Court Opinion

ID: 6348850
Source: CourtListenerOpinion
Date Created: 2022-06-10 19:15:29.537105+00
Date Added: 2024-06-11T08:42:47.003583
License: Public Domain

FILED
                                                                          June 10, 2022
                                                                         EDYTHE NASH GAISER, CLERK
                                                                        SUPREME COURT OF APPEALS
                                                                             OF WEST VIRGINIA

No. 21-0737, State of West Virginia ex rel. West Virginia University Hospitals, Inc.; and

West Virginia United Health System, Inc., d/b/a WVU Healthcare v. The Honorable Phillip

D. Gaujot, Judge of the Circuit Court of Monongalia County; Christopher Thomack; and

Joseph Michael Jenkins

Armstead, Justice, concurring in part and dissenting in part:

              The petitioners in this matter, West Virginia University Hospitals, Inc., and

West Virginia United Health System, Inc., d/b/a WVU Healthcare (collectively “WVU

Hospitals”), allege that the circuit court failed to comply with our mandate in State ex rel.

W. Va. Univ. Hosps., Inc. v. Gaujot, 242 W. Va. 54, 829 S.E.2d 54 (2019) (“Gaujot II”). 1

In particular, they object to the circuit court’s findings, after remand, of commonality and

ascertainability and to the circuit court’s refusal to revisit the subject of predominance

under our more recent decision in State ex rel. Surnaik Holdings of WV, LLC v. Bedell, 244

W. Va. 248, 852 S.E.2d 748 (2020). They object, further, to the circuit court’s alleged

failure to address the ethical concerns, raised in Gaujot II, about attorneys’ participation in

the class. Id. at 64 n.16, 829 S.E.2d at 64 n.16.

              1
                As the majority notes, the petition requested in this matter represents the
third instance in which this Court has addressed issues related to the underlying civil action
on which the request is based. The previous request for extraordinary relief filed in 2018,
State ex rel. W. Va. Univ. Hosps., Inc. v. Gaujot, 242 W. Va. 54, 829 S.E.2d 54 (2019),
being the second such instance in which issues related to this action have come before us,
I, like the majority, refer to the 2018 action as Gaujot II.
              Because I am satisfied with the circuit court’s removal of certain attorneys

from the class in order to address the ethical issues raised in Gaujot II, I agree with the

majority opinion’s refusal to grant relief on that issue. As the majority opinion observes

“[a] writ of prohibition is an extraordinary remedy” and one that “we do not grant . . .

lightly.” Nevertheless, we have also held that “[a] circuit court’s failure to conduct a

thorough analysis of the requirements for class certification pursuant to West Virginia

Rules of Civil Procedure 23(a) and/or 23(b) amounts to clear error.” Surnaik at ___, 852

S.E.2d at 750, syl. pt. 8. Because I believe that the circuit court has yet to conduct a

sufficiently thorough analysis of commonality or ascertainability for purposes of Rule

23(a) or of predominance for purposes of Rule 23(b), I respectfully dissent from those

portions of the majority opinion that find no error on these issues, and I would grant the

writ of prohibition.

              Commonality.

              Rule 23 authorizes “[o]ne or more members of a class [to] sue . . . as

representative parties” but “only if . . . there are questions of law or fact common to the

class . . . .” W. Va. R. Civ. P. 23(a)(2) (emphasis added). When these parties were before

us in Gaujot II, we found that the circuit court had “exceeded its legitimate powers by

certifying the class” without “conduct[ing] a sufficiently thorough analysis of the case to

determine whether the commonality required . . . under Rule 23 of the West Virginia Rules

of Civil Procedure is present.” Id. at 64, 829 S.E.2d at 64. We granted relief on that basis.

                                             2
              On    remand,    Christopher    Thomack      and   Joseph    Jenkins    (“Class

Representatives”) conducted additional discovery, and the circuit court subsequently found

commonality by determining that WVU Hospitals’ “average cost” to produce medical

records during the period set forth in the class definition, i.e., from January 18, 2008, to

June 5, 2014 (the “Class Period”), was $2.08. The court reasoned that, “[b]ased upon that

average cost of $2.08 per request fulfilled, it appears that each and every requestor suffered

damages based on the $10.00 search fee alone, without even considering the additional

damages related to the $.40 per page/image fee that was charged for every class member’s

request.” (Emphasis added.)

              This so-called “average cost” of $2.08 was the linchpin of the circuit court’s

analysis. The court noted that the medical records reimbursement statute, W. Va. Code §

16-29-2, had changed on June 6, 2014. After quoting both versions of the statute, the

circuit court announced, without any analysis, that both versions contained “the same

restrictions regarding the charges . . . on producing a patient’s medical record (that is, the

fees must be reasonable and based upon the expenses actually incurred).” The circuit court

also noted that WVU Hospitals had conducted a “time study” designed to “accurately

capture [WVU Hospitals’] actual costs incurred in producing medical records” under the

new statutory regime. Resulting invoices for the period of June 6, 2014, through July 31,

2014, showed that WVU Hospitals’ “average cost” to respond to a records request was

$2.08. Based on deposition testimony, the circuit court found that the results of the time

study were “transferrable” to the Class Period. The circuit court also found, based on

                                              3
deposition testimony, that WVU Hospitals could not replicate the process of producing

individual class members’ medical records during the Class Period, and the court

concluded that any uncertainty regarding damages should be resolved against WVU

Hospitals.

              I believe that the circuit court’s use of an “average cost” to find commonality

was improper. “A representative or statistical sample, like all evidence, is a means to

establish or defend against liability.” Tyson Foods, Inc. v. Bouaphakeo, 577 U.S. 442,

454–55 (2016). Sometimes, “a representative sample is the only practicable means to

collect and present relevant data establishing a defendant’s liability.” Id. at 455 (internal

quotation marks omitted). However, such evidence must be reliable. “Its permissibility

turns not on the form a proceeding takes—be it a class or individual action—but on the

degree to which the evidence is reliable in proving or disproving the elements of the

relevant cause of action.” Ibid.

              In this case, the “average cost” relied upon by the circuit court was unreliable

because it rested on a flawed assumption that West Virginia Code § 16-29-2 did not

meaningfully change on June 6, 2014. During the Class Period, the relevant portion of

West Virginia Code § 16-29-2 provided as follows:

                     The provider shall be reimbursed by the person
              requesting in writing a copy of the records at the time of
              delivery for all reasonable expenses incurred in complying
              with this article: Provided, That the cost may not exceed
              seventy-five cents per page for the copying of any record or
              records which have already been reduced to written form and
              a search fee may not exceed ten dollars.

                                              4
W. Va. Code § 16-29-2(a) (eff. 1999) (emphasis added). By contrast, during the time study,

the relevant portion of the statute contained these provisions:

                     A person requesting records from a provider shall . . .
              pay a reasonable, cost-based fee, at the time of delivery.
              Notwithstanding any other section of the code or rule, the fee
              shall be based on the provider’s cost of: (1) Labor for copying
              the requested records if in paper, or for placing the records in
              electronic media; (2) supplies for creating the paper copy or
              electronic media; and (3) postage if the person requested that
              the records be mailed.
                     ....

                    The labor for copying under this section shall not
              exceed twenty-five dollars per hour . . . .

W. Va. Code § 16-29-2(a) & (b) (eff. 2014) (emphasis added).

              These versions of the statute are substantially different. The 2014 statute

authorized WVU Hospitals to collect a “reasonable, cost-based fee” based on three things

only—labor, supplies, and postage. Ibid. Even the category of labor was restricted to

“[l]abor for copying” and “[l]abor . . . for placing the records in electronic media[.]” Under

the 1999 statute, however, WVU Hospitals had the right to seek reimbursement for each of

these costs plus every other expense that was both “reasonable” and “incurred in complying

with this article[.]” W. Va. Code § 16-29-2(a) (eff. 1999). Such reasonable expenses,

unlike those authorized by the 2014 statute, were not limited to the costs involved in

“copying” records or “placing the records in electronic media” but instead included costs

such as those incurred in searching for relevant records. W. Va. Code § 16-29-2(a) (eff.

2014) and W. Va. Code § 16-29-2(a) (eff. 1999). Indeed, the 1999 statute expressly

                                              5
included reference to a search fee. Such costs of searching for and locating records were

not included under the 2014 version of the statute.

              Because of these differences, no relevant inference can be drawn from the

amounts that WVU Hospitals charged for records between June 6, 2014, and July 31, 2014.

It may be that these invoices, which were based on the time study, provide some insight

regarding WVU Hospitals’ actual time investment in responding to records requests during

the Class Period. However, even this insight is of doubtful relevance because the labor

costs that WVU Hospitals could lawfully recoup were narrower under the 2014 statute than

they were under the 1999 statute. 2

              Furthermore, I am unsure that the “average cost” relied on by the circuit court

is useful in any manner with regard to certification of a class action in this matter. The

record shows, as WVU Hospitals has maintained all along, that the time it takes to respond

to a given records request can vary widely. According to the spreadsheet prepared by

Kathryn Crous, which served as the basis for the circuit court’s “average cost,” two minutes

of effort sometimes led to four or five images and other times led to as many as 1,240 or

5,253 images. Similarly, producing 73 images might take four minutes, while producing

              2
                  I also disagree with the circuit court’s assumption that the results of the
time study are properly “transferrable” to the Class Period. Certainly, Christine Metheny
testified that the results of the time study were “transferrable to the same process . . . a year
earlier” and even “[a]ll the way back.” I assume “[a]ll the way back” means to the
beginning of the Class Period, but we know that is not the case because Ms. Metheny later
clarified that generalization from the time study is only possible as far back as July 1, 2008,
when the “EPIC” system became operational. The majority opinion duly applies this time
limit to the “average cost” determined by the circuit court, but the majority opinion fails to
appreciate the significance of this limitation. Being able to generalize after July 1, 2008,
is not enough to show commonality when the Class Period began on January 18, 2008.
                                               6
75 images might take 14 minutes. The number of images-per-minute ranged from 0.6 (i.e.,

six images in ten minutes) to 11,991 (i.e., 11,991 images in one minute), 3 even as the

sample of charges ranged from $.36 to $46.25. If the underlying data is so widely

divergent, what reliable conclusion, if any, can be drawn from an average fee of $2.08?

Nevertheless, this “average cost” served as the basis for the circuit court’s finding of

commonality.

               If we set aside the circuit court’s “average cost” analysis, the circuit court

cites no other realistic basis for concluding that liability or damages are capable of

resolution on a class-wide basis. The record establishes that WVU Hospitals’ expense of

producing records varied substantially from request to request.         Because the statute

provided for “reimburse[ment] . . . for all reasonable expenses incurred[,]” W. Va. Code §

16-29-2(a) (eff. 1999) (emphasis added), we cannot know whether the fee that WVU

Hospitals charged to any given class member actually exceeded WVU Hospitals’ expenses

without individualized proof of what was necessary to respond to that class member’s

records request. Knowing what WVU Hospitals charged for the records does not establish

liability because WVU Hospitals’ fee is only half of the liability (and damages) equation.

               Like the circuit court, the majority opinion attempts to avoid this difficulty

by saying that WVU Hospitals must be subject to “probable and inferential data” because

it failed to calculate its actual reasonable expenses during the Class Period. However, as

               According to Melissa Martin, WVU Hospitals had the capacity to save
               3

some matters from a records request. This would obviously reduce the time to respond to
a subsequent request for the same records.
                                              7
noted above, such data is only acceptable proof if it is reliable, and the circuit court’s

“average cost” is not reliable. Furthermore, there is a substantial difference between

allocating the risk of uncertainty to WVU Hospitals regarding damages and allocating the

risk of uncertainty to them regarding liability. Gould v. Am.-Haw. S.S. Co., 535 F.2d 761,

782 (3d Cir. 1976) (stating that “there is a clear distinction between the measure of proof

necessary to establish the fact a plaintiff has sustained an injury, and the measure of proof

necessary to enable the jury to fix the amount of damages resulting from that injury”).

Class Representatives should not get the benefit of a less rigorous standard of proof until

they have shown that WVU Hospitals is, in fact, liable to them. J. Truett Payne Co. v.

Chrysler Motors Corp., 451 U.S. 557, 568 (1981) (“The cases relied upon by petitioner all

depend in greater or lesser part on the inequity of a wrongdoer defeating the recovery of

damages against him by insisting upon a rigorous standard of proof. In this case, however,

we cannot say with assurance that respondent is a ‘wrongdoer.’ . . . Absent such a finding,

we decline to apply to this case the lenient damages rules of our previous cases.”). This

distinction is particularly important to observe in a case where liability and damages are so

closely related. As we observed in Gaujot II, “[t]he statute is framed such that liability and

damages are two sides of the same coin[.]” Id. at 63, 829 S.E.2d at 63. Proof that WVU

Hospitals charged a class member more than its reasonable expenses is a factor of

establishing both WVU Hospitals’ liability and the extent of the class member’s damages.

Ibid.

              Accordingly, because commonality is an essential prerequisite for class

certification and because I believe that, despite our clear guidance in Gaujot II, the circuit

                                              8
court has yet to truly resolve the fundamental legal and factual issues necessary to decide

commonality in this case, I dissent on this issue and would grant a writ of prohibition on

this basis.

              Ascertainability.

              I further dissent from the majority opinion’s finding that we have no basis to

grant a writ of prohibition based on an absence of ascertainability. We have held that

“[b]efore certifying a class pursuant to Rule 23 of the West Virginia Rules of Civil

Procedure, it is imperative that the class be identified with sufficient specificity so that it

is administratively feasible for the court to ascertain whether a particular individual is a

member.” Syl. Pt. 3, State ex rel. Metro. Life Ins. Co. v. Starcher, 196 W. Va. 519, 474

S.E.2d 186 (1996) (emphasis added). The majority opinion quotes at length the circuit

court’s purported findings on this issue. However, much of the circuit court’s rationale for

its findings in relation to ascertainability is based upon its related findings regarding

commonality. As discussed above, I believe such findings regarding commonality and the

reliance of the circuit court on the “time study” to establish commonality are in error. The

majority, in reaching its determination that ascertainability has been established, points to

finding 8 of the circuit court’s order. However, finding 8 states, in pertinent part, that “the

Defendants’ assertion that an individual assessment of each class member’s damages will

be necessary has not been demonstrated under the facts presented to this Court” and further

finds that “the Defendants’ expert analysis set forth in the ‘time study’ concluded that

such individual charges would be the same as those charged under the subsequent version

                                              9
of the statute, thus providing a means of proving such individual cost . . . .” (Emphasis

added.) Accordingly, the circuit court’s finding as to ascertainability is inextricably

intertwined with its flawed analysis of commonality, which in turn is based upon the

erroneous assumption that the “time study” is a valid means of determining commonality.

Beyond this flawed analysis, the circuit court’s ascertainability findings amount merely to

conclusory statements about the ability of the claims process, patient spreadsheets and the

proposed class notice to render the class ascertainable. Such findings are inadequate to

support certification.

              Furthermore, I disagree with the majority opinion’s conclusion that EQT

Prod. Co. v. Adair, 764 F.3d 347 (4th Cir. 2014), is distinguishable from the facts in this

case.   The court in EQT remanded the underlying case for reconsideration of

ascertainability issues because “numerous heirship, intestacy, and title-defect issues

plague[d] many of the potential class members’ claims to the gas estate . . . [and] pose[d]

a significant administrative barrier to ascertaining the ownership classes.” Id. at 359.

According to EQT,

              [t]he fact that verifying ownership will be necessary for the
              class members to receive royalties does not mean it is not also
              a prerequisite to identifying the class. Without even a rough
              estimate of the number of potential successors-in-interest, we
              have little conception of the nature of the proposed classes or
              who may be bound by a potential merits ruling. Lacking even
              a rough outline of the classes’ size and composition, we cannot
              conclude that they are sufficiently ascertainable.
Id. at 359–60. As EQT explains, “plaintiffs need not be able to identify every class member

at the time of certification. But “[i]f class members are impossible to identify without

                                            10
extensive and individualized fact-finding or ‘mini-trials,’ then a class action is

inappropriate.” Id. at 358 (quoting Marcus v. BMW of N. Am., LLC, 687 F.3d 583, 593 (3d

Cir. 2012)). I believe that similar difficulties are present in this case because each plaintiff

would be required to produce individualized proof that he or she “reimbursed” WVU

Hospitals for more than their “reasonable expenses incurred[.]” W. Va. Code § 16-29-2(a)

(eff. 1999). Accordingly, I believe that it would be difficult to establish ascertainability

without addressing the specific facts in each case, and I respectfully dissent from the

majority opinion’s conclusion that no relief is warranted on this issue.

              Predominance.

              We have held that class certification requires a circuit court to “determine

that the party seeking class certification has satisfied all four prerequisites contained in

Rule 23(a) . . . and has satisfied one of the three subdivisions of Rule 23(b).” Syl. Pt. 8, in

part, In re W. Va. Rezulin Litig., 214 W. Va. 52, 585 S.E.2d 52 (2003), holding modified

by Surnaik, 244 W. Va. 248, 852 S.E.2d 748. Subdivision (3) of Rule 23(b) states, in

relevant part, “that the questions of law or fact common to the members of the class [must]

predominate over any questions affecting only individual members . . . .” W. Va. R. Civ.

P. 23(b)(3) (emphasis added).

              Whether common questions “predominate” over individual questions is an

issue that requires “thorough analysis[.]” Surniak at ___, 852 S.E.2d at 750, syl. pt. 7, in

part. According to Surnaik,

              thorough analysis of the predominance requirement of West
              Virginia Rule of Civil Procedure 23(b)(3) includes (1)

                                              11
              identifying the parties’ claims and defenses and their
              respective elements; (2) determining whether these issues are
              common questions or individual questions by analyzing how
              each party will prove them at trial; and (3) determining whether
              the common questions predominate. In addition, circuit courts
              should assess predominance with its overarching purpose in
              mind—namely, ensuring that a class action would achieve
              economies of time, effort, and expense, and promote
              uniformity of decision as to persons similarly situated, without
              sacrificing procedural fairness or bringing about other
              undesirable results. This analysis must be placed in the written
              record of the case by including it in the circuit court’s order
              regarding class certification.

Ibid.   WVU Hospitals object that the circuit court, on remand, failed to conduct a

preponderance analysis with the level of thoroughness that Surnaik requires, despite their

request for the court to do so. Indeed, the majority recognizes that the circuit court has not

addressed preponderance in an order since the class certification order that was entered on

April 16, 2014.

              The circuit court’s April 16, 2014 certification order does not approach the

level of analysis that Surnaik requires. The certification order merely announces that Class

Representatives “have satisfied the predominance requirement because the issue of the [sic]

whether the amount charged to patients for copies of their medical records is ‘reasonable’

under the applicable statute predominates all issues affecting individual members.” I do

not believe that this conclusory language even satisfies the preponderance standard that

applied when the certification order was entered. See Rezulin at 72, 585 S.E.2d at 72 (“A

conclusion on the issue of predominance requires an evaluation of the legal issues and the

proof needed to establish them. . . . The predominance requirement is not a rigid test, but

                                             12
rather contemplates a review of many factors . . . .” (emphasis added) (internal quotation

marks and citation omitted)).

              The majority opinion excuses this lack of analysis for two reasons, first,

because our opinion in Gaujot II allegedly did not require “the circuit court to address any

of the Rule 23 factors other than commonality” and, second, because “the circuit court

conducted its predominance evaluation eight years ago under the standard . . . in effect” at

that time. I do not believe either of the explanations offered by the majority excuse the

lack of findings by the circuit court to establish preponderance.

              I agree that, in Gaujot II, our express basis for granting the writ of

prohibition, as moulded, was the circuit court’s failure to conduct a “sufficiently thorough

analysis” of commonality. Gaujot II at 64, 829 S.E.2d at 64. That is not to say, however,

that other sufficient grounds for relief were not present; we did not decide that question

either way. On the contrary, we limited our analysis to commonality because the circuit

court’s lack of analysis, on that issue alone, was an entirely sufficient basis for granting

relief. Ibid. Nevertheless, we expressly “urge[d] the circuit court to determine whether the

requirements of Rule 23, particularly as they relate to commonality, have been met and, if

so, to craft a class definition consistent with such findings.” Ibid. (emphasis added). While

we admittedly emphasized commonality, we clearly urged the circuit court to determine

whether the “requirements” of Rule 23 had been met, not whether a single “requirement,”

namely commonality, had been met.

              Moreover, the fact that the circuit court had addressed the preponderance

criterion several years before did not prevent the circuit court from addressing it again after

                                              13
Surniak or cure the fact that the circuit court’s previous predominance analysis was

inadequate when it was issued. As the majority acknowledges in another context, class

“certification is conditional and may be altered, expanded, subdivided, or vacated as the

case progresses toward resolution on the merits.” Syl. Pt. 2, in part, State ex rel. Metro.

Life Ins. Co. v. Starcher, 196 W. Va. 519, 474 S.E.2d 186 (1996). Nothing in Surnaik

suggests that we intended its holdings to operate only prospectively. Moreover, because

we urged the circuit court in Gaujot II to make an analysis of the Rule 23 factors, the circuit

court had a duty to review the preponderance issue under the prism of Surnaik, which was

decided in 2020, after Gaujot II but before the circuit court entered the order under appeal

in this case in July 2021. Because compliance with Rule 23(b) is an essential prerequisite

for class certification and because I believe that the circuit court’s preponderance analysis

was inadequate under either a pre-Surnaik or post-Surnaik standard, I dissent as to this

issue and would grant a writ of prohibition on this basis as well.

               For these reasons, I concur in Part III.D of the majority opinion, and I

respectfully dissent as to Parts III.A., III.B., and III.C.

                                               14