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

MEMORANDUM OF LAW in Opposition re: 75 MOTION to Strike Document No. 73

S.D.N.Y.January 26, 2018

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK THE MEDICAL SOCIETY OF THE STATE OF NEW YORK, on behalf of its members; SOCIETY OF NEW YORK OFFICE BASED SURGERY FACILITIES, on behalf of its members; COLUMBIA EAST SIDE SURGERY, P.C., both directly and as the representative of PATIENTS C, D, E, and F; and on behalf of all others similarly situated, Plaintiffs, v. UNITEDHEALTH GROUP, INC., UNITED HEALTHCARE SERVICES, INC., UNITED HEALTHCARE INSURANCE COMPANY, UNITED HEALTHCARE SERVICE LLC, OPTUM GROUP, LLC and OPTUM, INC., and OXFORD HEALTH PLANS LLC, Defendants. Civil Action No. 1:16-cv-05265-JPO (Oral Argument Requested) PLAINTIFFS’ MEMORANDUM OF LAW IN OPPOSITION TO DEFENDANTS’ MOTION TO STRIKE THE CLASS ACTION COMPLAINT ZUCKERMAN SPAEDER LLP 485 Madison Avenue, 10th Floor New York, New York 10022 Telephone: (212) 704-9600 Facsimile: (917) 261-5864 Attorneys for Plaintiffs January 26, 2018 Case 1:16-cv-05265-JPO Document 81 Filed 01/26/18 Page 1 of 18 ii TABLE OF CONTENTS INTRODUCTION AND SUMMARY OF ARGUMENT ............................................................. 1 ARGUMENT .................................................................................................................................. 2 I. UNITED’S MOTION IS PROCEDURALLY IMPROPER............................................... 2 II. THE CLASS ALLEGATIONS SUFFICIENTLY SHOW THAT THE TERMS OF THE PLANS DO NOT SIGNIFICANTLY VARY ACROSS THE CLASS AND THAT ANY DIFFERENCES ARE NOT A BARRIER TO CLASS CERTIFICATION. ...................... 3 III. THE CLASS ALLEGATIONS SUFFICIENTLY SHOW THAT ANY VARIATIONS IN CLASS MEMBERS’ RIGHT TO SUE DO NOT PRECLUDE CLASS CERTIFICATION. ............................................................................................................. 8 CONCLUSION ............................................................................................................................. 12 Case 1:16-cv-05265-JPO Document 81 Filed 01/26/18 Page 2 of 18 iii TABLE OF AUTHORITIES Cases Allapattah Servs., Inc. v. Exxon Corp., 333 F.3d 1248 (11th Cir. 2003), aff’d sub nom. Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546 (2005) ................... 4 Auscape Int’l v. Nat’l Geographic Enterprises Inc., No. 02 CIV. 6441 LAK HBP, 2003 WL 23531750 (S.D.N.Y. July 25, 2003) ........................... 5 Bolanos v. Norwegian Cruise Lines Ltd., 212 F.R.D. 144, 153 (S.D.N.Y. 2002) ........................................................................................ 8 Broussard v. Meineke Disc. Muffler Shops, Inc., 155 F.3d 331 (4th Cir. 1998) ....................................................................................................... 5 Butler v. Sears, Roebuck & Co., 727 F.3d 796, 800 (7th Cir. 2013) ............................................................................................. 12 Campbell v. Chadbourne & Parke LLP, No. 16-CV-6832 (JPO), 2017 WL 2589389, (S.D.N.Y. June 14, 2017) ................................ 2, 3 DeMaria v. Horizon Healthcare Servs., Inc., No. 11-7298 (WJM), 2015 WL 3460997 (D.N.J. June 1, 2015)......................................... 10, 11 Emilio v. Sprint Spectrum L.P., 68 F. Supp. 3d 509 (S.D.N.Y. 2014) ....................................................................................... 2, 3 Hidalgo v. Johnson & Johnson Consumer Companies, Inc., 148 F. Supp. 3d 285 (S.D.N.Y. 2015) ......................................................................................... 3 In re U.S. Foodservice Inc. Pricing Litig., 729 F.3d 108 (2d Cir. 2013) ..................................................................................................... 4-5 Integrated Orthopedics, Inc. v. UnitedHealth Group, Inc., et al., 2:11-cv-00425-ES-JAD (D.N.J. Aug. 31, 2015) ....................................................................... 10 Johnson v. Nextel Commc’ns Inc., 780 F.3d 128 (2d Cir. 2015) ........................................................................................................ 4 Lexmark Int’l, Inc. v. Static Control Components, Inc., 134 S. Ct. 1377 (2014) ................................................................................................................ 8 Mazzola v. Roomster Corp., 849 F. Supp. 2d 395 (S.D.N.Y. 2012) ......................................................................................... 2 Case 1:16-cv-05265-JPO Document 81 Filed 01/26/18 Page 3 of 18 iv Meidl v. Aetna, Inc., No. 15-CV-1319 (JCH), 2017 WL 1831916 (D. Conn. May 4, 2017) ....................................... 7 Pascack Valley Hosp., Inc. v. Local 464 A UFCW Welfare Reimbursement Plan, 388 F.3d 393 (3d Cir. 2004) ................................................................................................. 10-11 Premier Health Ctr., P.C. v. UnitedHealth Grp., 292 F.R.D. 204 (D.N.J. 2013) ................................................................................................... 10 Premier Health Ctr., P.C. v. UnitedHealth Grp., Civ. No. 11-425, 2012 WL 1135608 (D.N.J. Apr. 4, 2012) ..................................................... 10 Reynolds v. Lifewatch, Inc., 136 F. Supp. 3d 503 (S.D.N.Y. 2015) ......................................................................................... 2 Roach v. T.L. Cannon Corp., 778 F.3d 401 (2d Cir. 2015) ...................................................................................................... 11 Rodriguez v. It’s Just Lunch, Int’l, 300 F.R.D. 125 (S.D.N.Y. 2014) ................................................................................................ 4 Seijas v. Republic of Argentina, 606 F.3d 53 (2d Cir. 2010) ........................................................................................................ 11 Spread Enterprises, Inc. v. First Data Merch. Servs. Corp., 298 F.R.D. 54 (E.D.N.Y. 2014) .................................................................................................. 5 Steinberg v. Nationwide Mut. Ins. Co., 224 F.R.D. 67 (E.D.N.Y. 2004) .................................................................................................. 4 Sullivan v. DB Invs., Inc., 667 F.3d 273 (3d Cir. 2011) .................................................................................................. 9, 11 Sykes v. Mel Harris & Assocs., LLC, 285 F.R.D. 279 (S.D.N.Y. 2012), aff’d, 780 F.3d 70 (2d Cir. 2015) ............................ 10, 11, 12 Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011) ................................................................................................................ 7, 8 Wit v. United Behavioral Health, 317 F.R.D. 106 (N.D. Cal. 2016) ................................................................................................ 4 Statutes 29 U.S.C. § 1104(a) ..................................................................................................................... 6-7 Case 1:16-cv-05265-JPO Document 81 Filed 01/26/18 Page 4 of 18 v Other Authorities 2 Newberg on Class Actions § 4:54 (5th ed.) ............................................................................... 11 5 Moore’s Federal Practice § 23.23[2] .......................................................................................... 8 Rules Fed. R. Civ. P. 12 .................................................................................................................... 1, 2, 3 Fed. R. Civ. P. 23 ................................................................................................................... passim Regulations 29 C.F.R. § 2560.503-1(g) .............................................................................................................. 6 Case 1:16-cv-05265-JPO Document 81 Filed 01/26/18 Page 5 of 18 1 INTRODUCTION AND SUMMARY OF ARGUMENT Defendants’ (collectively referred to herein as “United”) motion to strike is baseless. It ignores the plausibility of Plaintiffs’ class-action allegations and grossly distorts the requirements of Rule 12(f) and 23. As an initial matter, United’s motion is procedurally improper. This Court and others have repeatedly held that motions to strike class allegations should only be granted in the rare case that a complaint’s own allegations plead facts that make class certification impossible. Stated differently, meritorious motions to strike must address issues that are different than those that will be adjudicated after discovery in the context of a motion for class certification. United’s motion effectively ignores this requirement. It should be denied for this reason alone. It should also be denied because it is based on a misleading and distorted view of Rule 23. Without discussing any particular requirement of Rule 23, United manufactures two allegedly “individualized issues” - OBS-related plan terms and putative class members’ “standing” - and argues that they automatically preclude any form of Rule 23 certification. Yet it is axiomatic that Rule 23(a)(2) only requires that there be one important common question of law or fact. And certification under Rule 23(b)(1) and (b)(2) focuses on the uniformity of the defendants’ conduct, not the particular circumstances of particular class members. Although individual issues are relevant to Rule 23(b)(3) certification, they only defeat such certification when those issues predominate over the common issues. Against this backdrop, the complaint’s allegations concerning United’s Uniform Refusal to Pay are more than sufficient to entitle Plaintiffs to discovery. Plaintiffs allege that United historically interpreted the terms of all of its plans to cover OBS facility fees because the terms of those plans all called for such coverage. FAC ¶ 7-9, 34-37. The Complaint then alleges that, in Case 1:16-cv-05265-JPO Document 81 Filed 01/26/18 Page 6 of 18 2 order to save itself money, United reversed itself and interpreted those same plan terms to exclude coverage for OBS facility fees. Id. ¶ 10-11, 38-39. These allegations reflect claims challenging the type of uniform misconduct that Rule 23 was designed to address. The Court should see United’s motion for what it is: a premature and prejudicial attempt to defeat a motion for class certification without affording Plaintiffs their rights to discovery. The motion should be denied. ARGUMENT I. UNITED’S MOTION IS PROCEDURALLY IMPROPER. Motions to strike under Rule 12(f) are rarely successful. Reynolds v. Lifewatch, Inc., 136 F. Supp. 3d 503, 511 (S.D.N.Y. 2015); Emilio v. Sprint Spectrum L.P., 68 F. Supp. 3d 509, 514 (S.D.N.Y. 2014) (Oetken, J.) (“Motions to strike are viewed with disfavor and infrequently granted.”) (brackets and internal quotation marks omitted). This is particularly true in the class- action context because granting a Rule 12(f) motion requires a reviewing court to preemptively terminate the class aspects of litigation, solely on the basis of what is alleged in the complaint, before plaintiffs are permitted to complete the discovery to which they are otherwise entitled. Reynolds, 136 F. Supp. 3d at 511; Campbell v. Chadbourne & Parke LLP, No. 16-CV-6832 (JPO), 2017 WL 2589389, at *3 (S.D.N.Y. June 14, 2017) (Oetken, J.) (same). Thus, courts frequently defer the Rule 23 determination until the class-certification stage, after the development of a more complete factual record. Emilio, 68 F. Supp. 3d at 514-15 (Oetken, J.); Mazzola v. Roomster Corp., 849 F.Supp.2d 395, 410 (S.D.N.Y. 2012) (“[D]istrict courts in this Circuit have frequently found that a determination of whether Rule 23 requirements are met is more properly deferred to the class certification stage, when a more complete factual record can aid the Court in making this determination.”). A motion to dispose of class allegations on the Case 1:16-cv-05265-JPO Document 81 Filed 01/26/18 Page 7 of 18 3 pleadings is regarded as “procedurally premature” unless the motion “address[es] issues separate and apart from the issues that will be decided on a class certification motion.” Emilio, 68 F. Supp. 3d at 515 (Oetken, J.) (quotation omitted, emphasis added). United barely even alludes to this well-established legal standard. This is not surprising, given that United’s motion focuses exclusively on “[Rule 23] factors that would be analyzed and addressed by this Court in the course of deciding a motion for class [certification].” Campbell, 2017 WL 2589389, at *3. United does not even attempt to explain how this motion differs from premature analysis of the Rule 23 factors, but instead simply declares that “[t]he Court need not await class discovery to reject an uncertifiable class action.” Mot. at 3. This Court’s decisions in Emilio and Campell say otherwise. Indeed, although United relies upon the discussion of the applicable Rule 12(f) standards in Hidalgo v. Johnson & Johnson Consumer Companies, Inc., 148 F. Supp. 3d 285, 292 (S.D.N.Y. 2015), it fails to inform the Court that the defendant’s motion to strike there was denied precisely because the argument advanced in that case would be informed by discovery. The same is true here. II. THE CLASS ALLEGATIONS SUFFICIENTLY SHOW THAT THE TERMS OF THE PLANS DO NOT SIGNIFICANTLY VARY ACROSS THE CLASS AND THAT ANY DIFFERENCES ARE NOT A BARRIER TO CLASS CERTIFICATION. United’s plan-based argument is grounded in its unproven assertion that each United plan contains unique terms concerning coverage for OBS facility fees. See, e.g., Mot. at 2 (stating that there are “potentially thousands of plans at issue”). Plaintiffs’ complaint, however, does not come close to alleging that every plan contains unique OBS-facility-fee-related terms. Instead, the complaint alleges that all plans contain substantively identical language that covers OBS facility fees. FAC ¶ 34-35. Indeed, the plausibility of this allegation is bolstered by the allegations that United interprets all of its plans in the same way. Id. ¶¶ 9-10. Case 1:16-cv-05265-JPO Document 81 Filed 01/26/18 Page 8 of 18 4 Even if there are some variances among the plans, this is no automatic impediment to class certification (as United’s argument suggests). See, e.g., In re U.S. Foodservice Inc. Pricing Litig., 729 F.3d 108, 125 (2d Cir. 2013) (affirming class certification where class members’ contracts were not identical but the variations were immaterial); Allapattah Servs., Inc. v. Exxon Corp., 333 F.3d 1248 (11th Cir. 2003), aff’d sub nom. Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546 (2005) (affirming class certification where contracts were not identical but were materially uniform insofar as they imposed the same duty of good faith); Wit v. United Behavioral Health, 317 F.R.D. 106, 127 (N.D. Cal. 2016) (rejecting challenge to commonality based on immaterial variations in plan language). The situation in which a class is subject to differing state-law requirements provides a useful analogy; there, courts have certified classes despite variations. Johnson v. Nextel Commc’ns Inc., 780 F.3d 128, 140-41 (2d Cir. 2015) (“The application of multiple states’ laws does not in and of itself preclude class certification.”); Rodriguez v. It’s Just Lunch, Int’l, 300 F.R.D. 125, 141 (S.D.N.Y. 2014) (“A claim can implicate common issues and be litigated collectively, despite the existence of state law variations, so long as the elements of the claim are substantially similar and any differences fall into a limited number of predictable patterns which can be readily handled by special interrogatories or special verdict forms.”); Steinberg v. Nationwide Mut. Ins. Co., 224 F.R.D. 67, 76-78 (E.D.N.Y. 2004) (certifying national class because “variances” in state-law principles of contract interpretation were “manageable”). Alternatively, the Court could certify the class with the plans grouped by plan type, or limit the class to individuals with certain plan types. See, e.g., In re U.S. Foodservice Inc. Pricing Litig., 729 F.3d at 127 (“If the applicable state laws can be sorted into a small number of Case 1:16-cv-05265-JPO Document 81 Filed 01/26/18 Page 9 of 18 5 groups, each containing materially identical legal standards, then certification of subclasses embracing each of the dominant legal standards can be appropriate.”). United cites to three cases in support of its argument that United’s liability cannot be resolved class-wide because there are differences in plan language. Mot. at 11. However, those cases demonstrate why the motion should be denied - they were all decided at the class- certification or post-trial phase where the parties and the courts had the benefit of discovery (i.e. the benefit of seeing all the contracts at issue). See Spread Enterprises, Inc. v. First Data Merch. Servs. Corp., 298 F.R.D. 54 (E.D.N.Y. 2014) (decision on class certification); Auscape Int’l v. Nat’l Geographic Enterprises Inc., No. 02 CIV. 6441 LAK HBP, 2003 WL 23531750, at *1 (S.D.N.Y. July 25, 2003) (decision on class certification); Broussard v. Meineke Disc. Muffler Shops, Inc., 155 F.3d 331 (4th Cir. 1998) (decision on appeal following jury verdict). As in United’s own cited authority, the Court should decide this issue on a class-certification motion. It is premature to decide now.1 As it stands, United’s motion overstates the variations between the plans implicated in the class. In parsing the plans that cover Patients A, B, C, D, E, and F, see Mot. at 8-11, United fails to point to a provision that would exclude OBS fees, just as it did in its motion to dismiss. In the absence of such exclusion, any differences in plan provisions will prove immaterial. But United’s filings in this litigation (both this motion and its motion to dismiss) also support the inference that the class members’ plans can be sorted and grouped. For the first category of plans, United relies on a strained interpretation of what it means to be “licensed.” See Mot. at 8-9 (discussing Patients C, D, and E). Plaintiffs disagree with United’s interpretation of 1 On December 4, 2017, Plaintiffs served document requests on United requesting “[t]he plan document for each United plan under which a claim was submitted for services provided by an OBS provider, including claims for facility fees….” As United contends that a barrier to class certification might be potential plan variations, Plaintiffs expect that United will produce all the plans promptly so Plaintiffs can assess if and how the plan language varies among class members’ plans. Case 1:16-cv-05265-JPO Document 81 Filed 01/26/18 Page 10 of 18 6 this provision. See Pls.’ Mem. of Law in Opp’n to Defs.’ Mot. to Dismiss, Doc. 54 (“Plfs.’ Opp’n”), at 6-7. More importantly, whatever the merits of that argument, its resolution will apply equally to all plans that impose a licensure requirement. For the second category of plans (covering Patients B and F), United essentially argues that OBS facility fees are not explicitly discussed, and thus excluded by negative implication. See Mot. at 9-10; see also Pls.’ Opp’n at 9-10. Again, the category of plans that are “silent” can be resolved in a batch. Even if such plans authorize recourse to “external authorities,” Mot. at 10, that does not change the possibility for common resolution. For Patient A, United focuses on the definition of “Alternate Facility.” See Mot. at 10-11. But United neglects to mention that this provision was also the operative provision in Patient G’s plan. See Pls.’ Opp’n, at 7-9. Thus, this simply shows another potential category of plan language. The bottom line is, the more often the same provisions carry across plans, the more reasonable it is to infer that there can be common resolution based on analysis of a limited menu of material plan provisions. Finally, this Court has already ruled that “it is plausible to infer from the constellation of alleged denials and ‘stock letter[s]’” that United applied its Uniform Refusal to Pay “‘to all United Plans, without regard to those Plans’ particular terms and provisions.’” Op. and Order, Doc. 59, at 8 (quoting complaint). If discovery shows (as the complaint alleges) that United denied coverage for OBS facility fees based on its uniform policy and without regard to plan language,2 then every decision to deny coverage violated ERISA. See 29 U.S.C. § 1104(a) (“a 2 In its motion, United posits a host of other provisions of the named Plaintiffs’ plans that it argues could foreclose coverage, not just the facility-defining provision that Plaintiffs cite in the complaint. Mot. at 8-11. If United is right, Plaintiffs were entitled to see these provisions cited as rationales at the time of the denials. See 29 C.F.R. § 2560.503-1(g); (j) (under ERISA, denial letters must make “reference to the specific plan provisions on which the determination is based.”). To Plaintiffs’ knowledge, they were not. FAC ¶ 93-99. United cannot use plan provisions never cited in the denials, as required under ERISA, to its advantage now. Case 1:16-cv-05265-JPO Document 81 Filed 01/26/18 Page 11 of 18 7 fiduciary shall discharge his duties with respect to a plan . . . in accordance with the documents and instruments governing the plan”) (emphasis added). See also Meidl v. Aetna, Inc., No. 15- CV-1319 (JCH), 2017 WL 1831916, at *10 (D. Conn. May 4, 2017) (“The court finds unpersuasive the defendants’ argument that the differences between health plans destroys commonality. Despite making this argument, the defendants fail to draw the court’s attention to any denials of coverage for a putative class member’s TMS treatment as experimental or investigational not based on CPB 469, but based on, e.g., a particular health plan’s unique language.”). Here, the complaint alleges that United pays absolutely no attention to plan terms when denying coverage for OBS facility fees. See FAC ¶ 97 (“United’s letters demonstrate that United’s Uniform Refusal to Pay was developed without regard to the terms of the United Plans”); id. (“To quote United, it has decided as a matter of internal policy that ‘UnitedHealth Group will not reimburse facility charges performed in a physician’s office’”); id ¶ 98 (if the Uniform Refusal to Pay was based on plan language, “United would be unable to assert definitively that ‘facility fees will not be paid.’”). On such facts, a class could be certified based on United’s course of conduct, with a remedy being to require United to reprocess the class’s claims and apply the plan terms (whatever they may be) properly in making coverage determinations.3 This is precisely the result that Wal-Mart suggests, making United’s reliance on that case all the more curious. See Mot. at 2 (citing Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011)). In Wal-Mart, the Supreme Court held that Rule 23(b)(2) certification was improper because there was no uniform, company-wide policy to discriminate. See 564 U.S. at 353 (proof that Wal-Mart “operated under a general policy of discrimination . . . is entirely absent here.”). Here, Plaintiffs 3 Indeed, United’s motion, in trumpeting the need for “plan-specific, individualized” adjudication of claims, Mot. at 10, concedes this point (subject to Plaintiffs’ proof of the existence of a Uniform Refusal to Pay). Case 1:16-cv-05265-JPO Document 81 Filed 01/26/18 Page 12 of 18 8 allege precisely what was lacking in Wal-Mart - that United does not cover OBS facility fees pursuant to a Uniform Refusal to Pay that United employees must follow. FAC ¶ 93-94 (alleging Uniform Refusal to Pay was applied across the board and citing stock denial letters in support). Nothing like that existed in Wal-Mart, which is why class certification was denied in that case, but it is more than plausible in this one. III. THE CLASS ALLEGATIONS SUFFICIENTLY SHOW THAT ANY VARIATIONS IN CLASS MEMBERS’ RIGHT TO SUE DO NOT PRECLUDE CLASS CERTIFICATION. United also contends that the question of class member “standing” 4 is an individualized issue that defeats all forms of Rule 23 certification. This argument fails because any variations in anti-assignment clauses or assignments do not impact United’s uniform conduct. Rule 23(a)(2) only requires one significant common question. Wal-Mart Stores, Inc., 564 U.S. at 359; see also Bolanos v. Norwegian Cruise Lines Ltd., 212 F.R.D. 144, 153 (S.D.N.Y. 2002) (“The commonality requirement is satisfied if the class shares even one common question of law or fact, and factual differences in the claims of the class do not preclude a finding of commonality.”) (citing 5 Moore’s Federal Practice § 23.23[2]). Here, among other important common questions, the complaint asks whether United adopted the Uniform Refusal to Pay and applied it to all class members. FAC ¶ 93-95, 104-05, 108. United does not dispute that there are common answers to these questions, and those answers do not turn on any individualized questions about absent class members’ right to sue. United’s argument about the right to sue fares no better under Rule 23(b). The focus of Rule 23(b)(1) and (b)(2) is on the conduct of “the party opposing the class.” See Fed. R. Civ. P. 4 United’s use of “standing” is a misnomer. See Lexmark Int’l, Inc. v. Static Control Components, Inc., 134 S. Ct. 1377, 1387 (2014) (“statutory standing” no longer exists, and the issue is whether a plaintiff has stated a statutory claim, or cause of action). Plainly, the question here is not standing; rather, it is a question of whether an individual class member has the right to assert an ERISA claim. Every class member has “standing” because it suffered from an OBS denial. Case 1:16-cv-05265-JPO Document 81 Filed 01/26/18 Page 13 of 18 9 23(b)(1) (class action can be maintained if there is risk that individual adjudication could “establish incompatible standards of conduct for” United); id. (b)(2) (class action can be maintained where United “has acted or refused to act on grounds that apply generally to the class”). So questions about absent class members’ right to sue under ERISA are irrelevant to (b)(1) or (b)(2) class certification. Indeed, in this case, because Plaintiff Columbia East Side Ambulatory Surgery, P.C., may pursue the claims alleged and the injunctive relief sought (see Op. and Order, Doc. 59, at 10), certification under (b)(1) and (b)(2) would be entirely appropriate. And although individualized issues are relevant to certification under Rule 23(b)(3), they only defeat certification if they are proven to predominate. Federal courts have squarely rejected the argument that United’s proffered “standing” issue predominates over common issues. For instance, in Sullivan v. DB Invs., Inc., 667 F.3d 273, 301 (3d Cir. 2011) (en banc), the question was whether state antitrust laws precluded (b)(3) certification where they indisputably barred some absent class members’ individual claims. The court decisively said no: [We reject] a specific requirement that every class member has “some colorable legal claim” in order for a district court to certify a class. In our view, this requirement would result in a radical departure from what Rule 23 envisions and what our precedent demands, and it founders for many reasons. . . . Rule 23(b)(3) does not, as urged by the objectors and the dissent, require individual class members to individually state a valid claim for relief. . . . Here, the supposed lack of one element necessary to prove a violation on the merits-statutory standing- does not establish a concomitant absence of other predominantly common issues. Id. at 297, 307 (citations and footnotes omitted). Rather, as Sullivan instructs, the proper Rule 23(b)(3) inquiry remains the conduct of the defendant, not the conduct or status of class members. See id. at 310 (if argument that absent class members’ right to sue predominated under (b)(3) were adopted, “[n]o class would ever be certified.”). See also Sykes v. Mel Harris & Assocs., LLC, 285 F.R.D. 279, 293 (S.D.N.Y. 2012), aff’d, 780 F.3d 70 (2d Cir. 2015) (“Every Case 1:16-cv-05265-JPO Document 81 Filed 01/26/18 Page 14 of 18 10 potential class member’s claim arises out of defendants’ uniform, widespread practice[.] . . . The Court recognizes that should defendants be found liable on some or all of these claims, individual issues may exist as to causation and damages as well as to whether a class member’s claim accrued within the applicable statute of limitations. This, however, does not preclude a finding of predominance under Rule 23(b)(3).”). Here, it is clear from the complaint that United’s conduct (i.e. the Uniform Refusal to Pay) is common to all class members and causes the same impact. FAC ¶ 10-11, 93-99, 108. United’s argument that anti-assignment clauses create individualized issues has another problem besides being foreclosed by the text of Rule 23. It is factually wrong. United has a policy of honoring all provider assignments. See Mem. of Law in Supp. of Pls.’ Mot. for Partial Summ. J. on Liability, Doc. 348-1, Integrated Orthopedics, Inc. v. UnitedHealth Group, Inc., et al., 2:11-cv-00425-ES-JAD (D.N.J. Aug. 31, 2015), at 34-39. Thus, Plaintiffs can show with common evidence that all provider class members have the right to sue. See Premier Health Ctr., P.C. v. UnitedHealth Grp., 292 F.R.D. 204, 221 (D.N.J. 2013) (waiver of anti-assignment provisions through course of conduct is subject to common proof); Premier Health Ctr., P.C. v. UnitedHealth Grp., Civ. No. 11-425, 2012 WL 1135608, at *8 n. 3 (D.N.J. Apr. 4, 2012) (“Defendants cannot act as though valid assignments exist through course of conduct and then challenge the assignment’s very existence in litigation.”); DeMaria v. Horizon Healthcare Servs., Inc., No. 11-7298 (WJM), 2015 WL 3460997, at *8 (D.N.J. June 1, 2015) (“[A] party may waive an anti-assignment provision via course of dealing . . . .”);5 see also Pascack Valley 5 In DeMaria, discovery showed that Horizon processed Form 1500s (a uniform claim submission document) to collect payment through an automated process called a “claims engine“ that “contained an assignment to the submitting provider of the Horzon Insureds’ right to payment.” DeMaria v. Horizon Healthcare Servs., Inc., No. 11- 7298 WJM, 2015 WL 3460997, at *2 (D.N.J. June 1, 2015). Here, as United has not yet produced any documents and no depositions have been taken, Plaintiffs have no way of knowing whether United has similar claims engines that automatically confer an assignment to the submitting provider. Case 1:16-cv-05265-JPO Document 81 Filed 01/26/18 Page 15 of 18 11 Hosp., Inc. v. Local 464 A UFCW Welfare Reimbursement Plan, 388 F.3d 393, 404-05 (3d Cir. 2004) (Alito, J., concurring) (facts surrounding standard provider benefits claims “are more than sufficient to prove that the claims were implicitly assigned to the provider”). And even if the Court ultimately determines that individual class members are entitled to recovery only with individualized proof of a right to sue under ERISA, there are a myriad of ways to resolve this issue after certifying the class. As discussed above, individual questions about assignments do not impact a finding of liability against United, so they are not a barrier to class certification. Sullivan, 667 F.3d at 301, Sykes, 285 F.R.D. at 293. Accordingly, the assignment issue could be resolved at the relief or administration phase after a finding of liability. This is exactly how the Second Circuit (and every other circuit) has held that class member damages - a similar, sometimes individualized, element of the cause of action - should be adjudicated. Roach v. T.L. Cannon Corp., 778 F.3d 401, 405 (2d Cir. 2015) (“[It is] well- established in this Circuit that the fact that damages may have to be ascertained on an individual basis is not sufficient to defeat class certification under Rule 23(b)(3).”) (internal quotations omitted) (citing Seijas v. Republic of Argentina, 606 F.3d 53, 58 (2d Cir. 2010)); see also 2 Newberg on Class Actions § 4:54 (5th ed.) (“courts in every circuit have uniformly held that the 23(b)(3) predominance requirement is satisfied despite the need to make individualized damage determinations”). Indeed, courts have “a number of management tools available to address any individualized damages issues that might arise in a class action, including, inter alia, appointing a magistrate judge or special master to preside over individual damages proceedings, decertifying the class after the liability trial and providing notice to class members concerning how they may proceed to prove damages, creating subclasses, or altering or amending the class.” Sykes, 285 F.R.D. at 294 (internal quotations and citations omitted). Here, Case 1:16-cv-05265-JPO Document 81 Filed 01/26/18 Page 16 of 18 12 just as with damages, class members could be asked to submit documentation evidencing a valid assignment to entitle them to relief after trial if liability is found. Similarly, United’s Uniform Refusal to Pay is suitable for class certification under Rule 23(c)(4), which provides that in appropriate circumstances “an action may be brought or maintained as a class action with respect to particular issues.” See Butler v. Sears, Roebuck & Co., 727 F.3d 796, 800 (7th Cir. 2013) (“[A] class action limited to determining liability on a class-wide basis, with separate hearings to determine-if liability is established-the damages of individual class members, or homogeneous groups of class members, is permitted by Rule 23(c)(4) and will often be the sensible way to proceed.”). Whatever the approach, United’s argument that class members’ “standing” creates individualized issues fails to preclude class certification as both a legal and practical matter. CONCLUSION For the foregoing reasons, United’s motion to strike the class allegations is fatally premature, substantively meritless, and should be denied. Dated: New York, New York January 26, 2018 Respectfully submitted, s/ D. Brian Hufford 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 917.261.5864 (fax) dbhufford@zuckerman.com jcowart@zuckerman.com akumar@zuckerman.com npeyser@zuckerman.com Case 1:16-cv-05265-JPO Document 81 Filed 01/26/18 Page 17 of 18 13 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 81 Filed 01/26/18 Page 18 of 18