Progressive Northwestern Insurance Company v. Misty Huddleston and Lane Huddleston, Individually and on Behalf of All Arkansans Similarly Situated ( 2024 )

Cite as 2024 Ark. 145SUPREME COURT OF ARKANSAS
No. CV-24-52
Opinion Delivered: October 3, 2024
PROGRESSIVE NORTHWESTERN
INSURANCE COMPANY APPEAL FROM THE POPE
APPELLANT COUNTY CIRCUIT COURT
[NO. 58CV-22-74]
V.
HONORABLE JACK “JAY” T.
MISTY HUDDLESTON AND LANE PATTERSON II, JUDGE
HUDDLESTON, INDIVIDUALLY
AND ON BEHALF OF ALL AFFIRMED.
ARKANSANS SIMILARLY SITUATED
APPELLEES
SHAWN A. WOMACK, Associate Justice
Appellant Progressive Northwestern Insurance Company appeals a Pope County
Circuit Court order certifying a class to pursue claims against Progressive for a uniform
adjustment practice that allegedly violates Arkansas insurance law and is applied to all of
Progressive’s insureds who responsibly maintain health-care insurance with separate
providers. For reversal, Progressive argues: (1) the claims alleged by the Plaintiff
(Huddleston) are not common of that of the class; (2) they do not predominate over
individual issues; (3) Huddleston is not typical of the class; and (4) a class action is not a
superior method to handle hundreds, if not thousands, of these cases. We affirm.
I. Facts and Procedural Background
This is an appeal from a class-certification order against Progressive Northwestern
Insurance Company. Huddleston challenges Progressive’s alleged uniform adjustment of
medical expense insurance coverage (Med-Pay) in violation of Arkansas insurance law. The
class, consisting of Progressive’s insureds who maintain health-care insurance with separate
providers, contends that Progressive’s adjustment practice improperly reduces Med-Pay
benefits on the basis of payments from secondary health-care insurance.
Med-Pay, governed by Ark. Code Ann. § 23-89-202 (Repl. 2014), provides primary
coverage for medical expenses following an automobile accident and must pay without
consideration of other insurance. See Ark. Ins. Comm’n R. 21 § 6; Ark. Ins. Comm’n
Bulletin No. 4-74 (Apr. 5, 1974).1 Despite these legal requirements, Progressive employs
an adjustment method using “Code 563” on explanations of benefits. This practice adjusts
Med-Pay benefits to reflect amounts paid, anticipated to be paid, or capable of being paid
by the insured’s health-care provider, regardless of the medical provider’s actual billing. This
adjustment is documented in Progressive’s “Guidelines for Health Insurance Payments—
State Specific,” which directs that Med-Pay reimbursements match the amounts paid by the
insured’s health-care insurance. This results in a reduction of payments in alignment with
the secondary insurance’s coverage, rather than the billed amount.
The named plaintiff, Misty Huddleston, filed this action on behalf of her minor son
and similarly situated insureds after their Med-Pay claim was adjusted using Code 563
following an automobile accident. Huddleston argues that Progressive’s adjustment practice
1
https://insurance.arkansas.gov/site/assets/files/1914/4-74.pdf, archived at
https://perma.cc/AF38-3U3Q.
2
violates Arkansas law by considering secondary health-care insurance when calculating
primary Med-Pay coverage. Given the uniform application of the practice, she sought class
certification, a declaration that the practice is unlawful, and damages for breach of contract,
asserting that Progressive’s policy promised Med-Pay benefits unadjusted for secondary
insurance payments.
Following discovery, Huddleston moved for class certification, which the circuit
court granted. The class includes all Arkansas residents who had Med-Pay claims adjusted
by Progressive using Code 563 and received less than the policy limit for their claims
between February 16, 2017, and September 28, 2023. Progressive appeals the certification
of this class.
II. Standard of Review
The certification of a class action is governed by Arkansas Rule of Civil Procedure
23. Rule 23 imposes six prerequisites for certification of a class-action complaint: (1)
numerosity; (2) commonality; (3) typicality; (4) adequacy; (5) predominance; and (6)
superiority. Ark. R. Civ. P. 23(a), (b).2 Circuit courts have broad discretion regarding class
certification, and we will not reverse a circuit court’s decision to grant or deny class
certification absent an abuse of discretion.3
When reviewing a class-certification order, we focus on the evidence contained in
the record to determine whether it supports the circuit court’s conclusion regarding
2
Philip Morris Cos. Inc. v. Miner, 2015 Ark. 73, 462 S.W.3d 313.
3
See Gen. Motors Corp. v. Bryant, 374 Ark. 38, 285 S.W.3d 634 (2008).
3
certification.4 Our focus is “whether the requirements of Rule 23 are met,” and “it is totally
immaterial whether the petition will succeed on the merits or even if it states a cause of
action.”5 Stated another way, neither this court nor the circuit court may “delve into the
merits of the underlying claims when deciding whether the Rule 23 requirements have
been met.”6 This is because, under Arkansas law, class certification is purely “a procedural
question.”7 With these standards in mind, we now turn to the merits of this appeal.
III. Discussion
On appeal, Progressive challenges the circuit court’s findings on four of the six
prerequisites for a class action. First, Progressive argues that there are no common questions
because the use of the 563 Code varies depending on the specific payment scenario and
because of differences in individual damages. Next, rehashing the same commonality
arguments, Progressive claims that common questions do not predominate over individual
issues. Third, Progressive argues that the Plaintiff’s claims are not typical of those of the
class. And fourth, Progressive argues that a class action is not a superior method to adjudicate
Huddleston’s claims.
A. Commonality
4
Asbury Auto. Grp., Inc. v. Palasack, 366 Ark. 601, 237 S.W.3d 462 (2006).
5
Am. Abstract & Title Co. v. Rice, 358 Ark. 1, 9, 186 S.W.3d 705, 710 (2004).
6
Nat’l Cash, Inc. v. Loveless, 361 Ark. 112, 116, 205 S.W.3d 127, 130 (2005).
7
Carquest of Hot Springs, Inc. v. Gen. Parts, Inc., 367 Ark. 218, 223, 238 S.W.3d 916919–20 (2006).
4
One of the prerequisites for bringing a class-action complaint is that “there are
questions of law or fact common to the class.”8 This is the commonality requirement. This
requirement is met if even a single issue is common to all class members.9 A uniform practice
alleged to affect all class members in the same way can satisfy commonality, as it gives rise
to a shared cause of action.10 The circuit court must identify the common issues in a cause
of action when certifying a class.11
Below, the circuit court identified three common issues: (1) whether the 563 Code
adjustment practice is unlawful under Arkansas insurance law; (2) whether this adjustment
practice constitutes a breach of the Med-Pay insurance contract; and (3) whether class
members are entitled to damages or other relief. The Plaintiff claims these questions arise
from the uniform application of the 563 Code adjustment practice, which reduces Med-
Pay benefits on the basis of secondary health insurance payments, regardless of the provider’s
actual billing. And since all class members are affected by this practice in the same way, the
core question—whether the 563 Code adjustment practice is lawful—remains common to
all. We agree with Huddleston and, accordingly, affirm the circuit court’s finding on
commonality.
8
Ark. R. Civ. P. 23(a)(2).
9
City of Conway v. Shumate, 2017 Ark. 36, at 4, 511 S.W.3d 319, 323–24.
10
Walls v. Sagamore Ins. Co., 274 F.R.D. 243, 254 (W.D. Ark. 2011).
11
Philip Morris, 2015 Ark. 73, at 4, 462 S.W.3d at 316 (quoting Newberg, Class
Actions § 3.10 (3d ed. 1993)).
5
Here, Progressive’s practice of adjusting Med-Pay claims based on health insurance
payments is uniform and affects all class members equally. Yet Progressive argues that the
use of the 563 Code varies depending on the specific payment scenario, suggesting that this
undermines commonality. Progressive’s argument is misplaced. The variation in who is
paid—whether it be the medical provider, the insured, or the health-care insurer—is
irrelevant to the common issue at hand. The key question is how Progressive calculates
Med-Pay benefits based on health-care insurance payments, a practice the class alleges is
unlawful. This question is central to the case and applies uniformly to all class members,
thereby establishing commonality. Likewise, Progressive’s assertion that differences in
individual damages defeat commonality is unconvincing. As in Municipal Health Benefit Fund
v. Hendrix, 2020 Ark. 235, 602 S.W.3d 101, differing damages amounts do not negate
common legal and factual issues. The focus here is on the legality of the 563 Code
adjustment practice, and if it is found unlawful, the determination of damages can follow
from Progressive’s own records. Therefore, we affirm the circuit court’s findings on
commonality.
B. Predominance
The next issue involves predominance. Predominance is a shorthand term for the
following Rule 23(b) requirement: “An action may be maintained as a class action if . . . the
court finds that the questions of law or fact common to the members of the class
predominate over any questions affecting only individual members.” The starting point in
examining the predominance requirement is whether a common wrong has been alleged
6
against the defendant.12 This element can be satisfied if the preliminary, common issues may
be resolved before any individual issues.13
In making this determination, we do not merely compare the number of individual
versus common claims.14 Instead, we must decide if the issues common to all plaintiffs
“predominate over” the individual issues, which can be resolved during the decertified stage
of bifurcated proceedings if necessary.15 Conducting a trial on the common issue in a
representative fashion can achieve judicial efficiency. 16 Thus, the mere fact that individual
issues and defenses may be raised regarding the recovery of individual members cannot
defeat class certification where there are common questions concerning the defendant’s
alleged wrongdoing that must be resolved for all class members.17
In this case, the crux of the matter is whether Progressive’s practice of calculating
Med-Pay benefits by coordinating those benefits with its insureds’ secondary health-care
insurance is lawful under Arkansas law. This singular issue dominates the case and applies
uniformly to all class members, making it ripe for class-wide adjudication. Indeed, this
question dominates the case because it applies to all class members who were affected by the
12
Kersten v. State Farm Mut. Auto. Ins. Co., 2013 Ark. 124, 426 S.W.3d 455.
13
Asbury Auto., 366 Ark. at 610, 237 S.W.3d at 469.
14
Philip Morris, supra.
15
Id.
16
Id.
17
Id.
7
same uniform adjusting practice. As in Robertson, where individual negotiations and
professional discretion were argued to introduce individual issues, Progressive similarly
suggests that individualized issues exist, particularly the issue of damages.18 However, the
existence of such issues does not defeat predominance. Shumate, 2017 Ark. 36, at 8, 511
S.W.3d at 325, clarifies that the possibility of individual defenses or damages inquiries does
not negate class certification when there are overriding common questions concerning the
defendant’s alleged wrongdoing.
The circuit court correctly recognized this when it found that if the 563 Code
adjusting practice is found to be unlawful, that determination would apply across the entire
class, just as a judgment in favor of Progressive would preclude future challenges. This
consistent application of the adjusting practice, coupled with the common question of its
legality, demonstrates that predominance is satisfied in this case. Therefore, we affirm the
circuit court’s finding that the common issues predominate over any individual questions.
C. Typicality
Progressive also challenges the typicality of Huddleston’s claims, asserting that her
experience is not representative of the entire class. However, the typicality requirement, as
set forth in Ark. R. Civ. P. 23(a)(3), is met when the class representative’s claims arise from
the same course of conduct that gives rise to the claims of other class members.19 The focus
of the typicality analysis is on the defendant’s conduct, not the specific injuries or damages
18
Farmers Union Mut. Ins. Co., Inc. v. Robertson, 2010 Ark. 241, 370 S.W.3d 179.
19
See DIRECTV, Inc. v. Murray, 2012 Ark. 366, 423 S.W.3d 555.
8
suffered by individual plaintiffs.20 Thus, varying fact patterns or degrees of injury among
class members do not defeat typicality so long as the underlying legal theory and the alleged
conduct are the same for all plaintiffs.21
Here, the core issue is whether Progressive’s 563 Code adjustment practice violates
Arkansas insurance law. This practice allegedly impacted all class members uniformly by
coordinating Med-Pay benefits based on the insureds’ secondary health insurance.
Huddleston’s claim, like those of the other class members, arises directly from this practice.
Whether this adjustment practice is lawful is the key question that applies equally to all class
members. Thus, Huddleston’s claims are not merely typical—they are identical to those of
the class. As the circuit court correctly observed, “the factual and legal basis of Defendant’s
alleged liability are common to all members of the Class and represent a common cause of
action to Plaintiff and the Class members.”
Once more, Progressive attempts to challenge typicality by pointing to potential
differences in injuries or damages among class members, focusing on who was paid and
when. However, as this court has previously noted, arguments regarding individual damages
do not affect the determination of typicality, which pertains to the defendant’s conduct––
not the specifics of each plaintiff’s injury.22 Progressive’s argument fails to acknowledge that
the 563 Code adjusting practice was applied across the board to all class members, including
20
Diamante, LLC v. Dye, 2013 Ark. 501, 430 S.W.3d 710.
21
Cach, LLC v. Echols, 2015 Ark. 446, 506 S.W.3d 217.
22
Carquest, 367 Ark. 219, 238 S.W.3d 916.
9
Huddleston’s son. This practice, if unlawful, would have uniformly reduced Med-Pay claim
payments, constituting a breach of contract under Arkansas insurance law.
In short, the circuit court’s determination that Huddleston’s claims are typical of the
class is well-founded. We therefore affirm the circuit court’s finding that Huddleston is a
typical class representative.
D. Superiority
Last, Progressive contends that a class action is not the superior method to adjudicate
Huddleston’s claims. Under Ark. R. Civ. P. 23(b), a class action must be “superior to other
available methods for the fair and efficient adjudication of the controversy.” 23 The
superiority requirement is satisfied when class certification is the more efficient method of
handling the case, and it is fair to both sides.24 In determining superiority, courts consider
whether common, predominating questions of law or fact exist that can be decided on a
class-wide basis, as well as the manageability of the class and the need to avoid multiple
suits.25
Here, the circuit court properly found that a class action is the superior method for
handling the claims against Progressive. The court specifically noted that, “given the
predominance of the common issues,” a class action is “unquestionably superior to litigating
hundreds of individual lawsuits.” Each suit would require an analysis of the same 563 Code
23
Asbury, 366 Ark. 607, 237 S.W.3d 463.
24
ChartOne, Inc. v. Raglon, 373 Ark. 281, 283 S.W.3d 576 (2008).
25
Id.10
adjustment practice, which would result in repetitive litigation of the same legal issues. This
duplication of effort would not only waste the resources of both the court and the parties
but would also risk inconsistent adjudications. The legality of Progressive’s uniform
adjustment practice is at the heart of this case, making it particularly well-suited for class
adjudication.26
Progressive argues that individual claims should be litigated separately, but this
argument overlooks the fact that each class member is seeking to enforce the same Arkansas
law against the same adjustment practice. As the circuit court correctly concluded, there
are no individual issues that would strain manageability. The application of Arkansas law is
uniform across all claims, and the case does not involve complex variations in the law of
multiple jurisdictions. Progressive’s brief offers only a cursory challenge to the circuit court’s
superiority finding, failing to address the core issue: whether its 563 Code adjusting practice
violates Arkansas insurance law. As the circuit court noted, the legality or illegality of this
practice applies uniformly to all class members. If it is unlawful, the class prevails; if not,
Progressive prevails. There is no more efficient or fair method to adjudicate these claims
than through a class action, and Progressive’s arguments to the contrary miss the central
issue in the case. Accordingly, we affirm the circuit court’s finding that class treatment is
the superior method for handling this case.
For the foregoing reasons, we affirm the circuit court’s class-certification order.
Affirmed.
26
Id. at 373 Ark. at 287, 283 S.W.3d at 585.
11
Eversheds Sutherland (US) LLP, by: Kymberly Kochis and Tracey K. Ledbetter (admitted
pro hac vice); Anderson, Murphy & Hopkins, L.L.P., by: Debbie S. Denton and Mark D.
Wankum, for appellant.
Streett Law Firm, P.A., by: James A. Streett; Herzfeld, Suetholz, Gastel, Leniski & Wall,
PLLC, by: Joe P. Leniski; Brian G. Brooks, for appellees.
12