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Condry v. Unitedhealth Group, Inc.

United States District Court, N.D. California

December 23, 2019

RACHEL CONDRY, et al., Plaintiffs,
v.
UNITEDHEALTH GROUP, INC., et al., Defendants.

          ORDER GRANTING IN PART AND DENYING IN PART THE MOTION FOR CLASS CERTIFICATION RE: DKT. No. 222, 244, 245, 246, 247.

          VINCE CHHABRIA, United States District Judge

         The motion for class certification is granted in part and denied in part. This ruling assumes that the reader is familiar with the facts of the case, the parties' arguments, and the Rule 23 requirements, as well as this Court's earlier rulings on the cross-motions for summary judgment as to the named plaintiffs, the prior class certification motion, and the motion to intervene. A case management conference is scheduled for January 22, 2020 at 10:00 a.m. to discuss next steps. A joint case management statement is due January 15, 2020.

         Denial-Letter Class

         The Court ruled at summary judgment that United Healthcare, when it denied five named plaintiffs' claims for reimbursement of out-of-network lactation services, violated ERISA's requirement that the plan administrator “write a denial in a manner calculated to be understood by the claimant.” 29 C.F.R. § 2560.503-1(g); 29 U.S.C. § 1133; Booton v. Lockheed Medical Benefit Plan, 110 F.3d 1461, 1463 (9th Cir. 1997). The plaintiffs now seek certification of a class of ERISA plan participants who received the same denial letters as the five named plaintiffs, with an eye towards a court order requiring United Healthcare to send class members new letters that explain the basis for denial in a comprehensible fashion (which would, in turn, allow participants to meaningfully assess whether to contest the denial). United Healthcare's primary argument against certification of this class is that some class members may have had subsequent communications with United Healthcare, and those subsequent communications may have resolved the dispute between plan and participant (or at least rendered understandable a denial that was initially incomprehensible). Although it's safe to assume that some members of the class will fit this description, that's not a reason to deny the motion for class certification. United Healthcare engaged in the same conduct with respect to each of the proposed class members- sending an incomprehensible denial letter. Although subsequent communications may have resolved disputes about benefits, it does not change the fact that United Healthcare's denial letters to these class members violated ERISA in the same way as to each participant. An appropriate remedy, therefore, is to order United Healthcare to send a follow-up letter to each class member. The new letter can be worded so as to emphasize that if a participant believes her dispute with the company was mooted by activity or communications subsequent to the initial denial letter, she need not take further action in response to the new letter. Accordingly, this class is certified pursuant to Federal Rule of Civil Procedure 23(b)(2). See, e.g., Wit v. United Behavioral Health, 317 F.R.D. 106, 138 (N.D. Cal. 2016); cf. Kartman v. State Farm Mutual Automobile Insurance Co., 634 F.3d 883, 893 (7th Cir. 2011). The parties should include a stipulated draft letter to class members with the next case management statement. If they cannot agree on language after a good-faith effort, they should submit competing draft letters.

         Claims Reprocessing Class

         In contrast, the plaintiffs' request to certify a nationwide class of people who were denied coverage for out-of-network lactation services, for the purpose of ordering United Healthcare to reprocess all those claims under the correct standard, is an overreach.[1]

         To be sure, there is overwhelming evidence that United Healthcare's efforts to ensure that participants would receive coverage for lactation services as required by the Affordable Care Act were woefully inadequate. The company seemingly made no effort to compile comprehensive lists of in-network lactation providers, thus making it difficult for plan participants to determine whether such services were available in-network. Moreover, United Healthcare sometimes miscommunicated with participants who called to inquire about coverage, telling them as a blanket matter that out-of-network services were not included. Several documents, such as the Coverage Determination Guide that United Healthcare prepared for providers to use when submitting claims, stated that there was no obligation to cover out-of-network lactation services, which was true in situations where in-network services were available to the participant but false in situations where in-network services were unavailable. United Healthcare appeared to be operating on the assumption that in-network lactation services would be available to participants in its plans without inquiring whether that was actually so, and without communicating adequately to plan participants about their right to coverage for out-of-network lactation services if in-network services were unavailable. Moreover, as the internal emails reflect, the company was aware of these problems yet chose not to address them in a meaningful way. As a result, United Healthcare undoubtedly caused a significant number of mothers and their newborn babies to lose out on coverage for lactation services that they should have received under the ACA. Indeed, this happened to some of the named plaintiffs in this case. United Healthcare's misconduct, which appears to be ongoing, would presumably support a classwide claim for prospective relief-specifically, an injunction requiring the company to adopt reforms to better ensure coverage for lactation services in the future.

         But as discussed in prior rulings, none of the named plaintiffs in this case has standing to seek prospective injunctive relief. See Order Denying Motion for Class Certification, Dkt. 213 at 4-5. Thus, these plaintiffs are left to seek certification of a “reprocessing class”-that is, a class consisting of all people denied coverage for out-of-network lactation services for the purpose of ordering that United Healthcare reprocess their claims. They contend that certification of such a class is warranted because United Healthcare had a blanket nationwide policy of adjudicating claims for out-of-network coverage without reference to whether in-network services were available to plan participants.

         Presumably, if United Healthcare indeed applied a uniform standard or took a uniform approach to claims for out-of-network lactation services, class certification would be appropriate. See Wit v. United Behavioral Health, 317 F.R.D. 106, 138 (N.D. Cal. 2016); Des Roches v. California Physicians' Serv., 320 F.R.D. 486, 510 (N.D. Cal. 2017). But the evidence submitted in this case (in connection with both rounds of class certification briefing as well as the cross-motions for summary judgment as to the named plaintiffs) does not demonstrate a uniform standard or practice. If anything, the evidence undermines the plaintiffs' assertion that a uniform standard or approach existed with respect to coverage for out-of-network lactation services.

         As a preliminary matter, the plaintiffs have proposed a class that includes two distinct groups of people: (i) those who received out-of-network lactation services, submitted claims, and were denied; and (ii) those who received out-of-network services but never submitted claims at all. It makes no sense to include the second group when the asserted basis for class certification is that the wrong standard was applied to claims, and when the asserted purpose of class certification is to obtain reprocessing of those claims. Moreover, each of the named plaintiffs falls in the first group; there is no named plaintiff who contends her right to coverage was violated even though she didn't submit a claim for coverage. So there is no named plaintiff whose claim is typical of the second group, or who could adequately represent that group. After all, the primary question relating to liability would be different for each group-for the first group, it would involve whether United Healthcare applied a uniform (and uniformly incorrect) standard or practice to their claims; for the second group, it would presumably involve inquiry into whether participants were adequately informed of their potential right to coverage for out-of-network services.

         But even taking the first group-people whose claims for out-of-network lactation services were denied-the plaintiffs have not met their burden of demonstrating that United Healthcare applied a uniform standard or practice to those claims. Indeed, the plaintiffs' own presentation raises more questions than answers in this regard. The plaintiffs have identified what they believe to be the universe of out-of-network lactation claims submitted to United Healthcare during the class period.[2] They note that roughly 88 percent of the claims were partially or fully denied (which would be contrary to the ACA if no in-network services were available), meaning that roughly 12 percent of them were fully granted (as the ACA would require if no in-network services were available).[3] See Dkt. 222 at 19. If United Healthcare applied a uniform policy to all these claims-and if the uniform policy was to deny out-of-network claims without regard to the availability of in-network services-why were 12 percent of the claims fully granted? The plaintiffs mostly leave the Court to speculate on this question. That itself is a problem, because the burden is on the plaintiffs to demonstrate that class certification would be appropriate. But in any event, there is reason to believe, based on the limited evidence the parties have presented, that the varying results are the product of varying practices rather than a uniform one.[4]

         To understand why this unexplained 12/88 percent split undermines the plaintiffs' efforts to certify a class, it's necessary to consider how United Healthcare's plans are supposed to work when a plan participant seeks lactation services. At least some (and perhaps all) of the plans in which the proposed class members participated offer mechanisms for people to seek authorization to receive coverage for out-of-network care-mechanisms that would presumably apply in situations where ACA-required lactation services are not available in-network. For example, the plan for one of the named plaintiffs, Felicity Barber of San Francisco, states: “If medically appropriate care from a qualified provider cannot be provided within the network, we will arrange for the required care with an available and accessible non-network provider.” See Dkt. 102-13 at 27. The plan goes on to say that in this situation, the participant's “network physician” will notify United Healthcare of the need for out-of-network services, in which case the company “will work with you and your network physician to coordinate care through a non-network provider.” Id. at 29. And the plan sets forth a process for submitting claims for services from a non-network provider. Id. at 78.[5]

         With that in mind, let's return to the plaintiffs' analysis of claims for out-of-network lactation services. There are at least three possible explanations for the 12/88 percent split. First, perhaps the 12 percent had their claims granted because they successfully used their plans' mechanisms for obtaining coverage for out-of-network services, while the 88 percent had their claims denied either because the mechanisms revealed in-network services or because these plan participants failed to utilize the mechanisms in the first place. In this scenario, perhaps class certification would be appropriate on the plaintiffs' “uniform policy” theory, but it would not result in a reprocessing of claims. Instead it would result in a grant of summary judgment for United Healthcare and against the class, because this would presumably reflect compliance with the ACA's requirement that lactation services be covered out-of-network when in-network services are unavailable.[6]

         A second possibility is that the 12 percent had their claims granted for some reason unrelated to the availability of in-network lactation services, while the 88 percent had their claims denied without regard to the availability of in-network lactation services. Under this scenario, all claims were considered without regard to the availability of in-network services, suggesting a uniform (and uniformly incorrect) policy that would support certification of a class and an order requiring United Healthcare to reprocess denied claims under the correct standard. But the plaintiffs merely speculate that the 12 percent had their claims granted for reasons unrelated to the availability of in-network services, without presenting any evidence of what those reasons might have been. For example, at oral argument plaintiffs' counsel speculated, without evidence to back it up, that perhaps the 12 percent had particularly generous plans that automatically ...


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