McCracken et al v. Verisma Systems, Inc. et al
Filing
103
DECISION AND ORDER amending 102 Decision and Order on Motion to Certify Class, to appoint Faraci Lange LLP and Nichols Kaster PLLP as class counsel. Signed by Hon. Michael A. Telesca on 7/28/17. (AFB)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
ANN McCRACKEN, JOAN FARRELL,
SARAH STILSON, KEVIN McCLOSKEY,
CHRISTOPHER TRAPATSOS, and
KIMBERLY BAILEY, as individuals
and as representatives of the
classes,
DECISION AND ORDER
No. 6:14-cv-06248(MAT)
Plaintiffs,
-vsVERISMA SYSTEMS, INC., STRONG
MEMORIAL HOSPITAL, HIGHLAND
HOSPITAL, and UNIVERSITY OF
ROCHESTER,
Defendants.
INTRODUCTION
This
is a
putative
class
action
by
Ann
McCracken,
Joan
Farrell, Sara Stilson, Kevin McCloskey, Christopher Trapatsos, and
Kimberly
Bailey
(collectively,
“Plaintiffs”)
against
Verisma
Systems, Inc. (“Verisma”), Highland Hospital (“Highland”), Strong
Memorial Hospital (“Strong”), and the University of Rochester
Medical
Center
(“URMC”).1
Plaintiffs
allege
that
Defendants
systematically overcharged them and other patients who requested
copies of their medical records from the Rochester Healthcare
Defendants, in violation of New York Public Health Law (“PHL”) §
1
Highland, Strong, and the URMC are collectively referred to as the
“Rochester Healthcare Defendants.” Verisma and the Rochester Healthcare
Defendants are collectively referred to as “Defendants.”
18.2 Plaintiffs allege that Verisma and the Rochester Healthcare
Defendants ignored the restriction in the statute that limits the
amount that may be charged to produce the records “a reasonable
charge . . . not exceeding the costs incurred,” and not exceeding
$0.75
per
Rochester
page.
Instead,
Healthcare
Plaintiffs
Defendants
allege,
imposed
an
Verisma
and
the
across-the-board,
uniform charge of $0.75 per page for all copies of medical records,
even those produced electronically, in excess of their actual costs
and in violation of PHL § 18. Additional facts will be set forth
below as necessary to the Court’s resolution of Plaintiffs’ Motion
for Class Certification pursuant to Federal Rule of Civil Procedure
23 (“Rule 23”).
DISCUSSION
I.
Plaintiffs’ Proposed Class and Sub-Classes
Plaintiffs seek certification of one proposed class, the “URMC
Medical Records Class,” defined as follows:
All persons who (1) requested copies of medical records
(either by themselves or through a lawyer, personal
representative, or other qualified person acting on their
behalf) from a health care facility owned and/or operated
by the University of Rochester, (2) were charged by or
through Verisma Systems, Inc. for copies of such records
in accordance with Verisma’s “NY Fee Schedule PHL 18,”
and (3) paid such charges (either directly or through the
person making the request on their behalf) and had their
records released by or through Verisma on or after May
2
The statute provides in relevant part that “[t]he provider may impose a
reasonable charge for all inspections and copies, not exceeding the costs
incurred by such provider. . . . However, the reasonable charge for paper copies
shall not exceed seventy-five cents per page.” N.Y. Pub. Health L. § 18(2)(e).
-2-
14, 2011, excluding
Defendants.
any
principals
or
employees
of
Plaintiffs also seeks certification of two proposed subclasses,
defined as follows:
Highland Sub-Class:
All persons in the URMC Medical
Records Class who requested copies of medical records
through Highland Hospital and whose records were released
on or after May 14, 2011.
Strong Sub-Class: All persons in the URMC Medical Records
Class who requested copies of medical records through
Strong Memorial Hospital and whose records were released
on or after May 14, 2011.
(Plaintiffs Memorandum of Law (“Pls’ Mem.”) (Dkt #72) at 14).
II.
Application of the Rule3 23(a) Factors
Under
Rule
23(a),
a
proposed
class
must
satisfy
the
requirements of numerosity, commonality, typicality, and adequacy
of representation. See Fed. R. Civ. P. 23(a)(1)-(4). “In addition
to the express requirements of Rule 23(a), courts within the Second
Circuit have consistently recognized the ‘implied requirement of
ascertainability.’” Hughes v. The Ester C Co., 317 F.R.D. 333,
348–49 (E.D.N.Y. 2016) (citing Brecher v. Republic of Argentina,
806 F.3d 22, 24 (2d Cir. 2015) (quotations and citations omitted in
original);
other
citations
and
footnote
omitted).
The
Court
addresses these five factors in turn, below.
A.
Numerosity
3
Citations herein to “Rules” are to the Federal Rules of Civil Procedure,
unless otherwise noted.
-3-
“Numerosity” for purposes of Rule 23(a) means that the class
is “so numerous that joinder of all members is impracticable.” Fed.
R. Civ. P. 23(a)(1). Plaintiffs have established that at least
38,000 medical record requests were fulfilled, invoiced, and paid
pursuant to Verisma’s NY Fee Schedule PHL 18 during the relevant
time period. The Court finds that the numerosity requirement is
readily met here. See Consolidated Rail Corp. v. Town of Hyde Park,
47 F.3d 473, 483 (2d Cir. 1995) (“Because numerosity is presumed at
a
level of
40
jurisdictions
members,
or
300
whether viewed
assessing
as
700 tax-collecting
jurisdictions,
the
number
of
defendants vastly exceeds this threshold. Numerosity is therefore
satisfied.”) (internal citation omitted).
B.
Commonality
“Commonality”
under
Rule
23(a)
exists
when
there
are
“questions of law or fact common to the class.” Fed. R. Civ. P.
23(a)(2).
demonstrate
While
that
“[c]ommonality
the
class
requires
members
‘have
the
plaintiff
suffered
the
to
same
injury[,]’” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 349–50
(2011) (quotation omitted), “[t]his does not mean merely that they
have all suffered a violation of the same provision of law.” Id.
Rather, the class members’ “claims must depend upon a common
contention[,]” id., which is “of such a nature that it is capable
of classwide resolution[.]” Id. The determination of the common
contention’s “truth or falsity” in turn “will resolve an issue that
-4-
is central to the validity of each one of the claims in one
stroke.” Id.
The
Court
finds
that
Plaintiffs
have
“affirmatively
demonstrate[d] [their] compliance with” Rule 23(a)(2)’s commonality
requirement by “prov[ing] that there are in fact sufficiently
numerous
parties,
common
questions
of
law
or
fact,
etc.”
Id. (emphasis in original). Plaintiffs have identified several
common questions, including whether PHL § 18 allows Defendants to
charge per page for copies of medical records, even if their actual
costs of producing such records are less; what actual costs did
Defendants incur in fulfilling class members’ records requests;
which categories of costs are “reasonable” under PHL § 18; whether
Defendants’
actual
records are
less
pursuant
Verisma’s
to
and
reasonable
than the
NYPHL
amount
§
18
costs
of
producing
medical
class
members
were
charged
Fee
Schedule;
and
whether
Defendants’ failure to disclose their actual costs of production
would materially mislead a reasonable consumer, in violation of New
York General
Business
Law (“GBL”)
§
349.
See
Ruzhinskaya
v.
Healthport Technologies, LLC, 311 F.R.D. 87, 98 (S.D.N.Y. 2015)
(“Ruzhinskaya I”) (commonality prerequisite for class certification
met in action against hospital billing agent to recover for alleged
violation of deceptive trade practices statute and provision of PHL
§ 18; underlying questions of law, in particular construction of
critical statutory term “costs incurred,” were common to class, and
-5-
most obvious common question of fact was whether hospital billing
agent routinely billed statutory maximum cost-per-page to fill
requests for patient records).
C.
Typicality
Rule 23(a)(3) requires that “the claims or defenses of the
representative parties” must be “typical of the claims or defenses
of
the
class[.]”
Fed. R.
Civ.
P.
23(a)(3).
“Rule
23(a)(3)’s
typicality requirement is satisfied when each class member’s claim
arises from the same course of events and each class member makes
similar
legal
arguments
to
prove
the
defendant’s
liability.”
Robidoux v. Celani, 987 F.2d 931, 936 (2d Cir. 1993) (citations
omitted). “When it is alleged that the same unlawful conduct was
directed at or affected both the named plaintiff and the class
sought to be represented, the typicality requirement is usually met
irrespective of minor variations in the fact patterns underlying
individual claims.” Id. at 936-37 (citations omitted).
Here, the
class representatives’ claims and those of the members of the
proposed class arise from the same conduct by Defendants, i.e.,
that they uniformly charged more than their actual and reasonable
costs incurred in fulfilling medical records requests, in violation
of PHL § 18. All class members were charged under Verisma’s NY Fee
Schedule PHL § 18, which calculates class members’ invoices at a
$0.75
per
page
rate
without
regard
to
the
actual
costs
in
fulfilling a particular request. Verisma does not track its direct
-6-
or indirect costs expended in fulfilling a particular request; nor
has URMC produced any evidence that it tracked such costs with
regard to particular requests. Therefore, as Plaintiffs argue, the
only way to determine any individual requester’s damages is to
calculate Verisma’s aggregate costs and allocate them to particular
requests. Plaintiffs indicate this methodology is the same for all
class members
and
is
the
methodology
its
expert
proposes
to
utilize. The Court therefore finds that the typicality requirement
has been met. See Ruzhinskaya I, 311 F.R.D. at 99 (“The typicality
requirement is met here, because Ruzhinskaya’s claims and those of
the class she seeks to represent arise from the same conduct by
HealthPort (charging a uniform, and allegedly cost-unjustified,
per-page charge of 75 cents) and because Ruzhinskaya and similarly
situated requesters must prove similar facts, and make similar
legal arguments to prevail.”).
D.
Adequacy
Rule 23(a) demands that “the representative parties will
fairly and adequately protect the interests of the class[.]” Fed.
R. Civ. P. 23(a)(4). The Court accordingly must assess whether the
representative plaintiffs’ interests are “antagonistic” to the
interests
of
the
other
class
members,
and
whether
the
representative plaintiffs’ attorneys are “qualified, experienced,
and capable of conducting the litigation.” Baffa v. Donaldson,
Lufkin & Jenrette Sec. Corp., 222 F.3d 52, 60 (2d Cir. 2000).
-7-
Verisma
argues
that
Plaintiffs
are
inadequate
to
pursue
classwide deceptive trade practices claims under GBL § 349, which
applies solely to “consumer-oriented” conduct.4 Verisma argues that
Plaintiffs’ records requests do not constitute “consumer-oriented”
conduct because the records were ultimately used for litigation
purposes. The Court previously disposed of this issue in connection
with Verisma’s motion to dismiss. (See Decision & Order (Dkt #45)
at 15 (“The Court accordingly finds that Plaintiffs have pleaded
conduct that is consumer-oriented for purposes of their GBL § 349
claims.”)). Verisma has provided the Court with no basis to revisit
its determination on this issue. Likewise, the proposed class
representatives have averred that they will represent the interests
of other class members as they would their own, and are not aware
of
any
conflicts
of
interest
between
themselves
and
other
individuals who requested medical records from Highland Hospital,
Strong Memorial Hospital, or the University of Rochester Medical
Center. (See, e.g., Declaration of Ann McCracken (Dkt #76), ¶ 24).
The Court finds that representative plaintiffs are adequate for
purposes of Rule 23(a)(3).
4
See Oswego Laborers’ Local 214 Pension Fund v. Marine Midland Bank, N.A.,
85 N.Y.2d 20, 25–26 (1995) (stating a GBL § 349(a) requires a plaintiff to allege
the defendant’s acts are (1) directed to consumers and (2) deceptive or
misleading in a material way, and that (3) the plaintiffs have been “injured by
reason thereof”).
-8-
Verisma also argues that Faraci Lange LLP,5 Plaintiffs’ local
counsel, is not adequate to serve as class counsel because the firm
“waived” the class members’ claims by continuing to pay $0.75 per
page for medical records after Plaintiffs commenced the instant
action. In Ruzhinskaya I, the records provider raised an argument
against typicality based on similar facts, which the district court
rejected. See Ruzhinskaya I, 311 F.R.D. at 99 (“As to the second
alleged atypicality, the fact that [former attorney] Simonson, in
requesting medical records, agreed to pay HealthPort’s per-page
charge did not waive Ruzhinskaya’s right to challenge that charge
under [PHL] § 18.”). Likewise, the Court finds that Faraci Lange
LLP’s agreement to pay Verisma’s per-page charge for medical
records did not waive Plaintiffs’ rights to challenge that charge
under PHL § 18. While the common-law voluntary payment doctrine
“bars recovery of payments voluntarily made with full knowledge of
the facts, and in the absence of fraud or mistake of material fact
or law[,]” Dillon v. U-A Columbia Cablevision of Westchester, Inc.,
100 N.Y.2d 525, 526 (2003) (citation omitted), Plaintiffs here “had
no way to know at the time whether the charge exceeded [Verisma]’s
‘costs incurred.’ [Plaintiffs] also likely had no other practical
means of obtaining [their] . . . medical records.” Ruzhinskaya I,
311
F.R.D.
at
99.
Plaintiffs’
attorneys’
qualifications,
5
Defendants have raised no arguments regarding the adequacy of Nichols
Kaster PLLP to serve as class counsel.
-9-
experience, capability to conduct this litigation are not in
dispute. Accordingly, the Court finds that the adequacy requirement
is met as to class counsel.
E.
Ascertainability
The
Second
Circuit
has
identified
two
elements
of
ascertainability, explaining that a proposed class (1) must be
‘sufficiently definite so that it is administratively feasible for
the court
to
determine
whether
a
particular
individual
is a
member’; and (2) must be ‘defined by objective criteria that are
administratively feasible,’ such that ‘identifying its members
would not require a mini-hearing on the merits of each case.’” In
re Petrobras Sec., No. 16-1914-CV, ___ F.3d ___, 2017 WL 2883874,
at *10 (2d Cir. July 7, 2017) (quoting Brecher v. Republic of
Argentina, 806 F.3d 22, 24 (2d Cir. 2015) (quoting 7A Charles Alan
Wright & Arthur R. Miller et al., Federal Practice & Procedure §
1760 (3d ed. 1998); citations omitted). The Second Circuit recently
rejected an “independent administrative feasibility requirement,”
finding
it
to
be
neither
compulsory
under
Rule
23,
complementary to the requirements enumerated in Rule 23.
nor
In re
Petrobras Sec., 2017 WL 2883874, at *11; see also id. at *12 (“We
conclude that an implied administrative feasibility requirement
would be inconsistent with the careful balance struck in Rule 23,
which directs courts to weigh the competing interests inherent in
any class certification decision.”) (citations omitted). “While
-10-
class members need not be ascertained prior to certification, they
must be ascertainable at some stage of the proceeding.” Bakalar v.
Vavra, 237 F.R.D. 59, 64 (S.D.N.Y. 2006) (citations omitted). “The
standard for ascertainability is ‘not demanding’ and is ‘designed
only to prevent the certification of a class whose membership is
truly indeterminable.’” Ebin v. Kangadis Food Inc., 297 F.R.D. 561,
567 (S.D.N.Y. 2014) (citing Gortat v. Capala Bros., Inc., No.
07–CV–3629 (ILG), 2010 WL 1423018, at *2 (E.D.N.Y. Apr. 9, 2010)).
Furthermore, the “class need not be so finely described . . . that
every potential member can be specifically identified at the
commencement of the action; it is sufficient that the general
parameters of membership are determinable at the outset.” Brecher,
806 F.3d at 25, n. 2 (citing 1 McLaughlin on Class Actions § 4:2
(11th ed. 2014).
Defendants’
certain
extent
objections
with
their
to
ascertainability
arguments
against
overlap
to
a
predominance.
(See Verisma’s Memorandum of Law at 23; URMC’s Memorandum of Law at
7-13). Defendants argue that ascertainability of the class is
defeated because there are too many individualized issues as to
whether class members suffered damages, and whether class members
are “qualified persons” for purposes of PHL § 18.
Defendants argue that there is no way of knowing if all of the
class members sustained actual damages. Verisma presents three
additional scenarios that allegedly defeat ascertainability; these
-11-
all involve the circumstance of a patient’s attorney making a
records request on his or her behalf and then, based on the
particular retainer agreement and the outcome of the underlying
litigation, the patient is or is not required to reimburse the
attorney for the costs of the requested records. Verisma argues
that determining which payment and reimbursement scenario applies
to
each
member
of
the
prospective
class
would
require
an
examination of, inter alia, the patient’s retainer agreement and
the circumstances of the patient’s recovery in the underlying
lawsuit. However, “it is reasonable to expect an attorney to abide
by a fiduciary and/or contractual duty to return to the client
money the client paid but which has been recouped. A well-designed
claims process can further assure that any attorney claimant has
notified the client of a recovery in this case and/or has certified
the appropriate person to receive it.” Ruzhinskaya I, 311 F.R.D. at
101 (internal citation omitted); see also N.Y. R. Prof. Conduct
1.15(a), N.Y. Comp. Code R. & Regs. tit. 22, § 1200.0 (“A lawyer in
possession of any funds or other property belonging to another
person, where such possession is incident to his or her practice of
law, is a fiduciary, and must not misappropriate such funds or
property or commingle such funds or property with his or her
own.”). Likewise, the proposed class is limited to persons who were
charged $0.75 per page “in accordance with Verisma’s ‘NY Fee
Schedule PHL 18,’” thus obviating Verisma’s concern that the
-12-
proposed class sweeps in indigent requesters who were provided
copies of medical records free of charge. Verisma also raises the
possibility that a patient or her counsel may have been reimbursed
by an opposing party in a lawsuit for which the records were
requested, thus leading to a risk of double recovery. The district
court in Ruzhinskaya I rejected this argument, noting that the
parties could design a claims “process capable of assuring that a
class member whose costs were later covered by a third party
notifies that third party, so as to enable any claim among them to
be resolved.” 311 F.R.D. at 110; see also id. at 101 (“In the event
of an adverse judgment, HealthPort faces no risk of a double
recovery. It would be obliged to pay only once as to each request.
The concern HealthPort expresses of a follow-on demand by the
client after the attorney has obtained a recovery can be addressed
by
the
inclusion
in
the
claims
process
of
an
appropriate
release.”).
With
“qualified
regard
to
persons”
the
for
issue
of
purposes
whether
of
PHL
class
§
18,
members
here,
are
as
in
Ruzhinskaya I, the proposed class is limited to patients who
requested copies of their medical records “either by themselves or
through a qualified person.” Therefore, “the class as defined would
not
include,
for
example,
a
patient’s
opposing
counsel[,]”
Ruzhinskaya I, 311 F.R.D. at 101, or an insurance company. It is
administratively
feasible
for
[Versima]
-13-
to
identify,
in
each
instance, the party it billed and the party from whom it received
payment.” Id. Again, to the extent it is necessary to confirm
whether a particular request was submitted by a “qualified person”
for purposes of PHL § 18, this concern can be addressed through a
well
designed
Techs.,
LLC,
claims
No.
14
process.6
CIV.
See
Ruzhinskaya
2921(PAE),
2015
WL
v.
Healthport
9255562,
at
*1
(S.D.N.Y. Dec. 17, 2015) (“Ruzhinskaya II”) (The Court is confident
. . . that an ably designed claims process can assure that the
correct
recipient
is
identified
in
a
manner
that
leaves
no
meaningful risk of an undeserved double recovery.”) (footnote
omitted); see also
Goldemberg v. Johnson & Johnson Consumer
Companies, Inc., 317 F.R.D. 374, 399 (S.D.N.Y. 2016) (“[T]he Court
concludes that the implied ascertainability requirement of Rule 23
can, at minimum, be met on the basis of sworn statements indicating
class members purchased the products at issue in the necessary
state during the necessary limitations period.”).
Plaintiffs here have established the “general parameters of
membership” in the proposed class and sub-classes “are determinable
at the outset[,]” id., and they refuted Defendants’ arguments that
their proposed class and sub-classes are “truly indeterminable,”
Ebin, 297 F.R.D. at 567. Therefore, the Court concludes that the
6
The fact that Defendants have identified certain requests, in the category
of requests made pursuant NY Fee Schedule PHL § 18, as not having been submitted
by “qualified persons,” strengthens Plaintiffs’ contention that Defendants are
able to ascertain who is or is not a “qualified person” with reasonable certainty
based on existing records. (See Plaintiffs’ Reply (Dkt #88) at 6 & n. 11
(citations to record omitted)).
-14-
implied requirement of ascertainability has been met.
III. Application of the Rule 23(b) Factors
Once the Rule 23(a) prerequisites are met, the party seeking
class certification then must satisfy one of the subsections of
Rule 23(b). See Fed. R. Civ. P. 23(b)(1)-(3). Plaintiffs argue that
their proposed classes satisfy Rule 23(b)(3), which requires the
Court to find 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.”
Fed. R. Civ. P. 23(b)(3) (emphases supplied).
A.
Predominance
Rule 23(b)’s “‘predominance’ requirement is satisfied if: (1)
resolution of any material “legal or factual questions . . . can be
achieved through generalized proof,” and (2) “these [common] issues
are more substantial than the issues subject only to individualized
proof.”’” In re Petrobras Sec., No. 16-1914-CV, 2017 WL 2883874, at
*13 (2d Cir. July 7, 2017) (“Petrobras”) (quoting Mazzei v. The
Money Store, 829 F.3d 260, 272 (2d Cir. 2016) (further quotation
omitted; ellipsis and brackets in original). Predominance “is not
satisfied simply by showing that the class claims are framed by the
common harm suffered by potential plaintiffs.” Petrobras, 2017 WL
2883874, at *13 (citing
Amchem Prods., Inc. v. Windsor, 521 U.S.
591, 620 (1997) (“Amchem”) (noting that the “predominance criterion
-15-
is far more demanding” than the “commonality” requirement under
Rule 23(a); other citation omitted).
With regard to the PHL § 18 claims, the district court’s
analysis in Ruzhzinskaya I is instructive. There, the district
court rejected certification of a statewide class, noting that if
such a class were certified,
HealthPort could have unique defenses as to requests
involving providers whose average costs exceeded 75
cents. Where HealthPort could produce reliable evidence
of provider-level costs in excess of 75 cents, it would
be entitled to defend its costs with respect to that
provider on that basis, and, if such evidence were
credited, to prevail as to its pricing of requests made
to that provider. Thus, because the class includes claims
that HealthPort may choose to defend on the basis of
provider-level costs, a statewide class would fail to
satisfy the predominance requirement. . . .
Ruzhinskaya, 311 F.R.D. at 107. The district court rejected the
option of certifying provider-level subclasses to the statewide
class, because that approach “would result in a host of separate
inquiries into costs incurred, potentially one for each of the
500–some providers implicated by Ruzhinskaya’s proposed class.” Id.
However, the district court found, “a class drawn at the level of
requests to Beth Israel, Ruzhinskaya’s provider, would satisfy the
predominance requirement, because HealthPort has failed to show
that it can establish per-page costs for each separate request made
to that institution or for any narrower group of requests than at
-16-
the provider level.” Id.7
Here, Plaintiffs have limited the proposed class to “[a]ll
persons who . . . requested copies of medical records (either by
themselves or through a lawyer, personal representative, or other
qualified
person acting
on
their
behalf) from
a
health
care
facility owned and/or operated by the University of Rochester[.]”
Plaintiffs have further proposed two subclasses defined at the
individual provider-level, namely, class members who requested
copies of medical records through Highland, and class members who
requested
copies
of
medical
records
through
Strong.
These
definitions obviate the “predominance” problems identified by the
district
court
in
Ruzhinskaya
I,
because
Verisma
has
not
demonstrated that it can establish per-page costs for each separate
request made to Highland or Strong, or for any category of requests
more narrowly circumscribed than requests at the provider level.8
7
While the district court in Ruzhinskaya I declined to modify, sua sponte,
the plaintiffs’ proposed class definition, it stated that if the plaintiffs moved
to certify a class defined by patient record requests made to Beth Israel, it
“expect[ed] to certify such a class.” Ruzhinskaya I, 311 F.R.D. at 109. The
district court ultimately did certify a class defined as follows: “All persons,
who, at any time [during the class period] . . . , paid for, or are obligated to
pay for, copies of an individual’s patient information requested from Beth Israel
Medical Center by a ‘qualified person’ as defined in [PHL] § 18(l)(g), for which
copies HealthPort Technologies, LLC charged $0.75 per page. . . .” Ruzhinskaya
II, 2015 WL 9255562, at *2.
8
For instance, Plaintiffs note, Verisma does not “keep any records of the
labor and other costs expended processing and fulfilling each individual class
member’s records request.” (Pl’s Mem. (Dkt #72) at 23 (citing Deposition of
Annette Fenwick (“Fenwick Dep.”) (Dkt #73-4) at 33:13-18); see also id. at 10
(citing Fenwick Dep. at 11:18-20)). “[I]nstead of tracking costs on a
request-specific basis, Verisma tracked the direct costs of client-specific
departments, such as the labor and expenses related to on-site operations.” (Id.
at 11 (citing, inter alia, Fenwick Dep. at 31:19-32:5, 34:21-25, 45:2-4). Because
-17-
Where, as here, “the sole disputed element, ‘costs incurred,’ is to
be determined based solely on the pro rata allocation of aggregated
costs, common issues–within the universe of patient requests to
which these aggregated costs all apply–necessarily predominate.”
Ruzhinskaya I, 311 F.R.D. at 103.
As to the GBL § 349 claims for unjust enrichment, Verisma
argues that they are not amenable to class certification because
the elements of the cause of action are not subject to class-wide
proof. The district court in Ruzhinskaya II, 2015 WL 9255562,
rejected the same argument, and distinguished the case on which
Verisma principally relies, Vaccariello v. XM Satellite Radio,
Inc., 295 F.R.D. 62 (S.D.N.Y. 2011). Unlike in Vaccariello, “the
relevant issue here is simply whether [Verisma]’s charged fee was
excessive. A class member’s voluntary accession to such a fee is no
defense.” Ruzhinskaya II, 2015 WL 9255562, at *2 (citing, inter
alia, Spiro v. Healthport Technologies, LLC, 73 F. Supp.3d 259, 276
(S.D.N.Y. 2014) (rejecting the argument that voluntary payment of
HealthPort’s fee would bar an unjust enrichment claim)). The Court
finds that Plaintiffs have satisfied the predominance requirement.
B.
Superiority
In determining whether a class action would be “superior” to
Verisma’s business practice was to track costs by customer, i.e., by healthcare
provider, the only way to determine the costs incurred in fulfilling a particular
request is by analyzing aggregate costs for URMC and allocating those costs to
individual requests. (Id. at 15-16 (citing Fenwick Dep. at 32:19-33:12,
33:19-34:19)).
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other methods of litigating the plaintiffs’ claims, Rule 23(b)(3)
directs the court to consider “(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.” Fed. R. Civ. P. 23(b)(3).
In light of the manner in which the proposed class and subclasses have been defined by Plaintiffs here, the Court finds that
a
class
action
would
be
superior
to
the
alternative
of
an
individual lawsuit. See Ruzhinskaya I, 311 F.R.D. at 108 (finding
class action under PHL § 18 would be superior to individual
lawsuit, “assuming the class were limited to persons who requested
records from a single provider, . . . thereby reducing the ‘costs
incurred’ inquiry to a single provider-level inquiry”). The costs
of bringing this lawsuit would be prohibitive for any single class
member or even a small group of them, because “[t]he out-of-pocket
costs alone (apart from legal fees) for an individual to bring this
suit
would
have
almost
certainly
dwarfed
even
the
highest
realistically imaginable recovery for that individual.” Ruzhinskaya
I, 311 F.R.D. at 108. This weighs heavily in favor of finding a
class action to be superior in this case. See Amchem, 521 U.S. at
617 (“The policy at the very core of the class action mechanism is
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to overcome the problem that small recoveries do not provide the
incentive for any individual to bring a solo action prosecuting his
or her rights.”) (internal quotation marks omitted). Because of the
practical difficulties in pursuing an action such as this on an
individual basis, class members have no discernable interest in
“individually controlling the prosecution of separate actions[,]”
Fed. R. Civ. P. 23(b)(3)(A). Furthermore, they have averred that
they are unaware of “any litigation concerning the controversy
already begun,” Fed. R. Civ. P. 23(b)(3)(B), by individual class
members.
The
Court
accordingly
finds
that
the
superiority
requirement has been met.
CONCLUSION
For the foregoing reasons, the Court grants Plaintiffs’ Motion
for Class Certification pursuant to Rule 23. Accordingly, the Court
certifies a class defined as follows:
All persons who (1) requested copies of medical records
(either by themselves or through a lawyer, personal
representative, or other qualified person acting on their
behalf) from a health care facility owned and/or operated
by the University of Rochester, (2) were charged by or
through Verisma Systems, Inc. for copies of such records
in accordance with Verisma’s “NY Fee Schedule PHL 18,”
and (3) paid such charges (either directly or through the
person making the request on their behalf) and had their
records released by or through Verisma on or after May
14, 2011, excluding any principals or employees of
Defendants (“the Class” or “the URMC Medical Records
Class”).
The Court also certifies two provider-level sub-classes, which
are respectively defined as follows:
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All persons in the URMC Medical Records Class who
requested copies of medical records through Highland
Hospital and whose records were released on or after May
14, 2011 (“the Highland Sub-Class”).
All persons in the URMC Medical Records Class who
requested copies of medical records through Strong
Memorial Hospital and whose records were released on or
after May 14, 2011 (“the Strong Sub-Class”).
The Court appoints Ann McCracken, Joan Farrell, Sara Stilson,
Kevin McCloskey, Christopher Trapatsos, and Kimberly Bailey as
class representatives. Finally, the Court appoints Faraci Lange LLP
and Nicholas Kaster PLLP as class counsel.
ALL OF THE ABOVE IS SO ORDERED.
S/ Michael A. Telesca
__________________________
HON. MICHAEL A. TELESCA
United States District Judge
Dated:
July 28, 2017
Rochester, New York.
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