Martinez Reyes v. Summit Health Management, LLC

Background

Ana Martinez Reyes filed this class action against Summit Health Management, LLC, doing business as CityMD. She alleged that Summit Health improperly billed people for an “office visit” after they received COVID-19 tests, charging them for services that should have been free. Her complaint asserted claims under the New York General Business Law’s prohibition on deceptive business practices and for unjust enrichment. The opinion also states that Reyes claimed Summit Health violated the Family First Coronavirus Response Act and the Coronavirus Aid, Relief, Economic Security Act.

The proposed class covered people who paid CityMD bills, up to and including December 1, 2022, for COVID tests performed at CityMD facilities in New York or New Jersey. The parties conducted substantial discovery, including a review of Summit Health’s internal communications and correspondence with insurance companies. They participated in mediation on May 31, 2023, reached a settlement in principle, and submitted a proposed settlement agreement.

Motion and Legal Standards

Reyes and her attorneys filed an unopposed motion for preliminary approval of the class-action settlement. They also asked the court to approve the proposed notice, appoint class counsel, appoint Reyes as class representative, appoint a settlement administrator, and set a schedule for final approval.

Under Federal Rule of Civil Procedure 23(e), a court must review and approve a class settlement. At the preliminary stage, the court evaluates whether the settlement is likely to be fair, reasonable, and adequate and whether the class can likely be certified for purposes of the settlement. The court considered the adequacy of representation, the parties’ negotiations, the relief offered, and whether class members would be treated equitably, along with additional factors concerning litigation risks and the settlement’s value.

Preliminary Settlement Approval

The court found that Reyes adequately represented the class because her alleged injuries matched those of other class members. It also found that her attorneys had the necessary qualifications and experience. The court concluded that the settlement resulted from arm’s-length negotiations after substantial discovery and a day-long mediation assisted by an experienced mediator.

The court found the proposed relief adequate in light of the risks of proving liability, damages, and the state of mind needed to obtain enhanced damages. The distribution plan provided for automatic electronic payments or mailed checks based on information already known by the parties or supplied during the notice process. Class members would receive a minimum of $5 and a pro rata amount based on the charges refunded to them by Summit Health.

The proposed attorneys’ fees were limited to no more than one-third of the total settlement amount, or approximately $540,000. The court stated that this appeared reasonable at the preliminary stage but required attorneys’ affidavits and billing records before final approval of fees.

The court expressed concern about the proposed payment of unclaimed funds to Summit Medical Group Foundation, Inc., doing business as Summit Health Cares, under the cy pres doctrine. Cy pres distribution is a method of giving unclaimed class funds to an organization or purpose related to the lawsuit. Because Summit Health Cares had a name similar to the defendant, the court required the parties to explain at final approval what connection, if any, existed between the entities, why cy pres treatment was appropriate, and why Summit Health Cares was a suitable recipient. The court nevertheless found that this issue did not require delaying notice or preliminary approval.

The court also found that the proposed $9,000 service award for Reyes was within the range commonly approved in the district. However, it required the final-approval papers to address whether the award complied with appellate guidance concerning incentive payments and equitable treatment of absent class members.

Conditional Class Certification and Appointments

The court conditionally certified a class under Rules 23(a) and 23(b)(3) for settlement, notice, and award distribution only. The class consisted of:

“All persons who paid CityMD bills up to and including December 1, 2022 for a Covid test that was conducted at a CityMD facility located in either New York or New Jersey.”

The court found that the class had 138,776 members, that common legal and factual issues predominated, that Reyes’s claims were typical, and that a class action was superior for resolving the dispute. Because certification was for settlement purposes, the court did not address whether the case would be manageable at trial.

The court preliminarily appointed Reyes as class representative; Seth R. Lesser, Jeffrey A. Klafter, Janet Walsh, and Francesca Iacovangelo as class counsel; and American Legal Claim Services LLC as settlement administrator. It also provided that Summit Health could seek to decertify the class if the settlement was not finally approved, was not upheld on appeal, or otherwise ended before appellate rights expired.

Notice, Exclusion, and Objection Procedures

The court approved a notice plan using email and first-class mail. The plan included the settlement notice or a postcard directing class members to the notice online, and required follow-up notices for up to 45 days when updated address information became available. The court found that the plan was the best notice practicable under the circumstances and satisfied due-process requirements.

Class members could opt out by submitting a timely request for exclusion to the settlement administrator under the procedures in the opinion and settlement agreement. Members who did not timely opt out would be bound by later proceedings, orders, and judgments if the settlement received final approval. Members who wished to object or speak at the final approval hearing had to file a written objection by the deadline in the settlement notice and provide the information required by the opinion.

Schedule and Disposition

The court adopted the proposed schedule. Summit Health had to provide the class-member list to the settlement administrator within 10 business days after entry of the opinion. The administrator then had to mail the settlement notice within 10 business days after receiving the list. Written objections were due within 45 calendar days after the initial mailing, and opt-out requests were due no later than 30 days before the final approval hearing. The final approval hearing was scheduled for May 7, 2024.

The court GRANTED Reyes’s unopposed motion for preliminary approval of the settlement on the terms stated in the opinion and settlement agreement. It stayed other deadlines pending the final approval hearing, retained jurisdiction over matters arising from or connected with the settlement agreement, and directed the clerk to close the motion. The opinion granted preliminary approval; it did not make final approval of the settlement, attorneys’ fees, or service award.