Sangwin v. Montana BCBS

December 13 2013
DA 12-0712

IN THE SUPREME COURT OF THE STATE OF MONTANA
2013 MT 373

STEVE SANGWIN and AMY SANGWIN
WICKS, Individually and For the Benefit of
Their Minor Daughter, M.S.,

Plaintiffs and Appellees,

v.

STATE OF MONTANA and BLUE CROSS
AND BLUE SHIELD OF MONTANA, INC.,

Defendants and Appellants.

APPEAL FROM: District Court of the Eighth Judicial District,
In and For the County of Cascade, Cause No. BDV-10-0566(C)
Honorable Kenneth R. Neill, Presiding Judge

COUNSEL OF RECORD:

For Appellants:

Maxon R. Davis; Davis, Hatley, Haffeman & Tighe, P.C.;
Great Falls, Montana (for State of Montana)

Michael F. McMahon; Stefan T. Wall; Bernard F. Hubley; McMahon,
Wall & Hubley, PLLC; Helena, Montana
(for Blue Cross and Blue Shield of Montana)

For Appellees:

Alexander (Zander) Blewett, III; Anders Blewett; Hoyt & Blewett, PLLC;
Great Falls, Montana

Submitted on Briefs: August 14, 2013
Decided: December 13, 2013

Filed:

__________________________________________
Clerk
Justice Patricia Cotter delivered the Opinion of the Court.

¶1 Steve Sangwin is an employee of the State of Montana and a qualified subscriber

and beneficiary of the State of Montana Employee Benefits Plan (Plan). Blue Cross and

Blue Shield of Montana, Inc. (BCBS) administers the Plan. McKinley Sangwin, the

daughter of Steve Sangwin and Amy Sangwin Wicks, is also a beneficiary under the

Plan. This case arises out of a dispute over the denial of a preauthorization request for a

medical procedure for McKinley on the grounds that the procedure was “experimental for

research.” The State appeals the order of the Eighth Judicial District Court, Cascade

County, granting the Sangwins’ motion for class certification. We affirm the court’s

order defining the class, but reverse and remand with respect to the question certified for

class treatment.

ISSUES

¶2 A restatement of the issues on appeal is:

¶3 1. Did the District Court abuse its discretion in certifying the class under Rule
23(a), Montana Rules of Civil Procedure?

¶4 2. Did the District Court abuse its discretion in certifying the class under Rule
23(b), Montana Rules of Civil Procedure, and specifying for class treatment the question
of whether the State breached its contract of insurance with the plaintiffs?

FACTUAL AND PROCEDURAL BACKGROUND

¶5 Steve Sangwin is a teacher at the Montana School for the Deaf and Blind in

Cascade County, Montana. As an employee of the State, Steve is a qualified subscriber

and beneficiary of the Plan. Steve and Amy’s daughter, McKinley, is also a beneficiary

under the Plan. McKinley was diagnosed with a severe degenerative disk disease, and
2
when she was sixteen years old, her physicians recommended that she undergo artificial

disk replacement surgery. The Sangwins requested preauthorization for the procedure

from BCBS, the Plan administrator. BCBS denied the request in an October 8, 2009

letter and explained that, because McKinley was a minor, BCBS considered the operation

“investigational.” The Plan expressly excluded investigational procedures. The letter

contained a reference to the exclusions and limitations section of the Employee Benefits

Summary Plan Document, which stated: “The following services and expenses are not

covered: Services or procedures that are experimental procedures, as defined in

Chapter 9, which are for research.”1 Under Chapter 9, an experimental procedure or

service is defined as a procedure or service that “is experimental, investigational,

unproven, or not a generally acceptable medical practice in the predominate [sic] opinion

of independent experts utilized by the administrator of each plan.”

¶6 The Sangwins appealed the decision to the BCBS Medical Review Staff. In a

December 8, 2009 letter, BCBS explained that the Medical Review Staff and Associate

Medical Director had reviewed the documentation related to the preauthorization request

and had decided to uphold the original denial. The Associate Medical Director further

clarified that artificial disks were not Food and Drug Administration approved for

patients under the age of 18. The Sangwins then filed an appeal with the State of

Montana. After a meeting of the Health Care and Benefits Division appeals committee

on May 6, 2010, the State upheld the denial, stating that there was “no documentation

1
In December 2011, the State revised its Employee Benefits Summary Plan Document to
eliminate the phrase “which are for research.”
3
from the Food and Drug Administration showing this procedure is appropriate for

someone under the age of 18.” Thus, the State considered it an experimental or

investigational procedure that was specifically excluded under the Plan. After the denial,

the Sangwins nonetheless proceeded with the proposed surgery, which was successful,

incurring medical bills exceeding $55,000.

¶7 On June 8, 2010, the Sangwins initiated this action by filing a complaint in the

Eighth Judicial District Court, Cascade County. The Sangwins filed an amended

complaint in November 2010 and set forth five counts. The only relevant count for the

purposes of this appeal is the request for certification of a class action. The Sangwins

alleged that McKinley’s artificial disk replacement surgery was not experimental or for

research. They further alleged that BCBS and the State “have been denying the claims of

participants and beneficiaries based on the experimental exclusion for research for years

and years when the surgeries and other procedures were in no way meant for research and

when, at best, the experimental exclusion for research is ambiguous and must be

construed against Defendants.” The Sangwins defined class members as “other

participants and/or beneficiaries of any such Plan in Montana which have had their

employee benefits denied by the State of Montana based on the experimental exclusion

for research” in the past eight years.

¶8 On September 20, 2012, the District Court granted the Sangwins’ motion for class

certification. On November 23, 2012, the District Court entered an order defining the

class as:

4
 “All persons who were participants, subscribers and/or beneficiaries of the
State of Montana Employee Health Plan, including the State of Montana’s
Blue Cross Blue Shield Managed Care Plan, the Traditional Indemnity Plan
and any other health plan affiliated with the State of Montana, who have
had medical benefits denied by BCBS and/or the State of Montana based on
the contention that the benefits were experimental, investigational,
unproven, or not generally acceptable medical practice under the language
of the State of Montana Employee Benefits Summary Plan Document
unless such medical benefits were ‘for research’ from January 1, 2003,
through December 18, 2011. The class includes those individuals whose
claims were denied prior to medical benefits being rendered as well as
those individuals whose claims were denied after the medical benefits were
rendered.”

The District Court certified four claims for class treatment, including whether the State

breached its contract, whether BCBS acted as an agent of the State and acted wrongfully,

whether BCBS intentionally interfered with the contract between the State and Plaintiffs,

and whether BCBS acted with malice. The District Court’s order directed BCBS and the

State to provide the Sangwins’ counsel with the names and last known addresses of every

potential class member.

¶9 On September 19, 2012, the District Court granted the Sangwins’ motion for

partial summary judgment and determined the Sangwins could pursue general tort

damages against the State if they prevailed on their claim for breach of the covenant of

good faith and fair dealing. That ruling is not subject to this interlocutory appeal. BCBS

filed its notice of appeal on November 28, 2012, but later entered into a settlement with

the Sangwins. BCBS is therefore not a party to this appeal. This being so, of the four

issues certified for class treatment, the sole issue remaining so certified is whether the

5
State breached its contract. The State filed its notice of appeal on December 6, 2012.

The State challenges the District Court’s order certifying the class.

STANDARD OF REVIEW

¶10 We review a district court’s decision on a motion for class certification for an

abuse of discretion. Chipman v. N.W. Healthcare Corp., 2012 MT 242, ¶ 17, 366 Mont.

450, 288 P.3d 193. The question is not whether this Court would have reached the same

decision, but whether the district court acted arbitrarily without conscientious judgment

or exceeded the bounds of reason. Chipman, ¶ 17 (quotation marks omitted). When

reviewing a decision on class certification, we afford the trial court the broadest

discretion because it “is in the best position to consider the most fair and efficient

procedure for conducting any given litigation.” Jacobsen v. Allstate Ins. Co., 2013 MT

244, ¶ 25, 371 Mont. 393, 310 P.3d 452 (quoting Chipman, ¶ 17).

DISCUSSION

¶11 1. Did the District Court abuse its discretion in certifying the class under Rule
23(a), Montana Rules of Civil Procedure?

¶12 The class action is “an exception to the usual rule that litigation is conducted by

and on behalf of the individual named parties only.” Comcast Corp. v. Behrend, ___

U.S. ___, ___, 133 S. Ct. 1426, 1432 (internal citation omitted). Departure from the

usual rule is justified if the class representative is part of the class and has the same

interest and injury as the class members. Jacobsen, ¶ 27. “[C]lass action suits save the

resources of courts and parties by permitting an issue potentially affecting every [class

6
member] to be litigated in an economical fashion . . . .” Jacobsen, ¶ 27 (internal citation

omitted).

¶13 The propriety of a class action is governed by Rule 23 of the Montana Rules of

Civil Procedure. Because the Montana version of Rule 23 is identical to the

corresponding federal rule, federal authority on the issue of class certification is

instructive. Chipman, ¶ 43. Rule 23(a) sets forth four prerequisites necessary to sustain a

class action:

(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.

¶14 The party seeking certification bears the burden of establishing each element of

Rule 23(a). Chipman, ¶ 43 (citation omitted). Failure to establish the requisite elements

is fatal to class certification. Chipman, ¶ 43. In addition to satisfying the requirements of

Rule 23(a), a party must satisfy at least one of the provisions of Rule 23(b). M. R. Civ. P.

23(b).

¶15 When deciding whether to certify a class, a district court should not assess any

aspect of the merits unrelated to a Rule 23 requirement. Chipman, ¶ 44. It “may be

necessary for the court to probe behind the pleadings before coming to rest on the

certification question.” Comcast Corp., ___ U.S. at ___, 133 S. Ct. at 1432 (quoting

Wal-Mart Stores, Inc. v. Dukes, 564 U.S. ___, ___, 131 S. Ct. 2541, 2551 (2011) (internal

quotation omitted)). “[C]ertification is proper only if the trial court is satisfied, after a
7
rigorous analysis, that the prerequisites of Rule 23(a) have been satisfied.” Comcast

Corp., ___ U.S. at ___, 133 S. Ct. at 1432 (quoting Wal-Mart, 564 U.S. at ___, 131 S. Ct.

at 2551 (internal quotation omitted)). A “rigorous analysis” frequently entails some

“overlap with the merits of the plaintiff’s underlying claim” because the “class

determination generally involves considerations that are enmeshed in the factual and

legal issues comprising the plaintiff’s cause of action.” Comcast Corp., ___ U.S. at ___,

133 S. Ct. at 1432 (quoting Wal-Mart, 564 U.S. at ___, 131 S. Ct. at 2551-52 (internal

quotation marks omitted)). Actual, not presumed, conformance with Rule 23(a) is

indispensable. Wal-Mart, 564 U.S. at ___, 131 S. Ct. at 2551 (internal citation omitted).

¶16 In evaluating the Rule 23 requirements, the District Court properly looked beyond

the pleadings to the extent necessary to determine the propriety of class certification. The

District Court reviewed numerous briefs, motions, objections, and over 150 of the

proposed class members’ preauthorization request denial letters. The District Court also

held a hearing on the motion for class certification where attorneys for the Sangwins, the

State, and BCBS appeared and presented arguments. We hold that the District Court did

not abuse its discretion in certifying this lawsuit as a class action. Each relevant aspect of

the Rule 23(a) inquiry is discussed below in further detail.

A. Rule 23(a)(1)—Numerosity

¶17 The State does not dispute that the number of Plan participants, subscribers, or

beneficiaries denied preauthorization requests for procedures that were allegedly

experimental, investigational, unproven, or not generally acceptable meets the numerosity

8
requirement. Rule 23(a)(1) requires a proposed class to be “so numerous that joinder of

all members is impracticable.” “[P]laintiffs must present some evidence of, or reasonably

estimate, the number of class members.” Diaz v. Blue Cross & Blue Shield, 2011 MT

322, ¶ 31, 363 Mont. 151, 267 P.3d 756. Though the parties dispute the number of

potential class members and the requirements for inclusion in the class, the District Court

concluded it was “clear that the numerosity element is met because the State and BCBS

denied benefits based upon the ‘experimental for research’ exclusion in the State Plan

and Managed Care Supplement Plan well over one-hundred times.” The District Court

determined the large number of potential class members made joinder impracticable. We

conclude the District Court did not abuse its discretion in concluding that the Sangwins

have successfully satisfied the numerosity requirement.

B. Rule 23(a)(2)—Commonality

¶18 The State does not dispute that the commonality requirement is met. The element

of commonality requires “questions of law or fact common to the class.” M. R. Civ. P.

23(a)(2). Though the requirement has historically placed a relatively low burden on

plaintiffs, Jacobsen, ¶ 31, the U.S. Supreme Court “significantly tightened the

commonality requirement” in Wal-Mart. Chipman, ¶ 47. The claims of class members

and class representatives “must depend upon a common contention” that is “of such a

nature that it is capable of classwide resolution,” “mean[ing] that 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, 564 U.S. at ___, 131 S. Ct. at 2551.

9
¶19 The District Court determined that the class members raised common questions of

fact and law. The District Court identified both a uniform course of conduct by the State

and BCBS in denying benefits based upon the “experimental for research” exclusion and

a common question of law of whether such denial was unlawful. The District Court

concluded that the questions of fact and law raised by the Sangwins were sufficient to

satisfy the commonality requirement and support class certification. Though the District

Court relied upon the standard Montana followed prior to Wal-Mart, this requirement is

met even under Wal-Mart’s more stringent standard. All class members are connected by

the denial of a preauthorization request based on the same exclusion. These common

facts are related to the ultimate resolution of the dispute, namely the determination of

whether such denial was wrongful.

¶20 We conclude that the court correctly found that the class members are connected

by the denial of a preauthorization request based upon the same exclusion, and that this

common connection satisfies the commonality requirement. For the reasons set forth

below, however, we do not agree that there exists a predominant question of whether the

denial was wrongful.

C. Rule 23(a)(3)—Typicality

¶21 To satisfy the typicality element, a plaintiff must demonstrate that “the claims or

defenses of the representative parties are typical of the claims or defenses of the class.”

M. R. Civ. P. 23(a)(3). The typicality requirement is designed to ensure that the interests

of the named plaintiffs align with the interests of the class members, “the rationale being

10
that a named plaintiff who vigorously pursues his or her own interests will necessarily

advance the interests of the class.” Mattson v. Mont. Power Co., 2012 MT 318, ¶ 21, 368

Mont. 1, 291 P.3d 1209 (Mattson III) (citing Chipman, ¶ 53). Typicality is not a

demanding standard, and a named plaintiff’s claim is typical if it “stems from the same

event, practice, or course of conduct that forms the basis of the class claims and is based

upon the same legal or remedial theory.” Diaz, ¶ 35 (quotation omitted; emphasis in

original). The event, practice, or course of conduct need not be identical. Diaz, ¶ 35.

The typicality requirement “tends to merge” with the commonality requirement.

Jacobsen, ¶ 51 (internal citation omitted). It “prevents plaintiffs from bringing a class

action against defendants with whom they have not had any dealings.” Jacobsen, ¶ 51

(citing Diaz, ¶ 35).

¶22 The District Court concluded the Sangwins successfully established typicality. It

was irrelevant to the District Court that McKinley had surgery despite the

preauthorization denial because the Sangwins still suffered the same harm as the class

members. The District Court found a patterned course of conduct similar to the course of

conduct in Diaz. Typicality was satisfied in Diaz because the State’s practice of

employing its exclusion to third-party liability coverage constituted an event, practice, or

course of conduct that the class representatives shared with the class. Diaz, ¶ 36.

¶23 The State argues that the Sangwins mistakenly equate commonality with

typicality, and that the facts behind the Sangwins’ claims are unique. Specifically, it

notes that the Sangwins decided to go forward with treatment and incur medical bills,

11
presumably unlike many potential plaintiffs, and that McKinley was the only underage

patient for whom coverage was sought for implanting artificial intervertebral discs from

2003 to 2010. The State argues no typicality exists because the procedures denied by

BCBS varied greatly and some denials were made properly. According to the State, this

requirement is not met because each denial will require individual review.

¶24 The Sangwins contend “[t]he State has simply ignored the law on typicality under

almost identical facts,” including our decision in Diaz. The Sangwins acknowledge that

facts vary among the class members. For example, the amount of damages, the desired

procedure, and the timing of the denial inevitably vary. However, they argue that the

Sangwins had the same dealings with the State as the putative class members, and that

they all were wrongly denied benefits under the same exclusion, an exclusion the State

misconstrued and misapplied in the same manner for each claim. The Sangwins argue

typicality is not destroyed by the individual assessment of damages or by some variation

between the claims of the Sangwins and the class members.

¶25 In its reply brief, the State counters that the Sangwins mistakenly rely on Diaz

when the issues and relief sought differ. The State again argues that the Sangwins’

decision to proceed with the surgery and incur medical bills destroys typicality.

According to the State, the District Court did not engage in the required “rigorous

analysis.”

¶26 The State misses the point of the typicality requirement by raising issues with the

specific facts of the Sangwins’ claim. “Typicality refers to the nature of the claim or

12
defense of the class representative, and not to the specific facts from which it arose or the

relief sought.” Hanon v. Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 1992) (citation

omitted). The Sangwins are members of the class as defined by the District Court.

McKinley was denied preauthorization for a medical procedure under the “experimental

for research” exclusion. The Sangwins allege the State systematically applied the

exclusion to wrongfully deny benefits. The Sangwins’ claim is based on the same legal

theory as the proposed class members’ claims. Despite the State’s contentions, the

specifics of McKinley’s injuries or treatment do not render her atypical of the class. The

District Court conducted a “rigorous analysis;” it probed beyond the pleadings and

determined this element actually was met. We conclude the District Court did not abuse

its discretion in concluding that the Sangwins have met the typicality requirement.

D. Rule 23(a)(4)—Adequate Representation

¶27 The State does not dispute that this requirement is met. Montana Rule of Civil

Procedure 23(a)(4) requires that “the representative parties will fairly and adequately

protect the interests of the class.” Adequate representation requires that the named

representatives’ attorney is qualified, competent, and able to conduct the litigation, and

that the named representatives’ interests are not antagonistic to the class interests.

Chipman, ¶ 57 (citation omitted).

¶28 The District Court determined the law firm of Hoyt & Blewett PLLC was

qualified and competent counsel. The District Court further determined the Sangwins’

interests were aligned with the class’s interests. We conclude that counsel will

13
adequately represent the class, and that no conflicts exist between the Sangwins and the

class members.

¶29 2. Did the District Court abuse its discretion in certifying the class under Rule
23(b), Montana Rules of Civil Procedure, and specifying for class treatment the question
of whether the State breached its contract of insurance with the plaintiffs?

¶30 Having determined that the Rule 23(a) prerequisites are satisfied, we now turn our

inquiry to Rule 23(b). The District Court determined that the proposed class met the two

requirements of Rule 23(b)(3). It is on the basis of the requirements of this rule that we

reverse and remand with respect to the certified question.

¶31 Rule 23(b)(3) requires a court to “find[] that the questions of law or fact common

to the class members predominate over any questions affecting only individual

members.” In addition, a court must find that “a class action is superior to other available

methods for fairly and efficiently adjudicating the controversy.” M. R. Civ. P. 23(b)(3).

Matters pertinent to these findings include the class members’ interests in individually

controlling separate actions, the extent and nature of any already existing litigation

concerning the controversy, the desirability or undesirability of concentrating the

litigation in a particular forum, and likely difficulties in managing a class action. M. R.

Civ. P. 23(b)(3)(A)-(D). A central concern of the Rule 23(b)(3) predominance test is

whether adjudication of common issues will help achieve judicial economy. Mattson III,

¶ 39 (citing Vinole v. Countrywide Home Loans, Inc., 571 F.3d 935, 944 (9th Cir. 2009)

(internal quotation omitted)).

14
¶32 The District Court determined class certification was appropriate because class

members may not have the knowledge or resources to bring the claims individually or

may be subject to the requirement of exhausting administrative remedies prior to seeking

judicial relief. The District Court noted that there was no other litigation concerning the

issue, and that a class action suit would be conducive to complex healthcare litigation.

After acknowledging the existence of individual issues, such as damages, the District

Court concluded that common questions of law or fact nonetheless predominated because

BCBS and the State engaged in systematic conduct and the Sangwins and the class

members suffered the same or similar injuries.

¶33 The State argues the District Court failed to make any findings of fact for Rule

23(b)(3) purposes. The State contends that common issues do not predominate because

there were 158 temporally different decisions, and preauthorization denials and damages

will need to be investigated individually.

¶34 The Sangwins contend that individual calculation of damages should not preclude

class determination when common liability issues predominate. They further argue the

District Court’s finding was supported by its “determination that the State’s systematic

conduct of misconstruing the exclusion and denying claims under the same exclusion is

the predominant issue of law and fact and that Sangwin and every putative plaintiff

suffered a similar injury.” The State counters that the District Court only superficially

analyzed the predominance factors and failed to meet the federal standard set forth in

Wal-Mart and Comcast.

15
¶35 As indicated, the Sangwins contend the court properly certified the question of

whether the State breached its contract with the plaintiffs, and that common liability

issues predominate. In this connection, they maintain in their response brief that “[i]f

individuals’ claims were properly denied because the medical service was ‘for research,’

those members will not be a part of the class specially defined by the [District Court.]”

Otherwise stated, only those individuals whose requested services were not for research

will remain in the class, and the court can then decide if the denial of services to these

persons constituted a breach of contract. Herein lies the problem with the question

certified by the District Court for class resolution.

¶33 In order to make the determination of whether an individual’s claims were

properly denied, each claim—together with its underlying documentation including the

Consent Form and supporting affidavits—will have to first be separately analyzed. As

the Sangwins concede, this will have to be done before there can be a determination as to

whether the individual will be part of the class, and it will clearly have to be done before

there can be an assessment of whether the State breached its contract with that individual.

¶34 Because factual questions must be answered on an individual basis before the

plaintiffs will be in a position to establish liability, the predominance requirement under

Rule 23(b)(3) is not met. In re Bank of Am. Home Affordable Modification Program

(HAMP) Contract Litig., 2013 U.S. Dist. LEXIS 126028, 30-39 (D. Mass., Sept. 4, 2013)

(where factual questions are not susceptible to routine resolution and must be answered

on an individual basis before the plaintiffs can establish liability, predominance is not

16
satisfied). Again, Rule 23(b)(3) requires a court to “find[] that the questions of law or

fact common to the class members predominate over any questions affecting only

individual members.” Common issues must therefore be more prevalent than individual

issues. While we agree with the plaintiffs that the necessity to assess damages on an

individual basis does not necessarily defeat class action treatment, here there is

undeniably a preliminary need for an individual determination of whether each individual

qualifies as a class member. As we observed in Chipman, ¶ 48, class determination is

appropriate when the class members’ claims “depend on a common contention that is

capable of classwide resolution.” The question certified by the District Court is whether

the State breached its contract with the plaintiffs. This question cannot be answered until

after individual assessments are made; therefore, the certified question is incapable of

being resolved on a classwide basis.

¶35 This is not to say that the class itself was improperly certified. Rather, it is the

formulation of the certified issue that results in individual issues predominating over

common questions. There is seemingly one common issue of law critical to the entire

class, and that is the construction of the State Plan’s exclusion language. The

construction of the language in the exclusion and definitions sections of the Plan may

well present a common issue of law that would be appropriate for class consideration.

However, it is not the province of this Court to formulate the certified question.

¶36 For the foregoing reasons, we decline to disturb the District Court’s certification

of the class under the Rule 23(a). However, we reverse the District Court’s certification

17
of the plaintiffs’ claim as to “[w]hether the State of Montana breached its contract”

because it fails to satisfy the predominance requirement of Rule 23(b)(3). We remand to

allow the District Court to consider whether a particular issue may be certified for which

individual questions would not predominate.

CONCLUSION

¶37 Affirmed in part and reversed in part.

/S/ PATRICIA COTTER

We concur:

/S/ MIKE McGRATH
/S/ MICHAEL E WHEAT
/S/ BETH BAKER
/S/ BRIAN MORRIS

Justice Laurie McKinnon, concurring in part and dissenting in part.

¶38 The Court reverses the District Court’s certification of a class claim—namely,

“[w]hether the State of Montana breached its contract”—because this claims fails to

satisfy the predominance requirement of Rule 23(b)(3). Opinion, ¶ 36. I agree with this

holding. Our conclusion that “factual questions must be answered on an individual basis

before the plaintiffs will be in a position to establish liability,” Opinion, ¶ 34, is correct

and is fatal to class certification under Rule 23(b)(3)’s requirement “that the questions of

18
law or fact common to the class members predominate over any questions affecting only

individual members.”

¶39 The Court, however, affirms the District Court’s certification of the class under

Rule 23(a). Opinion, ¶ 36. I dissent from this holding. I do not agree that the

requirements of commonality and typicality have been met, and I also disagree with our

conclusion that class certification is appropriate before a plausible common question of

law or fact has even been identified. Although the Court reverses the District Court for

certifying the question of whether the State breached its contract with the proposed class

members, finding that this question “is incapable of being resolved on a classwide basis,”

Opinion, ¶ 34, the Court nevertheless determines that commonality has been met because

“[a]ll class members are connected by the denial of a preauthorization request based upon

the same [policy] exclusion,” Opinion, ¶ 19, and that typicality has been met because the

Sangwins’ claim “is based on the same legal theory as the proposed class members’

claims,” Opinion, ¶ 26.2 It is my opinion that the Court goes astray in determining that a

class action may be certified despite the absence of a common question of law or fact

capable of generating an answer meaningful to the litigation. I cannot reconcile our

analysis with that set forth in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. ___, 131 S. Ct.

2541 (2011), and other decisions evaluating compliance with Rule 23’s requirements.

¶40 The State’s liability to the Sangwins for insurance benefits “arises from the terms

of the insurance contract, and its contractual relationship with its insured.” Farmers

2
Other than breach of contract, I have been unable to discern any other legal theory
offered by the Sangwins.
19
Alliance Mut. Ins. Co. v. Holeman, 1998 MT 155, ¶ 21, 289 Mont. 312, 961 P.2d 114.

“[I]f the language is clear and explicit this Court may not rewrite an insurance contract,

but must enforce it as written.” Lee v. USAA Cas. Ins. Co., 2001 MT 59, ¶ 30, 304 Mont.

356, 22 P.3d 631. The Plan expressly excluded “experimental procedures or services,”

which are defined in Chapter 9 of the Plan’s benefits as follows:

Treatment, which is considered experimental because it meets one of the
following criteria:

1. Prescription drugs not approved by the FDA to be lawfully marketed for
the proposed use, and it is not identified in the American Hospital
Formulary Service, the AMA Drug Evaluation, or the Pharmacopoeia as
an appropriate use.

2. It is subject to review or approval by an institutional review board
(meaning that a hospital considered it experimental and put it under
review to meet federal regulations, or review is required and defined by
federal regulations, particularly those of the FDA or Department of
Health and Human Services).

3. It is the subject of an ongoing clinical trial that meets the definition of a
Phase 1, 2, or 3 clinical trial set forth in FDA regulations, regardless of
whether it’s an FDA trial.

4. It has not been demonstrated through prevailing, peer-reviewed medical
literature to be safe and effective for treating or diagnosing the condition
or illness for which its use is proposed.

5. The predominant opinion among experts as expressed in the published
authoritative literature is that further research is necessary in order to
define safety, toxicity, and effectiveness (or effectiveness compared
with conventional alternatives), and/or that usage should be
substantially confined to research settings.

6. It is not a covered benefit under Medicare as determined by the Centers
for Medicare and Medicaid Services (CMMS, formerly HCFA) because
it is considered experimental, investigational, or unproven.

20
 7. It is experimental, investigational, unproven, or not a generally
acceptable medical practice in the predominate opinion of independent
experts utilized by the administrator of each plan.

8. It is not experimental or investigational in itself pursuant to the above
and would not be medically necessary, but it is being provided in
conjunction with the provision of a treatment, procedure, device, or drug
which is experimental, investigational, or unproven.

¶41 McKinley Sangwin, a beneficiary under the Plan, was denied preauthorization

because she was a minor and the procedure for which she sought coverage—artificial

disc replacement—was considered experimental. It was explained to the Sangwins that

artificial discs were not FDA-approved for patients under 18 and that the procedure was

therefore excluded from coverage. The denial letter stated: “Per BCBSMT medical

policy, the patient must be greater than 18 years of age and skeletally mature to qualify

for benefits. Therefore, this is considered investigational. There are significant questions

remaining about potential long-term complications in such a young patient.”

¶42 Of the 158 claims that BCBS denied because they were for experimental

procedures, McKinley’s claim is the only one denied for a minor seeking an artificial disc

replacement. Dr. M.E. Berner, BCBS’s Medical Director, provided his affidavit setting

forth the variety of services, supplies, drugs, or devices that were denied because they

were considered to be investigational:

Clinical Trial - Chemotherapy (MRI-Echo, ECG, CT Scan, Labs, UA); PET
Scan (breast cancer, ovarian cancer, renal cell cancer, prostate cancer,
bladder cancer, lung nodules); Ketamine; GlucoWatch; Hyperbaric Oxygen
Pressurization; Mercury Detoxification and Chelation Therapy; Endocinch
Procedure (gastroesophageal reflux disease); Group Therapy and

21
Craniosacral Therapy; Outpatient Pain Clinic; Lengthen Roux Limb of
Small Intestine; Cool Touch Laser Treatment (acne); Botox injections
(myofacial pain syndrome, headache, migraines, neck pain, neck spasm,
whiplash, back pain, neuromuscular pain, Raynaud’s disease, excessive
salivation); Orthotripsy ESW (Plantar Fasciitis); Allergen Specific Food
lgG Quantitative or Semiquantitive Testing; Neuromuscular Stimulator;
Extracorporeal Shockwave Therapy; Hyperthermic Procedure; IV Therapy
with Albumin; F-Scan; gait analysis; Phentermine; NM III 2 Channel
Muscular Stimulator (muscle strengthening); Physical Performance Test;
L4-5 Anterior Exposure Artificial Disc Placement; Genetic Testing;
Computerized Dynamic Posturography; Sclerotherapy; Physical Therapy
(chronic pelvic pain syndrome and chronic prostatitis); Laser Treatment
(Rosacea); Hormone Pellet Implant; Virtual Colonoscopy; High-Dose
Indium-111 (Octreotide) Therapy; Ocular Motor Therapy; BRAVO pH
Study (catheter-free, wireless esophageal monitoring); Neurofeedback;
X STOP Procedure; Meniett Device (Menieres disease); Nucleoplasty
(Percutaneous Diskectomy) with Fluoroscopic Guidance; Sublingual
Immunotherapy; LifeVest Automatic Wearable Defibrillation System;
Pulsed Dye Laser Treatments (acne); MRI (breast); Second Radiofrequency
Ablation and Travel (ablation of metastatic liver tumors); Avastin (ovarian
cancer); Cognitive Therapy; CT Angiogram-Coronary (coronary arteries,
atypical chest pain, abnormal stress test); Contrast-Enhanced Computed
Tomographic Angiography; Phototherapeutic Keratectomy (PTK)
(recurrent corneal erosions); Cervical Disk Replacement; Y-90 Mesenteric
Mapping (cancer); Mobile Cardiac Outpatient Telemetry (MCOT) (event
monitor); Synvisc Injection (hip joint); Oral Immunoglobulin Therapy
(Norwalk Virus); Rituxan (Lupus); NESS L300 Foot Drop System Lower
Extremity Stimulator Unit (muscle strengthening); Laparoscopic
Cryoablation (renal mass); B-39 Study (breast cancer); Reclast
(osteoporosis); Internal Radiation Therapy; Continuous Passive Motion
Device (shoulder); Implantable Neurostimulator (occipital neuralgia);
Thermography (breast screening); Posture Pump; Biofeedback (bladder
outlet obstruction); Steriotactic Radiosurgery (metastic phyllodes tumor of
breast); Remicade (arthritis); Magnetic Treatment (incontinence);
Collection & Storage of Peripheral Blood Stem Cells (brain tumors);
X-Stop (distraction/decompression device); Stereotactic Body Radiation
Therapy (metastatic lung tumors); Artificial Disc; Excimer Laser Treatment
22
 (vitiligo); Avastin; BRCA Testing (genetic testing); Zometa
(bisphosphonates); IMRT (radiation therapy); Vest Compression
Device/Supplies (secretions and upper respiratory infection);
Neuromuscular Electrical Stimulation Device (muscular weakness);
Stereotactic Surgery (brain surgery to treat melanoma); BEST Clinical
Trial; Sublingual Allergy Drops; IMRT (breast); Avastin and Abraxane
(ovarian cancer); Transcatheter Closure of PFO; Stem Cell Transplant;
Cetuximab (metastatic cholangiocarcinoma); Pharmacogenetic Testing;
Occipital Nerve Stimulator.

¶43 I have set forth the above factual matters because we are required to “probe behind

the pleadings” to the extent necessary to decide the certification question.” Gen. Tel. Co.

of Southwest v. Falcon, 457 U.S. 147, 160, 102 S. Ct. 2364, 2372 (1982). “[A]ctual, not

presumed, conformance with Rule 23(a) remains . . . indispensable.” Falcon, 457 U.S. at

160, 102 S. Ct. at 2372. Rigorous analysis is necessary because, as has been observed,

“ ‘[a]ny competently crafted class complaint literally raises common “questions.” ’ ”

Wal-Mart, 131 S. Ct. at 2551 (brackets in original) (quoting Richard A. Nagareda, Class

Certification in the Age of Aggregate Proof, 84 N.Y.U. L. Rev. 97, 131-32 (2009)).

Examples of such questions include: “Do all of us plaintiffs indeed work for Wal-Mart?

Do our managers have discretion over pay? Is that an unlawful employment practice?

What remedies should we get?” Wal-Mart, 131 S. Ct. at 2551. Reciting these sorts of

questions “is not sufficient to obtain class certification.” Wal-Mart, 131 S. Ct. at 2551.

“Commonality requires the plaintiff to demonstrate that the class members have suffered

the same injury,” which “does not mean merely that they have all suffered a violation of

the same provision of law”—or, as here, the same provision of a contract. Wal-Mart, 131
23
S. Ct. at 2551 (internal quotation marks omitted). Because the class action is an

exception to the usual rule that litigation is conducted by and on behalf of the individual

named parties only, Wal-Mart, 131 S. Ct. at 2550, the class action device is appropriate

only where “[t]he issues involved are common to the class as a whole” and “[t]hey turn

on questions of law [or fact] applicable in the same manner to each member of the class,”

Califano v. Yamasaki, 442 U.S. 682, 701, 99 S. Ct. 2545, 2557 (1979).

¶44 Here, although the District Court and this Court conclude that there exists “a

uniform course of conduct by the State and BCBS in denying benefits based upon the

‘experimental for research’ exclusion,” Opinion, ¶ 19, alleging that the State uniformly

applied a provision of the insurance contract, absent anything more, does not create a

common question of law or fact. A common question of law or fact is not generated

merely by the Sangwins’ allegations that they are part of a group of insureds who have

had a particular contract provision applied adversely to them. Moreover, the Sangwins’

allegation that they were wrongfully denied coverage does not advance their claim that a

class action is appropriate. No legal theory, programmatic exclusion, policy, pattern,

practice, or conduct that could establish a wrong or liability to the class as a whole has

been alleged. The Sangwins’ contention is indistinguishable from any insured who

alleges that she was wrongfully denied benefits under the Plan and who, for that reason

alone, proposes a class action and asserts commonality by virtue of being an insured.

¶45 A review of the Plan’s applicable policy provisions and the reasons for denials

clearly demonstrates that the language of the “experimental”-exclusion provision is both

24
detailed and factually driven, and that the denials of the 158 claims were based on

assessments of each individual illness and the type of procedure for which coverage was

sought. The Court recognizes this fact in observing that, “[i]n order to make the

determination of whether an individual’s claims were properly denied, each claim—

together with its underlying documentation including the Consent Form and supporting

affidavits—will have to first be separately analyzed.” Opinion, ¶ 33. Yet, contrary to the

requirement of a “rigorous analysis,” Comcast Corp. v. Behrend, 569 U.S. ___, 133 S. Ct.

1426, 1432 (2013) (internal quotation marks omitted), nothing has been alleged or

demonstrated here which supports a determination by the District Court that a program or

practice exists for the denials, thereby generating a common question.

¶46 The facts of this case are distinguishable from our prior cases in which we have

held that a class action is appropriate. See McDonald v. Washington, 261 Mont. 392, 862

P.2d 1150 (1993) (common question of law as to whether the defendant breached a duty

owed to class members to provide adequate water and service rendered class action

appropriate); Ferguson v. Safeco Ins. Co. of Am., 2008 MT 109, 342 Mont. 380, 180 P.3d

1164 (class action appropriate to determine whether insurer programmatically breached

the duty to conduct a made-whole determination prior to subrogation); Diaz v. Blue Cross

& Blue Shield of Mont., 2011 MT 322, 363 Mont. 151, 267 P.3d 756 (whether

employees’ made-whole rights were violated by the State’s programmatically failing to

conduct a made-whole analysis before exercising subrogation rights was appropriate for

class action); Chipman v. Northwest Healthcare Corp., 2012 MT 242, 366 Mont. 450,

25
288 P.3d 193 (whether an enforceable standardized group employment contract exists

and what the parties’ legal obligations are under the contract would generate common

answers applicable to all class members); Mattson v. Mont. Power Co., 2012 MT 318,

368 Mont. 1, 291 P.3d 1209 (whether the power company operated Kerr Dam

unreasonably and caused unreasonable damage to shoreline properties was incapable of

being resolved on an individual basis and was appropriate as a class action).

¶47 In all of these cases, there was a question of law or fact common to each member

of the class that advanced, to some degree, the litigation of each class member’s claim.

In Ferguson and Diaz, the insurer’s obligation of to conduct a made-whole analysis prior

to subrogation applied to everyone and existed whether or not the insurance contract

addressed made-whole rights. The common question was generated by the insurer’s

alleged programmatic conduct of subrogating first, ahead of the insured’s made-whole

rights. In McDonald, everyone in the class was drinking the same water in Butte. In

Mattson, the dam operator could select only one elevation at which to maintain the lake at

any given time, and that elevation necessarily applied to and affected all shoreline

properties simultaneously. In Chipman, common questions concerning the employment

contract applied to everyone equally and concerned coverage issues that were not

factually driven by individual circumstances. The answer to the various common

questions advanced the litigation as a whole and, to some degree, each class member’s

claim. The distinction to be drawn between these cases and the current dispute is that,

here, the Sangwins have presented no common contention “that it is capable of classwide

26
resolution—which means that 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, 131

S. Ct. at 2551. Merely being “connected” by the denial of a preauthorization request

based on the “experimental” exclusion, Opinion, ¶ 20, does not generate a common

question where, as the Court acknowledges, the question of whether class members’

claims were improperly denied under this exclusion must be made on an individual basis,

Opinion, ¶¶ 33-34.

¶48 I understand the desire of the Plaintiffs to have this matter proceed as a class

action. The denial of benefits for an admittedly successful medical procedure on behalf

of a child cries out for a remedy and a method to prevent future hardship. Such a plea,

however, without anything more than a denial under a particular policy exclusion, does

nothing to further the requirements of Rule 23(a). In Falcon, for example, the Supreme

Court acknowledged that “racial discrimination is by definition class discrimination.”

457 U.S. at 157, 102 S. Ct. at 2370. However, the Supreme Court concluded:

[T]he allegation that such discrimination has occurred neither determines
whether a class action may be maintained in accordance with Rule 23 nor
defines the class that may be certified. Conceptually, there is a wide gap
between (a) an individual’s claim that he has been denied a promotion on
discriminatory grounds, and his otherwise unsupported allegation that the
company has a policy of discrimination, and (b) the existence of a class of
persons who have suffered the same injury as that individual, such that the
individual’s claim and the class claims will share common questions of law
or fact and that the individual’s claim will be typical of the class claims.
For respondent to bridge that gap, he must prove much more than the
validity of his own claim. Even though evidence that he was passed over
for promotion when several less deserving whites were advanced may
support the conclusion that respondent was denied the promotion because
of his national origin, such evidence would not necessarily justify the
27
 additional inferences (1) that this discriminatory treatment is typical of
petitioner’s promotion practices, (2) that petitioner’s promotion practices
are motivated by a policy of ethnic discrimination that pervades petitioner’s
Irving division, or (3) that this policy of ethnic discrimination is reflected in
petitioner’s other employment practices, such as hiring, in the same way it
is manifested in the promotion practices.

Falcon, 457 U.S. at 157-58, 102 S. Ct. at 2370-71 (footnote omitted).

¶49 As indicated, the crux of this case is the lack of a question of law or fact common

to the class, as required by Rule 23(a)(2), and whether the Sangwins’ claim is typical of

the class claims pursuant to Rule 23(a)(3). Although the State argues the impropriety of

class certification primarily under the headings of “typicality” and “predominance,” the

State’s substantive arguments include discussions of “commonality.” In this regard, we

have recognized that the requirements of Rule 23 tend to merge given the facts of the

particular case. Opinion, ¶ 21.3 The State, moreover, urges this Court to apply the

commonality standard set forth in Wal-Mart rather than the less stringent commonality

standard set forth in cases such as Ferguson. We again avoid this issue by holding

(incorrectly, in my view) that commonality is met under either standard. Opinion, ¶ 19;

see also Jacobsen v. Allstate Ins. Co., 2013 MT 244, ¶ 33, 371 Mont. 393, 310 P.3d 452.

3
See also Falcon, 457 U.S. at 157 n. 13, 102 S. Ct. at 2370 n. 13 (“The commonality and
typicality requirements of Rule 23(a) tend to merge. Both serve as guideposts for determining
whether under the particular circumstances maintenance of a class action is economical and
whether the named plaintiff’s claim and the class claims are so interrelated that the interests of
the class members will be fairly and adequately protected in their absence. Those requirements
therefore also tend to merge with the adequacy-of-representation requirement, although the latter
requirement also raises concerns about the competency of class counsel and conflicts of
interest.”); McDonald, 261 Mont. at 402, 862 P.2d at 1156 (typicality is closely related to both
commonality and adequacy of representation).
28
¶50 In any event, it is the responsibility of the trial court to determine whether all

requirements of Rule 23(a) and (b) have been satisfied. Opinion, ¶ 15 (citing Comcast,

133 S. Ct. at 1432, and Wal-Mart, 131 S. Ct. at 2551). This Court must review a district

court’s determinations despite our perception that a party has not disputed a particular

requirement. Here, in my view, we create confusion in our class-action jurisprudence by,

on one hand, reversing the District Court’s articulation of a common question of law or

fact (breach of contract) while, on the other hand, affirming the District Court’s

conclusion that commonality and typicality have been met. While certainly there may

exist a factual scenario that substantiates the existence of commonality and typicality, but

not predominance, that scenario cannot exist where, as here, the District Court has been

reversed on its determination of the common question. In bifurcating the common

question required by Rule 23(a)(2) from the common question that must predominate

under Rule 23(b)(3)—an approach for which our Opinion cites no authority—I fear we

have made it difficult for the District Court in this litigation to know how to proceed,

have failed to provide clear guidance regarding the parameters of class-action litigation,

and have created inconsistencies within Rule 23 itself.

¶51 Therefore, although I agree with the Court’s holding that Rule 23(b)(3)’s

predominance requirement is not met here, I disagree with our conclusion that the

commonality and typicality requirements of Rule 23(a)(2) and (a)(3) have been satisfied.

While the Court remands “to allow the District Court to consider whether a particular

issue may be certified for which individual questions would not predominate” pursuant to

29
Rule 23(b)(3), Opinion, ¶ 36, I believe the District Court necessarily must determine first,

as a threshold matter, whether there is a question of law or fact common to the class

under Rule 23(a)(2) and whether the Sangwins’ claim is typical of the class claims under

Rule 23(a)(3). I would reverse the District Court’s certification order in its entirety and

remand accordingly.

¶52 I concur and dissent.

/S/ LAURIE McKINNON

Justice Jim Rice joins the Concurrence and Dissent of Justice Laurie McKinnon.

/S/ JIM RICE

30