The Medical Society of the State of New York et al v. UnitedHealth Group Inc. et al

Filing 204

OPINION AND ORDER re: 142 MOTION to Certify Class . filed by Society of New York Office Based Surgery Facilities, The Medical Society of the State of New York, Columbia East Side Surgery, P.C.. For the foregoing reasons, Plainti ffs' motion for class certification is GRANTED in part and DENIED in part. A class composed of "any United Plan member, or member's valid assignee, whose claim for facility fees for services rendered by an out-of network OBS provider a ccredited under Section 230-d was denied," as set out in Part III, is certified for purposes of seeking declaratory and injunctive relief. The Court hereby appoints Columbia, MSSNY, and NYOBS as representatives of the certified class, and appoints Zuckerman Spaeder LLP and Buttaci Leardi & Werner LLC as co-lead class counsel. The Clerk of Court is directed to close the motion at Docket Number 142. SO ORDERED. (Signed by Judge J. Paul Oetken on 9/11/2019) (kv)

Case 1:16-cv-05265-JPO Document 204 Filed 09/11/19 Page 1 of 34

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
THE MEDICAL SOCIETY OF THE
STATE OF NEW YORK, on behalf of its
members, et al.,
Plaintiffs,

16-CV-5265 (JPO)
OPINION AND ORDER

-vUNITEDHEALTH GROUP INC., et al.,
Defendants.

J. PAUL OETKEN, District Judge:
Plaintiffs the Medical Society of the State of New York, the Society of New York Office
Based Surgery Facilities, and Columbia East Side Surgery, P.C. bring this putative class action
under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001, et
seq., against Defendants UnitedHealth Group Inc., United HealthCare Services, Inc., United
HealthCare Insurance Company, United HealthCare Service LLC, Optum Group, LLC, Optum,
Inc., and Oxford Health Plans LLC (collectively, “United”).
Plaintiffs have moved for class certification under Federal Rule of Civil Procedure 23.
(Dkt. No. 142.) For the reasons that follow, the motion is granted in part and denied in part.
I.

Background
The Court assumes familiarity with the background of this case, as set forth in the Court’s

prior opinions. Med. Soc’y of N.Y. v. UnitedHealth Grp. Inc., No. 16 Civ. 5265, 2019 WL
1409806, at *1 (S.D.N.Y. Mar. 28, 2019); Med. Soc’y of N.Y. v. UnitedHealth Grp. Inc., No. 16
Civ. 5265, 2018 WL 1773142, at *1 (S.D.N.Y. Apr. 12, 2018); Med. Soc’y of N.Y. v.
UnitedHealth Grp. Inc., No. 16 Civ. 5265, 2017 WL 4023350, at *1–2 (S.D.N.Y. Sept. 11,
2017).

1

Case 1:16-cv-05265-JPO Document 204 Filed 09/11/19 Page 2 of 34

A.

Procedural History

Plaintiffs initiated this action on July 1, 2016, and filed a first amended complaint on
September 23, 2016. (Dkt. Nos. 1, 36.) United moved to dismiss the first amended complaint.
(Dkt. No. 50.) In an Opinion and Order dated September 11, 2017, the Court granted that motion
in part, dismissing two claims due to the absence of a valid assignment from patients of the right
to seek reimbursement from United. (Dkt. No. 59 at 10–13.)
Plaintiffs filed the operative Corrected First Amended Class Action Complaint
(“Complaint”) on January 10, 2018. (Dkt. No. 73 (“Compl.”).) United moved to strike the class
allegations (Dkt. No. 75), and answered the Complaint (Dkt. No. 80). The Court denied the
motion to strike (Dkt. No. 87), and on May 14, 2018 United filed an amended answer, asserting
counterclaims (Dkt. No. 96). Plaintiffs moved to dismiss those counterclaims (Dkt. No. 97), and
United moved for partial summary judgment on twenty of Plaintiffs’ claims (Dkt. No. 107). In
an Opinion and Order dated March 28, 2019, the Court dismissed United’s counterclaims as
preempted under ERISA, and granted partial summary judgment in favor of United on the claims
at issue due to the existence of valid anti-assignment provisions in the relevant health benefits
plans. (Dkt. No. 153 at 13, 24–25.)
In the interim, Plaintiffs filed a motion for class certification (Dkt. No. 142), shortly
followed by a motion from United for summary judgment on the remaining claims (Dkt. No.
161). The motion for class certification is now fully briefed (Dkt. Nos. 143, 156, 174), and ready
for resolution.
B.

Factual Background

United is an insurer and administrator of employer-sponsored health benefit plans, which
are governed by ERISA. (Compl. ¶ 1.) For all of its plans, “United serves as the claims
administrator,” whereby it is “responsible for determining whether any given claim is covered by
2

Case 1:16-cv-05265-JPO Document 204 Filed 09/11/19 Page 3 of 34

the corresponding United Plan and effectuating any resulting benefit payment.” (Compl. ¶ 5.)
This case involves the benefits provided under United’s plans for outpatient surgery.
In New York State, outpatient surgical procedures can legally be performed in three kinds
of settings: hospitals, ambulatory surgical centers (“ASC”), and office-based surgery (“OBS”)
practices. (Compl. ¶ 8.) An OBS practice essentially comprises “an operating room in [a
physician’s] office.” (Compl. ¶ 8; see Dkt. No. 144-40 ¶ 6.) Hospitals and ASCs are governed
by Article 28 of the New York Public Health Law, which imposes several requirements
including the need to maintain an operating certificate from the state Department of Health. See
NY Pub. Health Law §§ 2801.1, 2805. In contrast, OBS practices are regulated under Section
230-d of the New York Public Health Law, which requires them to maintain accreditation
through a third-party agency approved by the state Commissioner of Health. See NY Pub.
Health Law § 230-d(1)(a), (1)(h).
In general, health insurers reimburse healthcare providers for two types of fees in
connection with outpatient surgical services: a “professional fee” to compensate for the medical
provider’s “time and expertise,” and a “facility fee” to compensate for the expense of using the
location where the service was performed. (Compl. ¶ 7.) Health insurance plans may consider
healthcare providers, such as OBS practices, to qualify as either “in-network” providers or “outof-network” providers, and most plans administered by United provide for benefits for services
by out-of-network providers. (Compl. ¶ 6.) In sum and substance, Plaintiffs allege that United
refuses to pay facility fees to out-of-network office-based surgery providers, which Plaintiffs
contend is contrary to the terms of United’s health benefits plans and the requirements of ERISA.
Plaintiff Columbia East Side Surgery, P.C. (“Columbia”) operated as an OBS practice
from 2013 to 2016, and is solely owned by Dr. Darrick Antell. (Dkt. No. 144-40 ¶¶ 1–2; Compl.

3

Case 1:16-cv-05265-JPO Document 204 Filed 09/11/19 Page 4 of 34

¶¶ 13, 19.) Columbia was properly accredited as an OBS practice under New York law during
that time (see Dkt. No. 144-39), and it provided out-of-network outpatient surgeries to patients
covered by United’s plans (Compl. ¶ 19; Dkt. No. 144-40 ¶ 2). Often these patients assigned to
Columbia their benefits claims for these surgeries, authorizing Columbia to seek reimbursement
from United through legal recourse if necessary. (Dkt. No. 144 ¶ 10.)
In billing United for its services, Columbia routinely submitted claims for facility fees.
(Dkt. No. 144-40 ¶ 2.) 1 In April 2013, however, United decided that it would not pay facility
fees to Columbia for its outpatient surgical services. In a letter to Columbia, United stated that
“without a valid operating certificate issued by the New York Commissioner of Health [under
Article 28], a physician’s office is not eligible to bill facility charges as an Ambulatory Surgery
Center. If you are certified for Office Based Surgery, UnitedHealth Group will not reimburse
facility fees.” (Dkt. No. 144-46 at 1.) United rejected each of Columbia’s subsequent attempts
to claim facility fees. (See Dkt. No. 144-47.)
Columbia alleges that United’s denial of its claims for facility fees is not an isolated
practice, but rather the result of a policy that affects the proposed class of United plan
beneficiaries and assignees. Indeed, as United’s representatives admit, “United’s standard
reimbursement policy, absent plan language to the contrary, is to treat providers of outpatient
surgical services in New York State that lack an Article 28 license as non-facilities that are not
eligible to charge facility fees for which United-administered plans provide benefits.” (Dkt. No.
144-13 at 4.) But because “United has not identified any plans with cont[r]ary provisions,” (Dkt.
No. 144-13 at 5), it does not pay facility fees to any OBS practices.

1

Specifically, as a plaintiff in this action, Columbia represents four patients insured
under United plans whose claims for facility fees were denied. (Compl. ¶¶ 13, 40–92.)
4

Case 1:16-cv-05265-JPO Document 204 Filed 09/11/19 Page 5 of 34

Plaintiffs contend that this policy is unlawful under ERISA because it was implemented
for financial concerns and is unrelated to plan language. (Dkt. No. 143 at 4.) Moreover,
Plaintiffs allege that the policy is inequitably applied to out-of-network OBS providers, but not
those that are in-network. (Dkt. No. 143 at 3–4, 9–10; see Dkt. No. 144-23 at 2.)
United’s policy is implemented through a process referred to as “C-flagging,” whereby
United flags certain providers as non-Article 28 entities and denies all subsequent facility fee
claims submitted by those providers. (Dkt. No. 144-11 at 2–3.) 2 Plaintiffs allege that the denial
of claims pursuant to C-flags, however, does not involve the interpretation of the terms of each
health benefits plan to determine whether the specific terms at issue require the payment of
facility fees to OBS practices. (Dkt. No. 143 at 3, 7, 11–12; see Dkt. No. 144-11 at 2–3; Dkt.
No. 144-19 at 71:11–22; Dkt. No. 144-18 at 58:8–10; Dkt. No. 144-15 at 108:4–9; Dkt. No.
144-32 at 3.)
When a C-flag is placed on a provider, the provider receives a standard letter
communicating United’s policy against paying facility fees to OBS practices. (Dkt. No. 144-11
at 4–5, 200; see Dkt. No. 73-6.) Letters reiterating the policy are then sent to the flagged
provider for each subsequent facility fee claim submitted. (Dkt. No. 144-29 at 2.) In denying
the facility fee claims, United also sends an explanation of benefits (“EOB”) form to the provider
and patient. The EOBs communicate that the claims were denied pursuant to codes LW and
D60H, which indicate that the provider was not licensed under Article 28 and thus could not
receive facility fees. (Dkt. No. 144-11 at 3, 209; see Dkt. No. 144-1.01.)

2

Where the Court relies on documents that have been filed under seal, the Court
has concluded that the parties’ interests in continued sealing of the portions referenced in this
Opinion and Order are insufficient to overcome the presumption of public access to judicial
documents. See Lugosch v. Pyramid Co. of Onondaga, 435 F.3d 110, 119–20 (2d Cir. 2006).
5

Case 1:16-cv-05265-JPO Document 204 Filed 09/11/19 Page 6 of 34

Looking to the language of the United plans at issue, Plaintiffs allege that they should be
interpreted to include OBS providers within the definition of the “facilities” that are entitled to
provide outpatient surgical services and receive facility fees for such services. (Dkt. No. 143 at
11–12.) Consequently, Plaintiffs assert that by applying a blanket policy that fails to interpret
these plan terms at all—much less interpret them correctly—United has violated ERISA in
denying the claims of all proposed class members.
Plaintiff Columbia brings a claim on behalf of its four patients and the proposed class for
United’s failure to pay benefits in violation of ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B).
(Compl. ¶¶ 13, 115–118.) The other Associational Plaintiffs—the Medical Society of the State
of New York (“MSSNY”) and the Society of New York Office Based Surgery Facilities
(“NYOBS”)—are organizations that represent the interests of health care providers, and whose
members include Dr. Antell and other physicians who own out-of-network OBS practices.
(Compl. ¶¶ 12, 14–18; Dkt. No. 144-22 at 20:20–24, 22:12–17.) Together, Columbia, MSSNY,
and NYOBS, on behalf of themselves and the proposed class, bring a second claim for injunctive
and declaratory relief from United’s refusal-to-pay policy under ERISA § 502(a)(1)(B) or
§ 502(a)(3), 29 U.S.C. §§ 1132(a)(1)(B), (a)(3). (Compl. ¶¶ 119–122.)
II.

Legal Standard
Class certification is governed by Federal Rule of Civil Procedure 23. Section (a) of Rule

23 requires the party seeking certification to establish four prerequisites:
(1) the class is so numerous that joinder of all members is impracticable;
(2) there are questions of law or fact common to the class;
(3) the claims or defenses of the representative parties are typical of the claims or
defenses of the class; and
(4) the representative parties will fairly and adequately protect the interests of the
class.

6

Case 1:16-cv-05265-JPO Document 204 Filed 09/11/19 Page 7 of 34

Fed. R. Civ. P. 23(a). In addition, “the movant must show that the action is one of three types
described in section (b).” Jackson v. Bloomberg, L.P., 298 F.R.D. 152, 159 (S.D.N.Y. 2014).
The Rule 23 requirements are more than a “mere pleading standard.” Wal-Mart Stores,
Inc. v. Dukes, 564 U.S. 338, 350 (2011). “Rather, the party seeking class certification must
actually establish [Rule 23’s] requirements by a preponderance of the evidence.” Jackson, 298
F.R.D. at 159. To determine whether this standard has been satisfied, a court must conduct “a
rigorous analysis” that may “overlap with the merits of the plaintiff's underlying claim.” Dukes,
564 U.S. at 351 (citation omitted). This analysis often requires going “beyond the pleadings to
consider the parties’ evidentiary submissions and make factual findings where those submissions
conflict[].” Jacob v. Duane Reade, Inc., 602 F. App’x. 3, 5 (2d Cir. 2015).
III.

Discussion
Plaintiffs have moved for certification of a class under Rule 23(b)(1) or Rule 23(b)(2) and

under Rule 23(b)(3). The proposed class seeks a declaratory judgment, an injunction prohibiting
United from continuing to deny all facility fee claims from OBS practices, and either an order
directing United to reprocess the denied claims or an award of benefits for those claims. (Dkt.
No. 143 at 25.) The proposed class consists of:
Any United Plan member, or member’s valid assignee, whose claim for facility fees
for services rendered by an out-of-network OBS provider accredited under Section
230-d was denied, where such claim was (1) submitted under a Plan governed by
ERISA; (2) denied during the applicable statute of limitations; and (3) denied on
the basis that the OBS provider was not certified under Article 28 of the New York
Public Health Law.
Excluded are Defendants, their parents, subsidiaries, and affiliates, their directors
and officers and members of their immediate families; also excluded are any
federal, state, or local governmental entities, any judicial officers presiding over
this action and the members of their immediate families, and judicial staff.

7

Case 1:16-cv-05265-JPO Document 204 Filed 09/11/19 Page 8 of 34

(Dkt. No. 143 at 13; see id. at 25.) Plaintiffs also ask the Court to appoint Columbia, MSSNY,
and NYOBS as class representatives and to appoint Zuckerman Spaeder LLP and Buttaci Leardi
& Werner LLC as co-lead class counsel. (Dkt. No. 142.)
United opposes class certification in its entirety, challenging Plaintiffs’ ability to certify a
class under three of the requirements of Rule 23(a), and each subsection of Rule 23(b). 3 The
Court first considers the threshold question of class member standing, before addressing whether
Plaintiffs have satisfied the requirements of Rule 23(a) and (b).
A.

Class Member Standing

As an initial matter, the Court considers whether certification of the proposed class would
raise standing issues. In the Second Circuit, “a class cannot be certified if any person captured
within that definition lacks Article III standing.” Calvo v. City of N.Y., No. 14 Civ. 7246, 2017
WL 4231431, at *3 (S.D.N.Y. Sept. 21, 2017) (citing Denney v. Deutsche Bank AG, 443 F.3d
253, 263–64 (2d Cir. 2006)). To satisfy the constitutional standing requirements, “plaintiff[s]
must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of

3

In support of their motion for class certification, Plaintiffs submitted an expert
report from Michael Miscoe. (Dkt. No. 144-38.) United subsequently moved to strike this
report under Federal Rule of Evidence 702 and Daubert v. Merrell-Dow Pharmaceuticals, 509
U.S. 579 (1993). (Dkt. Nos. 158, 159.) As United notes, however, “[t]he exclusion of Miscoe’s
testimony will have minimal impact on the pending class certification motion, as Plaintiffs make
only a single, passing reference to Miscoe’s opinions in their class certification brief.” (Dkt. No.
159 at 2.) Indeed, United is primarily concerned with the way Miscoe’s report could be
employed in opposition to its pending motion for summary judgment. (Id.)
Examining Plaintiffs’ class certification brief, the Court notes that the sole proposition for
which it cites the Miscoe report is substantially similar to a point that United made in support of
the motion to strike. (Dkt. No. 159 at 9.) Furthermore, the reliance on the Miscoe report in
Plaintiffs’ brief is so minimal, the Court concludes that whether or not the report is in evidence
would not ultimately control the outcome of the motion for class certification. Accordingly, the
Court defers consideration of the motion to strike until it resolves the pending motion for
summary judgment.
8

Case 1:16-cv-05265-JPO Document 204 Filed 09/11/19 Page 9 of 34

the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” Spokeo,
Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016).
United points to two issues related to the standing of putative class members. First,
United contends that determining whether class members possess standing to bring a claim under
ERISA will require individualized inquiry into whether patients validly assigned claims to their
healthcare provider or maintained the right to pursue their claims. (Dkt. No. 156 at 19.) The
type of “standing” that this argument refers to, however—what courts “formerly called ‘statutory
standing’”—is really a question of whether specific plaintiffs have a cause of action under the
statute, and does not implicate the limits of Article III. Am. Psychiatric Ass’n v. Anthem Health
Plans, Inc., 821 F.3d 352, 359 (2d Cir. 2016). The assignment issue is thus better understood as
relevant to the predominance inquiry under Rule 23(b), discussed below. (See Dkt. No. 87 at 4.)
Second, United contends that some putative class members have not suffered any injury
because Columbia “routinely releases patients from all responsibility to pay claims denied by
United.” (Dkt. No. 156 at 24.) Plaintiffs respond that patients were injured by United’s alleged
violation of ERISA in a manner sufficient to confer Article III standing even if they have no
“out-of-pocket liability.” (Dkt. No. 174 at 18.) The Court agrees with Plaintiffs.
At least four Circuits have held that “the denial of plan benefits is a concrete injury for
Article III standing even when patients were not directly billed for their medical services.”
Springer v. Cleveland Clinic Emp. Health Plan Total Care, 900 F.3d 284, 287 (6th Cir. 2018). If
patients were entitled to the payment of facility fees under the language of their health benefit
plans, United’s refusal to pay those fees denied patients the benefit of their bargain, which is an
injury “stemm[ing] from traditional principles of contract law that d[oes] not depend on financial
harm.” Id.

9

Case 1:16-cv-05265-JPO Document 204 Filed 09/11/19 Page 10 of 34

Patient class members have thus suffered a sufficient injury-in-fact to confer Article III
standing; and the Court is satisfied that the uncontested elements of standing have also been met
here as to all forms of relief sought.
B.

Rule 23(a) Requirements
1.

Numerosity

The first subsection of Rule 23(a) requires that the class be “so numerous that joinder of
each member is impracticable.” Fed. R. Civ. P. 23(a)(1). Courts in the Second Circuit presume
that the numerosity requirement is met if a putative class has forty or more members. See
Shahriar v. Smith & Wollensky Rest. Grp., Inc., 659 F.3d 234, 252 (2d Cir. 2011).
Plaintiffs have identified claims submitted by approximately 245 providers, implicating
an estimated 5,124 patients, in which facility fees were denied to what was likely an OBS
practice. (Dkt. No. 144 ¶¶ 26–30.) United does not challenge the conclusion that the proposed
class is numerous. The Court thus finds that Plaintiffs have satisfied the first requirement of
Rule 23(a) by demonstrating that the numerosity of the class would cause joinder of each
member to be impracticable.
2.

Commonality

The second subsection of Rule 23(a), the commonality requirement, mandates that “there
are questions of law or fact common to the class.” Fed. R. Civ. P. 23(a)(2). A question satisfies
this condition if 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.” Dukes, 564 U.S. at 350. “Where the same conduct or practice by the same defendant
gives rise to the same kind of claims from all class members, there is a common question.”
Johnson v. Nextel Commc’ns Inc., 780 F.3d 128, 137 (2d Cir. 2015) (citation omitted). A single

10

Case 1:16-cv-05265-JPO Document 204 Filed 09/11/19 Page 11 of 34

common question is alone sufficient to satisfy the commonality requirement if the question has
the capacity to “materially advance the litigation.” Ruiz v. Citibank, N.A., 93 F. Supp. 3d 279,
289 (S.D.N.Y. 2015).
Plaintiffs offer three questions to satisfy the commonality requirement: (1) “Was
United’s decision to deny the OBS facility-fee claim based on its interpretation of any particular
written Plan term?”; (2) “Did United cover OBS facility-fee claims for in-network providers,
while denying coverage for out-of-network providers?”; and (3) “Do the written terms of any
United Plan exclude outpatient surgery facility-fee coverage for non-Article 28 providers?”
(Dkt. No. 143 at 15.)
The first of these questions involves whether United had a uniform policy of denying
OBS facility fee claims without interpreting any specific plan terms to justify that result. (Dkt.
No. 143 at 15–16; see Dkt. No. 174 at 8–11.) Plaintiffs argue that United did have such a policy,
as evidenced by United’s C-flagging process: United verifies that an OBS provider is not
licensed under Article 28, flags that provider as being incapable of receiving facility fees, and all
future facility fee claims from that provider are denied. And this C-flagging process occurs
without reference to the specific terms of the health benefit plan under which the facility fee
claim was submitted. (Dkt. No. 200 ¶¶ 266–67.) For further support, Plaintiffs also point to the
standard letters and EOBs that United sends in denying these facility fee claims as common
evidence that notice to class members of claim denials did not reference specific plan terms.
(Dkt. No. 143 at 16; see Dkt. No. 144-47; Dkt. No. 144-1.01 at 5; Dkt. No. 144-1.19 at 3.)
Plaintiffs contend that this common evidence of how United’s refusal-to-pay policy was
implemented through C-flags, without consideration of individual plan language, will
demonstrate that United violated its obligations under ERISA to the entire class requiring

11

Case 1:16-cv-05265-JPO Document 204 Filed 09/11/19 Page 12 of 34

classwide vacatur of benefit denials and remand. (Dkt. No. 143 at 16.) United responds that
Plaintiffs’ argument regarding its interpretation of plan terms is factually incorrect, and that
answering this question requires individualized inquiry. (Dkt. No. 156 at 37.)
In attacking the factual premise underlying Plaintiffs’ argument, United alleges that it
vets the language of each plan when it “onboards” the plan into its “automatic adjudication
system,” and that this vetting process ensures that no benefit provisions are inconsistent with
United’s standard practice of not covering OBS claims for facility fees. (Dkt. No. 156 at 37–38;
see generally Dkt. No. 183 ¶¶ 43–50, 52, 54–58, 62–64 (describing United’s plan creation,
vetting, and onboarding processes.) As Plaintiffs correctly note in reply, however, whether
United’s vetting and onboarding processes satisfy its “duty under ERISA to apply plan terms in
denying OBS claims is itself a common question for class purposes.” (Dkt. No. 174 at 8.) 4
Moreover, whether the vetting and onboarding processes actually took account of the OBS
facility fees issue and interpreted the relevant plan language in light of this issue is heavily
disputed by Plaintiffs in the context of United’s pending motion for summary judgment. (See
generally Dkt. No. 183 ¶¶ 62, 64; Dkt. No. 200 ¶¶ 379–416.)
At this stage, “the proponent of class certification need not show that the common
questions ‘will be answered, on the merits, in favor of the class.’” Johnson, 780 F.3d at 138
(quoting Amgen Inc. v. Conn. Ret. Plans & Trust Funds, 568 U.S. 455, 459 (2013)). It need only

4

In a single footnote, United argues that the plan vetting process itself “varies by
plan.” (Dkt. No. 156 at 39 n.20.) The Court notes that “[a]rguments which appear in footnotes
are generally deemed to have been waived.” In re MF Glob. Holdings Ltd. Inv. Litig., No. 11
Civ. 7866, 2014 WL 8184606, at *2 (S.D.N.Y. Mar. 11, 2014) (citation omitted). Regardless,
these alleged variations nonetheless involve review of the plans for “consistency with United’s
standard claim adjudication policies.” (Dkt. No. 156 at 39 n.20; see Dkt. No. 183 ¶ 43 (noting
the existence of a “standard process for drafting, vetting, and loading the language of individual
plans into an automatic claim adjudication system”).) Consequently, how this review process
works and intersects with the C-flag process is capable of generalized proof.
12

Case 1:16-cv-05265-JPO Document 204 Filed 09/11/19 Page 13 of 34

demonstrate by a preponderance that there is at least one material question capable of classwide
resolution, such as an issue demonstrating that “the same conduct or practice by the same
defendant gives rise to the same kind of claims from all class members.” Id. at 137 (citation
omitted). Whether United’s vetting, onboarding, and C-flagging processes actually involve the
interpretation of plan terms in the ultimate decision to deny OBS facility fee claims, as a factual
matter—and whether these processes satisfy ERISA, as a legal matter—present such common
questions.
United briefly argues that the ultimate need for injunctive relief in this case would depend
upon the interpretation of specific plan language, which presents an individualized inquiry. (Dkt.
No. 156 at 39.) 5 However, this argument assumes the correctness of United’s factual allegations
regarding its onboarding and vetting processes, and whether those standard processes satisfy
ERISA. Those assumptions present common questions that the Court does not conclusively
resolve at the class certification stage.
Overall, the Court concludes that Plaintiffs have adequately demonstrated the existence
of at least one common question that will drive the resolution of this litigation. The
commonality requirement has thus been satisfied.
3.

Typicality and Adequacy

The third and fourth subsections of Rule 23(a) require that the claims or defenses of the
proposed class representatives “are typical of the claims or defenses of the class” and that the
proposed representatives “will fairly and adequately protect the interests of the class.” Fed. R.
Civ. P. 23(a)(3)–(4). To establish typicality, plaintiffs “must show that each class member’s

5

The bulk of the other arguments that United style as challenges to commonality
are more properly considered as relevant to the predominance inquiry, and are thus addressed
below as necessary. (Dkt. No. 156 at 18–23, 25–33.)
13

Case 1:16-cv-05265-JPO Document 204 Filed 09/11/19 Page 14 of 34

claim arises from the same course of events and each class member makes similar legal
arguments to prove the defendant’s liability.” In re Flag Telecom Holdings, Ltd. Sec. Litig., 574
F.3d 29, 35 (2d Cir.2009) (internal quotation marks omitted). To establish adequacy, plaintiffs
must show that “the proposed class representative [has] an interest in vigorously pursuing the
claims of the class, and [has] no interests antagonistic to the interests of other class members.”
In re Payment Card Interchange Fee & Merch. Disc. Antitrust Litig., 827 F.3d 223, 231 (2d Cir.
2016) (citation omitted). In addition, plaintiffs must demonstrate that “plaintiff’s attorneys are
qualified, experienced and able to conduct the litigation.” In re Flag Telecom, 574 F.3d at 35
(citation omitted).
Several aspects of typicality and adequacy are not contested in this case, and the Court
finds the requirements to be partially satisfied in these respects. As an initial matter, it is clear
that the claims of the class members arise from the same course of events: United flagged OBS
practices as ineligible to receive facility fees and denied claims for such fees pursuant to those Cflags. Any “minor variations in the fact patterns underlying individual claims” do not overcome
the fact that the same alleged “unlawful conduct was directed at or affected both the named
plaintiff and the class sought to be represented.” Jacob v. Duane Reade, Inc., 289 F.R.D. 408,
417 (S.D.N.Y. 2013) (quoting Robidoux v. Celani, 987 F.2d 931, 936–37 (2d Cir. 1993)). On its
face, then, typicality appears to be satisfied.
Additionally, under the adequacy inquiry, United does not contest the ableness of the
proposed class co-counsel. The Court concludes that counsel is sufficiently experienced and
qualified to conduct this litigation on behalf of the proposed class. (See Dkt. No. 143 at 24.)
Furthermore, United does not argue that Columbia will not vigorously pursue the claims of the
class, or that Columbia’s interest in pursuing facility fees is out of step with the interests of the

14

Case 1:16-cv-05265-JPO Document 204 Filed 09/11/19 Page 15 of 34

proposed class of patients and OBS practice assignees. The Court concludes that Columbia has
adequately demonstrated that it will vigorously pursue this action and that its interests are
generally consonant with those of the proposed class. (See Dkt. No. 143 at 22–23.)
Notwithstanding these undisputed matters, United argues that Columbia, NYOBS, and
MSSNY are not adequate or typical representatives of the proposed class. The Court first
addresses the challenges to Columbia’s typicality and adequacy, and then those pertaining to the
Associational Plaintiffs.
a.

Columbia

United contends that Columbia is not a typical or adequate class representative because
United has asserted an “unclean hands” affirmative defense against Columbia’s claims. (Dkt.
No. 156 at 10–11.) Columbia raises a number of responses, including that United’s “unclean
hands” defense is facially meritless. (Dkt. No. 174 at 20–21.)
“[W]here a putative class representative is subject to unique defenses which threaten to
become the focus of the litigation, certification of the class is not appropriate because the
representative cannot act in the best interest of the class.” Vargas v. Howard, 324 F.R.D. 319,
327 (S.D.N.Y. 2018) (internal quotation marks omitted) (quoting Baffa v. Donaldson, Lufkin &
Jenrette Sec. Corp., 222 F.3d 52, 59 (2d Cir. 2000)). The issue of unique defenses is “routinely
consider[ed] . . . under the typicality, commonality, and/or the adequacy prongs of Rule 23(a).”
Lapin v. Goldman Sachs & Co., 254 F.R.D. 168, 179 (S.D.N.Y. 2008). At the class certification
stage, the defendant “need not show . . . that the unique defense will prevail, only that it is
meritorious enough to require the plaintiff to devote considerable time to rebut the unique
defense.” Id. (citation and internal quotation marks omitted). A “groundless, far-fetched
defense” alone is insufficient to disqualify a plaintiff. Id. (citation omitted). Moreover, “the rule

15

Case 1:16-cv-05265-JPO Document 204 Filed 09/11/19 Page 16 of 34

barring certification of plaintiffs subject to unique defenses is not rigidly applied in this Circuit,”
and plaintiffs can be certified as class representatives even if they are subject to a particular
defense that may bar their recovery. Id. (brackets, internal quotation marks and citation omitted).
Here, United asserts a unique defense under the “unclean hands” doctrine, which “closes
the doors of a court of equity to one tainted with inequitableness or bad faith relative to the
matter in which he seeks relief.” Holm v. First Unum Life Ins. Co., 7 F. App’x 40, 41 (2d Cir.
2001) (quoting Precision Instrument Mfg. Co. v. Automotive Maint. Mach. Co., 324 U.S. 806,
814 (1945)). To succeed on an unclean hands defense, a defendant must demonstrate that the
plaintiff engaged in fraudulent, deceitful, or bad faith behavior, and that the “bad faith related to
the matter at issue in th[e] litigation.” Gidatex, S.r.L. v. Campaniello Imports, Ltd., 82 F. Supp.
2d 126, 131 (S.D.N.Y. 1999).
This relation requirement has resulted in the “narrowness of the doctrine’s application.”
Specialty Minerals, Inc. v. Pluess-Staufer AG, 395 F. Supp. 2d 109, 112 (S.D.N.Y. 2005). Cases
that have applied the unclean hands defense in this Circuit have done so where “the misconduct
that forms the basis for the unclean hands defense was directly related to plaintiff’s use or
acquisition of the right in suit.” Id. at 113; see Curley v. Brignoli Curley & Roberts Assocs., 746
F. Supp. 1208, 1219 (S.D.N.Y. 1989) (“What is material is not that the plaintiff’s hands are dirty,
but that he dirties them in acquiring the right he now asserts.” (citation omitted)).
Here, United points to five categories of allegedly fraudulent conduct by Columbia to
support its unclean hands defense: (1) using deceptive coding in billing claims; (2) ignoring
regulatory statements that it was not entitled to facility fees; (3) billing for services that were not
provided; (4) deliberately inflating bills; and (5) employing a specific billing service because it
would inflate bills. (Dkt. No. 156 at 8–10.) The problem, however, is that United does not

16

Case 1:16-cv-05265-JPO Document 204 Filed 09/11/19 Page 17 of 34

adequately demonstrate that these practices are “directly related to plaintiff’s use or acquisition
of the right in suit.” Specialty Minerals, 395 F. Supp. 2d. at 113. The right in suit originates
from ERISA and the language of the plans, which Columbia contends entitle OBS practices to
the payment of facility fees. The legal claims brought by Columbia in this action target the
failure to pay these fees, whereas the fraudulent conduct alleged by United targets the propriety
of billing for certain fees that were paid. (See Dkt. No. 174 at 19–20.)
If United could demonstrate that Columbia fraudulently billed for certain services when
in fact it did not perform any, then perhaps it would have a viable defense from equitable relief
associated with the facility fee claims for those services. But United does not specifically allege
that this was ever the case. In United’s stated examples where Columbia allegedly billed for
services not provided, it is clear in each instance that Columbia did in fact perform a service for
the patients. (See Dkt. Nos. 157-15, 157-16, 157-17). And United does not establish that these
services were improperly billed such that, even if Columbia prevails on its legal arguments, it
would not be entitled to facility fees in connection therewith.
Ultimately, United has not persuasively established that Columbia dirtied its hands “in
acquiring the right [it] now asserts.” Curley, 746 F. Supp. at 1219. Because “the Court cannot, at
this point, find that the unique defense is ‘meritorious,’” Lapin, 254 F.R.D. at 180, the assertion
of the defense does not prevent Columbia from being a typical or adequate representative of the
proposed class. Having rejected this unique defenses argument, and in light of the uncontested
aspects of adequacy and typicality inquiry discussed above, the Court concludes that Columbia is
an adequate and typical representative of the proposed class.

17

Case 1:16-cv-05265-JPO Document 204 Filed 09/11/19 Page 18 of 34

b.

Associational Plaintiffs

United also argues that the Associational Plaintiffs are inadequate and atypical class
representatives, raising some arguments specific to NYOBS, and some arguments applicable to
both NYOBS and MSSNY. (Dkt. No. 156 at 12–17.)
To the extent United contends that NYOBS will be subject to unique defenses due to any
alleged fraudulent conduct or relationship with Columbia (Dkt. No. 156 at 12–14), that argument
fails for the reasons given above. United also contends that NYOBS “places the interests of its
officers over those of other practices,” and has thus “demonstrated an unwillingness or inability
to represent even its own membership,” rendering it an inadequate class representative. (Dkt.
No. 156 at 12–13.) That NYOBS may have placed the interests of some members over that of
the membership body as whole on specific occasions in the past, however, does not establish that
it lacks “an interest in vigorously pursuing the claims of the class” in this case. In re Payment
Card, 827 F.3d at 231. There is no cause to suspect that, in the event a class is certified, the
interests of the NYOBS leadership and the interests of its members diverge with respect to the
desired outcome of this litigation.
United also suggests more generally that NYOBS lacks the proper character and integrity
to serve as a class representative. (Dkt. No. 156 at 13–14.) Whether a person “is of sufficient
moral character to represent a class” is indeed relevant to the adequacy requirement. Torres v.
Gristede’s Operating Corp., No. 04 Civ. 3316, 2006 WL 2819730, at *15 (S.D.N.Y. Sept. 29,
2006) (citation omitted). But this inquiry is specifically “directed at improper or questionable
conduct arising out of or touching upon the very prosecution of the lawsuit.” Id. (citation
omitted). Because none of the complained-of conduct occurred during the course of this

18

Case 1:16-cv-05265-JPO Document 204 Filed 09/11/19 Page 19 of 34

litigation, the Court is unwilling to conclude on this basis that NYOBS is an inadequate class
representative.
United also raises three arguments challenging the ability of both NYOBS and MSSNY
to serve as class representatives.
First, United contends that the associations cannot be class representatives because they
fall outside the definition of class members. (Dkt. No. 156 at 14–15.) In support, United relies
on the text of Rule 23, which provides that “[o]ne or more members of a class may sue” as a
class representative. Fed. R. Civ. P. 23(a). United also cites Sosna v. Iowa for the proposition
that “[a] litigant must be a member of the class which he or she seeks to represent at the time the
class action is certified by the district court.” 419 U.S. 393, 403 (1975).
United is correct that NYOBS and MSSNY do not technically qualify as class members
because they are not “United Plan member[s]”—i.e., patients—or “valid assignee[s]” of
member’s claims—i.e., OBS practices. (Dkt. No. 143 at 13.) But courts in this Circuit have
long permitted associations to serve as class representatives under similar circumstances. See,
e.g., Norwalk CORE v. Norwalk Redevelopment Agency, 395 F.2d 920, 937 (2d Cir. 1968);
Brooklyn Ctr. for Indep. of the Disabled v. Bloomberg, 290 F.R.D. 409, 419 (S.D.N.Y. 2012);
United States v. City of N.Y., 258 F.R.D. 47, 63 (E.D.N.Y. 2009). Following this body of
precedent, the Court concludes the Rule 23 permits an association, the members of which fall
within the definition of the proposed class, to serve as a class representative. The cited
proposition from the Supreme Court in Sosna—which came in the context of a discussion of
standing and mootness, did not purport to interpret Rule 23, and was made in a case that did not
involve any associational plaintiff seeking to represent a class—is not to the contrary.

19

Case 1:16-cv-05265-JPO Document 204 Filed 09/11/19 Page 20 of 34

Second, United contends that the motivating purpose of NYOBS and MSSNY are not
sufficiently in line with the proposed class. (Dkt. No. 156 at 15–16.) As the Second Circuit has
indicated, an association may “represent[] a class where its raison d’etre is to represent the
interests of that class.” Norwalk, 395 F.2d at 937. Courts have interpreted this statement to
mean that the association’s “purpose” must be “consonant with the interests of the class.” City of
N.Y., 258 F.R.D. at 62; see United for Children, Inc. v. City of N.Y., 214 F.R.D. 252, 263
(S.D.N.Y. 2003) (reasoning that the “organization appears to be consistent with the objectives of
the proposed class”).
Here, both NYOBS and MSSNY exist to represent the interests of OBS providers, either
exclusively or as part of the representation of the interests of the medical profession in New York
State. (Dkt. No. 144-43 ¶ 2; Dkt. No. 144-44 at 1, 3–4; Dkt. No. 59 at 13–14.) This
representation is consistent with the interests of the class in securing facility fees for OBS
practices where the plan language so requires.
United nonetheless contends that, because NYOBS and MSSNY lack patient members
and do not represent the interests of patients, they cannot be adequate class representatives.
(Dkt. No. 156 at 16.) But United does not argue that the interests of patient class members differ
in any way from that of OBS practices with valid assignment of patients’ claims in this action.
Nor does United dispute that an OBS practice, as the assignee of patient claims, can adequately
represent the interests of patient class members. See Cordes & Co. Fin. Servs., Inc. v. A.G.
Edwards & Sons, Inc., 502 F.3d 91, 101–02 (2d Cir. 2007). Because the associations represent
OBS practices that stand in the shoes of patients through valid assignments, the associations can
adequately represent the shared interests of a class consisting of both patients and practices.

20

Case 1:16-cv-05265-JPO Document 204 Filed 09/11/19 Page 21 of 34

Third, United contends that because liability in this case will turn on individualized
evidence, the Associational Plaintiffs are inappropriate class representatives. (Dkt. No. 156 at
16–17.) Plaintiffs respond that the case does not turn on individualized assessments of plan
terms. (Dkt. No. 174 at 22 n.37.) This issue is best understood as challenge to associational
standing.
The Court notes that, in addressing associational standing in an earlier Opinion and
Order, it recognized that NYOBS and MSSNY would lack standing if United could demonstrate
that Plaintiffs’ claims required an “unacceptable amount” of “examination of individual benefit
determinations.” (Dkt. No. 59 at 14–15.) This issue is intertwined with the Court’s
consideration of the commonality requirement. (See supra Section III.B.2.) Because the
question at the core of Plaintiffs’ request for injunctive and declaratory relief does not turn on
individualized evidence, as explained above, the Court need not and does not revisit its
conclusion regarding associational standing.
Overall, the Court concludes that the Associational Plaintiffs have demonstrated that they
are typical and adequate representatives of the proposed class for purposes of seeking declaratory
and injunctive relief.
C.

Rule 23(b) Requirements

Plaintiffs seek to certify a class under either Rule 23(b)(1) or (b)(2) to obtain declaratory
judgment and injunctive relief, including an order requiring reprocessing of the class members’
denied claims; and under Rule 23(b)(3) for the same relief and to “provid[e] the Court the
flexibility to award benefits in lieu of reprocessing.” (Dkt. No. 143 at 25.) The Court first
addresses whether certification of the class for purposes of declaratory and injunctive relief is
appropriate, before considering the requirements for certifying a benefits award class.

21

Case 1:16-cv-05265-JPO Document 204 Filed 09/11/19 Page 22 of 34

1.

Declaratory and Injunctive Class Under Rule 23(b)(1) and (b)(2)
a.

Subsection (b)(1)

Rule 23(b)(1) provides that a class may be satisfied if “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 members not
parties to the individual adjudications or would substantially impair or impede their
ability to protect their interests.
Fed. R. Civ. P. 23(b)(1).
Plaintiffs argue that certification is appropriate under subsection (b)(1)(A) because if
individual class members brought separate suits, “United could be forced to reprocess some OBS
facility-fee claims, but not others, even though the evidence underlying United’s conduct would
not vary.” (Dkt. No. 143 at 26.)
United’s response is twofold. It contends first that Plaintiffs have failed to demonstrate
that there is a real risk of separate actions in the event a class is not certified. (Dkt. No. 156 at
40.) But it is not clear that this showing is actually required under subsection (b)(1)(A). In the
sole case on which United relies for this requirement, the Second Circuit observed no danger of
individual actions under the circumstances because the plaintiff had expressly conceded “that
individual actions could not be brought as the small claimants who constitute the entire class
could not, on an individual basis, afford the expense of lengthy anti-trust litigation.” Eisen v.
Carlisle & Jacquelin, 391 F.2d 555, 564 (2d Cir. 1968). More recently, a court in this District
expressly rejected the argument that plaintiffs must affirmatively demonstrate a risk of separate
actions to obtain certification. See In re Citigroup Pension Plan ERISA Litig., 241 F.R.D. 172,
180 (S.D.N.Y. 2006); see also Meidl v. Aetna, Inc., No. 15 Civ. 1319, 2017 WL 1831916, at *17

22

Case 1:16-cv-05265-JPO Document 204 Filed 09/11/19 Page 23 of 34

n.19 (D. Conn. May 4, 2017) (disagreeing with the “false premise that putative class members’
financial interests and resources are a reason to avoid certification” under subsection (b)(1)(A)).
The Court concludes that Eisen applies where plaintiffs admit the inapplicability of
subsection (b)(1)(A), but does not require an affirmative showing of the risk of separate actions
to obtain certification under that subsection. Because Plaintiffs do not concede the impossibility
of separate actions in this case, Eisen does not bar certification.
For its second objection to certification under subsection (b)(1)(A), United contends that
it would not be subject to inconsistent standards because it “owes the class differing obligations
based on differing plan terms.” (Dkt. No. 156 at 40.) This response misconstrues the nature of
Plaintiffs’ argument. The obligation that United owes the class—about which courts could
disagree and require incompatible standards of conduct—comes not from plan terms but from
the statute and regulations.
As an ERISA plan administrator, United is required to discharge its duties “in accordance
with the documents and instruments governing the plan.” 29 U.S.C. § 1104(a)(1)(D); see
Heimeshoff v. Hartford Life & Acc. Ins. Co., 571 U.S. 99, 108 (2013) (discussing the importance
of the written terms of an ERISA plan). In denying claims for facility fees, United is required to
“provide adequate notice in writing to any participant or beneficiary whose claim for benefits
under the plan has been denied, setting forth the specific reasons for such denial.” 29 U.S.C.
§ 1133(1). Such notice must make “[r]eference to the specific plan provisions on which the
determination is based.” 29 C.F.R. § 2560.503-1(g)(1)(ii).
Plaintiffs contend that in adopting its policy of refusing to pay OBS facility fees and
processing claims for such fees consistent with that policy, United has run afoul of these
obligations. And the Court observes that these are precisely the kinds of obligations for which

23

Case 1:16-cv-05265-JPO Document 204 Filed 09/11/19 Page 24 of 34

subsection (b)(1)(A) aims to save defendants from incompatible judicial directives. See Kindle
v. Dejana, 315 F.R.D. 7, 12 (E.D.N.Y. 2016) (“The risk of inconsistent adjudications raised in
Rule 23(b)(1)(A) ‘speaks directly to ERISA suits, because defendants have a statutory
obligation, as well as a fiduciary responsibility, to treat the members of the class alike.’” (quoting
In re Citigroup, 241 F.R.D. at 179)).
Contrary to United’s characterization (Dkt. No. 156 at 41), this is not a case “where the
risk of inconsistent results in individual actions is merely the possibility that the defendants will
prevail in some cases and not in others, thereby paying damages to some claimants and not
others.” Meidl, 2017 WL 1831916, at *16. Rather, separate actions could put United into a
position in which its structure for processing facility fee claims from OBS practices is deemed
permissible by some courts but held to violate the requirements of ERISA by others. This falls
squarely into the circumstances in which courts have certified classes under subsection (b)(1)(A).
See, e.g., id. at *18 (holding certification appropriate where the insurer “applied the same
[policy] to all putative class members, and [applicable] regulations call for consistent application
of each plan’s provisions”); Premier Health Ctr., P.C. v. UnitedHealth Grp., No. 11 Civ. 425,
2014 WL 4271970, at *28–29 (D.N.J. Aug. 28, 2014) (certifying class where separate actions
involving compliance with “ERISA’s notice and appeal requirements” could impair defendants
“ability to pursue a uniform course of conduct”).
Accordingly, certification of a class seeking declaratory and injunctive relief under
subsection (b)(1)(A) is appropriate in this case. 6

6

Because Plaintiffs have satisfied Rule 23(b)(1)(A), the Court need not consider
the parties’ arguments regarding the application of subsection (b)(1)(B). Additionally, because
the Court is granting class certification in part, Plaintiffs’ request in the alternative for issue
certification (Dkt. No. 143 at 35–36) is denied as moot.

24

Case 1:16-cv-05265-JPO Document 204 Filed 09/11/19 Page 25 of 34

b.

Subsection (b)(2)

Plaintiffs also seek to certify a class for injunctive and declaratory relief under Rule
23(b)(2). This subsection of Rule 23(b) provides that a class action may be maintained if “the
party opposing the class has acted or refused to act on grounds that apply generally to the class,
so that final injunctive relief or corresponding declaratory relief is appropriate respecting the
class as a whole.” Fed. R. Civ. P. 23(b)(2). “Rule 23(b)(2) applies only when a single injunction
or declaratory judgment would provide relief to each member of the class.” Dukes, 564 U.S. at
360.
Here, Plaintiffs seek a declaratory judgment that the process employed by United to deny
facility fee claims violates ERISA and an order requiring United to “reprocess the denied claims
to fairly apply the terms of its Plans.” (Dkt. No. 143 at 27.) In numerous ERISA cases, courts
have certified classes under subsection (b)(2) where defendants allegedly employed an unlawful
general policy that affected the process for adjudicating all claims of the class, and plaintiffs
sought declaratory and injunctive relief requiring reprocessing of the claims. See, e.g., Trujillo v.
UnitedHealth Grp., Inc., No. 17 Civ. 2547, 2019 WL 493821, at *8 & n.6 (C.D. Cal. Feb. 4,
2019); Meidl, 2017 WL 1831916, at *20; Wit v. United Behavioral Health, 317 F.R.D. 106, 137
(N.D. Cal. 2016). 7
United counters that certification under subsection (b)(2) is nonetheless inappropriate
because a reprocessing injunction would not actually result in a final benefit to all members of

7

The ERISA cases on which United relies are not to the contrary (Dkt. No. 156 at
42), because those courts determined that there was no unlawful blanket policy or process
employed by defendants that could be assessed on a classwide basis without individualized
determinations of plan language and claims. See In re WellPoint, Inc. Out-of-Network UCR
Rates Litig., No. MDL 09-2074, 2014 WL 6888549, at *20–21 (C.D. Cal. Sept. 3, 2014);
Lipstein v. UnitedHealth Grp., 296 F.R.D. 279, 292 (D.N.J. 2013).
25

Case 1:16-cv-05265-JPO Document 204 Filed 09/11/19 Page 26 of 34

the class; instead, it would only provide for subsequent individualized determinations of specific
plan language by which some members might receive plan benefits. (Dkt. No. 156 at 42–43.)
The Seventh Circuit appears to have adopted the reasoning that United offers, holding that
injunctive or declaratory relief sought under Rule 23(b)(2) must itself be final relief benefiting
the whole class. See, e.g., Kartman v. State Farm Mut. Auto. Ins. Co., 634 F.3d 883, 893 (7th
Cir. 2011). But other courts have expressly rejected this position in the ERISA context, holding
that a reprocessing order is sufficient generalized relief under Rule 23(b)(2) even where every
individual class member might not ultimately receive benefits upon reprocessing of their claims.
See Meidl, 2017 WL 1831916, at *22 (distinguishing Kartman); Des Roches v. Cal. Physicians’
Serv., 320 F.R.D. 486, 509–10 (N.D. Cal. 2017) (same); Wit, 317 F.R.D. at 136–38 (same). In
reliance on the persuasive reasoning of courts to have encountered this issue in ERISA cases, this
Court holds that a reprocessing order and related relief are sufficient to satisfy the requirements
of Rule 23(b)(2) under the circumstances.
Overall, Plaintiffs have adequately demonstrated that, in adopting its policy toward OBS
facility fee claims and its process for rejecting such claims, United acted on grounds that apply
generally to the class and the relief sought would inure to the benefit of each member of the
class. Accordingly, Rule 23(b)(2) provides an additional basis for certifying the class for
injunctive and declaratory relief.
2.

Benefits Award Class Under Rule 23(b)(3)

Plaintiffs also seek certification under Rule 23(b)(3) so that the Court has the option of
awarding benefits directly to class members rather than remanding to United to reprocess their
denied benefits claims. (Dkt. No. 143 at 25.) The class’s benefits claims in particular, then—
and the nature of the inquiry the Court would need to engage in to determine whether an award

26

Case 1:16-cv-05265-JPO Document 204 Filed 09/11/19 Page 27 of 34

of benefits is required under the class members’ respective health benefit plans—are thus crucial
to the Rule 23(b)(3) inquiry.
To certify a class under Rule 23(b)(3), plaintiffs must satisfy three requirements. First,
they must demonstrate predominance: “that the questions of law or fact common to class
members predominate over any questions affecting only individual members.” Fed. R. Civ. P.
23(b)(3). Second, plaintiffs must demonstrate superiority: “that a class action is superior to other
available methods for fairly and efficiently adjudicating the controversy.” Id. Third, they must
show that the proposed class is ascertainable: that the “proposed class is defined using objective
criteria that establish a membership with definite boundaries.” In re Petrobras Sec., 862 F.3d
250, 269 (2d Cir. 2017). Because Plaintiffs have failed to show that common questions
predominate for their proposed benefit award class, the Court need not consider the other two
requirements.
“The predominance inquiry tests whether proposed classes are sufficiently cohesive to
warrant adjudication by representation.” Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036,
1045 (2016) (citation and internal quotation marks omitted). The requirement is satisfied “if
resolution of some of the legal or factual questions that qualify each class member’s case as a
genuine controversy can be achieved through generalized proof, and if these particular issues are
more substantial than the issues subject only to individualized proof.” In re U.S. Foodservice
Inc. Pricing Litig., 729 F.3d 108, 118 (2d Cir. 2013) (citation omitted). In making this
determination, courts must “give careful scrutiny to the relation between common and individual
questions in a case.” Tyson Foods, 136 S. Ct. at 1045.
United contends that common questions do not predominate for the class’s benefits
claims in part because determining whether OBS facility fees are covered under the terms of

27

Case 1:16-cv-05265-JPO Document 204 Filed 09/11/19 Page 28 of 34

specific health benefits plans will require substantial individualized inquiries. (Dkt. No. 156 at
44–45; id. at 25–34.) Specifically, United argues that the Court will need to examine individual
plan language for each denied OBS facility fee claim in the class to determine whether the
specific plan terms at issue should have been interpreted to cover the fees. (Dkt. No. 156 at 27–
28.) In support, United relies on several cases involving benefits claims under ERISA in which
courts denied class certification on predominance grounds because class members were subject
to different plan language requiring individualized interpretation. See, e.g., In re WellPoint,
2014 WL 6888549, at *7–11, *21; Lipstein, 296 F.R.D. at 288–91, 293; Franco v. Conn. Gen.
Life Ins. Co., 289 F.R.D. 121, 135–37 (D.N.J. 2013).
In arguing to the contrary that the proposed class’s claims for benefits will not require
substantial individualized inquiries into plan language, Plaintiffs make two points.
a.

Similarity of Plan Terms

First, Plaintiffs contend that the class members’ plans are sufficiently similar in relevant
respects that the benefits claims can be adjudicated on a classwide basis. (Dkt. No. 143 at 18–
20.) To demonstrate this similarity, Plaintiffs allege that all plans cover outpatient surgery
facility fees and no language in any United plan expressly limits these fees to Article 28
providers. (Dkt. No. 143 at 18.) However, the second of these allegations is hotly contested,
requiring the interpretation of plan language to determine whether certain plans indeed have
express restrictions against paying facility fees to OBS practices. (Dkt. No. 156 at 28, 33 n.17;
Dkt. No. 174 at 13–14 ¶ 1.) And even absent such express restrictions, the Court would need to
interpret the language of the plans in the class to determine whether, by their terms, they provide
coverage for such fees. See Heimeshoff, 571 U.S. at 108 (recognizing “the particular importance
of enforcing plan terms as written in § 502(a)(1)(B) claims”).

28

Case 1:16-cv-05265-JPO Document 204 Filed 09/11/19 Page 29 of 34

Plaintiffs nonetheless argue that adjudication of the class’s benefits claims will not
require individualized inquiry, because the relevant plan definitions are substantially similar.
(Dkt. No. 143 at 12, 19.) To understand this argument, it is necessary to lay out some
background about the sample of claims considered by the parties and the contours of the class as
a whole: Columbia has 49 remaining claims in this action under 45 different health benefit
plans. (Dkt. No. 162 at 1.) United assembles these into 20 groupings within which the plans at
issue have substantively identical relevant plan terms. (Dkt. No. 162 at 18–39.) The total
sample considered by Plaintiffs in moving for class certification includes 69 claims submitted by
63 patients, corresponding to plans for 46 different employer-sponsors. (Dkt. No. 144 ¶¶ 8–11.) 8
This sample is taken from a class that United estimates to contain “more than 2,300 separate
plans.” (Dkt. No. 102 at 2.) And United takes the position that it “cannot tell the prevalence of a
certain variant of plan language across the universe of plans it administers.” (Dkt. No. 200
¶ 416.) 9
Based on the sample of claims and plans before them, Plaintiffs argue that the plans are
materially indistinguishable. Some of the plans in the sample do indeed have certain similarities:
the plans of 24 different employers, covering the claims of 32 patients, share a common
definition of “alternate facility” (Dkt. No. 144 ¶ 15); and the plans of 11 different employers,
covering the claims of 13 patients, share a common definition of “ambulatory surgical center”

8

The total sample is larger than the number of claims remaining because the Court
previously granted partial summary judgment to United on assignment grounds for twenty of
Columbia’s claims. (Dkt. No. 153 at 6, 25; Dkt. No. 156 at 28 n.14.)
9

Plaintiffs have not established whether the entire class of plans can be sorted into
approximately the 20 groupings identified by United, or whether the proportion of variation
observed in the sample will be the same proportion across the entire class. If the latter is correct,
and the 20/45 ratio from this sample holds across the estimated universe of plans in the class, the
class would contain over 1,000 distinct groupings within which plans would have substantively
identical relevant plan terms.
29

Case 1:16-cv-05265-JPO Document 204 Filed 09/11/19 Page 30 of 34

(Dkt. No. 144 ¶ 16). According to Plaintiffs, these facility definitions encompass OBS practices,
demonstrating that any outpatient surgery fees covered by the plan cannot be denied to OBS
providers. (Dkt. No. 143 at 19–20.)
On the merits, United offers a different interpretation of these facility definitions. (See
Dkt. No. 156 at 29–30; Dkt. No. 162 at 19–20, 23–25.) And for class certification purposes, it
responds that these similar definitions alone will not prevent the class’s benefit claims from
being swallowed up by individualized inquiries. United’s primary argument posits that even
though some plans may share a common facility definition, the provisions relevant to the plan’s
scope of coverage nonetheless differ, and the Court must interpret all of a plan’s provisions
together to determine whether OBS facility fees are covered. (Dkt. No. 156 at 31–32.)
United is correct. In interpreting ERISA plans in the context of benefits claims, courts
must “review the Plan as a whole.” In re DeRogatis, 904 F.3d 174, 187 (2d Cir. 2018) (citation
omitted); see Browe v. CTC Corp., 331 F. Supp. 3d 263, 303 (D. Vt. 2018) (“[I]n construing the
plan documents, a court cannot interpret words in a vacuum, but rather must carefully consider
the parties’ context and the other provisions in the plan.” (brackets and citation omitted)).
Of Columbia’s 49 remaining benefits claims in this action brought under 45 different
plans, United sorted them into 20 groupings within which the plans at issue have substantively
identical relevant plan terms. (Dkt. No. 162 at 18–39.) And as explained in United’s summary
judgment briefing, these 20 groupings of plans contain various terms, apart from any common
definitions, that are relevant to interpreting whether OBS facility fees are covered. (See Dkt. No.
162 at 26–28 (plans for Patients BJ, Z, AI, and BA).) To resolve the merits of Columbia’s
benefits claims alone, the Court will need to individually analyze the specific terms within these
20 groupings of plans to determine whether the plans cover OBS facility fees. To resolve the

30

Case 1:16-cv-05265-JPO Document 204 Filed 09/11/19 Page 31 of 34

benefit claims of the entire class, the Court would need to sort approximately 2,300 plans
covering over 5,000 patients into similar groupings, then interpret the language of the plans
within each grouping to determine whether the corresponding facility fee claims should have
been granted.
This exercise would entail substantial individualized inquiry into plan language. And
where such inquiry is required, courts have held that certification of a class under Rule 23(b)(3)
is inappropriate. See, e.g., In re WellPoint, 2014 WL 6888549, at *21; Lipstein, 296 F.R.D. at
293; Franco, 289 F.R.D. at 135–37.
Plaintiffs respond to this argument only briefly in their reply, asserting in conclusory
fashion that “United overstates the amount of plan-term variation.” (Dkt. No. 174 at 24.) But as
the party seeking class certification, Plaintiffs bear the burden of establishing by a preponderance
of the evidence that the predominance requirement is satisfied. See Johnson, 780 F.3d at 137.
And here, Plaintiffs have not adequately explained why common facility definitions in some
class members’ plans render the variations among other plan terms irrelevant.
United argues as a secondary point that, even accepting that some plans have
substantially similar definitions relating to covered facilities, these similarities only occur in 35
plans in the sample, covering 48 claims. (Dkt. No. 144 ¶¶ 15–16.) Indeed, Plaintiffs
acknowledge that for 10 claims asserted on behalf of 9 patients, the plans at issue contain no
definition for facility. (Dkt. No. 144 ¶ 18; Dkt. No. 143 at 12.) And Plaintiffs make no
argument respecting the relevant plan terms for the remaining 11 claims in the sample. (See Dkt.
No. 144 ¶ 11.)
For 30% of the claims in the sample, then, the plans lack any shared facility definitions.
(Dkt. No. 156 at 32.) Plaintiffs make no attempt to rebut this point on reply, or to explain why

31

Case 1:16-cv-05265-JPO Document 204 Filed 09/11/19 Page 32 of 34

interpreting the terms of the plans underlying these claims would not require individualized
inquiries. Moreover, assuming the 30% ratio holds across the entire class—and that each of the
estimated 5,124 patients in the class only has one claim for unpaid facility fee benefits—
approximately 1,537 class members would not be subject to plans with similar facility
definitions. For this substantial proportion of class members, the Court would need to analyze
the specific terms of their health benefits plans to determine their entitlement to a benefits award.
Overall, on their first argument that the minimal variation in plan terms allows for
classwide adjudication of benefits claims, Plaintiffs have not demonstrated that each class
member’s entitlement to a benefits award is indeed capable of common proof.
b.

Granting Benefits in Light of ACA § 2706

Second, Plaintiffs briefly argue that United cannot deny OBS facility fee claims
“regardless of plan language” because any such denial would impermissibly conflict with
Section 2706 of the Affordable Care Act. (Dkt. No. 143 at 19 (citing 42 U.S.C. § 300gg-5; 29
U.S.C. § 1185d).) Plaintiffs read this provision to prohibit United from discriminating against
OBS practices by denying their facility fee claims but granting those of other providers. (Dkt.
No. 143 at 19.) As United explains, however, this argument does not save the Court from
needing to interpret individual plan language to resolve the benefit claims. (Dkt. No. 156 at 33–
34.) 10
The proposed class’s claims for benefits are brought under ERISA § 502(a)(1)(B).
(Compl. ¶ 116.) As this Court has noted previously, “courts may invoke ERISA § 502(a)(1)(B)
only to enforce the terms of the Plan, ‘as written.’” Laurent v. PricewaterhouseCoopers LLP,

10

Notably, Plaintiffs do not continue to press the relevance of ACA § 2706 to the
proposed class’s benefit claims in their reply brief. (Dkt. No. 174 at 15.)
32

Case 1:16-cv-05265-JPO Document 204 Filed 09/11/19 Page 33 of 34

No. 06 Civ. 2280, 2017 WL 3142067, at *4 (S.D.N.Y. July 24, 2017) (quoting CIGNA Corp. v.
Amara, 563 U.S. 421, 436 (2011)). Assuming that Plaintiffs’ understanding of the legal import
of ACA § 2706 is correct, the Court can interpret the class members’ plans in light of that
provision, using it to help determine “what the language [of the plans] means.” Id. at *5 (quoting
Amara, 563 U.S. at 436.) On the other hand, if the language of the plans cannot be interpreted to
cover OBS facility fees, the Court cannot alter the words of the plans—i.e., reform them—in
light of ACA § 2706 in order to grant benefits under ERISA § 502(a)(1)(B). Id. at *6.
But either way, the Court is required to examine the language of each class member’s
plan to determine whether it is capable of interpretation consistent with ACA § 2706. Even if
Plaintiffs’ understanding of this anti-discrimination provision is correct, then, it will not save the
Court from engaging in individualized inquiry into the language of class members’ plans.
* * *
Plaintiffs seek to certify a class under Rule 23(b)(3) so that the Court has the ability to
award class members benefits in the event that their facility fee claims were unlawfully denied.
But the Court can only award benefits that are covered by the class members’ respective plans,
and to determine whether benefits are covered the Court must interpret the language of those
plans. In the circumstances of this case, this interpretative exercise would necessarily devolve
into “a series of mini-trials” to establish each class member’s entitlement to benefits. Moore v.
PaineWebber, Inc., 306 F.3d 1247, 1253 (2d Cir. 2002).
Given the centrality of issues of plan interpretation to determining liability for the class’s
benefit claims, the Court concludes that these individualized questions would predominate at

33

Case 1:16-cv-05265-JPO Document 204 Filed 09/11/19 Page 34 of 34

trial. 11 Accordingly, because Plaintiffs have not adequately demonstrated that the predominance
requirement is satisfied, their request to certify a class under Rule 23(b)(3) is denied.
IV.

Conclusion
For the foregoing reasons, Plaintiffs’ motion for class certification is GRANTED in part

and DENIED in part. A class composed of “any United Plan member, or member’s valid
assignee, whose claim for facility fees for services rendered by an out-of-network OBS provider
accredited under Section 230-d was denied,” as set out in Part III, is certified for purposes of
seeking declaratory and injunctive relief. The Court hereby appoints Columbia, MSSNY, and
NYOBS as representatives of the certified class, and appoints Zuckerman Spaeder LLP and
Buttaci Leardi & Werner LLC as co-lead class counsel.
The Clerk of Court is directed to close the motion at Docket Number 142.
SO ORDERED.
Dated: September 11, 2019
New York, New York
____________________________________
J. PAUL OETKEN
United States District Judge

11

Because individual questions involving the assessment of plan language alone
will predominate over any common questions relevant to the proposed class’s benefits claims,
the Court need not address the parties’ arguments regarding the relevance of assignment issues to
the predominance inquiry. (Dkt. No. 156 at 18–23, 45; Dkt. No. 174 at 16–17, 25.)
34