On August 5th, in Hamm v. Blue Cross and Blue Shield of North Carolina, Judge Jolly certified a class action against health insurer Blue Cross. The class will consist of Blue Cross members who claim that their medical providers charged them more than the amount the providers had contracted with Blue Cross to charge for their services, after the members exceeded certain benefit maximums. According to Plaintiff’s Brief (at bottom), the class will have thousands of members.
The Court rejected a number of arguments made by Blue Cross as to why a proper class did not exist and why the class representative would not adequately represent the class.
Hamm was enrolled in a plan with Blue Cross that provided for "in-network providers" to charge a contracted-for amount for their services, referred to as the "allowed amount." Hamm’s contention was that the plan provided that Hamm would not be responsible for any charge over the allowed amount.
In Hamm’s situation, however, she hit the "benefit period maximums," which included a cap on the dollar amount that a member could receive in paid benefits from Blue Cross for certain services. She claimed that the in-network providers then began charging her at full rates, not the lower, negotiated-for allowed amount. Hamm disputed that the plan permitted these additional charges, which led to her lawsuit.
The main arguments against class certification made by Blue Cross, and rejected by Judge Jolly, were as follows:
Blue Cross argued that the class had no injury. As the insurer interpreted its agreement, in-network providers were entitled contractually to charge more than the allowed amount when a member exceeded the number of visits allowed by her policy (the "visit maximum"). But when a member exceeded the monetary amount that Blue Cross would pay for covered services (the "benefit maximum"), as opposed to the visit maximum, Blue Cross said that a provider was required to charge only the allowed amount, and it disputed that it had allowed the practice of a higher charge in those circumstances. The Court wrote that there was "pragmatic appeal" to this argument (Op. at 12 n.8), but said that the construction of the contract was "not as clear to the court as it is to Defendant," and found these were both "merit-based defense(s) not properly before the court at this stage. . . ." (Op. at 11 and 12).
The insurer also argued that a member would have no claim unless he or she had actually paid an amount over and above the allowed amount. The Court rejected this argument, stating that a class member would have at least a claim for nominal damages for a breach of the contract, and noting that Plaintiff sought a declaration regarding the future rights of the class members, which would not require a showing of any actual damages.
Blue Cross argued that the Court would have to make "extensive individualized inquiries" whether a class member had actually paid more than the allowed amount and whether administrative remedies had been exhausted. The Court held that these inquiries did not predominate over the common liability issue. It said that there would be "uniform, mechanized and documented evidence" of these matters given the nature of Blue Cross’ record-keeping. (Op. at 12 n.9).
On the point of adequacy, Blue Cross argued that the Plaintiff was subject to unique defenses regarding the amounts she claimed to have been charged over the allowed amount. Blue Cross contended that the only charges to Plaintiff over the allowed amount had come from an out-of-network provider, not an in-network provider, and that the services received were not a "covered service." The Court disagreed that these arguments precluded class certification, stating that "the focus of class certification ‘is properly on the typicality of the plaintiff’s claim as it applies to the general liability issues [and] not on the plaintiff’s ultimate ability to recover.’" (Op. at 15).
The Court concluded its analysis by ruling that a class action was a superior method for adjudicating the claims before it. It held "the controversy is over a contract of insurance that is standardized over hundreds of thousands of North Carolinians. The interpretation of such standardized agreement on a class-wide basis will provide certainty and prevent inconsistent adjudications."
(All other briefs were filed under seal)