PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

MARTHA WARD, on behalf of 

herself and all others similarly

situated,

Plaintiff-Appellee,

v.

DIXIE NATIONAL LIFE INSURANCE

COMPANY; NATIONAL FOUNDATION  No. 08-2378 LIFE INSURANCE COMPANY,

Defendants-Appellants.

SOUTH CAROLINA DEPARTMENT OF

INSURANCE; RONALD DANIEL

ROTUNDA,

Amici Supporting Appellants. 

Appeal from the United States District Court

for the District of South Carolina, at Columbia.

Joseph F. Anderson, Jr., District Judge.

(3:03-cv-03239-JFA)

Argued: December 1, 2009

Decided: February 8, 2010

Before TRAXLER, Chief Judge, and WILKINSON and

MICHAEL, Circuit Judges.
Affirmed by published opinion. Judge Wilkinson wrote the

opinion, in which Chief Judge Traxler and Judge Michael

joined.

COUNSEL

ARGUED: Kenneth W. Starr, KIRKLAND & ELLIS, LLP,

Los Angeles, California, for Appellants. Richard Harpootlian,

RICHARD A. HARPOOTLIAN, PA, Columbia, South Carolina, for Appellee. ON BRIEF: Susan E. Engel, Elizabeth M.

Locke, KIRKLAND & ELLIS, LLP, Washington, D.C.; J.

Calhoun Watson, Jr., SOWELL GRAY STEPP & LAFFITTE, LLC, Columbia, South Carolina; C. Allen Foster,

Kevin E. Stern, Robert P. Charrow, GREENBERG

TRAURIG, LLP, Washington, D.C., for Appellants. Graham

L. Newman, RICHARD A. HARPOOTLIAN, PA, Columbia,

South Carolina; Tobias G. Ward, Jr., TODD & WARD PC,

Columbia, South Carolina, for Appellee. Jeffrey A. Jacobs,

SOUTH CAROLINA DEPARTMENT OF INSURANCE,

Columbia, South Carolina, for South Carolina Department of

Insurance, Amicus Supporting Appellants. Professor Ronald

D. Rotunda, CHAPMAN UNIVERSITY SCHOOL OF LAW,

Orange, California, for Ronald Daniel Rotunda, Amicus Supporting Appellants.

OPINION

WILKINSON, Circuit Judge:

This case began as a relatively straightforward class action

suit for breach of contract. Martha Ward and other policyholders in the state of South Carolina (collectively, "plaintiffs") sued insurance companies National Foundation Life

Insurance Company ("National") and Dixie National Life

Insurance Company ("Dixie") (collectively, "defendants").

2 WARD v. DIXIE NATIONAL LIFE
Plaintiffs alleged that defendants violated their contractual

promise under the insurance policies to pay policyholders the

"actual charges" of cancer treatments. The dispute centered on

the proper meaning of "actual charges": Plaintiffs contended

that the phrase meant the full amount a medical provider

billed patients for its services, while defendants argued that it

meant the lesser amount a medical provider received as payment from insurers for its services. 

After several procedural twists and turns, the question

reached this court, and in a previous decision, we adopted

plaintiffs’ definition of "actual charges." Ward v. Dixie Nat’l

Life Ins. Co., 257 Fed. Appx. 620 (4th Cir. 2007) (per

curiam). Shortly thereafter, however, the South Carolina legislature enacted a statute adopting, in effect, defendants’ definition. On this latest appeal, defendants ask us to reverse the

trial court, apply the freshly enacted statutory definition to

this case, and overturn our prior decision. Because doing so

would undermine the presumption against statutory retroactivity and raise constitutional concerns, we decline defendants’

invitation. Defendants also raise a number of other issues

regarding class certification and the calculation of damages,

but we likewise find these arguments without merit. Accordingly, we affirm. 

I.

All the class members in this case, including lead plaintiff

Martha Ward, are South Carolina residents who hold supplemental cancer insurance policies with defendants. The insurance policies, which were initially issued by Dixie and later

assigned to National, obligate the insurer to pay its policyholders the "actual charges" of any covered cancer treatments

they undergo, in exchange for policyholders’ regular premium

payments. As "supplemental" insurance, the terms of the policies require defendants to make payments of "actual charges"

directly to policyholders, not to medical providers. Medical

providers often are paid for their services not by defendants

WARD v. DIXIE NATIONAL LIFE 3
but by primary insurers, such as Blue Cross or Medicare. In

this case, because many of the plaintiffs had both supplemental and primary insurance, they received payments for the

value of their cancer treatments even though they were not

paying out-of-pocket for those treatments. In this sense, the

supplemental cancer policies serve, as defendants explained in

letters to policyholders, to "provid[e] financial protection

against the catastrophic effects of health care costs." 

The policies do not define "actual charges." For the years

immediately following the policies’ issuance, Dixie, and then

National, paid "actual charges" based on the amount a medical provider charged for its services, usually as reflected in

the medical provider’s bill to its patients. This amount is usually greater than the amount actually received by medical providers as payment for their services. This is because medical

providers frequently enter into pre-negotiated agreements

with primary insurers in which they agree to accept a discounted amount as payment-in-full for their services (or, in

the case of Medicare, are required under federal law to accept

a discounted amount as payment-in-full for their services).

The discounted amount paid to medical providers is shown on

explanation of benefits (EOB) statements and on Medicare

forms. 

In late 2001 or early 2002, National changed its payment

practice. Instead of basing "actual charges" on the full list

price of healthcare services, it began basing "actual charges"

on the lesser payment medical providers received. Its policyholders were not pleased. In March 2003, one policyholder,

Martha Ward, sued defendants in South Carolina state court,

claiming that by paying "actual charges" in the discounted

amount, defendants had breached the insurance contracts. In

response, defendants removed the action to federal court on

the basis of diversity jurisdiction.

The United States District Court for the district of South

Carolina certified a statewide class of plaintiffs, which con4 WARD v. DIXIE NATIONAL LIFE
sisted of all South Carolina residents "insured during the class

period under cancer policies from defendant Dixie National

Life Insurance Company, sold in South Carolina, where Dixie

promised to pay . . . ‘actual charges.’" Soon thereafter, both

parties filed motions for summary judgment, and the district

court initially granted summary judgment in favor of defendants. 

Plaintiffs appealed the district court’s judgment, and this

court held that the phrase "actual charges," as used in plaintiffs’ insurance policies, was patently ambiguous, and that

under South Carolina law, that ambiguity had to be resolved

in favor of the insured. Ward v. Dixie Nat’l Life Ins. Co., 257

Fed. Appx. 620, 625-27 (4th Cir. 2007) (per curiam) (hereinafter, "Ward I"). Accordingly, this court adopted plaintiffs’

definition of actual charges: the amount billed by a medical

provider for a service, even if that amount is not the same as

the amount paid for the service by insurers. Id. at 625. This

court in Ward I thus remanded the case back to the district

court with instructions to enter summary judgment in favor of

plaintiffs on their breach of contract claim. Id. at 630. 

In response to Ward I, and before the district court could

follow this court’s instructions on remand, the South Carolina

state legislature took action. It enacted a statute defining "actual charges" for all insurance policies of the type at issue

here: supplemental disease policies that do not otherwise

define the term. S.C. Code Ann. § 38-71-242(B). The definition adopted by the state legislature was, in effect, that advocated by defendants and rejected by this court in Ward I. The

statute defines "actual charges" as the amount a medical provider accepts as payment-in-full for its medical services,

whether by pre-negotiated agreement with a third-party

insurer or by operation of law in the case of Medicare. Id.

§ 38-71-242(A)(1)(a) & (b). The statute further states:

Notwithstanding any other provision of law, after the

effective date of this section, an insurer . . . shall not

WARD v. DIXIE NATIONAL LIFE 5
pay any claim or benefits based upon . . . actual

charges . . . in an amount in excess of the . . . "actual

charges" . . . as defined in this section. 

Id. § 38-71-242(C). The effective date of the statute was June

4, 2008.

In light of the new legislative landscape, defendants moved

for judgment on the pleadings, arguing that the statute prohibited them from paying "actual charges" as defined in Ward I.

The district court, however, denied their motion, holding that

the new statute did not apply retroactively to this lawsuit. The

court rested its holding on the presumption against statutory

retroactivity, under which a statute does not apply retroactively unless the legislature clearly and explicitly expresses an

intent that it do so. In this case, the court did not find the necessary clear and explicit intent, stating that "[n]othing in

either the legislative history or the language of § 38-71-242

unambiguously indicates that the statute is to be applied retroactively." 

Consequently, the district court determined that it was

bound to use this court’s definition of "actual charges" in

Ward I in lieu of the statutory definition. The district court

proceeded to follow this court’s instructions to enter summary

judgment in favor of plaintiffs and subsequently entered an

order awarding plaintiffs nearly $8 million in damages.

Attached to the order was a calculation of damages for each

of 182 class members, each of whom was a policyholder

whose policy contained the contested language clarified by

the decision in Ward I. Defendants now appeal. 

II.

Defendants’ primary contention on appeal is that the district court erred in refusing to apply the South Carolina statute’s definition of "actual charges" in this case. For the

reasons explained below, we disagree.

6 WARD v. DIXIE NATIONAL LIFE
A.

Both federal and South Carolina courts employ a robust

presumption against statutory retroactivity. See, e.g., Landgraf v. USI Film Prods., 511 U.S. 244, 265 (1994); Jenkins

v. Meares, 394 S.E.2d 317, 319 (S.C. 1990). Under this presumption, courts assume that statutes operate prospectively

only, to govern future conduct and claims, and do not operate

retroactively, to reach conduct and claims arising before the

statute’s enactment. See, e.g., Landgraf, 511 U.S. at 265, 269-

70; Jenkins, 394 S.E.2d at 319. Since legislatures generally

intend statutes to apply prospectively only, this rule of statutory construction is a means of giving effect to legislative

intent. See Rivers v. Roadway Exp., Inc., 511 U.S. 298, 304-

05 (1994). 

Although only a presumption, "the presumption against

retroactive legislation is deeply rooted in our jurisprudence,

and embodies a legal doctrine centuries older than our Republic." Landgraf, 511 U.S. at 265. It has been described as

"[a]mong the most venerable of the[ ] [judicial] default rules,"

Tasios v. Reno, 204 F.3d 544, 549 (4th Cir. 2000), a "timehonored presumption," Hughes Aircraft Co. v. U.S. ex rel.

Schumer, 520 U.S. 939, 946 (1997), and a "rule of general

application." Fernandez-Vargas v. Gonzales, 548 U.S. 30, 37

(2006) (citation and internal quotations omitted).

When determining whether the presumption against retroactivity bars the application of a statute in a given case, courts

perform a three-step analysis. See Landgraf, 511 U.S. at 280.

First, a court must "determine whether [the legislature] has

expressly prescribed the statute’s proper reach." Id. If so,

"there is no need to resort to judicial default rules," and hence,

the presumption against retroactivity does not apply. Id. If,

however, the legislature has not prescribed the statute’s reach,

a court must move to step two and "determine whether the

new statute would have a retroactive effect" if applied to the

case at hand. Id. If not, the presumption against retroactivity

WARD v. DIXIE NATIONAL LIFE 7
again has no application, but if it does, the presumption is

triggered, and the court must then inquire under the third step

whether the presumption is overcome with "clear congressional intent" in favor of retroactivity. Id. Although defendants

put up a fight at each of the three steps along the way, we ultimately find their arguments unpersuasive. 

1.

Under the first step of the analysis, we must decide whether

the South Carolina General Assembly expressly prescribed

the reach of the statute. Id. For example, the legislature may

avoid triggering the presumption against retroactivity by

including an explicit provision stating that the statute governs

lawsuits already initiated prior to its enactment. Martin v.

Hadix, 527 U.S. 343, 354 (1999); see also Fernandez-Vargas

v. Gonzales, 548 U.S. 30, 38 (2006) (finding no express prescription absent "any clause expressly dealing with" conduct

before the effective date, either expressly including it within

the statute’s ambit or expressly excluding it). The standard for

express prescription is "a demanding one," requiring prescription that is truly express and unequivocal. See I.N.S. v. St.

Cyr, 533 U.S. 289, 316 (2001). The South Carolina statute

here contains no such express and unequivocal language specifying whether it applies to lawsuits filed before its enactment,

such as this one. 

Defendants contend, however, that the South Carolina legislature prescribed the statute’s reach by expressly applying

the statute to "any claim or benefits," without limitation and

without regard to when those claims or benefits arose. S.C.

Code Ann. § 38-71-242(C) (emphasis added). Since this particular litigation concerns "any claim or benefit," defendants

argue, the statute applies and the analysis ends there. We

think this argument misconstrues the first step of the analysis.

The inquiry under the first step focuses on whether the legislature has expressly prescribed the statute’s temporal reach,

8 WARD v. DIXIE NATIONAL LIFE
not merely its substantive reach. See Martin v. Hadix, 527

U.S. at 353-54. Thus, if a legislature wishes to avoid triggering the presumption against retroactivity, it may not merely

apply the statute to an expansive category of cases. It must

instead expressly not limit the statute’s temporal reach. See id.

In fact, the Supreme Court in Martin v. Hadix rejected a claim

virtually identical to defendants’. See id. There, petitioners

argued that Congress had expressly prescribed the statute’s

reach by stating that it applied to "any action [brought] by a

prisoner who [is] confined." Id. at 353 (citation and internal

quotations omitted) (emphasis in original). The Court held

that this language "falls short" of the requisite express directive, because it failed to include "language more obviously

targeted to addressing the temporal reach of that [statute]." Id.

at 353-54. Likewise, here, without a provision clearly

delineating the time period to which the statute applies, we do

not find that the South Carolina legislature expressly prescribed its reach. 

2.

We accordingly proceed to the second step of the retroactivity analysis to determine whether the statute, if applied to

this case, would operate retroactively. Landgraf v. USI Film

Prods., 511 U.S. 244, 280 (1994). A statute operates retroactively when it would attach new legal consequences to events

occurring prior to its enactment. Id. at 269-70. A statute may

have retroactive effect in a number of circumstances, including, for example, when the statute "would impair rights a

party possessed when he acted, increase a party’s liability for

past conduct, or impose new duties with respect to transactions already completed." Id. at 280; see Hughes Aircraft Co.

v. U.S. ex rel. Schumer, 520 U.S. 939, 947 (1997) (explaining

that this list is non-exhaustive). This inquiry requires a "commonsense, functional judgment." Martin v. Hadix, 527 U.S. at

357. 

If applied to this case, the South Carolina statute would

operate retroactively. It took effect on June 4, 2008 — at least

WARD v. DIXIE NATIONAL LIFE 9
six years after defendants’ underpayment of "actual charges"

to the policyholders gave rise to the suit, about five years after

the commencement of the suit, and almost one year after this

court resolved the meaning of "actual charges" in Ward I.

Applying the statute here would reach back to alter the legal

consequences of those events taking place before the statute

went into effect. Significantly, application of the statute here

would disrupt the rights and duties of the parties as adjudicated in Ward I. 

Defendants attempt to argue that the statute, if applied,

would not operate retroactively, since it applies only to

unpaid claims of insurance benefits. Because the claims here

were not paid before the statute’s enactment, defendants suggest, the statute does not apply to any conduct or transactions

occurring before the statute’s enactment. This argument, however, misses the mark. The claims in this case are unpaid only

insofar as they are under-paid. Defendants owed plaintiffs

"actual charges" at the time plaintiffs underwent the covered

cancer treatments and submitted their claims to defendants;

the fact that defendants have not yet fulfilled their obligations

does not somehow make those obligations unsettled or incomplete. In confronting a similar argument, the Supreme Court,

in Eastern Enterprises v. Apfel, 524 U.S. 498, 532 (1998)

(citation omitted), held that the statute at issue would operate

retroactively, even though it "mandates only the payment of

future health benefits," because "it nonetheless ‘attaches new

legal consequences to [an employment relationship] completed before its enactment." Here, too, the South Carolina

statute would attach new legal consequences to claims and

obligations arising before the statute’s June 4, 2008 effective

date, even if those claims presently remain unpaid. 

3.

Finally, having determined that the presumption against

retroactivity is applicable to this case, we must decide under

the third step whether the presumption is overcome. Landgraf,

10 WARD v. DIXIE NATIONAL LIFE
511 U.S. at 280. To overcome the presumption against retroactivity, a legislature must clearly demonstrate an intent to

apply the statute retroactively. See id. This standard is undeniably high, requiring an expression of legislative intent that is

obvious from the statute’s text. See S.C. Dep’t of Revenue v.

Rosemary Coin Machines, Inc., 528 S.E.2d 416, 418 (S.C.

2000). Usually, legislative history is an insufficient indicia of

intent, and courts instead demand "express words evincing an

intent that it be retroactive or words necessarily implying such

an intent." Am. Nat’l Fire Ins. Co. v. Smith Grading & Paving, Inc., 454 S.E.2d 897, 899 (S.C. 1995) (citation omitted);

see also Bowen v. Georgetown Univ. Hosp., 488 U.S. 204,

208-09 (1988). The "words used [in the statute must be] so

clear, strong, and imperative that no other meaning can be

annexed to them, or . . . the intention of the legislature [must

be such that it] cannot be otherwise satisfied." U.S. Fid. &

Guar. Co. v. United States, 209 U.S. 306, 313, 314 (1908). In

general, courts will apply a statute retroactively only if "that

result is so clearly compelled as to leave no room for reasonable doubt," Hyder v. Jones, 245 S.E.2d 123, 125 (S.C. 1978),

and will refuse to apply a statute retroactively absent "statutory language . . . so clear that it could sustain only one interpretation." Lindh v. Murphy, 521 U.S. 320, 328 n.4 (1997).

In this case, the South Carolina statute falls quite short of

this rigorous standard for overcoming the presumption against

retroactivity. Neither the statutory language nor the legislative

history evinces any intent to apply the statute’s definition to

the insurance contracts in this case, and if anything, supports

the opposite interpretation. Three considerations require this

conclusion. First, the statute states that it has no effect until

"after the effective date," June 4, 2008. S.C. Code Ann. § 38-

71-242(C) (emphasis added). Courts have repeatedly held that

the inclusion of an effective date is inconsistent with legislative intent to apply the statute retroactively. See, e.g., S.C.

Dep’t of Revenue v. Rosemary Coin Machines, Inc., 528

S.E.2d 416, 418 (S.C. 2000); Pulliam v. Doe, 142 S.E.2d 861,

863 (S.C. 1965). "A statement that a statute will become

WARD v. DIXIE NATIONAL LIFE 11
effective on a certain date does not even arguably suggest that

it has any application to conduct that occurred at an earlier

date." Landgraf v. USI Film Prods., 511 U.S. 244, 257

(1994). 

Second, by its own terms, the statute declares that insurers

"shall not pay any claim" in excess of the statutory definition

of "actual charges." S.C. Code Ann. § 38-71-242(C) (emphasis added). The word "shall" typically suggests that the legislature designed the statute to apply only prospectively; "[t]he

use of the future tense . . . effectually negatives any suggestion that the statute was intended to apply retroactively." Link

v. Receivers of Seaboard Air Line Ry. Co., 73 F.2d 149, 152

(4th Cir. 1934) (citation omitted). 

Third and finally, nothing in the statute’s legislative history

evidences a legislative desire to apply the statute’s definition

to this case. The South Carolina legislature knew about this

particular litigation when it enacted the statute and yet never

suggested that the statute apply to it. If the legislature wanted

to apply the statute to this case, it could have, should have,

and likely would have made that wish more apparent. 

Nonetheless, defendants argue that the presumption is overcome here, since the South Carolina General Assembly

passed the statute in direct response to Ward I. Because the

legislature thought Ward I was wrongly decided, defendants

contend, the legislature necessarily must have wanted to apply

the statute on remand in order to overturn Ward I. As already

discussed, however, this view is unsupported by the statute’s

text and legislative history. Furthermore, as courts have previously recognized, the mere fact that a legislature enacts a new

law in order to correct or clarify a recent judicial decision

does not warrant an inference that the legislature intended the

new law to apply to the case giving rise to it. See Rivers v.

Roadway Exp., Inc., 511 U.S. 298, 304-05 (1994); Condit v.

United Air Lines, Inc., 631 F.2d 1136, 1140 (4th Cir. 1980).

"The usual purpose of a special interpretive statute is to cor12 WARD v. DIXIE NATIONAL LIFE
rect a judicial interpretation of a prior law which the legislature determines to be inaccurate. Where such statutes are

given any effect, the effect is prospective only." Id. (citation

and internal quotations omitted). Having concluded the threestep retroactivity analysis, we conclude that the presumption

against retroactivity operates to bar the application of the

South Carolina statute to the claims here. 

B.

Defendants suggest, however, that our analysis seriously —

and unconstitutionally — constricts the proper sphere of legislative authority. In defendants’ view, the surpassing intent of

the South Carolina legislature was to express its displeasure

with Ward I, undo its effects, and restore the defendants’ definition of "actual charges" to plaintiffs’ policies. To fail to

respect this intention, we are told, amounts to a stark assertion

of judicial supremacy. According to defendants and amici

who argue in their favor, the "state legislature is . . . owed deference, not disregard, in its attempt to amend a state common

law rule of construction," Reply Br. of Appellants 10, and the

district court’s determination that "Ward I [would] trump a

validly-enacted statute by the South Carolina General Assembly that was passed to repeal that very decision . . . upsets our

nation’s traditional principles of separation of powers." Br. of

Ronald D. Rotunda as Amicus 8. As expressed above, defendants’ view fails to comport with the intention of the legislature as expressed in the wording of the enactment. And as

explained below, it is defendants’ view, not this court’s, that

invites the greater constitutional difficulty. 

1.

The law disfavors retroactivity, Bowen v. Georgetown

Univ. Hosp., 488 U.S. 204, 208 (1988), in part because it

inevitably "raise[s] particular concerns." Landgraf v. USI

Film Prods., 511 U.S. 244, 266 (1994). One such concern is

that of unfairness. See, e.g., id. at 265, 271. By attaching new

WARD v. DIXIE NATIONAL LIFE 13
and perhaps unanticipated legal consequences to past conduct,

retroactive legislation threatens to "deprive citizens of legitimate expectations and upset settled transactions." Gen.

Motors Corp. v. Romein, 503 U.S. 181, 191 (1992). 

Another concern is that of unconstitutionality. In many

cases, retroactive legislation risks violating those provisions

of the Constitution in which "the antiretroactivity principle

finds expression." Landgraf, 511 U.S. at 266. In the criminal

context, for example, retroactive application of penal statutes

is flatly prohibited by the Ex Post Facto Clause. See Johnson

v. United States, 529 U.S. 694, 701 (2000). Likewise, in the

civil context, retroactive application of statutes potentially

implicates the Contract Clause, the Takings Clause, the Due

Process Clause, and others. Landgraf, 511 U.S. at 266; see

also Eastern Enters. v. Apfel, 524 U.S. 498, 504 (1998) (holding that retroactive application of a statute violated the Takings Clause); Link v. Receivers of Seaboard Air Line Ry. Co.,

73 F.2d 149, 153 (4th Cir. 1934) (noting that retroactive

application of a statute potentially violated the Contract and

Due Process Clauses). 

By limiting instances of statutory retroactivity, the presumption against retroactivity mitigates both fairness concerns and constitutional concerns. Perhaps because

retroactivity so often raises fairness problems, courts often

explain the presumption’s purpose in those terms, praising the

presumption’s ability to preserve "elementary considerations

of fairness." See Landgraf, 511 U.S. at 265, 271. Of course a

presumption is just that, not an absolute. But as the Supreme

Court noted, "[A] requirement that [the legislature] first make

its intention clear helps ensure that [the legislature] itself has

determined that the benefits of retroactivity outweigh the

potential for disruption and unfairness." Id. at 268. In this

case, for example, applying the statute to overturn the adjudication in Ward I would, to say the least, disrupt the legitimate

expectations of policyholders who have purchased policies,

undergone their cancer treatments, and expected a measure of

14 WARD v. DIXIE NATIONAL LIFE
reimbursement for those treatments under the adjudicated

standard. To upend the legitimate expectations of these cancer

patients and upset the prior adjudication of their policies

would fly in the face of the presumption, and we see nothing

in the South Carolina statute that persuades us the legislature

intended to work this sort of retrospective deprivation on its

citizens.

Indeed, to ascribe this sort of intent to the legislature would

court its share of constitutional difficulties. Courts do not

lightly ascribe to legislatures an unconstitutional intent. See

Ashwander v. Tenn. Valley Auth., 297 U.S. 288, 341-56

(1936) (Brandeis, J., concurring). For like the presumption

against retroactivity, the doctrine of constitutional avoidance

attempts to "giv[e] effect to [legislative] intent, not [to] subvert[ ] it," since it is premised on the "reasonable" notion that

legislatures "d[o] not intend [an interpretation] which raises

serious constitutional doubts." Clark v. Martinez, 543 U.S.

371, 382 (2005); see N.L.R.B. v. Catholic Bishop, 440 U.S.

490, 501, 507 (1979); see also Zadvydas v. Davis, 533 U.S.

678, 689 (2001); Mary Helen Coal Corp. v. Hudson, 235 F.3d

207, 214 (4th Cir. 2000) ("As is our duty, we decline to interpret the statute in a manner that gratuitously raises grave constitutional questions."); Gold v. S.C. Bd. of Chiropractic

Exam’rs, 245 S.E.2d 117, 119-20 (S.C. 1978) ("When the

issue is the constitutionality of a statute, every presumption

will be made in favor of its validity and no statute will be

declared unconstitutional unless its invalidity appears so

clearly as to leave no doubt that it conflicts with the Constitution."). 

2.

In this case, the constitutional difficulties do in fact pertain

to separation of powers, albeit not in the manner defendants

suggest. In cases like this one, in which it is contended that

the legislative branch acted not to supplant a judicial ruling

prospectively, which it of course may do, but to reverse the

WARD v. DIXIE NATIONAL LIFE 15
ruling of a particular case, separation of powers concerns are

implicated. As Alexander Hamilton warned in the Federalist:

"A legislature, without exceeding its province, cannot reverse

a determination once made in a particular case; though it may

prescribe a new rule for future cases." Federalist No. 81, at

483 (Clinton Rossiter ed., 1961). 

Both the U.S. Supreme Court and the South Carolina

Supreme Court have acknowledged the soundness of this general rule. In Plaut v. Spendthrift Farm, Inc., 514 U.S. 211, 219

(1995), the Court held that the Constitution prohibited legislation from operating retroactively to require courts to reopen

"final judgments." The Court reasoned that the Constitution

charged the judiciary — and the judiciary alone — with the

responsibility of saying what the law is in a particular case or

controversy, and once the judiciary does so, the legislature

"may not declare by retroactive legislation that the law applicable to that very case was something other than what the

courts said it was." Id. at 227 (emphasis in original). 

The South Carolina Supreme Court, in no uncertain language, employs an arguably even more stringent standard,

using separation of powers to prohibit the legislature from

enacting retroactive statutes that effectively overturn a "prior,

on-point judicial decision." JRS Builders, Inc. v. Neunsinger,

614 S.E.2d 629, 631 (S.C. 2005); see also Simmons v. Greenville Hosp. Sys., 586 S.E.2d 569, 572 (S.C. 2003); Steinke v.

S.C. Dep’t of Labor, Licensing & Regulation, 520 S.E.2d 142,

157 (S.C. 1999); Lindsay v. Nat’l Old Line Ins. Co., 207

S.E.2d 75, 78 (S.C. 1974). In Steinke, for instance, the South

Carolina Supreme Court succinctly asked and answered:

"May the Legislature by a retroactive amendment overrule

this Court’s prior interpretation of a statute? We conclude the

Legislature may not." 520 S.E.2d at 157. The court explained

that because statutory construction is a judicial function, and

because "a judicial [interpretation] of a statute is determinative of its meaning and effect," any subsequent law attempting

to modify that interpretation cannot apply retroactively with16 WARD v. DIXIE NATIONAL LIFE
out impermissibly invading the judicial power. Id. (citation

and internal quotations omitted); see also JRS Builders, 614

S.E.2d at 631 & n.2. 

These cases suggest that the South Carolina legislature’s

statutory definition of "actual charges" should not blithely be

read to contravene this court’s earlier judicial definition of

"actual charges" for the plaintiffs in Ward I. In Ward I, we

determined that "actual charges" meant the full amount a

medical provider billed for its services, and we directed the

entry of summary judgment against defendants on liability.

Ward v. Dixie Nat’l Life Ins. Co., 257 Fed. Appx. 620, 625-27

(4th Cir. 2007) (per curiam). The defendants now argue that

the South Carolina legislature has since come along and said

that "actual charges" really meant, for these particular plaintiffs and these precise policies, something else entirely: the

lower amount a medical provider actually received as payment for its services. S.C. Code Ann. § 38-71-242. Were we

to accept this argument, we would be forced to decide

whether the legislature’s action was unconstitutional under

Plaut on the ground that our decision in Ward I constituted a

"final judgment[ ]." Cf. Plaut v. Spendthrift Farm, Inc., 514

U.S. 211, 219 (1995). Similarly, we would also have to decide

whether the legislature’s action was unconstitutional under

South Carolina law because it overturned a "prior, on-point

judicial decision." Cf. JRS Builders, Inc., 614 S.E.2d at 631.

That defendants’ argument raises these "grave constitutional

questions," Mary Helen Coal Corp. v. Hudson, 235 F.3d 207,

214 (4th Cir. 2000), gives us reason enough to reject it.

Absent a clearer statement of intent, we will not assume that

the legislature sought to apply the new rule retrospectively

and provoke a fight of constitutional dimensions.

In their strenuous insistence that the South Carolina statute

applies here, defendants and their amici argue that federal

courts must defer to state legislatures because it is within the

power of legislatures to alter common law rules of contract

construction, because plaintiffs lack vested rights in non-final

WARD v. DIXIE NATIONAL LIFE 17
judgments, and because it is within the power of states, not

the federal government, to regulate the insurance industry. See

Br. of Appellants 22, 29; Br. of Ronald D. Rotunda as Amicus

9-10. These propositions strike us by and large as unexceptional, and we do not quarrel with them as general statements.

The problem with these propositions is not that they are at all

wrong in the abstract but that they all rest on the unwarranted

assumption that the South Carolina General Assembly

intended to apply the statute retroactively to this particular

case, thereby undoing the prior adjudicated definition. In this

way, defendants attempt erroneously to frame the issue as one

about what the state legislature may do, instead of one about

what it has done.

As the district court found, however, "[n]othing in either

the legislative history or the language of § 38-71-242 unambiguously indicates that the statute is to be applied retroactively." As we already noted, the text of the statute makes no

mention of retroactive application, uses the future tense

"shall," and includes an effective date. In fact, a legislative

committee declined to adopt suggested language that would

have declared the statute applicable to any policy that "has

been or will be issued." See J.A. 1432. 

Given the lack of clear legislative intent in favor of retroactivity, we need not decide whether the state legislature could

apply the statute to this case. Here, the state legislature did not

apply the statute to this case. And indeed, as far as federalism

is concerned, South Carolina courts have been, if anything,

even more insistent than federal courts in demanding an

unambiguous expression of legislative intent before applying

a statute retroactively, a demand motivated in large part by a

concern for the proper judicial and legislative roles. 

Accordingly, we will not attribute to the General Assembly

a constitutionally suspect intent when it has not made any

such intent explicit. The framers of the Constitution, having

witnessed firsthand the "ruins of a system of intermingled leg18 WARD v. DIXIE NATIONAL LIFE
islative and judicial powers," Plaut v. Spendthrift Farm, Inc.,

514 U.S. 211, 219 (1995), believed that "[o]ne branch . . .

cannot encroach on the domain of another without danger."

Plyler v. Moore, 100 F.3d 365, 370-71 (4th Cir. 1996) (citation and internal quotations omitted). It takes little enough

imagination to project where lodging powers over particular

disputes in legislative hands might lead. "Were the power of

judging joined with the legislative, the life and liberty of the

subject would be exposed to arbitrary control." Federalist No.

47, at 300 (James Madison) (quoting Montesquieu) (Clinton

Rossiter ed., 1961). For the foregoing reasons, the district

court was right to deflect that prospect, accord the South Carolina statute a sound reading that steers free and clear of any

constitutional shoals, and respect this court’s prior mandate in

Ward I.

III.

Defendants also raise several other contentions on appeal.

We shall address them in turn.

A.

Defendants claim that the district court erred in certifying,

and then on defendants’ later motion, in not decertifying, the

class of statewide plaintiffs in this case. Defendants argue that

this was error for two reasons: first, because the "adequacy"

requirement of Federal Rule of Civil Procedure 23(a)(4) was

not met, and second, because the "predominance" requirement

of Federal Rule of Civil Procedure 23(b)(3) was not met. 

In considering defendants’ claim, we begin by noting a district court’s "wide discretion" in deciding whether to certify

or decertify a class. Cent. Wesleyan College v. W.R. Grace &

Co., 6 F.3d 177, 185 (4th Cir. 1993) (citations and internal

quotations omitted). Because a district court possesses greater

familiarity and expertise than a court of appeals in managing

the practical problems of a class action, id., its certification

WARD v. DIXIE NATIONAL LIFE 19
decision is entitled to "substantial deference," especially when

the court makes "well-supported factual findings supporting

its decision." See Gunnells v. Healthplan Servs., Inc., 348

F.3d 417, 434, 421 (4th Cir. 2003). We may reverse such a

decision only if the district court abused its discretion. Deiter

v. Microsoft Corp., 436 F.3d 461, 465 (4th Cir. 2006). Here,

that standard is not satisfied. 

Under the adequacy requirement of Rule 23(a)(4), a district

court may certify a class only if the class representative "will

fairly and adequately protect the interests of the class." Fed.

R. Civ. P. 23(a)(4). Defendants claim that because the class

representative in this case, Martha Ward, will likely receive

enough in damages to offset any increased insurance premiums resulting from this lawsuit, she cannot protect the interests of those class members whose damage awards are so

small that they stand to lose on net. The district court, however, did not abuse its discretion in concluding, after a

detailed factual analysis, that "[g]iven the identity of claims

between the named plaintiff and the class members, there is

no potential for conflicting interests in this action." 

For a conflict of interest to defeat the adequacy requirement, "that conflict must be fundamental." Gunnells, 348 F.3d

at 430 (citation and internal quotations omitted). A conflict is

not fundamental when, as here, all class members "share common objectives and the same factual and legal positions [and]

have the same interest in establishing the liability of [defendants]." Id. at 431. Moreover, a conflict will not defeat the

adequacy requirement if it is "merely speculative or hypothetical," id. at 430 (citation and internal quotations omitted), and

in this case, the conflict rests on the uncertain prediction that

this lawsuit will cause premiums to increase enough to

adversely affect some members of the class. 

Defendants also contend that the class action fails under

Rule 23(b)(3)’s predominance requirement, which demands

that "questions of law or fact common to class members pre20 WARD v. DIXIE NATIONAL LIFE
dominate over any questions affecting only individual members." Fed. R. Civ. P. 23(b)(3). According to defendants,

individualized evidentiary issues regarding each class member’s damage award would overwhelm any issues common to

all class members. Once again, however, we decline to find

that the district court’s careful conclusion was an abuse of discretion. To be sure, individualized damage determinations cut

against class certification under Rule 23(b)(3). See, e.g.,

Broussard v. Meineke Discount Muffler Shops, Inc., 155 F.3d

331, 342-43 (4th Cir. 1998). But the district court did not

abuse its discretion in determining that the damage calculation

in this case was, at least in one important respect, not individualized. As the court explained, for all class members, damages equal "‘actual charges’ less amount paid." In other

words, the formula for damages was identical for all class

members, awarding them the difference between the amount

defendants should have paid (the higher amount charged by

medical providers) and the amount defendants actually paid

(the lower amount accepted by medical providers). 

B.

Defendants next claim that the district court erred by

awarding plaintiffs damages using explanation of benefit

(EOB) statements alone, without also requiring each plaintiff

to produce bills from their healthcare providers as proof of

"actual charges." Under defendants’ view, a proper calculation of damages would require both an actual bill (to reflect

"actual charges") and an EOB statement (to reflect the amount

already paid). 

The bill received by a patient is not the only appropriate

evidence of "actual charges." In fact, "actual charges" are evidenced not only by patients’ bills but also by EOB statements,

in the row labeled "Charge." The district court’s decision to

use EOB statements to prove damages was therefore prudent.

By including both "actual charges" and amount paid, an EOB

statement kills two birds with one stone, enabling the calculaWARD v. DIXIE NATIONAL LIFE 21
tion of damages with half the paperwork. A requirement that

each class member submit bills as additional proof of "actual

charges" would be unnecessary and impractical. 

C.

Defendants next claim that the district court erred in awarding damages to class members who are Medicare beneficiaries, since federal law prohibits medical providers from

sending Medicare patients bills showing "actual charges" and

instead allows them to send Medicare patients bills showing

only the amount received as payment from Medicare. Thus,

defendants argue, because there are no "actual charges" in the

case of Medicare beneficiaries, there are no damages.

This argument, however, suffers from the same flaw as

defendants’ previous argument: it, in the district court’s

words, "place[s] undue significance on the medical patient’s

receipt of an initial bill." Because "actual charges" are simply

the non-discounted value of medical services, they exist

regardless of whether the amount is shown on a patient’s bill,

on an EOB statement, or, in the case of Medicare beneficiaries, on the forms a healthcare provider submits to Medicare

in order to get paid. "Medicare summaries show two charges

associated with medical services," the district court found,

both "the cost a medical provider assigns to its services and

the amount of payment the provider accepts as payment for its

services." Therefore, Medicare beneficiaries can prove "actual

charges" even though "actual charges" are not shown on their

bills.

When "actual charges" are understood simply as the higher

price associated with medical services, it is clear that there is

no good reason to treat class members covered by Medicare

any differently from class members covered by private insurance. In neither case do medical providers expect to receive

a payment of "actual charges" from patients, since in both

cases, patients have other coverage that pays a discounted

22 WARD v. DIXIE NATIONAL LIFE
amount on their behalf. The fact that privately insured

patients, unlike Medicare patients, may see the amount they

are not required to pay, is simply irrelevant. 

D.

Defendants further contest the district court’s reliance on

six spreadsheets for the purpose of calculating plaintiffs’ damages. Each of the six spreadsheets contained a column reflecting the equivalent of "actual charges," which was derived

from EOB statements, and a column reflecting the lower cost

already paid by defendants. Five of the spreadsheets were created by defendants themselves in response to plaintiffs’ discovery request. The remaining spreadsheet was prepared by

plaintiffs’ counsel, who used EOB statements provided by

defendants to generate the data. On the basis of these six

spreadsheets, plaintiffs’ damages expert, a certified public

account, compiled a final spreadsheet that synthesized the

numbers contained in the six spreadsheets and applied an

appropriate interest rate to determine the total damages for all

plaintiffs in the class. The district court predicated its damage

award on the expert’s conclusion. 

Given the defendants’ own role in creating the spreadsheets, it is ironic that they now claim the spreadsheets are

unreliable and inadmissible as "double hearsay": "hearsay"

because the EOB statements were prepared by insurers

instead of medical providers to report medical providers’

charges, and "double" because the spreadsheets were prepared

by litigants and counsel instead of the insurers who supplied

the EOB statements. Thus, defendants claim, the district court

should not have permitted the spreadsheets’ use in determining damages. In the alternative, defendants suggest that the

district court should have required upwards of 500 medical

providers to come in and testify as to their "actual charges."

We shall review the district court’s decision to accept evidence for abuse of discretion. United States v. Vidacak, 553

WARD v. DIXIE NATIONAL LIFE 23
F.3d 344, 348 (4th Cir. 2009). In this case, the district court

did not abuse its discretion by basing its damages award on

the data in the six spreadsheets. Under Federal Rule of Evidence 703, plaintiffs’ expert was permitted to rely upon certain "facts or data," even if hearsay, if they are "of a type

reasonably relied upon by experts in the particular field in

forming opinions or inferences upon the subject." Here, plaintiffs’ damages expert did just that, relying upon data contained in the six spreadsheets to form his opinion on the

amount of total damages for all class members. When asked

directly whether the spreadsheets were of the type "that somebody that is an expert in your area would normally rely on to

reach an opinion," plaintiffs’ expert answered unconditionally, "[y]es." Defendants did not present any evidence to contradict that testimony. Accordingly, we hold that the district

court did not abuse its discretion. 

E.

We turn now to defendants’ final contention. Defendants

argue that the district court erred in declining to offset damages by the higher insurance premiums that plaintiffs potentially would have paid absent a breach. Defendants produced

expert testimony that if defendants had been paying "actual

charges" as defined in Ward I all along, defendants would

have charged plaintiffs an extra $2.7 million or so in premiums. According to defendants, it is a fundamental legal principle that a party to a contract should be put in no better a

position than it would have been in had the other party to the

contract performed its end of the bargain. See Restatement

(Second) of Contracts § 347; 11-55 Corbin on Contracts

§ 55.3. Thus, defendants argue, the total damages award

should be reduced by $2.7 million. 

As an initial matter, we note that this argument assumes

that, at the time they entered into the insurance contracts here,

the parties understood defendants’ contractual obligation to

mandate the payment of "actual charges" only in the lower

24 WARD v. DIXIE NATIONAL LIFE
amount accepted as payment-in-full by medical providers.

This claim is dubious, especially since, as the district court

pointed out, it "ignores that [defendants] at one time paid benefits according to the higher, fictional amount for the medical

services at issue, and that they later began to view the coverage provided by their insurance policies to extend only to the

lower amount." If in fact defendants believed they had promised to pay "actual charges" in the higher amount at the outset,

then plaintiffs were paying for that promise all along in the

form of higher premiums. In such a case, allowing defendants

to offset damages would be unnecessary and, as the district

court explained, "amount[ ] to a substantial re-writing of the

policy." Plaintiffs should not be denied the benefit of their

bargain. 

Moreover, as the district court also acknowledged, even if

we accept the "familiar principle that no party may be placed

in a better position by reason of a breach," that principle "is

not a license for speculation." Here, we think the proposed

damages offset is too largely in the realm of speculation. The

district court found that it was far from a sure thing that

defendants would have charged higher premiums at all, and

even if they had, that the amount of the premium hike was little more than a guess: 

[T]he proposition that [defendants] can look back at

their loss experience data, come up with how they

would have increased their rates based on that loss

experience data, proceed on the assumption that the

South Carolina Department of Insurance would have

approved the hypothetically requested rate increases

[as is required by law], and alter the premium payments under these insurance contracts is . . . speculative. 

We see no reason to overturn the district court’s determination that the increased premiums were insufficiently certain to

justify offsetting damages here. 

WARD v. DIXIE NATIONAL LIFE 25
IV.

For the foregoing reasons, the judgment of the district court

is 

AFFIRMED.

26 WARD v. DIXIE NATIONAL LIFE