STARKO, INC., d/b/a MEDICINE CHEST #1, and JERRY JACOBS, d/b/a PILL BOX PHARMACY #4, for and on behalf of themselves and all others similarly situated v. PRESBYTERIAN HEALTH PLAN, INC., a New Mexico corporation, d/b/a PRESBYTERIAN SALUD, and CIMARRON HEALTH PLAN, INC., a New Mexico corporation, d/b/a CIMARRON HEALTH MAINTENANCE ORGANIZATION, a/k/a CIMARRON HMO, consolidated with STARKO, INC., d/b/a MEDICINE CHEST #1, and JERRY JACOBS, d/b/a PILL BOX PHARMACY #4, for and on behalf of themselves and all others similarly situated v. NEW MEXICO HUMAN SERVICES DEPARTMENT
Docket No. 27,992 consolidated with Docket No. 29,016
IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
December 15, 2011
Opinion Number: 2012-NMCA-053; Certiorari Granted, February 13, 2012, No. 33,382; Certiorari Granted, March 30, 2012, No. 33,383; Certiorari Granted, March 30, 2012, No. 33,384
Linda M. Vanzi, District Judge
Charles R. Peifer
Robert E. Hanson
Lauren Keefe
Elizabeth Radosevich
Albuquerque, NM
Cavin & Ingram, P.A.
Sealy H. Cavin, Jr.
Stephen D. Ingram
Albuquerque, NM
for Appellants/Cross-Appellees
Long, Pound & Komer, P.A.
John B. Pound
Santa Fe, NM
Rodey, Dickason, Sloan, Akin & Robb, PA
Edward Ricco
Albuquerque, NM
for Appellee Presbyterian Health Plan, Inc.
Modrall, Sperling, Roehl, Harris & Sisk, P.A.
Lisa Mann
Jennifer A. Noya
Albuquerque, NM
for Appellee/Cross-Appellant Cimarron Health Plan, Inc.
Gary K. King, Attorney General
Jerome Marshak, Special Assistant Attorney General
Eric R. Miller, Assistant Attorney General
Santa Fe, NM
for Appellee New Mexico Human Services Department
OPINION
KENNEDY, Judge.
{1} Today, we update a continuing saga of Medicaid-related litigation spanning more than eleven years.1 Starko, Inc. and Jerry
{2} We hold that
{3} Consequently, we affirm in part, reverse in part, and remand to the district court for proceedings consistent with this Opinion.
I. BACKGROUND
{4} Congress created the Medicaid program in 1965 to supplement the Social Security Act. Atkins v. Rivera, 477 U.S. 154, 156 (1986); see
{5}
If drug product selection is permitted by [
NMSA 1978, Section 26-3-3 (2005)], reimbursement by the [M]edicaid programshall be limited to the wholesale cost of the lesser expensive[,] therapeutic equivalent drug generally available in New Mexico plus a reasonable dispensing fee of at least three dollars [and] sixty-five cents ($3.65).3
{6} That began to change in 1994. At that time, the Legislature authorized HSD to transition from a fee-for-service to a managed care program and, in 1997, HSD implemented SALUD!, a managed care program, in which it entered into competitively bid contracts with the MCOs to provide care to Medicaid recipients. The contracts, known as Medicaid Managed Care Service (MMCS) Agreements required the MCOs to provide medical care and pharmacy services to all qualified Medicaid recipients. These contracts explicitly incorporated “[a]ll applicable statutes, regulations and rules implemented by the [f]ederal [g]overnment, the State of New Mexico . . . and [HSD], concerning Medicaid services[.]” Shortly after the adoption of SALUD!, HSD notified pharmacists that, in order to continue to provide services under Medicaid, pharmacists would be required to contract with the MCOs instead of HSD. Under the new MCO-pharmacist contracts, pharmacists would be reimbursed by the MCOs at the “current and applicable Medicaid reimbursement rates” which, Plaintiffs allege, had the potential to be significantly lower than the statutory reimbursement rates guaranteed by
{7} Under SALUD!, pharmaceutical costs were negotiated directly between HSD and the MCOs, and Plaintiffs allege that, under the new regime, the MCOs were sufficiently paid by HSD to comply with
{8} Over HSD‘s protests, Plaintiffs were certified as a class in October 1999. At that time, the MCOs had not yet been added as Defendants. In 2000, Plaintiffs moved for summary judgment, and the district court ruled that HSD was affirmatively required to comply with
{9} The MCOs attacked the class certification. They filed briefs asking the court to decertify the class and included a number of supporting exhibits. As a result, the district court allowed discovery into “whether the class should be decertified.” The MCOs never requested an evidentiary hearing on their motions, but oral arguments were heard in September 2002. After this second consideration of the class certification issue, the district court denied the MCOs’ motions to decertify the class and found that the requirements of Rule 1-023 NMRA continued to be met. The MCOs appealed to this Court pursuant to Rule 1-023(F). We refused to consider the merits of their claim and held that an appeal under Rule 1-023(F) was unavailable. See Starko I, 2005-NMCA-040, ¶¶ 2, 18 (discussing the applicability of Rule 1-023(F)).
{10} It appears that such wrangling through the years has directly influenced the language of contracts between the parties. Most notably, contracts between HSD and the MCOs have taken several forms. The first contracts in 1997 simply required the MCOs to pay pharmacists in a manner consistent with “current and applicable . . . reimbursement rates.” Then, in 2001, following the district court‘s order that HSD and the MCOs comply with
{11} As these cases have progressed since the last appeal, three separate district court judges have issued a variety of orders. We review four.
{12} First, in 2006, Presbyterian filed a motion for judgment on the pleadings. Following the hearing, the district court affirmed its earlier ruling that HSD‘s affirmative duty to Plaintiffs under
{13} Second, in 2007, Presbyterian filed a second motion for judgment on the pleadings, which Cimarron joined. Together, the MCOs sought rulings on Plaintiffs’ claim for breach of the contracts between the MCOs and HSD. Following argument, the district court held that the claims were unfounded because Plaintiffs were not intended third-party beneficiaries of the contracts between the MCOs and HSD. Further, the court found that a third-party beneficiary claim would not lie against the MCOs even if Plaintiffs had been intended beneficiaries. The district court reasoned that “[t]o allow an action against the MCOs on a third-party beneficiary theory would be inconsistent with th[is c]ourt‘s previous ruling that Plaintiffs have no private right of action.”
{14} Third, in 2008, Plaintiffs filed a motion for summary judgment on the issue of when
{15} Fourth, in 2008, Plaintiffs submitted a motion for partial summary judgment on several
{16} On appeal from these orders, Plaintiffs argue several points of error. First, they assert that
{17} Against any extent to which we reverse any portion of the district court‘s rulings in this matter, Cimarron asks us to consider its conditional cross-appeal. In it, Cimarron argues, first, that the district court‘s class certification in this case was both constitutionally and statutorily defective and, second, presuming
II. STANDARD OF REVIEW
{18} When reviewing judgments on the pleadings, we “accept as true all facts well pleaded and question only whether the plaintiffs might prevail under any state of facts provable under the claim.” Garcia v. Rodey, Dickason, Sloan, Akin & Robb, P.A., 106 N.M. 757, 760, 750 P.2d 118, 121 (1988). All interpretations of law made by the district court are reviewed de novo. Klinksiek v. Klinksiek, 2005-NMCA-008, ¶ 4, 136 N.M. 693, 104 P.3d 559.
{19} We review orders granting or denying summary judgment de novo. Romero v. Philip Morris Inc., 2010-NMSC-035, ¶ 7, 148 N.M. 713, 242 P.3d 280. “Summary judgment is proper when the material facts are undisputed and the only remaining issues are questions of law.” Farmers Ins. Co. of Ariz. v. Sandoval, 2011-NMCA-051, ¶ 6, 149 N.M. 654, 253 P.3d 944 (internal quotation marks and citation omitted).
{20} We likewise apply a de novo standard when engaging in statutory interpretation. State v. Smith, 2009-NMCA-028, ¶ 8, 145 N.M. 757, 204 P.3d 1267; see Sedillo v. N.M. Dep‘t of Pub. Safety, 2007-NMCA-002, ¶ 7, 140 N.M. 858, 149 P.3d 955 (“The question of whether statutes create or imply a private right of action is a question of law . . . reviewed de novo.“). In doing so, we strive to effectuate the intent and policies of the Legislature, looking “first to the words chosen . . . and the plain meaning of the . . . language.” Smith, 2009-NMCA-028, ¶ 8 (internal quotation marks and citation omitted). When a statute‘s language “is clear and unambiguous, we give effect to that language and refrain from further statutory interpretation.” Id. (internal quotation marks and citation omitted). Where ambiguity arises, we go outside the plain language and engage in further statutory interpretation. N.M. Bd. of Veterinary Med. v. Riegger, 2007-NMSC-044, ¶ 11, 142 N.M. 248, 164 P.3d 947. We “construe the entire statute . . . so that all . . . provisions [are] considered in relation to one another.” Id. (internal quotation marks and citation omitted). “In ascertaining legislative intent, we look not only to the language used in the statute, but also to the object sought to be accomplished and the wrong to be remedied.” Patterson v. Globe Am. Cas. Co., 101 N.M. 541, 543, 685 P.2d 396, 398 (Ct. App. 1984), superseded by statute on other grounds as stated in Journal Publ‘g Co. v. Am. Home Assurance Co., 771 F. Supp. 632, 635 (S.D.N.Y. 1991).
III. DISCUSSION
A. Plaintiffs Have Not Waived Claims Regarding Section 27-2-16(B)
{21} As a threshold issue, Defendants assert that Plaintiffs waived any claim they had regarding
{22} In addition, HSD argues that, in the provider agreements it made with Plaintiffs, Plaintiffs agreed “[t]o accept as payment in full the amount paid in accordance with the reimbursement structure in effect for the period during which such services were provided as per
{23} We disagree with the contentions of both the MCOs and HSD that Plaintiffs’ claims have been waived. In 1997, as stated above, Plaintiffs sought a temporary restraining order from the court to determine the effect of entering into new contracts with the MCOs. The court issued the order and required HSD to either allow Plaintiffs to refuse the new contracts, or agree that such contracts would not waive any rights under
{24} This Court has explained in the past,
a valid waiver requires a known legal right, relinquished for consideration, where such legal right is intended for the waivor‘s sole benefit and does not infringe on the rights of others. . . . In no case will a waiver be presumed or implied, contrary to the intention of the party whose rights would be injuriously affected thereby, unless, by his conduct, the opposite party has been misled, to his prejudice, into the honest belief that such waiver was intended or consented to. Absent proof of an express agreement, in order to establish waiver[,] there must be a showing of unequivocal acts or conduct on the part of the person against whom waiver is asserted showing an intent to waive.
McCurry v. McCurry, 117 N.M. 564, 567, 874 P.2d 25, 28 (Ct. App. 1994) (internal quotation marks and citations omitted). When we consider the actions taken by Plaintiffs to preserve their statutory rights through a court order and the change in position chosen at the time by HSD, we do not see these contracts they entered into with Defendants as unequivocal acts showing an intent to waive statutory rights.
{25} HSD‘s argument that Plaintiffs contractually waived their right to seek further compensation from HSD is inconsistent with HSD‘s agreement that Plaintiffs would not waive their statutory rights by engaging in contracts with the MCOs. Furthermore, entering into contracts with the MCOs can hardly be said to constitute an unequivocal intent to waive rights under
{27} Thus, we hold that the district court was correct when it concluded that Plaintiffs did not waive their rights under
B. Section 27-2-16(B)
{28} New Mexico‘s Medicaid program falls under the Public Assistance Act. See
provide such methods and procedures . . . as may be necessary to . . . assure that payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area[.]
1. Section 27-2-16(B) Survived the Transition to Managed Care
{29} The MCOs argue that
{30} The MCOs fail to demonstrate that the Legislature intended for
{31} Nor are we persuaded by Cimarron‘s argument that the statute‘s very language demonstrates its inapplicability to managed care. Essentially, Cimarron claims that because
{32} These arguments are misplaced. We agree with the district court‘s holding that the MCOs “are not [health plans], and they are not third[-]party insurers. Rather, they are part of the Medicaid program.” The Medicaid program begins at the government level, upstream of the MCOs, and continues through the provision of care and services to recipients downstream of the MCOs. Had our Legislature intended reimbursements to come directly and only from HSD, it could have easily used the term “department” in
2. Section 27-2-16(B) Creates a Private Right of Enforcement
{33} Plaintiffs contend that the district court erred in finding that there was no implied private cause of action under
a. Implied Cause of Action Based Upon Legislative Intent
{34} First, we address the three factors that may contribute to the recognition of a private cause of action based upon legislative intent. We first analyze whether the statute was enacted for the special benefit of a class of which Plaintiffs are members.
{35} Next, we examine whether there is any indication in the statute of legislative intent, explicit or implicit, to create or deny a private remedy. “The guiding principle of statutory
construction is that a statute should be interpreted in a manner consistent with legislative intent. . . . [W]e look not only to the language used in the statute, but also to the purpose to be achieved and the wrong to be remedied.” Hovet, 2004-NMSC-010, ¶ 10. Here, we utilize factors developed by the United States Supreme Court in evaluating legislative intent, including (1) whether the statute contains “rights-creating language“; (2) whether it has an “aggregate, not individual, focus“; and (3) the purpose of the statute. Gonzaga Univ. v. Doe, 536 U.S. 273, 284, 290 (2002); see Blessing v. Freestone, 520 U.S. 329, 340-41 (1997); Nat‘l Trust, 117 N.M. at 593, 874 P.2d at 801. The Supreme Court typically applies these questions regarding legislative intent within the context of a
{36} In Gonzaga University, 536 U.S. at 287, the Supreme Court held that the Family Educational Rights and Privacy Act‘s (FERPA) non-disclosure provisions failed to confer enforceable rights as the provisions “entirely lack the sort of ‘rights-creating’ language critical to showing the requisite congressional intent to create new rights.” There, a student sought to sue the university by bringing a
{37} In contrast, the United States Supreme Court held that there was legislative intent to create a private cause of action under the Boren Amendment. Wilder v. Va. Hosp. Ass‘n, 496 U.S. 498, 512 (1990). There, an association of hospitals brought a
There can be little doubt that health care providers are the intended beneficiaries of the Boren Amendment. The provision establishes a system for reimbursement of providers and is phrased in terms benefit[t]ing health care providers: It requires a state plan to provide for payment . . . of the
hospital services, nursing facility services, and services in an intermediate care facility for the mentally retarded provided under the plan.
Id. at 510 (internal quotation marks and citation omitted). The Supreme Court concluded that this right was enforceable because the Boren Amendment was cast in mandatory, rather than precatory, terms since it required the state to “provide for payment . . . of hospital[s] according to rates the [s]tate finds are reasonable and adequate.” Id. at 512 (first alteration in original). The Court described this language as a “congressional command, . . . wholly uncharacteristic of a mere suggestion or nudge” and held that the hospital association had a right to bring the action. Id. (internal quotation marks and citation omitted).
{38} The case at bar more resembles Wilder rather than Gonzaga University, and the facts here, as in Wilder, weigh in favor of finding legislative intent to create a private cause of action under
{39} Furthermore,
{40} Like Wilder, the payment provision of
{41} Last, we determine whether a private remedy would either frustrate or assist the underlying purpose of the legislative scheme. The purpose of
{42} For the reasons we have discussed, we hold that the Legislature intended to provide an implied cause of action under the statute.
b. Application of the Private Cause of Action to the Parties
{43} As explained above,
{44} In addition, Plaintiffs argue on appeal that “the district court erred in concluding that [
can be subject to the private cause of action derived from
{45} For the above reasons, we hold that the issue of an implied cause of action against HSD has not been preserved. Woolwine v. Furr‘s, Inc., 106 N.M. 492, 496, 745 P.2d 717, 721 (Ct. App. 1987) (“To preserve an issue for review on appeal, it must appear that appellant fairly invoked a ruling of the trial court on the same grounds argued in the appellate court.“); see State v. Wyman, 2008-NMCA-113, ¶ 10, 144 N.M. 701, 191 P.3d 559. We will not address issues that were not preserved and are now raised for the first time on appeal. State v. Ware, 118 N.M. 703, 705, 884 P.2d 1182, 1184 (Ct. App. 1994). Thus, upon remand, the implied cause of action under
3. Section 27-2-16(B) Applies Whenever a Substitution is Possible, Even if the Substitution Was Not Made
{46} Plaintiffs also appeal the district court‘s holding that the statute “applies whenever a pharmacist dispenses a multiple source drug to a Medicaid recipient at a lower cost than the drug listed in the prescription; and . . . whenever a pharmacist dispenses a therapeutically equivalent drug to a Medicaid recipient which is lower in cost than the drug listed in the prescription.” This issue was briefed and preserved by Plaintiffs in the second of the two appeals at issue in this Opinion to which HSD was a party. Though the MCOs have not briefed the matter, it was properly raised, and we consider our resolution of this legal issue applicable to all of the parties.
{47} Plaintiffs contend that based upon its plain language,
{48} Before we begin our analysis, we reiterate that
{49} The crucial phrase of the statute is “[i]f drug product selection is permitted by
{50} Furthermore, this reading of the statute is consistent with the practical implications, objective, and purpose of
{51} In contrast, the district court‘s interpretation of
{52} HSD places too much emphasis on the role of
{53} Furthermore, Plaintiffs assert that “the district court‘s decision does not adequately take into account that drug product selection occurs not only in the case of brand[]name/generic substitution, but also in the case of choosing among non-pioneer versions of multiple source drugs.” Plaintiffs contend that there are three reasons for which this distinction must be accounted, all of which are related to the FDA distinguishing between multiple source drugs as separate and unique drugs with or without the same active ingredients. We do not see that the district court ruled that
{54} The district court appears to draw no distinction between substitutions where the prescribed drug is a brand name drug and substitutions where the prescribed drug is a multiple source generic version. Based upon the plain language of the statute, we hold that the statute requires no distinction between prescribed drugs that are generic and those that are brand name, as long as the pharmacist is authorized to use his or her discretion to dispense a lesser expensive drug than the prescribed drug, and the substitution meets the requirements set out in
{55} Thus, we reverse the district court‘s determination that
4. Amount of Payment Required by Section 27-2-16(B) —The District Court Failed to Determine Whether $3.65 Was a Reasonable Dispensing Fee
{56} Plaintiffs appeal the district court‘s finding that a base dispensing fee of $3.65 is reasonable, arguing that there are contested issues of material fact with regard to the reasonableness of the dispensing fee. Reasonableness is a question of fact when the court is required to weigh evidence. Rio Grande Kennel Club v. City of Albuquerque, 2008-NMCA-093, ¶ 18, 144 N.M. 636, 190 P.3d 1131 (“The issue regarding the reasonableness of [a statute‘s license and permit] fees presented a question of fact requiring the district court to weigh evidence. . . . Facts may exist to prove that the fee provisions in [the statute] are excessive or unreasonable with respect to the cost of regulation.“).
{57} In granting HSD‘s motion for summary judgment, the district court based its holding that $3.65 was a reasonable dispensing fee on two grounds. First, it gave deference to HSD‘s interpretation of
{58} Plaintiffs contend that they presented evidence below that created a dispute regarding the reasonableness of the $3.65 dispensing fee, a material fact. First,
{59} Further, HSD directs this Court to other information that raises additional factual questions regarding the reasonableness of a $3.65 dispensing fee. HSD asserts that “the actual cost to dispense prescription drugs varies dramatically with the volume of the dispensing pharmacy. . . . [Some smaller pharmacies] count[] out pills by hand[,] while large pharmacies have machines that can do it faster [and] have non-pharmacist technicians to fill prescriptions who get paid less than a licensed pharmacist.” Thus, a base fee of $3.65 may be reasonable for larger pharmacies, where it may not be reasonable for smaller pharmacies.
{60} Moreover, HSD‘s contention that the $3.65 dispensing fee is greater than that paid in the private health insurance sector is not determinative of reasonableness itself and raises further factual questions. We do not know how the private sector reimburses pharmacists for the ingredient cost of the drug, or whether they reimburse for more or less than the AWP, minus fourteen percent, as the Medicaid program does. HSD even admits in its reply brief regarding this motion for summary judgment that dispensing fees can vary greatly, depending upon how much the pharmacists are reimbursed for the drug ingredient costs. In that brief, HSD argued that “New Mexico‘s dispensing fee is reasonable when compared with the fees paid under Medicaid by other [s]tates. . . . Other [s]tates pay a dispensing fee ranging from $2.00 to more than $10.” HSD then explained that “some [s]tates with a higher dispensing fee pay a lower ingredient cost.” Thus, the standard insurance companies use to reimburse for the ingredient cost plays a significant role in how much the companies will then reimburse for the dispensing fee. We are not provided with information regarding how the private sector reimburses pharmacists for the ingredient cost. Without such information, we will not assume that the private sector‘s ingredient cost reimbursement schemes are similar to Medicaid‘s.
{61} Because the district court was required to weigh the evidence regarding this issue, we hold that reasonableness of the dispensing fee was a question of fact in this case. Facts exist in the record that may prove that the $3.65 fee was unreasonable. Thus, summary judgment on the reasonableness of the dispensing fee was inappropriate. We remand for a factual determination about what a reasonable dispensing fee is for each pharmacy.
C. The District Court Properly Dismissed Plaintiffs’ Claim Regarding HSD‘s Reduction of Reimbursement Without Federal Approval During a Six-Month Gap Period
{62} Plaintiffs argue that the district court erred in denying their motion for summary judgment on HSD‘s violation of
{64} Two federal statutes of the
[i]f the Secretary, after reasonable notice and opportunity for hearing to the [s]tate agency administering or supervising the administration of the [s]tate plan approved under this subchapter, finds--
- that the plan has been so changed that it no longer complies with the provisions of section 1396a of this title; or
- that in the administration of the plan there is a failure to comply substantially with any such provision;
the Secretary shall notify such [s]tate agency that further payments will not be made to the [s]tate (or, in his discretion, that payments will be limited to categories under or parts of the [s]tate plan not affected by such failure), until the Secretary is satisfied that there will no longer be any such failure to comply. Until he is so satisfied he shall make no further payments to such [s]tate (or shall limit payments to categories under or parts of the [s]tate plan not affected by such failure).
{65} The statutes quoted above are the current versions of the Act. Prior to 1981, the Act contained different language that required preapproval of state plans before they were implemented. Specifically,
{66} Furthermore, as the district court highlighted in its memorandum opinion, persuasive case law supports this position. In Charleston Mem‘l Hosp. v. Conrad, 693 F.2d 324, 325-26 (4th Cir. 1982), the plaintiff argued that the state illegally implemented reductions in Medicaid coverage because implementation took place before the federal government approved the changes. After analyzing
{67} Plaintiffs cite two cases in support of their appeal of this issue: AMISUB (PSL), Inc. v. Colorado Dep‘t. of Soc. Servs., 879 F.2d 789 (10th Cir. 1989) and Oregon Ass‘n. of Homes for Aging, Inc. v. Oregon, 5 F.3d 1239 (9th Cir. 1993). In AMISUB, the court held that when the state amended its Medicaid inpatient reimbursement rates, such an amendment was void because it violated procedural and substantive requirements of the Federal Medicaid Act. 879 F.2d at 801. However, the violations at issue had nothing to do with implementing reimbursement rates without prior authorization. Id. Likewise, Oregon Ass‘n. does not deal with an amended plan submitted for HCFA approval. 5 F.3d at 1241. There, nursing homes challenged the state‘s reclassification of nursing services into rate categories, causing the nursing homes to receive less reimbursement from the Medicaid program. Id. at 1240. The court found that “[a] law that effects a change in payment methods or standards without HCFA approval is invalid.” Id. at 1241. Nonetheless, the state in that case never submitted an amendment to HCFA for approval even after the reclassification of nursing services was implemented. Because neither of these cases deals with the issue of implementing changes in reimbursement prior to HCFA approval, we do not find them persuasive.
{68} We agree with the district court that “[t]he cases cited by Defendants [in their motion], the fact that prior approval would hamstring [s]tate officials trying to anticipate . . . and react to changing demands on the Medicaid program, as well as the history of the statute[,] make a strong case against prior approval.” Thus, we affirm the district court‘s holding that Plaintiffs do not have a cause of action against HSD for reimbursement during the period the amendment to the Medicaid payment structure was not yet approved.
D. Plaintiffs May Bring a Breach of Contract Claim Against HSD Under the Provider Agreements
{69} Before the Medicaid program in New Mexico transitioned to managed care, Plaintiffs signed provider agreements with HSD “in order to qualify for reimbursement from the Medicaid program.” Through the agreements, HSD required providers to agree to terms regarding record keeping, payment, compliance with state and federal law, reimbursement by third parties, and other issues. Plaintiffs argue that the district court improperly held that no obligation could arise from Plaintiffs’ provider contracts that incorporate the guarantees of Section 27-2-16(B). Plaintiffs contend that the provider “agreements expressly and impliedly require [HSD] to pay any shortfall in pharmacist reimbursement and create an actionable claim against [HSD] for the shortfall between what the MCOs paid and what [Section] 27-2-16(B) requires.” Plaintiffs make two specific arguments regarding a third-party liability clause in the contract and the incorporation of Section 27-2-16(B) into the contracts.
{70} First, Plaintiffs argue that the third-party liability provisions of the provider agreements require HSD to make up any shortfall arising out of the MCOs’ failure to abide by Section 27-2-16(B). The 1990 provider agreements contain a section called “Third[-]Party Liability” that requires Plaintiffs
{71} We reiterate here, applying the same reasoning as we did above, that the MCOs are part of the Medicaid program. They are not third-party insurers or health plans when they pay providers for the services and drugs provided to Medicaid participants. In this context, they are conduits for Medicaid funds. Thus, we hold that Plaintiffs’ contention that HSD is responsible for the difference under the “Third[-]Party Liability” section of the provider agreements lacks merit. Thus, the district court properly dismissed the contract claim on this ground.
{72} Second, Plaintiffs argue that the provider agreements incorporate Section 27-2-16(B) because all relevant statutes are incorporated into contracts. Plaintiffs argue that, under this agreement, HSD should have ensured that Plaintiffs were paid in accordance with Section 27-2-16(B) and, by failing to do so, they breached the provider contracts.
{73} “A contract incorporates the relevant law, whether or not it is referred to in the agreement.” State ex rel. Udall v. Colonial Penn Ins. Co., 112 N.M. 123, 130, 812 P.2d 777, 784 (1991); Durham v. Sw. Developers Joint Venture, 2000-NMCA-010, ¶ 18, 128 N.M. 648, 996 P.2d 911 (“The provisions of applicable statutes are part of every contractual commitment.“). We agree that the provider agreements incorporated Section 27-2-16(B) as the statute is relevant and applicable to the contractual commitments involved in the provider agreements, namely, Plaintiffs’ commitment to provide services and HSD‘s commitment to reimburse Plaintiffs. Moreover, the provider agreements specifically reference New Mexico‘s Medicaid payment structure in the section titled “Payment in Full,” stating that the providers agree to “accept as payment in full the amounts paid in accordance with the reimbursement structure in effect for the period during which such services were provided as per
{74} HSD argues that Plaintiffs do not have a right to sue for further reimbursement under this contract because of the above quoted section in the agreements titled, “Payment in Full.” HSD contends that this term of the contract waives any right to sue for further reimbursement because Plaintiffs promised to “accept as payment in full the amounts paid in accordance with the reimbursement structure in effect for the period during which such services were provided as per
{75} This is not the meaning of this clause of the contract. If it were, HSD could pay providers nominal fees for their services, and the providers would have no recourse. Plaintiffs entered into the provider agreements, agreeing to accept as payment in full “amounts paid in accordance with the reimbursement structure in effect.” They did not agree to accept amounts less than that provided by statute as payment in full. If Plaintiffs were paid in accordance with the reimbursement structure in effect—Section 27-2-16(B)—we would agree that they could not
{76} HSD further argues the MMCS agreements between HSD and the MCOs included a provision that exempts the state from liability for shortfalls in payments made by the MCOs to Plaintiffs. This provision states that “[t]he subcontractor must accept payment from the MCO as payment for any services included in the benefit package, and cannot request payment from HSD or from Medicaid members . . . for services performed under the subcontract.” HSD argues that “[t]his provision was to be incorporated in all contracts between the MCOs and their subcontractors. . . . Thus, [Plaintiffs] have independently contracted away any claim they might have for additional reimbursement by HSD.” We disagree with HSD‘s waiver argument. Pursuant to the district court‘s order requiring HSD to agree that Plaintiffs did not waive their rights by agreeing to participate in managed care, Plaintiffs have not waived their rights under provider agreements by contracting to participate and participating in managed care.
{77} Last, HSD opposes Plaintiffs’ argument on the ground that Plaintiffs admitted in their fourth amended complaint that the provider agreements only apply to fee-for-service transactions and not to managed care. The paragraph HSD references in Plaintiffs’ fourth amended complaint states that “HSD has entered into contracts with . . . Plaintiffs and the Class for the provision of Medicaid pharmaceutical services on behalf of . . . HSD in the fee-for-service portion of the Medicaid [p]rogram that HSD administers.” We do not see how this historical explanation of the provider agreements’ purpose amounts to an admission that the contracts only apply to fee-for-service Medicaid reimbursements. The provider agreements were signed during the period in which HSD only reimbursed providers in accordance with the fee-for-service reimbursement plan, prior to the implementation of managed care. Such information was relevant to their complaint. Furthermore, the provider agreements explicitly state that assent by providers is a precondition to any reimbursement by the Medicaid program whatsoever. The final clause of the contract states the provider agreements must be signed as “a precondition to participation in the New Mexico Medical Assistance Program . . . that the provision of services, the billing of services, [and] the receiving of payment for services under the program cannot be accomplished without the proper completion and Department approval of [the provider agreement].” Thus, we conclude that these agreements govern Plaintiffs’ relationship with HSD with regard to any Medicaid reimbursement. We therefore reject HSD‘s argument with regard to the admission.
{78} In sum, Plaintiffs may bring a breach of contract cause of action against HSD for the Medicaid program‘s failure to reimburse Plaintiffs in accordance with Section 27-2-16(B). We remand to the district court to determine whether HSD, in its performance under the provider agreements, has “fail[ed] to perform a contractual obligation when that performance is called for.” UJI 13-822 NMRA.
E. Plaintiffs’ Contract Claim as Third-Party Beneficiaries
{79} Plaintiffs seek to enforce contracts between HSD and the MCOs on a third-party beneficiary theory. As we stated earlier, these contracts specifically incorporate Section 27-2-16(B). The contractual provisions are written in clear language, and there can be no doubt that the MCOs and HSD intended compliance with the statute to form part of their agreement. In their most current form, the contracts provide that subcontracts “for pharmacy providers shall include a payment provision consistent with [Section 27-2-16(B)] unless there is a change in law or regulation.” There have been no such changes.
{80} Plaintiffs argue that the district court erred when it held that “an action against [the] MCOs on a third-party beneficiary theory would be inconsistent with the [conclusion] that Plaintiffs have no private right of action.” HSD argues that Plaintiffs were not
{81} We are unpersuaded by HSD‘s contention that Plaintiffs were not intended third-party beneficiaries because they were not referenced by name in the contract, and the contention that Defendants did not believe that the purpose of the contract was to benefit Plaintiffs. “A third-party is a beneficiary if the actual parties to the contract intended to benefit the third-party. The intent to benefit the third-party must appear either from the contract itself or from some evidence that the person claiming to be a third party beneficiary is an intended beneficiary.” Callahan v. N.M. Fed‘n of Teachers-TVI, 2006-NMSC-010, ¶ 20, 139 N.M. 201, 131 P.3d 51 (internal quotation marks and citations omitted). Whether the parties had the requisite intent is a question of fact, appropriate for the trier-of-fact to decide. Moriarity v. Meyer, 21 N.M. 521, 529-30, 157 P. 652, 655 (1916). The fact that Plaintiffs were not referenced by name in the contract does not prove by itself that the contract was not intended to benefit them. Section 27-2-16(B), which is incorporated into the contract, specifically references Medicaid providers who dispense drugs to Medicaid participants. Plaintiffs fall within this class of Medicaid providers and, thus, could be found by a trier-of-fact to be intended third-party beneficiaries on that basis. Moreover, Defendants’ assertions that they did not intend to benefit Plaintiffs, as well as the fact they were not named in the contract, are evidence for the trier-of-fact to consider in determining whether Plaintiffs are intended third-party beneficiaries.
{82} Next, the MCOs’ first argument has been disposed of by our analysis above, indicating that there is an implied cause of action under Section 27-2-16(B). Even if there was not an implied cause of action under that statute, such a fact would not bar their third-party beneficiary claim. The cases cited by the MCOs and relied upon by the district court generally hold that a third-party beneficiary claim is just another way of getting a certain remedy from a statute that does not provide that remedy. Grochowski v. Phoenix Constr., 318 F.3d 80, 86 (2d Cir. 2003) (refusing to consider third-party beneficiary claim where the plaintiffs had not sought relief under the prescribed statutory remedy); Hodges v. Atchison, Topeka & Santa Fe Ry. Co., 728 F.2d 414, 415 (10th Cir. 1984) (disallowing the plaintiff‘s claim under a third-party beneficiary theory because the plaintiff refused to participate in arbitration as provided by statute and, stating in dicta, that the claim was “but another aspect of the implied right of action argument“); Carson v. Pierce, 546 F. Supp. 80, 87 (E.D. Mo. 1982) (reaching the merits of the contract claim, but holding that the plaintiffs were not intended third-party beneficiaries on the basis that the statute created no implied right of action); Wogan v. Kunze, 623 S.E.2d 107, 117, 120 (S.C. Ct. App. 2005) (holding that the non-existence of a private remedy under the statute prohibited the third-party beneficiary claim).
{83} Nonetheless, other courts have recognized such claims. See Brogdon ex rel. Cline v. Nat‘l Healthcare Corp., 103 F. Supp. 2d 1322, 1330 (N.D. Ga. 2000) (allowing a third-party beneficiary claim despite a lack of Congressional intent to create a private remedy under the Medicare and Medicaid Acts); Found. Health v. Westside EKG Assocs., 944 So. 2d 188, 194-95 (Fla. 2006) (holding that the lack of a private right of action in a state statute did not foreclose the plaintiffs third-party beneficiary claim); Dierkes v. Blue Cross & Blue Shield of Mo., 991 S.W.2d 662, 668 (Mo. 1999) (en banc) (allowing a third-party beneficiary claim to enforce the inclusion
{84} The first approach promoted by the MCOs is founded on the notion that allowing a third-party beneficiary claim is somehow identical to recognizing an implied right of action under the statute. For instance, in Hodges, the circuit court disallowed the plaintiff‘s third-party claim after finding that there was no implied right of action. 728 F.2d at 416. It held that such a claim was “but another aspect of the implied right of action argument.” Id. Similarly, in Wogan, the court held that “[n]othing in the contract creates liability outside the Medicare Act. Because the Act does not confer a private right of action to sue . . . we refuse to allow an action . . . on the ground [that the defendant] breached his contract” to comply with the Act. 623 S.E.2d at 119.
{85} The MCOs would have us adopt the reasoning of those jurisdictions as discussed above, which disallows third-party beneficiary claims of this type. We refuse to do so. The court in Dierkes reasoned:
[The] plaintiffs are not suing solely for [the defendant‘s] violation of [the statute], although compliance with that section becomes an element of the claim to the extent it is part of [the defendant‘s] promise. Instead, [the] plaintiffs are suing for . . . breach of contract, . . . [a] claim[] existing independent of the foregoing statute.
{86} The contract specifically includes the statutory requirement for payment to Plaintiffs pursuant to law. Plaintiffs seek to enforce this contract on a third-party beneficiary theory. Plaintiffs are not foreclosed from asserting a third-party beneficiary contract claim just because they may not do so directly under Section 27-2-16(B) when operation of the statute appears to be written as a contractual requirement for their reimbursement.
{87} In looking at Plaintiffs’ third-party beneficiary claim in this case, the district court began by asking why HSD entered into contracts with the MCOs “in the first place.” It then found, based on an interpretation of Section 27-2-16(B) and by analogy to cases from other jurisdictions, that the statute expresses a motivation to serve “the medical needs of the aged, blind, and disabled. This [motivation] makes it apparent that the beneficiaries of these services are Medicaid enrollees, not providers.” Finally, though not completely clear from the record, the conclusion that the statute was intended to benefit Medicaid enrollees led the district court to reason that the contract term incorporating it could not have been intended to benefit Plaintiffs. The district court stated that “Plaintiffs are not third[-]party beneficiaries to the contracts between HSD and the MCOs[.]” We hold that this finding requires reversal.
{88} As we discussed above, when a district court considers a motion for judgment on the pleadings, it must “accept as true all facts well pleaded and question only whether the plaintiffs might prevail under any state of facts provable under the claim.” Garcia, 106 N.M. at 760, 750 P.2d at 121. In their fourth amended complaint, Plaintiffs argue that “HSD has entered into valid written contracts with the MCOs for implementation of the managed care program[.]” Furthermore, Plaintiffs assert that they “are third[-]party beneficiaries under [those contracts] as the unambiguous language of such contracts governs the benefits received by Plaintiffs in dispensing prescription medicines to Medicaid recipients.”
{89} By finding that the Medicaid program as a whole was intended to benefit only Medicaid enrollees, the district court decided the merits of the third-party beneficiary claim. Essentially, it ruled on the intent of HSD and the MCOs in bargaining for the inclusion of the term in the contract. We hold that such a finding was a factual determination inappropriate to decide in a judgment on the pleadings. We reverse the district court on this issue and remand for additional factual development. Though we do not reach the merits of the issue, at this point, we see no reason why the contract term could not have been intended to benefit both Medicaid recipients and Plaintiffs. Certainly, if Medicaid recipients are to receive prescription medication, the participation of Plaintiffs is essential to the proper functioning of the system,
F. Plaintiffs May Bring the Unjust Enrichment Claim
{90} Plaintiffs sued the MCOs for unjust enrichment, alleging that “the MCOs failed to pay Plaintiffs the reimbursement rates to which they were entitled under [Section] 27-2-16(B) and were [thus] unjustly enriched by the amount of Medicaid reimbursements they wrongfully withheld[—]the difference between what [Section] 27-2-16(B) required and what they paid.” The district court dismissed Plaintiffs’ unjust enrichment claim on the ground that a contract existed between Plaintiffs and the MCOs and between the MCOs and HSD, barring equitable relief. The court subsequently dismissed Plaintiffs’ contractual claims.
{91} Unjust enrichment allows recovery by an aggrieved party from another who has profited at the aggrieved party‘s expense. Heimann v. Kinder-Morgan CO2 Co., 2006-NMCA-127, ¶ 20, 140 N.M. 552, 144 P.3d 111. In order to state a claim for unjust enrichment against the MCOs, Plaintiffs are required to allege, first, that the MCOs knowingly benefitted at Plaintiffs’ expense and, second, that allowing the MCOs to retain this benefit would be unjust. Id. That Plaintiffs had a contractual relationship with the MCOs does not foreclose a claim for unjust enrichment. See Danley v. City of Alamogordo, 91 N.M. 520, 521, 577 P.2d 418, 419 (1978) (holding that a builder was free to pursue an unjust enrichment claim despite the fact that it was in privity with the defendant); Platco Corp. v. Shaw, 78 N.M. 36, 37, 428 P.2d 10, 11 (1967).
{92} Plaintiffs argue that the district court improperly dismissed their claim for unjust enrichment, and we agree. In its order granting Presbyterian‘s 2006 motion for judgment on the pleadings, the court dismissed Plaintiffs’ claim because it found they possessed “a complete and adequate remedy at law. . . . In this case, the party‘s actions are regulated by a contract [between the MCOs and HSD,] and Plaintiffs are seeking damages for breach of that contract.” (Internal quotation marks and citation omitted.) Thus, the district court dismissed Plaintiffs’ unjust enrichment claim because it considered it “legally insufficient.”
{93} To support its conclusion, the district court relied on Sims v. Sims, 1996-NMSC-078, ¶ 28, 122 N.M. 618, 930 P.2d 153, but that case is not dispositive on these facts. In Sims, our Supreme Court considered the issue of whether the existence of a statutory cause of action foreclosed a traditionally recognized equitable claim. Id. ¶ 17. Holding that equity remained available in such a situation, the Court concluded that “[t]here is no requirement that the creation of a statutory remedy at law for a particular type of claim will automatically supplant an equitable remedy that addresses the same claim. [Any] major departure from the long tradition of equity practice should not be lightly implied.” Id. ¶ 29 (internal quotation marks and citations omitted). Likewise, as the Court held in Hydro Conduit Corp. v. Kemble, 110 N.M. 173, 178, 793 P.2d 855, 860 (1990), “unjust enrichment constitutes an independent basis for recovery in a civil-law action, analytically and historically distinct from the other two principal grounds for such liability, contract and tort.” See Tom Growney Equip., Inc. v. Ansley, 119 N.M. 110, 112, 888 P.2d 992, 994 (Ct. App. 1994).
{94} Thus, dismissal of Plaintiffs’ claim for unjust enrichment on Presbyterian‘s motion for judgment on the pleadings was error. Plaintiffs assert that the MCOs entered into valid contracts with HSD, ones in which the MCOs promised to pay in accordance with Section 27-2-16(B). Plaintiffs allege further that HSD paid the MCOs to comply with the statute, but that those payments were at least partially retained by them. Such pleadings are enough to state a claim in equity for unjust enrichment, and the fact that Plaintiffs had contracts with the MCOs does not work to automatically foreclose it. Our system explicitly provides for alternative pleading of civil claims.
G. Declaratory and Injunctive Relief Was Properly Denied
{95} Finally, Plaintiffs argue that their demands for declaratory and injunctive
It is the general rule that the granting of declaratory relief is discretionary, under both the federal and the state acts. Whether such jurisdiction is to be entertained rests in the exercise of sound judicial discretion by the [district] court, and its decision will not be disturbed on appeal, in the absence of a clear showing of abuse of that discretion.
Allstate Ins. Co. v. Firemen‘s Ins. Co., 76 N.M. 430, 434, 415 P.2d 553, 555 (1966) (internal quotation marks and citation omitted). Furthermore, injunctive relief is a harsh, drastic remedy that a district court “should issue only in extreme cases of pressing necessity and only where there is a showing of irreparable injury.” Leonard v. Payday Prof./Bio-Cal Comp., 2008-NMCA-034, ¶ 14, 143 N.M. 637, 179 P.3d 1245 (internal quotation marks and citation omitted). The district court in this case acted within its discretion having already entered an order keeping Plaintiffs’ statutory entitlement alive, allowing access to a measure of relief that perhaps might exceed the reach of declaratory or injunctive judgments. Plaintiffs’ demands for injunctive and declaratory relief essentially sought to remedy the underlying substantive claims. Because the outcomes of those substantive issues were unclear at the time the district court considered these equitable remedies, the district court did not abuse its discretion in denying them.
II. Class Certification Was Proper
{96} Because we reverse in part the orders of the district court, we now consider Cimarron‘s conditional cross-appeal. Specifically, Cimarron makes two arguments that Plaintiffs’ class was improperly certified. First, Cimarron claims that allowing the MCOs to be added as Defendants after the original class certification results in a violation of its constitutional due process rights. Second, Cimarron claims the district court improperly applied the requirements for class certification under
{97} Decisions to certify a class are reviewed for abuse of discretion. Abuse occurs when the district court “misapprehends the law or if [its] decision is not supported by substantial evidence.” Brooks v. Norwest Corp., 2004-NMCA-134, ¶ 7, 136 N.M. 599, 103 P.3d 39. “Within the confines of Rule 1-023, the district court has broad discretion whether or not to certify a class.” Id. The rule lists four prerequisites to certification of a class action:
- [Numerosity:] the class is so numerous that joinder of all members is impracticable;
- [Commonality:] there are questions of law or fact common to the class;
- [Typicality:] the claims or defenses of the representative parties are typical of the claims or defenses of the class; and
- [Adequacy of representation:] the representative parties will fairly and adequately protect the interests of the class.
Ferrell v. Allstate Ins. Co., 2008-NMSC-042, ¶ 9, 144 N.M. 405, 188 P.3d 1156 (internal quotation marks and citation omitted). Litigants attempting to certify a class must also meet one of three requirements under
{98} As we stated above, the court certified the class in this case before the MCOs were added as Defendants. Thereafter, Plaintiffs, unopposed by HSD, argued that the MCOs were indispensable parties by virtue of the changed Medicaid administrative and payment scheme. They persuaded the district court to allow amendment of their complaint. The MCOs attacked the
{99} Cimarron argues that this scenario gives rise to a due process violation. We disagree. As case law demonstrates, post-certification amendments to include additional defendants typically only violate due process where the subsequently added defendants do not receive an adequate opportunity to contest the certification and the allegations against them. See In re Am. Med. Sys., Inc., 75 F.3d 1069, 1075, 1086 (6th Cir. 1996) (holding that the additional defendants could not be added after original class certification without having time to contest the certification); Van Vels v. Premier Athletic Ctr. of Plainfield, Inc., 182 F.R.D. 500, 506-07 (W.D. Mich. 1998) (allowing post-certification amendment to include the additional defendants as long as they were given additional time for discovery and dispositive motions); see Walker v. World Tire Corp., 563 F.2d 918, 921 (8th Cir. 1977) (concluding that courts may not “rule on the class action question without affording the parties notice and an opportunity to make a record on the issue” and stating that “[t]he propriety of class action status can seldom be determined on the basis of the pleadings alone“).
{100} Both Plaintiffs and Cimarron cite In re Am. Med. Sys., Inc., 75 F.3d at 1086, and we too believe that case provides the appropriate analytical framework for these facts. There, the plaintiffs received class certification, and the next month they moved to amend their complaint to include an additional defendant. Id. at 1075. Then, “[w]ithout any further discovery, briefing, or argument, the district judge issued an amended order of class certification.” Id. The newly added defendant appealed, and the Sixth Circuit held that “[t]he district [court] failed in its duty to conduct a rigorous analysis and clearly abused its discretion.” Id. at 1086 (internal quotation marks omitted). Such a defendant must receive a meaningful opportunity to respond to the complaint, a chance to conduct discovery, time to brief the issues, and a hearing in which the issue may be argued. Id.
{101} Each of the above requirements were met in the present case. Once the district court granted Plaintiffs’ motion to amend their complaint, the MCOs almost immediately challenged the class certification. The district court granted discovery to the MCOs on the issue of “whether, under the [s]econd [a]mended [c]omplaint, Plaintiffs have abandoned the class certification against the [s]tate . . . and whether the MCOs, as new Defendants, are subject to the previous class certification[.]” Likewise, a hearing was held where the parties were given an opportunity to argue the issue and, on June 5, 2003, more than two years after Plaintiffs moved to add the MCOs as Defendants, the district court held that class certification was proper as to the MCOs. Under such conditions, where the MCOs had adequate notice and a chance to fully respond, we hold that no violation of their due process rights occurred.
{102} We are similarly unpersuaded by Cimarron‘s argument that the burden of proof as to class certification was unlawfully shifted to their shoulders. Our Supreme Court held:
We can properly consider only those facts which appear in the transcript on appeal, which in this case is identical with the record proper in the district court. Upon a doubtful or deficient record[,] we indulge every presumption in support of the correctness and regularity of the decision of the trial court. Every reasonable intendment and presumption are resolved in favor of the proceedings and judgment in that court.
State ex rel. Alfred v. Anderson, 87 N.M. 106, 107, 529 P.2d 1227, 1228 (1974) (citations omitted).
{103} Given that Cimarron provides us with no citations to the record tending to
{104} We also hold that the district court did not abuse its discretion in its application of Rule 1-023. Plaintiffs clearly have standing to sue. They meet the requirements of numerosity, commonality, typicality, and adequacy of representation. Furthermore, it is clear to us that the Rule 1-023(B)(3) requirements of predominance and superiority were satisfied. Substantial evidence supports the district court‘s conclusions on these matters.
{105} The requirements of standing have been met. In order to demonstrate standing, a plaintiff must demonstrate “(1) an injury in fact, (2) a causal relationship between the injury and the challenged conduct, and (3) a likelihood that the injury will be redressed by a favorable decision.” Forest Guardians v. Powell, 2001-NMCA-028, ¶ 16, 130 N.M. 368, 24 P.3d 803 (internal quotation marks and citation omitted). Standing is a “threshold legal issue” to class certification. Andrews v. Am. Tel. & Tel. Co., 95 F.3d 1014, 1022 (11th Cir. 1996). Cimarron alleges that because Plaintiffs contracted with the PBMs and not directly with the MCOs themselves, they lack standing to sue. This proposition is unsupported by precedent in Cimarron‘s briefs. Indeed, Plaintiffs alleged direct economic injuries against HSD and the MCOs because they were paid less than the statutory requirement. Such injuries were allegedly attributable to actions of either HSD, the MCOs, or both, and would presumably be cured if those parties were required to pay. That some Plaintiffs were required to contract with a PBM who, in turn, contracted with an MCO, does not defeat standing. In such a situation, a causal connection between the injury and challenged conduct may still exist and because the MCOs provide no law to the contrary, we hold that standing is not defeated by the mere existence of contracts between Plaintiffs and the PBMs. By the same token, some Plaintiffs had a direct relationship with an MCO; all allege the same right to payment of Medicaid reimbursement monies.
{106} We hold that substantial evidence supports the district court‘s conclusions as to numerosity, typicality, commonality, and adequacy of representation.
{107} Nor did it abuse its discretion in finding that the requirements of predominance and superiority were met. Under
{108} We find nothing in the record to indicate the existence of any class member interested in maintaining a separate action. Judicial resources will be saved by certification, the number of class members is manageable, and the damages of each class member can be calculated in a similar manner.
{109} In addition, Cimarron contends that the class certification resulted in “one-way intervention.” Cimarron argues that Plaintiffs’ decision to submit their motion for partial summary judgment for resolution after the original class certification, but before joining the MCOs, constituted impermissible “one-way intervention.” One-way intervention is the principle that potential members of a class may not wait until after the resolution of the case on the merits before joining the class. Valley Utils., Inc. v. O‘Hare, 89 N.M. 262, 264-65, 550 P.2d 274, 276-77 (1976). To do so would be to “invite[] non[-]participating parties to share in the spoils of a judgment obtained by others even though those absent parties will not be bound by the judgment if they [subsequently] decide to bring another action.” Id. at 265, 550 P.2d at 276.
{110} Cimarron fails to explain how one-way intervention is applicable to this situation, citing case law that expressly applies the principle solely to intervening plaintiffs in class actions. See id. at 264, 550 P.2d at 276 (holding that “only those members of [the plaintiff] class who joined the suit prior to the verdict are either bound by it, or allowed to benefit from it“); see also Peritz v. Liberty Loan Corp., 523 F.2d 349, 353-54 (7th Cir. 1975) (describing one-way intervention as the problem created by potential class members waiting for a resolution of the merits before deciding to join the lawsuit). One-way intervention is inapplicable here as non-parties are not attempting to intervene and share in the spoils of a judgment already obtained by others in this case.
{111} As part of this one-way intervention argument, Cimarron further contends that Plaintiffs received “an impermissible preview of the merits before obtaining class certification binding all . . . parties in the case” because Plaintiffs obtained a partial decision on the merits that “[Section] 27-2-16(B) . . .
IV. CONCLUSION
{112} Based on the foregoing analysis, we affirm in part, reverse in part, and remand this case for further proceedings.
{113} IT IS SO ORDERED.
RODERICK T. KENNEDY, Judge
WE CONCUR:
MICHAEL D. BUSTAMANTE, Judge
JONATHAN B. SUTIN, Judge
Topic Index for Starko, Inc. v. Presbyterian Health Plan, Inc., Docket Nos. 27,992/29,016
AE APPEAL AND ERROR
AE-SR Standard of Review
CP CIVIL PROCEDURE
CP-CA Class Actions
CP-IJ Injunctions
CP-SJ Summary Judgment
CP-WA Waiver
CN CONTRACTS
CN-BF Beneficiaries
CN-BR Breach
CN-TB Third Party Beneficiary
CN-WV Waiver of Rights
IN INSURANCE
IN-HI Health Insurance
IN-HO Health Maintenance Organizations
JM JUDGMENT
JM-DJ Declaratory Judgment
PA PUBLIC ASSISTANCE
PA-MM Medicare and Medicaid
RE REMEDIES
RE-UE Unjust Enrichment
ST STATUTES
ST-IP Interpretation
ST-LI Legislative Intent