A.F. et al v. Providence Health Plan
Filing
56
Opinion and Order - The Court finds that Plaintiffs have satisfied all of the requirements of Rule 23(a) and Rule 23(b)(2). Accordingly, the Court GRANTS Plaintiffs' Motion to Certify the injunctive 101 Class 36 . The class claim to be decided is whether Providence is violating ERISA or Oregon law by denying members coverage under the Developmental Disability Exclusion for ABA therapy services. The Court appoints Plaintiffs as class representatives, Stoll Stoll Berne Lokting & Shlacheter and Keith Dubanevich as lead class counsel, and Megan Glor as co-class counsel. The class is further defined in this Opinion and Order. Signed on 12/24/2013 by Judge Michael H. Simon. (mja)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
A.F., by and through his parents and
guardians, Brenna Legaard and Scott
Fournier; and A.P., by and through his
parents and guardians, Lucia Alonso and
Luis Partida, and on behalf of similarly
situated individuals,
Case No. 3:13-cv-00776-SI
Plaintiffs,
OPINION AND ORDER
v.
PROVIDENCE HEALTH PLAN,
Defendant.
Keith S. Dubanevich, Joshua L. Ross, and Nadine A. Gartner, Stoll Stoll Berne Lokting &
Shlacheter, P.C., 209 S.W. Oak Street, Suite 500, Portland, OR 97204; Megan E. Glor, Megan E.
Glor, Attorneys at Law P.C., 621 S.W. Morrison Street, Suite 900, Portland, OR 97205.
Attorneys for Plaintiffs.
William F. Gary, Arden J. Olson, and Aaron Landau, Harrang Long Gary Rudnick, P.C., 360
East 10th Avenue, Suite 300, Eugene, OR 97401; Aaron T. Bals, Harrang Long Gary Rudnick,
P.C., 1001 S.W. Fifth Avenue, Suite 1650, Portland, OR 97204. Attorneys for Defendant.
PAGE 1 – OPINION AND ORDER
Michael H. Simon, District Judge.
Plaintiffs A.F. and A.P. (collectively “Plaintiffs”) bring this putative class action against
Defendant Providence Health Plan (“Providence”). Plaintiffs claim that Providence illegally
denied coverage to Plaintiffs as members of Providence-issued group health plans in Oregon of
the therapeutic technique of Applied Behavior Analysis (“ABA”). Plaintiffs move to certify a
class under Fed. R. Civ. P. 23(b)(2). Dkt. 36. Plaintiffs seek injunctive and declaratory relief,
asking the Court to enjoin Providence from denying coverage based on its Developmental
Disability Exclusion and to issue a declaration stating that the Developmental Disability
Exclusion violates applicable law. For the reasons discussed below, Plaintiffs’ motion for class
certification is GRANTED.
BACKGROUND
Plaintiffs A.F. and A.P. are both insured as dependent-beneficiaries under group health
plans in Oregon provided by Providence. A.F. and A.P. have both been diagnosed with Autism
Spectrum Disorder and prescribed ABA therapy by their treating physicians. ABA therapy is an
intensive behavior therapy that measures and evaluates observable behaviors. Evidence shows
that ABA therapy may help autistic children with cognitive function, language skills, and
adaptive behavior. Evidence also suggests that the benefits of ABA are significantly greater with
early intervention for young autistic children. Providence currently denies all requests for
coverage of ABA therapy.
In 2012, Providence denied a request by A.F.’s parents for reimbursement for the
expenses of ABA therapy. A.F.’s parents appealed the initial denial, which Providence also
denied. When A.F.’s parents appealed a second time, Providence denied the second appeal and
provided this explanation:
PAGE 2 – OPINION AND ORDER
Under the language of the Oregon Group Member Handbook for
Open Option Plans, services “related to developmental disabilities,
developmental delays or learning disabilities” are specifically
excluded from coverage under this plan. (See Group Member
Handbook, at 43). There is no question that autism spectrum
disorder is a “developmental disability” or involves
“developmental delay,” and PHP [Providence Health Plan] here
has so interpreted it, in this case as it has in other cases seeking
ABA services for autism spectrum disorder. Because ABA
services are related to autism spectrum disorder, they are therefore
not benefits covered under the plan.
Declatation of Joshua L. Ross (“Ross Decl.”) Ex. C at 9. Dkt. 41-3.
Also in 2012, Providence denied the request by A.P.’s physician for authorization of
ABA therapy to treat A.P.’s autism. A.P.’s parents appealed Providence’s denial, and Providence
denied the appeal. Providence provided the following explanation, almost identical to the
explanation provided to A.F., to A.P.’s parents:
Under the language of the Oregon Group Member Handbook for
Open Option Plans, mental health services “related to
developmental disabilities, developmental delays or learning
disabilities” are specifically excluded from coverage under this
plan. (See Group Member Handbook, at 41). There is no question
that autism spectrum disorder is a “developmental disability” or
involves “developmental delay,” and Providence as the plan
administrator here has so interpreted it, in this case as it has in
other cases seeking ABA services for autism spectrum disorder.
Because ABA services are mental health services related to autism
spectrum disorder, they are therefore not benefits covered under
the plan.
Ross Decl. Ex. D at 8. Dkt. 41-4.
Thus, in both cases, Providence denied coverage of ABA therapy because it is a service
“related to developmental disabilities, developmental delays or learning disabilities.” Id. This
exclusion (hereinafter, “the Developmental Disability Exclusion”) is included in all of the group
plan insurance contracts issued by Providence after 2007. The Developmental Disability
PAGE 3 – OPINION AND ORDER
Exclusion is listed in the member handbook given to all members that describes the governing
terms of the insurance plans.
Providence issues two types of plans: “self-insured” group plans and “insured” group
plans. Under a “self-insured” plan, the employer carries the risk of coverage. Under an “insured”
plan, Providence carries the risk of coverage. Both the “self-insured” and “insured” plans are
subject to Oregon law and the federal Employee Retirement Income Security Act (“ERISA”).
29 U.S.C. §§ 1000 et. seq. Plaintiff and all potential class members are members of “insured”
group plans. Providence is both the administrator of the plans and a fiduciary to all plan
members. Providence is obligated to apply exclusions consistently and uniformly.
Providence uses diagnosis codes and current procedural terminology (“CPT”) codes to
process members’ claims. The diagnosis codes for Autism Spectrum Disorder all start with 299.
There is no CPT code for ABA therapy.
Although Providence’s group plans differ in terms of the specific benefits provided to
group members, all of the group plan contracts issued after January 1, 2007 contain several
identical provisions, including: (1) coverage for “Mental Health Services;” (2) a definition of
“Mental Health Services” that includes coverage of autism; and (3) exclusion of coverage for
“services related to developmental disabilities, developmental delays, or learning disabilities”
(the Developmental Disabilities Exclusion). Providence denies coverage of ABA therapy under
the Developmental Disabilities Exclusion for all group members under all group plans,
regardless of whether the member seeks reimbursement for payments for ABA therapy or preauthorization of coverage.
The Developmental Disabilities Exclusion is not the only exclusion Providence asserts it
can rely on to deny coverage for ABA therapy. For example, Providence states that it also
PAGE 4 – OPINION AND ORDER
intends to deny claims for ABA therapy on the ground that ABA therapy is investigational and
experimental (hereinafter, “the Experimental Exclusion”). Providence, however, denied the ABA
therapy claims of both A.F. and A.P. based solely on the Developmental Disability Exclusion.
Providence asserts that its current position is to deny ABA therapy based on any and all potential
bases for denial, including but not limited to, both the Developmental Disability Exclusion and
the Experimental Exclusion.
Starting in 2007, Providence elected under Or. Rev. Stat. § 743.857(1) to be bound by an
independent review organization (“IRO”) with respect to the statutorily mandated external
review of denial of coverage. The IRO review process allows plan members to appeal the denial
of benefits to an independent physician outside of the Providence system, who reviews the denial
under the four statutorily prescribed areas of review: (1) “whether a course or plan of treatment is
medically necessary,” (2) “whether a course or plan of treatment is experimental or
investigational,” (3) “whether a course or plan of treatment that an enrollee is undergoing is an
active course of treatment for purposes of continuity of care,” and (4) “whether a course or plan
of treatment is delivered in an appropriate health care setting and with the appropriate level of
care.” Or. Rev. Stat. § 743.857(1). Twice since 2007, Providence members have appealed the
denial of ABA therapy through the IRO process. Dkt. 46. In both instances, the independent
physician found that ABA therapy was not experimental and that Providence must provide
coverage for the therapy. Id. Notably, the Developmental Disability Exclusion is not reviewable
through the IRO process. Therefore, if Providence denies coverage for ABA therapy based solely
on the Developmental Disability Exclusion, as it did for A.F. and A.P., the plan member will not
be able to appeal the denial through an IRO.
PAGE 5 – OPINION AND ORDER
STANDARDS
Class actions are governed by Rule 23 of the Federal Rules of Civil Procedure. A party
seeking class certification must satisfy each of the four requirements of Rule 23(a) and at least
one requirement of Rule 23(b). Wang v. Chinese Daily News, Inc., --- F.3d---, 2013 WL
4712728, at *2 (9th Cir. Sept. 3, 2013). Rule 23 provides more than “a mere pleading standard,”
and the plaintiff “must be prepared to prove” that each of the Rule 23 requirements is satisfied.
Wal-Mart Stores, Inc. v. Dukes, ---U.S.---, 131 S. Ct. 2541, 2551 (2011). District courts have
broad discretion to determine whether a class should be certified. Armstrong v. Davis, 275 F.3d
849, 871 n.28 (9th Cir. 2001).
Under Rule 23(a), a district court may certify a class only if:
(1) the class is so numerous that joinder of all members is
impracticable; (2) there are questions of law and 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.
Fed. R. Civ. P. 23(a). In other words, the class must meet the requirements of numerosity,
commonality, typicality, and adequacy of representation. Mazza v. Am. Honda Motor Co., Inc.,
666 F.3d 581, 588 (9th Cir. 2012).
After all four of the requirements of Rule 23(a) are satisfied, the party seeking to
maintain a class action also must “satisfy through evidentiary proof at least one of the provisions
of Rule 23(b).” Comcast Corp. v. Behrend, ---U.S.---, 133 S. Ct. 1426, 1432 (2013). Rule 23(b)
states that the plaintiff must demonstrate either: (1) a risk of substantial prejudice from separate
actions; (2) “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;” or (3) there are “questions of law or fact common to
PAGE 6 – OPINION AND ORDER
class members [that] 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).
The district court should engage in a “rigorous analysis” to ensure that the prerequisites
of Rules 23(a) and (b) have been satisfied. Wal-Mart, 131 S. Ct. at 2551; Comcast Corp., 133 S.
Ct. at 1432. Although a court’s class certification analysis may “entail some overlap with the
merits of the plaintiff’s underlying claim, Rule 23 grants courts no license to engage in freeranging merits inquiries at the certification stage.” Amgen, Inc. v. Conn. Retirement Plans and
Trust Funds, ---U.S.---, 133 S. Ct. 1184, 1194-95 (2013) (citation omitted). “Merits questions
may be considered to the extent—but only to the extent—that they are relevant to determining
whether the Rule 23 prerequisites for class certification are satisfied.” Id. at 1195.
DISCUSSION
A. The Proposed Class
Plaintiffs propose the following class (the “101 Class”)1 for injunctive relief:
All individuals: (a) who are, or will be up to the date of class
certification, beneficiaries of an ERISA health benefit plan (i) that
is subject to Oregon law, (ii) that contains an Exclusion for
services related to developmental disabilities, developmental
delays, or learning disabilities, (iii) and that has been or will be
issued for delivery, or renewed, on or after January 1, 2007 up to
the date of class certification, in the state of Oregon, by Providence
Health Plan or any affiliate of Providence Health Plan, its
predecessors or successors and all subsidiaries or parent entities;
(b) who either have been or will be diagnosed, up to the date of
class certification, with any diagnosis code beginning with 299
contained in either the Diagnostic and Statistical Manual of Mental
Disorders (DSM-IV-TR, Fourth Edition) or the International
1
In the motion for certification before the Court, Plaintiffs seek certification for a
declaratory and injunctive class (the 101 Class). Dkt. 43 at 11. In the First Amended Complaint,
Plaintiffs indicated that they may, at a later date, move to certify a subclass (the 102 Class), and
may seek monetary damages for that subclass. Dkt. 9 at 21.
PAGE 7 – OPINION AND ORDER
Classification of Diseases, Ninth Edition (ICD-9); and (c) who are
not (i) a parent, subsidiary, affiliate, or control person of
Defendant, (ii) an officer, director, agent, servant or employee of
Defendant, (iii) the immediate family member of any such person,
or (iv) a class member who has previously released a claim for
benefits under a settlement agreement.
Plfs’ Redacted Memo. at 11. Dkt. 43.2
B. Rule 23(a)
Plaintiffs argue that the proposed class satisfies all of the elements of Rule 23(a):
numerosity, commonality, typicality, and adequacy of representation. Providence argues that
Plaintiffs’ proposed class does not satisfy any of the Rule 23(a) requirements. The Court
addresses each requirement in turn.
1. Numerosity
Rule 23(a)(1) requires that Plaintiffs demonstrate that “the class is so numerous that
joinder of all members is impracticable.” Fed. R. Civ. P. 23(a)(1). Rule 23(a)(1) provides no
bright-line test or minimum number of class members necessary to meet the numerosity
requirement; instead, the Court must evaluate the specific facts of each case. Gen. Tel. Co. of the
Nw., Inc. v. EEOC, 446 U.S. 318, 330 (1980). In general, classes of 15 members or less are too
small, and classes of 16 to 39 members may or may not be sufficiently numerous, depending on
the facts of the case. See id.; MOORE’S FEDERAL PRACTICE § 23-05 (2d ed. 1987). In this district,
there is a “rough rule of thumb” that 40 class members is sufficient to meet the numerosity
requirement. Giles v. St. Charles Health Sys., Inc., ---F.R.D.---, 2013 WL 5774124, at *2 (D. Or.
Oct. 22, 2013); see also Wilcox Dev. Co. v. First Interstate Bank of Or., N.A., 97 F.R.D. 440, 443
(D. Or. 1983) (same); MCLAUGHLIN ON CLASS ACTIONS § 4:5 (9th ed.) (“The rule of thumb
2
Section C of the proposed class definition can be found in paragraph 103 of the First
Amendment Complaint. Dkt. 9.
PAGE 8 – OPINION AND ORDER
adopted by most courts is that proposed classes in excess of 40 generally satisfy the numerosity
requirement.”).
Plaintiffs argue that the Court should define the class to include all current group plan
members who have received a diagnosis of autism and all future group plan members who have
received or will receive a diagnosis of autism through the date of class certification. Today, there
are 259 current Providence group plan members who have submitted a claim for benefits
associated with a diagnosis of autism. Plaintiffs argue that a class of 259 members clearly meets
the numerosity requirement.
Providence responds by arguing that a significant portion of the proposed class has not
yet suffered an actual injury. Providence asserts that the class should be limited to those plan
members who have already requested and have been denied ABA services because these class
members have experienced an actual injury. Only ten members, other than the two named
Plaintiffs, have been denied ABA services. Providence asserts that only these 12 members meet
the constitutional standing requirement under Article III, and therefore, the class is not
numerous.
In the context of ERISA, other circuits “have drawn a distinction between constitutional
standing to seek injunctive relief and constitutional standing to seek [money damages].” Faber v.
Metro. Life Ins. Co., 648 F.3d 98, 102 (2d Cir. 2011); see also Loren v. Blue Cross & Blue Shield
of Mich., 505 F.3d 598, 607 (6th Cir. 2007); Gillis v. Hoechst Celanese Corp., 4 F.3d 1137, 1148
(3d. Cir. 1993). Although the Ninth Circuit has not yet addressed this specific legal issue, the
other circuits that have considered it all agree that “a plan participant may have Article III
standing to obtain injunctive relief related to ERISA’s disclosure and fiduciary duty requirements
without a showing of individual harm to the participant.” Cent. Se. & Sw. Areas Health &
PAGE 9 – OPINION AND ORDER
Welfare Fund v. Merck-Medco Managed Care, LLC, 433 F.3d 181, 199 (2d Cir. 2005); see also
Faber, 648 F.3d at 102 (same); Horvath v. Keystone Health Plan E., Inc., 333 F.3d 450, 456
(3d Cir. 2003) (finding that the plaintiff “need not demonstrate actual harm in order to have
standing to seek injunctive relief” under ERISA); Larson v. Northrop Corp., 21 F.3d 1164, 1171
(D.C. Cir. 1994) (holding that the plaintiff need not demonstrate actual harm in order to file suit
for breach of fiduciary duty under ERISA). Because Plaintiffs move only for class certification
of an injunctive class and seek injunctive relief under ERISA, no showing of individualized harm
of class members is required to establish Article III standing.3
Plaintiffs have met their burden of meeting the numerosity requirement of Rule 23(a). A
class of 259 members satisfies the 40-person “rough rule of thumb,” and joinder would be
impracticable under the particular circumstances of this case.
2. Commonality
Rule 23(a)(2) states that class certification is only appropriate when the case presents
“questions of law or fact common to the class.” Fed. R. Civ. P. 23(a)(2). In order to satisfy the
commonality requirement, Plaintiffs must show that the class members suffered the “same
injury.” Wal-Mart, 131 S. Ct. at 2551 (citation and quotation marks omitted). In Wal-Mart, the
Supreme Court stated the test for commonality: “[The] common contention . . . must be of such a
nature that it is capable of classwide resolution—which means that determination of its truth or
falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.”
3
Providence also argues that Wal-Mart changes the standing requirements under ERISA
because the Supreme Court held in that case that a class representative must have the same injury
as the class members. 131 S. Ct. at 2550. As Plaintiffs point out, however, the “same injury”
standard comes from Supreme Court precedent dating back to 1977, and therefore, the ERISA
case law was developed after the “same injury” standard. See E. Tex. Motor Freight Sys., Inc. v.
Rodriquez, 431 U.S. 395, 403 (1977) (noting that the Supreme Court has “repeatedly held” that a
class representative must “suffer the same injury” as the class members). Providence’s argument
that Wal-Mart alters the landscape of ERISA injunctive class actions is not persuasive.
PAGE 10 – OPINION AND ORDER
Id. Rather than requiring that every issue be common, however, for purposes of Rule 23(a)(2)
“even a single [common] question will do.” Id. at 2556 (alteration in original) (quotation marks
omitted); see also Mazza, 666 F.3d at 589.
Plaintiffs assert that the claims of the injunctive class depend on a common contention—
that the Developmental Disability Exclusion violates state and federal law. This common
question, Plaintiffs argue, affects each class member, and the answer to the common question
will resolve an issue central to the validity of each class member’s claim.
Providence responds that the commonality requirement is not satisfied because A.F.’s
and A.P.’s cases have questions of law and fact distinct from the rest of the class. Particularly,
Providence asserts that in A.F.’s and A.P.’s cases, Providence may have waived the right to
assert the Experimental Exclusion, but in the case of every other class member Providence has
not waived the right to assert the Experimental Exclusion.
Putting aside whether Providence’s strategic decision to deny A.F.’s and A.P.’s claims on
a different basis than all other plan members’ claims violates Providence’s fiduciary duty under
ERISA to treat all plan members similarly, Providence’s argument does not defeat class
certification under Rule 23(a)(2). Regardless of whether Providence can raise the specific
Experimental Exclusion (or any other defense or exclusion) against certain class members but
not others, all class members have in common the issue of whether the Developmental
Disabilities Exclusion violates state or federal law. See Z.D. v. Group Health Cooperative, No.
C-11-1119-RSL, 2012 WL 5033422, at *4 (W.D. Wash. Oct. 17, 2012) (holding that the issue of
whether Defendant’s policy of limiting coverage “on the basis of beneficiaries’ ages amounted to
a breach of their fiduciary duties” was a common issue); Churchill v. Cigna Corp., No. 10-6911,
2011 WL 3563489, at *4 (E.D. Pa. Aug. 12, 2011) (holding that “[w]hile class members may be
PAGE 11 – OPINION AND ORDER
entitled to different benefits, participate in different Cigna-administered plans, and have children
who would benefit from ABA in varying degrees, these differences are not significant enough in
this litigation to defeat commonality”); In re Louisiana-Pacific Corp., No. Civ. 02-1023-KI,
2003 WL 23537936, at *4 (D. Or. Jan. 24, 2003) (holding that defendant’s breach of fiduciary
duties under ERISA was a common issue despite other individual distinctions among class
members). Resolution of this common issue on a class-wide basis will settle this particular
question “in one stroke” for all putative class members. Thus, Plaintiffs have satisfied the
commonality requirement.
3. Typicality
In order to meet the typicality requirement, Plaintiffs must show that the named parties’
claims or defenses are typical of the claims or defenses of the class. Fed. R. Civ. P. 23(a)(3).
Under the “permissive standards” of Rule 23(a)(3), the “representative’s claims are ‘typical’ if
they are reasonably co-extensive with those of absent class members; they need not be
substantially identical.” Hanlon v. Chrysler Corp., 150 F.3d 1011, 1020 (9th Cir. 1998). “The
purpose of the typicality requirement is to assure that the interest of the named representative
aligns with the interests of the class.” Hanon v. Dataproducts Corp., 976 F.2d 497, 508 (9th
Cir. 1992). In order to determine whether claims and defenses are typical, courts look to
“whether other members have the same or similar injury, whether the action is based on conduct
which is not unique to the named plaintiffs, and whether other class members have been injured
by the same course of conduct.” Id. (quotation marks omitted); see also Wolin v. Jaguar Land
Rover N. Am., LLC, 617 F.3d 1168, 1175 (9th Cir. 2010).
Plaintiffs argue that A.F.’s and A.P.’s claims are typical of the unnamed class members
because Providence denies coverage for ABA therapy to all group plan members whose plans
contain the Developmental Disabilities Exclusion, and therefore, Providence’s course of conduct
PAGE 12 – OPINION AND ORDER
in determining that the Developmental Disabilities Exclusion applies to ABA therapy in all
instances affects all Plaintiffs similarly. Providence responds that the claims of the named
Plaintiffs are not typical of the class because A.F. and A.P. have a unique defense. Specifically,
Providence contends that if it later applies the Experimental Exclusion, A.F. and A.P. may have
the unique defense that Providence waived its right to assert to do so. Providence argues this
could be a major focus of the litigation as it continues. As such, Providence argues, there is a
danger that the absent class members will suffer because their representatives will be
preoccupied with issues unique to them.
The issue of whether Providence may have waived the Experimental Exclusion in A.F.’s
and A.P.’s cases has no bearing on the question of whether the denial of ABA therapy based on
the Developmental Disabilities Exclusion violates state or federal law. This is true irrespective of
the fact that each individual class member may or may not have additional other exclusions that
may or may not apply to their cases.4 A.F.’s and A.P.’s claims are typical of the proposed
injunctive class because they result from the same injurious course of conduct and because the
requested injunction, if granted, would provide relief to all class members similarly situated. In
other words, if Plaintiffs are correct on the merits, then Providence would no longer be able to
deny coverage of ABA therapy based on the Developmental Disabilities Exclusion.
4. Adequacy of Representation
Rule 23(a)(4) states that before a class can be certified, a court must find that “the
representative parties will fairly and adequately protect the interests of the class.” Fed. R. Civ.
4
Moreover, it is unclear whether the Experimental Exclusion will be a viable exclusion
for Providence to use moving forward. Based on Providence’s own disclosures in this litigation,
the IRO process has consistently found that ABA therapy is not experimental. When this issue is
addressed through litigation, courts have also consistently found that ABA therapy is not
experimental. See, e.g., McHenry v. PacificSource Health Plans, 679 F. Supp. 2d 1226, 1237-39
(D. Or. 2010).
PAGE 13 – OPINION AND ORDER
P. 23(a)(4). This requirement turns on two questions: (1) whether “the named plaintiffs and their
counsel have any conflicts of interest with other class member;” and (2) whether “the named
plaintiffs and their counsel [will] prosecute the action vigorously on behalf of the class.” Hanlon,
150 F.3d at 1020. The adequacy requirement is based on principles of constitutional due process;
as such, a court cannot bind absent class members if the representation is inadequate. Hansberry
v. Lee, 311 U.S. 32, 42-43 (1940); Hanlon, 150 F.3d at 1020.
Plaintiffs assert that the adequacy requirement is satisfied because the named Plaintiffs
and their counsel have no conflicts with any members of the class and because Plaintiffs’ counsel
include experienced class action attorneys and experts on ERISA and health benefits law.
Providence responds that Plaintiffs have not met the adequacy requirement for three reasons:
(1) there is a conflict between the named Plaintiffs and the absent class members, (2) Plaintiffs
have not demonstrated that Plaintiffs’ counsel have the experience necessary to represent the
class adequately, and (3) identified class counsel may not be a law firm, but must be specified
individual lawyers.
Providence argues first that a conflict exists between the named Plaintiffs and the absent
class members because of the Experimental Exclusion as discussed above. At oral argument
Providence further asserted that absent class members would be disadvantaged by class
certification because if the class lost on the merits, then the absent class members would be
unable to go through the IRO process, where they might be more likely to succeed in receiving
coverage for ABA therapy. The Court rejects this argument because, without delving into the
merits, it is evident that the absent class members will be in the same position if Plaintiffs lose on
the merits regardless of whether there is class certification. If the Court rules for Providence on
the merits and the class is certified, Providence can deny class members’ request for coverage of
PAGE 14 – OPINION AND ORDER
ABA therapy based solely on the Developmental Disability Exception and prevent absent class
members from appealing through the IRO process. If the Court rules for Providence on the
merits and the class is not certified, absent class members face the same result—Providence can
deny class members’ requests for coverage of ABA therapy based solely on the Developmental
Disability Exception and still prevent absent class members from appealing through the IRO
process because that exclusion is not part of the IRO review criteria. See Or. Rev. Stat.
§ 743.857(1). Thus, because a loss on the merits will negatively affect absent class members in
the same way regardless of whether the class is certified, no conflict exists that would defeat the
adequacy of representation.5
Moreover, Plaintiffs have presented sufficient evidence to demonstrate that Plaintiffs’
counsel, both as individual lawyers and as a law firm, are qualified to represent the class.
Plaintiffs’ law firm Stoll Stoll Berne Lokting & Shlacheter includes lawyers who have been
appointed lead counsel in numerous class action lawsuits. In addition, Plaintiffs’ counsel Megan
Glor has significant experience litigating health benefits claims and has expertise in ERISA law.
Providence’s argument that a law firm cannot be appointed lead counsel is unavailing, as federal
courts in this district and others regularly appoint law firms rather than specific lawyers as lead
class counsel. See Chehalem Physical Therapy, Inc. v. Coventry Health Care, Inc., No. 3:09-cv00320-HU (D. Or. May 8, 2013); Gessele v. Jack in the Box, Inc., No. 3:10-cv-00960-ST, 2013
WL 1326538 (D. Or. April 1, 2013). For all of these reasons, Plaintiffs have made a sufficient
showing to demonstrate adequacy of representation.
5
At oral argument, Providence further argued that the three absent class members who
already have appealed a denial of coverage for ABA therapy since the onset of this litigation
would be prejudiced by class certification. See Dkt. 53. The Court rejects this argument as well.
Class certification will have no effect on these three absent class members’ ability to appeal their
claims through the IRO process because Providence already has asserted both the Experimental
Exclusion and the Developmental Disability Exclusion in denying their claims. See Dkt. 54.
PAGE 15 – OPINION AND ORDER
C. Rule 23(b)(2)
Having satisfied the prerequisites of Federal Rule of Civil Procedure 23(a), Plaintiffs may
proceed on a class basis only if the class also meets the requirements of one of the subsections of
Federal Rule of Civil Procedure 23(b). Plaintiffs seek certification of the 101 Class under
Rule 23(b)(2).
1. Legal Standards
Rule 23(b)(2) permits class treatment when “the party opposing the class has acted or
refuses 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). “The fact that some class members may have suffered no injury or different injuries
from the challenged practice does not prevent the class from meeting the requirements of Rule
23(b)(2).” Rodriguez v. Hayes, 591 F.3d 1105, 1125 (9th Cir. 2009).
Additionally, the primary relief sought must be injunctive or declaratory. Wang, 2013
WL 4712728, at *4 (citing Wal-Mart, 131 S. Ct. at 2557-58). The principle undergirding this
requirement is that the “‘indivisible nature of the injunctive or declaratory remedy’” justifies
certification because the “‘conduct is such that it can be enjoined or declared unlawful only as to
all of the class members or as to none of them.’” Wal-Mart, 131 S. Ct. at 2557 (quoting Richard
A. Nagareda, Class Certification in the Age of Aggregate Proof, 84 N.Y.U. L. Rev. 97, 132
(April 2009)). The Advisory Committee Notes explain that subdivision (b)(2) was intended to
reach situations where the final relief settles the “legality of the behavior with respect to the class
as a whole. . . .” Advisory Committee Notes to 1966 amendments to Rule 23(b)(2). Rule 23(b)(2)
does not authorize certification “when each individual class member would be entitled to a
different injunction or declaratory judgment against the defendant.” Wal-Mart, 131 S. Ct. at
2557; see also Ellis v. Costco Wholesale Corp., 657 F.3d 970, 987 (9th Cir. 2011) (same).
PAGE 16 – OPINION AND ORDER
Moreover, claims for monetary relief that are “not incidental to the injunctive or declaratory
relief” are ineligible for class certification under Rule 23(b)(2). Wal-Mart, 131 S. Ct. at 2557.
2. Discussion
Plaintiffs seek an injunction pursuant to Rule 23(b)(2), enjoining Providence’s continued
application of the Developmental Disability Exclusion in violation of Oregon law or ERISA.
Plaintiffs contend that certification under Rule 23(b)(2) is appropriate because all class members
belong to the Providence insured group plan, the group plan is subject to Oregon law and
ERISA, and Providence applies the Developmental Disability Exclusion uniformly and without
individualized consideration. Plaintiffs contend that if Providence’s application of the
Developmental Disability Exclusion is unlawful, then the conduct would be illegal as to all
beneficiaries and the appropriate remedy would be to enjoin the alleged illegality as to all class
members.
Providence raises two primary arguments against class certification under Rule 23(b)(2).6
First, Providence argues that an injunction will provide “complete relief only as to” the named
plaintiffs in this action. Def’s Memo. at 31. Dkt. 44. Providence denied the ABA therapy claims
as to the named plaintiffs only on the basis of the Developmental Disability Exclusion.
6
At oral argument, Providence also argued that the 101 Class should be evaluated under
Rule 23(c)(4) as an “issue class” rather than as an “injunctive class” under Rule 23(b)(2).
Rule 23(c)(4) provides that “[w]hen appropriate, an action may be brought or maintained as a
class action with respect to particular issues.” Fed. R. Civ. P. 23(c)(4). Subdivision (c)(4) allows
adjudication “as to particular issues only,” such as permitting adjudication of a specific issue
relating to liability. Advisory Committee Notes to 1966 amendments to Rule 23(c)(4). Plaintiffs
have already bifurcated issues of liability and damages with the 101 Class and the 102 Class. If
the Court were to issue declaratory and injunctive relief, then the class claim, as specified in the
First Claim for Relief in the First Amended Class Action Allegation Complaint, would be
resolved in its entirety. First Am. Compl. at ¶ 129-35. Dkt. 9. Although “[a] trial court can sever
and try only certain issues” under Rule 23(c)(4), the Court finds that such an action is
unnecessary in light of Plaintiffs’ specific request for relief. See In re N. Dist. of Cal., Daikon
Shield IUD Prods. Liab. Litig., 693 F.2d 847, 856 (9th Cir. 1982), abrogated on other grounds in
Valentino v. Carter-Wallace, Inc., 97 F.3d 1227 (9th Cir. 1996).
PAGE 17 – OPINION AND ORDER
Providence contends that it may resolve similar claims in the future by asserting all applicable
plan exclusions, including denying claims as for ABA therapy services based on the
Experimental Exclusion. Id.
Providence’s attempt to distinguish the named plaintiffs and other putative class members
is unavailing. An injunction would provide specific and meaningful relief to all named class
members: no claim for ABA therapy services could be denied based on the Developmental
Disability Exclusion. This remedy is squarely within the type of relief contemplated by
Rule 23(b)(2). See Berger v. Xerox Corp. Retirement Income Guarantee Plan, 338 F.3d 755,
763-64 (7th Cir. 2003) (certifying a class under Rule 23(b)(2) where the relief sought was a
declaration that Xerox’s actions were not in compliance with ERISA); Z.D., 2012 WL 1977962,
at *7 (certifying an injunctive class under Rule 23(b)(2) to determine whether a health plan met
the requirements of Washington law and ERISA); Zhu v. Fujitsu Group 401(K) Plan, No. C-031148RMW, 2004 WL 3252573, at *7 (N.D. Cal. Mar. 3, 2004) (granting class certification under
Rule 23(b)(2) where the plaintiffs sought declaratory relief that a 401(k) plan was illegal under
ERISA). Each class member does not require a different injunction in order to resolve the legal
question posed by the 101 Class. Wal-Mart, 131 S. Ct. at 2557. The fact that Providence may
assert other defenses against some members of the class does not affect the availability of
classwide relief under Rule 23(b)(2) to enjoin the assertion of one specific defense that,
allegedly, is not legally permissible. See Rodriguez, 591 F.3d at 1125 (rejecting the argument
that individual defenses can defeat Rule 23(b)(2) certification because the rule “does not require
[a court] to examine the viability or bases of class members’ claims for declaratory and
injunctive relief, but only to look at whether class members seek uniform relief from a practice
applicable to them all”).
PAGE 18 – OPINION AND ORDER
Second, Providence argues that its conduct towards the two named plaintiffs will not
recur as to other putative class members in the future because Providence’s policy has changed.
In A.F.’s and A.P.’s case, Providence applied only the Developmental Disability Exclusion in
denying coverage. Going forward, Providence intends on applying any applicable basis to deny
ABA therapy, including both the Experimental Exclusion and the Developmental Disability
Exclusion. The Developmental Disability Exclusion, however, will continue to be applied by
Providence unless enjoined. As admitted by Providence, the issue raised by denying claims
based on the Developmental Disability Exclusion is not moot as to other potential class members
because Providence intends to continue its practice at least until January 1, 2015. Def’s Memo.
at 32. Providence’s continued application of the Developmental Disability Exclusion
distinguishes those cases where courts have denied class certification under Rule 23(b)(2)
because a challenged policy had been abandoned entirely. See, e.g., Blackwell v. SkyWest
Airlines, Inc., 245 F.R.D. 453, 466 (S.D. Cal. 2007) (denying certification under Rule 23(b)(2) in
part because the defendant had ceased engaging in the challenged conduct); Stuart v. Radioshack
Corp., No. C-07-4499 EMC, 2009 WL 281941, at *13 (N.D. Cal. 2009) (noting that certification
under Rule 23(b)(2) can be difficult where there is a change in policy and the actual practice
under the new policy is not factually established).
In short, although additional independent legal questions may be raised by Providence’s
stated policy to apply any potentially applicable exclusion to an ABA therapy claim, Plaintiffs
may seek classwide relief to enjoin Providence from continuing to assert the Developmental
Disability Exclusion. See Lane, 283 F.R.D. at 602 (explaining that injunctive relief that “focuses
on defendants’ conduct” and not on individual class members is consistent with Rule 23(b)(2)
and Wal-Mart); see also Buus v. WAMU Pension Plan, 251 F.R.D. 578, 588 (W.D. Wash. 2008)
PAGE 19 – OPINION AND ORDER
(certifying a class seeking “equitable relief in the form of an injunction prohibiting enforcement”
of a plan’s allegedly unlawful provisions under ERISA). Resolving the legal question posed by
Plaintiffs provides complete relief as to the specific issue raised by the 101 Class, even if it does
not ultimately address every class members’ needs or issues.
The Court finds that Plaintiffs and all putative class members subscribe to Providence’s
group plan. The group plan contains an identical provision—the Developmental Disability
Exclusion—that Providence concedes will continue to be applied to requests for ABA therapy
going forward unless enjoined by this Court. All putative class members, therefore, have an
interest in receiving an answer to the question of whether the Developmental Disability
Exclusion is legal. Although there may be additional legal bases for Providence to deny any
given claim for benefits, Providence’s conduct regarding the Developmental Disability
Exclusion “can be enjoined or declared unlawful only as to all the class members or as to none of
them.” Wal-Mart, 131 S. Ct. at 2557 (quotation marks and citation omitted). The 101 Class does
not request an award of monetary damages. Furthermore, the relief requested does not require
individualized injunctive relief. See Wal-Mart, 131 S. Ct. at 2557. Thus, certification under Rule
23(b)(2) is appropriate.
CONCLUSION
The Court finds that Plaintiffs have satisfied all of the requirements of Rule 23(a) and
Rule 23(b)(2). Accordingly, the Court GRANTS Plaintiffs’ Motion to Certify the injunctive 101
Class. Dkt. 36. The class claim to be decided is whether Providence is violating ERISA or
Oregon law by denying members coverage under the Developmental Disability Exclusion for
ABA therapy services. The Court appoints Plaintiffs as class representatives, Stoll Stoll Berne
Lokting & Shlacheter and Keith Dubanevich as lead class counsel, and Megan Glor as co-class
counsel. The class is defined as follows:
PAGE 20 – OPINION AND ORDER
All individuals: (a) who are, or will be up to the date of class
certification, beneficiaries of an ERISA health benefit plan (i) that
is subject to Oregon law, (ii) that contains an Exclusion for
services related to developmental disabilities, developmental
delays, or learning disabilities, (iii) and that has been or will be
issued for delivery, or renewed, on or after January 1, 2007 up to
the date of class certification, in the state of Oregon, by Providence
Health Plan or any affiliate of Providence Health Plan, its
predecessors or successors and all subsidiaries or parent entities;
(b) who either have been or will be diagnosed, up to the date of
class certification, with any diagnosis code beginning with 299
contained in either the Diagnostic and Statistical Manual of Mental
Disorders (DSM-IV-TR, Fourth Edition) or the International
Classification of Diseases, Ninth Edition (ICD-9); and (c) who are
not (i) a parent, subsidiary, affiliate, or control person of
Defendant, (ii) an officer, director, agent, servant or employee of
Defendant, (iii) the immediate family member of any such person,
or (iv) a class member who has previously released a claim for
benefits under a settlement agreement.
IT IS SO ORDERED.
DATED this 24th day of December, 2013.
/s/ Michael H. Simon
Michael H. Simon
United States District Judge
PAGE 21 – OPINION AND ORDER
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