Consumer Class Actions and Mass Torts : Class Action Lawyer & Attorney : J. Russell Jackson : Skadden Law Firm : Complex Class Actions : Consumer Class Actions & Mass Torts Law Blog

Recently another federal court refused to certify a medical monitoring class because it presented too many individual issues.  In Gates v. Rohm and Haas Co., 2010 WL 774327 (E.D. Pa. Mar. 5, 2010), the residents of McCollum Lake Village in Illinois sued the defendant, alleging that its specialty chemicals manufacturing facility contaminated their Village with vinyl chloride, causing a significantly increased risk of developing brain cancer and a drop in property values.  They asserted the following claims:  medical monitoring, public and private nuisance, negligent and intentional trespass, strict liability, negligence, negligence per se, CERCLA, and conspiracy.  They sought class certification under Rules 23(b)(2) and 23(b)(3).  After a three-day hearing, the court denied certification, holding that individual issues predominated.

Although the court found that the numerosity, typicality, and commonality requirements of Rule 23(a) were met, it expressed concern about the adequacy of representation requirement because the class, as defined, ran the risk of precluding people who later developed physical injuries from bringing claims for such injuries under the general rule against claim-splitting.  The court ultimately assumed, without deciding, that the adequacy of representation requirement was met.

In analyzing the medical monitoring claim under Rule 23(b)(3), the court took issue with the failure of plaintiffs' experts to establish a minimum exposure level that applied to the entire class and represented a significant increase in the risk of developing disease.  Plaintiffs experts had earlier admitted that such figures were necessary to establish the need for medical monitoring, but all that they ultimately could deliver were average exposure levels.  They acknowledged that the putative class members' actual exposure levels varied significantly based on how long they spent outside, whether they also worked in the village, etc.  Relying on Rowe v. E.I. DuPont de Nemours & Co., 2008 U.S. Dist. LEXIS 103528 (D.N.J. Dec. 23, 2008), the court rejected the use of exposure levels from risk assessments and concluded that individualized issues predominated and precluded certification of the medical monitoring class.

The court also held that the medical monitoring requested -- annual MRIs in asymptomatic individuals -- were problematic from a class certification perspective; the risks for various individuals (children, people with kidney disease, claustrophobic patients) made it unlikely that "'informed physicians, unaffected by litigation considerations, would recommend routine monitoring' with MRIs in asymptomatic patients such as the proposed class members."  Gates, 2010 WL 774327 at *19 (citation omitted).

The court also rejected class certification under Rule 23(b)(2), holding that for the same reasons the class failed the predominance requirements, it also failed the "cohesiveness" requirement inherent in Rule 23(b)(2).

Finally, the court also rejected the property damage class proposed for certification under Rule 23(b)(3).  For that class, the court concluded that plaintiffs could not prove that each property was exposed to vinyl chloride, and certainly not in the same amounts.  Moreover, the fact of damages and the extent of damages were considerations weighing against a finding of predominance and superiority.

Gates is an example of a court that took its responsibilities seriously, holding three days of class certification hearings and receiving copious amounts of expert testimony on the key issues.  It did not lightly come to the conclusion that the prerequisites of Rule 23 were not met. 

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Too often courts and litigants spout the canard that damages issues do not preclude class certification.  But where damages cannot be calculated by the easy application of a standardized formula, and instead involve a complicated, multi-faceted individualized inquiry, the unmanageability of damages issues can defeat class certification.  A recent decision from the Alabama Supremes highlights this point.

In Eufaula Hospital Corp. v. Lawrence, 2009 WL 2903459 (Ala. Sept. 11, 2009), the trial court had certified a class action of people who had visited the defendant's emergency room and were categorized as "self pay" patients.  These patients, who were uninsured and not covered by governmental programs like Medicare or Medicaid, had signed an admission contract providing that they obligated themselves "to pay the account of the Facility in accordance with the regular rates and terms of the Facility."  Plaintiffs alleged that this was a contract with an undefined price term, and that Alabama law required that the price implied by law must reflect the "reasonable value" of the services.  Plaintiffs argued that they were overcharged because the defendant charged them the rack rate (or "chargemaster rate") for services rendered, which was more than the hospital's cost and more than the hospital received for the same procedures performed on patients who were insured or covered by government programs.  Plaintiffs sued for breach of contract, unjust enrichment, and injunctive relief.  The trial court had certified the class under Rule 23(b)(2) and (b)(3).

The Alabama Supreme Court reiterated that trial courts faced with class certification decisions must engage in a rigorous analysis of whether the elements of Rule 23 are met.  The defendant had challenged the trial court's conclusion that the "reasonable charge" could be calculated on a classwide basis.  Plaintiffs' expert had looked at the compensation formulas employed by the three largest third-party payors:  Medicare, Medicaid, and Blue Cross.  Using those amounts, the expert concluded that a reasonable charge would be 115% of the hospital's actual cost for the procedure.

The Alabama Supreme Court observed that the class members themselves were not treated uniformly by the defendant:

[M]any self-pay or uninsured patients are offered discounts on their bills, including prompt-pay discounts and charity discounts, or the debts are settled for a lesser amount.  Also, many patients never pay their bills, and some debts are turned over to collection agencies.

Id. at *9.

Moreover, after analyzing a series of decisions from other states, the court recognized that ascertaining the "reasonable charge" for services would require an individualized inquiry and cannot be addressed by the plaintiffs' proposed one-size-fits-all formula:

Under Alabama law, a determination of a reasonable charge for medical services in this case will require an examination of the circumstances of the charges for the services, the customs in the medical-service community, the price a willing provider would take for its services, and the price a recipient of those services would pay.  The testimony by the defendants as to the normal rates charged by them will be relevant, as well as testimony concerning "the [defendants'] internal factors [and] the similar charges of other hospitals in the community."  We agree that such determinations are "necessarily an individual inquiry that will depend on the specific circumstances of each class member, the time frame in which care was provided, and both [the defendant's] and other hospitals' costs at that time."  Finally, the defendants' acceptance of lower payments from Blue Cross, Medicare, and Medicaid stem "from legal and contractual requirements that applied solely to those classes of patients," and is not necessarily based on market factors or, as both [plaintiffs' and defendants' experts] acknowledged, on the actual costs of the services provided.  Thus, reliance on the rates paid by those entities may not be the baseline on which to calculate a reasonable charge for the medical services rendered.

Id. at *14 (citations omitted).

The court thus concluded that the individualized issues inherent in calculating a reasonable charge overwhelmed class cohesiveness and rendered certification under Rule 23(b)(2) and (b)(3) inappropriate.

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