Diana Doiron v. Conseco Health Insurance Company

* Pursuant to 5TH CIR. R. 47.5, the Court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 07-30357
DIANA DOIRON
Plaintiff-Appellee
v.
CONSECO HEALTH INSURANCE COMPANY
Defendant-Appellant
Appeal from the United States District Court
for the Middle District of Louisiana
USDC No. 04-784-JJB-CN
Before JONES, Chief Judge, and DAVIS and GARZA, Circuit Judges.
PER CURIAM:*
In this appeal, Defendant-Appellant Conseco Health Insurance Company
(“Conseco”) appeals the district court’s grant of Plaintiff-Appellee Diana Doiron’s
(“Doiron”) Motion for Class Certification. We vacate and remand.
I.
The proposed lead plaintiff, Doiron, filed suit on behalf of a class of
approximately 198 Conseco policyholders, alleging that Conseco breached its
policy obligations. Doiron alleges she purchased a policy of cancer insurance for
United States Court of Appeals
Fifth Circuit
F I L E D
May 28, 2008
Charles R. Fulbruge III
Clerk

-- 1 of 7 --

No. 06-11088
1 The Radiation Chemotherapy Benefit reads:
We will pay this benefit if your physician prescribes radiation or chemical
treatments for the destruction of abnormal tissue as part of cancer treatment.
Examples of these treatments include:
• X-ray radiation;
• Radium and cesium implants;
• Cobalt;
• Hormone therapy; and,
• Chemotherapy.
The U.S. Food and Drug Administration must have classified the cancer
treatment either as approved or investigational. These treatments may be
performed on an inpatient or outpatient basis.
We will not pay for any type of diagnostic tests or laboratory tests related to
these treatments.
The maximum amount payable for approved and investigational treatment for
each person insured by this policy is shown in the Benefit Schedule.
2
herself and her husband. She alleges the policy obligated Conseco to pay
specified benefits for charges incurred if she or her husband was diagnosed with
cancer. Doiron’s husband was subsequently diagnosed with cancer. He
underwent medical treatment including radiation and chemotherapy treatment,
but later died due to his illness. Doiron alleges that although she submitted
proof of loss, medical records, medical bills, and other documentation to Conseco,
Conseco paid only some benefits but denied others including some benefits
submitted under the policy’s Radiation/Chemotherapy Benefit provision.1
Doiron claims that Conseco’s failure to pay all the benefits is a breach of
contractual obligations and sought class certification for similarly situated
plaintiffs. Doiran alleges that Conseco has a uniform corporate policy of denying
claims for benefits for certain charges that she and other class members incurred
as part of their radiation and chemotherapy treatments. Doiron proposed two
sub-classes, which the district court accepted. One sub-class consists of
policyholders who incurred specific charges as part of their radiation treatment
and whose claims were or will be denied by Conseco. The other sub-class

-- 2 of 7 --

No. 06-11088
3
consists of policyholders who incurred specified charges as part of their
chemotherapy treatment and whose claims were or will be denied by Conseco.
During discovery Conseco agreed to conduct a random sampling of 28 class
members (the “sample group”) and to review their claim records. Both parties
stipulated that this review indicated, inter alia, that: (1) Conseco paid at least
one claim for radiation or chemotherapy treatment benefits under the
Radiation/Chemotherapy Benefit provision for Doiron and each person in the
sample group; (2) Conseco denied for Doiron and each person in the sample
group at least one claim for benefits for one or more of disputed radiation and
chemotherapy treatment charges solely for the reason that they were “not
covered” under the Radiation/Chemotherapy Benefit provision; and (3) Conseco
denied claims, including radiation and chemotherapy claims, for eligibility or
timeliness reasons for some in the sample group.
The district court held that Doiron’s proposed sub-classes satisfied the
requirements of Rules 23(a) and 23(b)(3). For the reasons that follow, we vacate
certification of the sub-classes and remand to the district court for further
proceedings consistent with this opinion.
II.
We review a district court’s certification of a class for abuse of discretion.
O’Sullivan v. Countrywide Home Loans, Inc., 319 F.3d 732, 738 (5th Cir. 2003).
“Implicit in this deferential standard is a recognition of the essentially factual
basis of the certification inquiry and of the district court’s inherent power to
manage and control pending litigation.” In re Monumental Life Ins. Co., 365
F.3d 408, 414 (5th Cir. 2004) (quoting Allison v. Citgo Petroleum Corp., 151 F.3d
402, 408 (5th Cir. 1998)). We review the legal standards applied by the district
court de novo. Id. Conseco challenges the district court’s certification order on
a number of grounds which we consider below.

-- 3 of 7 --

No. 06-11088
4
A. Rule 23(a) Commonality
Conseco argues that the district court erred because the individuals in the
sub-classes do not present a common issue of law. Conseco argues that it may
have denied claims because they were untimely, duplicate, lacked proof of loss,
or were “not covered” under a provision of the policy. This is because the
approved sub-class definitions sweep into the sub-classes both (1) policyholders
that have had claims denied as “not covered” under the Radiation/Chemotherapy
Benefit provision and (2) policyholders that have had claims denied for other
reasons. As such, Conseco argues that for each sub-class member the court will
have to do a claim-by-claim analysis to determine whether the claim was denied
under the Radiation/Chemotherapy Benefit provision.
Commonality requires that there be “questions of law or fact common to
the class.” James v. City of Dallas, 254 F.3d 551, 570 (5th Cir. 2001). The
plaintiff need only show that “there is at least one issue whose resolution will
affect all or a significant number of the putative class members. Forbush v. J.C.
Penny Co., 994 F.2d 1101, 1106 (5th Cir. 1993) (citation omitted). That “some
of the plaintiffs may have different claims, or claims that may require some
individualized analysis, is not fatal to commonality.” James, 254 F.3d at 570.
Although every member of the sample group had at least one claim that
Conseco denied for the sole reason that it was “not covered” under the
Radiation/Chemotherapy Benefit provision, it is impossible to know whether this
commonality extends to every member of the class. Thus, the district court erred
in approving the sub-classes, as defined, because they may sweep into the sub-
classes policyholders who had claims denied for reasons other than that the
claims were “not covered” under the Radiation/Chemotherapy Benefit provision.
Although all other requirements of Rule 23(a) are satisfied by these sub-class
definitions, on remand the district court should revisit the sub-class definitions
to narrow the sub-classes such that they include only policyholders who had

-- 4 of 7 --

No. 06-11088
5
claims denied only because they are “not covered” under the
Radiation/Chemotherapy Benefit provision. Once the sub-classes are so defined,
the sub-classes will satisfy every element of Rule 23(a).
B. Rule 23(b)(3) Predominance and Superiority
Conseco argues that common issues do not predominate because the court
cannot determine liability by simply interpreting the language of the
Radiation/Chemotherapy Benefit provision. The court, Conseco continues, would
have to conduct individualized mini-trials for sub-class members to determine
the reasons Conseco denied their claims and whether other reasons for denying
the claims shield Conseco from liability.
The predominance inquiry requires that questions of law or fact common
to the members of the class “predominate over any questions affecting only
individual members.” Unger v. Amedisys Inc., 401 F.3d 316, 320 (5th Cir. 2005).
This requirement, although similar to the commonality requirement of Rule
23(a), is “far more demanding” and “tests whether proposed classes are
sufficiently cohesive to warrant adjudication by representation.” Id. The
predominance inquiry requires a court to consider, if the class were certified,
how trial on the merits would be conducted. Bell Atlantic Corp. v. AT&T Corp.,
339 F.3d 294, 302 (5th Cir. 2003). The superiority requirement is simply that
“class action is superior to other available methods for the fair and efficient
adjudication of the controversy.” FED R. CIV. P. 23(b)(3).
As discussed above, it is true that, as the sub-classes are currently defined,
they sweep in claims that may have been denied for reasons other than as “not
covered” under the Radiation/Chemotherapy Benefit provision. If the sub-
classes are not narrowed as set forth above, Conseco would have a valid point
that many of the relevant claims were denied as untimely, duplicate, or lacking
in proof of loss. If class members decided to challenge the denial of these claims,
the court would have to conduct mini-trials, which would prevent common issues

-- 5 of 7 --

No. 06-11088
6
from predominating in each sub-class. We are satisfied, however, that the sub-
class definition set forth above including only policyholders whose claims were
denied for the sole reason that they are “not covered” under the
Radiation/Chemotherapy Benefit provision, would satisfy this concern. As
redefined the sub-classes would not include policyholders against whom Conseco
has the aforementioned alternative defenses and would thus satisfy the
predominance requirement of Rule 23(b)(3). Conseco also argues that class
action is not the superior method of resolving these policyholders’ claims. On
this point, we agree with the district court that class action is more efficient than
dealing with over one hundred individual suits relying on the same theory and
proof of liability. We conclude that the sub-classes, redefined as discussed above,
would satisfy all the requirements of Rule 23(b)(3), including both predominance
and superiority.
C. Bad Faith
Louisiana insurance law requires that an insurer pay covered claims for
medical bills no more than thirty days from the date the insurer receives notice
and proof of the claim, unless the failure to pay is supported by just and
reasonable grounds. LA. R. S. § 22:657. Unless a denial is based on just and
reasonable grounds, it is deemed “arbitrary and capricious.” Stewart v.
Calcasieu Parish Sch. Bd., 933 So.2d 797, 801 (La. App. 3d Cir. 2006). Whether
a denial is arbitrary or capricious is a fact-based analysis. Id.
Doiron alleges that Conseco was arbitrary and capricious in denying policy
benefit payments to the plaintiff and the other class members. Conseco argues
that Doiron’s bad faith claims preclude class certification because they require
a fact-based analysis of each claim to determine whether Conseco acted in an
arbitrary and capricious manner. Under the current sub-class definitions, the
court would have to test each claim individually to determine whether it was
made in bad faith. If the sub-classes are redefined as described above, however,

-- 6 of 7 --

No. 06-11088
7
individualized fact-based inquires to examine bad faith claims will be
unnecessary. Doiron and the other class members would have to show that
Conseco’s failure to pay for covered charges was unreasonable, which would turn
on Conseco’s interpretation of the policy’s coverage for chemotherapy and
radiation, issues that would not vary among different class members. Thus,
with the sub-classes redefined as discussed above, the question of bad faith
claims does not create an obstacle to class certification.
III.
For all the reasons stated above, we conclude that the sub-classes should
be narrowed such that they include only policyholders whose claims were denied
for the sole reason that they are “not covered” under the
Radiation/Chemotherapy Benefit provision. The sub-classes, so defined, would
satisfy the requirements of Rule 23(a) and Rule 23(b)(3), including those
challenged by Conseco, and would justify class certification. We thus VACATE
the certification order and REMAND to the district court for redefinition of the
sub-classes and for further proceedings consistent with this opinion.
VACATED and REMANDED.

-- 7 of 7 --