ST. LOUIS PARK CHIROPRACTIC, P.A., individually v. Federal Insurance Company

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________
No. 08-3808
____________
ST. LOUIS PARK CHIROPRACTIC, P.A.,
individually and on behalf of all others similarly situated,
Appellant
v.
FEDERAL INSURANCE COMPANY;
GREAT NORTHERN INSURANCE COMPANY;
CHUBB NATIONAL INSURANCE COMPANY
____________
No. 08-3809
____________
INNOVATIVE PHYSICAL THERAPY, INC.,
Individually and on behalf of all others similarly situated;
DAVIS CHIROPRACTIC, P.A.; CASEY OIE, D.C. d/b/a BLAKE CHIROPRACTIC
v.
METLIFE AUTO & HOME; METROPOLITAN PROPERTY
AND CASUALTY INSURANCE COMPANY
INNOVATIVE PHYSICAL THERAPY, INC.;
DAVIS CHIROPRACTIC, P.A.;
CASEY OIE, D.C. d/b/a BLAKE CHIROPRACTIC,
Appellants

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____________
No. 08-3821
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ALLIED MEDICAL, P.A.; SLP CHIROPRACTIC, P.A.;
NORTH PALM NEUROSURGERY, P.L.;
CASEY OIE, D.C. d/b/a BLAKE CHIROPRACTIC; TODD M. WULF, P.A.;
MAR VISTA INSTITUTE OF HEALTH,
individually and on behalf of others similarly situated,
Appellants
v.
AMERICAN INTERNATIONAL INSURANCE COMPANY, LLC;
AMERICAN INTERNATIONAL INSURANCE COMPANY OF DELAWARE;
AMERICAN INTERNATIONAL INSURANCE COMPANY OF NEW JERSEY;
AMERICAN INTERNATIONAL INSURANCE COMPANY OF CALIFORNIA;
NEW HAMPSHIRE INSURANCE COMPANY;
AIG NATIONAL INSURANCE COMPANY, INC.;
GRANITE STATE INSURANCE COMPANY;
AIG CLAIMS SERVICES, INC.; AIG MARKETING, INC.
____________
No. 08-3822
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ADVANCED ACUPUNCTURE CLINIC, INC.,
d/b/a ADVANCED THERAPY CLINIC; TODD M. WULF, P.A.;
CASEY OIE, D.C. d/b/a BLAKE CHIROPRACTIC CENTER;
SLP CHIROPRACTIC, P.A., individually and on behalf of all others similarly situated,
Appellants
v.
ALLSTATE INSURANCE COMPANY;
DEERBROOK INSURANCE COMPANY;
ENCOMPASS INSURANCE COMPANY OF AMERICA

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____________
No. 08-3823
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ADVANCED ACUPUNCTURE CLINIC, INC.,
d/b/a ADVANCED THERAPY CLINIC;
ALLIED MEDICAL, P.A.; CASEY OIE,
individually and on behalf of others similarly situated,
d/b/a BLAKE CHIROPRACTIC CENTER,
Appellants
v.
FARMERS INSURANCE EXCHANGE
____________
No. 08-3824
____________
CASEY OIE, D.C.,
individually and on behalf of others similarly situated,
d/b/a BLAKE CHIROPRACTIC,
Appellant
v.
TRAVELERS INDEMNITY COMPANY
____________
On Appeal from the United States District Court
for the District of New Jersey
(D.C. Nos. 07-cv-03110, 07-cv-05446, 07-cv-04622,
07-cv-04925, 07-cv-05445 and 07-cv-05447)
District Judge: Honorable Joel A. Pisano
____________
Argued June 1, 2009

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Honorable Paul S. Diamond, United States District Judge for the Eastern District*
of Pennsylvania, sitting by designation.
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Before: FISHER and CHAGARES, Circuit Judges, and DIAMOND, District Judge.*
(Filed: July 22, 2009 )
James E. Cecchi
Lindsey H. Taylor (Argued)
Carella, Byrne, Bain, Gilfillan,
Cecchi, Stewart & Olstein
5 Becker Farm Road
Roseland, NJ 07068
Attorneys for St. Lous Park Chiropractic, P.A.,
Innovative Physical Therapy, Inc.,
Davis Chiropractic, P.A., Casey Oie, D.C., d/b/a
Blake Chiropractic, Allied Medical, P.A.,
SLP Chiropractic, P.A., North Palm Neurosurgery, P.L.,
Casey Oie, Todd M. Wulf, P.A.; Mar Vista Institute
of Health and Advanced Acupuncture Clinic, Inc.,
d/b/a Advanced Therapy Clinic
Joseph A. Arnold
Cozen & O’Connor
457 Haddonfield Road
Liberty View, Suite 300
Cherry Hill, NJ 08002
Jacob C. Cohn (Argued)
William P. Shelley
Cozen & O’Connor
1900 Market Street, 3rd Floor
Philadelphia, PA 19103
Attorneys for Federal Ins. Co., Great Northern
Ins. Co. and Chubb National Ins. Co.

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DanaLynn T. Colao
David J. D’Aloia
Saiber
One Gateway Center, 13th Floor
Newark, NJ 07102-5311
Jeffrey P. Lennard
Steven M. Levy (Argued)
Sonnenschein, Nath & Rosenthal
233 South Wacker Drive
8000 Sears Tower
Chicago, IL 60606
Attorneys for Metlife Auto & Home and
Metropolitan Property & Casualty Ins. Co.,
Allstate Ins. Co., Deerbrook Ins. Co. and
Encompass Ins. Co. of America
Tacy F. Flint
Robert N. Hochman (Argued)
Theodore R. Scarborough
Sidley Austin
One South Dearborn Street
Chicago, IL 60603
Amy S. Kline
Saul Ewing
1500 Market Street
Centre Square West, 38th Floor
Philadelphia, PA 19102

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Aaron S. Mandel
Loevy & Loevy
312 North May Street, Suite 100
Chicago, IL 60607
Attorneys for American International Ins. Co., LLC,
American International Ins. Co. of Delaware,
American International Ins. Co. of New Jersey,
American International Ins. Co. of California,
New Hampshire Ins. Co., AIG National Ins. Co., Inc.,
Granite State Ins. Co., AIG Claims Services, Inc. and
AIG Marketing, Inc.
Richard H. Epstein
Sills, Cummis & Gross
One Riverfront Plaza
Newark, NJ 07102
David L. Yohai (Argued)
Weil, Gotshal & Manges
767 Fifth Avenue, 27th Floor
New York, NY 10153
Attorneys for Farmers Ins. Exchange
James S. Coons
Morison, Ansa, Holden, Assuncao & Prough
Two Tower Center Boulevard, Suite 1600
East Brunswick, NJ 08816
Neil J. Dilloff (Argued)
DLA Piper US
6225 Smith Avenue
Baltimore, MD 21209-0000
Attorneys for Travelers Ins. Co.
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OPINION OF THE COURT
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DIAMOND, District Judge.
In these six putative class actions, Appellants -- who have sought reimbursements
under insurance policies issued by several of the Appellee companies -- charge that
Appellees breached the policies by using a computer auditing system to evaluate those
reimbursements. The District Court dismissed all six actions on various grounds. We
conclude that Appellants have not stated a cognizable breach of contract claim and will
affirm on this alternative ground.
I.
Because we write primarily for the benefit of the Parties, we will summarize the
complex history of these cases.
Appellees (Defendants below) are: (1) insurance companies that issue Personal
Injury Protection (“PIP”) automobile insurance policies; and (2) entities that adjust PIP
claims on behalf of insurers. Appellants (Plaintiffs below) are medical providers in
Minnesota, Texas, Kansas, Arkansas, Florida, and California who treated persons insured
by Appellees and then, after receiving assignments from their patients, sought payment
for those services from Appellees.
In each of the actions below, Appellants asked the District Court to certify a Rule
23(b)(3) class of medical providers and insureds bringing the same claim: that Appellees
breached the underlying insurance contracts by using “computerized auditing system[s]”
to determine the amount to be paid for each PIP claimed reimbursement. Appellants’

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Supp. Br. at 1; App. at 156-57, 185-86, 211-12, 237-38, 271-72, 305-06; Fed. R. Civ. P.
23(b)(3). Each auditing system includes a database compiled by a third party used to
calculate the prevailing billing rates for medical services within a given area. According
to Appellants, these databases are “flawed and corrupt,” thus reducing or automatically
applying undisclosed “cap[s]” on some reimbursements. (Appellants’ Supp. Br. at 1, 4.)
The first of these actions was filed in the District of New Jersey on July 3, 2007.
St. Louis Park Chiropractic, P.A. v. Fed. Ins. Co., No. 08-3808 (“Chubb”). On
September 10, 2007, the Chubb Defendants moved to dismiss for failure to state a claim
and lack of subject matter jurisdiction. Fed. R. Civ. P. 12(b)(6), (b)(1). While this
Motion was pending, additional class actions were filed in the same Court against other
insurers. App. at 30-31; see Innovative Physical Therapy, Inc. v. Metlife Auto & Home,
No. 08-3809 (“Metlife”); Allied Med., P.A. v. Am. Int’l Ins. Co., No. 08-3821 (“AIG”);
Advanced Acupuncture Clinic, Inc. v. Allstate Ins. Co., No. 08-3822 (“Allstate”);
Advanced Acupuncture Clinic, Inc. v. Farmers Ins. Exch., No. 08-3823 (“Farmers”);
Casey Oie, D.C. v. Travelers Indem. Co., No. 08-3824 (“Travelers”). On November 16,
2007, the District Court denied the Chubb Defendants’ Motion to Dismiss without
prejudice to their right to re-file pursuant to a coordinated briefing schedule in all six
cases. (App. at 30-31.) On March 18, 2008, Defendants moved to dismiss each of the
named Plaintiffs’ actions on myriad grounds. In addition, the Allstate, Metlife, and
Chubb Defendants moved to strike the class allegations arguing, inter alia, that Plaintiffs

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could never meet Rule 23’s class certification requirements because individual issues of
law and fact predominated. Fed. R. Civ. P. 23(b)(3).
On August 26, 2008, the District Court granted Defendants’ Motions and
dismissed all six actions. In Allstate, Metlife, and Chubb, the Court dismissed the
Minnesota named Plaintiffs’ breach of contract claims, ruling that under state law they
were subject to mandatory arbitration. (App. at 33-36, 58-60, 95-98.) The Court
dismissed the claims of certain of the named Plaintiffs in AIG and Farmers because the
Defendants in those cases were not parties to the underlying insurance policies. (App. at
86, 122-23.) The Court sua sponte dismissed: (1) the claims of certain named Plaintiffs
in Metlife and AIG because those Plaintiffs “ma[d]e no allegations against” Defendants
in their Complaints; and (2) the claims of certain named Plaintiffs in Allstate on forum
non conveniens grounds. (App. at 60 n.6, 86 n.5, 98-101.) Finally, the District Court
granted summary judgment against the named Plaintiff in Travelers because the insured
patient had entered into a settlement and release. (App. at 129-30.)
The District Court also granted Defendants’ Motions to Strike the class allegations
in Chubb, Metlife, and Allstate. The Court determined that Plaintiffs could not meet the
requirements for a Rule 23(b)(3) class because: (1) the Minnesota named Plaintiffs were
inadequate class representatives as they were required to arbitrate their claims (Fed. R.
Civ. P. 23(a)(4)); (2) individual issues of law and fact predominated over common issues
(Fed. R. Civ. P. 23(b)(3)); and (3) a class action was not the superior form of action (Fed.

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R. Civ. P. 23(b)(3)). (App. at 37-50, 60-73, 101-14.) The Defendants in Farmers and
Travelers “chose[] to await the Court’s decision [in Allstate] before addressing the class
allegations.” (App. at 120 n.1, 127 n.1.) The District Court nonetheless stated that
because it had decided to “deny class certification” in Allstate, “the issue, as it pertains to
[Travelers and Farmers], is moot.” (Id.) The AIG Defendants had not moved to strike
the class allegations. In its Order dismissing the named Plaintiffs’ claims, however, the
District Court noted that “[h]ad [the AIG] Defendants made such a motion,” it would
have “denied class certification because Plaintiffs do not meet the requirements under
Fed. R. Civ. P. 23.” (App. at 80 n.3.)
Plaintiffs timely appealed the District Court’s Orders. (App. at 1-18.) With the
exception of the claims against certain Chubb Defendants that were dismissed for lack of
personal jurisdiction, Appellants challenge every ground on which the District Court
dismissed the named Plaintiffs’ claims and struck the class allegations. Appellees urge us
to affirm both for the reasons addressed by the District Court and on additional grounds
that the District Court did not reach.
During oral argument, we sought to determine whether Plaintiffs had stated a
cognizable breach of contract claim below (an issue that neither the Parties nor the
District Court had addressed). At our request, the Parties subsequently submitted
supplemental briefs on this question.

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II.
The District Court had subject matter jurisdiction pursuant to 28 U.S.C.
§ 1332(d)(2)(A). We have appellate jurisdiction pursuant to 28 U.S.C. § 1291.
III.
Appellants are unable to identify any contractual provision that: (1) prohibits
Appellees from using a computerized auditing system; or (2) requires Appellees to
consider -- or prohibits them from considering -- any particular criterion in determining
whether an expense is “reasonable.” Accordingly, we do not believe Appellees’ use of
computerized auditing systems breached the underlying insurance contracts. See, e.g.,
Ware v. Rodale Press, Inc., 322 F.3d 218, 225 (3d Cir. 2003) (“[A] plaintiff seeking to
proceed with a breach of contract action must establish (1) the existence of a contract,
including its essential terms, (2) a breach of a duty imposed by the contract, and
(3) resultant damages.”) (internal quotation marks and alterations omitted); 23 Richard A.
Lord, Williston on Contracts § 63:1 (4th ed. 2002) (“[A] breach of contract is a failure,
without legal excuse, to perform any promise that forms the whole or part of a contract.”).
Appellants suggest that we have not properly construed their breach of contract
claim. They argue that Appellees’ use of computerized auditing breached the policy
provision requiring them to pay “reasonable” medical expenses. (Appellants’ Supp. Br. at
2 & Ex. 1.) It is apparent, however, that the gravamen of Appellants’ claim is that
Appellees’ use of computerized auditing itself violated the insurance contracts.

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Appellants confirm this in asking us to reverse the District Court’s decision to strike their
class allegations. In making that decision, the District Court construed Appellants’ claim
below exactly the way Appellants now ask us to construe it: that Appellees below
breached the policy provision requiring them to pay “reasonable” medical expenses. The
District Court reasoned that this claim would necessarily require a determination of
“reasonableness” expense by expense. Because individual factual and legal issues would
thus predominate, the Court ruled that Appellants could not meet the certification
requirements of Rule 23(b)(3). (E.g., App. at 111.)
In challenging that determination, Appellants have argued to us that the District
Court misconstrued their breach of contract claim, which is unrelated to the
reasonableness of the reimbursements paid:
Plaintiffs are not challenging individual determinations of reasonableness for
the claims of individual class members because the Insurers never made any.
Rather, Plaintiffs are challenging the uniform process that the Insurers apply
to all claims.
Appellants’ Br. at 22 (emphasis supplied); see also id. at 23 n.8 (“The District Court was
viewing Plaintiffs’ claims through the wrong end of the telescope. The District Court
believed that the issue was whether the amount the Insurers paid was reasonable. That is
not the issue.”) (citation omitted). Appellants acknowledge that Appellees did not reduce
all reimbursements. (Tr. at 8, June 1, 2009.) Thus, the “uniform process that the Insurers
apply to all claims” is computerized auditing.

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In these circumstances, our construction of the claim below is the same as
Appellants’: that the use of computerized auditing itself breached the underlying
contracts. As we have discussed, however, because those insurance policies do not
require or bar the use of any means of expense evaluation, Appellees’ use of
computerized auditing did not breach the policies.
Even if we adopt Appellants’ directly contradictory construction of their claim --
that the use of computerized auditing breached the provision requiring Appellees to pay
“reasonable” expenses -- that claim remains non-cognizable. All the underlying policies,
with “slight variation[s] in the[ir] language,” require the payment of “reasonable” medical
expenses. (Appellants’ Supp. Br. at 2.) Appellants offer no authority suggesting that this
provision may be construed as requiring or prohibiting a particular manner of expense
review. Rather, the authority Appellants offer is inapposite, involving: (1) policies that
required insurance companies to consider specific criteria when determining
“reasonableness”; or (2) state law that required insurers to evaluate claims in a particular
manner. See Brooks v. Educators Mut. Life Ins. Co., 206 F.R.D. 96, 105 (E.D. Pa. 2002)
(underlying insurance policies required the insurer to determine the “reasonable and
customary charge” for medical expenses in relation to “the usual charge . . . provided in
the same geographical area”); Strawn v. Farmers Ins. Co. of Or., 209 P.3d 357, 365-66
(Or. Ct. App. 2009) (computerized auditing might contravene the Oregon statute that
prohibits insurers from “[r]efusing to pay claims without conducting a reasonable

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investigation based on all available information” (quoting Or. Rev. Stat.
§ 746.230(1)(d))). Indeed, in the single apposite decision we have found, the court
rejected a breach of contract claim identical to that advanced by Plaintiffs. See State
Farm Mut. Auto. Ins. Co. v. Sestile, 821 So. 2d 1244, 1245-46 (Fla. Dist. Ct. App. 2002)
(insurer’s use of a “computer-generated database to determine the reasonableness of
medical bills” did not violate Florida’s PIP statute and did not breach the underlying
insurance policy because “neither the policy nor the statute declares how an insurer is to
make [a] determination [of reasonableness]”).
In these circumstances, Appellees’ use of computerized auditing -- whether taken
by itself or as a means to reduce some reimbursements -- does not violate any provision of
the underlying insurance policies. Accordingly, we conclude that Appellants have failed
to state a legally cognizable breach of contract claim.
Finally, Appellants protest our consideration of the cognizability issue because it
was not raised by the Parties and was not considered below. Appellants ignore, however,
that we may “affirm a result reached by the District Court on different reasons, as long as
the record supports the judgment.” United States v. Sanchez, 562 F.3d 275, 279 (3d Cir.
2009) (quoting Guthrie v. Lady Jane Colleries, Inc., 722 F.2d 1141, 1145 n.1 (3d Cir.
1983)); see also Helvering v. Gowran, 302 U.S. 238, 245 (1937). It is apparent from the
record that Appellants have failed to state a viable breach of contract claim. Accordingly,
we may affirm the District Court on this alternative ground.

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IV.
For the reasons stated, we will affirm the August 26, 2008 Orders of the District
Court. In light of our decision, we do not address the grounds on which the District Court
based its decisions or the alternative grounds raised by Appellees.

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