Case No.: 4:17-cv-00618-PJH

HCC LIFE INSURANCE COMPANY AND HCC MEDICAL INSURANCE SERVICES, LLC’S 

NOTICE OF MOTION AND MOTION TO STRIKE CLASS ACTION ALLEGATIONS

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GERARD G. PECHT (Admitted Pro Hac Vice)

gerard.pecht@nortonrosefulbright.com

NORTON ROSE FULBRIGHT US LLP

1301 McKinney, Suite 5100

Houston, Texas 77010-3095

Telephone: (713) 651-5151

Facsimile: (713) 651-5246

M. SCOTT INCERTO (Admitted Pro Hac Vice)

scott.incerto@nortonrosefulbright.com

NORTON ROSE FULBRIGHT US LLP

98 San Jacinto Boulevard, Suite 1100

Austin, Texas 78701-4255

Telephone: (512) 474-5201

Facsimile: (512) 536-4598

JOSHUA D. LICHTMAN (SBN 176143)

joshua.lichtman@nortonrosefulbright.com

MICHELLE L. MELLO (SBN 288081)

michelle.mello@nortonrosefulbright.com

NORTON ROSE FULBRIGHT US LLP

555 South Flower Street, Forty-First Floor

Los Angeles, California 90071

Telephone: (213) 892-9200

Facsimile: (213) 892-9494

Attorneys for Defendants

HCC LIFE INSURANCE COMPANY and HCC 

MEDICAL INSURANCE SERVICES, LLC 

(erroneously sued as TOKIO MARINE HCC –

MEDICAL INSURANCE SERVICES GROUP) 

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA – OAKLAND DIVISION

MOHAMMED AZAD and DANIELLE 

BUCKLEY, on behalf of themselves and all 

others similarly situated,

Plaintiffs,

v.

TOKIO MARINE HCC – MEDICAL

INSURANCE SERVICES GROUP, HEALTH 

INSURANCE INNOVATIONS, INC., HCC

LIFE INSURANCE COMPANY, and 

CONSUMER BENEFITS OF AMERICA,

Defendants.

Case No.: 4:17-cv-00618-PJH

HCC LIFE INSURANCE COMPANY 

AND HCC MEDICAL INSURANCE 

SERVICES, LLC’S NOTICE OF 

MOTION AND MOTION TO STRIKE 

CLASS ACTION ALLEGATIONS

[FED. R. CIV. P. 12(f), 23(c)(1)(A) 

AND/OR 23(d)(1)(D)]

Date: May 24, 2017

Time: 9:00 a.m.

Ctrm : 3

Complaint Filed: February 7, 2017

Case 4:17-cv-00618-PJH Document 49 Filed 04/13/17 Page 1 of 22
TABLE OF CONTENTS

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HCC LIFE INSURANCE COMPANY AND HCC MEDICAL INSURANCE SERVICES, LLC’S 

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NOTICE OF MOTION AND MOTION ........................................................................................ 1

ISSUES TO BE DECIDED ............................................................................................................ 1

MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT ........................................ 2

ARGUMENT AND AUTHORITIES............................................................................................. 4

I. Standard of Decision for Motion to Strike Class Action Allegations..................... 4

II. The Class Allegations Fail As to Plaintiffs’ Misrepresentation Claims 

Because Putative Class Members Were Exposed to Disparate Information 

About the Preexisting Conditions Exclusion .......................................................... 5

A. Plaintiff Azad’s purchase transaction.......................................................... 7

B. Plaintiff Buckley’s purchase transaction..................................................... 8

C. Plaintiffs’ Complaint demonstrates that putative class members 

were not uniformly exposed to any alleged misrepresentations of 

the preexisting conditions exclusion ........................................................... 9

III. Plaintiffs’ Improper Claims-Handling Theory Is Not Amenable to a Class 

Action.................................................................................................................... 13

CONCLUSION............................................................................................................................. 18

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TABLE OF AUTHORITIES

Page(s)

Cases

Am. W. Door & Trim v. Arch Specialty Ins. Co.,

2015 U.S. Dist. LEXIS 34589, 2015 WL 1266787 (C.D. Cal. Mar. 18, 2015)........................17

Basurco v. 21st Century Ins. Co.,

108 Cal. App. 4th 110 (2003)....................................................................................................15

Bates v. Bankers Life & Cas. Co.,

993 F. Supp. 2d 1318 (D. Or. 2014) ...................................................................................16, 17

Berger v. Home Depot USA, Inc.,

741 F. 3d 1061 (9th Cir. 2014)....................................................................................................5

Campion v. Old Republic Home Prot. Co.,

272 F.R.D. 517 (S.D. Cal. 2011).....................................................................................6, 13, 15

Chateau Chamberay Homeowners Ass’n v. Associated Int’l Ins. Co.,

90 Cal. App. 4th 335 (2001)......................................................................................................14

Cohen v. DirecTV,

178 Cal. App. 4th 966 (2010)....................................................................................................13

In re Countrywide Fin. Corp. Mortg. Marketing & Sales Practices Litig.,

277 F.R.D. 568 (S.D. Cal. 2011).................................................................................................6

In re First Am. Home Buyers Prot. Corp. Class Action Litig.,

313 F.R.D. 578 (S.D. Cal. 2016).......................................................................................5, 8, 13

Henry v. Allstate Insurance Co.,

2007 U.S. Dist. LEXIS 57822 (E.D. La., Aug. 8, 2007)...........................................................17

Hernandez v. State Farm Fire & Cas. Co.,

2017 U.S. Dist. LEXIS 34174 (S.D. Cal. Mar. 9, 2017).............................................4, 5, 12, 17

Langan v. United Servs. Auto. Ass’n,

69 F. Supp. 3d 965 (N.D. Cal. 2014) ..........................................................................................4

Mazza v. American Honda Motor Co., Inc.,

666 F. 3d 581 (9th Cir. 2012)......................................................................................................5

Newell v. State Farm Gen. Ins. Co.,

118 Cal. App. 4th 1094 (2004)................................................................................14, 15, 16, 17

Ramirez v. Baxter Credit Union,

2017 U.S. Dist. LEXIS 40810 (N.D. Cal. Mar. 21, 2017)..........................................................4

Case 4:17-cv-00618-PJH Document 49 Filed 04/13/17 Page 3 of 22
TABLE OF AUTHORITIES (continued)

Page(s)

Cases

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Sanders v. Apple, Inc.,

672 F. Supp. 2d 978 (N.D. Cal. 2009) ......................................................................................12

Spires v. Liberty Mutual Fire Ins. Co.,

2006 U.S. Dist. LEXIS 95248 (E.D. La., Nov. 21, 2006).........................................................17

Stearns v. Ticketmaster Corp.,

655 F.3d 1013 (9th Cir. 2011).................................................................................................5, 6

Tietsworth v. Sears,

720 F. Supp. 2d 1123 (N.D. Cal. 2010) ..................................................................................4, 5

Rules and Statutes

Cal. Bus. & Prof. Code § 17200 .........................................................................2, 5, 6, 8, 12, 13, 16

Fed. R. Civ. P. 12(b)(6).....................................................................................................................1

Fed. R. Civ. P. 12(f)......................................................................................................................1, 4

Fed. R. Civ. P. 23(a)..........................................................................................................................5

Fed. R. Civ. P. 23(b) ........................................................................................................................5

Fed. R. Civ. P. 23(c)(1)(A) ..........................................................................................................1, 4

Fed. R. Civ. P. 23(d)(1)(D) ..........................................................................................................1, 4

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NOTICE OF MOTION AND MOTION

PLEASE TAKE NOTICE that on May 24, 2017 at 9:00 a.m., before the Honorable 

Phyllis J. Hamilton, United States District Judge, at the United States District Court, Northern 

District of California, Oakland Courthouse, 1301 Clay St, Oakland, CA 94612, Courtroom 3 – 3rd

Floor, Defendants HCC Life Insurance Company (“HCC”) and HCC Medical Insurance Services, 

LLC (erroneously sued as Tokio Marine HCC – Medical Insurance Services Group) (collectively, 

the “HCC Defendants”) will and hereby do move this Court for an order to strike the class action 

allegations from each Count of the Complaint filed by plaintiffs Mohammed Azad (“Azad”) and 

Danielle Buckley (“Buckley”) (collectively, “Plaintiffs”), as alternative relief in case the Court 

does not grant the HCC Defendants’ concurrently-filed motion to dismiss Plaintiffs’ Complaint in 

its entirety pursuant to Fed. R. Civ. P. 12(b)(6). This motion is made on the ground that 

Plaintiff’s class allegations are deficient and, thus, constitute immaterial matter that should be 

stricken pursuant to Fed. R. Civ. P. 12(f), 23(c)(1)(A) and 23(d)(1)(D).

The motion is based on this Notice of Motion and Motion, the included Memorandum of 

Points and Authorities in Support, the Declarations of Jon Padgett, Dan Garavuso, and Sumera 

Khan filed herewith, the Proposed Order filed herewith, all pleadings and papers filed herein, 

arguments of counsel, and any other matters properly before the Court. 

ISSUES TO BE DECIDED

Should the Court strike Plaintiffs’ class action allegations because the complaint fails to 

allege facts sufficient to establish that commonly triable issues will predominate, in that:

(1) as to Plaintiffs’ theory that the HCC Defendants’ misrepresented and/or 

failed to disclose the preexisting conditions exclusion in their Short Term Medical (“STM”) 

insurance policies, Plaintiffs fail to allege facts showing that class members were uniformly 

exposed to or received the alleged misrepresentations; and

(2) Plaintiffs’ theory that the HCC Defendants unreasonably denied claims for 

policy benefits and engaged in improper claims-handling practices cannot be adjudicated on a 

common, classwide basis, without individualized review of how each class member’s claim was 

handled, and whether any policy benefits due were unreasonably delayed or denied.

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MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT

Plaintiffs seek certification of a putative class of either all California purchasers of ShortTerm Medical (“STM”) insurance policy Certificates issued by HCC or all California insureds 

whose claims for benefits were denied. (Compl. ¶ 82.)1 As detailed in the HCC Defendants’ 

concurrently-filed motion to dismiss, while Plaintiffs assert five Counts on behalf of that putative 

class (for violation of the Unfair Competition Law, Cal. Bus. & Prof. Code § 17200 (“UCL”), 

false advertising, breach of contract, bad faith, and “unjust enrichment”), they allege two theories 

of misconduct:

(1) That the HCC Defendants misrepresented and/or failed to adequately disclose that 

the STM Certificates excluded coverage for preexisting conditions (Compl. ¶¶ 3, 19-22, 39-50, 

53-54, 93-99, 105-113); and 

(2) That the HCC Defendants employed (and misrepresented they did not engage in) 

improper claims-handling practices to unreasonably deny or delay paying claims. (Compl. ¶¶ 3, 

25-28, 33-36, 58-73.) 

Based on the facts alleged or incorporated by reference into Plaintiffs’ Complaint, neither 

of those theories can proceed as a class action because commonly triable issues will not 

predominate as to either theory. 

Plaintiffs’ false advertising/misrepresentation theory relies on one “exemplar ‘brochure’” 

available on the HCC website that, Plaintiffs contend, when “read in conjunction” with the STM 

application, failed to adequately disclose the preexisting conditions exclusion. (Compl. ¶¶ 40-47, 

54, 93-99, 105-113.) However, Plaintiffs allege no facts demonstrating that this brochure was 

uniformly disseminated to or reviewed by all putative class members prior to their purchases. 

(Id.) Indeed, neither named plaintiff alleges they actually saw or relied on that brochure to make 

their purchase decision. Further, the facts alleged about Azad’s and Buckley’s purchases further 

highlight that putative class members were exposed to disparate information about the STM 

 1 STM coverage was issued in California as a group policy through Consumer Benefits of 

America (“CBA”), with insureds receiving individual Certificates that contained detailed terms 

and conditions of coverage and also incorporated the group policy. (See Compl. ¶¶ 18, 57; see 

also Declaration of Jon Padgett (“Padgett Decl.”) ¶¶ 1, 9, 11 and Exs. 13 and 15.) 

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product—including numerous other materials on the website that expressly disclosed the 

preexisting conditions exclusion—such that many, if not all, putative class members could not 

have been misled. (See id.) Thus, commonly-triable issues will not predominate as to Plaintiffs’ 

false advertising/misrepresentation theory.

As to Plaintiffs’ improper claims-handling theory, the predominance requirement cannot 

be satisfied because in order for any given putative class member to prevail on this theory, he or 

she must establish not only that the HCC Defendants engaged in allegedly improper claimshandling practices but also that his or her claim for policy benefits was improperly denied or 

delayed. It is well-established that making this assessment with respect to insurance claimshandling activities cannot be done on a classwide basis, because it requires individualized 

examination of how each claim was investigated and handled. 

In addition, Plaintiffs’ allegations of various improper claims-handling activities (and the 

alleged non-disclosure thereof) demonstrate the disparate, uncommon nature of the alleged 

misconduct and the need for individualized inquiry. For example, the Complaint appears to base 

the improper claims-handling theory at least in part on the allegation that the HCC Defendants 

failed to disclose that claims are routinely denied for pre-existing conditions. (See Compl. ¶ 3, 

54.) But, neither Azad’s nor Buckley’s claims were denied, let alone denied due to the 

preexisting conditions exclusion; rather, their claims were abated pending receipt of requested 

information from their medical service providers. 

Further, Plaintiffs’ claim-handling theory is based on additional asserted misconduct that 

either is not alleged to have occurred as to the named plaintiffs or which it is apparent did not 

occur in common to the entire putative class. For instance, the Complaint asserts, among other 

things, that the HCC Defendants: (i) trained claims representatives to obstruct, delay or deceive 

claimants (id. ¶ 58); (ii) failed to properly or timely investigate claims (id. ¶¶ 69, 120-121, 123);

(iii) requested unnecessary medical records (id. ¶¶ 27, 69), (iv) “forced” claimants to perform 

“claim processing” functions (id. ¶¶ 70, 122), (v) trained claims representatives to lie to claimants 

about escalating appeals of adverse claim decisions (id. ¶ 67), and/or (vi) denied claimants the 

right to request independent medical reviews of the necessity of certain medical treatment (id. ¶ 

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124). Thus, Plaintiffs’ allegations make clear that determining whether any given claimant was 

subjected to improper claims-handling activities will require individualized adjudication and 

cannot be determined on a classwide basis. For the same reason, Plaintiffs’ attempt to dress up 

their claims-handling allegations as misrepresentations—e.g., the allegations that the HCC 

Defendants failed to disclose that they “routinely attempt to deny most claims on the basis of 

preexisting conditions or other grounds” (id. ¶ 54) or that they would not provide “fair claims 

processes” (id. ¶ 93)—does not save their class action allegations. Adjudicating that nondisclosure theory would require the same individualized assessment to determine whether any 

given claim was properly handled as would the direct improper claims-handling theory.

Accordingly, Plaintiffs’ class action allegations should be stricken as to both their 

misrepresentation and improper claims-handling theories. 

ARGUMENT AND AUTHORITIES

I. Standard of Decision for Motion to Strike Class Action Allegations

Federal Rules of Civil Procedure 12(f), 23(c)(1)(A) and 23(d)(1)(D) permit the Court to 

strike class allegations where it is clear from the pleadings that a class cannot be certified and

numerous courts in the Ninth Circuit have done so. E.g., Hernandez v. State Farm Fire & Cas. 

Co., 2017 U.S. Dist. LEXIS 34174, at *7-8 (S.D. Cal. Mar. 9, 2017) (“sometimes the issues are 

plain enough from the pleadings” that a motion to strike is “an appropriate means of testing class 

claims”) (citations omitted); Ramirez v. Baxter Credit Union, 2017 U.S. Dist. LEXIS 40810, at 

*21 (N.D. Cal. Mar. 21, 2017) (class allegations may be stricken “[w]here the complaint 

demonstrates that a class action cannot be maintained on the facts alleged”); Langan v. United 

Servs. Auto. Ass’n, 69 F. Supp. 3d 965 (N.D. Cal. 2014) (class allegations may be stricken where 

the complaint “shows conclusively” that the claims at issue are not subject to certification under 

Rule 23); Tietsworth v. Sears, 720 F. Supp. 2d 1123, 1145-46 (N.D. Cal. 2010) (a court may 

“strike class allegations prior to discovery if the complaint demonstrates that a class action cannot 

be maintained.”)

As with motions to dismiss, in deciding a motion to strike class allegations the Court may 

consider materials incorporated by reference in the Complaint and/or subject to judicial notice 

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along with the plaintiff’s factual allegations. See Tietsworth, 720 F. Supp. 2d at 1146; 

Hernandez, 2017 U.S. Dist. LEXIS 34174, at *7-8 (in assessing the sufficiency of class action 

allegations “[a]t the pleading stage, the Court may consider not only the complaint itself, but also 

documents it refers to, whose authenticity is not questioned, and matters judicially noticed.”)

To bring a class action, a plaintiff must satisfy both Fed. R. Civ. P. 23(a) and 23(b). 

Under Rule 23(a), Plaintiffs must show the factors colloquially referred to as numerosity, 

commonality, typicality and adequacy of representation. Mazza v. American Honda Motor Co., 

Inc., 666 F. 3d 581, 588 (9th Cir. 2012). As Plaintiffs’ claims in this action seek monetary relief 

(Compl. ¶¶ 100-101, 103, 116, 125-127, 138-139), they must also meet the predominance and 

superiority requirements of Rule 23(b)(3). Mazza, 666 F.3d at 588. 

As discussed below, this is a case in which it is appropriate to strike the class action 

allegations at the pleadings stage because it is apparent that common issues will not predominate. 

II. The Class Allegations Fail As to Plaintiffs’ Misrepresentation Claims Because 

Putative Class Members Were Exposed to Disparate Information About the 

Preexisting Conditions Exclusion

The predominance requirement cannot be satisfied as to Plaintiffs’ misrepresentation/false 

advertising claims if the putative class members were not uniformly “exposed to” the alleged 

misrepresentations. See Stearns v. Ticketmaster Corp., 655 F.3d 1013, 1020 (9th Cir. 2011) 

(predominance would not be satisfied if putative class members “were exposed to quite disparate 

information from various representatives”); Berger v. Home Depot USA, Inc., 741 F. 3d 1061, 

1068 (9th Cir. 2014) (“class certification of UCL claims is available only to those class members 

who were actually exposed to the business practices at issue”); In re First Am. Home Buyers Prot. 

Corp. Class Action Litig., 313 F.R.D. 578, 609 (S.D. Cal. 2016) (same). Thus, if “disparate” 

communications occurred with different potential purchasers and, in particular, if at least some 

such communications disclosed the preexisting conditions exclusion, then there is “no cohesion” 

and the putative class cannot be certified because Plaintiffs’ misrepresentation claims are not 

subject to common proof. See, e.g., Stearns, 655 F.3d at 1020; Berger, 741 F. 3d at 1068; In re 

Countrywide Fin. Corp. Mortg. Marketing & Sales Practices Litig., 277 F.R.D. 568, 608 (S.D. 

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Cal. 2011) (plaintiffs “must show ‘uniform conduct likely to mislead the entire class’ to satisfy 

predominance.”) Here, the factual allegations contained or incorporated by reference in the 

Complaint demonstrate that putative class members were not uniformly exposed to common 

misrepresentations or omissions as to the STM Certificates’ preexisting conditions exclusion and, 

to the contrary, that the preexisting conditions exclusion was widely disclosed to putative class 

members.

Plaintiffs acknowledge that the HCC STM product was marketed through multiple 

distribution channels, with some customers (like plaintiff Azad) purchasing through defendant 

Health Insurance Innovations (“HII”) and/or its affiliated sub-producers, such as Insurance Care 

Direct; other customers purchasing through non-HII-affiliated brokers (like plaintiff Buckley, 

who purchased via Healthy Halo Insurance Services, Inc.); and still other customers purchasing 

directly from HCC. (See Compl. ¶¶ 15-17, 19-23, 29, 39; see Declaration of Dan Garavuso 

“Garavuso Decl.”) ¶¶ 1-2; Declaration of Jon Padgett (“Padgett Decl.”) ¶ 11 and Ex. 15 at 40.) 

Plaintiffs nonetheless make broad, vague, conclusory allegations of “common omissions and 

representations” and of the use of “common unscrupulous and dishonest tactics” employed by 

brokers to sell STM Certificates. (Compl. ¶¶ 49-50, 53-54.) But, Plaintiffs allege no specific 

facts to support these conclusory assertions or account for the differing information available to 

purchasers via the different distribution channels.

Even the limited information Plaintiffs allege or incorporate by reference about the Azad 

and Buckley purchases demonstrates that putative class members were not uniformly “exposed 

to” any misrepresentations or omissions, let alone the same alleged misrepresentations or 

omissions and, therefore, the class claims fail. See, e.g., Campion v. Old Republic Home Prot. 

Co., 272 F.R.D. 517, 536 (S.D. Cal. 2011) (“an inference of common reliance is permitted in 

claims arising under the UCL [only] when a specific material misrepresentation of a particular 

fact was made to each class member and the claims of all the class members stem from this 

source. [But,] [w]here a class of consumers may have seen all, some or none of the 

advertisements that form the basis of a plaintiff’s suit, an inference of common reliance or 

liability is not permitted.” ) 

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A. Plaintiff Azad’s purchase transaction

While Plaintiffs do not identify any specific alleged misrepresentation made to or relied 

on by Azad, the circumstances of his purchase reflect that the preexisting conditions exclusion 

was repeatedly disclosed to him and also readily ascertainable from the HCC website. (Compl. 

¶¶ 19-22, 40-47, 53-54.) First, Plaintiffs assert that in or about December 2015 Azad conducted 

an “online search for health insurance” that resulted in him being “directed to the website for a 

broker, Insurance Care Direct (http://www.insurancecaredirect.com).” (Compl. ¶ 19.) A 

screenshot of that website’s page describing short term health insurance, as it existed in 

December 2015, reflects that Azad was expressly advised that, under such policies, “pre-existing 

conditions are not covered.” (Declaration of Sumera Khan (“Khan Decl.”), ¶¶ 2-3 and Ex. 1.) 

Second, Azad alleges that after visiting the Insurance Care Direct website he was referred 

to a broker and that his “application process [for the STM policy] was entirely verbal, with all 

representations regarding the policy being made to Azad over the phone.” (Compl. ¶ 20.) 

Notably, Azad does not identify any representation made to him during that phone call that 

preexisting conditions would be covered by HCC. To the contrary, the recording of the phone 

call made under the direction of the independent selling agency verifies that Azad was explicitly 

advised of and assented to the preexisting conditions exclusion. (Garavuso Decl. ¶ 2 and Ex. A; 

Khan Decl., ¶ 4 and Ex. 2, pp. 2-4.)

Third, given that Azad alleges his application process “was entirely verbal,” the 

allegations central to Plaintiff’s misrepresentation theory—that a single “exemplar brochure” for 

the STM product contained on the HCC website was allegedly deceptive “when read in 

conjunction with” or “read together with” the STM “Application Form” (Compl. ¶¶ 40-47, 49)—

simply do not apply to Azad. In short, because Azad does not allege that he even visited the HCC 

website, let alone carried out the extensive steps that would have been necessary to download the 

brochure (Padgett Decl. ¶¶ 8 and Exs. 9-10), and does not allege that he read either the brochure 

or the application, he cannot claim to have been “exposed” to any alleged misrepresentations

therein. Thus, the putative class allegations are defective because neither Azad, nor any other 

putative class member who also did not obtain that brochure, would have a viable UCL or FAL 

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claim based on the brochure, even assuming that the brochure was somehow misleading (which it 

was not). See In re First Am. Home Buyers Prot. Corp. Class Action Litig., 313 F.R.D. 578, 609 

(S.D. Cal. 2016) (certification of UCL and FAL “claims is available only to those class members 

who were actually exposed to the business practices at issue” because “one who was not exposed 

to the alleged misrepresentation and therefore could not possibly have lost money or property as a 

result of the unfair competition is not entitled to restitution.”)

Moreover, Azad alleges that, upon completing and submitting his application, on 

December 8, 2015, he received an email confirming that coverage had been issued, advising him 

he had 10 days to cancel, and providing instructions on how to create an online account. (Compl. 

¶¶ 22-23 and n. 6.) Indeed, that email, along with instructing him how to access the “plan 

documents” online, advised Azad that “[t]o learn more about how your plan works, click here,” 

with a hyperlink to a one and a half minute video HCC had uploaded to You Tube that, among 

other things, explained the preexisting conditions exclusion. (See id. ¶ 23; Garavuso Decl. ¶¶ 3-4 

and Ex. B; see Padgett Decl. ¶ 10 and Ex. 14.) Thus, even assuming––contrary to his 

representations in the recorded phone call––that Azad was reasonably unaware of the preexisting 

conditions exclusion prior to making his purchase, he was well aware of it in sufficient time to 

exercise his 10 day free look right to cancel.

B. Plaintiff Buckley’s purchase transaction

Plaintiffs allege no facts about Buckley’s transaction, other than that: (i) Buckley’s 

husband made the purchase; and (ii) did so on or about April 1, 2016. (Compl ¶¶ 9, 29.) 

Plaintiffs do not identify any alleged oral representations made to the Buckleys, or even allege 

that they spoke to any broker or other alleged representative of the HCC Defendants about the 

policy prior to purchase. And, as with Azad, Plaintiffs do not identify any specific alleged 

misrepresentation or omission made to or relied on by the Buckleys, let alone that they relied on 

any particular alleged misrepresentation or omission as to the existence of the preexisting 

conditions exclusion. (See id. ¶¶ 29-38, 40-47, 53-54, 99.) Nor do Plaintiffs allege any facts to 

support the conclusion that the Buckleys were exposed to or relied on the same alleged 

misrepresentations or omissions as Azad. 

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Further, because the Buckleys made their purchase online (through the broker Healthy 

Halo Insurance Services, Inc.), the “fulfillment” package emailed to them on April 1, 2016, the 

day after their purchase, was different from that sent to Azad by HII. (See Garavuso Decl. ¶ 3 

and Ex. B; Padgett Decl. ¶ 11 and Ex. 15.) The Buckleys’ package included, among other things, 

their payment receipt, their insurance cards, information about CBA, and their Certificate 

(including the preexisting conditions exclusion). (Padgett Decl. Ex. 15.) The Buckleys’ package 

also had a one page cover letter that explicitly advised them, under the heading “Pre-Existing 

Conditions,” that “charges resulting directly or indirectly from any pre-existing condition are 

excluded from this insurance,” and also advised (under the heading “Free Look Provision”) that 

they could cancel the policy “for any reason” within ten days. (Id.) (emphasis in original). 

C. Plaintiffs’ Complaint demonstrates that putative class members were not 

uniformly exposed to any alleged misrepresentations of the preexisting 

conditions exclusion

While Plaintiffs’ Complaint is lengthy, their fraud/false advertising theory hinges on two

central factual allegations:

• That an “exemplar brochure” available on the HCC website and the STM 

application, when “read together,” would lead reasonable consumers to believe 

that only those specific medical conditions listed in the application were subject to 

a preexisting conditions exclusion; and

• That the HCC Defendants made a sample STM policy “difficult to locate” on the 

website, so as to prevent potential buyers from discovering the actual preexisting 

conditions exclusion until it was too late. (See Compl ¶¶ 40-47, 49, 53-54.)

However, as noted above, the Complaint does not allege that either Azad or the Buckleys 

saw or relied on that brochure. Nor is it alleged that either Azad or the Buckleys read the 

application form, let alone read it “together” with the brochure to reach the conclusion about the 

scope of the preexisting conditions exclusion posited by the Complaint. Nor is it alleged that 

either Azad or the Buckleys tried to review the sample STM policy Certificate on the HCC 

website but found it “difficult to locate.” 

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More importantly, Plaintiffs allege no facts to demonstrate that all putative class members 

were uniformly “exposed to” the brochure that is the linchpin of their false advertising theory. 

Given where that brochure was located on the HCC website at the time of Plaintiffs’ purchases 

(under either the “Producers” or the “Claim Forms” tabs), to obtain it a consumer would have 

needed to: (i) know what he or she was looking for and (ii) followed multiple steps to download a 

copy. (Padgett Decl. ¶¶ 2 and 8 and Exs. 9-10.)

Specifically, from the HCC website homepage at http://www.hccmis.com/, one way a 

consumer could have obtained the brochure would have been to: (1) decide to navigate to the 

“Producers” tab; (2) scroll through the “Producer Zone” and “Getting Contracted” options; (3) 

click on the “Brochures and Downloads” tab without knowing what was there; (4) after the 

“Downloads” page opened to the “Claim” options, know to instead navigate over to the 

“Brochures” options; (5) from the various brochures options know enough of HCC’s jargon to 

recognize that the box labeled “STM Complete” related to Short Term Medical insurance, and (6) 

click on the link to “CA STM brochure.” (Id. ¶ 8 and Ex. 9.) Alternatively, a consumer on the 

HCC homepage could also have reached that brochure by: (1) navigating to the “Customer 

Service” tab; (2) clicking on “Claim Forms;” (3) when the “Claim Forms” page opened, 

navigating to the “Brochures” sub-tab; and then following steps (5) and (6) described above. (Id. 

Ex. 10.) Thus, just as neither Azad nor Buckley alleges they actually downloaded, reviewed or 

relied on the brochure, it is unlikely that any critical mass of putative class member consumers 

would have done so. And, it is certainly not alleged that all putative class members uniformly 

obtained and reviewed the brochure, but did not review all of the other materials specifically 

disclosing the pre-existing conditions exclusion, let alone were confused by the brochure as to the 

scope of the preexisting conditions exclusion. 

Further, while Plaintiffs focus entirely on one brochure, they ignore the primary 

consumer-facing materials that were available on the HCC website at the time of Plaintiffs’ 

purchases in December 2015 and on or about April 1, 2016. In particular, Plaintiffs ignore the 

“Short-Term Medical Insurance” product description page, which prominently warned of the 

preexisting conditions exclusion, stating immediately under the product heading: 

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Please note, our Short Term Medical insurance is intended for temporary 

gaps in health insurance. It is not compliant with the federal Affordable Care 

Act and does not cover expenses related to pre-existing conditions. 

(Padgett Decl., ¶¶ 4-5 and Exs. 3-5) (emphasis in original and additional emphasis added).

This product description page on the HCC website was more readily available to potential 

purchasers than the brochure emphasized by Plaintiffs. For example, a consumer visiting HCC’s 

website homepage would get to this product description page by simply navigating to the 

“Products” tab, and clicking on “Short-Term Medical.” (Id. ¶ 5 and Ex. 3.) Additionally, a 

consumer on the HCC website homepage who merely read the very first heading asking 

“Affordable Short Term Insurance – which best describes you?,” looked to part of the page for 

“U.S. Residents,” and clicked on “Tell Me More,” would immediately reach the same Short-Term 

Medical product page, with the warning that it “does not cover expenses related to pre-existing

conditions.” (Id. Ex. 4) (emphasis in original.) And, at the time of Buckley’s purchase, from the 

HCC homepage clicking on the “Products” heading would take a user to a “Travel Health Plans 

and Short Term Insurance” summary page from which, by clicking on the “Short Term Medical” 

hyperlink, the user would again reach the “Short-Term Medical” product description page with 

the preexisting condition warning. (Id. ¶ 5 and Ex. 5.)

Moreover, at the time of Plaintiffs’ purchases, if a consumer visited the “Short-Term 

Medical” product page and happened not to see the preexisting conditions warning, but was 

nonetheless interested enough to click through the “Select Your State” box to choose California, 

the next page that appeared––“California Short Term Medical Insurance Plans”––made another

explicit disclosure of the preexisting conditions exclusion, under the heading “Limits and 

Considerations of STM Coverage.” (Id. ¶ 6 and Ex. 6.)

Plaintiffs allege no facts to support a conclusion that the entire putative class failed to visit 

any of these pages of the HCC website that clearly and repeatedly disclosed the preexisting 

conditions exclusion before making their purchases (despite those pages on the website being as 

easy or easier to find than the brochure).

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Also, as Plaintiffs concede, the California form STM policy Certificate was available on 

the HCC website and clearly excluded coverage for preexisting conditions treated or diagnosed 

within the prior six months. (See Compl. ¶¶ 40, 54; see also Padgett Decl. ¶ 7 and Ex. 7, Part VI, 

p. 18.) Contrary to Plaintiffs’ conclusory assertion that the HCC Defendants made the Certificate

“difficult to locate” on the HCC website so as to prevent consumers from learning of the

preexisting conditions exclusion (Compl. ¶ 54), the “California Short Term Medical Insurance 

Plans” product page invited consumers to “get more details ... by reviewing the full policy 

documents here,” with a hyperlink to the form Certificate. (Padgett Decl. ¶ 7 and Ex. 8.) 

Accordingly, Plaintiffs allege no facts to demonstrate that all putative class members were 

somehow able to navigate the HCC website to find and solely rely on the brochure, and yet 

unable to find either the multiple pages of product descriptions on the website that expressly 

disclosed the pre-existing conditions exclusion or the hyperlinked Certificate. In short, Plaintiffs 

fail to allege facts demonstrating that the putative class was “uniformly exposed” to the alleged 

misrepresentations or omissions. 

Under similar circumstances, numerous California courts have struck class action 

allegations or denied class certification. For example, in Sanders v. Apple, Inc., 672 F. Supp. 2d 

978 (N.D. Cal. 2009), the court struck the class allegations in a case alleging that Apple 

misrepresented the quality of its 20-inch screen iMacs because putative class members were not 

uniformly exposed to the same representations and relied on differing information. Id. at 982-83

and 990-991. Sanders explained that “no class may be certified that contains members lacking 

Article III standing” to sue, and that the putative class therein did so because it “necessarily 

include[d] individuals who ... either did not see or were not deceived by [the allegedly 

misleading] advertisements.” Id. Further, Sanders held that common issues would not 

predominate because the court “would be forced to engage in individual inquiries of each class 

member with respect to materiality of the [alleged] statement, whether the member saw Apple’s 

ads or visited Apple’s website, and what caused the member to make the purchase.” Id.; see 

Hernandez v. State Farm Fire & Cas. Co., 2017 U.S. Dist. LEXIS 34174, at *10-11 (S.D. Cal. 

March 9, 2017) (striking class claims in suit for fraud and violation of the UCL because many 

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putative class members “were not injured, and lack standing to sue.”)

Similarly, in Campion, the court denied certification of a putative class alleging that an 

issuer of home warranties violated the UCL by misrepresenting that it would pay covered claims 

and “failing to disclose it maintained policies, procedures and economic incentives to deny 

legitimate claims.” 272 F.R.D. at 536-37. Campion held that common issues did not predominate 

because, despite Plaintiffs’ conclusory assertion that the defendant disseminated “uniform written 

materials,” the representations were disseminated a variety of ways (including advertisements, 

oral representations or the defendant’s website) and “proposed class members may have seen 

some, all or none of [the alleged misrepresentations] prior to their purchase.” Id.; see also In re 

First Am. Home Buyers Prot. Corp. Class Action Litig., 313 F.R.D. at 609 (denying certification 

because plaintiffs “failed to demonstrate that there was cohesion among class members as to how 

they were exposed—if they were even exposed at all—to the various alleged false and misleading 

representations”); Cohen v. DirecTV, 178 Cal. App. 4th 966, 979 (2010) (denying certification 

under the UCL because, among other things, the putative class included people “who never saw 

DIRECTV advertisements or representations of any kind,” and those “who only saw and/or relied 

upon advertisements that contained no [alleged misrepresentations].”)

Here, it is appropriate to strike the class allegations on the pleadings because the 

Complaint’s factual allegations and matters incorporated by reference make clear that Plaintiffs 

cannot establish that the alleged misrepresentations as to the STM product’s preexisting 

conditions exclusions were uniformly made to all putative class members. 

III. Plaintiffs’ Improper Claims-Handling Theory Is Not Amenable to a Class Action

Plaintiffs assert various unfair claims-handling practices as the basis for their breach of 

contract and bad faith Counts, and incorporate those allegations as grounds for UCL, FAL and 

unjust enrichment claims. (Compl. ¶¶ 3, 25-28, 33-36, 58-73, 93, 96, 99-103, 108-110, 118-145.) 

As detailed in the concurrently-filed motion to dismiss, Plaintiffs allege that the HCC Defendants

breached the STM policy Certificates and their implied duty of good faith and fair dealing by:

(1) unreasonably denying or delaying payment of Plaintiffs’ claims for benefits;

(2) failing to conduct an adequate or timely investigation of Plaintiffs’ claims, 

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including by making excessive demands for medical records; and

(3) training claims representatives (“CSRs”) to “deceive,” “discourage” and “obstruct” 

claimants from pursuing claims; (see id.).

However, neither Azad nor Buckley alleges that their medical providers ever produced the 

requested records. (See id. at ¶¶ 26-27, 33-36, 70.) Nor do Plaintiffs allege that HCC actually 

denied their claims for benefits rather than abated their claims until the requested medical records

were received. (See id.; see Padgett Decl. ¶¶ 12-13 and Exs. 16-19.) More importantly, based on 

these allegations, it is clear that commonly triable issues will not predominate as to Plaintiffs’ 

improper claims-handling theory.

Neither the named plaintiffs nor any other putative class member can establish liability for 

breach of contract or tortious bad faith without establishing that the allegedly improper claims 

handling activities resulted in unreasonable delay or denial of contract benefits. Chateau 

Chamberay Homeowners Ass’n v. Associated Int’l Ins. Co., 90 Cal. App. 4th 335, 346 (2001) (a 

claim for breach of the implied covenant of good faith and fair dealing fails unless policy benefits 

are unreasonably delayed or denied); Newell v. State Farm Gen. Ins. Co., 118 Cal. App. 4th 1094, 

1103 (2004) (despite alleged scheme by insurer to limit liability on earthquake claims and use of 

improper claims practices, holding that “each putative class member could still recover for breach 

of contract... only by proving his or her claim was wrongfully denied, ..., and the insurer’s action 

in doing so was unreasonable,” and striking class allegations because this would require 

individualized inquiry.)

Here, determining whether a given HCC insured’s claim was unreasonably delayed or 

denied will necessarily require individualized proof as to a variety of critical facts specific to each 

insured to determine not only damages, but also liability, including, among other things: 

(1) whether the insured made a claim; 

(2) whether records were requested from medical providers and, if so, were provided;

(3) whether the insured authorized his or her doctors to provide records to HCC and, if 

so, whether such requests were honored;

(4) whether the medical records provided (if any) were complete;

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(5) whether the claim was adjusted in a timely manner as compared to when HCC 

received “proper proof of loss” (i.e., the necessary claim information from both the claimant and 

his or her medical providers); 

(6) whether there were communications between the claimant and HCC CSRs and, if 

so, their content – i.e., whether, as Plaintiffs allege, the CSRs “obstructed” or “discouraged” the 

claimant from pursuing the claim; 

(7) whether the claimant suffered a covered loss, including any potentially-appropriate 

assessment whether the insured was “eligible” to obtain the policy Certificate; 

(8) whether the claim was denied based on the preexisting conditions exclusion, for 

failure to provide requested records, or for some other reason.;

(9) if the claim was denied based on the preexisting conditions exclusion, whether 

such decision was appropriate under the terms of the policy and Certificate (e.g., was the claim 

based on a medical condition for which the insured had received treatment in the six months prior 

to the effective date of coverage and, if it was within the last 63 days prior to the effective date of 

coverage, was such treatment subject to the “creditable coverage” exception carved out from the 

preexisting conditions exclusion) (see Padgett Decl. Ex. 7, Part VI, p. 18, ¶ 1); and

(10) whether the value of the loss, if covered, was below the chosen deductible, as was 

Buckley’s. (See Compl. ¶ 38; Padgett Decl., ¶ 11 and Ex. 15, Part X, p. 28.)

These issues cannot be adjudicated on a classwide basis and will necessarily require

individualized review of how each particular claim was adjusted. 

Numerous courts have held that similar suits alleging improper insurance claims-handling 

practices and claims decisions cannot proceed by class action, irrespective of plaintiffs’ 

allegations that claims were “systematically” underpaid or that the insurer engaged in 

“institutional bad faith.” See, e.g., Newell, 118 Cal. App. 4th at 1098-99 and 1101-06; Basurco v. 

21st Century Ins. Co., 108 Cal. App. 4th 110, 119 (2003); Campion, 272 F.R.D. at 531 (“[w]hen 

Plaintiff’s contract-based causes of action are examined from the point at which a claim for 

benefits was made and Defendant’s duty to perform arose, it is evident an individual inquiry into 

the handling of each class member’s claim would be necessary to determine whether a breach 

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occurred ... [because] even if Defendant has a uniform policy that encourages the wrongful 

denial of claims, the mere existence of this policy would not prove on a class-wide basis that 

claims were wrongfully denied or inappropriately handled.”)

The need for individualized proof in a suit challenging an insurer’s claims adjusting 

practices is illustrated by Newell, which dismissed class allegations in a case asserting breach of 

contract, bad faith and violation of the UCL in adjusting earthquake claims. 118 Cal. App. 4th 

1094 at 1098-1099 and 1101-1106. The Newell plaintiffs alleged that insurers underpaid all 

putative class members’ claims through a common practice of applying improper depreciation 

deductions, the amount of which “could be determined by a formula.” Id. at 1098. Plaintiffs 

argued a class action was proper because their claims “require proof of only a pervasive scheme 

by [the insurers] to limit liability on earthquake claims and widespread use of bad faith practices.” 

Id. at 1103. Newell rejected this argument, and dismissed the class allegations, holding that no 

class member could establish liability unless he or she “did not receive policy benefits to which 

he [or she] was otherwise entitled,” and that this required a necessarily individualized assessment 

to determine the amount of benefits due, irrespective of plaintiffs’ conclusory allegation that the 

proper depreciation deduction could be determined by a common formula. Id. at 1102-1104. 

Similar to Newell, and on point here, is Bates v. Bankers Life & Cas. Co., 993 F. Supp. 2d 

1318 (D. Or. 2014). In Bates, plaintiffs sued for, among other things, mishandling of claims 

under long-term health insurance policies “through a combination of delay and nonpayment.” Id. 

at 1324, and 1329. Plaintiffs alleged that the insurer developed “onerous procedures calculated to 

discourage policyholders from pursuing valid claims for insurance benefits under the policies and 

to delay and deny such claims improperly,” including, for example, because employees could not 

respond to policyholders by telephone, routinely lost medical records and other documentation 

provided by plaintiffs, and denied claims because of missing records. Id. at 1329-30. The Bates 

court struck plaintiffs’ class allegations, holding that “[t]o the extent [the] claims are premised on 

allegations of claims mishandling, such claims inevitably require case-by-case analysis of the 

operative facts, because the inquiry is in all respects fact-specific for every insured, including 

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inquiry as to the insured’s particular health conditions and medical needs, [and] the particular care 

provided.” Id. at 1341.

Recent decisions from other district courts in California have also struck class action 

allegations in similar cases alleging improper insurance claims-handling practices. For example, 

in Hernandez v. State Farm, 2017 U.S. Dist. LEXIS 34174 (S.D. Cal. Mar. 9, 2017) plaintiffs 

alleged, among other things, breach of contract, bad faith and unfair business practices arising out 

of their insurer’s handling of the “mitigation” portion of water damage claims. Id. at *3-7. 

Hernandez held that common issues could not predominate and, thus, struck the class allegations 

because, “even if Defendants did everything” alleged, extensive individualized-fact finding would 

still be required to determine whether a given putative class member (i) had a “valid claim” and 

(ii) if so, whether he or she had suffered any compensable injury since, in some instances, their 

claims may have been fairly valued by the insurer. Id. at *8, 10-11 and 13; see also Am. W. Door 

& Trim v. Arch Specialty Ins. Co., 2015 U.S. Dist. LEXIS 34589, at *2-4 and *25-26, 2015 WL 

1266787 (C.D. Cal. Mar. 18, 2015) (striking class allegations in action asserting that insurer 

breached general liability policies and engaged in bad faith through a practice of settling claims 

for unreasonably high amounts so as to exhaust insureds’ deductibles and avoid having to pay 

defense costs that would not apply against policy limits for indemnity because it would be 

necessary to evaluate “each individual insured’s claim to determine whether”: (1) it was covered;

(2) defendant “actually settled that claim rather than litigating it;” and (3) “the amount of the 

settlement exceeded the liability under the claim.”) 2

 2 Reflecting that these decisions are not anomalous, federal courts in other districts have also

struck or dismissed class allegations in cases alleging that insurers systematically “underpaid” or 

“under-valued” claims because individualized inquiry would be necessary as to “timing and 

adjustment of each class member’s claim” and “the nature and extent of damage.” E.g., Henry v. 

Allstate Insurance Co., 2007 U.S. Dist. LEXIS 57822, *3-6 and 8 (E.D. La., Aug. 8, 2007);

Spires v. Liberty Mutual Fire Ins. Co., 2006 U.S. Dist. LEXIS 95248, *4 (E.D. La., Nov. 21, 

2006) (concluding that “while Liberty Mutual’s general procedures for adjusting claims might 

arguably be common to all claims, demonstrating a wrongful pattern or practice of failing to 

adjust claims will require an intensive review of the individual facts of each class member’s 

damage claim.”)

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The rationale of Newell, Bates, Hernandez, and Am. W. Door & Trim applies equally here, 

as it is not possible to determine whether any given putative class member’s claim for STM 

policy benefits was wrongfully denied or otherwise improperly handled by the HCC Defendants 

without individualized review of their claim. Accordingly, common issues cannot predominate 

and the class action allegations should be stricken from each of Plaintiffs’ Counts to the extent 

based on their theory of improper claims-handling practices.3

CONCLUSION

For the foregoing reasons, in the event that the HCC Defendants’ concurrently-filed 

motion to dismiss is not granted in its entirety, the Court should nonetheless strike Plaintiffs’ 

class action allegations. 

Dated: April 13, 2017 GERARD G. PECHT 

M. SCOTT INCERTO 

JOSHUA D. LICHTMAN

MICHELLE L. MELLO

NORTON ROSE FULBRIGHT US LLP

By /s/ Joshua D. Lichtman __

JOSHUA D. LICHTMAN

Attorneys for Defendants

HCC LIFE INSURANCE COMPANY and

HCC MEDICAL INSURANCE SERVICES, 

LLC (erroneously sued as TOKIO MARINE 

HCC – MEDICAL INSURANCE SERVICES 

GROUP) 

 3 Similarly, to the extent Plaintiffs’ attempt to dress up their claims-handling allegations as 

misrepresentations, common issues will not predominate because the same individualized inquiry 

as to the handling of each underlying claim would be necessary to determine whether there was or 

was not any misrepresentation or omission. For example, it is impossible to adjudicate Plaintiffs’ 

contentions that the HCC Defendants failed to disclose that they “routinely attempt to deny most 

claims on the basis of preexisting conditions or other grounds” (id. ¶ 54) or that they would not 

provide “fair claims processes” (id. ¶ 93) without adjudicating the necessarily individualized 

issue whether the underlying claims were properly handled. 

Case 4:17-cv-00618-PJH Document 49 Filed 04/13/17 Page 22 of 22