Charlotte Phillips v. Wellpoint Incorporated
2014 U.S. App. LEXIS 16056
| 7th Cir. | 2014Background
- WellPoint acquired RightCHOICE via Illinois regulators’ approval during 2001-02, then RightCHOICE Insurance withdrew from Illinois in 2002 and was replaced by costlier UniCare policies.
- Policyholders who did not pay higher premiums had to seek coverage from other insurers, often for pre-existing conditions.
- A putative class action was filed in federal court (Cima v. WellPoint) seeking relief for former RightCHOICE policyholders; the district court denied class certification and ruled on the merits.
- Because no class was certified, the initial judgment bound only named plaintiffs; plaintiffs then filed a new suit in state court with similar claims.
- Defendants removed the subsequent suit under CAFA §1453, invoking §1332(d)’s jurisdictional framework, including the home-state “citizenship” concept in §1332(d)(4).
- The district court later concluded plaintiffs failed to prove class-members’ Illinois citizenship as of removal, and the appellate panel affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §1332(d)(4) home-state exception applies and who bears the burden | Myrick/Phillips argue Illinois citizenship shown by residence; burden on defendant to show lack. | WellPoint argues plaintiffs failed to prove class citizenship; burden on plaintiff under Hart v. FedEx. | Burden on party relying on home-state exception; evidence lacking, no remand. |
| Whether the district court properly declined to remand under §1332(d)(4) | Class members’ Illinois residency and employer-citizen considerations support remand. | District court followed §1332(d)(4) criteria, no sufficient evidence of Illinois citizenship. | Court affirmed denial of remand. |
| Whether private action can enforce HIPAA in this context | HIPAA terms echoed in policy; private action should enforce. | HIPAA cannot be privately enforced where public/private mechanisms exist. | HIPAA cannot be enforced by private suit; contract enforcement suffices. |
| Whether the merger/withdrawal of RightCHOICE violated HIPAA or Illinois law | Actions breached Illinois HIPAA-like provisions and misrepresented plans. | No Illinois law violation shown; withdrawal permitted; HIPAA provisions largely matched by contract terms. | No violation; contract terms aligned with HIPAA. |
| Whether costs were properly awarded to the prevailing party | Costs should be borne by losing party given reprehensible conduct. | Rule 54(d)(1) presumes awarding costs to prevailing party; district court did not abuse discretion. | Costs upheld for defendants; not an abuse of discretion. |
Key Cases Cited
- Hart v. FedEx Ground Package System, Inc., 457 F.3d 675 (7th Cir. 2006) (burden for home-state exception lies with the relying party)
- In re Sprint Nextel Corp., 593 F.3d 669 (7th Cir. 2010) (distinguishes residence from citizenship for §1332(d)(4))
- Morrison v. YTB International, Inc., 649 F.3d 533 (7th Cir. 2011) (limits on subject-matter jurisdiction; jurisdictional rules are party-driven)
- Abbasi v. Paraskevakos, 187 Ill.2d 1? (1999) (private enforcement of HIPAA-like terms)
- Fisher v. Lexington Health Care, Inc., 188 Ill.2d 455 (1999) (HIPAA terms in contracts; state-law enforcement)
- Rand v. Monsanto Co., 926 F.2d 596 (7th Cir. 1991) (class counsel bear costs of failure; strategic decisions matter)
- White v. Sundstrand Corp., 256 F.3d 580 (7th Cir. 2001) (cost-shifting considerations for class actions)
- Gonzalez v. Thaler, 132 S. Ct. 641 (2012) (limitations on waivers of jurisdictional issues; service of issues)