Appeals Court of Arizona Affirms Decision to Refuse a Class Action Decision Against an Insurance Company

The Appeals Court of Arizona reviewed Ferrara v. 21^st Century N. Am. Ins. CO. The appellant, Cynthia Ferrara, requested review of the trial court’s denial of her motion for class certification made by Rule 23, Ariz. R. Civ. P. The appeals court affirmed after finding no “abuse of discretion.”

Ferrara was injured in a car accident during her period of employment, and as of the date of the accident, she was covered by an auto insurance policy provided by the defendant, 21^st Century North America Insurance Company. Ferrara acquired $3,981 in medical bills from her injuries. She was eligible to receive, and did receive, workers’ compensation benefits for those expenses, though her employer’s workers’ compensation carrier could pay off the treatment costs at a decreased rate of $2,053.

After a $6,812 settlement on her third-party claim against the liable driver, Ferrara’s workers’ compensation carrier issued a lien on, and was repaid $2,053 from, her third-party settlement. Ferrara then submitted the medical expenses she had collected to 21^st Century and documents that proved she had reimbursed the workers’ compensation carrier. Ferrara was seeking coverage pursuant to the “Med Pay” provision of her insurance policy in the amount of $3,981.

21^st Century decided to deny her claim and stated an exclusion in the policy: “We do not provide Medical Payments Coverage for any insured for bodily injury…occurring during the course of employment if workers’ compensation benefits are required or available for the bodily injury.”

Ferrara then filed the immediate action for breach of contract and declaratory relief and sought class action certification that is pursuant to Rule 23. The class, which Ferrara is the only named plaintiff, was to include all persons or assignees who were covered by 21^st Century auto policies or their underwriting entities who had made a claim for Med Pay benefits that was denied on the workers’ compensation exclusion. After discovery and dispute, the trial court concluded that Ferrara had failed to meet the requirements of Rule 23(a) and denied class certification. An interlocutory appeal followed this decision.

If a plaintiff is seeking class certification, he or she must satisfy all the requirements of Rule 23(a) and at least one of the requirements of Rule 23(b). The problem of determining if a suit should proceed as a class action is left to the trial court’s decision and, without an abuse of discretion, the appeals court will not interfere with the trial court’s determination.

While addressing Rule 23, the United States Supreme Court stated that “it may be necessary for the court to probe behind the pleadings before coming to rest on the certification question, and that certification is proper only if the trial court is satisfied, after a rigorous analysis, that the prerequisites of Rule 23(a) have been satisfied.”

In Rule 23(a), Ariz. R. Civ. P. asks a party seeking certification to show: the class is so big that joinder of all members is “impracticable,” there are questions of law or fact common to the class, the defenses or claims of the representative parties are similar of the claims or defenses of the class, and the parties represented will adequately and fairly protect the class’s interests. These four conditions “effectively limit the class claims to those fairly encompassed by the named plaintiff’s claims.” The trial court found that Ferrara did not establish the first three requirements.

The trial court’s “rigorous analysis” of determining if the requirements of Rule 23(a) has been met will “frequently…entail some overlap with the merits of the plaintiff’s underlying claim.” It was found that the determination of the class usually involves considerations that are entangled in the legal and factual problems comprising the plaintiff’s cause of action.

In the court’s conclusion, they found that they are persuaded due to a number of factors. These included the potentially small number of class members and the state law’s variances on an important issue that could make problems sufficient to preclude class certification on the grounds of the first three requirements of Rule 23. The plaintiff’s burden was to show both “that there are in fact sufficiently numerous parties, common questions of law or fact.”

There is enough reasonable evidence to support the trial court’s decision that Ferrara did not meet her burden of proof to prove a class action was actually appropriate. With no abuse of discretion, the appeals court affirms the decision.