if they overlap with the merits — including disputes
touching on elements of the cause of action.” Id. (citing Hydrogen Peroxide, 552
F.3d at 307). “Rule 23 gives no license to shy away from making factual findings
that are necessary to determine whether the Rule’s requirements have been met.” Id.
The various inquiries in the Rule 23 analysis each have their own unique
language and tests, but ultimately, class certification is proper where the class serves
the interests of judicial economy and fairness. See Clark v. Bally’s Park Place, Inc.,
298 F.R.D. 188, 201 (D.N.J. 2014) (“[T]he Court must balance, in terms of fairness
and efficiency, the merits of a class action against those of alternative available
methods of adjudication.”); Gen. Tel. Co. of Southwest v. Falcon, 457 U.S. 147, 148
(1982). (“[T]he efficiency and economy of litigation . . . is a principal purpose of
the [class action] procedure.”).
IV.

DISCUSSION

In short, this motion poses a simple, concrete question. Can the Court fairly
and efficiently determine whether the bundling policy violated the rights of the
proposed classes? Or do the individual inquiries that will be required to ultimately
determine what, if any, actual damages each class member gets, pose such an
overwhelming problem as to make class certification impractical and unfair? On the
evidence produced, the Court can indeed determine, on a class-wide basis, whether
the bundling policy violated ERISA or breached all the non-ERISA contracts in this
case. However, in order to keep the class manageable, the available relief must be
limited to an order that Horizon reprocess the class members’ claims.
All claims extend from common evidence. This evidence begins with the
definition of “therapeutic manipulation,” which was a treatment covered under all
Horizon plans. “Therapeutic manipulation” was uniformly defined in all relevant
plans as follows:
Therapeutic Manipulation means the treatment of the articulations of
the spine and musculoskeletal structures for the purpose of relieving
certain abnormal clinical conditions resulting from the impingement
upon associated nerves causing discomfort. Some examples are
manipulation or adjustment of the spine, hot or cold packs, electrical
muscle stimulation, diathermy, skeletal adjustments, massage,
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adjunctive, ultra-sound, doppler, whirlpool, hydro therapy or other
treatment of similar nature.
(Plaintiffs’ Ex. 7 (Horizon Basic Plan A/50 excerpts) at 2). Plaintiffs have produced
evidence that “therapeutic manipulation” included E/M and PT. (See Plaintiffs’ Ex.
8 (Dell’Arena Dep. 32:7-33:4; 37:8-38:16; 43:23-44:24)).
It is undisputed that sometime in the 1990s, Horizon decided to implement the
subject bundling policy. (Horizon’s Ex. 6 (Burns Dep. 38:12-14); Horizon’s Ex. 7
(Dell’Arena Dep. 192:25-193:9); Horizon’s Ex. 9 (Harris Dep. 22:1-23:7)). It has
been stipulated that the bundling policy appeared nowhere in any plan documents.
(Plaintiffs’ Ex. 2 at ¶ 2(c)). The bundling policy manifested on Explanation of
Benefit forms as payment made for CMT but denied for E/M and/or PT when the
provider administered CMT along with E/M and/or PT at the same time. (See
Plaintiffs’ Ex. 5 at ¶ 7). Horizon would justify the denial of the relevant E/M and
PT claims, uniformly, on the grounds that chiropractors were ineligible to be paid
for E/M or PT. (See Plaintiffs’ Ex. 12 (Vern-Dixon Dep. 107:14-108:16)). The
denial of claims and appeals was automatic and systematic. (Plaintiffs’ Ex. 10
(Burns Dep. 50:6-51:21); Plaintiffs’ Ex. 29 (Hayes Dep. 19:25-21:2)). The denial
was unrelated to medical criteria. (Plaintiffs’ Ex. 21 (Harris Dep. 79:14-80:7)).
Both the ERISA and breach of contract claims are entirely based on this
simple evidence. For the ERISA claims, there are two prongs of alleged liability:
(1) denying the claims on the basis that chiropractors were not eligible for
reimbursement for E/M and PT is false and therefore in violation of ERISA (Count
I); (2) the automatic denial of all appeals violated the “full and fair review” of
appeals required by ERISA, 29 U.S.C. § 1133 (Count II). For the contract claims,
the allegation is simply that the bundling policy violated Horizon’s contractual
obligation to make payments for “therapeutic manipulation.”
Horizon’s defenses to its bundling policy are simple and apply to all
allegations that the bundling policy violated ERISA and New Jersey contract law.
One defense is that the practice of bundling was “a reasonable practice consistent
with Horizon’s legal obligations, the chiropractic reimbursement practices of the
country’s largest payor (The Centers for Medicare and Medicaid Services (“CMS”)),
and standard industry claims edits applied by insurers beyond Horizon.” (Opp. Br.
2). Moreover, Horizon argues that its provider manuals, as early as 1999, informed
providers that they could only bill one CPT code per visit and that PT was considered
part of CMT. (See Opp. Br. 8-10). Also, Horizon argues that chiropractic industry
literature supported the bundling of services. (See Opp. Br. 10-12). Additionally,
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Horizon defends itself against all Par providers with the terms of its “Specialty
Provider Agreement” (Plaintiffs’ Ex. 9), which stated that Par providers: (1) agreed
to be bound by Horizon’s final determinations; (2) acknowledged that Horizon
would have final authority to determine what counted as a covered service; (3)
acknowledged that Horizon had the right to “rebundle and unbundle claims;” and
(4) agreed to accept payment “in accordance with reassignment and bundling.”
(Opp. Br. 5). Horizon defends itself against the Non Par provider class by arguing
that the class members should have sought payment from the patients when Horizon
denied their claims. (See Opp. Br. 15-16).
In sum, the four Rule 23(a) elements have been satisfied. The class has
commonality. The members have all “suffered the same injury,” Wal-Mart, 131 S.
Ct. at 2551 – subjection to an improper claims denial practice. The “glue” holding
the claims together is the question of whether automatic denial under the bundling
policy violated ERISA or New Jersey contract law. Id. The “classwide proceedings”
will “generate common answers” (i.e. whether the policy did violate ERISA or the
terms of the non-ERISA contracts). Id. Finally, the common answer is “apt to drive
the resolution of the litigation.” Id. The Plaintiffs’ claims are typical of the class
members’ claims because they align perfectly with the other class members in that
the Plaintiffs submitted Form 1500s for CMT, PT, and E/M and were paid for CMT
but denied payment for PT and E/M on the grounds that chiropractors were not
eligible for E/M and PT claims. The Plaintiffs’ claims thus arise “from the same
event or practice or course of conduct that gives rise to the claims of the class
members” and are “based on the same legal theory.” Baby Neal ex rel. Kanter v.
Casey, 43 F.3d 48, 58 (3d Cir. 1994). There is no serious doubt that the Plaintiffs
are adequate class representatives nor that the class is sufficiently numerous.1
A. Rule 12(b)(3) – Predominance
The Third Circuit has stated:
Under Rule 23(b)(3), “questions of law or fact common to class
members [must] predominate over any questions affecting only
individual members.” This predominance requirement “tests whether
proposed classes are sufficiently cohesive to warrant adjudication by
representation.” Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 623,
117 S.Ct. 2231, 138 L.Ed.2d 689 (1997). . . . A plaintiff must
“demonstrate that the element of [the legal claim] is capable of proof at
Horizon has admitted that “[t]he proposed Class numbers more than 50 persons” (Plaintiffs’ Ex.
41 (Responses to Requests for Admissions ¶ 23)).
1

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trial through evidence that is common to the class rather than individual
to its members.” Hydrogen Peroxide, 552 F.3d at 311. “Because the
nature of the evidence that will suffice to resolve a question determines
whether the question is common or individual, a district court must
formulate some prediction as to how specific issues will play out in
order to determine whether common or individual issues predominate
in a given case.” Id. (quotation marks omitted).
Marcus v. BMW of N. Am., LLC, 687 F.3d 583, 600 (3d Cir. 2012).
Horizon claims that “individualized issues” predominate over the central
question of the bundling policy’s legality. While it is true that Horizon’s ultimate
responsibility on each claim will require individual attention, the fairest and most
efficient way for the court to address the class members’ claims is to consider the
legality of the bundling policy on a class-wide basis and, if illegal, to order
reprocessing of the claims. If the Plaintiffs prove their case, Horizon can
administratively work through the individualized issues that each claim presents.
Further conflicts that survive the reprocessing would be appropriately adjudicated in
separate court actions. Below the Court addresses Horizon’s “individualized issues”
and explains why they do not predominate.
Horizon’s first “individualized issue” is the varying language of assignments.
It claims that the varying language makes standing for each class member too
uncertain for class certification. This argument is not persuasive.
It is not disputed that Horizon’s first obligation to pay is to the Horizon
Insureds. It is also not disputed that Plaintiffs and class members obtained the right
to payment from Horizon via “patient intake forms” that frequently contain highly
individualized language about assignment of rights to insurance payments. At first
blush, the variation of assignment language makes the class seem untenable. For
example, Dr. Proodian used patient intake forms that did not contain assignment
language and merely contained directions for endorsing the insurance check to Dr.
Proodian’s practice. (Opp. Br. 14). Dr. DeMaria used a form stating that patients
were “assign[ing] directly to Dr. ______ all insurance benefits, if any, otherwise
payable to me for services rendered,” (Plaintiffs’ Ex. 25 (at AAD_0000014)), and
that the assignment ‘will end when my current treatment plan is completed or one
year from the date signed below.” (Id.).
But it is also undisputed that no one can be a class member unless he or she
submitted a Form 1500 to Horizon. All Form 1500s contained an assignment stating
that the patient “authorizes payment of medical benefits to the undersigned physician
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or supplier for services described below.” (Plaintiffs’ Ex. 19). The preponderance
of the evidence indicates that Horizon accepted all Form 1500 assignments. (See
Plaintiffs’ Ex. 39 (Hinds Dep. 27:21-30:24); Plaintiffs’ Ex. 40 (Naeris Dep. 38:2139:16); Plaintiffs’ Ex. 12 (Vern-Dixon Dep. 53:5-53:25) (“from our standpoint,
that’s it [checking the box on the 1500].”)). The Form 1500 creates a derivative
right to sue for payment under both ERISA and New Jersey contract law. See
Premier Health Ctr., P.C. v. UnitedHealth Grp., 2014 WL 4271970, at *12 (D.N.J.
Aug. 28, 2014); Gregory Surgical Servs., LLC v. Horizon Blue Cross Blue Shield of
New Jersey, Inc., 2007 WL 4570323, at *4 (D.N.J. Dec. 26, 2007) (citing County of
Morris v. Fauver, 707 A.2d 958, 969 (N.J. 1998); Garden State Bldgs., L.P. v. First
Fid. Bank, N.A., 702 A.2d 1315, 1322 (N.J. Super. Ct. App. Div. 1997)).
Nor is standing undermined by anti-assignment clauses that sometimes
appeared in the contracts between Horizon and its Insureds. These clauses
frequently stated that patients could assign rights to payment but not rights to sue.
(See Opp. Br. 18-19). These anti-assignment clauses are null and void as far as the
Plaintiffs’ right to sue for payment due is concerned. Under New Jersey contract
law, a party may waive an anti-assignment provision via a course of dealing that
renders the anti-assignment provision inequitable. See Gregory Surgical Servs.,
LLC v. Horizon Blue Cross Blue Shield of New Jersey, Inc., 2007 WL 4570323, at
*4 (D.N.J. Dec. 26, 2007) (citing County of Morris v. Fauver, 707 A.2d 958, 969
(N.J. 1998); Garden State Bldgs., L.P. v. First Fid. Bank, N.A., 702 A.2d 1315, 1322
(N.J. Super. Ct. App. Div. 1997), cert. denied, 707 A.2d 153 (N.J. 1998)). It would
be patently unfair to allow the patient to assign his rights to payment to a provider
but not let the provider sue for breach of the assigned contract for payment.
Horizon’s making a decision based on a Form 1500 should be read as a waiver of
any anti-assignment clause, at least as far as suit for payment on the particular claim
goes. The same can be said of the right to sue under ERISA. See Premier Health
Ctr., P.C. v. UnitedHealth Grp., 2014 WL 4271970, at *12 (D.N.J. Aug. 28, 2014)
(“Defendants cannot act as though valid assignments [of rights to payment under
ERISA-governed plans] exist through course of conduct and then challenge the
assignment’s very existence in litigation.”). Each class member has limited standing
to sue by virtue of Horizon paying or denying a claim submitted on a Form 1500.
Horizon also argues that the standing among class members is too uncertain
because any provider who did not seek payment directly from Horizon Insureds after
Horizon refused to pay the claims has no injury in fact. (Opp. Br. 15-17; 19-20).
This argument is not persuasive. No Circuit has ever accepted this argument before.
Spindex Physical Therapy USA Inc. v. United Healthcare of Arizona, Inc., 770 F.3d

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1282, 1291 (9th Cir. 2014) (citing HCA Health Services of Georgia, 240 F.3d 982
(11th Cir. 2001)).
Horizon further argues that the class concerns do not predominate because
claims might be denied for reasons other than the bundling policy. Other reasons
for denial might include: (1) time limitations present in certain contracts; (2) whether
the claim included certain modifiers in the claims, the presence or absence of which
could be construed as an admission that the E/M and PT charges were not
reimbursable; (3) information in the patients’ medical records that may warrant
denial of the claim. These possibilities do not dissuade the Court from finding that
certifying a class for the remedy of re-processing is the most fair and efficient
method of adjudicating the legality of the bundling policy. Any reason for denial
other than the bundling policy is subordinate to the question of the bundling policy’s
legality because the claims were automatically denied under the bundling policy,
without any consideration of whether other legitimate reasons for denial might exist.
Horizon can still deny any claim for a proper reason during a reprocessing.
Even if liability is established on each claim, the amount of damages due on
each claim is uncertain. The sum payable depends upon whether the provider was
participating or non-participating, the applicable fee schedule, and the terms of each
Horizon Insured’s plan. But the need to determine damages on a claim-by-claim
basis does not undermine the predominance of the central issue of bundling’s
legality. See Newberg § 4:54 (“[C]ourts in every circuit have uniformly held that
the 23(b)(3) predominance requirement is satisfied despite the need to make
individualized damage determinations”).
Horizon also raises practical payout issues, like whether Horizon or the
employer should pay in cases of Horizon ASO plans. This, and all other issues
Horizon raises are all subordinate to the central question and would be rightly raised
in subsequent litigation.
All the classes can be certified under Rule 12(b)(3) because the issue of the
bundling policy’s legality, which can be fully redressed with an order to reprocess
the claims, predominates over any of the subordinate issues that Horizon raises,
individually or collectively. All evidence to prove and defend the legality of the
bundling policy is uniform for all class members. See Marcus v. BMW of N. Am.,
LLC, 687 F.3d 583, 600 (3d Cir. 2012). A class action is the superior method for
dealing with the issue because it will allow one court to determine one time whether
the bundling policy was illegal, and if so, order Horizon to do what it would have
done in the absence of the illegal policy.

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B. Rule 23(b)(1)(B)
The ERISA classes can also be certified under Rule 23(b)(1)(B) because the
result for the judgment on the legality of the bundling policy for the named Plaintiffs
in this case would have the effect of determining the legality of the bundling policy
for all proposed class members. Thus if the Court rules in Horizon’s favor on the
issue of the bundling policy, it is likely to have the effect of pre-ordaining a negative
outcome on causes of action that members of the proposed class could make on their
own in the absence of class certification here. See 7AA Wright et al., supra, § 1774
(citation omitted).
C. Ascertainability Requirement
Finally, the class is ascertainable because the parties stipulated that Horizon
can readily determine, from claims data, instances when Defendants (1) paid claims
submitted by chiropractors for CMT services, but (2) denied claims submitted by
chiropractors for E/M and PT services performed on the same day as the paid CMT
service. (Plaintiffs’ Ex. 5 ¶ 7).
V.

CONCLUSION

For the reasons set forth below, the Plaintiffs’ Motion to Certify a Class is
GRANTED, with class-wide relief limited to a reprocessing of the claims. An
appropriate order follows.
/s/ William J. Martini
________________________________
WILLIAM J. MARTINI, U.S.D.J.
Date: June 1, 2015

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