Predominance Inquiry and Rigorous Analysis: Comcast Corp. Already Impacting Class Certification Appellate Review
The recent Comcast Corp. opinion from the U.S. Supreme Court is already impacting appellate review of class certification decisions. In Comcast Corp. v. Behrend, 569 U.S. __, 133 S. Ct. 1426 (2013), the Supreme Court held that certification was improper when plaintiffs’ damages model fell short of establishing that damages were capable of measurement on a class-wide basis; as a result, individual damages determination would predominate over any common class issues. After Comcast Corp., not only must damages be proven on a class-wide basis, but, as shown in Halvorson v. Auto-Owners Ins. Co., courts may start taking a sharper look at and closer examination of plaintiffs’ evidentiary support for class certification requirements. Case No. 12-1716, 2013 U.S. App. LEXIS 13580 (8th Cir. July 3, 2013). As shown in Halvorson, Comcast Corp. requires a stringent predominance inquiry − a real rigorous analysis.
In Halvorson, plaintiffs alleged that defendant breached certain policies by utilizing systematic procedures that resulted in nonpayment of reasonable medical expenses. Halvorson, 2013 U.S. App. LEXIS 13580. at *4.
“Bill reviewers calculate R&C reductions by compiling prices for medical services in a defined geographic area and then comparing the claims against the 80th percentile for charges in the same area. The 80th percentile represents the amount 80 percent of doctors in the area charge for the medical service rendered. Auto-Owners selected the 80th percentile as a figure likely to provide coverage for what it promised to pay—’the usual and customary’ amount for the service. The bill reviewers report their calculations to Auto-Owners’s claims adjusters. Auto-Owners routinely approves payments for 100 percent of charges up to the 80th percentile and rejects charges for amounts that exceed the 80th percentile.”
Id. After the district court certified a class of North Dakota policy holders, defendant appealed, arguing that class issues predominate over individual issues. Id. at 2. The Eighth Circuit held that plaintiffs failed to meet the predominance requirement of Rule 23(b)(3) and that the claims should be certified as a class action. Id. at 9 (quoting Comcast Corp., 133 S. Ct. 1426, 1432 (2013). “Given the certified class does not meet the predominance requirements of Rule 23, the district court abused its discretion in certifying the class.” Id.
“The predominance inquiry requires an analysis of whether a prima facie showing of liability can be proved by common evidence or whether this showing varies from member to member.” Id. at 13 (citation omitted). Here, individual inquires about what would be “usual and customary” for each class member would “overwhelm questions common to the class.” Id. at 16, 17. Since class members incurred different injuries and were treated by different medical providers charging different prices for their services, answering class questions would “necessitate individual fact inquires for each member of the class.” Id. Moreover, “[i]n order for a class to be certified, each member must have standing and show an injury in fact that is traceable to the defendant and likely to be redressed in a favorable decision.” Id. at 13. If the healthcare provider accepted payment from defendant as payment in full (or if the defendant-insurer settled the dispute without involving the class member), then the class member would not have been injured and would not have standing and the class could not be certified.
The Eighth Circuit reversed and remanded the case.
While it remains debatable whether Comcast Corp. changed the law, as Rule 23(b)(3) already required a rigorous analysis, Halvorson shows that courts are taking a close look at whether plaintiffs have provided sufficient evidentiary support to show that the class issues predominate over individual issues. Appellate courts are requiring a rigorous analysis of all class action requirements, including predominance. Absent such support, class certification must be rejected; absent a real rigorous analysis of the predominance requirement, certification will not survive appellate review.
July 12, 2013