United States Court of Appeals
Fifth Circuit
F I L E D
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT July 19, 2007
_______________________
Charles R. Fulbruge III
No. 06-30573 Clerk
_______________________
EILEEN MALDONADO; DARRYL SOIGNET, SR.; and
CAROL VERLANDER EISWIRTH, on Behalf of Themselves
and All Others Similarly Situated,
Plaintiffs-Appellants,
versus
OCHSNER CLINIC FOUNDATION,
Defendant-Appellee.
On Appeal from the United States District Court
for the Eastern District of Louisiana, New Orleans Division
No. 2:04-CV-2635
Before JONES, Chief Judge, and BENAVIDES and STEWART, Circuit
Judges.
EDITH H. JONES, Chief Judge:
Three appellants seek to represent a class of uninsured
patients who received treatment from Appellee Ochsner Clinic
Foundation (“Ochsner”) during a period of at least ten years. The
district court denied class certification. Finding no reversible
error of fact or law in the court’s careful and thorough
consideration of this case, we affirm. See Maldonado v. Ochsner,
237 F.R.D. 145 (E.D. La. 2006). Our opinion highlights the
essential grounds for affirmance.
I. BACKGROUND
Appellants received medical treatment from Ochsner, a
non-profit corporation receiving tax exemptions under 26 U.S.C.
§ 501(c)(3) and LA. REV. STAT. § 47:287:501, at a time in which they
were uninsured. They were then billed Ochsner’s standardized
“chargemaster”1 rates for their care. Because Ochsner offers
discounts from the standardized rates to patients with private
insurance plans, Medicare, or Medicaid, Appellants claim that the
undiscounted charges are unreasonable.
Appellants sued Ochsner and the American Hospital
Association (“AHA”) in state court, alleging numerous state law
causes of action, including breach of contract. Appellants allege,
for instance, that by charging unreasonable rates, Ochsner violated
the contract entered into between Ochsner and the state of
Louisiana when Ochsner accepted tax exemptions as a charitable
organization. Appellants further contend that Ochsner violated
articles 2053 and 2055 of the Louisiana Civil Code, which require
charges in open price contracts to be equitable. See Grimaldi
Plumbing & Heating Co. v. Doucette, 414 So. 2d 832, 833 (La. App.
1982).
The defendants removed the case to federal court, where
AHA was voluntarily dismissed. Appellants then sought class
certification under Federal Rules of Civil Procedure 23(b)(2) or
1
The “chargemaster” is an exhaustive and detailed price list for each
of the thousands of services and items provided by Ochsner.
2
(3). The proposed class would be composed of: “all persons who
received any form of health care treatment and were charged an
undiscounted amount for the services at Ochsner from September 1,
1993, through the date of commencement of class notice or entry of
judgment and who were uninsured at the time of treatment.” After
a hearing and briefing, the district court denied Appellants’
motion for class certification. This court subsequently granted
Appellants’ petition for permission to appeal. See FED. R. CIV. P.
23(f).
II. DISCUSSION
This court reviews a district court’s denial of class
certification for abuse of discretion. Bell Atl. Corp. v. AT&T
Corp., 339 F.3d 294, 301 (5th Cir. 2003). “Implicit in this
deferential standard is a recognition of the essentially factual
basis of the certification inquiry and of the district court’s
inherent power to manage and control pending litigation.” In re
Monumental Life Ins. Co., 365 F.3d 408, 414 (5th Cir. 2004)(quoting
Allison v. Citgo Petroleum Corp., 151 F.3d 402, 408 (5th Cir.
1998)). We review de novo whether the district court applied the
correct legal standards. Id.
To obtain class certification, parties must satisfy Rule
23(a)’s four threshold requirements, as well as the requirements of
3
Rule 23(b)(1), (2), or (3). See Amchem Prods., Inc. v. Windsor,
521 U.S. 591, 613-14, 117 S. Ct. 2231, 2245 (1997). The party
seeking class certification bears the burden of establishing that
Rule 23 is appropriate. O’Sullivan v. Countrywide Home Loans,
Inc., 319 F.3d 732, 737-38 (5th Cir. 2003). The district court
must “conduct a rigorous analysis of the Rule 23 prerequisites
before certifying a class.” Id. at 738 (internal quotation marks
omitted).
A. Rule 23(a)
Rule 23(a) requires initially that the proposed class
representatives demonstrate numerosity, commonality, typicality,
and adequacy of representation. FED. R. CIV. P. 23(a). The district
court found that Appellants generally satisfied this burden, see
Maldonado, 237 F.R.D. at 148-49, and Ochsner focuses its appeal on
Rule 23(b)’s requirements.2 We will assume arguendo that
Appellants meet the Rule 23(a) requirements. See Allison, 151 F.3d
at 411 n.2.
B. Rule 23(b)(2)
Class certification under Rule 23(b)(2) is appropriate if
the requirements of 23(a) are satisfied and:
the party opposing the class has acted or refused to act
on grounds generally applicable to the class, thereby
making appropriate final injunctive relief or
corresponding declaratory relief with respect to the
class as a whole.
2
We need not review the district court’s finding that Maldonado is not
a “typical” member or an adequate representative of the proposed class.
4
FED. R. CIV. P. 23(b)(2). To qualify for class-wide injunctive
relief, class members must have been harmed in essentially the same
way, and injunctive relief must predominate over monetary damage
claims. Bolin v. Sears, Roebuck & Co., 231 F.3d 970, 975 (5th Cir.
2000). Additionally, the injunctive relief sought must be
specific. FED. R. CIV. P. 65(d); see also Ala. Nursing Home Ass’n
v. Harris, 617 F.2d 385, 387-88 (5th Cir. 1980).
Appellants cannot satisfy these standards. In addition
to monetary damages, Appellants seek an injunction requiring
Ochsner, in part, to provide them with “mutually affordable health
care” and to cease and desist charging them a higher amount than
that charged to insured patients. See Maldonado, 237 F.R.D. at
149-50. They have failed, however, to identify any way to
determine what a reasonable or “mutually affordable” rate is for
the wide variety of medical services offered by Ochsner.
The difficulty in specifying exactly what Appellants seek
from an injunction highlights the fact that individualized issues
here overwhelm class cohesiveness. See Allison, 151 F.3d at 414.
The amount patients were charged and the amount that is
“reasonable” for the services they received is 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 Ochsner’s and other hospitals’ costs at that time.
See Howard v. Willis-Knighton Med. Ctr., 924 So. 2d 1245, 1263 (La.
App. 2006)(“reasonableness of charges inquiry requires individual
5
considerations that may include . . . the patient’s financial
status, the actual hospital services rendered, their customary
value, and the amount of a recovery from a third party”). Other
variables exist. The discount from the chargemaster rate paid by
Ochsner’s insured patients varies widely depending on the insurance
provider and the particular procedure involved.3 Similarly, the
amount paid by the class members themselves varies significantly,
as Ochsner offered numerous discounts to uninsured patients.4 In
fact, the vast majority of uninsured patients paid nothing,5 making
it unclear what they would gain from an injunction. Appellants are
unable to explain how a court could define or enforce meaningful
injunctive relief.
Rule 23(b)(2) certification is also inappropriate when
the majority of the class does not face future harm. See Bolin,
231 F.3d at 978. Before suit was filed, Ochsner instituted an
automatic thirty-five percent discount to uninsured patients, on
top of the numerous other discounts already provided to uninsured
patients. An injunction prohibiting Ochsner from charging the
3
This is not a case where Ochsner charges one “insured” rate and one
“uninsured” rate. Cf. Monumental, 365 F.3d at 412 (insurance company charged
black policyholders a higher premium than white policyholders). There is no set
charge to which Appellants can point to as being the “reasonable” fee.
4
Among these are “prompt pay” discounts, charity care considerations,
discounts provided during the collection process, service discounts for
dissatisfied patients, and discounts pertaining to particular treatments.
5
Approximately eighty-three percent of the over 39,000 uninsured
patients treated by Ochsner during the proposed ten-year class period, including
Maldonado, paid nothing for their treatment. Many of the remaining seventeen
percent did not pay the full amount of the charges.
6
“full” chargemaster rate in the future would be meaningless, while
an injunction requiring Ochsner to afford the discount that it has
instituted serves no purpose. This situation leaves monetary
claims for retrospective damages predominant in the case.
Therefore, the “declaratory relief [Appellants] seek serves only to
facilitate the award of damages,” and Rule 23(b)(2) certification
is improper.6 Id.
C. Rule 23(b)(3)
To gain class certification under Rule 23(b)(3), a
proposed class must satisfy Rule 23(a), and “[c]ommon questions
must ‘predominate over any questions affecting only individual
members’[,] and class resolution must be ‘superior to other
available methods for the fair and efficient adjudication of the
controversy.’” Amchem, 521 U.S. at 615, 117 S. Ct. at 2246
(quoting FED. R. CIV. P. 23(b)(3)). The predominance inquiry is
“more demanding than the commonality requirement of Rule 23(a)” and
requires courts “to consider how a trial on the merits would be
conducted if a class were certified.” Bell Atl., 339 F.3d at 301,
302 (internal quotation marks omitted). Additionally, the
superiority analysis “requires an understanding of the relevant
6
Pointedly, the named Plaintiffs are not at risk for future harm.
Since she initially received treatment, Maldonado returned to Ochsner, and,
despite receiving the thirty-five percent discount, has again paid nothing.
Soignet has received Medicare coverage since the filing of the suit, and Eiswirth
has switched to another hospital due to dissatisfaction with her Ochsner doctor.
7
claims, defenses, facts, and substantive law presented in the
case.” Allison, 151 F.3d at 419.
This case cannot pass muster under the Rule 23(b)(3)
criteria, as Appellants present no sensible way to resolve the
dispute on a class-wide basis. The district court fully explained
these problems. We begin by acknowledging that class-wide breaches
of state law are alleged and raise some “common” issues of law and
fact. Suffice it to emphasize here, however, that given the state
court’s dictate that the reasonableness of medical fees depends on
multiple factors, including the services rendered, patient’s
financial status, and customary fee for similar services, see
Howard, 924 So. 2d at 1263, it is unlikely Appellants could ever
demonstrate that the chargemaster rates are unreasonable.
Moreover, the court cannot simply require Ochsner to refund to
uninsureds the difference between what they paid, if anything, and
what insured patients paid7 because, as Appellants admit, insured
patients paid a wide variety of discounts from the chargemaster
rates depending on the individual contracts and the specific
procedures involved in their care.8 At this level, there is not
one charge for insured patients and one charge for uninsured
patients, but an array of charges tailored to each patient’s
7
Notably, all patients are charged the same rate, regardless of
insured or uninsured status. What Appellants take issue with is that insurance
companies, as well as Medicare and Medicaid, generally are not expected to pay
the full chargemaster rate.
8
See supra Section II(B).
8
treatment. In addition, the percentage of the chargemaster rate
paid by an individual insurance company may vary from procedure to
procedure. The fact-specific rather than class-oriented nature of
the claims thus predominates not only at the plaintiffs’ level,
since two patients’ care and financial circumstances are hardly
ever comparable,9 but also in determining a “reasonable” charge for
each service from among the melange of third-party payer
discounts.10 Both the district court here and a Florida district
court that recently rejected a similar class action persuasively
concluded that neither predominance nor superiority are satisfied
in this type of case. See Colomar v. Mercy Hospital, Inc., No.
05-22409, 2007 WL 1784118, at *8-11 (S.D. Fla. April 11, 2007);
Maldonado, 237 F.R.D. at 152-55.
III. CONCLUSION
For the foregoing reasons, Appellants have not satisfied
the requirements of either Rule 23(b)(2) or (b)(3). The district
court properly denied class certification.
AFFIRMED.
9
See Howard, 924 So.2d at 1263.
10
To avoid the latter difficulty, Appellants suggest that a “reasonable
rate” consists of a weighted average of the amounts paid by insurance companies,
Medicare, and Medicaid. Under this approach, contrary to common sense,
approximately half of the insurers would have negotiated an “unreasonable” rate.
This proposal also ignores that the court would still need to calculate this
average amount for each of the countless number of procedures and combination of
procedures class members received. Similarly, Appellants’ emphasis on the
thirty-five percent discount Ochsner now gives uninsured patients is unavailing.
The fact that Ochsner has voluntarily chosen to give patients a discount, perhaps
in a desire to receive some compensation for its services, in no way proves that
it was legally obliged to give the across-the-board fee reduction.
9