Wilmington Pain & Rehabilitation Center, P.A. v. USAA General Indemnity Insurance Company
N15C-06-218 JRJ CCLD
| Del. Super. Ct. | Oct 17, 2017Background
- Plaintiff Wilmington Pain & Rehabilitation Center, P.A. (WPRC) is a Delaware medical provider that sued USAA insurers alleging underpayment of Delaware PIP claims under 21 Del. C. § 2118(a).
- USAA uses a computerized Reasonable Fee Methodology (RF System) that benchmarks provider charges to the CMS database and pays at the 80th percentile with a $10 or 5% "round-up" adjustment.
- WPRC sought class certification for all Delaware providers whose PIP claims were subjected to USAA's RF System since June 19, 2012, pursuing declaratory relief that USAA systematically underpays.
- The suit proceeded on an amended complaint asserting a single declaratory-judgment claim; USAA challenged certification and argued factual individualized inquiries were required.
- The Court applied Superior Court Civil Rule 23 (modeled on Fed. R. Civ. P. 23) and conducted the required rigorous analysis into commonality, typicality, adequacy, and Rule 23(b) criteria.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to sue on PIP claims | WPRC is a claimant/assignee and can sue under § 2118B (citing Sammons) | USAA argued asserted assignments are unenforceable (abandoned at argument) | Court assumed standing challenge abandoned; standing not resolved against WPRC |
| Commonality under Rule 23(a) | Class shares central question: RF System causes underpayments violating § 2118 | Determination of "reasonable" medical expenses requires individualized factual inquiries (injuries, CPT codes, time, geozip) | Denied commonality; claim cannot be resolved in one stroke for all members |
| Typicality and Adequacy | WPRC: representative claims arise from same event and law (use of RF System) | USAA: WPRC may face unique defenses, lacks understanding/effort, and has billing issues | Typicality and adequacy not met because proof requires individualized inquiries; Court found typicality lacking and did not reach adequacy fully |
| Rule 23(b)(1)/(2) suitability for declaratory relief | WPRC: seeks only declaratory relief; RF System is generally applicable so (b)(2) fits | USAA: no risk of inconsistent standards; declaratory relief would require individualized judgments so class lacks cohesiveness | (b)(1)(A) not met (no incompatible adjudications risk); (b)(2) not met because declaratory remedy is not indivisible across class; certification denied |
Key Cases Cited
- Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (class-commonality requires a common contention capable of classwide resolution)
- In re Celera Corp. S'holder Litig., 59 A.3d 418 (Del. 2012) (Delaware courts require rigorous Rule 23 analysis)
- Barnes v. American Tobacco Co., 161 F.3d 127 (3d Cir. 1998) (Rule 23(b)(2) requires class cohesiveness for indivisible injunctive/declaratory relief)
- Johnson v. Geico Cas. Co., 673 F. Supp. 2d 255 (D. Del. 2009) (refusal to certify class challenging computerized fee reductions under PIP statute)
- Brooks v. Educators Mut. Life Ins. Co., 206 F.R.D. 96 (E.D. Pa. 2002) (certification where plaintiffs attacked systematic flaws in claims-software itself)
- First State Orthopaedics v. Concentra, Inc., 534 F. Supp. 2d 500 (E.D. Pa. 2007) (class claims premised on alleged manipulation/flaws in bill-review system)
- MRI Assocs. of St. Pete, Inc. v. State Farm Mut. Auto. Ins. Co., 755 F. Supp. 2d 1205 (M.D. Fla. 2010) (reasonableness under PIP statutes requires individualized proof)