The Eleventh Circuit Declares That CAFA’s Amount-In-Controversy Requirement Can Be Satisfied In Declaratory Relief Cases

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On February 14, 2014, the Eleventh Circuit Court of Appeals held that the Class Action Fairness Act’s (CAFA) $5,000,000 amount-in-controversy requirement can be satisfied where the plaintiff seeks only declaratory relief. S. Fla. Wellness, Inc. v. Allstate Ins. Co., No. 14-10001, --- F.3d ----, 2014 WL 576111 (11th Cir. Feb. 14, 2014).  A dispute arose when South Florida Wellness, a Florida-based healthcare provider, sought payment from Allstate for its treatment of an Allstate insured under a policy that provided for personal injury protection (PIP) coverage.  South Florida Wellness sought payment of 80% of the amount billed pursuant to § 627.736(1)(a), Fla. Stat., but Allstate paid a lower amount based on its interpretation of the policy and pursuant to the reimbursement methodology set forth in § 627.736(5)(a), Fla. Stat.  South Florida Wellness contended that Allstate was required to clearly and unambiguously indicate in its policies that it would limit payments to the statutory fee schedule in § 627.736(5)(a).

South Florida Wellness filed a putative class action in Florida state court on behalf of “Any and all health care providers and insureds who submitted claims for no-fault benefits under PIP policies which were in effect from March, 2008, where Allstate utilized the reimbursement methodology pursuant to Florida Statute 627.736(5)(a) 2(a-f) (2008) (the fee schedule) to limit reimbursement to the provider or the insured where the policy did not expressly and unambiguously indicate Defendant’s election to limit reimbursement in accordance with Florida Statute 627.736(5)(a) 2 as its sole methodology for payment of No Fault claims.”  South Florida Wellness did not seek monetary damages, but instead sought only a declaration that the language Allstate used in the class members’ policies did not clearly and unambiguously indicate that payments would be limited as provided for in § 627.736(5)(a).

Allstate removed the action to federal court arguing CAFA-based federal subject matter jurisdiction.  As support Allstate submitted an affidavit that the putative class included over 100 healthcare providers and insureds who had submitted “1,655,733 bills for payment or reimbursement” of medical expenses under Allstate Florida auto policies that provided PIP coverage, that Allstate had paid out $126,474,216.25 in benefits for those claims based on the fee schedule in § 627.736(5)(a), and that if Allstate had not limited payment based on § 627.736(5)(a), then the putative class members would have received $194,651,033.94 in benefits (or 80% of the billed amounts).  Allstate argued that the amount in controversy, therefore, was $68,176,817.69, which is the difference between what it paid out and what it would have paid out had it not limited payments based on § 627.736(5)(a), because that is the additional amount of benefits the putative class members would be eligible to recover in the event that they obtained the declaratory judgment.

South Florida Wellness contended that the value of declaratory relief is too speculative to satisfy CAFA’s amount-in-controversy requirement because Allstate had failed to show that declaratory judgment would trigger a flow of money to the plaintiffs.  The district court agreed and remanded the action to state court.  The Eleventh Circuit reversed.  Noting that South Florida Wellness had not provided any evidence to rebut Allstate’s affidavit or to controvert its calculations, the Eleventh Circuit held that Allstate’s affidavit established that the declaratory judgment will determine whether Allstate made insufficient payments on more than 1.6 million “bills for payment or reimbursement,” with the amount of the insufficiency exceeding $68 million, which it will owe the putative class members.  That is the amount in controversy, the Eleventh Circuit held.  Citing Pretka v. Kolter City Plaza II, Inc., 608 F.3d 744, 751 (11th Cir. 2010), the Court noted that members of the putative class might not ultimately recover the full $68,176,817.69, but “the pertinent question at the jurisdictional stage is what is in controversy in the case, not how much the plaintiffs are likely to recover.”

Topics:  Amount in Controversy, CAFA, Class Action, Mass Action, Putative Class Actions

Published In: Civil Procedure Updates, Civil Remedies Updates, Health Updates, Insurance Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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