DDS No. 23-7-3567

April 14, 2014 (Date Decided)

Judge Chesler

For Plaintiffs: Darlery Franco, David Chazen and Camilo Nelson: Barry M. Epstein, Barbara G. Quackenbos (Epstein & Quackenbos, P.C.); Bruce H. Nagel, Randee M. Matloff (Nagel Rice, LLP); James E. Cecchi (Carella Byrne Bain Gilfillan Cecchi Stewart & Olstein, PC); Christopher A. Seeger (Seeger Weiss); Christopher Burke, Joseph Guglielmo, Amanda Lawrence (Scott and Scott).

for Defendants: Brian J. McMahon, E. Evans Wohlforth, Jr., William P. Deni, Jr. (Gibbons P.C.); William H. Pratt, Frank M. Holozubiec, Joshua B. Simon, Katherine L. McDaniel, Warren Haskel (Kirkland & Ellis LLP).

Plaintiffs Darlery Franco, David Chazen and Camilo Nelson (“Subscriber Plaintiffs”) filed a renewed motion for class certification in this matter concerning the alleged underpayment of out-of-network (ONET) claims in a manner contrary to plan language due to Defendant Cigna’s use of the Ingenix databases to determine the “usual customary and reasonable” rate (UCR). Cigna opposes the motion.

The Court denied Subscriber Plaintiffs’ first motion for class certification (Franco I), finding they did not carry their burden of demonstrating that common questions of law and fact would predominate over individual issues to satisfy Rule 23(b)(3)’s predominance requirement. Specifically, the Subscriber Plaintiffs failed to demonstrate that: (1) Cigna plan language concerning (UCR)-based ONET benefits was uniform such that it could be applied to the entire class’s claim to recover unpaid benefits; (2) a violation of plan terms by Cigna under the abuse of discretion standard could be established based on common evidence; and (3) damages could be calculated based on a standard methodology. The Court also found that the class definition failed to incorporate the identifying aspects of membership.

Subscriber Plaintiffs’ revised approach to demonstrating that the redefined classes – an ERISA Class and a RICO Class – meet the (b)(3) requirements corrects some of the problems in Franco I. Subscriber Plaintiffs inject greater precision into the definitions of their two proposed classes. They also narrow the UCR language to two basic formulations used in Cigna plans.

However, the classes do not present common liability issues that will predominate over individual ones. Even plans that use one of the two UCR definitions vary as to the information Cigna may consider in determining ONET benefits. Further, multiple combinations of the UCR provisions and additional clauses would influence the determination of an appropriate UCR and ONET benefit, impacting liability. Subscriber Plaintiffs fail to demonstrate how a classwide trial of the ERISA and RICO claims would cohesively address such combinations and permutations of applicable plan language. Another obstacle to class certification is the lack of demonstration that injury is capable of classwide proof. The motion makes the erroneous assumption that, if Subscriber Plaintiffs succeed in proving that Ingenix was a flawed database, harm to all members of the redefined ERISA and RICO Classes necessarily follows.

The Court denies the Subscriber Plaintiffs’ renewed motion for class certification, finding the motion fails to satisfy the requirements for certification of a Rule 23(b)(3) class.