Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

High Street Rehabilitation, LLC v. American Specialty Health Inc.

United States District Court, E.D. Pennsylvania

August 29, 2019

HIGH STREET REHABILITATION, LLC, and DEFABIO SPINE AND SPORT REHAB, LLC, individually, and on behalf of all others similarly situated, Plaintiffs,
v.
AMERICAN SPECIALTY HEALTH INCORPORATED, AMERICAN SPECIALTY HEALTH NETWORKS, INC., CIGNA CORPORATION and CONNECTICUT GENERAL LIFE INSURANCE COMPANY, Defendants.

          MEMORANDUM OPINION

          NITZA I. QUIÑONES ALEJANDRO, JUDGE

         INTRODUCTION

         Before this Court is a motion for final approval of the settlement agreement filed by Plaintiffs High Street Rehabilitation, LLC, and DeFabio Spine and Sport Rehab, LLC (collectively, “Plaintiffs”) pursuant to Federal Rule of Civil Procedure (“Rule”) 23, [ECF 174], and a motion for an award of attorneys' fees to class counsel, reimbursement of class counsel's expenses, and service award to plaintiffs. [ECF 177]. Previously, this Court granted preliminary approval to the Class Action Settlement Agreement. [ECF 171, 173]. A hearing was scheduled and held on August 16, 2019, to entertain oral argument on Plaintiffs' unopposed motion for final approval. Counsel for all parties appeared. For the reasons stated herein, the motion for final approval of the class action settlement and motion for attorneys' fees and expenses are both granted.

         BACKGROUND

         In 2012, Dr. Steven G. Clarke, along with the American Chiropractic Association (“ACA”), brought this action against Defendants American Specialty Health Incorporated and American Specialty Health Networks, Inc. (collectively, “ASH”), and Cigna Corporation and Connecticut General Life Insurance Company (collectively, “Cigna, ” and together with ASH, “Defendants”), seeking recovery under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §1132(a)(1)(B), related to the denial of out-of-network plan benefits claims for chiropractic services based on Cigna and ASH's Utilization Management Reviews (“UMR”) procedures. In that complaint, Cigna's insured, Carol Lietz, also alleged distinct claims regarding administrative fees. This Court dismissed the claims, but the Court of Appeals for the Third Circuit (“Third Circuit”) affirmed in part and reversed and remanded in part. Am. Chiropractic Ass'n v. Am. Specialty Health Inc., 625 Fed.Appx. 169 (3d Cir. 2015).[1] After remand, in 2015, Dr. Clarke, along with two other chiropractic practices, Ashford Chiropractic Center and Wolke Chiropractic & Rehabilitation, filed a First Amended Class Action Complaint. On June 6, 2018, Plaintiff High Street Rehabilitation, LLC, a chiropractic center operated by Dr. Clarke, filed the Second Amended Class Action Complaint (the current complaint in this action), which removed Ashford and Wolke as plaintiffs and added Plaintiff DeFabio Spine and Sport Rehab, LLC, a chiropractic care center operated by Dr. Donald C. DeFabio.

         The parties engaged in extensive document and data discovery in the High Street and Lietz Actions for nearly two years, which included the following:

• Responses to extensive sets of document requests and interrogatories;
• Negotiation of a Protective Order (including special provisions to protect class members' medical information to ensure compliance with HIPAA);
• Negotiation of ESI and Claims Sampling Protocols approved by the Court;
• Production of over 200, 000 documents representing over 1.5 million pages;
• Production of multiple databases and claims samples from Cigna and ASH representing over 500 gigabytes of data;
• Intensive negotiations over various document, data production, and other discovery issues, including numerous telephone conferences and email exchanges; exchange of over 100 letters; and numerous meet and confers regarding various disputes;
• Extensive work by database experts to sync the various Cigna and ASH databases in order to evaluate liability and damages issues;
• Work with a leading chiropractic expert regarding liability issues;
• The preparation of a comprehensive deposition and “trial map” synthesizing the analysis of all documents and information produced by the parties and obtained via Class Counsel's continuing investigation; and
• Preparation for depositions.

         On November 13, 2018, the parties participated in a mediation session before David Geronemus, Esquire, of JAMS. In connection with the mediation, the parties exchanged extensive mediation briefs that set forth the legal and factual bases related to the parties' respective claims and defenses. After extensive negotiations, the parties reached an agreement to settle Settlement Class Members' claims for $11.75 million, plus a commitment from Defendants to take reasonable steps to implement certain business reforms.

         The Terms of the Settlement

         The Settlement, the full terms of which are set forth in the Settlement Agreement, provides substantial economic benefits to the Class. The Settlement has three primary components: (1) Cigna and ASH will pay $11.75 million as the total settlement amount, which includes $1 million toward administrative fees and $10.75 million toward benefit claims; (2) ASH will make reasonable efforts to enact certain business reforms related to the conduct challenged by Plaintiffs in this action; and (3) mutual releases of all claims between the parties. Notably, Defendants will be required to pay the Settlement Class benefits automatically. The Settlement Class Members will not need to file a claim or take any other steps to receive the payments due to them under the Settlement.

         Preliminary Approval and Class Notice

         On March 26, 2019, Plaintiffs filed a motion for preliminary approval of class action settlement, provisionally certifying settlement class, directing notice to the settlement class, and scheduling final approval hearing. [ECF 168]. By Order dated April 8, 2019, this Court granted preliminary approval to the proposed Settlement and provisionally certified the proposed class. Pursuant to this Court's preliminary approval order, AB Data sent notice to the relevant governmental officials under the Class Action Fairness Act (“CAFA”), 28 U.S.C. §1715, et seq., effected publication notice, and sent direct postcard notice to Settlement Class members in accordance with the plan for notice, which this Court found to be the best notice practicable under the circumstances and consistent with the requirements of due process. Notice was mailed to 26, 128 Settlement Class Members. The notices provided each Settlement Class Member with an approximate amount of the check they would receive if the Settlement is approved. No. objections were filed, only two (2) Settlement Class Members opted-out of the Settlement, and one Member served a challenge to its payment amount. In addition, Class Counsel made presentations to the Pennsylvania Chiropractic Association and the Association of New jersey Chiropractors and communicated with the American Chiropractic Association; each of these organizations support the Settlement.

         DISCUSSION

         When granting final approval of a class action settlement, a district court must hold a hearing and conclude that the proposed settlement is fair, reasonable and adequate. See Fed. R. Civ. P. 23(e)(2); Sullivan v. DB Invs., Inc., 667 F.3d 273, 295 (3d Cir. 2011); In re Ins. Brokerage Antitrust Litig., 579 F.3d 241, 258 (3d Cir. 2009). Although there is a strong judicial policy in favor of voluntary settlement agreements, Pennwalt Corp. v. Plough, 676 F.2d 77, 79-80 (3d Cir. 1982), courts are generally afforded broad discretion in determining whether to approve a proposed class action settlement. Eichenholtz v. Brennan, 52 F.3d 478, 482 (3d Cir. 1995). “The law favors settlement particularly in class actions and other complex cases where substantial judicial resources can be conserved by avoiding formal litigation.” In re Gen. Motors Corp. Pick-Up Truck Fuel Tank Prod. Liab., 55 F.3d 768, 784 (3d Cir. 1995). In addition to conservation of judicial resources, “[t]he parties may also gain significantly from avoiding the costs and risks of a lengthy and complex trial.” Id.

         In Girsh v. Jepson, 521 F.2d 153 (3d Cir. 1975), the Third Circuit set forth factors (often called the “Girsh factors”) a district court should consider when reviewing a proposed class action settlement. The Girshfactors are:

(1) the complexity, expense and likely duration of the litigation;
(2) the reaction of the class to the settlement;
(3) the stage of the proceedings and the amount of discovery completed;
(4) the risks of establishing liability;
(5) the risks of establishing damages;
(6) the risks of maintaining the class action through the trial;
(7) the ability of the defendant to withstand a greater judgment;
(8) the range of reasonableness of the settlement fund in light of the best possible recovery; and
(9) the range of reasonableness of the settlement fund to a possible recovery in light of all the attendant risks of litigation.

In re Ins. Brokerage Antitrust Litig., 579 F.3d at 258 (citing Girsh, 521 F.2d at 157). However, no one factor is dispositive. Hall v. Best Buy Co., 274 F.R.D. 154, 169 (E.D. Pa. 2011). Further, a “court may approve a settlement even if it does not find that each of [the Girsh] factors weighs in favor of approval.” In re N.J. Tax Sales Certificate Antitrust Litig., 750 Fed.Appx. 73, 77 (3d Cir. 2018).

         In Krell v. Prudential Ins. Co. of Am. (In re Prudential), 148 F.3d 283 (3d Cir. 1998), the Third Circuit identified additional nonexclusive factors (the “Prudential factors”) for courts to consider for a “thorough going analysis of settlement terms.” See also In re Pet Food Prods. Liab. Litig., 629 F.3d 333, 350 (3d Cir. 2010). These Prudential factors often overlap with the Girsh factors, and include:

(1) the maturity of the underlying substantive issues, as measured by experience in adjudicating individual actions, the development of scientific knowledge, the extent of discovery on the merits, and other factors that bear on the ability to assess the probable outcome of a trial on the merits of liability and individual damages;
(2) the existence and probable outcome of claims by other classes and subclasses;
(3) the comparison between the results achieved by the settlement for individual class or subclass members and the results achieved or likely to be achieved for other claimants;
(4) whether class or subclass members are accorded the right to opt-out of the settlement;
(5) whether any provisions for attorneys' fees are reasonable; and
(6) whether the procedure for processing individual claims under the settlement is fair and reasonable.

In re Pet Food, 629 F.3d at 350. Only the Prudential factors relevant to the litigation in question need be addressed. In re Prudential, 148 F.3d at 323-24.

         With these principals in mind, this Court will consider each of the Girsh factors and the relevant Prudential factors in its review of the proposed class action settlement.

         Girsh Factors

         1. The complexity, expense and likely duration of the litigation

         Needless to say, had the Settlement not been reached, this matter would likely have proceeded to trial on the issues of liability and a determination of damages, if any. The continued prosecution of Plaintiffs' claims against Defendants would have required significant additional expense to the Class and a substantial delay before any potential recovery. Though at the time the parties reached the Settlement, the parties had vigorously litigated this case for more than seven years and engaged in extensive fact discovery, much work remained, including fact depositions, expert discovery, and motion practices with respect to class certification and summary judgment. Further, no matter the outcome of a trial, it is likely that one or all of the parties would have appealed, leading to further litigation costs and delay in any realized recovery. Thus, the avoidance of unnecessary expenditure of time and ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.