Opinion ID: 6491398
Heading Depth: 4
Heading Rank: 2

Heading: participation of individual members

Text: At the outset, it should be noted that HMA concedes it is not seeking monetary damages, see supra note 6, notwithstanding the fact that its complaint specifically alleges that: HMA is ... entitled to the relief provided in [HRS chapter 480]. In this regard, as a direct and proximate result of [HMSA’s] unfair methods of competition, HMA and HMA members have suffered and continue to suffer damages and are therefore entitled to treble damages sustained by them. [HMA] is further entitled to equitable relief, as provided by HRS chapter 480, including an injunction. In addition, [HMAJ is entitled to recover of their reasonable attorneys’ fees together with the costs sustained in prosecuting this action. (Emphases added.) Because claims for monetary damages would require the significant participation of individual members, such factor would fatally undercut a request for organizational standing. On this point, the United States Supreme Court has explained that: Whether an association has standing to invoke the court’s remedial powers on behalf of its members depends in substantial measure on the nature of the relief sought. If in a proper case the association seeks a declaration, injunction, or some other form of prospective relief, it can reasonably be supposed that the remedy, if granted, will inure to the benefit of those members of the association actually injured. Indeed, in all cases in which we have expressly recognized standing in associations to represent their members, the relief sought has been of this kind. Hunt, 432 U.S. at 343, 97 S.Ct. 2434 (quoting Warth, 422 U.S. at 515, 95 S.Ct. 2197) (internal quotation marks and parentheses omitted). Consequently, courts have held that associations cannot generally raise claims for monetary damages on behalf of their members. See Pennsylvania Psychiatric Soc’y v. Green Spring Health Servs., Inc., 280 F.3d 278, 284 (3d Cir.2002); Air Transp. Ass’n of Am. v. Reno, 80 F.3d 477, 484-85 (D.C.Cir.1996) (citing a collection of cases for the same proposition); Sanner v. Bd. of Trade of City of Chicago, 62 F.3d 918, 923 (7th Cir.1995); United Union of Roofers, Waterproofers, & Allied Trades No. 40 v. Ins. Corp. of Am., 919 F.2d 1398, 1400 (9th Cir.1990); Alaska Fish & Wildlife Fed’n & Outdoor Council, Inc. v. Dunkle, 829 F.2d 933, 938 (9th Cir.1987). We agree. Thus, to the extent that HMA’s complaint raises claims for monetary damages on behalf of its members, we believe HMA lacks standing. However, as previously noted, see supra note 6, HMA has effectively abandoned its alleged monetary damage claims on behalf of its members, indicating instead that it no\r seeks only declaratory and injunctive relief. Thus, based on HMA’s representation, the remaining organizational standing question is whether HMA’s request for declaratory and injunctive relief will require an inappropriate level of individual participation based on the allegations in the complaint, which we take as true. Generally, “requests by an association fo-declaratory and injunctive relief do not require participation by individual association members.” Hosp. Council of Western Pennsylvania v. City of Pittsburgh, 949 F.2d 83, 89 (3d Cir.1991) (citations omitted)! However, the general rule is not invariable. In the •instant ease, HMSA contends that:. [M]uch of [HMA’s] ease involves claims about “medically necessary” care, profiling “individual” physicians, requiring “excessive” documentation for claims, failing to provide sufficient staffing for inquiries or sufficient explanation for denials, which can only be evaluated by examining the facts of each patient and physician involved. [HMA] will need to prove how HMSA’s wrongful conduct harms physicians individually and then ask the court to infer that HMSA’s policies and practices as a whole are flawed. To show HMSA’s alleged .“systemic” practices, [HMA] will need to prove first that the alleged practices occurred to identifiable physicians and patients, next, show that its proof represents the norm, not some aberration, and then establish that the practices violated the relevant contracts and statutes. This cannot be accomplished without both the active participation of [HMA’s] members and disclosure of evidence regarding their treatment of individual patients who are HMSA members. HMA disagrees, arguing that: [T]he notion that [HMA] would be required to provide individualized evidence (including individual patients’ records) regarding HMSA’s improper reimbursement decision, or to show how each individual physician was harmed, ignores that the wrongs complained of in this action are the result of pervasive, systemic policies and institution-wide practices that were intentionally created and implemented for the purpose of cutting HMSA’s own costs at the expense of physicians and patients without regard to patients’ health conditions, treatment setting, and other individualized factors. An examination of the systemic practices [HMA] seeks to enjoin demonstrates that the type of individualized inquiry the [c]ireuit [c]ourt describes would not be necessary. Practices such as “downcoding,” “bundling,” disregard of “modifiers” and improper application of CPT codes are alleged to have been used routinely and automatically (in many cases, through use of automated computer software), without regard to questions of medical necessity or the circumstances attendant to the provision of individual services to patients. Thus, the proof of [HMA’s] claims regarding these practices would be adduced primarily through HMSA’s own witnesses and own records (which would already include documentation of claims submitted by physicians). It will not require the testimony of every affected physician. (Emphases in original.) Relying on Pennsylvania Psychiatric Society v. Green Spring Health Services, Inc., 280 F.3d 278, 284 (3d Cir.), cert. denied, 537 U.S. 881, 123 S.Ct. 102, 154 L.Ed.2d 138 (2002), HMA maintains that any limited participation by individual physicians would not defeat its organizational standing. In Pennsylvania Psychiatric Society, the United States Court of Appeals for the Third Circuit expressed doubt as to whether certain claims for declaratory and injunctive relief, brought by an association on behalf of its members, could be established without significant individual participation. Id. at 286. There, an association of licensed psychiatrists (the Society) brought suit against Green Spring Health Services, Inc. (Green Spring), an administrator of managed health care plans that had entered into individual contracts (the Green Spring contracts) with its member-psychiatrists to form a “provider network” of psychiatric services. Id. at 281-82. The Society also sued various health maintenance organizations (HMOs) that had contracted with Green Spring to provide psychiatric services to the HMOs’ subscribers. Id. at 281. The Society sought damages, as well as declaratory and injunctive relief, on the grounds that Green Spring and the HMOs (collectively, the defendants) had unfairly profited at the expense of the Society’s members by refusing] to authorize and provide reimbursement for medically necessary mental health treatment; interfering] with patients’ care by permitting non-psychiatrists to make psychiatric treatment decisions; violating] [the Green Spring contracts] by improperly terminating relationships with certain psychiatrists; and breaeh[ing] the contractual duties of good faith and fair dealing by failing to timely pay psychiatrists and by referring patients to inconvenient treatment locations, thereby depriving some patients access to treatment. Id. at 282. The defendants moved to dismiss the complaint for lack of the Society’s standing to sue on behalf of its members. Id. at 285. They argued that the medical coverage decisions on psychiatric care forming the basis for the Society’s allegations were “fact-intensive inquiries” that would fail the third prong of the Hunt test. Id. The United States District Court for the Western District of Pennsylvania agreed and granted the defendants’ motion. Id. at 286. Although the Third Circuit, on appeal, agreed with the trial court’s dismissal of the claims for damages, id. at 284, 286 n. 6., it reversed with respect to the Society’s declaratory and injunctive claims, stating: [The Society/ maintains [that] the heart of its complaint involves systemic policy violations that will make extensive individual participation unnecessary. In effect, the [Society] contends the methods the [defendants] employ for making deci sions—e.g., authorizing or denying mental health services, eredentialing physicians, and reimbursement—represent breaches of contract as well as tortious conduct. Therefore, insofar as its allegations concern ho'W the [defendants] render these decisions, the Society’s complaint involves challenges to alleged practices that may be established with sample testimony, which may not involve specific, factually intensive, individual medical care determinations. If the Society can establish these claims with limited individual participation, it would satisfy the requirement for [organizational] standing. While we question whether the Society can accomplish this, at this stage of the proceedings on a motion to dismiss for lack of standing, we review suffieiency of the pleadings and must accept as true all material allegations of the complaint and must construe the complaint in favor of the plaintiff. For this reason, we believe the Society’s suit should not be dismissed before it is given the opportunity to establish the alleged violations without significant individual participation^] Id. at 286 (some emphases in original and some added) (citations, internal quotation marks, and alteration marks omitted). Moreover, in Hospital Council of Western Pennsylvania v. City of Pittsburgh, 949 F.2d 83 (3d Cir.1991), a case cited by the court in Pennsylvania Psychiatric Society, the Third Circuit explained that the third prong of the Hunt test was satisfied even though the participation of some of the individual members of the council might be required. Id. at 89. In Hospital Council of Western Pennsylvania, the Council 19 had filed a complaint in federal district court, alleging that the defendant-governmental-units were attempting to force tax-exempt member-hospitals to make payments in lieu of taxes by indicating that, if the hospitals did not make such payments, their tax-exempt status would be challenged or they would likely encounter difficulty with other governmental matters such as zoning approvals. The federal district court dismissed the complaint based upon, inter alia, its conclusion that the claims asserted and the relief requested would require the participation of the individual hospitals in the lawsuit and that, therefore, the Council had not met the third requirement of Hunt. On appeal, the Third Circuit, focusing on the Supreme Court’s language in Hunt that organizational standing is inappropriate if the claim or request for relief requires “the participation of individual members in the lawsuit,” id. at 89 (quoting Hunt, 432 U.S. at 343, 97 S.Ct. 2434) (internal quotation marks omitted), stated: Viewed alone, this language could be interpreted to mean that [organizational] standing is not permitted if participation by any members of the association would be necessary. This language, however, appears to paraphrase a more detailed statement first made by the [Supreme] Court in Warth and repeated in later cases. In Warth ..., the Court wrote: [S]o long as the nature of the claim and of the relief sought does not make the individual participation of each injured parity indispensable to proper resolution of the cause, the association may be an appropriate representative of its members entitled to invoke the court’s jurisdiction. [422 U.S. at 511, 95 S.Ct. 2197 (emphasis added).] The Court quoted and relied upon this statement in Hunt, 432 U.S. at 343[, 97 S.Ct. 2434.] Accordingly, it appears that an association may assert a claim that requires participation by some members. Id. at 89 (some emphases in original and some added). Recognizing that the Council’s claims would require some participation by some Council members, the Third Circuit acknowledged that, unlike some prior organizational standing cases, the case was not challenging a statute, regulation, or ordinance, but instead involved a challenge to governmental practices. Consequently, it would probably be necessary to prove, through evidentiary submission, the manner in which the defendants treated individual member hospitals. Id. at 89-90. Such litigation would likely require that member-hospitals provide discovery and trial testimony by their officers and employees. Nevertheless, the Third Circuit concluded that, because such participation would not constitute participation by “each injured party” in the suit, it did not run afoul of the third prong of the Hunt test. Id. at 90 (bracketed word omitted). We believe the approach of the Third Circuit is a sound one. Therefore, turning to the allegations in HMA’s complaint, we note that HMA’s prayer for relief seeks, inter alia, a permanent injunctive relief prohibiting, restraining, and enjoining [HMSA] from engaging in the conduct complained of herein, including, inter alia: (i)continuing to direct their internal agents to reduce or fully deny reimbursement without regard to the validity or necessity of the services provided; (ii) continuing to bundle claims for separate procedures thereby denying HMA members all or part of the payment due for some procedures; (iii) denying payment of modifiers for complicated medical cases that involve excessive time and resources; (iv) continuing to downcode procedures performed by HMA members; (v) continuing to use software that automatically downcodes healthcare services provided by HMA members; (vi) improperly employing software programs to “profile” physicians and automatically downcode procedures and/or deny payment to those physicians identified as purportedly providing “excessive procedures” without any clinical review, oversight or justification; [[Image here]] (viii) forcing physicians and their staff to expend unreasonable amounts of time and resources attempting to obtain the reimbursement to which they are entitled; (ix) failing to provide adequate explanations for the denial of claims for reimbursement; [[Image here]] (xiii) systematically reducing reimbursement rates to HMA members below reasonable levels; (xiv) failing to properly reimburse HMA members by requiring physicians to submit excessive documentation justifying their claims submissions; and (xv) otherwise interfering with or obstructing the right to full and timely reimbursement to HMA members. HMA maintains that its claims are “highly amenable to proof with little or no physician participation, because they involve systemic policy violations that will make extensive individual participation unnecessary.” Consistent with the argument advanced in its answering brief, HMA reiterates in its reply brief that HMSA’s adjudication of physician reimbursement claims is improper because HMSA adjudicates claims on an automated, systemic basis, using software that automatically imposes pre-determined “edits” upon claims, without any consultation of patient records or the actual circumstances surrounding each claim. Hence, there is no need to require a trial into the medical necessity of any medical service rendered, because [HMA] will establish the impropriety of HMSA’s conduct by demonstrating that [HMSA] automatically reduces or denies payments without regard to medical necessity. (Emphases in original.) Inasmuch as HMA’s allegations substantially focus on systemic practices and methods used to make decisions regarding reimbursement and approval of treatments, we conclude that HMA has satisfied the third Hunt requirement and, thus, has sustained its burden to plead organizational standing. See Pennsylvania Psychiatric Soc’y, 280 F.3d at 286 (finding that allegations involving systemic policy violations do not need “specific, factually intensive, individual medical care determinations”). Additionally, our conclusion that HMA’s allegations are sufficient to confer organization standing is strongly supported by a similar decision in In re Managed Care Litigation, 298 F.Supp.2d 1259 (S.D.Fla.2003). In that case, two groups of plaintiffs—the health care providers and medical associations—commenced suit against managed care companies (the insurers), alleging that the insurers engaged in a pattern of failing to fully and timely pay claims for reimbursement for medical services in violation of federal and state statutes. Id. at 1271. Among other things, the United States District Court for the Southern District of Florida concluded that the medical associations had standing to bring suit on behalf of its members on the grounds that (1) the medical associations’ allegations concerned “a broad-based scheme where systemic techniques are used to make decisions regarding patient care and compensation for treatment” and (2) the medical associations were not seeking damages for their members, only injunctive and declaratory relief. Id. at 1308. Moreover, although some of HMA’s allegations may require several physician members to testify and participate in the lawsuit, the third element of the Hunt test is nonetheless satisfied because the allegations of systemic denial and delay in reimbursement and HMA’s request for declaratory and in-junctive relief on HMSA’s alleged deceptive and unfair practices do not require “individualized proof,” i.e., participation of each physician member. See Retired Chicago Police Ass’n v. City of Chicago, 7 F.3d 584, 603 (7th Cir.1993) (“Declaratory, injunctive, or other prospective relief will usually inure to the benefit of the members actually injured and thus individualized proof of damages is often unnecessary.” (Citing Warth, 422 U.S. at 515, 95 S.Ct. 2197.)); Hosp. Council of Western Pennsylvania, 949 F.2d at 89 (“association may assert a claim that requires participation by some members” (emphasis omitted)); Appraisers Coalition v. Appraisal Inst., 845 F.Supp. 592, 601 (N.D.Ill.1994) (“The third element of Hunt is satisfied, despite the participation of one or many members of an association, when the cause of action and relief sought does not require ‘individualized proof for the litigation of the case.”). Accordingly, we hold that HMA has, at this stage in the litigation, carried its burden of pleading standing to bring claims on behalf of its physician members. However, whether, on a going-forward basis, HMA will be able to satisfy its burden of organizational standing with the manner and degree of evidence required at successive stages of the litigation is an issue upon which this court expresses no opinion. We now turn to address the second threshold matter, i.e„ whether HMA has standing to sue in it ⅜ individual capacity.