Mitchell v. Conseco Life Insurance Company
Filing
81
OPINION AND ORDER re 60 MOTION to Certify Class filed by Cathy A Mitchell, is held in abeyance. The Defendant Conseco is to produce copies of the claims records of the first one hundred of the 304 insureds who we re referred to in its prior discovery response within 30 days of the date this order is filed. The claims records are to be designated as confidential and subject to the Confidentiality Order previously entered in this case. Additionally, the names and addresses of the insureds must be redacted. Plaintiff Mitchell will have 30 days to inspect the documents and notify the court of the status of her class certification motion. Signed by Honorable Timothy M Cain on 6/3/2013. (gpre, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
GREENW OOD DIVISION
Cathy A. Mitchell,
Plaintiff,
v.
Conseco Life Insurance Company,
Defendant.
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C/A No. 8:12–548-TMC
OPINION AND ORDER
This matter is before the court on Plaintiff Cathy Mitchell’s (“Mitchell’s”) Motion for
Class Certification, pursuant to F.R.Civ.P. 23(a) and (b)(3). (ECF No. 60). Defendant
Conseco Life Insurance Company (“Conseco”) has filed a response opposing the motion
(ECF No. 66) and Mitchell has filed a reply (ECF No. 67). A hearing was held on the
motion on May 23, 2013, and the motion was taken under advisement. For the reasons
below, the motion is held in abeyance pending the production of documents as discussed
below.
I. Facts/Background
In February 1985, Mitchell purchased a cancer treatment benefits policy from
Transport Life Insurance Company. (Am. Compl. ¶ 14). Subsequently, Conseco acquired
Mitchell’s policy and similar cancer policies from other companies, and Conseco is now the
insurance company responsible for paying the benefits under these policies. (Am. Compl.
¶¶ 6 and 15). Mitchell’s policy included the following provision:
BLOOD AND PLASMA BENEFIT. The Insurance Company will pay benefits
based on actual charges for blood and blood plasma. There will be no
Lifetime Maximum Benefit, but benefits are not provided for processing
charges or for blood which is replaced by donors.
(Am. Compl. ¶ 28). The terms “actual charges,” “blood,” and “blood plasma” are not
defined by the policy.
Conseco underwrites two types of cancer policies: “actual charges policies” and
“pre-defined policies.”
Conseco explains that when “an actual charge [policy] is
considered - we pay the benefit billed by the provider. A predefined policy indicates that
there is a daily or per unit limitation.” (Pl.’s Mem. Supp. Mot. to Cert. Class Ex. C - Rule
30(b)(6) Deposition of Conseco at 43).
In late February 2011, Mitchell was diagnosed with Stage III ovarian cancer. (Am.
Compl. ¶ 18). Since March 2011, Mitchell has undergone numerous treatments and
incurred over $90,000 in charges which she alleges are covered by the policy.
(Am.
Compl. ¶¶ 20-23).
In her Amended Complaint, Mitchell alleges claims for breach of contract and bad
faith refusal to pay against Conseco based upon Conseco’s failure to pay benefits due
under a cancer benefits policy. Mitchell argues that Conseco breached the insurance
contract by failing to adjust the policy based upon the usual and customary meaning of the
blood benefits provided. Instead, Conseco utilized provider-produced “revenue codes”
found on the insured’s medical bills to determine what services would be treated as a
compensable service and/or product. Conseco denied Mitchell’s insurance claims based
upon its policy of finding blood products and services associated with revenue codes 390
through 399 noncompensable.
In the motion before the court, Mitchell seeks certification of the following class:
All persons insured under “Actual Charges” cancer benefit policies from
Conseco Life Insurance Company sold in South Carolina who have made
claims for “Blood Benefits” provided by the policies from December 20, 2008
to the present and whose claims for “Blood Benefits” have included medical
revenue codes 390-399.
Excluded from the class are the officers, directors and employees of the
defendant.
(Pl.’s Mem. Supp. Mot. for Class Cert. at 1).
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Discussion
Pursuant to Rule 23(a), to obtain class certification, the plaintiff must satisfy the
following elements: “(1) numerosity of parties; (2) commonality of factual and legal issues;
(3) typicality of claims and defenses of class representatives; and (4) adequacy. The final
three requirements of Rule 23(a), commonality, typicality, and adequacy of representation,
“‘tend to merge,’ with commonality and typicality ‘serv[ing] as guideposts for determining
whether . .
. maintenance of a class action is economical and whether the named
plaintiff’s claim and the class claims are so interrelated that the interests of the class
members will be fairly and adequately protected in their absence.’” Broussard v. Meineke
Disc. Muffler Shops, Inc., 155 F.3d 331, 337 (4th Cir. 1998)(citing Gen. Tel. Co. v. Falcon,
457 U.S. 147, 157, n.13 (1982)). Additionally, if the Rule 23(a) requirements are met, the
court must then determine if the class fits into one of the categories outlined in Rule 23(b).
Among other things, Conseco contends that Mitchell has failed to establish that the
class is so numerous that joinder is impracticable. To satisfy the numerosity requirement,
Mitchell must show that “the class is so numerous that joinder of all members is
impracticable.” Fed.R.Civ.P. 23(a)(1). Numbers alone are not controlling. Ballard v. Blue
Shield of Southern West Virginia, Inc., 543 F.2d 1075, 1080 (4 th Cir. 1976)(citing Cypress
v. Newport News Gen. & Nonsectarian Hosp. Ass’n, 375 S.E.2d 648, 652-54 (4th Cir.
1967)). Rather, the court must consider the circumstances of each case in evaluating the
practicability of joinder. Id. In this circuit, class actions have been found to meet the
numerosity requirement with as few as 18 members. See Cypress, 375 F.2d at 653.
Conseco acknowledges that Mitchell is not required to identify the precise number
of persons in the purported class to demonstrate impracticability of joinder. However,
Conseco contends Mitchell is required to provide a reasonable estimate of the class size
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before her proposed class can be certified. Conseco contends Mitchell has not presented
any evidence whatsoever as to the size of the proposed class.
Mitchell contends that, in a discovery response, Conseco Life stated that “the
number of insureds in the State of South Carolina who have made claims on any Conseco
Life cancer policies encompassing a benefit for ‘blood’ and/or ‘blood plasma’ since June
13, 2009 is 304.” (Pl.’s Mem. Supp. Mot. to Cert. Class Ex. D).
In its memorandum, Conseco argues that there are substantial differences between
the proposed class and the class of persons described by Conseco. (Def.’s Mem. Opp.
Mot. to Certify Class at 14).
These differences include: (1) policies issued in South
Carolina (regardless of whether the insureds currently live in South Carolina or elsewhere),
not insureds who currently reside in South Carolina; (2) claims for blood benefits which
included revenue codes 390-399, not any claims under cancer policies; (3) claims that
were submitted from December 20, 2008 to present, not June 13, 2009 to present; and (4)
policies that pay “actual charges” for blood and plasma, as opposed to all policies that
provide for blood and plasma benefits regardless of whether the policies are “actual
charge policies” or “pre-defined policies.” Id.
W ith the court’s permission, Conseco also filed a sur-reply opposing the motion to
certify class. (ECF Nos. 72 and 76). W ith its sur-reply, Conseco filed an affidavit from
Judith Richey, a manager of health claims. (Def.’s Sur-Reply Opp. Mot. to Certify Class
Ex. A). In her affidavit, Richey attests that 64 claims from 34 insureds fall within the
proposed class. Id. ¶ 8. She further attests that 22 of the 64 claims were denied, at least
in part, based upon the revenue codes and these 22 claims involve only 9 insureds. Id. ¶
9. On May 17, 2013, Conseco filed a motion to substitute a revised affidavit of Richey. In
her revised affidavit, Richey attests there are 63 claims from 34 insureds that fall within the
proposed class and there are 22 claims involving 11 insureds which were denied, at least
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in part, based upon the revenue codes. 1 Mitchell opposed the motion to substitute the
affidavit, but specifically stated she did not oppose the revised affidavit being filed as a
supplemental exhibit.
In her opposition, Mitchell argued that Richey lacked personal
knowledge as to the number of insureds who fall within the class and she relied upon
information relayed to her by an adjuster. (Pl.’s Mem. Opp. Mot. to Substitute at 8).
At the hearing, Conseco argued that the interrogatory response cited to by Mitchell
does not establish a potential class of 304 members. First, Conseco contends that the
question propounded was how many insureds with cancer policies which include a blood
benefits provision have submitted any claims.2
Conseco contends the question was not
limited to how many of these insureds have filed blood benefits claims.
At the hearing, Mitchell requested that she be allowed, at her expense, to review the
claims files of the 304 insureds initially identified by Conseco in order to determine which of
these insureds may qualify as putative class members. Conseco objected citing privacy
concerns and referring to the request as a fishing expedition. In response, counsel for
Mitchell narrowed the request to only the first one hundred of the 304 claim files.
After considering the arguments, the court agrees Mitchell should not be allowed to
go on a general fishing expedition of Conseco’s files. However, she is entitled to
documents which relate directly to her claims against Conseco.
The court cannot
conclude that Mitchell’s request is so patently overreaching or unnecessary so as to
constitute a fishing expedition. These documents are sought in an effort to determine the
1
The court notes that the revised affidavit was provided to opposing counsel prior to
Richey’s deposition. (Def.’s Mot. to Substitute Affidavit ¶ 4).
2
The interrogatory asked Conseco to “[s]tate the number of insureds in the State of
South Carolina who made claims on Policy Form 10536-SC, or any other policy or policies
identified in response to Interrogatory 2, above, from December 20, 2008 to present.”
(Pl.’s Mem. Supp. Mot. to Certify Ex. D at 4).
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potential number of the proposed class.
This is an essential question which may
determine whether this action is certified as a class action.
As to Conseco’s argument regarding the privacy of its insureds, the court finds this
is not a reason to deny Mitchell’s request. Although Conseco did not specifically cite to the
Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), HIPAA allows for
this disclosure. Under HIPAA, 45 C.F.R. § 164.512(e) provides that, pursuant to a court
order, a “covered entity may disclose protected health information in the course of any
judicial or administrative proceeding . . .” Id.
The court, however, imposes certain
requirements, set forth below, to safeguard the privacy of the insureds.
Conclusion
Pursuant to 45 C.F.R.§ 164.512(e), the Defendant Conseco is to produce copies of
the claims records of the first one hundred of the 304 insureds who were referred to in its
prior discovery response within 30 days of the date this order is filed. The claims records
are to be designated as confidential and subject to the Confidentiality Order previously
entered in this case. (ECF No. 21). Additionally, the names and addresses of the insureds
must be redacted. Plaintiff Mitchell will have 30 days to inspect the documents and notify
the court of the status of her class certification motion.
IT IS SO ORDERED.
s/Timothy M. Cain
United States District Judge
Anderson, South Carolina
June 3, 2013
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