Diaz v. State

Diaz v. State, 2013 MT 219 (Aug. 6, 2013) (6-1) (Baker, J., for the majority; Wheat, J., dissenting)

Issue: Whether the district court abused its discretion by defining the class to include only those insureds who had timely filed claims for covered benefits.

Short Answer: No.

Affirmed

Facts: Blue Cross and Blue Shield of Montana (BCBS) and New West Health Services administer the state’s self-funded healthcare benefit plan, which was created by statute. Plaintiffs were insured through the plan. Each was injured in separate car accidents caused by insured tortfeasors whose insurers accepted liability. The third-party insurers paid Plaintiffs’ medical expenses.

BCBS and New West allegedly exercised their subrogation rights without first confirming that the insureds had been made whole. According to Plaintiffs, BCBS refused to pay Diaz for medical expenses already paid by the tortfeasor’s insurer, and New West refused to pay Hoffman-Berhnardt the reimbursement it received from her medical providers following payment by the tortfeasor’s insurer to the medical providers.

Plaintiffs filed a class complaint in 2008, alleging the state, BCBS and New West violated the insureds’ statutory made-whole rights, and seeking declaratory and injunctive relief. The district court denied class certification in 2009. Plaintiffs appealed, and this Court remanded for a determination of whether the made-whole statutes apply to third-party administrators such as BCBS and New West. On remand, the district court determined they do not. The Court affirmed that decision but reversed the order denying class certification. Diaz I.

On remand, the district court dismissed BCBS and New West.

Procedural Posture & Holding: Plaintiffs again moved to certify the class, and the state sought to limit the proposed definition. Plaintiffs contended they should be allowed to conduct discovery prior to any modification of the class. After a hearing, the court issued a class certification order,  adopting the eight-year statute of limitations suggested by Plaintiffs but also adopting a one-year filing limitation proposed by the state. Plaintiffs appeal the filing limitation, and the Court affirms.

Reasoning: The state first argues the Plaintiffs do not have standing; however, a class certification order is appealable and Plaintiffs have a direct interest that was prejudiced by the district court’s decision and could benefit from its reversal.

Plaintiffs argue that providers usually file claims, not insureds, and because providers know of the exclusion, they tend not to file claims for medical expenses with the health insurers. As a result, Plaintiffs argue, these non-filing insureds will be excluded from the class unfairly  precisely because they complied with the policy exclusion being challenged. The state responds that the original class could not be accurately and effectively identified, and could include members who have no actual claim against the state. Given a potential class of 32,000 people, the state argued, managing such a huge class would border on the impossible.

“Absent a showing that potential class members who never filed claims because of the policy exclusion constituted a significant portion of the putative class and could be identified through a manageable process that was not overly burdensome, the District Court’s decision to limit the class to insureds who timely filed claims for covered benefits was not arbitrary or unreasonable.” ¶ 26.

Justice Wheat’s Dissent: Justice Wheat would modify the class definition to conform to the one just approved by the Court in Rolan v. New West.