Wit v. UnitedHealthcare Insurance Company

Background

The court had previously certified three classes in the related cases brought against United Behavioral Health (UBH):

- The Wit Guideline Class, involving certain denials of residential-treatment coverage under plans governed by the Employee Retirement Income Security Act (ERISA). - The Wit State Mandate Class, involving certain residential-treatment denials under ERISA plans also governed by Connecticut, Illinois, Rhode Island, or Texas law. - The Alexander Guideline Class, involving certain denials of outpatient or intensive-outpatient coverage under ERISA plans.

The plaintiffs’ theory was that UBH developed and used coverage guidelines that were more restrictive than generally accepted standards of care or, for the State Mandate Class, the standards required by state law. UBH sought to decertify all three classes, arguing that individualized differences in plans, denials, appeals, and injuries defeated the requirements for class treatment under Federal Rule of Civil Procedure 23.

Rulings on UBH’s decertification arguments

The court found a sufficient reason to reconsider the class definitions because trial evidence and later work on the class lists raised issues relevant to certification. But it rejected most of UBH’s arguments concerning commonality and typicality. The court held that the alleged injury was the adoption and use of flawed guidelines in deciding coverage claims, and that plaintiffs did not have to prove that the guidelines were the sole cause of every denial or that each claimant would ultimately have been entitled to benefits. The court also concluded that the presence of some acceptable criteria in the guidelines did not eliminate the alleged common injury.

The court modified all three class definitions to exclude people whose benefits were fully approved following an administrative appeal. The court said it was not deciding whether those individuals lacked standing or whether their individual claims would fail as a matter of law. Instead, the court found that the unresolved issues concerning this group defeated commonality and typicality for class purposes.

The court rejected UBH’s argument that the named plaintiffs were inadequate representatives because they had narrowed their theories to obtain class certification. It also rejected UBH’s request to remove Texas-law claimants from the Wit State Mandate Class. The court clarified that its liability finding covered Texas denials based on UBH guidelines whether those guidelines were used alone or together with Texas criteria. A Texas class member whose denial letter cited UBH guidelines therefore was not excluded merely because the letter also cited Texas criteria.

The court also rejected UBH’s argument that the classes had been improperly certified under all three relevant Rule 23(b) provisions for particular remedies. It concluded that the original certification and the decision to allow class members to opt out of mandatory remedies were correct, while noting that a separate remedies order addressed which Rule 23(b) provision applied to each remedy.

Notice and class-list errors

Some people fit the class definitions because of a denial at the administrative-appeal level but were omitted from the class lists because the method used to identify class members captured only initial denials. The court concluded that these people had not received the individual notice required for Rule 23(b)(3) claims and therefore partially decertified the classes as to Rule 23(b)(3) remedies for those individuals, subject to two exceptions.

The first exception covers people who were mistakenly placed on the class list, received individual notice, did not opt out, and are found by UBH’s review to fit the class definition. The second covers people who learned about the case through the official case website before the opt-out deadline and did not opt out. Those individuals remain eligible for all remedies. The court required UBH to review the files of 170 people who received individual notices to determine whether any fit the class definitions.

The court did not order individual notices to the people excluded because they were omitted from the lists. Instead, plaintiffs’ counsel had to post notice on the case website. The partial decertification for this group would take effect 120 days after that website notice was posted.

Final disposition

The court granted in part and denied in part UBH’s Decertification Motion. It modified the classes to exclude people whose benefits were later fully approved on appeal, changed the Illinois State Mandate Class period to August 18, 2011 through January 1, 2016, and partially decertified the classes for Rule 23(b)(3) remedies as to certain people omitted from the class lists. For class members excluded by the order, the court stayed the case and tolled the limitations period on their individual claims for 120 days after notice was sent or posted, as applicable. Judge Joseph C. Spero also directed the parties to submit proposed procedures for identifying affected members, finalizing the class lists, and preparing the notices within 14 days.