Spine Care Delaware, LLC v. United States Automobile Association ( 2020 )

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
SPINE CARE DELAWARE, LLC )
)
Plaintiff, )
)
v. ) C.A. No.: N18C-01-253 EMD CCLD
)
UNITED STATES AUTOMOBILE )
ASSOCIATION, USAA GENERAL )
INDEMNITY COMPANY, USAA )
CASUALTY INSURANCE COMPANY, )
AND GARRISON PROPERTY AND )
CASUALTY INSURANCE COMPANY )
)
Defendants. )
)
)
)
Submitted: September 9, 2020
Decided: September 16, 2020
ORDER REFUSING TO CERTIFY DEFENDANTS’ APPLICATION
FOR CERTIFICATION OF INTERLOCUTORY APPEAL OF CLASS
CERTIFICATION ORDER
This 16th day of September, 2020, upon consideration of Defendants’ Application for
Certification of an Interlocutory Appeal of Class Certification Order (the “Application”) filed by
Defendants United States Automobile Association, USAA General Indemnity Company, USAA
Casualty Insurance Company, and Garrison Property and Casualty Insurance Company
(collectively, the “Defendants”) on September 4, 2020; Plaintiff Spine Care Delaware, LLC’s
Opposition to Defendants’ Application for Certification of an Interlocutory Review (the
“Response”) filed by Plaintiff Spine Care Delaware, LLC (“Spine Care”); the Court’s Opinion
dated June 18, 2020 (the “Opinion”); Supreme Court Rule 42 (“Rule 42”); and this civil action’s
entire record:
APPLICABLE STANDARD
1. Rule 42(b) dictates the standard for certifying an interlocutory appeal. “No
interlocutory appeal will be certified by the trial court or accepted by this Court unless the order
of the trial court decides a substantial issue of material importance that merits appellate review
before a final judgment.”1 In deciding whether to certify an interlocutory appeal, the trial court
must consider: (1) the eight factors listed in Rule 42(b)(iii); 2 (2) the most efficient and just
schedule to resolve the case; and (3) whether and why the likely benefits of interlocutory review
outweigh the probable costs, such that interlocutory review is in the interests of justice. 3 “If the
balance [of these considerations] is uncertain, the trial court should refuse to certify the
interlocutory appeal.”4
2. Initially, the Court must determine if the Opinion that Defendants seek
certification of “decides a substantial issue of material importance that merits appellate review
before a final judgment.”5 The “substantial issue of material importance” prong of Rule 42
requires a determination of whether the Opinion presents any substantial issue of material
importance that could merit appellate review before a final judgment.6 The Opinion is not
1
Del. Supr. Ct. R. 42(b)(i).
2
Delaware Supreme Court Rule 42(b)(iii) provides that the trial court should consider whether:
(A) The interlocutory order involves a question of law resolved for the first time in this State;
(B) The decisions of the trial courts are conflicting upon the question of law;
(C) The question of law relates to the constitutionality, construction, or application of a statute of this State,
which has not been, but should be, settled by this Court in advance of an appeal from a final order;
(D) The interlocutory order has sustained the controverted jurisdiction of the trial court;
(E) The interlocutory order has reversed or set aside a prior decision of the trial court, a jury, or an
administrative agency from which an appeal was taken to the trial court which had decided a significant
issue and a review of the interlocutory order may terminate the litigation, substantially reduce further
litigation, or otherwise serve considerations of justice;
(F) The interlocutory order has vacated or opened a judgment of the trial court;
(G) Review of the interlocutory order may terminate the litigation; or
(H) Review of the interlocutory order may serve considerations of justice. See Del. Supr. Ct. R. 42(b)(iii).
3
Id.
4
Id.
5
Id. 42(b)(i).
6
See, e.g., Realogy Hdlgs. Corp. v. Sirva Worldwide, 2020 WL 4559519 (Del. Ch. Aug. 7, 2020).
2
addressing a minor issue like a discovery dispute, but rather the viability of class certification.
The Court concludes, therefore, that the substantial issue criterion is met in Defendants’ request
for certification.
BACKGROUND
3. Spine Care filed its Plaintiff Spine Care Delaware, LLC’s Motion for Class
Certification (the “Motion) on or about July 29, 2019. The Motion centered on the Defendants’
alleged untimely payment of covered medical expenses to Spine Care and other healthcare
providers. Spine Care contends that the statutory interest owed on overdue PIP-related medical
expenses is owed to Spine Care and others in the class. On October 7, 2019, Defendants filed
their Defendants’ Answering Brief in Opposition to Plaintiff’s Motion for Class Certification
(the “Answer”). On November 13, 2019, Spine Care filed its Plaintiff Spine Care Delaware,
LLC’s Reply Brief in Support of its Motion for Class Certification (the “Reply”). The Court
held a hearing on the Motion, the Answer and the Reply on January 29, 2020. After the hearing,
the Court took the Motion under advisement. On June 18, 2020, the Court issued the Opinion.
The Opinion granted the relief requested in the Motion and certified a class under Civil Rule 23.
4. Defendants moved to reargue the Opinion. Defendants contended that
reargument was necessary because: (i) they wished for further clarification on “whether the
certified class is limited to facility fee bills that Defendants allegedly were precluded as a matter
of law from disputing because they had deemed the underlying anesthesia bills to be
compensable”7 and (ii) the class was improper as it is founded upon “a misapprehension of
Defendants’ data systems and ability to identify those claims.” 8
7
Defs.’ Mot. to Reargue at 1-2.
8
Id. at 2.
3
5. The Court denied reargument. The Court held that Defendants were merely
rehashing arguments already asserted and previously determined by the Court. The Court noted
that the class definition was proper for:
All persons or entities who, since September 25, 2014, submitted claims for
medical-expense-related Personal Injury Protection (or “PIP”) benefits under
Delaware auto policies issued by United Services Automobile Association, USAA
General Indemnity Company, USAA Casualty Insurance Company or Garrison
Property and Casualty Insurance Company, where (i) the claim was not disputed
by the insurer on grounds of insufficient documentation within 30 days of receipt;
(ii) the claim was not paid by the insurer within 30 days of receipt; and (iii) though
ultimately paid in whole or part, the insurer made no payment of statutory interest
on the claim. 9
For the purposes of the class definition requiring that “the claim was not disputed by the insurer
on grounds of insufficient documentation within 30 days of receipt,” the Court held that
instances identified by the parties where a bill for a facility fee was disputed for lack of
documentation to determine medical necessity can be considered undisputed and compensable in
the absence of any other reason for denying coverage.10 The Court addressed this point due to a
standing argument made by Defendants. In other words, the Court allowed Spine Care to be
included in the class because Defendants were “precluded” from contesting the compensability
of a portion of Spine Care’s claim on a basis previously found to be improper by this Court. 11
6. On August 25, 2020, the Court entered an order implementing the Opinion.
PARTIES CONTENTIONS
7. Defendants assert that the Application meets the criteria set forth in Rule
42(b)(iii)(A), (C), (G) and (H). Defendants claim that: (i) the Opinion decides an issue
unresolved in Delaware because the (a) the Supreme Court has never address an “interest class”
9
Spine Care Delaware, LLC, 2020 WL 3564706, at *4 (Del. Super. June 18, 2020).
10
Id. at *6.
11
See Spine Care Delaware, LLC v. State Farm Mut. Auto. Ins. Co., 2007 WL 495899, at *3 (Del. Super. Feb. 5,
2001).
4
before and (b) Delaware courts have not addressed a situation where class membership can be
determined only by an individualized resolution of the merits of each class member’s claim; (ii)
the Opinion relates to the interpretation and application of a statute, 21 Del. C. § 2118 (“Section
2118”), which has not been, but should be, settled by the Supreme Court in advance of an appeal
from a final order; and (iii) an interlocutory review of the Opinion may terminate this civil and
action and thus serves the considerations of justice.
8. Spine Care opposes interlocutory appeal of the Opinion. In the Response, Spine
Care argues that none of the rulings in the Opinion are questions of first impression in Delaware.
Spine Care also contends that interlocutory review cannot possibly terminate this civil
proceeding because, even without class certification, Spine Care could proceed with its
individual claim against Defendants. Finally, Spine Care claims that piecemeal litigation of
Spine Care’s claim and the class claims will not serve the considerations of justice.
DISCUSSION
9. The Court agrees with the arguments made in the Response. The Court may be
viewing this too simplistically but, in rendering the Opinion, the Court did not seem to address
any questions of first impression. True, the Supreme Court has not ruled on the specific issues of
this civil action, but the Court had and so had other jurisdictions. As noted in the Response, the
Court has previously addressed class certification of statutory interest claims under Section
2118.12 Moreover, while there may be individual questions for certain claimants as to whether
they meet Spine Care’s class definition, this Court found that these individual questions did not
12
As noted in the Response, the Court has previously granted class certification and approved class settlements in
cases involving statutory interest under Section 2118. See Resp. at 3-5 (referring to Womack v. State Farm Mut.
Auto. Ins. Co., C.A. No. 06C-04-013RFS (Del. Super. Aug. 21, 2008) (class action involving, in part, statutory
claims to interest under Section 2118); Lowery v. USAA Gen. Indem. Co., C.A. No. N04C-12-083 (Del. Super. June
20, 2007) (classwide claims for statutory interest under Section 2118); and Crowhorn v. Nationwide Mut. Ins. Co.,
836 A.2d 558 (Del. Super. 2003) (final certification involving statutory interest under Section 2118 after previously
granting a motion to certify on June 23, 2003)).
5
predominate over whether Defendants failed to pay statutory interest on PIP claims that were
paid late. That is because the individual factual determinations that must be made, including the
amount of interest to which each claimant is entitled, can be made by reference to records and
objective criteria—objective criteria and mathematical calculations applied to undisputed
records.
10. The Court understands that Defendants disagree with the conclusions made in the
Opinion. In addition, the specific facts of this case may differ from other cases. However, this
does not mean that the question is novel. The propriety of class certification for statutory interest
claims under Section 2118 has been addressed by this Court and by other trial courts.
11. Defendants contend that the Court’s use of preclusion to address the standing of
Spine Care calls for interlocutory review to resolve an issue of statutory construction. The Court
did not undertake a novel statutory construction in assessing Spine Care’s standing. The Court
found Defendants disputed Spine Care’s claim as to the necessity of a facility fee when that form
of dispute had already been addressed and determined to be invalid by the Court—i.e., contesting
the facility fee when it already paid the corresponding physician’s fee. 13 As such, Defendants
could not be found to have genuinely disputed Spine Care’s claim for their patient, Ms. Upshaw.
Therefore, the Court found that Spine Care was a member of the class sought to be certified
because the claim was not “genuinely” disputed by Defendants on grounds of insufficient
documentation. 14
13
See Spine Care Delaware, LLC v. State Farm Mut. Auto. Ins. Co., 2007 WL 495899, at *3 (Del. Super. Feb. 5,
2001).
14
Id. at *2-3 (“In this case, each claimant received a bill from Spine Care for medical services or treatment which
included a facility fee. State Farm has not asserted that there is a policy exclusion for a facility fee related to medical
treatment, nor has it asserted that the insureds' injuries (and concomitant medical fees) did not arise from an insured
incident or a covered vehicle. The Court holds that State Farm is precluded from asserting a coverage defense to
claims for facility fees to which it did not respond within the statutory 30-day period set forth in § 2118B(c). This
principle also applies to inaccurate and unreliable responses. State Farm issued numerous denial letters based on a
licensing issue which State Farm has abandoned in hopes of now defending its denials on other grounds. The
6
12. Interlocutory review will not result in a termination of this civil action. Spine
Care has asserted both individual as well as classwide claims for statutory interest under Section
2118. As such, interlocutory review could only possibly terminate the class claims but not the
individual claims of Spine Care.
13. The Court does not feel that interlocutory review will otherwise serve the
considerations of justice. Defendants do not, in the Application, seem to make additional
arguments for their Rule 42(b)(iii)(H) argument. Instead, Defendants reiterate that the class is
unascertainable because factual determination of the merits of claims will predominate. The
Court addressed those issues in the Opinion. Discovery on the issue of whether the claim was
disputed on the facility fee is narrow—i.e., a request for documentation to demonstrate that the
use of a facility was a medical necessity. All other claims need to meet objective criteria:
whether the claim submitted was within the statutory period; whether Defendants disputed the
claim on grounds of insufficient documentation within 30 days of receipt; whether Defendants
paid the claim within 30 days of receipt; and, though ultimately paid in whole or part, whether
Defendants paid any required statutory interest on the claim. None of this requires adjudication
on the merits of each claim.15
14. Moreover, as presented at the hearing on the Motion and through briefing, this
does not seem to involve “intractable problems” that must be resolved through interlocutory
appeal and not the normal trial court litigation process. As such, the Court does not find that the
benefits of interlocutory appeal outweigh the probable costs such that interlocutory review is in
the interests of justice.
requirement that a written explanation be provided [within 30 days] is meaningless unless the proffered explanation
is correct.”) (emphasis added).
15
See, Shady Grove Orthopedic Assoc., P.A. v. Allstate Ins. Co., 293 F.R.D. 287, 306 (E.D.N.Y. 2013). Bulmash v.
Travelers Indemnity Co., 257 F.R.D. 84 (D. Md. 2009).
7
15. The Court does not believe that Defendants have demonstrated that interlocutory
review of the Opinion is warranted. At the very least, a balancing of the considerations is
uncertain. The Court, therefore, will refuse to certify the interlocutory appeal.
CONCLUSION
IT IS HEREBY ORDERED that certification to the Supreme Court of the State of
Delaware for disposition in accordance with Rule 42 is REFUSED.
Dated: September 16, 2020
Wilmington, Delaware
/s/ Eric M. Davis
Eric M. Davis, Judge
8