O'Dowd v. Anthem, Inc.

          FINAL ORDER AND JUDGMENT

          Kristen L. Mix, United States Magistrate Judge.

         This matter is before the Court on Plaintiff's Unopposed Motion for Attorneys' Fees and Expenses and Incentive Award for Named Plaintiff [#128]^[1] (the “Motion for Attorneys' Fees”) and Unopposed Motion for Final Approval of Class Action Settlement and Related Relief [#131] (the “Motion for Final Approval”) (collectively, the “Motions”). Plaintiff requests, and Defendants do not oppose, that the Court approve the Settlement Agreement [#121-1], which resolves all of Plaintiff's and class members' claims in this litigation. A fairness hearing pursuant to Fed.R.Civ.P. 23(e)(2) was held on May 24, 2019, at 9:30 a.m. in the Alfred A. Arraj United States Courthouse, 90119th Street, Denver, Colorado. For the reasons stated below, the Motions [#128, #131] are GRANTED.^[2]

         I. Background

         A. Factual Background

         This case concerns the reimbursement methodology Defendant Rocky Mountain Hospital and Medical Service, Inc. (“Anthem Colorado”) used for Out-of-Network Behavioral Health Services.^[3] As Plaintiff explains in the Motion for Final Approval [#131], “Anthem Colorado historically determined the allowed reimbursement amount (the ‘Allowed Amount') for out-of-network behavioral health professional providers using a fee schedule (the ‘ZBHA Fee Schedule') that differed from the reimbursement methodology that Anthem Colorado most often used to calculate the Allowed Amounts for out-of-network medical and surgical services (the ‘RBRVS Reimbursement Methodology') [which] was based on Medicare payment rates.” [#131] at 7 (citing Second Am. Compl. [#53] (the “SAC”) ¶¶ 26-27, 39-40).

         Plaintiff O'Dowd purchased a Preferred Provider Organization (“PPO”) health insurance policy from Anthem Colorado in 2008 and has been under the care of a psychiatrist since January of 2008. Id. (citing SAC [#53] ¶¶ 19, 22). Plaintiff's “psychiatrist is an Out-of-Network Provider under the Anthem Colorado PPO plan, which means that the provider does not participate in Anthem Colorado's PPO network and has not agreed to accept Anthem Colorado's reimbursement as payment in full for services provided to Plaintiff.” Id. Applying the ZBHA Fee Schedule, “Anthem Colorado imposed a cap on the Allowed Amount for Plaintiff's psychiatrist [and, ] [b]ased on the terms of her contract with her provider, Plaintiff was financially responsible for the difference between her psychiatrist's charges and the Maximum Allowable Amount paid by Anthem.” Id. at 7-8 (citing SAC [#53] ¶ 23).

         “Plaintiff alleges that Anthem Colorado's application of the ZBHA Fee Schedule for Out-of-Network Behavioral Health Services resulted in lower reimbursement rates than the RBRVS Reimbursement Methodology, thereby increasing the out-of-pocket responsibility borne by her and other putative class members for such services.” Id. at 8 (citing SAC [#53] ¶ 27). Plaintiff further alleges that, by using this different methodology for Out-of-Network Behavioral Health Services, Anthem Colorado violated ERISA^[4] and Colorado state law, and “deprived Plaintiff and other persons in health plans insured or administered by Anthem Colorado of benefits that were owed under the respective Plans.” Id. (citing SAC [#53] at 22-26).

         B. Procedural Background

         Plaintiff initiated this lawsuit in Boulder County District Court on behalf of herself and others similarly situated on July 18, 2014. See Compl. [#4]. On October 10, 2014, Anthem Colorado removed the action to this Court pursuant to 28 U.S.C. § 1441(a) and (c). Notice of Removal [#1].

         Plaintiff filed an Amended Complaint on January 21, 2015, which asserted four claims against Defendants. See Am. Compl. [#27] ¶¶ 41-68. Defendant Anthem Colorado then filed a Motion to Dismiss Amended Complaint in Part (the “First Motion to Dismiss”) [#29]. On September 30, 2016, the Court granted in part and denied in part the First Motion to Dismiss. See Order [#36]. Specifically, the Court denied Defendant's First Motion to Dismiss with respect to the first, second, and third claims, and granted Defendant's First Motion to Dismiss with respect to the fourth claim. Id. However, the Court dismissed the fourth claim without prejudice. Id. at 15.

         Subsequently, Plaintiff moved to file a Second Amended Complaint. See [#51]. This motion was unopposed. Id. The Court granted the motion, and Plaintiff filed her Second Amended Complaint on December 1, 2015. See SAC [#53]. Plaintiff's Second Amended Complaint, which is the operative pleading in this case, did not add any new claims, but instead added further specificity with respect to her existing claims. Thus, Plaintiff's current claims are as follows: (1) a claim seeking a declaratory judgment that Defendants violated Colo. Rev. Stat. §§ 10-16-104(7) and 10-16-107.7; (2) a claim seeking injunctive relief under ERISA, specifically 29 U.S.C. § 1132(a)(3); (3) a claim for payment of benefits and associated interest under ERISA, specifically 29 U.S.C. § 1132(a)(1)(B); and (4) a breach of fiduciary duty claim under ERISA, specifically 29 U.S.C. §§ 1132(a)(1)(B) and 1132(a)(3). See Id. ¶¶ 57-87.

         After the filing of Plaintiff's Second Amended Complaint, Defendants filed a Partial Motion to Dismiss Plaintiff's Second Amended Complaint [#66] (the “Second Motion to Dismiss”) which sought to dismiss all claims against Defendant Anthem and claims one, two, and four against Defendant Anthem Colorado. The Court denied Defendants' Second Motion to Dismiss on September 23, 2016. Order [#91].

         Following the Court's September 23, 2016 Order [#91], the parties engaged in prolonged settlement negotiations which culminated in the parties executing a proposed Settlement Agreement, dated March 7, 2018. On October 22, 2018, the Court entered its Order [#125] (the “Preliminary Approval Order”) granting Plaintiff's Unopposed Motion for Preliminary Approval of Class Action Settlement and Related Relief [#121]. Pursuant to the Preliminary Approval Order [#125], the Court: (1) conditionally certified the class for settlement purposes; (2) preliminarily appointed Plaintiff as a representative of the Settlement Class and D. Brian Hufford, Jason S. Cowart, and Andrew N. Goldfarb of Zuckerman Spaeder LLP (“Zuckerman”), and Gregory A. Gold and Sommer D. Luther of The Gold Law Firm (“The Gold Firm”) as counsel for the Settlement Class (collectively, “Class Counsel”); (3) preliminarily approved the parties' Settlement Agreement; (4) appointed Dahl Administration, LLC (“Dahl”) as the Settlement Administrator; (5) approved of and ordered the Settlement Administrator to provide the Mailed Notice, Long Form Notice, and CAFA Notice to Settlement Class Members; and (6) provided opportunities for absent Settlement Class Members to be heard.

         It appears that the parties have complied with all requirements of the Court's Preliminary Approval Order [#125], including sending Notice to the Settlement Class Members. Ness Decl. [#131-2] ¶ 4. In the present Motions [#128, #131], Plaintiff seeks, and Defendants do not oppose, an order from the Court: (1) granting final certification of the Settlement Class to implement the Settlement, (2) granting final approval of the Settlement Agreement pursuant to Fed.R.Civ.P. 23(e), including the Plan of Allocation, and (3) approving Plaintiff's attorneys' fees, costs, and incentive award. Motion for Final Approval [#131] at 25.

         C. Overview of the Settlement Agreement

         As Plaintiff summarizes, the proposed Settlement Agreement has three primary components: (1) a change to Anthem Colorado's business practices requiring it to use its RBRVS Reimbursement Methodology for covered Out-of-Network Behavioral Health Services for a period of three years; (2) payment by Defendants of a Settlement Amount of $380, 000 that will be allocated among members of the proposed Settlement Class according to the proposed Plan of Allocation, subject to a De Minimis Threshold of $2.00; and (3) a release of claims against Defendants and Related Entities. Motion [#131] at 11; see Settlement Agreement [#121-1] §§ 8, 9, 13. The proposed Settlement Agreement defines the Settlement Class as:

[A]ll Plan Members who received Out-of-Network Behavioral Health Services with dates of service during the Settlement Class Period that were allowed at or below the provider's billed charges.

Settlement Agreement [#121-1] § 1.58. The Settlement Class Period ran from June 1, 2008, to October 22, 2018, the date of the Court's Preliminary Approval Order [#125]. Id. § 1.60. Excluded from the Settlement Class are:

(a) Defendants and any current and former Subsidiaries, divisions, Affiliates, predecessors, insurers, assignees, and successors-in-interest; (b) any judge who presides or has presided over the Litigation, together with his/her immediate family members and any other individual residing in the judge's household; and (c) individuals who validly and timely request to Opt Out of this Agreement pursuant to Section 5.1 of the Settlement Agreement.

Id. § 1.58.

         With respect to the first component, the Settlement Agreement provides, for three years, the injunctive relief Plaintiff seeks in this litigation. Motion for Final Approval [#131] at 18; see Settlement Agreement [#121-1] § 8. Specifically, Anthem Colorado agrees to implement for three years a reimbursement methodology for determining Allowed Amounts for Out-of-Network Behavior Health Services delivered in Colorado that aligns with the methodology Anthem Colorado most often uses to calculate Allowed Amounts for out-of-network medical and surgical health care services. Id. According to Plaintiff, “[t]his will address what [she] alleged to be improper disparities in reimbursement for Out-of-Network Behavioral Health Services [because, ] [u]nder the Settlement, for a given Out-of-Network Behavioral Health Service, the Allowed Amount will be determined using the same RBRVS Reimbursement Methodology regardless of whether the service is performed by a behavioral health professional or a medical care provider.” Id.

         As to the second component, the monetary relief provided by the Settlement Agreement seeks to “reimburse Settlement Class Members for a portion of the difference, if any, between the actual Allowed Amount for the Out-of-Network Behavioral Health Services compared to what it would have been had Anthem Colorado used its RBRVS Reimbursement Methodology.” Id. at 18. To accomplish this, the distribution of funds to Settlement Class Members are subject to determination by the Settlement Administrator pursuant to the process set forth in the Plan of Allocation [#121-8] which “provides for a pro rata distribution to eligible Settlement Class Members based on the ratio of each Settlement Class Member's Total Alleged Underpayment to the Total Alleged Underpayment of all Settlement Class Members collectively.” Motion for Final Approval [#131] at 21; see Settlement Agreement [#121-1] § 9.1; Plan of Allocation [#121-8]. In order to “preserve the Settlement Fund, if the pro rata payment calculated for a particular Settlement Class Member does not exceed Two Dollars ($2.00), that Settlement Class Member will not receive a payment. Id. This is because the administrative costs of processing and sending such check to the Settlement Class Member would have exceeded the value of the check itself.” Id. at 21.

         Finally, as to the third component, the Settlement Agreement contains a release of claims related to the lawsuit from Plaintiff and from all Settlement Class Members. Id. § 13. Specifically, on final approval of the Settlement Agreement, Plaintiff and the Settlement Class Members shall be deemed to have released the Released Claims. [#121-1] § 1.51.

         The Released Claims are defined as:

any and all manner of claims, counterclaims, actions, causes of action, arbitrations, damages, debts, demands, duties, judgments, liabilities, losses, obligations, penalties, liquidated damages, proceedings, agreements, promises, controversies, costs, expenses, attorneys' fees, and suits of every nature and description whatsoever, whether based on federal, state, provincial, local, foreign, statutory, or common law or any other law, rule, or regulation, in the United States, whether fixed or contingent, accrued or unaccrued, liquidated or unliquidated, at law or in equity, matured or unmatured, known or unknown, foreseen or unforeseen, whether class or individual in nature, arising on or before the Sunset Date, that the Releasing Parties, or any of them, ever had, now have, can have, shall or may hereafter have, or that have been or could have been asserted against any of the Released Parties by the Releasing Parties, directly or derivatively, in the Litigation, or any other forum based on, by reason of, arising from, in connection with, or in any way relating to the conduct, events, facts, transactions, occurrences, acts, representations, omissions, or other matters set forth, alleged, embraced, or otherwise referred to or alleged in the Complaint. This includes, without limitation and as to the Released Parties only, any claims arising from, in connection with or in any way relating to the adequacy or lawfulness of Anthem Colorado's reimbursement rates, policies, or methodologies, including but not limited to the ZBHA Fee Schedule or RBRVS Reimbursement Methodology, used by Anthem Colorado to determine reimbursement for Out-of-Network Behavioral Health Services, and Anthem Colorado's determination, computation, payment, nonpayment, adjustment, or limitation of reimbursement for Out-of-Network Behavioral Health Services based on the ZBHA Fee Schedule or the RBRVS Reimbursement Methodology. Notwithstanding the foregoing, Released Claims do not include claims against the Released Parties by Persons covered by self-funded plans that have elected to use reimbursement methodologies or rates other than the RBRVS Reimbursement Methodology, arising on or after the Preliminary Approval Date. For avoidance of doubt, Released Claims do not include claims against the Released Parties relating to medical necessity or coverage determinations.

Id.

         Finally, the Settlement Agreement states that “Defendants specifically deny any wrongdoing or liability, and this Settlement Agreement is entered to resolve all claims amicably and does not imply or suggest in any way fault or wrongdoing.” Id. § 16.3.

         D. Notice to and Response from Settlement Class Members

         Pursuant to the Preliminary Approval Order [#125], the Court appointed Dahl as the Settlement Administrator to give notice to the Settlement Class Members and to carry out other responsibilities as provided for in the Settlement Agreement. [#125] ¶ 23. Additionally, the Court approved the parties' proposal to be jointly responsible for identifying names and addresses of potential Settlement Class Members and for Defendants to provide the Settlement Administrator with information from which a list of potential Settlement Class Members could be identified for the Mailed Notice. Id. ¶ 10.

         On March 16, 2018, prior to the Court's Preliminary Approval Order [#125], Dahl mailed notice to the appropriate state insurance regulators in all fifty states, as well as to the Attorney General of the United States, pursuant to the requirements of the Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1715(b). Ness Decl. [#131-2] ¶ 6. No. objection was raised by any recipient of the CAFA notice. Motion for Final Approval [#131] at 11.

         On February 7, 2019, Dahl received data from Defendant's counsel containing records for 19, 750 Settlement Class Members. Ness Decl. [#131-2] ¶ 7. On February 19, 2019, the court-approved Mailed Notice was mailed by Dahl to the 19, 750 Settlement Class Members. Id. Settlement Class Members were identified as individuals who received Out-of-Network Behavioral Health Services from Anthem Colorado with dates of service between June 1, 2008 and October 22, 2018. [#121-5]. The Mailed Notice advised the Settlement Class Members of the Settlement Agreement, including a description of the injunctive and monetary relief obtained, instruction on how to op-out or object to the Settlement Agreement, information on how Class Counsel would be paid, information about the Settlement Hearing, and the binding effect of a class judgment. Id. The Mailed Notice also informed the Settlement Class Members of the automated toll-free phone number and settlement website established by Dahl for persons seeking information about the settlement. Id. ¶ 8.

         The automated toll-free phone number is a helpline to assist potential Settlement Class Members and any other persons seeking information about the Settlement. Id. ¶ 8. The phone number is fully automated and operates 24 hours per day, seven days per week, and is still operating. Id. The toll-free phone number includes a voice response system that allows callers to listen to general information about the settlement and responses to frequently asked questions (“FAQs”). Id. ¶ 9. According to the Ness Declaration, “Dahl worked with counsel for the Parties to prepare responses to the FAQs to provide accurate answers to anticipated questions about the settlement, and Counsel approved the full helpline script prior to implementation.” Id.

         The settlement website was activated on February 19, 2019, and is still operating. Id. ¶ 9. According to the Ness Declaration, the website displays “general settlement information; a list of important dates and deadlines; a list of [FAQs] and Responses; reviewable and downloadable versions of important documents, including the Complaint, the Settlement Agreement, the Long Form Notice, and the motion for attorneys' fees and expenses; and information on how to contact the Settlement Administrator via email, U.S. Mail, or phone.” Id. ¶ 12.

         Out of the 19, 750 Mailed Notices initially sent, 3, 183 were returned with no forwarding address. Id. Dahl sent 2, 992 of the returned Mailed Notices for tracing, and was able to obtain updated information and re-mail the Mailed Notice to 2, 222 Settlement Class Members. Id. Of those 2, 222 Mailed Notices, 205 were returned without a forwarding address and 41 were returned with a forwarding address. Id. Dahl re-mailed the Mailed Notice to all 41 Settlement Class Members with forwarding addresses and, in total, re-mailed 2, 263 Mailed Notices. Id. Ultimately, Dahl was unable to locate addresses for only 5.9% of the total population of Settlement Class Members. Id. Kimberly K. Ness, a principal of Dahl, states that, in her experience, this is a highly successful mailing rate for a Settlement Class of this size. Id.

         As of April 22, 2019, Dahl has received, and responded to when appropriate, 26 live phone calls, 8 email messages, and 1 piece of written correspondence related to this settlement. Id. ¶ 14. Also as of April 22, 2019, the automated helpline has received 118 telephone calls and the settlement website has received 212 unique visits. Id. ¶¶ 10, 12. Pursuant to the Preliminary Approval Order, the deadline for potential class members to opt-out of or object to the Settlement was April 5, 2019. [#125] at 15. By that deadline, of the 19, 750 Settlement Class Members: (i) eight individuals opted out of the Settlement, (ii) one family of Settlement Class Members objected to the Settlement, and (iii) no Settlement Class Members provided notices of intent to appear at the May 24, 2019 Settlement Hearing. Motion for Final Approval [#131] at 10; Ness Decl. [#131-2] ¶ 15. A list of those persons who have requested to opt-out of the settlement agreement has been filed on the docket under Level 1 Restriction. [#133].

         Finally, no Settlement Class Members appeared at the May 24, 2019 Settlement Hearing to object to the Settlement.

         II. Final Certification of the Settlement Class

         A class certified for settlement purposes only must nevertheless satisfy the requirements of Rule 23. See Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 620- 622 (1997). “Settlement, though a relevant factor, does not inevitably signal that class-action certification should be granted more readily than it would be were the case to be litigated.” Id. at 620 n.16. Indeed, “proposed settlement classes sometimes warrant more, not less, caution on the question of certification.” Id. “On the other hand, a district court that is asked to certify a class for settlement purposes need not inquire whether the case would, if tried, present ‘intractable management problems,' as settlement necessarily means the parties are not proceeding to trial.” In re Thornburg Mortg., Inc. Sec. Litig., 912 F.Supp.2d 1178, 1227 (D.N.M. 2012) (quoting Amchem Prods., 521 U.S. at 620 n.16).

         A party seeking to certify a class bears the “strict” burden of proving that the requirements of Rule 23 have been met. Reed v. Bowen, 849 F.2d 1307, 1309 (10th Cir. 1988); see also Cook v. Rockwell Int'l Corp., 151 F.R.D. 378, 381 (D. Colo. 1993). Specifically, Plaintiff must establish each of the four requirements set forth in Rule 23(a): “(1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class.” Cook, 151 F.R.D. at 381.

         In addition, a party seeking class certification must establish that the case falls within one of the subcategories provided in Rule 23(b). Id. These subcategories are: (1) that separate actions would create a risk of inconsistent adjudications resulting in conflicting consequences for Defendants or other putative class members; (2) that Defendants have acted on grounds that generally apply to the class; and (3) that common questions of law or fact predominate over individualized questions. DG ex rel. Stricklen v. Deveughn, 594 F.3d 1188, 1194 (10th Cir. 2010).

         A. Rule 23(a)

         Defendants do not oppose the Motion for Final Approval [#131] and, pursuant to the Settlement Agreement, have agreed to the certification of a Rule 23 class for settlement purposes. See [#131] at 6; [#121-1] at 24. Plaintiff asserts that because the Court provisionally certified the Class for settlement purposes in the Preliminary Approval Order [#125] and because “nothing about the Class or the bases supporting class certification has changed since then, ” the Court should grant final certification of the Class to implement the Settlement. Motion for Final Approval [#131] at 12. The Court agrees.

         1. Numerosity

         With respect to the numerosity element of Rule 23(a)(1), “[t]he burden is upon plaintiffs seeking to represent a class to establish that the class is so numerous as to make joinder impracticable.” Folks v. State Farm Mut. Auto. Ins. Co., 281 F.R.D. 608, 616 (D. Colo. 2012) (quoting Peterson v. Okla. City Hous. Auth., 545 F.2d 1270, 1273 (10th Cir. 1976)). Determining whether Plaintiff has met this element is not subject to a “set formula”; it is a “fact-specific inquiry.” Folks, 281 F.R.D. at 616 (quoting Trevizo v. Adams, 455 F.3d 1155, 1162 (10th Cir. 2006)).

         Here, Defendants do not oppose the certification of a Rule 23 class and thus, do not dispute that Plaintiff meets the numerosity element of Rule 23(a). The Settlement Class includes 19, 742 putative class members, Motion for Final Approval [#131] at 12, which the Court finds to satisfy the numerosity factor of Rule 23(a). See, e.g., Mullen v. Treasure Chest Casino, LLC, 186 F.3d 620, 624 (5th Cir. 1999) (finding that proposed Class consisting of “100 to 150 members-is within the range that generally satisfies the numerosity requirement”); Bittinger v. Tecumseh Prod. Co., 123 F.3d 877, 884 n.1 (6th Cir. 1997) (rejecting as “frivolous” the “content[ion] that Plaintiffs failed to address the issue of whether joinder of all [1, 100] members of the class [wa]s impracticable”); Robidoux v. Celani, 987 F.2d 931, 936 (2d Cir. 1993) (“[T]he difficulty in joining as few as 40 class members should raise a presumption that joinder is impracticable.”); Clay v. Pelle, No. 10-cv-01840-WYD-BNB, 2011 WL 843920, at *2-3 (finding that a class of 400 prisoners, all subject to the challenged prison policy, satisfied the numerosity element).

         2. Common Question of Law or Fact

         The Court next turns to the common-question requirement of Rule 23(a)(2). For class members to share a least one common question of law or fact, they must “possess the same interest and suffer the same injury.” Trevizo, 455 F.3d at 1163 (citing Gen. Tel. Co. of the Sw. v. Falcon, 457 U.S. 147, 156 (1982)). Class members do not need to share both common questions of law and common questions of fact. J.B. ex rel Hart v. Valdez, 186 F.3d 1280, 1288 (10th Cir. 1999). Determining the existence of common questions turns on whether “a classwide proceeding will be efficacious in generating common answers apt to drive the resolution of litigation.” Martinez v. Nash Finch Co., No. 11-cv-02092-MSK-KLM, 2013 WL 1313921, at *5 (D. Colo. Jan. 30, 2013). Further, the common question must be able to be resolved classwide, meaning that the “determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011).

         Here, Defendants have stipulated to the certification of a Rule 23 class and thus, do not dispute that Plaintiff meets the commonality requirement of Rule 23(a). Plaintiff states that “the claims of every putative member of the Settlement Class, including [her], turn on the same common questions that have common answers, including whether Anthem Colorado was acting as an ERISA fiduciary when it created and applied its ZBHA Fee Schedule to Out-of-Network Behavioral Health Services, whether it breached its fiduciary duties by so doing, and whether Anthem Colorado's use of the ZBHA Fee Schedule for Out-of-Network Behavioral Health Services violated Colorado's mental health parity laws.” Motion for Final Approval [#131] at 13. The Court agrees that “[t]he answer to each of these questions would be the same for every Settlement Class member and would rest on common proof that does not depend upon the individual circumstances of any Settlement Class member, including Plaintiff.” Id.; see Pliego v. Los Arcos Mexican Rests., Inc., 313 F.R.D. 117, 126 (D. Colo. 2016) (“Commonality still exists if class members differ factually but challenge the application of a commonly-applied policy.”). The impact of Defendants' alleged conduct was consistent among potential class members and thus, the resolution of Plaintiff's common questions would result in common answers classwide. See ...