Mun. Health Benefit Fund v. Hendrix

2020 Ark. 235

602 S.W.3d 101

MUNICIPAL HEALTH BENEFIT FUND, Appellant

v.Ricky HENDRIX, Individually and on Behalf of All Arkansans Similarly Situated, Appellee

No. CV-19-681

Supreme Court of Arkansas.

Opinion Delivered: June 11, 2020

Harrington, Miller, Kieklak, Eichmann & Brown, P.A., by: R. Justin Eichmann ; and Asia Cruz, for appellant.

Streett Law Firm, P.A., by: James A. Streett, Russellville; and Brian G. Brooks, Attorney at Law, PLLC, by: Brian G. Brooks, for appellee.

JOHN DAN KEMP, Chief Justice

Appellant Municipal Health Benefit Fund ("MHBF") appeals a Pope County Circuit Court order certifying two classes pursuant to Rule 23 of the Arkansas Rules of Civil Procedure. For reversal, MHBF argues that appellee Ricky Hendrix failed to prove the class-certification requirements of commonality, predominance, superiority, typicality, and adequacy and that the circuit court lacked jurisdiction over the class action. We affirm.

I. Facts

MHBF is a trust created by the Arkansas Municipal League under authority of the Interlocal Cooperation Act, Arkansas Code Annotated §§ 25-20-101 –108 (Repl. 2014 & Supp. 2017). MHBF provides benefits to employees of its municipal members. The terms of MHBF's policy booklet apply uniformly to those who receive health-benefit coverage through MHBF, and the policy booklet sets forth the benefits available and MHBF's rights and obligations concerning payment of those benefits.

Hendrix obtained MHBF health-benefit coverage for his family and himself through his employment as a detective with the Russellville Police Department. On May 20, 2016, Hendrix's daughter was injured in a car accident, necessitating treatment from multiple medical-care providers. MHBF denied payment for portions of the bills incurred by Hendrix's daughter based on its interpretation of two exclusionary terms in its policy booklet:

i. [MHBF]’s interpretation of its policy to require an insured to purchase coverage pursuant to [Arkansas Code Annotated] § 23-89-202(1) in conjunction with their automobile insurance coverage or, in the absence of such optional coverage, that the policy entitled the MHBF to coordinate their insurance benefits as if that coverage existed; and

ii. [MHBF]’s position that the medical charges incurred by their insureds can be denied or reduced by the MHBF based on [its] belief that those charges were not "reasonable and customary" under the language (and/or the absence thereof) of the Fund's policy related to this exclusionary term.

Hendrix appealed both above bases for exclusions to MHBF's Board of Trustees. An appeal hearing was held on May 5, 2017, and MHBF ultimately denied his appeal of both bases for exclusion in their entirety.

On December 19, 2017, Hendrix filed his amended class-action complaint, alleging that the two exclusionary terms were so subjective, ambiguous, and misleading that they were unenforceable against the classes. He sought a declaration on the enforceability of MHBF's interpretation of the two exclusionary terms and asserted a failure to pay insurance claims pursuant to Arkansas Code Annotated § 23-79-208 (Repl. 2014) or, alternatively, breach of contract for failure to pay the benefits as agreed.

The circuit court granted Hendrix's motion to certify two classes to pursue the three causes of action asserted in the amended complaint. The two classes included

Class 1: The auto-insurance class

All individuals and/or entities located and/or domiciled within the State of Arkansas who filed one or more claims with the Arkansas Municipal Health Benefit Fund on and between September 7, 2012 and December 31, 2016 and who had their claim(s) denied or reduced by the MHBF, in whole or in part, on the stated basis that the Fund was coordinating that claim as if the claimant had the "med-pay" coverage addressed by Ark. Code Ann. [ ] § 23-89-202(1).

Class 2: The reasonable and customary charges or "UCR" class

All individuals and/or entities located and/or domiciled within the State of Arkansas who filed one or more claims with the Arkansas Municipal Health Benefit Fund on or between September 12, 2012 through the date of entry of this Class Certification Order and who had their claim(s) denied or reduced by the MHBF, in whole or in part, on the stated basis that the charges claimed exceed those that are "reasonable and customary."

The circuit court ruled that the class members satisfied the requirements of Rule 23, and it made detailed findings on each of the Rule 23 requirements.¹ MHBF filed a timely appeal from the circuit court's order granting class certification.

II. Arguments

MHBF contends that the circuit court's order granting class certification should be reversed because the classes lacked commonality, predominance, superiority, typicality, and adequacy and because the circuit court lacked jurisdiction over the class action.

Class certification is governed by Arkansas Rule of Civil Procedure 23. ChartOne, Inc. v. Raglon , 373 Ark. 275, 279, 283 S.W.3d 576, 580 (2008). Circuit courts are given broad discretion in matters regarding class certification, and we will not reverse a circuit court's decision to grant or deny class certification absent an abuse of discretion. Id. , 283 S.W.3d at 580. When reviewing a class-certification order, we review the evidence contained in the record to determine whether it supports the circuit court's decision. Id. , 283 S.W.3d at 580. Our focus is whether the Rule 23 requirements have been met, and it is totally immaterial whether the petition will succeed on the merits or even if it states a cause of action. Philip Morris Cos., Inc. v. Miner , 2015 Ark. 73, at 3, 462 S.W.3d 313, 316. This court will not delve into the merits of the underlying claims when deciding whether the Rule 23 requirements have been met. Nat'l Cash, Inc. v. Loveless , 361 Ark. 112, 116, 205 S.W.3d 127, 130 (2005). The six requirements for class-action certification, as stated in Rule 23, are (1) numerosity, (2) commonality, (3) typicality, (4) adequacy, (5) predominance, and (6) superiority. Gen. Motors Corp. v. Bryant , 374 Ark. 38, 42, 285 S.W.3d 634, 637 (2008).

A. Rule 23 Requirements

1. Commonality

MHBF argues that the circuit court abused its discretion in finding that the classes met the commonality requirement because any liability involves an individualized inquiry into the reasonableness of charges. It also asserts that because it is a trust, the Uniform Declaratory Judgments Act does not apply; therefore, relief under the declaratory-judgment claim is foreclosed. And because it is neither insurance nor a contract, any relief on the insurance and breach-of-contract claims is unavailable. MHBF contends there cannot be a common question that will resolve its liability as to the claims against it.

Rule 23(a)(2) requires a determination by the circuit court that "there are questions of law or fact common to the class." Union Pac. R.R. v. Vickers , 2009 Ark. 259, at 8, 308 S.W.3d 573, 578.We have held that

Rule 23(a)(2) does not require that all questions of law or fact raised in the litigation be common. The test or standard for meeting the rule 23(a)(2) prerequisite is ... [that] there need be only a single issue common to all members of the class.... When the party opposing the class has engaged in some course of conduct that affects a group of persons and gives rise to a cause of action, one or more of the elements of that cause of action will be common to all of the persons affected.

Williamson v. Sanofi Winthrop Pharms., Inc. , 347 Ark. 89, 96, 60 S.W.3d 428, 432 (2001) (quotation omitted). Commonality is satisfied when "the defendant's acts, independent of any action by the class members, establish a common question relating to the entire class." Id. at 97, 60 S.W.3d at 433.

On commonality, the circuit court's order stated,

In the case at bar, the Court finds that each of the claims of the proposed classes are, in all material respects, identical to Plaintiff's claim.... [T]he claims of every class member here not only turn on a single pattern of conduct by Defendant, but on the Court's interpretation of [a] single document promulgated by Defendant, the MHBF Policy Booklet. The Defendant here has drafted, promulgated, and acted under two uniformly applicable set[s] of policy exclusion terms to reduce and/or deny the health insurance claims of the Class Members. Accordingly, the factual and legal bases of Defendants’ alleged liability, as well as the challenged contractual language in the MHBF's Policy from which this alleged liability arises, are common to all members of the Class and represent the core of each common cause of action asserted by the named Plaintiff and the Class members. Such common questions are:

i. Whether the express terms of the MHBF's Policy, as defined or undefined therein, allow for the application of the insuring exclusions at issue against the members of UCR and Auto Coverage Classes;

ii. Whether the insuring exclusions applied against the members of UCR and Auto Coverage Classes at issue herein, which were drafted by the MHBF, are subject to ambiguity or more than one reasonable interpretation, and are thus subject to be construed, strictly or otherwise, in favor of the Class Members under Arkansas law;

iii. The MHBF's liability for and the determination of damages, if any, under Ark. Code [Ann.] § 23-79-208, Ark. Code [Ann. §] 16-22-308, and/or Arkansas common, contract and/or statutory law as alleged in the Complaint.

... [T]he Court finds that the proposed classes, and the three causes of action asserted by each in the operative complaint, easily satisfy the commonality requirement of Rule 23.

We agree with the circuit court's finding because the claims of the classes’ members turn on the circuit court's interpretation of the two exclusions in the MHBF policy booklet. Here, the interpretation and enforceability of those two exclusions will be the same as to all members.

We are unpersuaded by MHBF's reliance on Williamson , 347 Ark. 89, ...