Kirven v. Central States Health & Life Co of Omaha et al
Filing
64
Certification of Issue to SC Supreme Court, granting 63 Joint MOTION Certify Questions to the South Carolina Supreme Court. Signed by Honorable Margaret B Seymour on 2/5/2013. (asni, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
COLUMBIA DIVISION
Diane Kirven, on behalf of herself and
all others similarly situated,
)
)
)
Plaintiff,
)
)
vs.
)
)
Central States Health & Life Co. of
)
Omaha, and Philadelphia American Life
)
Insurance Company,
)
)
Defendants.
)
____________________________________)
TO:
C/A No. 3:11-2149-MBS
ORDER OF CERTIFICATION
THE HONORABLE CHIEF JUSTICE AND JUSTICES OF THE SOUTH CAROLINA
SUPREME COURT
Plaintiff Diane Kirven filed the within class action complaint against Defendants Central
States Health & Life Co. of Omaha (“Central States”) and Philadelphia American Life Insurance
Company (“Philadelphia American”) on August 15, 2011. Plaintiff alleges that she entered into a
“cancer and specified disease” contract of insurance (the “Policy”) with Central States on November
22, 1999. Under the Policy, Central States promised to pay Plaintiff benefits regardless of any other
insurance coverage she carried. Central States also promised to pay Plaintiff a defined benefit in an
amount equal to (or a percentage of) the “actual charges” for certain medical and pharmaceutical
treatments. Comp. ¶¶ 13, 21. The Policy did not define the term “actual charges.” According to
Plaintiff, however, Central States paid benefits under its “cancer and specified disease” policies
calculated on the charges billed to the insureds by their medical providers and/or pharmacies. Id.
¶ 14. Stated differently, Central States paid benefits based upon billed amounts and did not reduce
the benefits based upon any discounts negotiated between Central States and Plaintiff’s medical
providers.
Plaintiff was diagnosed with cancer in February 2003. She was required to undergo
chemotherapy and radiation treatments. Id. ¶ 22. Plaintiff submitted claims to Central States under
the Policy. Central States paid Plaintiff a percentage of the actual charges for radiation and
chemotherapy represented on her medical provider bills. Central States also paid Plaintiff benefits
based upon the charges of medical providers represented on her medical provider bills until
Plaintiff’s cancer fell into remission. Id. ¶¶ 24, 25.
On December 31, 2005, Philadelphia American acquired Central States’ South Carolina
“cancer and specified disease” policies. Plaintiff alleges that between January 1, 2006 and
approximately August 21, 2008, Philadelphia American continued to pay benefits under the “cancer
and specified disease” policies in the same manner as had Central States, i.e., based upon the
charges billed to the insured by their medical providers without respect to any discounts negotiated
between Philadelphia American and Plaintiff’s medical providers. Id. ¶¶ 15, 16.
The South Carolina Legislature enacted S.C. Code Ann. § 38-71-242, effective June 4, 2008.
Section 38-71-242 provides, in pertinent part:
(A)(1) When used in any individual or group specified disease insurance policy in
connection with the benefits payable for goods or services provided by any health
care provider or other designated person or entity, the terms “actual charge”, “actual
charges”, “actual fee”, or “actual fees” shall mean the amount that the health care
provider or other designated person or entity:
(a) agreed to accept, pursuant to a network or other agreement with a health
insurer, third-party administrator, or other third-party payor, as payment in
full for the goods or services provided to the insured;
(b) agreed or is obligated by operation of law to accept as payment in full for
2
the goods or services provided to the insured pursuant to a provider,
participation agreement, or supplier agreement under Medicare, Medicaid, or
any other government administered health care program, where the insured
is covered or reimbursed by such program; or
(c) if both subitems (a) and (b) of this subsection apply, the lowest amount
determined under these two subitems; and
(2) must include any applicable deductibles, coinsurance requirements, or co-pay
requirements applicable to the insured under any government administered health
care program or any private primary health insurance coverage for the health care
provider's goods or services provided to the insured.
Plaintiff’s cancer recurred in 2009. Plaintiff again underwent chemotherapy. She filed a
claim with Philadelphia American for benefits under the Policy. Relying on section 38-71-242,
Philadelphia American required Plaintiff to submit an Explanation of Benefit form as documentation
of the paid amounts. Philadelphia American thereupon reduced the amount of benefits paid to
Plaintiff in accordance with the statutory definition promulgated after the date of the Policy. Plaintiff
contends that the section 38-71-242 cannot be applied retroactively to policies in existence prior to
its enactment. Accord Ward v. Dixie Nat’l Life Ins. Co., 595 F.3d 164 (D.S.C. 2010) (finding that
presumption against retroactivity bars application of 38-71-242 to policies already in effect).
The parties agree that the correct legal definition of “actual charges,” as that term is used in
the Policy, is dispositive of the issue of Defendants’ liability to Plaintiff and others similarly situated,
and that the correct legal definition of “actual charges” is determinative of the damages, if any, due
Plaintiff and others similarly situated. Thus, the parties have jointly moved the court to certify the
issue regarding retroactivity of section 38-71-242 to the South Carolina Supreme Court.
South Carolina Rule of Appellate Procedure 244 provides that the South Carolina Supreme
Court in its discretion may answer questions of law certified to it by a federal court “if there are
3
involved in any proceeding before that court questions of law of this state which may be
determinative of the cause then pending in the certifying court when it appears to the certifying court
there is no controlling precedent in the decisions of” the South Carolina Supreme Court.
Certification of a question of state law is appropriate when the federal tribunal is required
to address a novel issue of local law which is determinative in the case before it. Grattam v. Board
of School Comm’rs, 805 F.2d 1160, 1164 (4th Cir. 1986). In this case, it appears that the South
Carolina Supreme Court has not squarely addressed the question of retroactive application of the
definition of “actual charges” contained in section 38-71-242. Therefore, the court certifies the
following questions to the South Carolina Supreme Court:
1.
Can the definition of “actual charges” contained within S.C. Code Ann. § 3871-242 be applied to insurance contracts executed prior to the statute’s
effective date?
2.
Can the South Carolina Department of Insurance mandate the application of
“actual charges” definition in S.C. Code Ann. § 38-71-242 to policies already
in existence on the statute’s effective date by prohibiting an insurance
company from paying claims absent the application of that definition?
IT IS SO ORDERED.
/s/ Margaret B. Seymour
Senior United States District Judge
Columbia, South Carolina
February 5, 2013
4
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?