SECONDDIVISI ON Septem ber 28, 2007

No. 1-06-2949
SH EL DON WERNI KO FF, Ind ividu ally and on B eha lf of a Class of Sim ilarly Situated Individual s,

Plaintiff-Appellant,
v. HEALTH C

ARE S ERVICECORPOR ATION, a M utual Leg al R ese rveCom pan y d/ b/aBlu eCr ossBlu eS hield of Illinois, Defendant-Appellee. ) ) ) ) ) ) ) ) ) ) ) ) Appeal from the Circuit Court of Cook County
No. 00 L 6856
Hon ora ble David R. Donner

sberger, Judge Presiding.

JUSTICE KARNE ZIS delivered the opinion of the court: Pla intif f, S held on Wern ikof

f, in divid ually

and on b eha lf of

a c lassof s im ilarly situated individuals, appeals from an order of the c ircuit court granting the motions of defendant, Health Care S ervice Corporation d/b/a BlueCross B lueShield of Illi nois, to decertify the class and for sum mary judgm ent. On appeal, plaintiff contends that the circuit court's order decertifying the class and granting sum mary judgm ent was erroneous. For the following reasons, w e reverse the circuit court's decertification1-06-2949

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order and affi rm the circuit court' s order granti ng summ ary judgment as to class representative W ernikoff. The record con tains the fol lowing perti nent infor mation. Defendant uti lizes a "generational rating structure" in determining its policyholders' premium rates. When an applicant applies for a policy, defendant's underwriters consider the application and determ ine w het her

theapp lican t qu alifie s fo r a p olicy . When a n ap plica nt in itiall y quali fies for a pol icy, the appl icant and al l depende nts are charged the "new business" premiumrate. That rate is guaranteed for one year. After the one-year period, a policyholder may renew the policy at a "Generation 1" prem ium rate, which is higher than the new

business rate. After the second year, a policyholder may renew at a "Generation 2" rate, which is higher than the G eneration 1 rate. After the t hird year, a policyholder may renew at a "Generation 3" rate, w hich is higher than the Generation 2 rat e. Rath er t han ren ew ing, an exi stin g po licy hold er m ay a gain qua lify for theiniti al, lower new

business rate if the policyholder subm its a new application for coverage and the application is approved by defendant's underw riters. Som e policyholders may be offered the new

business rate conditioned upon acceptance of a coverage ex clusion rider, w hich would exclude coverage fo r a particu lar m edical cond ition. Policy holders can learn of prem ium increases in w ritten materials such as rate change notices. The written notice s provide a te lephone number to contact a customer service represen tative if p olicyholders have qu estions a bout th eir prem iums . If po licyholders call th e reference nu mber and ask how to lower their premiums, a customer service1-06-2949

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rep res entative m ight

disc usstheopt ion of ap plyin g asa new app lican t an d, if approved, receiving the new business rate. Policyholders m ay also learn about the new business rate through insurance brokers fromwhom they purchased their policy. Plaintiff filed hi s initial complaint in 2000 and a first amended com plaint in 2001. The amen ded com plaint all eged claims for v iolation of the Illi nois Consum er Fraud and Deceptive Business P ractices Act (815 ILC S 505/1 et s eq. (W est 2000)) (count I) and
com mon law fraud (count II ). Plaintiff alleged generall y that defendant utilized a fraudulent schem e of increasing policyholders' premium s each year and as a result of the schem e, thousands of policyholders paid higher prem iums than they needed to pay. According to the com plaint, defendant failed to disclose to policyholders the option of reapplying as a new policyholder and, if approved, paying the new business rate premium. Specificall y, plai ntiff al leged that defendant's "st andard written materia ls" omi tt ed th e f ac t t ha t d ef en da nt wou l d a ut oma ti ca l l y i nc re as e p ol i cy ho l de rs ' p re mi ums each year. Plaintiff also alleged that defendant's w ritten materials m isrepresented and falsely stated that the prem iums w ere increased because defendant ha d conducted a "review of the rates " or a "review of our p olicy premium s and claim utilization." This case was ini tial ly certi fied as a cl ass action i n 2003 by Judge Leste r D. Foreman. The court certi fied the fol lowing cla ss:

"All persons who purch ased individual health i nsurance policies from [t he defendant] and thereafter re newed those poli cies, on one or more occasions,
w itho ut r eap plyin g fo r th e new

bus ines s ra te e ven tho ugh theopt ion to ap ply1-06-2949

1 It appears from other fil ings in the record that th e motions were filed on March 7, 2006, although the date sta mps on the m otions are illegi ble.

4 would have been available." Subse quently, in 2004, t he casewas reassign ed to J udge De borah M ary Doo ling, w ho m odif

ied t he c lassdef

initio n toincl udeonly

tho se in divid ualsw ho w ould have qualified for the new business rate had they applied. In Ma rch 2006 , after

the ca se was reas signed toJudge D avid R. D onnersb erger, defendant sim ultaneously filed a motion to decertify the c lass and a m otion for
sum mary

judgm ent pursuant to sect ion 2-1005 of the Code of Civil Procedure (735 ILCS 5/2-100 5 (West 2000)). 1 On Jun e 23, 20 06, thecourt g ranted d efendan t's mot ions. On appeal, plain tiff contend s that the circu it court' s order decerti fying the cl ass and gran ting sum m ary j udgm ent w as erron eous. W e first ad dress p laintiff's contentions regarding the court's decertification order. An action may be maintained as a cl ass action i n Illi nois onl y if the court fi nds: "(1 ) Th e cla ss is s o nu m ero us t hat j oind er o f all m em ber

s is impracticable. (2) There are questio ns of fact or law comm on to the class, which
com m on q ues tion s pr

edo m inate over a ny q ues tion s af fec ting only individual me mbers

.1-06-2949

5 (3) The representative parties will fairly and adequately protect the interest of the class. (4) The class action is an appropriate m ethod for the fair and efficient adjudication of the controversy." 735 ILCS5/2-801 (West 2002). A class m ay be certified "[a]s soon as prac ticable after the com mencement of an action"; however, the court's order certifying the class "m ay be conditional and may be
am ended be fore a de cision on t he m erits." 7 35 ILCS5/2-802 (West 2002). "Where indi vidual [issues] * * * predominate over comm on question s of law and fact, a class action will not be certified." Key v. Jewel Cos. , 176 Ill. App. 3d 91, 98 (1988). In Barliant , our suprem e court determ ined that an order setting aside an earlier determ ination of class certification would be proper if clearly changed circums tances or
more complete discovery warranted it, rather th an m ere feelings of error regarding the original certifi cation order. Barliant v. Follett Corp. , 74 Ill. 2d 226, 231 (1978). Class decertification will not be disturbed absent an abuse of discretion. Key , 17 6 Ill. App. 3d at 95. Plaintiff argues that the decertification order was e rroneous because it failed to find there were "change d circums tances" or m ore com plete discovery warranting decertification. Plaintiff acknowledges that there w as discovery taken afte r Judge Foreman's c lass certification ruling, but argues that it did not reveal any new facts or any changed circum stances. Defendant notes that

prior to class certification, the parties had only taken 41-06-2949

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party depositions, and after certification, the parties had conducted over 24 depositions . Defe ndant c laimsthat as a result of m ore com plete disco very, t here w ere many "changed circum stances." S pecifically, defendant points to plaintiff's second deposition, which occurred after t he class was certified, in which plaintiff admitted that he knew about the option to reapply to receive the new business rate but chose not to do so for several years. D efendant also points to the fact that the depositions of m any policyholders revealed that not all poli cyholders relied on the "standard written
m aterials" bu t relied on t he statem ents m ade in oral com m unicationswith defenda nt's custom er service representatives. W e look to Barliant v. Follett Corp. , 74 Ill. 2d 226 (1978) and Key v. Jewel Cos. , 176 Ill. App. 3d 91 (1988), for guidance. In Barliant , the trial judge vacated a prior j udg e'sclas s ac

tion cer tificatio n, b ut w

as r eve rse d on app eal b eca usetherecord did not reflect any changed circum stances that w ould have justified changing the prior ruling. Barliant , 74 Ill. 2d at 231-32. In Key , the t rial judg e also va cated aprior j udge's class action certification, but was af firmed on appeal becaus e the initial certifi cation was bas ed upon pleadings that were later subs tantially amended, w hich constituted changed circum stances w arranting decertification. Key , 176 Ill. App. 3d at 99-100. Here, although m ore discovery occurred after the initial class certification, that discovery did not am ount to changed circum stances w arranting decertification. The "new" fact

s that defendant points to may be "new" per se , but they did not am ount to any significant difference or change. When plai ntiff learned about the option of1-06-2949

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applying for the new business rate or whether p olicyholders reli ed on oral
comm unicati ons from defendant's customer service r epresentati ves would only affect plaintiff or each class mem ber's possible recovery or ability to ultimately establish a
cau se of ac

tion aga inst

def end ant . I t did not

riseto t he le vel of su ch acha ngeas in Key , where thepleadings were am ended after class certification. Therefore, we find that the circuit court abused its discretion in decertifying the class. W e next addres s plaintiff's contentions with respect to the court's order granting defendant's m otion for sum mary judgm ent. Sum mary

judgm ent is proper if the pleadings, depositions, affidavits, admissions, and other mat ters on file demons trate there is no g enuine i ssue of material fact an d the movant is entitl ed to judgment as a mat ter of law. Sm ith v. Arm or Plus Co. , 248 Ill . App. 3d 831, 839 (199 3). The purpo se of sum mary

judgm ent is not to try a quest ion of fact but to determ ine whether one exists. Mitchell v. Jewel Food Stores , 142 Ill. 2d 152, 165 (1990). A t riable issue of fact exists w here the re is a dispu te as to m aterial facts or w here them aterial facts are undisputed but reasonable persons m ight draw different inferences from those facts. In re Estate of H oover , 155 Ill. 2d 402, 411 (1993). The court sh ould construe the evidence strictly against the m ovant and liberally in favor of the opponent. Richter v. Burton Investment Properties, Inc. , 240 Ill. App. 3d 998, 1001 (1993). Appellate review of an order gr anting summary j udgment is de novo

. Outboard Marine Corp. v. Liberty Mutual Insurance Co. , 154 Ill. 2d 90, 102 (1992). Count I of plaintiff's first am ended com plaint all eged defendant violated the1-06-2949

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Illi nois Consumer Fraud and Deceptive Busi ness Practices Act (815 IL CS 505/2 (W est 2000)) (Act). To establish a claim for consum er fraud under the Act , plaintiff must show that defendant com mitted a de ceptive act or practice, that def endant intended for plaintiff to rely on the deception, and that the deception occurred in the course of conduct involving trade or com merce. Johnson v. M atrix Financial Services Corp. , 354 Ill. App. 3d 684, 690 (2004). The A ct is to be liberally construed in order to effectuate its purpose. Johnson , 354 Ill. App. 3d at 690. S ection 2 of the Act defines consum er fraud in pe rtinent p art as: "the use or e mployment of any deception, fraud, fa lse pretense, false prom ise, misrepresentat ion or the concealme nt, suppression or omission of any

ma terial fact, with intent that others rely upon the concealm ent, suppres sion or om ission of s uch m aterial fact ." 815 I LCS 5 05/2 (West 2000). Count II alleged defendant com mitted co mm on law fraud. The elem ents of
com mon-law

fraud are (1) a false statem ent of m aterial fact; (2) defendant's know ledge that the statem ent was false; (3) defendant's intent that the s tatem ent induce plaintiff to act; (4) plaintiff's reliance upon the truth of the statem ent; and (5) plaintiff's damages resulting from reliance on the statem ent. Hart v. Boehmer Chevrolet Sale s, Inc. , 33 7 Ill. App. 3d 742, 751 (2003 ). The first element includes three requirements: (1) t he defendant m ust m ake a m isrepresentation; (2) it must involve a fact; and (3) the misrepresentat ion must be m aterial. Hart , 337 Ill. App. 3d at 751. A ma terial fact exists where a buyer would have acted differently knowing the inform ation, or if it concerned the type of inform ation upon which a buyer w ould be expected to rely in making a1-06-2949

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decision regarding the purchase of the product. Connick v. Suzuk i Motor Co. , 17 4 Ill. 2d 482, 505 (1996). The circ uit cour

t gr anted d efe nda nt' s m otio n fo r su m m ary j udg m ent

on t he b asis that plaintiff

lacked s tanding. The court stated that be cause p laintiff's em ployer, Square Jewelers, a corp oration owned by plainti ff, paid the i nsurance premiums, plaintiff could not maintain a cause of action for consum er fraud or com mon law fraud. The court

also held th at Squ are Jew elers was not a proper plaintiff because S quare Jewelers did not apply for the policy and w as not the policyholder. Plainti ff contends on appea l that the cour t's order cre ated a "Catch-22" in which
no en ti ty ha d st an di ng to br in g t he cl ai m. Re ga rd le ss o f th e p ro pr ie ty of th is fi nd in g, we find that sum mary

judgm ent was proper, albeit on another basis. We note that we m ay affirm the t rial court on any basis in the record. W ilder v. Finnegan , 267 Ill. App. 3d 422, 426 (1994). Plaintiff's argument on ap peal with respect to th e court's sum mary judgm ent order onl y addressed the i ssue of standin g. Although defe ndant argued in its re sponse brief on appeal that sum mary judgm ent was proper for num erous reasons other than plain tiff 's la ck of s tan ding , pla intif f fa iled to sp ecif

icall y ad dre ss the se a rgu m ents in his reply brief. Instead, plaintiff referred this court to his response to defendant's m otion for sum m ary j udgm ent filed in th e circuit court. We note th at "reviewing courts are entitled to have the issues clearly defined, to be cited pertinent authorities and are not a depos itory in w hich an ap pellant is to d um p the en tire m atter of pleadings, court1-06-2949

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actions, argum ent and research as it w ere, upon the court." Boeger v. Boe ger , 14 7 Ill. App. 3 d 629, 6 30 (1986 ). Here, summ ary judgment w as proper becau se plai ntiff cannot establi sh a cause of action for either consum er fraud or com mon law fraud. M ost significantly, plainti ff cannot establish that he relied on defendant's representations. P laintiff acknowledged in his deposition that when he received the rate change notice, he called the telephone numbe r listed and spoke with a cus tom er service representative w ho informed himof the option to reapply and receive the new business rate. Plaintiff further adm itted that he cho se no t to re ap pl y fo r t he ne w bu si ne ss r at e f or sev er al yea rs du e t o h is own personal medical concerns. Both consum er fraud and com mon law fraud require that plaintiff rely on defendant's representations. Plaintiff cannot establish a cause of action under either theory. Therefore, we find that sum mary judgm ent in favor of defendant was proper. Upon remand, we direct the cir cuit court to a ppoint a ne w class representative. Accordingly, we reverse the circuit court's order decertifying the class, affirmthe court's orde r granti ng defendant' s motion for summ ary judgment and remand the cause to the circuit court for further proceedings cons istent with this opinion. Reversed in part, and affirm ed in part; cause rem anded. SOUTH and HA LL, JJ., concur.