1 HON. JAMES L. ROBART
7 8 UNITED STATES DISTRICT COURT 9 WESTERN DISTRICT OF WASHINGTON AT SEATTLE 10
11 J.R., by and through his parents and guardians, Ju.R. and Ja.R., individually, on NO. 2:18-cv-01191-JLR 12 behalf of similarly situated individuals, AMENDED STIPULATED ORDER: 13 Plaintiff, (1) FINALLY APPROVING 14 v. SETTLEMENT AGREEMENT; BLUE CROSS AND BLUE SHIELD OF (2) APPROVING DISBURSEMENTS 15 ILLINOIS; CATHOLIC HEALTH PURSUANT TO SETTLEMENT 16 INITIATIVES MEDICAL PLAN; and AGREEMENT; CATHOLIC HEALTH INITIATIVES, (3) APPROVING PAYMENT OF 17 Defendants. ATTORNEYS FEES, LITIGATION 18 COSTS AND CASE CONTRIBUTION AWARD; 19 (4) ESTABLISHING A LATE CLAIM DEADLINE DUE TO COVID-19; 20 AND 21 (5) ORDERING FINAL REPORT ON DISBURSEMENT OF QUALIFIED 22 SETTLEMENT FUND 23 NOTED FOR HEARING: 24 April 15, 2020 25 26 1 I. BACKGROUND 2 On November 25, 2019, the Court preliminarily approved a proposed Settlement 3 Agreement between Plaintiff on behalf of the Class and Defendants Catholic Health 4 Initiatives (now known as CommonSpirit Health and referred to herein as “CHI”), the 5 Catholic Health Initiatives Medical Plan (“the Plan”), and Blue Cross and Blue Shield of 6 Illinois (“BCBSIL”), (collectively, “Defendants”). Dkt. No. 60; Dkt. No. 61. In conjunction 7 with that Order, the Court directed CHI and the Plan to transmit the names and 8 addresses of the Class Notice Recipients located after a reasonable search to the Claims 9 Processor within 60 days of the entry of the Order. Dkt. No. 60, ¶4. In an amendment to 10 the initial Order Preliminarily Approving the Settlement Agreement, the Court directed 11 the Claims Processor to mail the Class Notice and partially revised Claim Form Materials 12 (Dkt. No. 54-2; Dkt. 62-1) to the Class Notice Recipients within 20 days of receiving the 13 names and addresses of Class Notice Recipients from Defendants. Dkt. 60, ¶5; Dkt. 63, 14 ¶2. By February 13, 2020, all Class Notices and Claim Form Materials were initially 15 mailed in accordance with the class notice procedures. Dkt. No. 64, ¶¶4-7. Class counsel also established a settlement web page within 30 days of the date of the Order 16 Preliminarily Approving Settlement Agreement, that contained the Class Notice, the 17 Claim Form Materials and key filings in the litigation, including the Motion for 18 Attorneys’ Fees, Litigation Costs and Incentive Awards. Hamburger Decl. ¶3. See 19 http://www.symslaw.com/chisettlement/. 20 The Order also provided that class members who wished to comment on or object 21 to the proposed Agreement were required to do so by April 1, 2020. Class members were 22 informed of their rights and of this deadline in the notices that were mailed to them and 23 via links on Class counsel’s website. 24 The Order further scheduled a final settlement hearing, which was held on April 25 15, 2020, to consider objections and comments by class members and to determine 26 1 whether the proposed Agreement is fair, reasonable, adequate and should be approved 2 by the Court. 3 II. FINDINGS 4 1. The parties have reached a Settlement Agreement providing prospective 5 coverage of medically necessary Applied Behavior Analysis (ABA) therapies to treat 6 Autism and a claims process for reimbursement of previously uncovered ABA therapies, 7 the exact terms of which are set out in the Agreement. 8 2. This Agreement also establishes a settlement fund of $800,000. Under the 9 terms of the Agreement, this fund will be used to pay retrospective claims for 10 unreimbursed ABA therapy services during the class period, attorneys’ fees and costs, 11 case contribution awards, costs of claims administration, and taxes. If funds remain after 12 these payments, then the residual funds will be returned to CHI. 13 3. The Agreement provides that an independent claims administrator will 14 receive and process claims, and it provides for an appeal process in the event of a dispute 15 over whether a claim should be paid. 16 4. The Court’s Order and a subsequent Stipulated Order Modifying 17 Settlement Approval Process and Class Notice Package required the Claim Processor to 18 mail court-approved notices, claim forms, and a “Certification of Payment(s)” to class 19 members by direct mail. The notices informed class members that they had an 20 opportunity to object or submit comments to the Court regarding the proposed 21 Agreement and that they must do so in writing by April 1, 2020. 22 5. Consistent with the Order, Defendants provided notices and materials 23 required under the Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1715(b). 24 6. Class notices were mailed initially to 21,423 participants and beneficiaries 25 in the CHI Medical Plan. The Claims Processor reports that it checked the addresses 26 against the National Change of Address database before mailing and that it would 1 conduct additional searches for addresses for notices that were returned. See generally 2 Dkt. No. 64. 3 7. No class members objected to the Settlement Agreement. No class 4 members submitted comments. A total of 5 claims were received by the Claims 5 Processor by April 1, 2020. The total value of these claims, before they are adjudicated 6 by the Claims Processor, together with the claim of the named plaintiff is approximately 7 $82,242.75. 8 III. CONCLUSIONS 9 8. Rule 23(e) provides that “a class action shall not be dismissed or 10 compromised without the approval of the court….” Compromise and arbitration of 11 complex litigation is encourage and favored by public policy. See Simula, Inc. v. Autoliv, 12 Inc., 175 F.3d 716, 719 (9th Cir. 1999). 13 9. A presumption of fairness and adequacy attaches to a class action 14 settlement reached in arm’s-length negotiations by experienced class counsel after 15 meaningful discovery. See, e.g., Officers for Justice v. Civil Service Com., 688 F.2d 615, 625 16 (9th Cir. 1982); Pickett v. Holland Am. Line-Westours, Inc., 145 Wn.2d 178, 209, 35 P.3d 351 17 (2001). 18 10. The following factors are generally considered when determining whether 19 a settlement is fair, adequate and reasonable: the likelihood of success by plaintiff; the 20 amount of discovery or evidence; the settlement terms and conditions; recommendation 21 and experience of counsel; future expense and likely duration of litigation; 22 recommendation of neutral parties, if any; number of objectors and nature of objections; 23 and the presence of good faith and absence of collusion. Officers for Justice, 688 F.2d at 24 625. 25 26 1 11. Based upon these factors, the Court finds that the Agreement is fair, 2 reasonable, and in the best interests of the class. The requirement of Fed. R. Civ. P.23 3 and due process have been satisfied. 4 12. Specifically, the Court concludes that the Agreement was the result of 5 arm’s-length bargaining. It was reached after sufficient discovery and other litigation 6 activity. Although the class had a strong likelihood of success, the key legal issues in the 7 case had not been adjudicated, such that there was risk in proceeding with the litigation. 8 A settlement in which class members will be able to continue to obtain coverage of 9 medically necessary ABA therapies in the future, and full reimbursement for their ABA 10 therapies, achieves the goals of the litigation. There is no evidence of collusion between 11 the parties, and the agreement was reached in good faith. 12 13. The class was provided with adequate notice, and due process has been 13 satisfied in connection with the distribution of the notice.
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1 HON. JAMES L. ROBART
7 8 UNITED STATES DISTRICT COURT 9 WESTERN DISTRICT OF WASHINGTON AT SEATTLE 10
11 J.R., by and through his parents and guardians, Ju.R. and Ja.R., individually, on NO. 2:18-cv-01191-JLR 12 behalf of similarly situated individuals, AMENDED STIPULATED ORDER: 13 Plaintiff, (1) FINALLY APPROVING 14 v. SETTLEMENT AGREEMENT; BLUE CROSS AND BLUE SHIELD OF (2) APPROVING DISBURSEMENTS 15 ILLINOIS; CATHOLIC HEALTH PURSUANT TO SETTLEMENT 16 INITIATIVES MEDICAL PLAN; and AGREEMENT; CATHOLIC HEALTH INITIATIVES, (3) APPROVING PAYMENT OF 17 Defendants. ATTORNEYS FEES, LITIGATION 18 COSTS AND CASE CONTRIBUTION AWARD; 19 (4) ESTABLISHING A LATE CLAIM DEADLINE DUE TO COVID-19; 20 AND 21 (5) ORDERING FINAL REPORT ON DISBURSEMENT OF QUALIFIED 22 SETTLEMENT FUND 23 NOTED FOR HEARING: 24 April 15, 2020 25 26 1 I. BACKGROUND 2 On November 25, 2019, the Court preliminarily approved a proposed Settlement 3 Agreement between Plaintiff on behalf of the Class and Defendants Catholic Health 4 Initiatives (now known as CommonSpirit Health and referred to herein as “CHI”), the 5 Catholic Health Initiatives Medical Plan (“the Plan”), and Blue Cross and Blue Shield of 6 Illinois (“BCBSIL”), (collectively, “Defendants”). Dkt. No. 60; Dkt. No. 61. In conjunction 7 with that Order, the Court directed CHI and the Plan to transmit the names and 8 addresses of the Class Notice Recipients located after a reasonable search to the Claims 9 Processor within 60 days of the entry of the Order. Dkt. No. 60, ¶4. In an amendment to 10 the initial Order Preliminarily Approving the Settlement Agreement, the Court directed 11 the Claims Processor to mail the Class Notice and partially revised Claim Form Materials 12 (Dkt. No. 54-2; Dkt. 62-1) to the Class Notice Recipients within 20 days of receiving the 13 names and addresses of Class Notice Recipients from Defendants. Dkt. 60, ¶5; Dkt. 63, 14 ¶2. By February 13, 2020, all Class Notices and Claim Form Materials were initially 15 mailed in accordance with the class notice procedures. Dkt. No. 64, ¶¶4-7. Class counsel also established a settlement web page within 30 days of the date of the Order 16 Preliminarily Approving Settlement Agreement, that contained the Class Notice, the 17 Claim Form Materials and key filings in the litigation, including the Motion for 18 Attorneys’ Fees, Litigation Costs and Incentive Awards. Hamburger Decl. ¶3. See 19 http://www.symslaw.com/chisettlement/. 20 The Order also provided that class members who wished to comment on or object 21 to the proposed Agreement were required to do so by April 1, 2020. Class members were 22 informed of their rights and of this deadline in the notices that were mailed to them and 23 via links on Class counsel’s website. 24 The Order further scheduled a final settlement hearing, which was held on April 25 15, 2020, to consider objections and comments by class members and to determine 26 1 whether the proposed Agreement is fair, reasonable, adequate and should be approved 2 by the Court. 3 II. FINDINGS 4 1. The parties have reached a Settlement Agreement providing prospective 5 coverage of medically necessary Applied Behavior Analysis (ABA) therapies to treat 6 Autism and a claims process for reimbursement of previously uncovered ABA therapies, 7 the exact terms of which are set out in the Agreement. 8 2. This Agreement also establishes a settlement fund of $800,000. Under the 9 terms of the Agreement, this fund will be used to pay retrospective claims for 10 unreimbursed ABA therapy services during the class period, attorneys’ fees and costs, 11 case contribution awards, costs of claims administration, and taxes. If funds remain after 12 these payments, then the residual funds will be returned to CHI. 13 3. The Agreement provides that an independent claims administrator will 14 receive and process claims, and it provides for an appeal process in the event of a dispute 15 over whether a claim should be paid. 16 4. The Court’s Order and a subsequent Stipulated Order Modifying 17 Settlement Approval Process and Class Notice Package required the Claim Processor to 18 mail court-approved notices, claim forms, and a “Certification of Payment(s)” to class 19 members by direct mail. The notices informed class members that they had an 20 opportunity to object or submit comments to the Court regarding the proposed 21 Agreement and that they must do so in writing by April 1, 2020. 22 5. Consistent with the Order, Defendants provided notices and materials 23 required under the Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1715(b). 24 6. Class notices were mailed initially to 21,423 participants and beneficiaries 25 in the CHI Medical Plan. The Claims Processor reports that it checked the addresses 26 against the National Change of Address database before mailing and that it would 1 conduct additional searches for addresses for notices that were returned. See generally 2 Dkt. No. 64. 3 7. No class members objected to the Settlement Agreement. No class 4 members submitted comments. A total of 5 claims were received by the Claims 5 Processor by April 1, 2020. The total value of these claims, before they are adjudicated 6 by the Claims Processor, together with the claim of the named plaintiff is approximately 7 $82,242.75. 8 III. CONCLUSIONS 9 8. Rule 23(e) provides that “a class action shall not be dismissed or 10 compromised without the approval of the court….” Compromise and arbitration of 11 complex litigation is encourage and favored by public policy. See Simula, Inc. v. Autoliv, 12 Inc., 175 F.3d 716, 719 (9th Cir. 1999). 13 9. A presumption of fairness and adequacy attaches to a class action 14 settlement reached in arm’s-length negotiations by experienced class counsel after 15 meaningful discovery. See, e.g., Officers for Justice v. Civil Service Com., 688 F.2d 615, 625 16 (9th Cir. 1982); Pickett v. Holland Am. Line-Westours, Inc., 145 Wn.2d 178, 209, 35 P.3d 351 17 (2001). 18 10. The following factors are generally considered when determining whether 19 a settlement is fair, adequate and reasonable: the likelihood of success by plaintiff; the 20 amount of discovery or evidence; the settlement terms and conditions; recommendation 21 and experience of counsel; future expense and likely duration of litigation; 22 recommendation of neutral parties, if any; number of objectors and nature of objections; 23 and the presence of good faith and absence of collusion. Officers for Justice, 688 F.2d at 24 625. 25 26 1 11. Based upon these factors, the Court finds that the Agreement is fair, 2 reasonable, and in the best interests of the class. The requirement of Fed. R. Civ. P.23 3 and due process have been satisfied. 4 12. Specifically, the Court concludes that the Agreement was the result of 5 arm’s-length bargaining. It was reached after sufficient discovery and other litigation 6 activity. Although the class had a strong likelihood of success, the key legal issues in the 7 case had not been adjudicated, such that there was risk in proceeding with the litigation. 8 A settlement in which class members will be able to continue to obtain coverage of 9 medically necessary ABA therapies in the future, and full reimbursement for their ABA 10 therapies, achieves the goals of the litigation. There is no evidence of collusion between 11 the parties, and the agreement was reached in good faith. 12 13. The class was provided with adequate notice, and due process has been 13 satisfied in connection with the distribution of the notice. As noted above, there were 14 no objections to the proposed Agreement, and no opt-outs. 15 IV. CLASS NOTICE AND ADMINISTRATIVE COSTS 16 14. Upon the occurrence of the conditions set forth in section 2 of the 17 Settlement Agreement, the Court authorizes the payment of claims administration 18 costs/fees (totaling $63,903.60 as of April 15, 2020) from the Settlement Trust Fund to the 19 Claims Administrator. Additional costs related to claims administration and arbitration 20 costs may be paid out of the Settlement Trust Fund as they become due, as necessary. 21 Class counsel shall document and submit those additional invoices and payments in 22 connection with Class Counsel’s Final Report, described below. 23 V. ATTORNEYS’ FEES AND LITIGATION COSTS 24 15. Class counsel is entitled to attorneys’ fees under the common fund 25 doctrine. As permitted by the Agreement, class counsel has sought an award of 28% of 26 1 the Settlement Amount. That request is granted, and the Court awards $224,000 as 2 attorneys’ fees to class counsel. 3 16. Class counsel is also entitled to payment of litigation costs. As permitted 4 by the Agreement class counsel sought reimbursement of $9,008.14 in litigation costs. 5 That request is granted, and the Court awards $9,008.14 in litigation costs to class 6 counsel. 7 17. No objections were received to class counsel’s fee request or the request for 8 reimbursement of litigation costs. 9 18. Upon the occurrence of the conditions set forth in Section 2 of the 10 Settlement Agreement, class counsel is authorized to distribute attorneys’ fees and 11 litigation costs from the Settlement Trust Fund to class counsel. 12 VI. CASE CONTRIBUTION AWARDS 13 19. Upon the occurrence of the conditions set forth in Section 2 of the 14 Settlement Agreement, J.R., by and through his parents Ja.R. and Ju.R. are awarded a 15 case contribution award in the sum of $10,000 as described in the Settlement Agreement. 16 The Court authorizes the disbursement of these funds from the Settlement Trust Fund. 17 20. No objections were received to the request for case contribution awards. 18 VII. PAYMENTS TO CLASS MEMBERS 19 21. Upon the occurrence of the conditions set forth in Section 2 of the 20 Settlement Agreement, the Court authorizes the payment of approved class member 21 claims. The Court authorizes the disbursement of these funds from the Settlement Trust 22 Fund. Class members must negotiate their checks within 90 days of issuance. Class 23 counsel may extend this deadline on request from a class member and is authorized to 24 issue replacement checks for lost checks without further approval of the Court. 25 22. Upon the occurrence of the conditions set forth in Section 2 of the 26 Settlement Agreement, the Court authorizes the payment of $18,674.00 to the parents of 1 J.R., pursuant to Sections 8.3 and 8.5 of the Agreement, reflecting the documented 2 amount of unreimbursed ABA claims incurred by J.R. The Court authorizes the 3 disbursement of these funds from the Settlement Trust Fund. 4 VIII. ESTABLISHMENT OF LATE CLAIM DEADLINE DUE TO COVID-19 5 23. Class Counsel anticipates that Late Claims (claims arriving at the Claims 6 Administrator after April 1, 2020 and by June 1, 2020) may be submitted to the claims 7 administrator, due the COVID-19 crisis. 8 24. The parties agree that Late Claims should be accepted by the claims 9 administrator through June 1, 2020. 10 25. Class counsel shall post notice about the acceptance of Late Claims on its 11 website, but will note that whether and how the Court will approve the payment of Late 12 Claims is uncertain. 13 26. The parties shall meet and confer regarding the Late Claims received by 14 June 1, 2020, to determine if they can reach agreement regarding a proposal for how Late 15 Claims should be administered. If the parties reach agreement, they should submit a 16 joint proposal regarding Late Claims. If no agreement is reached, each party may submit 17 a proposal to the Court regarding how the Court should address the Late Claims. 18 27. The parties must file their Late Claims Processing proposal(s), either jointly 19 or separately, by no later than May 15, 2020. 20 IX. CLASS COUNSEL’S FINAL REPORT, DISMISSAL AND REVERSION TO 21 CHI. 28. Class Counsel shall submit a final report to the Court regarding claims 22 processing and disbursement of funds from the Qualified Settlement Fund by no later 23 than 30 days after the Claims Processor processes all valid claims, including any Late 24 Claims authorized for payment by the Court. The Report shall detail the payment of 25 court-awarded attorneys’ fees, costs, expenses, case contribution award, costs of 26 1 notice/administration, payment of class member claims, taxes and an agreed-upon or 2 court-approved “holdback amount” necessary to complete the activities of and close the 3 Qualified Settlement Fund. At the same time, Class Counsel shall file a proposed Order 4 of Dismissal. 5 29. All remaining funds, if any, in the Qualified Settlement Fund shall be 6 returned to CHI within 60 days of the entry of the Order of Dismissal, and consistent 7 with the requirements of the Settlement Agreement. Any part of the “holdback amount” 8 remaining after payment of all expenses and other liabilities of the Qualified Settlement 9 Fund, shall be returned to CHI, upon closure of the Qualified Settlement Fund. 10 X. ORDER 11 It is hereby ORDERED that: 12 1. The Settlement Agreement is approved as fair, reasonable and adequate 13 under Fed. R. Civ. P. 23, and its terms shall bind class members, since no class member 14 opted-out. 15 2. Class counsel is awarded attorneys’ fees, litigation costs, and 16 reimbursement of costs of notice and administration, as set forth above. These amounts 17 are authorized to be paid to class counsel from the Settlement Trust Fund. 18 3. Class counsel and/or its designee is also authorized to distribute checks to 19 class members and the named plaintiff in accordance with the Agreement and this 20 Order, as approved by the Claims Processor or on appeal. These amounts are authorized 21 to be paid from the Settlement Trust Fund. 22 4. Case contribution award of $10,000 to Plaintiff J.R. by and through his 23 parents Ja.R. and Ju.R. as set forth in the Agreement is approved, and class counsel is 24 authorized to distribute that sum from the Settlement Trust Fund to the parents of J.R. 25 5. Class counsel is authorized to pay the continuing costs of claims 26 administration and class notice from the Settlement Trust Fund. Class counsel shall 1 document these such payments to the Court in a Final Report submitted at the 2 conclusion of this matter. 3 6. Class counsel is ordered to submit a Final Report in accordance with the 4 Agreement and this Order. 5 7. The Claims Administrator is authorized to accept Late Claims (claims 6 submitted between April 2, 2020 and June 1, 2020) from class members. 7 8. By no later than May 15, 2020, the parties shall jointly or individually 8 submit a proposal or proposals addressing the administration and payment of Late 9 Claims. 10 9. Class counsel is authorized to distribute to CHI any funds remaining after 11 the payment of court-awarded attorneys’ fees, costs, expenses, case contribution award, 12 costs of notice/administration, payment of class member claims, taxes and an agreed- 13 upon or court approved “holdback amount” necessary to complete the activities of and 14 close the Qualified Settlement Fund. When the Qualified Settlement Fund is closed, 15 Class counsel is authorized to distribute any remaining funds to CHI. 16 10. The Court shall retain jurisdiction over this matter until the Qualified 17 Settlement Fund is closed and an Order of Dismissal is entered. 18 11. This is a final appealable Order. See Fed. R. App. P. 4(a). 19 It is so ORDERED, nunc pro tunc to April 15, 2020, this 30th day of April, 2020. 20
21 A 22 23 JAMES L. ROBART United States District Judge 24
25 26 1 Presented by:
2 McKENZIE ROTHWELL BARLOW 3 & COUGHRAN, P.S. 4 /s/ Jeffrey G. Maxwell 5 Jeffrey G. Maxwell (WSBA # 33503) Attorneys for Defendant 6 Catholic Health Initiatives Medical Plan 7 and Catholic Health Initiatives 8 GROOM LAW GROUP, CHTD.
9 /s/ Kara Wheatley per email authorization 10 Lars C. Golumbic (Admitted pro hac vice) Kara Wheatley (Admitted pro hac vice) 11 Paul J. Rinefierd (Admitted pro hac vice) Attorneys for Defendant 12 Catholic Health Initiatives Medical Plan 13 and Catholic Health Initiatives
14 15 16 17 18 19 20 21 22 23 24 25 26 1 CERTIFICATE OF SERVICE 2 I hereby certify that on April 30, 2020, I caused the foregoing to be electronically filed with the Clerk of the Court using the CM/ECF system, which will send notification 3 of such filing to the following: 4 • Lisa M.C. Elizondo 5 lelizondo@kilpatricktownsend.com, irountree@kilpatricktownsend.com, lisa.mc.elizondo@gmail.com 6 • Lars S. Golumbic lgolumbic@groom.com 7 • Daniel S. Gross 8 daniel@sylaw.com, matt@sylaw.com, theresa@sylaw.com, stacy@sylaw.com 9 • Eleanor Hamburger ehamburger@sylaw.com, matt@sylaw.com, theresa@sylaw.com, stacy@sylaw.com 10 • Jeffrey G. Maxwell 11 jeffreym@mrbclaw.com, jodiw@mrbclaw.com 12 • Gwendolyn C. Payton GPayton@kilpatricktownsend.com, irountree@kilpatricktownsend.com 13 • Paul J. Rinefierd 14 prinefierd@groom.com, jcolumbro@groom.com • Richard E. Spoonemore 15 rspoonemore@sylaw.com, matt@sylaw.com, rspoonemore@hotmail.com, 16 theresa@sylaw.com, stacy@sylaw.com • Kara Wheatley 17 kwheatley@groom.com 18 I further certify that I have mailed by United States Postal Service the document 19 to the following non CM/ECF participants: 20 • (No manual recipients) 21 DATED: April 30, 2020, at Seattle, Washington. 22 /s/ Jeffrey G. Maxwell 23 Jeffrey G. Maxwell (WSBA # 33503) 24 25 26