Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Green v. Geico General Insurance Co.

Superior Court of Delaware

April 24, 2018

YVONNE GREEN, WILMINGTON PAIN & REHABILITATION CENTER, and REHABILITATION ASSOCIATES, P.A., on behalf of herself and all others similarly situated, Plaintiffs,

          Submitted: January 31, 2018

         Upon Defendant GEICO General Insurance Company's Motion to Dismiss GRANTED in part DENIED in part

          Richard H. Cross, Jr., Esquire, Christopher P. Simon, Esquire, Cross & Simon, LLC, Wilmington, Delaware, Attorneys for Plaintiffs Yvonne Green, Wilmington Pain & Rehabilitation Center, and Rehabilitation Associates, P.A.

          Paul A. Bradley, Esquire, Maron Marvel Bradley Anderson & Tardy, LLC, Wilmington, Delaware, George M. Church, Esquire, Miles & Stockbridge P.C., Baltimore, Maryland, Meloney Perry, Esquire, Perry Law, P.C., Dallas, Texas, Attorneys for Defendant GEICO General Insurance Company

          ERIC M. DAVIS, JUDGE.


         Yvonne Green, Wilmington Pain & Rehabilitation Center ("WPRC"), and Rehabilitation Associates, P.A. ("RA") sued on behalf of themselves and all others similarly situated (collectively "Plaintiffs"). The Plaintiffs filed suit against Geico General Insurance Company ("Geico"). Plaintiffs allege that Geico uses two computerized rules (collectively, the "Rules") to evaluate insurance claims submitted by insureds to Geico. Plaintiffs argue that the Rules analyze these claims without actually evaluating the substantive facts underlying the claim.

         Geico moves to dismiss Plaintiffs' claims, urging the Court to follow the reasoning used by the United State District Court for the District of Delaware when decertifying a similar class. Geico argues that the Court cannot certify a class in this case because individual issues will predominate the case regarding damages. Additionally, Geico argues that the Plaintiffs' allegations fail to state a claim for which relief can be granted.

         For the reasons set forth below, the Court GRANTS in part and DENIES in part without prejudice the Motion.

         II. RELEVANT FACTS[1]

         A. GEICO's Claims Processing

         Plaintiffs' case challenges GEICO's process for evaluating personal injury protection ("PIP") claims submitted to GEICO by its insureds. Under Delaware law and pursuant to GEICO's contractual obligations, after an insured submits a proof of loss, GEICO must repay all "reasonable and necessary expenses incurred within two years from the date of the accident."[2]This includes compensation for medical and hospital services.[3] In evaluating PIP claims, GEICO relies on the Rules that purportedly analyze all claims the same way, regardless of the facts giving rise to the underlying claim.[4] These Rules are the source of the present litigation.

         The first rule at issue is the Geographic Reduction Rule (the "GRR").[5] Under the GRR, GEICO sets an arbitrary cap at the "80th percentile" of other claims submitted to GEICO within a particular geographic region.[6] As a result of the GRR, 20% of bills submitted to GEICO for reimbursement are automatically deemed "unreasonable, " without inquiry into the facts giving rise to the claim or any factors that could impact pricing.[7] Based on this, Plaintiffs allege that the GRR is, in effect, a secret cap on what GEICO will pay.[8]

         The second rule at issue is the Passive Modality Rule (the "PMR").[9] Under the PMR, GEICO automatically denies payment for certain "passive modalities" when treatment occurs more than eight weeks from the date of the automobile accident.[10] GEICO enforces the PMR without making any inquiry into the facts or treatment to determine if treatment is appropriate.[11]Based on this, Plaintiffs allege that the PMR is, in effect, a secret policy exclusion on what GEICO will pay.[12] Additionally, GEICO does not disclose its claims handling policies, the GRR, or the PMR to its insureds.[13]

         B. Plaintiffs Submitted PIP Claims to GEICO

         On September 12, 2011, Ms. Green was injured in a car accident.[14] After receiving medical treatment, Ms. Green, as an individual insured, submitted her medical bills to GEICO for repayment under her PIP policy.[15] In processing her claims for PIP benefits, GEICO used the GRR and PMR.[16] As a result, GEICO denied payment of covered PIP benefits to Ms. Green without, according to Plaintiffs, reasonable justification.[17]

         Similarly, WPRC and RA, as assignees of their insured patient's claims, submitted claims to GEICO for processing and payment for treatment they provided.[18] When WPRC and RA submitted claims to GEICO directly, GEICO treated WPRC and RA as claimants under the insured's policy.[19] In processing WPRC and RA's claims for PIP benefits, GEICO used the GRR and the PMR.[20] As a result, GEICO denied payment of covered PIP benefits to WPRC and RA without, according to Plaintiffs, reasonable justification.[21]

         C. Procedural History[22]

         On March 10, 2014, Ms. Green filed the initial class action complaint (the "Initial Chancery Complaint") against GEICO in the Delaware Court of Chancery. The Initial Chancery Complaint alleged causes of action for injunctive relief, bad faith breach of contract, breach of duty of fair dealing, consumer fraud, and tortious interference with contract. The Initial Chancery Complaint also sought class action status pursuant to Court of Chancery Rule 23.

         GEICO filed its initial responsive pleading on April 14, 2014. The case was dormant until February 2015. At that time, the Court of Chancery requested a status report from the parties. Ms. Green's counsel requested a stay pending the outcome of a motion to decertify classes filed in Johnson v. GEICO Casualty Co., a similar case in the United States District Court for the District of Delaware (the "Delaware District Court"). In September 2015, the Delaware District Court decertified two previously certified classes. After being advised of the Delaware District Court's decision, the Court of Chancery conducted a status conference on November 3, 2015.

         On December 11, 2015, Ms. Green filed an amended class action complaint (the "Amended Chancery Complaint"). The Amended Chancery Complaint added two additional plaintiffs, WPRC and RA, and replaced four of the five original counts. The Amended Chancery Complaint asserted claims for breach of contract, bad faith breach of contract, declaratory relief, and deceptive trade practices act violations.

         GEICO then moved to dismiss the Amended Chancery Complaint. Following a hearing and additional briefing, Vice Chancellor Joseph R. Slights III dismissed the Amended Chancery Complaint for lack of subject matter jurisdiction on February 1, 2017. Plaintiffs then filed a timely election to transfer to this Court on February 24, 2017.

         Due to administrative reasons regarding the transfer, Plaintiffs filed the complaint (the "Class Action Complaint") in this Court on March 20, 2017. The Class Action Complaint is essentially identical to the Amended Chancery Complaint, asserting the same claims for Breach of Contract, Bad Faith Breach of Contract, Declaratory Relief, and Deceptive Trade Practices Act violations.[23] The Class Action Complaint alleges class certification on behalf of all persons, including insureds and medical providers, whose claims for PIP benefits were denied or reduced as a result of the GRR and the PMR. The members of this class are referred to as "The Claimant Class" and the "The Insured Class."

         On April 4, 2017, GEICO moved to dismiss the Class Action Complaint through Defendant GEICO General Insurance Company's Motion to Dismiss Plaintiffs' Class Action Complaint (the "Original Motion"). On May 4, 2017, Plaintiffs opposed the Original Motion and filed Plaintiffs' Answering Brief in Opposition to Defendant GEICO General Insurance Company's Motion to Dismiss Plaintiffs' Complaint (the "Original Opposition"). GEICO filed Defendant GEICO General Insurance Company's Reply Brief in Support of its Motion to Dismiss Plaintiffs' Class Action Complaint (the " Original Reply") on May 4, 2017.[24] The Court held oral argument for the Motion on June 16, 2017 and took the matter under advisement.[25] On July 12, 2017, the Court granted a stipulation to allow Plaintiffs to file the Amended Complaint and rendered the pending motions moot.[26]

         D. Parties' Contentions

         On August 1, 2017, Geico filed a Motion to Dismiss Plaintiffs' First Amended Class Action Complaint (the "Motion"). On September 1, 2017, Plaintiffs filed their Opposition to Defendant Geico General Insurance Company's Motion to Dismiss Plaintiffs' Amended Complaint (the "Opposition"). On September 18, 2017, Geico filed its Reply Brief in Support of its Motion to Dismiss Plaintiffs' First Amended Class Action Complaint (the "Reply").

         1. Geico's Contentions

         Geico argues that Plaintiffs cannot successively make a class certification because: (1) Plaintiffs have failed to allege any facts in support of the requirements of Rule 23 of the Superior Court Civil Rules ("Civil Rule "); (2) Plaintiffs cannot maintain a class action under Civil Rules 23(b)(1)(A) or (b)(2) because the relief they seek is primarily monetary; (3) Plaintiffs cannot satisfy the requirements of Civil Rule 23(b)(3) as a matter of law;[27] and (4) Plaintiffs' class definitions proposed in paragraphs 64 and 80 of the Amended Complaint are facially deficient. Regarding class certification, Geico relies upon a federal class action case filed in the Delaware District Court and urges the Court to follow the federal case under the comity doctrine. Additionally, Geico claims that the allegations by WPRC and RA do not relate back to the Original Chancery Complaint.[28]

         Geico also argues that Plaintiffs claims must fail on their merits. First, Geico contends that declaratory relief is not appropriate because the Delaware Insurance Code empowers the Insurance Commissioner to regulate insurers and enforce violations of the Delaware PIP statute, and that role cannot be subsumed by the Delaware Judiciary.[29] Second, Geico claims that Count IV for violations of the Deceptive Trade Practice Act fail to state a claim as a matter of law.[30]Third, Geico argues that the claims for breach of contract and bad faith breach of contract fail to state claims upon which relief can be granted.[31] Finally, Geico contends that Plaintiffs claim for punitive damages failed to state a claim upon which relief can be granted.[32]

         2. Plaintiffs' Responsive Contentions

         In the response, Plaintiffs claims that: (1) Geico bears the burden to show that the unilateral rules are reasonable and necessary; (2) comity and stare decisis have no application in this case; (3) common questions predominate the breach of contract and bad faith claims; (4) a Declaratory Judgment action is appropriate; (5) this class action is the superior method based on the amount of recovery for each plaintiff and the action is manageable at this stage of litigation; (6) Plaintiffs' class definitions are sufficient; (7) the Amended Complaint related back to the Original Chancery Complaint; (8) Plaintiffs' challenge to Geico's Rules is not preempted by the Insurance Code or the Insurance Commissioner's powers; and (9) Plaintiffs pleaded sufficient evidence of deceptive trade practices to keep punitive damages at this stage of litigation.

         E. The Hearing and Subsequent Communications

         On December 1, 2017, the Court held a hearing (the "Hearing") regarding the Motion, Opposition, and Reply. At the Hearing, the Court reserved its decision pending a submission of the Insurance Commission's examination of Geico's claim processing. On January 2, 2018, Geico provided the Court the Delaware Department of Insurance's Report of Geico's claim processing (the "Insurance Examination").[33]

         The Insurance Examination is dated February 29, 2016. The Insurance Examination focused on Geico's complaint handling, underwriting and rating, and claims. The examiners also conducted an examination of Geico's PIP review of personal auto PIP claims. The Insurance Examination reviewed PIP claims from July 1, 2015 through April 30, 2017. The Insurance Examination makes no mention of the Rules.

         On January 16, 2018, Plaintiffs filed an letter in response to Geico's submission of the Insurance Examination.[34] Plaintiffs objected to the use or inclusion of the Insurance Examination in the Court's decision of the Motion. Essentially, Plaintiffs argue that the Insurance Examination: (1) lacks any probative value; (2) is an unsworn hearsay statement; and (3) is a document outside the Complaint.

         Geico filed an objection to Plaintiffs' January 16 letter on the same day.[35] Geico argues that it did not submit the Insurance Examination as an expert report or to show that the Department of Insurance approves the Rules. Rather, Geico submitted the Insurance Report to show how the Department of Insurance recently exercised its broad powers to conduct investigations into Geico's claim processing and that the Insurance Commissioner holds the power to conduct these investigations consistent with Clark v. State Farm Mut. Ins. Co.[36]

         On January 26, 2018, Trinidad Navarro, Delaware's Insurance Commissioner, sent a letter to the Court (the "Commissioner's Letter").[37] Commissioner Navarro indicates that he is aware of this civil action and that it involves certain computer rules which automatically deny some PIP claims. Commissioner Navarro also notes that he knows that Geico submitted the Insurance Examination to the Court which examined Geico's claim processing for PIP claims. In the Commissioner's Letter, Commissioner Navarro states that the Insurance Examination does not reference or analyze Geico's use of the computer rules. In fact, Commissioner Navarro "further confirmed with the examiners that the Exam in no way addressed, and the examiners did not review or analyze, the Computer Rules at issue in this matter."[38] Commissioner Navarro provides that "I found the allegations and information set out in the pleadings concerning and as a result, I may consider further examination of GEICO for these particular claims handling issues and the Computer Rules specifically."[39]

         On January 30, 2018, Geico filed a letter in response to the Commissioner's Letter.[40] On January 31, 2018, Plaintiffs objected to Geico's letter.[41]

         Given the flurry of additional submissions subsequent to the Hearing, the Court considers January 31, 2018 as the date this matter was fully submitted for decision.


         Upon a motion to dismiss under Civil Rule 12(b)(6), the Court (i) accepts all well-pleaded factual allegations as true, (ii) accepts even vague allegations as well-pleaded if they give the opposing party notice of the claim, (iii) draws all reasonable inferences in favor of the non-moving party, and (iv) only dismisses a case where the plaintiff would not be entitled to recover under any reasonably conceivable set of circumstances.[42] However, the Court must "ignore conclusory allegations that lack specific supporting factual allegations."[43]


         Under Personal Injury Protection claims ("PIP"), insurers are required to pay for reasonable medical expenses.[44] The plaintiff bears the burden of proving that the medical expenses incurred are reasonable and necessary.[45]

         A. Comity and Stare Decisis

         The Court may follow the doctrine of comity when two courts have "concurrent jurisdiction over the same matter."[46] The doctrine is not a legal rule but "an expression of one state's entirely voluntary decision to defer to the policy of another, especially in the face of a strong assertion of interest by the other jurisdiction."[47] The Delaware Supreme Court recognizes and has applied the doctrine of comity.[48] The Supreme Court has stated that "[c]omity permits one state to give effect to the laws of a sister state, not out of obligation, but out of respect and deference."[49] The Court should apply the doctrine of comity to avoid conflicting rulings.[50]

         A case similar to the instant action was filed in the Delaware District Court. In Johnson v. Geico Casualty Co., the plaintiffs filed suit against Geico for their use of the same two rules.[51]Initially, the Delaware District Court certified the class. Later in the litigation, the Delaware District Court reviewed the class and found that the plaintiffs could not maintain the class based on a damage model which required significant individual inquiries. The Delaware District Court decertified the class because "even assuming that Geico's policies resulted in the classes' claims being systematically denied and reduced, . . . individualized inquiries would be required to determine whether each class member's individual claim was actually medically necessary and their expenses reasonable."[52] Although there were common issues of law and fact as to the defendant's liability, the individual determinations regarding damages would predominate over those common questions.[53]

         Unlike Johnson, Plaintiffs have not yet moved to certify the class. This civil action is just in the initial pleading stages of litigation. Although Johnson is persuasive in this case, Plaintiffs have not presented any damage model or moved to certify the class. At this stage in the litigation, the Court-applying Civil Rule 12(b) standards-cannot find that Plaintiffs would be unable to certify or maintain the classes in the light most favorable to the Plaintiffs. See Sections IV.B and IV.C below.

         B. Class Action Prerequisites

         Civil Rule 23 governs class actions in this Court. Class actions can only be initiated if:

One or more members of a class may sue or be sued as representative parties on behalf of all only if (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.[54]

         Civil Rule 23(a) is patterned after Federal Rule of Civil Procedure 23(a).

         In Johnson, the Delaware District Court certified a class of insureds challenging the Rules.[55] When the Delaware District Court certified the class, the determination of damages was unclear and "would depend in part on individual class members' circumstances."[56] But, the Delaware District Court revisited the issue in a later decision and found that the trial plan required evidence of damages for each class member.[57] Although there may be common questions of law and fact as to the liability, the inquiry into damages for each class member would predominate the common questions.[58]

         This Court recently issued a decision regarding a similar issue. In Wilmington Pain & Rehab. Ctr., P.A. v. USAA Gen. Indem. Ins. Co., the plaintiffs, challenging two computer rules, sought class certification.[59] The first rule used the medical providers code and geozip code to determine the reasonableness of the fee.[60] Then, USAA used the 80th percentile rule.[61] This Court ruled that although there is a common question because all claims were subject to the two rules, commonality under Rule 23(a) requires more than the use of the same rule.[62] As in Johnson, the Wilmington Pain & Rehab. Ctr. Court only denied the motion to certify (and/or decertified) after the parties had engaged in discovery and the facts-after discovery- demonstrated that the plaintiffs could not satisfy the requirements of Civil Rule 23(a) and (b).[63]

         The Court finds that it is premature to dismiss this civil action before Plaintiffs have an opportunity to engage in discovery and retain experts. The courts in Johnson and Wilmington Pain & Rehab. Ctr. did not dismiss those cases at the initial stages of the litigation. The analysis on Civil Rule 23 may depend on Plaintiffs' damages model. It is not clear how Plaintiffs plan to seek damages. If they seek to get individual damages for each class member for the difference between the insured's claim and the amount paid by Geico on that claim, then Plaintiffs' individual issues may override the common questions. However, at this point in the litigation, Plaintiffs claim survives and the issue of class certification is premature.

         C. Maintaining Class Action

         Once a class action is initiated, it may only continue if the prerequisites of paragraph (a) are met and at least one of the requirements in paragraph (b) are met. Paragraph (b) requires:

(1) The prosecution of separate actions by or against individual members of the class would create a risk of:
(A) Inconsistent or varying adjudications with respect to individual members of the class which would establish incompatible standards of conduct for the party opposing the class, or
(B) Adjudications with respect to individual members of the class which would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests; or
(2) 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; or
(3) 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, and that a class action is superior to other available methods for the fair and efficient adjudication of ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.