The Medical Society of the State of New York et al v. UnitedHealth Group Inc. et al

MEMORANDUM OF LAW in Support re: 142 MOTION to Certify Class . . Document

S.D.N.Y.February 22, 2019

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK THE MEDICAL SOCIETY OF THE STATE OF NEW YORK, et al., Plaintiffs, - v. - UNITEDHEALTH GROUP INC., et al., Defendants. : : : : : : : : : : : : Civil Action No. 16-cv-5265 (JPO) MEMORANDUM OF LAW IN SUPPORT OF PLAINTIFFS’ MOTION FOR CLASS CERTIFICATION Cyril V. Smith (pro hac vice) ZUCKERMAN SPAEDER LLP 100 East Pratt Street, Suite 2440 Baltimore, MD 21202 410-332-0444 410.659.0436 (fax) John W. Leardi BUTTACI LEARDI & WERNER LLC 212 Carnegie Center, Suite 202 Princeton, NJ 08540 609.799.5150 609.799.5180 (fax) D. Brian Hufford Jason S. Cowart Anant Kumar Nell Z. Peyser ZUCKERMAN SPAEDER LLP 485 Madison Avenue, 10th Floor New York, NY 10022 212.704.9600 212.704.4256 (fax) Attorneys for Plaintiffs and the Putative Class Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 1 of 46 i TABLE OF CONTENTS Page TABLE OF AUTHORITIES ......................................................................................................... iii INTRODUCTION AND SUMMARY OF ARGUMENT ............................................................. 1 FACTUAL BACKGROUND ......................................................................................................... 4 I. OUTPATIENT SURGERY .................................................................................... 4 II. UNITED’S UNIFORM REFUSAL TO PAY......................................................... 7 III. CESAS WAS SUBJECTED TO THE UNIFORM REFUSAL TO PAY ............ 10 IV. UNITED’S PLANS .............................................................................................. 11 ARGUMENT ................................................................................................................................ 12 I. THE PROPOSED CLASS AND ITS CLAIMS ................................................... 13 II. THE PROPOSED CLASS SATISFIES RULE 23(a) ........................................... 14 A. The OBS Class is so numerous that joinder of all members is impracticable ............................................................................................. 14 B. Common issues of law and fact affect all members of the Class .............. 14 1. Common evidence will show that United’s OBS facility-fee denials were not based on any Plan language ............................... 15 2. Common evidence will show that United covered OBS facility-fee charges for in-network providers ............................... 17 3. Common evidence will show that the terms of United’s Plans do not exclude facility-fee coverage for non-Article 28 providers ....................................................................................... 18 C. CESAS’s claims are typical of the OBS Class ......................................... 21 D. Plaintiffs will fairly and adequately protect the interests of the OBS Class ................................................................................................. 22 1. Plaintiffs are more than adequate Class representatives ............... 22 2. Proposed Class counsel are also more than adequate ................... 24 III. THE PROPOSED CLASS SATISFIES RULE 23(b) .......................................... 25 Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 2 of 46 ii A. Certification of the OBS Class will avoid the risk of individual adjudications establishing incompatible standards of conduct for United, or impairing the interests of absent class members ...................... 25 B. Certification under Rule 23(b)(2) is appropriate because injunctive relief is necessary to remedy United’s misconduct, which similarly affected all members of the OBS Class .................................................... 27 C. The OBS Class can be certified under Rule 23(b)(3) because common questions of law and fact predominate and class adjudication is the best way to fairly and efficiently decide this case .................................... 28 1. The OBS Class is ascertainable .................................................... 29 2. Common questions predominate for the proposed Class .............. 31 3. Class-wide adjudication is superior .............................................. 34 IV. IN THE ALTERNATIVE, ISSUE CERTIFICATION UNDER RULE 23(c)(4) IS APPROPRIATE ................................................................................. 35 CONCLUSION ............................................................................................................................. 36 Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 3 of 46 iii TABLE OF AUTHORITIES Page(s) Cases Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997) ...................................................................................................... 22, 25, 32 Amgen Inc. v. Conn. Ret. Plans & Tr. Funds, 568 U.S. 455 (2013) .................................................................................................................. 32 Benjamin v. Oxford Health Insurance, Inc., No. 3:16-cv-00408 (CSH), 2018 WL 3489588 (D. Conn. July 19, 2018) ......................... 16, 25 Benner v. Becton Dickinson & Co., 214 F.R.D. 157 (S.D.N.Y. 2003) .............................................................................................. 35 Biomed Pharm. v. Oxford Health Plans (N.Y.), Inc., 831 F. Supp. 2d 651 (S.D.N.Y. 2011) ................................................................................ 17, 20 Butler v. Sears, Roebuck & Co., 727 F.3d 796 (7th Cir. 2013) .................................................................................................... 33 Churchill v. CIGNA Corp., No. 10-cv-6911 (JRS), 2011 WL 3563489 (E.D. Pa. Aug. 12, 2011) ...................................... 34 Churchill v. CIGNA Corp., No. 10-cv-6911 (JRS), 2012 WL 3590691 (E.D. Pa. Aug. 21, 2012) ...................................... 32 Cole v. City of Memphis, 839 F.3d 530 (6th Cir. 2016) .................................................................................................... 29 Compania Pelineon De Navegacion, S.A. v. Texas Petrol. Co., 540 F.2d 53 (2d Cir. 1976) ....................................................................................................... 33 Consol. Rail Corp. v. Town of Hyde Park, 47 F.3d 473 (2d Cir. 1995) ....................................................................................................... 14 Cordes & Co. Fin. Servs., Inc. v. A.G. Edwards & Sons, Inc., 502 F.3d 91 (2d Cir. 2007) ....................................................................................................... 23 Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73 (1995) ...................................................................................................................... 4 DeMaria v. Horizon Healthcare Servs., Inc., No. 11-cv-7298 (WJM), 2015 WL 3460997 (D.N.J. June 1, 2015) ......................................... 26 Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 4 of 46 iv Dial Corp. v. News Corp., 314 F.R.D. 108 (S.D.N.Y. 2015) .............................................................................................. 34 Durakovic v. Bldg. Serv. 32 BJ Pension Fund, 609 F.3d 133 (2d Cir. 2010) ......................................................................................... 15, 16, 18 Escalante v. Cal. Physicians’ Serv., 309 F.R.D. 612 (C.D. Cal. 2015) .............................................................................................. 28 Estate of Gardner v. Continental Cas. Co., 316 F.R.D. 57 (D. Conn. 2016) .................................................................................... 27, 32, 34 Flores v. Anjost Corp., 284 F.R.D. 112 (S.D.N.Y. 2012) .............................................................................................. 30 Floyd v. City of New York, 283 F.R.D. 153 (S.D.N.Y. 2012) .............................................................................................. 29 Fort Worth Emps.’ Ret. Fund v. J.P. Morgan Chase & Co., 301 F.R.D. 116 (S.D.N.Y. 2014) ........................................................................................ 14, 21 Franzese v. United Health Care/Oxford, 232 F. Supp. 3d 267 (E.D.N.Y. 2017) ...................................................................................... 16 Gallo v. Madera, 136 F.3d 326 (2d Cir. 1998) ..................................................................................................... 19 Hansen v. Monumental Life Ins. Co., No. 05-cv-1905 (JBA), 2008 WL 9428331 (D. Conn. Mar. 6, 2008) ...................................... 30 In re Amla Litig., 282 F. Supp. 3d 751 (S.D.N.Y. 2017) ...................................................................................... 32 In re Flag Telecom Holdings, Ltd. Sec. Litig., 574 F.3d 29 (2d Cir. 2009) ....................................................................................................... 22 In re Nassau Cty. Strip Search Cases, 461 F.3d 219 (2d Cir. 2006) ..................................................................................................... 35 In re Petrobras Sec., 862 F.3d 250 (2d Cir. 2017) ................................................................................... 28, 29, 30, 32 In re U.S. Foodservice Inc. Pricing Litig., 729 F.3d 108 (2d Cir. 2013) ..................................................................................................... 13 In re Visa Check/MasterMoney Antitrust Litig., 280 F.3d 124 (2d Cir. 2001) ..................................................................................................... 30 Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 5 of 46 v Jackson v. Bloomberg, L.P., 298 F.R.D. 152 (S.D.N.Y. 2014) .............................................................................................. 13 Kindle v. Dejana, 315 F.R.D. 7 (E.D.N.Y. 2016) .................................................................................................. 25 Marisol A. v. Giuliani, 126 F.3d 372 (2d Cir. 1997) ......................................................................................... 13, 14, 21 McCulloch Orthopaedic Surg. Servs., PLLC v. Aetna Inc., 857 F.3d 141 (2d Cir. 2017) ..................................................................................................... 31 Med. Soc’y of N.Y. v. UnitedHealth Grp. Inc., No. 16-cv-5265 (JPO), 2017 WL 4023350 (S.D.N.Y. Sept. 11, 2017) .............................. 24, 25 Meidl v. Aetna, Inc., No. 15-cv-1319 (JCH), 2017 WL 1831916 (D. Conn. May 4, 2017)..................... 21, 25, 26, 28 Metro. Life Ins. Co. v. Glenn, 554 U.S. 105 (2008) .................................................................................................................. 15 Miller v. United Welfare Fund, 72 F.3d 1066 (2d Cir. 1995) ..................................................................................................... 18 Monaco v. Stone, No. 98-cv-03386 (CPS), 2002 WL 32984617 (E.D.N.Y. Dec. 20, 2002) ................................ 21 Montefiore Med. Ctr. v. Teamsters Local 272, 642 F.3d 321 (2d Cir. 2011) ..................................................................................................... 31 Muller v. First Unum Life Ins. Co., 341 F.3d 119 (2d Cir. 2003) ..................................................................................................... 35 N.Y. State Psych. Ass’n, Inc. v. UnitedHealth Grp., 798 F.3d 125 (2d Cir. 2015) ..................................................................................................... 24 Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999) .................................................................................................................. 26 Pelman v. McDonald’s Corp., 272 F.R.D. 82 (S.D.N.Y. 2010) ................................................................................................ 35 Peterson v. UnitedHealth Grp. Inc., 242 F. Supp. 3d 834 (D. Minn. 2017) ....................................................................................... 24 Peterson v. UnitedHealth Grp. Inc., 913 F.3d 769 (8th Cir. 2019) .............................................................................................. 23, 24 Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 6 of 46 vi Premier Health Ctr., P.C. v. UnitedHealth Grp., No. 11-cv-425 (ES), 2014 WL 4271970 (D.N.J. Aug. 28, 2014) ............................................. 27 Roach v. T.L. Cannon Corp., 778 F.3d 401 (2d Cir. 2015) ............................................................................................... 32, 33 Robidoux v. Celani, 987 F.2d 931 (2d Cir. 1993) ..................................................................................................... 21 Robinson v. Metro-North Commuter R.R. Co., 267 F.3d 147 (2d Cir. 2001) ............................................................................................... 22, 35 Steinberg v. Nationwide Mut. Ins. Co., 224 F.R.D. 67 (E.D.N.Y. 2004) ................................................................................................ 22 Sykes v. Mel S. Harris & Assocs. LLC, 780 F.3d 70 (2d Cir. 2015) ....................................................................................................... 15 Trujillo v. UnitedHealth Grp., Inc., No. 17-cv-2547 (JFW), 2019 WL 493821 (C.D. Cal. Feb. 4, 2019) ............................ 26, 28, 31 Varity Corp. v. Howe, 516 U.S. 489 (1996) .................................................................................................................. 13 Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011) ................................................................................................ 14, 16, 22, 27 Wit v. United Behavioral Health, 317 F.R.D. 106 (N.D. Cal. 2016) .................................................................................. 26, 28, 32 Z.D. ex. rel. J.D. v. Grp. Health Coop., No. 11-cv-1119 (RSL), 2012 WL 1977962 (W.D. Wash. June 1, 2012) ................................. 25 Z.D. ex. rel. J.D. v. Grp. Health Coop., No. 11-cv-1119 (RSL), 2012 WL 5033422 (W.D. Wash. Oct. 17, 2012) ................................ 28 Zervos v. Verizon New York, Inc., 277 F.3d 635 (2d Cir. 2002) ..................................................................................................... 18 Statutes 29 U.S.C. § 1102(a)(1) .................................................................................................................... 4 29 U.S.C. § 1104(a) ................................................................................................................ 16, 26 29 U.S.C. § 1104(a)(1)(D) ............................................................................................................ 19 29 U.S.C. § 1132(a)(1)(B) ............................................................................................................ 13 Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 7 of 46 vii 29 U.S.C. § 1132(a)(3) .................................................................................................................. 13 29 U.S.C. § 1133 ........................................................................................................................... 26 29 U.S.C. § 1185d ......................................................................................................................... 19 42 U.S.C. § 300gg-5 ................................................................................................................. 7, 19 Other Authorities 10 NYCRR § 755.1 ......................................................................................................................... 5 N.Y. Pub. Health Law § 230-d .............................................................................................. passim N.Y. Pub. Health Law § 2801 ................................................................................................... 5, 20 N.Y. Pub. Health Law § 2801-a .................................................................................................... 19 N.Y. Pub. Health Law § 2805 ................................................................................................... 5, 19 Rules Fed. R. Civ. P. 23(a) ............................................................................................................... 13, 29 Fed. R. Civ. P. 23(a)(1) ................................................................................................................. 14 Fed. R. Civ. P. 23(a)(2) ................................................................................................................. 14 Fed. R. Civ. P. 23(a)(3) ................................................................................................................. 21 Fed. R. Civ. P. 23(a)(4) ................................................................................................................. 22 Fed. R. Civ. P. 23(b) ............................................................................................................... 13, 25 Fed. R. Civ. P. 23(b)(1)..................................................................................................... 25, 26, 36 Fed. R. Civ. P. 23(b)(2)............................................................................................... 27, 28, 29, 36 Fed. R. Civ. P. 23(b)(3).......................................................................................................... passim Fed. R. Civ. P. 23(b)(3)(A) ........................................................................................................... 34 Fed. R. Civ. P. 23(b)(3)(B) ........................................................................................................... 34 Fed. R. Civ. P. 23(b)(3)(C) ........................................................................................................... 35 Fed. R. Civ. P. 23(b)(3)(D) ........................................................................................................... 35 Fed. R. Civ. P. 23(c)(4) ........................................................................................................... 35, 36 Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 8 of 46 viii Regulations 29 C.F.R. § 2560.503-1(b) ............................................................................................................ 26 Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 9 of 46 Plaintiffs Columbia East Side Ambulatory Surgery, P.C. (“CESAS”), The Medical Society of the State of New York (“MSSNY”) and the Society of New York Office Based Surgery Facilities (“NYOBS”) (collectively, “Plaintiffs”) submit their memorandum of law in support of a motion to certify a class (the “OBS Class”) of all persons whose claims for out-of- network office-based surgery (“OBS”) facility fees were denied under health care plans administered by Defendants (“United”) and governed by ERISA1 (“Plans”). INTRODUCTION AND SUMMARY OF ARGUMENT Class certification is appropriate here based on United’s admissions alone. United admits that all of its Plans cover facility fees associated with outpatient surgery. And it admits that when administering all of its Plans, it uniformly refuses to cover certain types of outpatient surgery facility charges: those from OBS providers. It admits that it uses a standardized process to effectuate this uniform denial policy, and that this single process applies to all of its Plans. It admits that neither the denials, nor the process that leads to them, are based on any particular provision in any particular written Plan document. And finally, it admits that the explanation of benefits (“EOB”) forms that it sends when denying any such claims offer the same blanket explanation that references no particular Plan term: that the claim was denied because OBS providers are not certified under Article 28 of the New York Public Health Law. These admissions of a common course of conduct, impacting Class members in the exact same way, are more than enough to certify the proposed Class. This case will ask the Court to determine whether United wrongfully denied claims for OBS facility charges. There are two major components to a surgery bill. The first is a “professional fee.” It reimburses the surgeon for her professional time, labor, and expertise in 1 The Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001, et seq. Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 10 of 46 2 performing the surgery. The second component is a “facility fee.” It reimburses the person who provides the specialized setting (if necessary) within which the surgery takes place. As the claims administrator for all United Plans, United is responsible for determining whether a facility fee is payable in connection with a given service. United admits that its Plans all cover facility fees in connection with outpatient surgery. See Ex.2 6 (Resp. to Pls.’ Interrog. 14). In New York, outpatient surgeries can be performed at hospitals or ambulatory healthcare locations certified under Article 28 of the New York Public Health Law (“Article 28”). When such surgeries are performed at an Article 28 setting, United covers both the professional charges and the applicable facility fees for both in-network and out-of-network providers. Outpatient surgeries can also be performed in New York at an OBS venue that has been accredited under New York Public Health Law § 230-d (“Section 230-d”).3 Although accredited OBS venues are authorized under New York law to perform outpatient surgeries, just like Article 28 providers, United has uniformly determined that it will not reimburse facility fees charged by out-of-network OBS venues under any of its Plans (the “Uniform Refusal to Pay”). United takes the blanket position that because OBS venues are not certified under Article 28, they are not “facilities” entitled to facility-fee reimbursement. See, e.g., Ex. 13 (Hicks written testimony) at 27-28.4 In applying this policy to deny all claims for OBS facility charges, however, United failed to identify any Plan provision explicitly limiting coverage to Article 28 locations. See infra pp. 8-9. 2 Citations to “Ex.” refer to the exhibits attached to the Declaration of Anant Kumar in Support of Plaintiffs’ Motion for Class Certification, submitted herewith. 3 United disputes that accredited OBS settings qualify as “facilities.” To avoid confusion, Plaintiff will use terms like “venue,” “operating room,” or “suite” to describe the location where OBS occurs. This is not a concession, of course, that these locations are not correctly described as OBS facilities. 4 Jacqueline Rivera, Rebecca Falk, and Jeannette Hicks were designated as United’s Rule 30(b)(6) representatives to testify on various topics noticed by Plaintiffs. See Kumar Decl. ¶¶ 31-32. Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 11 of 46 3 United effectuates this Uniform Refusal to Pay by “flagging” those providers that United determines to be non-Article 28 OBS suites, and denying all facility charges from those flagged providers. See, e.g., Ex. 11 (Rivera written testimony) at 2-5. There are two fundamental problems with United’s conduct, which apply uniformly to all Class members’ claims. First, the flagging and denial system has nothing to do with the terms of the Plans and, indeed, is implemented without any United employee consulting any Plan terms. See, e.g., Ex. 15 (Rivera Dep.) at 108:4-9 ( ). Indeed, United’s own internal communications recognize the Uniform Refusal to Pay has no grounding in Plan terms. See Ex. 32 at UHG-50959 ( ); Ex. 33 at UHG- 53409 ( ). Second, United inconsistently covers OBS facility fees for in-network providers because it serves United’s own financial interest, even though covered services are defined by the Plans without regard to the network status of the provider. Despite United’s announced position that OBS facility fees are not covered under any of its Plans, it spares in-network providers from the flag, so that in-network OBS venues can bill and be paid for facility charges. United employees have acknowledged the created by applying the Uniform Refusal to Pay in this fashion. See Ex. 23 at UHG-58770 ( ); Ex. 24 at UHG-32287 ( Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 12 of 46 4 ). United employees also admit that United’s approach to OBS reimbursement has nothing to do with the written Plan terms and instead flows entirely from financial considerations. Ex. 25 at UHG-56269 ( ); Ex. 26 at UHG-35431 ( ); Ex. 27 at UHG-38409 ( ). United’s common course of conduct in denying out-of-network OBS facility-fee charges runs contrary to ERISA’s foundational requirement that Plans must be administered in accordance with their written terms. See, e.g., Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73, 83 (1995) (citing 29 U.S.C. § 1102(a)(1)). As a result, Plaintiffs bring this proposed class action seeking to end United’s unlawful conduct and remedy its wrongful denials. FACTUAL BACKGROUND I. OUTPATIENT SURGERY Historically, all surgery was performed in hospitals. Over the past several decades, however, the locations of many types of surgery have migrated to other settings, such as free- standing ambulatory surgery facilities and office-based venues. This development has been driven by technological advances and considerations about patient safety, cost-effectiveness, and convenience. New York and federal law and regulations have evolved over time to reflect this phenomenon. In New York, “hospitals” are regulated by Article 28 of the Public Health Law, Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 13 of 46 5 which was created in 1965. See N.Y. Pub. Health Law § 2801(1). Article 28 requires that the New York Department of Health approve and issue an operating certificate before a “hospital” can be established. See id. § 2805(1). By the mid-1980s, regulations were put in place to account for “ambulatory surgery centers” as a type of Article 28 “hospital.” 10 NYCRR § 755.1 (hereinafter, “ASCs”). In 2007, New York legally recognized and regulated the next step in non-hospital surgery: “office-based surgery” (“OBS”). New York law defines OBS as “any surgical or other invasive procedure, requiring general anesthesia, moderate sedation, or deep sedation, and any liposuction procedure, where such surgical or other invasive procedure or liposuction is performed … in a location other than an [Article 28] hospital … excluding minor procedures and procedures requiring minimal sedation.” N.Y. Pub. Health Law § 230-d(1)(h). The legislative history, including the State Senate Introducer’s Memorandum in Support of the bill, explained that the law’s purpose was to bring the performance of OBS under state oversight. See Ex. 48 at 00009-10. Under the new law, OBS had to be performed “in a setting that has obtained and maintains full accredited status,” which means “full accreditation by nationally-recognized accrediting agency(ies) determined by the [Commissioner of Health.]” N.Y. Pub. Health Law § 230-d(1)(a) and (3). The accrediting agencies chosen by the Commissioner of Health are The Joint Commission (“TJC”), the Accreditation Association for Ambulatory Health Care (“AAAHC”), and the American Association for Accreditation of Ambulatory Surgery Facilities (“AAAASF”). Accreditation ensures that the OBS provider meets certain standards governing equipment, staffing, and the physical plant itself, in order to guarantee patient safety during Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 14 of 46 6 surgery. See Ex. 35 at UHG-61667 (list of standards under the TJC’s OBS accreditation manual); Ex. 36 (printout from AAAASF website describing its OBS accreditation program). Thus, in New York, a patient can choose to undergo safe and legal invasive outpatient surgery in one of three settings: a general hospital; an Article 28 ASC; or an OBS suite. A patient might choose an OBS setting because of its lower risk of infection, lower cost, and convenience. See Ex. 37 (Aesthetic Surgery Journal article) at 226, 233. There is no substantive difference between the types of surgeries that can be performed in an OBS and an Article 28 ASC. Ex. 38 (Miscoe expert report) at 6. Notwithstanding the term “office-based,” an accredited OBS operating room is obviously different from a standard physician’s office. That much was confirmed by United’s own expert, who explained that an OBS venue has a unique surgery room that is qualitatively different than the examination room or traditional office that may be used by the surgeon. Ex. 16 (Jacobs Dep.) at 133:7-20. As reflected in the photographs submitted herewith, the named plaintiff, CESAS, exemplifies the difference. See Ex. 41 (photographs of operating room, exam rooms, and consultation office); Ex. 42 (floor plan). The costs of maintaining an OBS operating room are substantial - they can exceed a million dollars for construction and hundreds of thousands of dollars annually for upkeep. See Ex. 28 at UHG-31712 at slide 6 (PowerPoint presentation by NYOBS for United); Ex. 45 at CESAS_24598-99 (email providing cost estimate breakdown for CESAS). Just as New York law evolved to account for the development of new surgery settings, taking into consideration patient safety and patient choice, so too did federal law. One concern behind the passage of the 2010 Patient Protection and Affordable Care Act (“ACA”) was the protection of patient choice. To that end, Section 2706 of the law prohibits health plans from Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 15 of 46 7 discriminating in coverage against particular provider types “acting within the scope of [their] license or certification under applicable State law.” 42 U.S.C. § 300gg-5. II. UNITED’S UNIFORM REFUSAL TO PAY United admits that all its Plans cover outpatient surgery facility fees. See Ex. 6 (Resp. to Pls.’ Interrog. 14). Thus, such fees are paid by United whenever surgeries are performed at Article 28 general hospitals or ASCs. Nevertheless, United denies all OBS facility-fee claims submitted by out-of-network providers under all of its Plans, based on United’s view that only Article 28 providers are covered. See Ex. 5 (Apr. 13, 2018 Conf. Tr.), at 2:21-22; Ex. 13 (Hicks written testimony) at 27-28; Ex. 12 (Falk written testimony) at 10. United’s policy derives from its professed understanding of “industry standards,” based on, for example, what the Centers for Medicare and Medicaid Services (CMS) cover and purported New York State regulatory guidance. See Ex. 13 (Hicks written testimony) at 28-29; Ex. 17 (Hicks Dep.) at 114:3-23, 116:21-118:9. There is no evidence that Plan language had any impact on how United formulated this Article 28 restriction. United carries out its Uniform Refusal to Pay through a standard process called the “C Flag.” United personnel determine whether a provider is an accredited OBS venue as opposed to an Article 28 location, and if it is the former, the C Flag is placed on that provider. Once the flag is placed, all charges for facility fees from that provider are stopped and denied. See Ex. 15 (Rivera Dep.) at 33:4-35:24; Ex. 11 (Rivera written testimony) at 2-3. The C Flag is provider- based; that is, it is unrelated to the content of any specific written Plan document. See id. at 2-5; Ex. 18 (Darsow Dep.) at 81:21-82:4; Ex. 19 (Falk Dep.) at 71:11-22; Ex. 29 (2012 C Flag Review Job Aid) at UHG-2489. Moreover, the C Flag is prospective: it is placed outside the context of any specific claim, and therefore, without reference to any specific written Plan terms. See Ex. 18 (Darsow Dep.) at 58:8-14. Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 16 of 46 8 United admits that the C Flag process does not involve consulting the written Plan document governing the claim. Instead, the claim is automatically denied based on the flag, or in some instances because . See Ex. 15 (Rivera Dep.) at 108:4-9, 110:11-17; Ex. 11 (Rivera written testimony) at 3, 188; Ex. 34 (Provider Search standard operating procedure) at 87-88; Ex. 20 (Ayala Dep.) at 28:1-24. It is not surprising that United denies OBS claims without consulting Plan terms. As a general matter, United’s claim-processing operations do not rely on the terms of actual Plan documents - that is, a summary plan description (“SPD”) or certificate of coverage (“COC”). United’s Rule 30(b)(6) designee on claim processing testified . See Ex. 19 (Falk Dep.) at 39:13- 18. That same witness explained that , and she could not even identify the steps that would be required to access such documents. Id. at 39:19-40:4. Another United witness, who has worked for United for 23 years, including as a claims processor for over a decade, was unfamiliar with the very term “plan document.” Ex. 20 (Ayala Dep.) at 10:6-12:19, 28:9-24, 62:4-63:16. When a provider is first placed under the C Flag, it receives a standard notification letter communicating United’s blanket policy that it will not pay OBS facility fees under any circumstances, because OBS suites are not Article 28-certified. See Corrected First Am. Class Action Compl. (“Compl.,” Doc. 73) at Ex. F (Doc. 73-6); Ex. 29 (C Flag Review Job Aid) at UHG-2489; Ex. 30 (Provider Verification ASC Policy and Procedure) at UHG-2525; Ex. 11 (Rivera written testimony) at 4-5, 200. If facility-fee claims continue to be submitted for that provider, follow-up letters are sent reiterating United’s Uniform Refusal to Pay. These letters, Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 17 of 46 9 although otherwise identical, often list multiple different claims involving different patients under different Plans. See Compl. Ex. G (Doc. 73-7); Ex. 29 (C Flag Review Job Aid) at UHG- 2489; Ex. 31 at UHG-27950; Ex. 47 (stock letters). Once a claim is denied under the C Flag, United issues EOBs to both the provider and the patient reflecting its standard policy. Because the policy is not based on the actual terms of the Plans, the EOBs reference no specific Plan language. The two principal explanation codes United uses to deny OBS facility-fee claims are “LW” and “D60H,” and those codes simply state that “facility fees are not payable on this claim” because the provider is not Article 28-certified. See Ex. 11 (Rivera written testimony) at 3, 209; Ex. 1-1 at UHG-63 and 5076 (LW EOBs for Patient C); Ex. 1-19 at UHG-11025 and 11031 (D60H EOBs for Patient Y). As one method to identify class members, United has produced spreadsheets listing all claims denied under these two codes for an approximately 7-year-period spanning from 2011 to 2018. See Kumar Decl. at ¶¶ 21-24. United’s Uniform Refusal to Pay is subject to one important caveat: United will pay such fees to in-network OBS providers - providers who have a contract with United dictating reimbursement rates. After 2013, United’s stock denial letters contained an express carve-out for in-network OBS suites: “As a non-participating physician office with an OBS accreditation, UnitedHealth Group will not reimburse facility fees.” See Compl. Ex. F (Doc. 73-6) (emphasis added). Internal United emails acknowledge . Ex. 23 at UHG-58770; see also Ex. 24 at UHG- 32287 ( ); Ex. 26 at UHG-35431 ( ). Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 18 of 46 10 This is a because the Plans’ definitions of “covered services” do not change depending on the network status of the provider. That is, a participating provider is reimbursed only if the underlying benefit plan covers the service. See Ex. 2-39 (Patient AS’s COC) at UHG-19082 (Plan covers “Covered Health Services,” whether they come from participating or non-participating providers); Ex. 21 (Galian Dep.) at 65:24-67:12 ( ). As a result, there is no justification under the Plans to pay facility fees for OBS suites that participate in United’s network, but not for out-of-network OBS providers like CESAS. III. CESAS WAS SUBJECTED TO THE UNIFORM REFUSAL TO PAY From 2013 to 2016, CESAS operated as an out-of-network OBS provider, solely owned and operated by Dr. Darrick Antell. Pursuant to Section 230-d, CESAS has been accredited by the TJC and AAAASF. See Ex. 40 (Antell Decl.) at ¶¶ 1-2; Ex. 39 (accreditation certificates). CESAS patients executed forms that assigned CESAS the patients’ benefits claim; designated CESAS as an authorized representative under ERISA; and/or named it as the patients’ attorney- in-fact. See Kumar Decl. ¶ 10; Ex. 1 (claim files). CESAS has submitted numerous claims arising under numerous United Plans for OBS facility fees that were denied. CESAS was flagged by United as a non-Article 28 provider in April 2013, after which its claims were denied pursuant to the C Flag. See Ex. 11 (Rivera written testimony) at 197-199; Ex. 15 (Rivera Dep.) at 159:3-160:5. As a result, CESAS received various EOBs and stock letters consistent with the practices described above. See Ex. 1 (claim files); Ex. 46 (Apr. 2013 letter to CESAS); Ex. 47 (follow-up stock letters to CESAS). Dr. Antell is a member of MSSNY and an officer of NYOBS. Ex. 22 (Antell Jan. 18, 2019 Dep.) at 20:19-21:7, 22:9-17. Both associations advocate for the interests of OBS providers Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 19 of 46 11 and their patients, including their right to appropriate reimbursement under applicable health benefit plans. See Ex. 43 (Tichenor Decl.); Ex. 44 (Schuh Decl.). IV. UNITED’S PLANS United has produced Plan documents for the denied claims that CESAS has put at issue in this litigation (Patients C-F and H-BQ), and has agreed that these Plan documents constitute the relevant sample for purposes of class-certification proceedings. See Doc. 102 at 2 n.1.5 As noted above, United admits that the written terms of all of its Plans cover outpatient surgery facility fees. None of the Plan documents contains language restricting facility-fee reimbursement to Article 28 providers. See Kumar Decl. ¶ 14; Ex. 2 (sample Plan documents). And again, in carrying out its Uniform Refusal to Pay, United did not consult the Plans, nor did it rely on any specific written Plan terms. Rather, United asserts that its Plans are standardized when it comes to the scope of reimbursable “facility” providers. See Ex. 13 (Hicks written testimony) at 27-28. This uniformity across Plan terms is reflected in how such terms are actually captured in United’s claim-adjudication systems. As United’s counsel has asserted: “It would be absurd if you had to comb through the original plan document” every time a claim came in. Ex. 5 (Apr. 13, 2018 Conf. Tr.) at 13:10-14. Instead, the “terms have already been loaded into the system,” id., using shortened summaries called benefit detail reports (BDRs). The BDRs are materially uniform, and their criterion for facility reimbursement is that the surgery must occur in an Like the Plan documents, the BDRs say nothing about Article 28. Nor do they define “facility,” or include any discussion of OBS suites, or otherwise limit facility fees to 5 Discovery revealed that the plans for Patients K, L, and T are not governed by ERISA. By agreement of the parties, those benefit claims are no longer part of the lawsuit and are therefore excluded from the sample. Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 20 of 46 12 Article 28 locations. See Ex. 12 (Falk written testimony) at 9; Ex. 7 (Exemplar BDR for Estée Lauder) at UHG-39270; Ex. 8 (exemplar BDR for Gap, Inc.) at UHG-43673. In short, United does not rely on the nuances of specific written Plan language to deny OBS facility fees. Rather, there is a “uniform policy that defines facility,” and the question is whether an OBS operating room “qualifies as a ‘facility’” under all the Plans, or none of them. See Ex. 13 (Hicks written testimony) at 30; Ex. 17 (Hicks Dep.) at 117:15-118:5; Ex. 19 (Falk Dep.) at 142:3-11. Although irrelevant to United’s Uniform Refusal to Pay, the Plans do share common formulations of what constitutes a “facility” entitled to coverage. The Plans applicable to 35 claims from the CESAS sample contain a definition for “Alternate Facility” that reads: “a health care facility that is not a Hospital and that provides one or more of the following services on an outpatient basis, as permitted by law: surgical services ….” See Kumar Decl. ¶ 15. The Plans applicable to 13 additional claims from the CESAS sample contain a definition for “Ambulatory Surgical Center” that reads: “A facility currently licensed by the appropriate state regulatory agency for the provision of surgical and related medical services on an outpatient basis.” See id. at ¶ 16. As noted above, New York law defines ASCs as a type of Article 28 provider, but that is not the scope of the definition within United’s Plans; to be clear, Plaintiffs contend that OBS venues qualify as “Ambulatory Surgical Centers” as that term is used in the Plans. Ten remaining claims from the sample fall under Plans that do not appear to have a facility definition at all. See id. at ¶ 18. ARGUMENT To certify a class, Plaintiffs must establish the elements of Rule 23 by a preponderance of the evidence: first, that the class satisfies the numerosity, commonality, typicality, and adequacy Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 21 of 46 13 of representation requirements of Rule 23(a); and second, that the class qualifies under at least one of the categories in Rule 23(b). In re U.S. Foodservice Inc. Pricing Litig., 729 F.3d 108, 117 (2d Cir. 2013). “The Second Circuit has emphasized that Rule 23 should be given liberal rather than restrictive construction[].” Jackson v. Bloomberg, L.P., 298 F.R.D. 152, 159 (S.D.N.Y. 2014) (Oetken, J.); accord Marisol A. v. Giuliani, 126 F.3d 372, 377 (2d Cir. 1997). I. THE PROPOSED CLASS AND ITS CLAIMS Plaintiffs seek to represent a class (the “OBS Class”) defined as follows: Any United Plan member, or member’s valid assignee, whose claim for facility fees for services rendered by an out-of-network OBS provider accredited under Section 230-d was denied, where such claim was (1) submitted under a Plan governed by ERISA; (2) denied during the applicable statute of limitations; and (3) denied on the basis that the OBS provider was not certified under Article 28 of the New York Public Health Law. Excluded are Defendants, their parents, subsidiaries, and affiliates, their directors and officers and members of their immediate families; also excluded are any federal, state, or local governmental entities, any judicial officers presiding over this action and the members of their immediate families, and judicial staff. The Class asserts two claims. The first claim arises under 29 U.S.C. § 1132(a)(1)(B), which allows a claimant to bring suit to challenge an administrator’s “wrongful denial of benefits.” Varity Corp. v. Howe, 516 U.S. 489, 512 (1996). The second claim is brought under § 1132(a)(3), which is a “catchall” provision providing “appropriate equitable relief for injuries caused by violations that § 502(a) does not elsewhere adequately remedy.” See Varity Corp., 516 U.S. at 512. This claim is brought in the alternative, to the extent the relief sought is unavailable under (a)(1)(B). See Compl. ¶¶ 103-05, 119-22. If United has wrongfully denied the claims, the Court has broad remedial powers. See Varity Corp., 516 U.S. at 512. The proposed Class seeks relief to the fullest extent possible, including reprocessing of the denied claims so that United can fairly apply the terms of its Plans, Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 22 of 46 14 and related injunctive and declaratory relief. See Compl. at Prayer for Relief. Alternatively, the proposed Class - if certified under Rule 23(b)(3) - seeks an award of the benefits unlawfully withheld by United. See id. II. THE PROPOSED CLASS SATISFIES RULE 23(a) A. The OBS Class is so numerous that joinder of all members is impracticable. Under Rule 23(a)(1), the class must be so large that “joinder of all members is impracticable.” Generally, a class satisfies numerosity if it has more than forty members. Consol. Rail Corp. v. Town of Hyde Park, 47 F.3d 473, 483 (2d Cir. 1995). United’s denial spreadsheets show claims from at least 245 providers are implicated in the proposed Class. See Kumar Decl. ¶¶ 25-30. Based on unique subscriber identification numbers from just one denial list, 3,246 patients are implicated. Kumar Decl. ¶ 28. The New York Department of Health maintains a list of accredited OBS providers; as of the end of 2018, there were approximately 900 such providers.6 B. Common issues of law and fact affect all members of the Class. Under Rule 23(a)(2), commonality exists “if plaintiffs’ grievances share a common question of law or of fact” with potential class members. Marisol A., 126 F.3d at 376. “Courts in this district have characterized the commonality requirement as a low hurdle.” Fort Worth Emps.’ Ret. Fund v. J.P. Morgan Chase & Co., 301 F.R.D. 116, 131 (S.D.N.Y. 2014) (Oetken, J.) (quotation marks omitted). After all, the Supreme Court has held that even a single common question of law or fact will satisfy commonality. Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 359 (2011). What is important is that the movant shows “a common contention” that is “capable of classwide resolution” and “apt to drive the resolution of the litigation.” Dukes, 564 U.S. at 6 See https://www.health.ny.gov/professionals/office-based_surgery/practices/alphabetical_list.htm. Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 23 of 46 15 350. Of course, it is not required that the common questions “address each element of each of the[] claims.” Sykes v. Mel S. Harris & Assocs. LLC, 780 F.3d 70, 86 (2d Cir. 2015). The Supreme Court has held that, in determining the legality of an ERISA benefit denial, a court should be “guided by principles of trust law.” Thus, it should “analogize a plan administrator to the trustee of a common-law trust” and “consider a benefit determination to be a fiduciary act,” that is, “an act in which the administrator owes a special duty of loyalty to the plan beneficiaries.” Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 111 (2008). As in any ERISA case challenging the wrongful denial of benefits by a fiduciary exercising discretion under the plan, the proposed Class’s claims will require the Court to analyze the procedural and substantive reasonableness of United’s conduct in light of the requirements of ERISA. See, e.g., id. at 115-18; Durakovic v. Bldg. Serv. 32 BJ Pension Fund, 609 F.3d 133, 139-42 (2d Cir. 2010). Here, at least three questions are “apt to drive” every Class member’s claim: • Was United’s decision to deny the OBS facility-fee claim based on its interpretation of any particular written Plan term? • Did United cover OBS facility-fee claims for in-network providers, while denying coverage for out-of-network providers? • Do the written terms of any United Plan exclude outpatient surgery facility-fee coverage for non-Article 28 providers? As discussed below, each of these questions can be resolved through common evidence. 1. Common evidence will show that United’s OBS facility-fee denials were not based on any Plan language. United has conceded that it has a uniform policy of denying OBS facility-fee claims. Plaintiff will prove through common evidence that United denied these claims without consulting or relying on the actual written terms of its Plans. That evidence is detailed supra pp. Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 24 of 46 16 7-9. United’s imposed its policy through the C Flag, and United admits that review of its Plans was not part of that process. Indeed, the C Flag was applied prospectively to deny claims from all flagged OBS providers, and thus could not possibly have relied on Plan language. Moreover, as explained supra p. 9, the C Flag system generated standardized EOB forms that were the same regardless of the underlying Plan and that referenced no particular Plan terms. The EOBs simply parroted United’s Article 28 rationale. Both the deficient EOBs, and the stock letters that United sent reaffirming its Article 28 denials, are common evidence, and neither references specific Plan terms. United’s denial of OBS facility fees without regard to the written terms of its Plans, if proven, is crucial to any given Class member’s individual claim. Such conduct violates a host of ERISA obligations that exist to ensure reasoned fiduciary decisionmaking, and which are incorporated into ERISA’s civil-remedies provision. See, e.g., 29 U.S.C. § 1104(a) (requiring fiduciary to prudently administer Plan in accordance with governing document). United’s failure to consult its Plans is reason enough to vacate its denials. See, e.g., Durakovic, 609 F.3d at 140 (court must consider administrator’s “decisionmaking deficiencies”); Franzese v. United Health Care/Oxford, 232 F. Supp. 3d 267, 278-79, 282 (E.D.N.Y. 2017) (where there was no evidence United had evaluated claim under applicable plan terms, remand appropriate so it could apply “due consideration” of “relevant [p]lan provisions”); Benjamin v. Oxford Health Insurance, Inc., No. 3:16-cv-00408 (CSH), 2018 WL 3489588, at *7-10 (D. Conn. July 19, 2018) (United’s total failure to consider claimant’s medical records was “clear error of judgment” warranting remand). Thus, common evidence “will resolve an issue that is central to the validity of each one of the claims in one stroke.” Dukes, 564 U.S. at 350. Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 25 of 46 17 2. Common evidence will show that United covered OBS facility-fee charges for in-network providers. Although United uniformly rejected out-of-network OBS facility-fee claims under all its Plans, it did cover in-network OBS facility-fee claims. See supra pp. 9-10. That contradictory approach undercuts any argument that United correctly denied the Class’s benefit claims. After all, whether a service is covered or not turns on the benefits provided under the written Plan, not United’s agreements with providers. United’s hypocrisy - what United’s own employees called - stems from the fact that United’s policy is driven by financial considerations, not faithful interpretation of Plan terms. See Ex. 25 at UHG-56269 ( );7 Ex. 26 at UHG-35431 ( ); Ex. 27 at UHG-38409 ( ). Thus, common proof will show United’s inconsistent interpretation of its Plans to selectively pay OBS facility fees, in furtherance of its own financial interests. This evidence, in turn, “drives the resolution” of whether United’s denials were wrongful. See Biomed Pharm. v. 7 This email was authored by Pamela Vallone, a member of United’s “Affordability” department, which spearheads initiatives to reduce health plan costs. The “Louise” referenced is Louise Dobbe, who worked for Optum, a subsidiary of United. The flagging process was centralized in Optum, and Dobbe was essentially the lead point-of- contact on the initiative. See Ex. 11 (Rivera written testimony) at 4-5. Id. at 190. Jacqueline Rivera, United’s Rule 30(b)(6) witness on the flagging process, testified that “Optum is a servicing company. And we look at United as being a client. … [R]eports were sent over to United Healthcare payment integrity ... to ensure that, you know, what is fraud and abuse doing for our clients. … Q: So essentially SIU [the Special Investigation Unit] sends these reports to justify its existence and maintain its services? A: Right.” Ex. 15 (Rivera Dep.) at 146:25-147:25. Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 26 of 46 18 Oxford Health Plans (N.Y.), Inc., 831 F. Supp. 2d 651, 662 (S.D.N.Y. 2011) (citing cases); Durakovic, 609 F.3d at 140. 3. Common evidence will show that the terms of United’s Plans do not exclude facility-fee coverage for non-Article 28 providers. As discussed above, common evidence will show that United did not consider Plan language in denying OBS claims, and did not explain what Plan terms it was relying on when it denied those claims. Thus, common evidence will demonstrate that specific written Plan terms are not even part of the administrative record (i.e., the materials that United considered in rendering its original benefits determinations) and United cannot proffer new rationales at this stage of review. See, e.g., Miller v. United Welfare Fund, 72 F.3d 1066, 1071-72 (2d Cir. 1995). United’s claim-adjudication practices were so inadequate that the proposed Class is in the dark about which Plan terms are even relevant. Nevertheless, based on common evidence - namely, the Plan sample - two things are clear about the Plans’ terms. First, all of United’s Plans cover outpatient surgery facility fees. Ex. 6 (Resp. to Pls.’ Interrog. 14). Second, no language in United’s Plans restricts outpatient surgery facility-fee coverage to Article 28 providers. See Kumar Decl. ¶ 14. Even United personnel recognized that the Plans did not communicate this purported restriction to United’s members. See Ex. 32 at UHG-50959 ( ); Ex. 33 at UHG-53409 ( ). This is enough to show, class- wide, that the denials cannot stand: administrators are not allowed “to graft additional requirements” into Plans, and such conduct is “contrary to basic ERISA principles.” See Zervos Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 27 of 46 19 v. Verizon New York, Inc., 277 F.3d 635, 647 (2d Cir. 2002) (quoting Gallo v. Madera, 136 F.3d 326, 330 (2d Cir. 1998)). It makes sense that the Plans do not exclude coverage for non-Article 28 providers, because such an exclusion would violate ERISA as a substantive matter. ERISA incorporates Section 2706 of the ACA, which states, in relevant part: (a) Providers. A group health plan and a health insurance issuer offering group or individual health insurance coverage shall not discriminate with respect to participation under the plan or coverage against any health care provider who is acting within the scope of that provider’s license or certification under applicable State law. … 42 U.S.C. § 300gg-5; 29 U.S.C. § 1185d. Here, OBS suites are “acting within the scope of [their] license or certification under applicable State law.” Thus, common proof will show that United’s interpretation of its Plans to deny coverage for OBS facility fees is unsustainable regardless of Plan language - because denials cannot conflict with the substantive protections of ERISA. See, e.g., 29 U.S.C. § 1104(a)(1)(D). As a result, Plan terms defining “Alternate Facilities” or “Ambulatory Surgical Centers” require only that the provider be “permitted by law” or “licensed by the appropriate state regulatory agency.” See supra p. 12. If a general hospital and an ASC are “licensed” to provide outpatient surgeries under Article 28, so too is an OBS operating room “licensed” to provide such surgeries under Section 230-d. Article 28 speaks in terms of “certificates” when it describes the process for securing approval to establish a “hospital” (see N.Y. Pub. Health Law §§ 2801-a, 2805), while Section 230-d uses “accreditation.” Under either situation, the entity at issue is authorized “by the appropriate state regulatory agency” to provide outpatient surgery services. Indeed, the definition for “Alternate Facility” in United’s Plans specifies it is “a health care facility that is not a Hospital ….” See supra p. 12. To the extent Article 28 has been Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 28 of 46 20 incorporated into the United Plans, as it would have to be if United’s Uniform Refusal to Pay policy were valid, this definition means that an “Alternate Facility” must be something other than a general hospital or an ASC, as both are deemed “hospitals” under the Article 28 definition. See N.Y. Pub. Health Law § 2801(1). And in New York the only other “health care facility that is not a Hospital” but can provide invasive outpatient surgical services “as permitted by law” is an accredited OBS operating room. Thus, the term “Alternate Facility” can only reasonably be interpreted to include accredited OBS venues. In truth, United understands its Plans to have a uniform standard for the reimbursement of facility fees, regardless of actual Plan language. See supra pp. 7, 11-12. But without actually applying or reviewing any Plan terms, United has concluded that only an entity certified under Article 28 can be deemed to be a “facility” sufficient to bill for facility fees, such that OBS accreditation does not allow for such fees to be reimbursed. Because this policy was not tied to any particular Plan provision, when United issued OBS denials to its members and sent stock (common) communications to providers, its Uniform Refusal to Pay was not based on any Plan term. As a result, in resolving this litigation, the Court need only decide whether United acted reasonably in concluding that because an OBS suite is only accredited under Section 230-d and not certified under Article 28, it cannot be a “facility” for purposes of receiving payment for facility fees. Just as United did, the Court can reach this decision on a class-wide basis, without having to apply specific Plan terms. The common question simply becomes whether an OBS suite is a “facility,” using that term “in an ordinary and popular sense as would a person of average intelligence and experience,” and looking to “the dictionary definition of the term or the common-sense understanding of its usage.” Biomed Pharm., 831 F. Supp. 2d at 660. Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 29 of 46 21 C. CESAS’s claims are typical of the OBS Class. The “typicality” requirement of Rule 23(a)(3) is met when each class member’s claims arise from the same course of events and each member makes similar legal arguments to prove liability. Marisol A., 126 F.3d at 376. The commonality and typicality requirements tend to merge into one another, so that proof of one will be proof of the other. Id. The focus of the typicality inquiry is “not [on] the plaintiffs’ behavior, but rather [on] the defendant’s actions.” Fort Worth Emps.’ Ret. Fund, 301 F.R.D. at 132 (citation and quotation marks omitted). This requirement is “not demanding,” id., and when it is shown that “the same unlawful conduct was directed at or affected both the named plaintiff and the class sought to be represented, the typicality requirement is usually met irrespective of minor variations in the fact patterns underlying individual claims.” Robidoux v. Celani, 987 F.2d 931, 936-37 (2d Cir. 1993). Moreover, “organizations with associational standing may serve as class representatives” where “the underlying purpose of the organization is to represent the interests of the class.” Monaco v. Stone, No. 98-cv-03386 (CPS), 2002 WL 32984617, at *38 (E.D.N.Y. Dec. 20, 2002) (citing cases). Such a showing by itself is “enough to satisfy the typicality requirement[].” Id. Here, the evidence demonstrating commonality also demonstrates typicality. CESAS’s facility-fee claims were denied pursuant to the C Flag, which effectuated the Uniform Refusal to Pay. See supra p. 10. The crux of CESAS’s claim is that United’s across-the-board denials were wrongful. The arguments set forth above are the same arguments that all other putative class members would make to establish United’s liability. See Meidl v. Aetna, Inc., No. 15-cv-1319 (JCH), 2017 WL 1831916, at *12 (D. Conn. May 4, 2017) (finding typicality where the injuries of named plaintiff and other putative class members all “derive from a unitary course of conduct by a single system”) (quotation marks omitted). And NYOBS and MSSNY advocate for the Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 30 of 46 22 interests of OBS providers and their patients, including their interest in receiving appropriate health plan reimbursement, see supra pp. 10-11, which means they satisfy the typicality requirement. D. Plaintiffs will fairly and adequately protect the interests of the OBS Class. “The adequacy inquiry under Rule 23(a)(4) serves to uncover conflicts of interest between named parties and the class they seek to represent. A class representative must be part of the class and possess the same interest and suffer the same injury as the class members.” Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 625-26 (1997) (quotation marks and citations omitted). In that way, the adequacy, commonality, and typicality inquiries overlap, asking whether “named plaintiff’s claim and the class claims are so interrelated that the interests of the class members will be fairly and adequately protected in their absence.” Dukes, 564 U.S. at 349 n.5. This means that (1) the named plaintiffs’ interests are not “antagonistic to the interest of other members of the class,” and (2) the named plaintiffs’ attorneys are “qualified, experienced and able to conduct the litigation.” In re Flag Telecom Holdings, Ltd. Sec. Litig., 574 F.3d 29, 35 (2d Cir. 2009). Plaintiffs and their counsel satisfy both requirements. 1. Plaintiffs are more than adequate Class representatives. Plaintiffs and the absent Class members have the same interest in proving that United’s conduct was wrongful, and they have the same interest in obtaining relief, including reprocessing of the wrongly denied claims. This is enough to satisfy adequacy. In addition, CESAS has demonstrated its commitment to “vigorous prosecution” of the Classes’ claims. See Steinberg v. Nationwide Mut. Ins. Co., 224 F.R.D. 67, 73 (E.D.N.Y. 2004) (quoting Robinson v. Metro-North Commuter R.R. Co., 267 F.3d 147, 155 (2d Cir. 2001)). The sole owner and operator of CESAS, Dr. Antell, has sat for two depositions, once as a Rule 30(b)(1) witness and once as a Rule 30(b)(6) representative for Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 31 of 46 23 CESAS. See Ex. 40 (Antell Decl.) at ¶ 3. Beyond deposition time, Dr. Antell has spent at least forty hours assisting counsel with discovery in this action, including deposition preparation and document collection, while CESAS personnel have spent hours more assisting counsel with discovery-related tasks. Id. at ¶¶ 4-5. It does not matter that CESAS is a provider, while other members of the proposed Class are patients. Under controlling Second Circuit precedent, an assignee such as CESAS8 can represent a class otherwise comprising the typical assignors, that is, the patients. See Cordes & Co. Fin. Servs., Inc. v. A.G. Edwards & Sons, Inc., 502 F.3d 91 (2d Cir. 2007). In Cordes, the lower court denied certification, finding that the proposed named plaintiffs failed adequacy because they “were assigned their interests in the litigation.” Id. at 97. The Second Circuit vacated this finding, and held that the fact that the proposed class representatives were assignees was no basis for disqualification. Id. at 102. Instead, the Second Circuit explained that the assignees were “assimilated class members by virtue of the assignments.” Id. at 101. The court reasoned: It is indeed commonplace for an assignee to institute or continue an action of his or her assignor on an assigned claim even though he or she, apart from the assignment, is without standing, and the court, apart from the assignment, would be without power to decide the case. … [A]n assignment … does not render the claim less amenable to resolution as a class action, nor class action treatment less beneficial to the litigants, after the transfer of the asserted cause or causes of action than before. Id. at 102. The fundamental class inquiry does not change: are the class claims “fairly encompassed within the representative’s claims”? Id. at 101 (quotation marks omitted). This 8 Plaintiffs’ Opposition to United’s Motion for Partial Summary Judgment explained that, even where there is an enforceable anti-assignment clause, CESAS has the capacity to sue under ERISA as its patients’ authorized representative and/or attorney-in-fact. See Doc. 113 at 1-2, 18-22. Recently, the Eighth Circuit confirmed that the capacity to sue as an authorized representative is distinct from the capacity to sue as an assignee. See Peterson v. UnitedHealth Grp. Inc., 913 F.3d 769, 774-75 (8th Cir. 2019). Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 32 of 46 24 reasoning extends to MSSNY and NYOBS; after all, this Court has already held that they have associational standing based on at least some members’ valid assignments. Med. Soc’y of N.Y. v. UnitedHealth Grp. Inc., No. 16-cv-5265 (JPO), 2017 WL 4023350, at *7 (S.D.N.Y. Sept. 11, 2017) (Oetken, J.). Thus, Plaintiffs are more than fit to serve as class representatives. 2. Proposed Class counsel are also more than adequate. Proposed class counsel are likewise “adequate.” Zuckerman Spaeder LLP has successfully prosecuted numerous class actions against insurance companies, including but not limited to United, for violations of ERISA and related federal and state laws. Among their successes were two of the largest recoveries ever obtained in health-insurance class actions. See Ex. 50 (compilation of attorney biographies). Their efforts have led to “landmark” and “exceptional” victories in ERISA litigation, including two cases that accepted plaintiffs’ arguments while rejecting United’s. See Ex. 51 (news articles); N.Y. State Psych. Ass’n, Inc. v. UnitedHealth Grp., 798 F.3d 125 (2d Cir. 2015) (holding third-party administrator is proper defendant for suit alleging wrongful denial of benefits); Peterson v. UnitedHealth Grp. Inc., 242 F. Supp. 3d 834 (D. Minn. 2017), aff’d, 913 F.3d 769 (8th Cir. 2019) (finding United acted unreasonably when it clawed back benefits without ever considering whether plan documents gave it authority to so). Mr. Leardi of Buttaci Leardi & Werner LLC also has extensive experience in healthcare law, having served as outside General Counsel to several healthcare organizations. See Ex. 50 (compilation of attorney biographies). His practice focuses on provider reimbursement disputes, including several class actions against managed-care companies. See id. Given the significant collective experience of proposed counsel in class-action, ERISA, and healthcare litigation, they will more than adequately protect the interests of the proposed Class. Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 33 of 46 25 III. THE PROPOSED CLASS SATISFIES RULE 23(b) A movant must also establish that a class is maintainable under at least one provision of Rule 23(b). Here, the proposed Class challenges United’s Uniform Refusal to Pay and seeks the following relief: (1) a declaratory judgment; (2) an injunction prohibiting United from continuing to pursue its Uniform Refusal to Pay; and (3) an order that United reprocess the denied claims, or an award of benefits. Remand to the claims administrator is the default ERISA remedy unless there is no reasonable basis to withhold benefits. See, e.g., Benjamin, 2018 WL 3489588, at *8-9. Accordingly, Plaintiffs seek certification of a (b)(1) or (b)(2) class to obtain declaratory judgment and related injunctive relief, including a reprocessing order. Plaintiffs also seek certification under (b)(3) to obtain the same relief, while providing the Court the flexibility to award benefits in lieu of reprocessing.9 A. Certification of the OBS Class will avoid the risk of individual adjudications establishing incompatible standards of conduct for United, or impairing the interests of absent class members. Rule 23(b)(1) certification is appropriate where a defendant “is obliged by law to treat the members of the class alike” or where individual adjudications “would as a practical matter be dispositive of the interests of the nonparty class members or substantially impair or impede their ability to protect their interests.” Amchem, 521 U.S. at 614 (quotation marks omitted). There are “few better scenarios for certification under (b)(1)(A) or (b)(1)(B)” than cases asserting an insurer’s uniform denial policy is illegal under ERISA. Z.D. ex. rel. J.D. v. Grp. Health Coop., No. 11-cv-1119 (RSL), 2012 WL 1977962, at *7 (W.D. Wash. June 1, 2012); see also Meidl, 2017 WL 1831916, at *17-20 (citing Z.D. and similar cases); Kindle v. Dejana, 315 F.R.D. 7, 12 9 The associational Plaintiffs, MSSNY and NYOBS, seek only to serve as representatives of the Class to the extent that it seeks injunctive and declaratory relief. See Med. Soc’y of N.Y., 2017 WL 4023350, at *7 (“[T]he Association Plaintiffs appropriately emphasize that they seek only injunctive and declaratory relief from United’s alleged Uniform Refusal to Pay policy … [not] payments for individual benefits.”). Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 34 of 46 26 (E.D.N.Y. 2016) (cases involving breach of duties owed to “a large class of beneficiaries” are “‘[c]lassic examples’ of matters falling within Rule 23(b)(1).”) (quoting Ortiz v. Fibreboard Corp., 527 U.S. 815, 833-34 (1999)). Here, United owes the same obligations to all Class members. For all Class members, it must adjudicate claims in compliance with ERISA and interpret Plan provisions consistently. See 29 U.S.C. § 1104(a); 29 U.S.C. § 1133; 29 C.F.R. § 2560.503-1(b). If the Class is not certified and individual members bring individual lawsuits, it is possible that courts could disagree, with one court ruling that United did not act wrongfully in carrying out its Uniform Refusal to Pay, while another interprets ERISA differently and rules that it did. United could be forced to reprocess some OBS facility-fee claims, but not others, even though the evidence underlying United’s conduct would not vary - that is, it denies OBS facility fees without consulting the terms of its Plans, and those Plans do not restrict facility-fee coverage to Article 28 providers. Courts have repeatedly certified (b)(1) classes against United and other insurers under these circumstances. See Meidl, 2017 WL 1831916, at *18 (certifying class under (b)(1)(A) because insurer applied the same uniform policy to all putative class members, and “because regulations call for consistent application of each plan’s provisions”) (citing 29 C.F.R. § 2560.503-1(b)(5)); Trujillo v. UnitedHealth Grp., Inc., No. 17-cv-2547 (JFW), 2019 WL 493821, at *8 (C.D. Cal. Feb. 4, 2019) (similar, versus United); Wit v. United Behavioral Health, 317 F.R.D. 106, 133 (N.D. Cal. 2016) (certifying class of United plan members under (b)(1)(A) because “common requirement” in all the plans “means that multiple challenges … by putative class members could lead to inconsistent results”); DeMaria v. Horizon Healthcare Servs., Inc., No. 11-cv-7298 (WJM), 2015 WL 3460997, at *9 (D.N.J. June 1, 2015) (finding (b)(1)(B) certification appropriate where “judgment on the legality of the bundling policy for the named Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 35 of 46 27 Plaintiffs in this case would have the effect of determining the legality of the bundling policy for all proposed class members”); Premier Health Ctr., P.C. v. UnitedHealth Grp., No. 11-cv-425 (ES), 2014 WL 4271970, at *28-29 (D.N.J. Aug. 28, 2014) (finding (b)(1)(A) met where lawsuit asserted United’s repayment demands failed to comply with ERISA’s notice and appeal requirements). B. Certification under Rule 23(b)(2) is appropriate because injunctive relief is necessary to remedy United’s misconduct, which similarly affected all members of the OBS Class. Under Rule 23(b)(2), a class may be maintained when the defendant “has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole.” A class should be certified under (b)(2) “where broad, class-wide injunctive or declaratory relief is necessary to redress a group-wide injury.” Estate of Gardner v. Continental Cas. Co., 316 F.R.D. 57, 75 (D. Conn. 2016) (quotation marks and citations omitted). Class members need not be “identically situated”; instead, “[w]hat is important is that the relief sought by the named plaintiffs benefit the entire class.” Id. (quotation marks and citations omitted); accord Dukes, 564 U.S. at 360 (Rule 23(b)(2) applies when “a single injunction … would provide relief to each member of the class”). The proposed OBS Class fits squarely within (b)(2). First, Plaintiffs will show that United’s Uniform Refusal to Pay affects all members of the proposed Class generally and injures them in the same way. Second, the principal relief for the proposed (b)(2) class - an order that United reprocess the denied claims to fairly apply the terms of its Plans, and a related declaratory judgment - is an injunctive remedy offering all class members uniform relief from the harm caused by United’s unlawful conduct. Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 36 of 46 28 Courts have repeatedly certified (b)(2) classes where the plaintiffs sought reprocessing as a remedy for ERISA violations. In Meidl, the court certified an injunctive reprocessing class under (b)(2), stressing that “[t]he Second Circuit has repeatedly held that … where insurance administrators unlawfully deny benefits, the appropriate remedy is typically to return the claim to the insurance plan administrator for reconsideration.” 2017 WL 1831916, at *22 (quotation marks omitted). The Meidl court’s reasoning is amply supported by case law, including multiple classes certified focused on United’s misconduct. See, e.g., Trujillo, 2019 WL 493821, at *8 & n.6 (certifying (b)(2) class against United where plaintiffs sought “order declaring that the process used … to deny requests for coverage is wrongful” and related injunctive reprocessing) (emphasis in original); Wit, 317 F.R.D. at 136 (finding requirements for (b)(2) class met where United’s flawed treatment guidelines “constitute ‘shared grounds’ for all of the members of the proposed classes to proceed on a collective basis,” and where the plaintiffs’ injury could be remedied by reprocessing); Escalante v. Cal. Physicians’ Serv., 309 F.R.D. 612, 616, 620 (C.D. Cal. 2015) (similar); Z.D. ex. rel. J.D. v. Grp. Health Coop., No. 11-cv-1119 (RSL), 2012 WL 5033422, at *6 (W.D. Wash. Oct. 17, 2012) (similar). C. The OBS Class can be certified under Rule 23(b)(3) because common questions of law and fact predominate and class adjudication is the best way to fairly and efficiently decide this case. The proposed OBS Class also meets the requirements of Rule 23(b)(3) because “questions of law or fact common to class members predominate over any questions affecting only individual members” and “a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.” Moreover, Plaintiffs here can satisfy the implied requirement of “ascertainability” that courts have read into (b)(3). See In re Petrobras Sec., 862 Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 37 of 46 29 F.3d 250, 264 (2d Cir. 2017).10 “Ascertainable” does not mean perfect or even “administrative[ly] feasib[le],” but rather, only that the class “be defined using objective criteria that establish a membership with definite boundaries.” Petrobras, 862 F.3d at 264. The Class meets these requirements easily. The Class plainly meets the Petrobras standard of objective ascertainability. The core dispute - did United wrongfully deny benefits under its Uniform Refusal to Pay policy? - predominates over other issues. The possibility of individualized damages assessments is no barrier to certification, and as discussed below, damages can be determined through a common methodology. And the Court will be able to try and resolve the class-wide liability questions on a relatively limited record, which makes class treatment superior. 1. The OBS Class is ascertainable. As noted, Petrobras only requires that the proposed definition of class membership be “objective” and “definite.” 862 F.3d at 264. The “modest threshold requirement” of ascertainability “will only preclude certification if a proposed class definition is indeterminate in some fundamental way.” Id. at 269. The Court should not consider the “practicality” of class member identification, but only whether such identification is “objectively possible.” Id. at 270 (emphases in original). 10 The ascertainability requirement does not apply outside of (b)(3). See, e.g., Floyd v. City of New York, 283 F.R.D. 153, 171-72 & n.115 (S.D.N.Y. 2012) (stating that “[i]t would be illogical to require precise ascertainability in a suit that seeks no class damages” and identifying cases in the Second Circuit where court approved (b)(2) classes with definitions that did not permit full ascertainability). Petrobras likewise suggests that ascertainability is only a (b)(3) concern: “Appellants do not challenge the district court’s findings with regard to the class certification elements under Rule 23(a). Rather, they assert two arguments under Rule 23(b)(3) … [including] that both Classes fail to satisfy ascertainability, predominance, and superiority ….”). 862 F.3d at 260. See also Cole v. City of Memphis, 839 F.3d 530, 542 (6th Cir. 2016) (“The decisions of other federal courts and the purpose of Rule 23(b)(2) persuade us that ascertainability is not an additional requirement for certification of a (b)(2) class seeking only injunctive and declaratory relief.”). Finally, to the extent any ascertainability requirement applies to (b)(1) or (b)(2) classes, it would be no more stringent than Petrobras’s “objective criteria” formulation, which is met for the reasons discussed herein. Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 38 of 46 30 Here, Class membership is objective and bounded: (1) each Class member must be the legal holder of a claim submitted to United under an ERISA-governed Plan; (2) that claim must have sought facility-fee reimbursement for services received at an accredited OBS provider; and (3) that claim must have been denied within the applicable statute of limitations on the basis that the accredited OBS provider is not Article 28-certified. Class membership is therefore purely objective and definite. Even if “administrative feasibility” concerns are carried forward in (b)(3)’s predominance or superiority analyses, see Petrobras, 862 F.3d at 268-69 & n.20, the possibility that records may have to be reviewed to determine class membership is no barrier to certification. See id. (stressing that manageability analysis is “explicitly comparative in nature” - is class treatment better than the alternative - and that “failure to certify an action under Rule 23(b)(3) on the sole ground that it would be unmanageable is disfavored”) (quoting In re Visa Check/MasterMoney Antitrust Litig., 280 F.3d 124, 140 (2d Cir. 2001)). A (b)(3) class can be certified where the movant identifies the types of documents and information that “will permit the Court to administratively determine whether each proposed member may become part of the class.” Hansen v. Monumental Life Ins. Co., No. 05-cv-1905 (JBA), 2008 WL 9428331, at *3 (D. Conn. Mar. 6, 2008); Flores v. Anjost Corp., 284 F.R.D. 112, 123 (S.D.N.Y. 2012) (where the class can be ascertained “by objective documentation” “[t]he fact that an analysis of Defendants’ data is necessary does not render a class unascertainable”).11 11 Although some pre-Petrobras cases incorrectly dealt with manageability concerns under the ascertainability prong, they are still instructive. Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 39 of 46 31 Here, United has provided spreadsheets listing claims denied under codes LW and D60H.12 Those lists contain partial TINs (taxpayer identification numbers) for the associated providers, and United has testified that the spreadsheets can be supplemented with the full TINs, the names and addresses of the providers, and the names and addresses of the respective patients. See Ex. 11 (Rivera written testimony) at 221; Ex. 15 (Rivera Dep.) at 172:8-173:4. Meanwhile, the New York Department of Health maintains a website listing accredited OBS providers, which can be cross-referenced against the provider names and addresses to ensure inclusion of appropriate claims. See Kumar Decl. ¶ 67; Ex. 15 (Rivera Dep.) at 170:4-13; see also id. at 41:3- 14 (United’s Provider Verification department documents whether a provider is an accredited OBS). To the extent the Court finds it necessary to determine whether a claim has been validly assigned, that task is straightforward: assignment is indicated on the claim form submitted to United, see Montefiore Med. Ctr. v. Teamsters Local 272, 642 F.3d 321, 329 n.8 (2d Cir. 2011); McCulloch Orthopaedic Surg. Servs., PLLC v. Aetna Inc., 857 F.3d 141, 147 (2d Cir. 2017), and for any given Plan, it takes only a few seconds to determine whether it has an anti-assignment clause. As a general matter, “United is a sophisticated national insurance company that maintains detailed data,” which mitigates any concerns about identifying class members. Trujillo, 2019 WL 493821, at *9. 2. Common questions predominate for the proposed Class. “Predominance is satisfied if resolution of some of the legal or factual questions that qualify each class member’s case as a genuine controversy can be achieved through generalized proof, and if these particular issues are more substantial than the issues subject only to 12 According to United, the D60H and LW denial codes do not exhaust the full universe of benefit claims implicated in the proposed Classes’ lawsuit. See Kumar Decl. ¶ 25. An alternate method to isolate the benefit claims at issue would be to . See Ex. 15 (Rivera Dep.) at 176:2-5. Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 40 of 46 32 individualized proof.” Roach v. T.L. Cannon Corp., 778 F.3d 401, 405 (2d Cir. 2015) (quotation marks and citations omitted). In short, the proposed class should be “sufficiently cohesive to warrant adjudication by representation.” Amchem, 521 U.S. at 623. A plaintiff need only establish that common questions predominate; it need not “prove that the predominating question will be answered in [its] favor.” Amgen Inc. v. Conn. Ret. Plans & Tr. Funds, 568 U.S. 455, 468 (2013). And the very concept of “predominance” makes clear that a movant does not have to show “each element of her claim is susceptible to classwide proof.” Petrobras, 862 F.3d at 268 (quoting Amgen, 568 U.S. at 469). As shown above, United’s liability to Class members rests on common questions of fact and law. And it is plain that these common questions predominate. Courts have repeatedly found predominance satisfied where an insurance company has implemented a uniform policy to deny claims of a certain type. See Churchill v. CIGNA Corp., No. 10-cv-6911 (JRS), 2012 WL 3590691, at *10 (E.D. Pa. Aug. 21, 2012) (“The propriety of this uniform policy - specifically, whether it violates ERISA - can be litigated in a single forum.”); Estate of Gardner, 316 F.R.D. at 76 (“[T]he overriding question to which this suit addresses itself is one that is capable of class resolution-whether the policy (which Defendant admits to having) of denying all claims for coverage of MRC/ALSAs, demonstrates a breach of contract, unfair trade practice, or bad faith.”); Wit, 317 F.R.D. at 140 (finding predominance where “case stands or falls” on whether administrator’s guidelines - applied to all class members - were unlawful). Although United can be expected to identify any number of allegedly “individual” issues, these issues are not more qualitatively important than the common, core issue of whether United wrongfully denied OBS facility-fee claims. See, e.g., In re Amla Litig., 282 F. Supp. 3d 751, 767 (S.D.N.Y. 2017) (predominance requires “qualitative assessment” of importance of individual Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 41 of 46 33 versus common questions - “it is not bean counting”) (quoting Butler v. Sears, Roebuck & Co., 727 F.3d 796, 801 (7th Cir. 2013)). To the extent individualized damages calculations are required for an award of benefits, that alone cannot defeat certification. See Roach, 778 F.3d at 409; 1966 Advisory Comm. Note to Fed. R. Civ. P. 23(b)(3) (class may be certified under (b)(3) “despite the need, if liability is found, for separate determination of the damages suffered by individuals within the class”). And here, the calculation of damages presents no manageability concerns, because there are straightforward methods for determining the size of the awards. United is able to isolate benefit claims it has denied with denial codes corresponding to Article 28 denials, and it is also able to identify the amounts it would have paid13 on the claims but for the improper denial, at least in the aggregate. See Ex. 15 (Rivera Dep.) at 61:7-63:9.14 Alternatively, United admits it can derive amounts owed on the claims by applying its current out-of-network reimbursement methodology for the applicable Plan. See id. at 67:24- 71:24. This is an appropriate measure of damages that can be applied on a class-wide basis. See, e.g., Compania Pelineon De Navegacion, S.A. v. Texas Petrol. Co., 540 F.2d 53, 56 (2d Cir. 1976) (“It is not required that damages be proved with mathematical exactness provided that there is reasonable data from which the amount of damages can be ascertained with reasonable 13 In addition, the record shows that United can “marry” the denied facility-fee claims to their corresponding professional-fee claims - and thus determine those situations in which the surgery was covered and reimbursed. See Ex. 21 (Galian Dep.) at 124:3-17. If the professional fee was paid for the surgery, and the artificial Article 28 barrier is removed, then the OBS facility fees must also be paid. 14 With respect to Oxford claims, Oxford SIU generated periodic reports (monthly, then daily) that included “would- have-paid” amounts for specific claims. See Ex. 15 (Rivera Dep.) at 66:11-22, 134:7-137:14. Although United’s production included examples of such reports, they do not appear to have been systematically and comprehensively collected. These reports could also form the basis for claim-payment calculations, at least for a large portion of the Class’s benefit claims. Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 42 of 46 34 certainty, and the party who has caused the loss may not insist on theoretical perfection.”) (quotation marks omitted). 3. Class-wide adjudication is superior. A class action is superior where “class-wide litigation of common issues will reduce litigation costs and promote judicial efficiency.” Dial Corp. v. News Corp., 314 F.R.D. 108, 121 (S.D.N.Y. 2015). Regardless of the potential value of any particular individual’s claim, where a “common legal grievance” is at issue and class treatment will “achieve economies of time, effort, and expense,” then class treatment is superior. Estate of Gardner, 316 F.R.D. at 76. In Churchill, a case dealing with an insurer’s uniform denial of a type of treatment for autism, the court found the superiority requirement met, stating: [I]t is in the best interests of the class to consolidate their resources to challenge Cigna’s denial of ABA coverage as a group. … While each individual could potentially have a substantial claim for damages, pursuing such a claim would require significant expenditures for attorneys’ fees and costs which could well exceed the amount of recovery. Even if such fees and costs are ultimately recoverable, the necessity for large upfront expenditures and the time required to litigate against a well-funded company could deter meritorious lawsuits. … Because it is Cigna’s nationwide policy to deny all coverage for ABA treatment, a nationwide class action contesting this uniform denial is the most cost-effective and efficient method for resolution of this dispute. Churchill v. CIGNA Corp., No. 10-cv-6911 (JRS), 2011 WL 3563489, at *7 (E.D. Pa. Aug. 12, 2011). Those reasons apply with equal force here. A class action contesting United’s uniform policy to deny coverage for OBS facility fees is clearly the most effective and efficient method to resolve the pending dispute. Individual members’ interests are served by pursuing class-wide relief, not by “separate actions” against a behemoth like United. See Fed. R. Civ. P. 23(b)(3)(A). Counsel is unaware of any ongoing litigation concerning the dispute by individual members of the proposed Class. See id. (b)(3)(B). The dispute concerns reimbursement for services that Plan Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 43 of 46 35 members received from New York OBS providers, making this forum particularly suitable. See id. (b)(3)(C). Moreover, there are no special “difficulties in managing” the action. See id. (b)(3)(D). Trial in this case would be relatively simple, as it would be based on the common evidence identified above. See supra pp. 7-12. Indeed, the Court could well resolve the case through a bench trial “on the papers,” after considering submissions by the parties concerning whether United’s systemic application of its Uniform Refusal to Pay policy was wrongful. See, e.g., Muller v. First Unum Life Ins. Co., 341 F.3d 119, 124 (2d Cir. 2003). IV. IN THE ALTERNATIVE, ISSUE CERTIFICATION UNDER RULE 23(c)(4) IS APPROPRIATE Even if certification as to liability or damages might not otherwise be appropriate, a class should nonetheless be certified “with respect to particular issues” pursuant to Rule 23(c)(4). This mechanism can be used to excise any thorny individualized issues that might still concern the Court. See In re Nassau Cty. Strip Search Cases, 461 F.3d 219, 226 (2d Cir. 2006) (“Rule 23 authorizes the district court in appropriate cases to isolate the common issues under [(c)(4)] and proceed with class treatment of these particular issues.”); 1966 Advisory Comm. Note to Fed. R. Civ. P. 23(c)(4) (“[An] action may retain its ‘class’ character only through the adjudication of liability to the class,” after which class members “come in individually and prove the amounts of their respective claims”). Issue certification is warranted where it “materially advance[s] a disposition of the litigation as a whole.” Benner v. Becton Dickinson & Co., 214 F.R.D. 157, 169 (S.D.N.Y. 2003) (quoting Robinson, 267 F.3d at 167 n.12). “District courts should take full advantage of this provision … in order to reduce the range of disputed issues in complex litigation and achieve judicial efficiencies.” Pelman v. McDonald’s Corp., 272 F.R.D. 82, 95-96 (S.D.N.Y. 2010) (quoting Robinson, 267 F.3d at 167-68). Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 44 of 46 36 The facts of United’s Uniform Refusal to Pay give rise to three central common questions, as discussed above. See supra pp. 15-20. Resolution of these questions, individually or collectively, would “reduce the range of disputed issues” while “materially advanc[ing] disposition” of the litigation. Even if individualized issues might exist apart from these questions, favorable answers to any one of them will help establish class members’ entitlement to some relief. Therefore, at a bare minimum, issue certification of one or more of these common questions is warranted. CONCLUSION For all of the foregoing reasons, Plaintiffs request that the Court certify the proposed classes under Rules 23(b)(1), (b)(2), and/or (b)(3). In the alternative, Plaintiffs request issue certification pursuant to Rule 23(c)(4) as set forth above. Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 45 of 46 37 Dated: New York, New York February 22, 2019 Respectfully submitted, /s/ Anant Kumar D. Brian Hufford Jason S. Cowart Anant Kumar Nell Z. Peyser ZUCKERMAN SPAEDER LLP 485 Madison Avenue, 10th Floor New York, NY 10022 212.704.9600 212.704.4256 (fax) akumar@zuckerman.com Cyril V. Smith (pro hac vice) ZUCKERMAN SPAEDER LLP 100 East Pratt Street, Suite 2440 Baltimore, MD 21202 410.332.0444 410.659.0436 (fax) csmith@zuckerman.com John W. Leardi BUTTACI LEARDI & WERNER, LLC 103 Carnegie Center, Suite 323 Princeton, NJ 08540 609.799.5150 609.799.5180 (fax) jwleardi@buttacilaw.com Counsel for Plaintiffs and the Putative Class Case 1:16-cv-05265-JPO Document 143 Filed 02/22/19 Page 46 of 46