Diaz v. Blue Cross & Blue Shield
2011 MT 322
| Mont. | 2011Background
- The State of Montana funds and administers a self-funded employee health plan via two TPAs, BCBS and New West, paying a flat per-member fee for services.
- Diaz and Hoffmann-Bernhardt allege their made-whole rights were violated when TPAs and the State did not conduct a made-whole analysis before exercising subrogation or paying/reimbursing medical expenses.
- The State plan is governed by Title 2, Chapter 18, Part 8 and related subrogation provisions; Title 33 does not apply to the State plan.
- The district court held TPAs are not insurers under the subrogation statutes and therefore not liable under Montana’s made-whole laws.
- Diaz and Hoffmann-Bernhardt sought class certification under MRCP 23 to include others with reduced benefits and to obtain declaratory and injunctive relief
- The Supreme Court remanded to determine whether Montana’s made-whole laws apply to TPAs; the district court later again concluded they do not, while the Court of Appeals reversed on class certification for the State defendants.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Do MT made-whole laws apply to TPAs? | Diaz and Hoffmann-Bernhardt argue TPAs are insurers under §§2-18-901 to -902; they are subject to made-whole duties. | BCBS/New West are mere administrators; the State is the insurer; TPAs are not insurers or third-party beneficiaries. | TPAs are not subject to the made-whole laws as insurers or third-party beneficiaries. |
| Is class certification warranted against the State on declaratory/injunctive relief? | A single common issue exists: whether the State’s subrogation exclusion violates made-whole rights; common relief applies to all. | Individualized made-whole determinations predominate; class action is inappropriate under Rule 23(b)(2) and (b)(3). | The class is certifiable under Rule 23(b)(2) for declaratory/injunctive relief; TPAs not parties to certification; remand to proceed consistent with this holding. |
Key Cases Cited
- Ferguson v. Safeco Ins. Co. of Am., 342 Mont. 380 (2008 MT 109) (made-whole analysis and class certification framework discussed)
- Sieglock v. Burlington N. Ry. Co., 319 Mont. 8 (2003 MT 355) (deference to district court on class certification)
- Shattuck v. Kalispell Reg’l Med. Ctr., Inc., 261 P.3d 1021 (2011 MT 229) (recognizes federal authority on class certification; made-whole context)
- McDonald v. Washington, 862 P.2d 1150 (1993 MT) (Rule 23 prerequisites treatment and typicality)
- Gilmour v. Gates, McDonald & Co., 382 F.3d 1312 (11th Cir. 2004) (intended third-party beneficiary must be shown by contract terms)
- Gardner & White Consulting Servs., Inc. v. Ray, 474 S.E.2d 663 (Ga. App. 1996) (distinguishes benefit to employee as third-party beneficiary)