Opelousas General Hospital Authority v. Fairpay Solutions, Inc.
655 F.3d 358
| 5th Cir. | 2011Background
- Opelousas General Hospital Authority sues FairPay Solutions, LEMIC, and Zurich in Louisiana state court for alleged Louisiana Racketeering Act violations.
- Plaintiff class contends FairPay under-calculates workers' compensation reimbursements and that insurers apply these calculations to hospitals.
- Defendants remove to federal court under CAFA and diversity grounds, with LEMIC later argued as fraudulently joined.
- District court remands to state court under the local controversy exception, after discovery and briefing.
- Opelousas General appeals, arguing LEMIC’s conduct is a significant basis for the class claims under the local controversy exception.
- Court reviews de novo whether the local controversy exception applies, focusing on whether a local defendant’s conduct forms a significant basis for the claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether LEMIC's conduct forms a significant basis for the claims | Opelousas contends LEMIC’s conduct underpins the class claims. | FairPay/LEMIC argues no defendant’s conduct forms a significant basis for all claims. | LEMIC’s conduct does not form a significant basis. |
| Whether extrinsic evidence may support CAFA local controversy analysis | Opelousas relied on discovery and affidavits to prove the local controversy exception. | Defendants argue extrinsic evidence is permissible to assess the exception. | Extrinsic evidence considered; failure to show significant basis. |
Key Cases Cited
- Preston v. Tenet Healthsystem Mem. Med. Ctr., Inc., 485 F.3d 793 (5th Cir.2007) (local controversy exception must be narrowly applied; burden on plaintiffs)
- Admiral Ins. Co. v. Abshire, 574 F.3d 267 (5th Cir.2009) (local controversy factors; narrow application)
- Kaufman v. Allstate New Jersey Ins. Co., 561 F.3d 144 (3d Cir.2009) (significant basis can be satisfied by a substantial portion of putative class)
- Evans v. Walter Indus., Inc., 449 F.3d 1159 (11th Cir.2006) (mere relief against local defendant via joint liability does not convert conduct of others)