ATTORNEYS FOR APPELLANTS: ATTORNEYS FOR APPELLEES:
THOMAS G. STAYTON IRWIN B. LEVIN
JOHN JOSEPH TANNER DAVID J. CUTSHAW
DANIEL R. ROY
Cohen & Malad, LLP
Baker & Daniels Indianapolis, Indiana
COURT OF APPEALS OF INDIANA
ASSOCIATED MEDICAL NETWORKS, LTD., )
ASSOCIATED INSURANCE COMPANIES, )
INC., and ANTHEM HEALTH SYSTEMS, INC., )
vs. ) No. 49A05-0203-CV-122
DR. WILLIAM R. LEWIS, DR. DARRYL )
FORTSON and WABASH AVENUE MEDICAL )
CENTER, and all others similarly situated, )
APPEAL FROM THE MARION SUPERIOR COURT
The Honorable Robyn L. Moberly, Judge
Cause No. 49D12-9912-CP-1710
February 26, 2003
OPINION - FOR PUBLICATION
STATEMENT OF THE CASE
Appellants-Defendants, Associated Medical Networks, Ltd. (AMN), Associated Insurance Companies, Inc. (AIC), and Anthem
Health Systems, Inc. (AHS) (collectively, Anthem), appeal the trial courts certification of this
case as a class action under Indiana Trial Rule 23, in favor of
Appellees-Plaintiffs, Dr. William R. Lewis (Dr. Lewis), Dr. Darryl Fortson (Dr. Fortson), and
Wabash Avenue Medical Center (WAMC), and all others similarly situated (collectively the Doctors).
Anthem raises two issues on review, which we restate as follows:
1. Whether the trial court abused its discretion in determining that the
predominance requirement of Ind. Rule 23(B)(3) was satisfied.
2. Whether the trial court properly considered the pertinent matters enumerated in
T.R. 23(B)(3)(a)-(d) when concluding that certification of the subject class was superior to
FACTS AND PROCEDURAL HISTORY
Anthem is a health insurer. During the 1990s, Anthem maintained networks of
preferred health care providers, many of which are still in place today.
Generally, networks like Anthem provide incentives, such as lower co-payments and greater insurance
reimbursements to encourage patients to seek medical care from physicians who are part
of the network. In turn, network physicians agree to accept fees for
the medical services that they provide that are lower than they might ordinarily
charge. In exchange for charging lower fees, the physicians in the network
receive certain benefits from the insurer. Specifically, Anthem pays insurance claims
directly to network physicians, rather than reimbursing the patients of network physicians.
Overall, Anthems networks allow it to reduce the costs of healthcare. Subsequently,
the cost of premiums are correspondingly lower.
Since 1960, Dr. Lewis has practiced medicine in Gary, Indiana at WAMC.
Dr. Lewis has rendered care to patients with health insurance from Blue Cross
and Blue Shield (BCBS) (now Anthem); and he was paid directly by Anthem
for the medical treatment that he rendered to Anthem insureds. In 1986,
Dr. Lewis license to practice medicine was placed on probationary status for an
incident that occurred in 1978. From 1986 through 1991, Anthem continued to
pay Dr. Lewis directly for the medical treatment that he rendered to his
patients and its insureds. However, on February 4, 1991, Dr. Lewis was
notified that he was no longer a member of Anthems preferred or participating
provider network. As a result, Anthem sent checks for Dr. Lewis services
directly to the insureds, i.e. his patients. The insureds were the payees
on the checks. This practice continued until April of 1995, when the
Indiana Medical Licensing Board lifted the probationary status of Dr. Lewis. At
this time, Anthem resumed direct payment to Dr. Lewis and WAMC for medical
services rendered to its insureds. During Dr. Lewis probationary period, Anthem informed
Dr. Lewis patients that they should seek the services of another physician.
However, Dr. Lewis practiced medicine in an area designated by Medicare as medically
under-served, or an area where there were not enough physicians to serve the
local populace. As a result, Dr. Lewis continued to treat his patients
and Anthems insureds, but he was not paid by Anthem directly.
In October 1992, Dr. Fortson, the nephew of Dr. Lewis, began working
with Dr. Lewis at WAMC. Even though Dr. Fortson did not have
any restrictions on his license, Anthem refused to pay him directly for medical
services rendered to his patients and its insureds. Instead, Anthem paid its
insureds for the medical care that he rendered. Anthem has admitted that
Dr. Fortson was disqualified from the network because he practiced with Dr. Lewis.
Anthems direct payment of monies owed to the Doctors for services rendered was
extremely tempting to many of the Doctors patients. Several of the patients
were poor or were recently hospitalized. As a result, many of the
insureds, i.e. patients of the Doctors, cashed the checks from Anthem and never
paid the Doctors. Consequently, the Doctors lost thousands of dollars in income.
In 1992, Dr. Lewis and WAMC filed an individual action in Lake County
against Anthem and several of their patients. This complaint alleged that Anthem
improperly paid medical insurance benefits, for treatments rendered by Dr. Lewis and WAMC,
directly to the patients of Dr. Lewis and WAMC. At this time,
Dr. Lewis did not think of bringing a class action because he believed
that Anthem was singling him out for the fact that he was an
African-American and the fact that he performed abortions in the past. A
couple of years later, Dr. Lewis attended a medical conference and found out
that Anthem was applying the criteria of not paying doctors directly to other
providers. Thereafter, Dr. Lewis initiated a class action lawsuit.
On October 25, 1995, the Doctors and others similarly situated, filed a class
action in the Lake County Superior Court. In the complaint, the Doctors
alleged that Anthem refused to honor valid assignments of benefits executed by their
patients and Anthems insureds. Additionally, the Doctors argued that Anthem failed to
protect their valid equitable liens on health insurance proceeds generated as a result
of their treatment of their patients. On the same day, the
Doctors filed a motion to consolidate the 1992 action with the class action,
and the trial court granted the motion. Anthem filed its answer and
asserted the affirmative defense that pursuant to T.R. 75, proper venue was not
in Lake County but in Marion County.
Subsequently, on November 17, 1995, Anthem removed the case to federal court on
the basis of a federal question. Specifically, Anthem removed the case to
federal court because the Employment Retirement and Income Security Act of 1974 (ERISA)
governed many of the insureds. On January 10, 1996, the Doctors filed
a Motion to Remand. On April 16, 1997, the District Court denied
the Doctors motion. As a result, the Doctors filed a Motion to
Amend Complaint on May 27, 1997, in order to eliminate any claims pertaining
to patients with health insurance plans governed by ERISA. On December 30,
1997, the District Court granted the Motion to Amend Complaint filed by the
Doctors. Accordingly, the case was remanded back to state court. As
a result of the Amended Complaint, the Doctors and the class members are
limited to claims against patients with insurance policies that were not governed by
On June 12, 1998, Anthem moved to have the case transferred to Marion
County pursuant to Ind. Trial Rule 75, because the Doctors failed to file
the case in the only court with preferred venue. The Lake Superior
Court denied Anthems motion and Anthem appealed the venue issue to this court.
On June 16, 1999, we reversed the Lake Superior Court and ordered
the case transferred to Marion County. See Assoc. Med. Networks, Ltd. v.
Lewis, No. 45A04-9811-CV-532 slip op. (Ind. Ct. App. June 16, 1999).
On May 1, 2001, Anthem filed a motion for summary judgment on all
of the Doctors claims. On December 3, 2001, the trial court granted
Anthems motion for summary judgment on the Doctors equitable lien claim, holding that
Indiana law does not recognize this claim. The trial court also partially
granted Anthems motion for summary judgment on the Doctors claim of assignment of
benefits. To resolve the Doctors claim on assignment of benefits, the trial
court reviewed evidence pertaining to each of the Doctors patients who allegedly received
insurance benefits from Anthem but did not pay the Doctors for the medical
services rendered. Specifically, the trial court determined what kind of health insurance
plan each patient had and whether each patient gave the Doctors a valid
assignment of benefits. Based on its patient-by patient, plan-by-plan, assignment-by-assignment review of
the evidence, the trial court found that many of the patients health insurance
plans were governed by ERISA. Because only non-ERISA claims are at issue
in this case, the Doctors claims based on assignments executed by patients with
ERISA plans failed as a matter of law. The trial court also
found that most of the forms that the Doctors offered as assignments of
benefits from the patients lacked the assignment language that Indiana law requires.
Consequently, as a result of the summary judgment ruling, the Doctors only have
remaining claims for insurance benefits that Anthem paid to two of their patients.
Moreover, on December 3, 2001, the trial court also addressed the request of
the Doctors to have the case certified as a class action. The
trial court previously held a class certification hearing on October 17, 2001.
On December 3, 2001, the trial court certified the case as a class
action after considering the oral arguments of counsel and the materials filed in
support. The trial court defined the class as follows:
Any and all health care providers in the State of Indiana, who have
ever had restrictions placed on their license to practice medicine by the Health
Professions Bureau, including their professional associations, corporations, partnerships, associates, and partners, or who,
for any reason, were not preferred health care providers or network providers, and
to which Defendants and their predecessors failed to forward checks for medical services
rendered to patients insured by [Anthem] or their predecessors (under health insurance contracts
which are not governed by ERISA or which are specifically exempted from ERISA
pursuant to 29 U.S.C. sec. 1003) directly to the health care provider, or
otherwise include said health care provider as a payee on said checks, and
who were damaged thereby.
(Appellants App. pp. 15-6).
On December 21, 2001, Anthem motioned the trial court to enter the class
action certification order as a final judgment pursuant to T.R. 54(B). On
December 27, 2001, the trial court granted Anthems motion. On January 2,
2002, the Doctors filed a motion to reconsider the trial courts December 27,
2001 motion, which entered the class certification order as a final judgment.
On January 23, 2002, the trial court granted the Doctors motion to reconsider,
and extended the time for Anthem to move to certify the class certification
order for interlocutory review by this court. On January 29, 2002, Anthem
moved to certify the class certification order for interlocutory review. On March
13, 2002, Anthem filed a motion for this court to accept jurisdiction of
the interlocutory appeal. On May 23, 2002, we accepted jurisdiction.
Anthem now appeals. Additional facts will be provided as necessary.
DISCUSSION AND DECISION
I. Standard of Review
We review a trial courts decision to certify a class action for an
abuse of discretion. Rene v. Reed, 726 N.E.2d 808, 816 (Ind. Ct.
App. 2000). An abuse of discretion occurs when the trial courts decision
is clearly against the logic and effect of the facts and circumstances before
the court. Bowles v. Bowles, 721 N.E.2d 1247, 1249 (Ind. Ct. App.
1999). This standard requires the appellate court to only look to the
evidence most favorable to the class certification order and all reasonable inferences to
be drawn therefrom to determine whether the trial court abused its discretion.
Lake County Trust Co. v. Wine, 704 N.E.2d 1035, 1042 (Ind. Ct. App.
A trial court may certify a class action only if the plaintiff meets
its burden of satisfying the requirements of T.R. 23. McCart v. Chief
Executive Officer in Charge, Independent Federal Credit Union, 652 N.E.2d 80, 82-3 (Ind.
Ct. App. 1995). Specifically, T.R. 23 establishes a two-step procedure for determining the
propriety of class action certification. The trial court must first determine whether
the class meets the four preliminary requirements of T.R. 23(A):
(1) the class is so numerous that joinder of all members is impracticable;
(2) there are questions of law or fact common to the class;
(3) the claims or defenses of the representative parties are typical of the
claims or defenses of the class; and
(4) the representative parties will fairly and adequately protect the interests of the
class.II. Class Action Certification
See T.R. 23(A).
Additionally, a class action that satisfies all four of the T.R. 23(A) requirements
must also satisfy at least one of the three subsections of T.R. 23(B).
The burden of proving the conditions precedent to class certification rests with
the plaintiffs and the plaintiffs failure to meet any one of the mandated
prerequisites in T.R. 23(A) results in the denial of class certification. ConAgra,
Inc. v. Farrington, 635 N.E.2d 1137, 1140 (Ind. Ct. App. 1994), rehg denied.
A trial court has broad discretion in determining whether an action
is maintainable as a class action. CSX Transp., Inc. v. Clark, 646
N.E.2d 1003, 1006 (Ind. Ct. App. 1995); Skalbania v. Simmons, 443 N.E.2d 352,
356 (Ind. Ct. App. 1982), trans. denied. On appeal, we neither reweigh
evidence nor judge witness credibility. We affirm if the evidence most favorable
to the judgment and all reasonable inferences to be drawn therefrom support the
trial courts determination. American Cyanamid Co. v. Stephen, 623 N.E.2d 1065, 1070
(Ind. Ct. App. 1993).
In the present case, Anthem asserts that the trial court abused its discretion
when it certified this case as a class action. Specifically, Anthem maintains
that the trial court erred when determining that the predominance requirement of T.R.
23(B)(3) was satisfied.
As stated above, in determining the propriety of class action certification, a trial
court must first determine whether the class meets the four prerequisites of T.R.
23(A), generally known as numerosity, commonality, typicality, and adequacy of representation. If
these are met, the trial court must then assess whether the action also
satisfies at least one of the three subsections of T.R. 23(B). Here,
the trial court found that the Doctors satisfied the prerequisites to class certification
pursuant to T.R. 23(A). Specifically, the trial court held:
All of the elements of Trial Rule 23(A) are satisfied in the present
Rule 23(A)(1) (Numerosity): [Anthem] [has] identified more than Eighteen Thousand (18,000) health
care providers whose patients received direct payment from Anthem(f/k/a Blue Cross/Blue Shield).
It is reasonable to infer that more than Forty (40) health care providers
were not paid these funds by their patients such that joinder is impracticable.
Rule 23(A)(2) (Commonality): The claims of the [Doctors] and class members are
all based on a common nucleus of operative facts. Anthem does not
[assert] that there are no common issues of law or fact.
Rule 23(A)(3) (Typicality): The claims of the [Doctors] and the class members
are all based on the same legal theories. There is no evidence
that [Doctors] claims are antagonistic to the class claims.
Rule 23(A)(4) (Adequacy): [Doctors] testified at their depositions that they were committed
to devoting the time and effort necessary to prosecuting this litigation. The
named [Doctors] interests are not antagonistic to the interests of class members.
Finally, [Doctors] counsel is experienced in complex and class action litigation, as evidenced
by their firm resume.
(Appellants App. pp. 14-5). Moreover, the trial court held that class certification
was proper under T.R. 23(B)(3). The trial court stated:
The elements of Rule 23(B)(3) are satisfied in the present manner because common
questions predominate over individual ones and a class action is superior to other
available methods for the fair and efficient adjudication of this controversy. The
Court notes that individual class members do not appear to wish to control
the prosecution of separate actions, that no other litigation concerning this controversy has
been commenced, that is desirable to concentrate this litigation in a single forum,
and that no difficulties are likely to be encountered in the management of
this action as a class action. [Anthems] common course of conduct in
paying patients of non-Network health care providers is a predominant factual and legal
(Appellants App. p. 15).A. Predominance
In the instant case, Anthem does not concede that this case meets the
requirements of T.R. 23(A). Instead, Anthem contends that we do not need
to address whether the case satisfies T.R. 23(A) because the case fails to
meet the requirements of T.R. 23(B). Anthem argues that the trial court
abused its discretion by certifying this case as a class action under T.R.
23(B)(3). Specifically, Anthem asserts that the trial court abused its discretion in
determining that the predominance requirement of T.R. 23(B)(3) was satisfied.
Class certification under T.R. 23(B)(3) is appropriate only where questions of law or
fact common to the members of the class predominate over any questions affecting
only individual members and a class action is superior to other available methods
for the fair and efficient adjudication of the controversy. See T.R. 23(B)(3).
Anthem maintains that common questions cannot predominate where each class member will
have to individually prove each claim at trial. However, Indiana law holds
that the element of predominance can be established by a showing of a
common course of conduct on the part of the class defendant. See
NIPSCO v. Bolka, 693 N.E.2d 613, 616-17, 620 (Ind. Ct. App. 1998); Connerwood
Healthcare, Inc. v. Estate of Herron, 683 N.E.2d 1322, 1326 (Ind. Ct. App.
1997); Skalbania, 443 N.E.2d at 363.
Here, there is evidence to support a finding that questions of fact or
law predominate over questions only affecting individual doctors and that class action treatment
is a superior method of adjudication. See id.; T.R. 23(B). Anthem
asserts that it was error for the trial court to conclude that there
were common factual issues because the proof of the representative plaintiffs claims, i.e.
the Doctors claims, will not operate to establish Anthems liability to an absent
class member or any element of a class members claim. However, the record
shows that Anthem engaged in a common course of conduct. Specifically, the
record reflects that Anthem does not pay non-participating health care providers who have
obtained assignments of benefits from their patients, but pays their patients directly in
derogation of the assignment of benefits. Since the trial court identified a
common course of conduct, the predominance requirement of T.R. 23(B)(3) is established.
See Bolka, 693 N.E.2d at 616-17, 620; Connerwood Healthcare, Inc., 683 N.E.2d at
1326; Skalbania, 443 N.E.2d at 363. As a result, we find that
it was certainly within the discretion of the trial court to conclude that
Anthems common course of conduct permeated each class members claim and predominated.
See Lake County Trust Co., 704 N.E.2d at 1042.
Next, Anthem contends that the trial court abused its discretion by misapplying the
requirements of T.R. 23(B)(3)(a) through (d) for class certification. Specifically, Anthem argues
that the trial court improperly held that a class action is superior to
other available methods for the fair and effective adjudication of the controversy.
T.R. 23(B)(3) lists four factors that the trial court must consider when determining
that a class action is the superior method of resolving a controversy.
The matters pertinent to the findings include:
a) the interest of members of the class in individually controlling the prosecution or
defense of separate actions;
b) the extent and nature of any litigation concerning the controversy already commenced by
or against members of the class;
c) the desirability or undesirability of concentrating the litigation of the claims in the
d) the difficulties likely to be encountered in the management of a class action.CONCLUSION
See T.R. 23(B)(3)(a)-(d). When determining what weight should be given to the
factors listed in T.R. 23(B)(3)(a) through (d), the trial court is given broad
discretion. American Cyanamid Co., 623 N.E.2d at 1074.
Here, the record reflects that during the class certification proceedings, Anthem provided no
evidence that individual class members were interested in controlling their own litigation or
that other litigation was commenced on the same issues. See T.R. 23(B)(3)(a)
and T.R. 23(B)(3)(b). Moreover, the record is devoid of evidence from Anthem
that the concentration of this litigation in centrally located Marion County is undesirable.
See T.R. 23(B)(3)(c). In fact, the record shows that Anthem filed
for the change of venue to Marion County. The evidence on the
record also fails to establish manageability problems. See T.R. 23(B)(3)(d). The
trial court retained jurisdiction to modify the definition of the plaintiff class to
create subclasses in order to properly manage the case as a class action,
pursuant to T.R. 23(D). Clearly, the trial court found that a class
action is the superior method of resolving this controversy. See T.R. 23(B)(3)(a)-(d).
Accordingly, we find that the trial court did not abuse its discretion
in finding that Anthems common course of conduct in paying patients of non-Network
health care providers is a predominant factual and legal issue that is best
resolved by means of a class action. See American Cyanamid Co., 623
N.E.2d at 1070, 1074.
Based on the foregoing, we conclude that the trial court did not abuse
its discretion in certifying this case as a class action pursuant to T.R.
MATTINGLY-MAY, J., and ROBB, J., concur.