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Last week, the Ninth Circuit Court of Appeals reversed a District Court decision denying class certification in Yokoyama v. Midland National Life Insurance Company, __ F.3d __, 2009 WL 2634770 (9th Cir. August 28, 2009). Yokoyama concerns a class action involving the sale of annuities to senior citizens where the Ninth Circuit addressed, for the first time, the standard of review of a class certification where the underlying issue is purely an issue of law. Under existing precedent articulated by Parra v. Bashas’, Inc., 536 F.3d 975, 977 (9th Cir. 2008), a district court’s class action certification is reviewed on appeal under an abuse of discretion standard of review. However, the Ninth Circuit reasoned that this conflicted with U.S. Supreme Court precedent that all issues of law must be reviewed de novo. See Salve Regina Coll. V. Russell, 499 U.S. 225, 231 (1991). In Yokoyama, the issue was whether Hawaii consumer protection statutes require a finding of individual reliance. Since the class certification turned on this narrow issue of Hawaii state law, the Ninth Circuit Court of Appeals found that the proper standard of review was de novo.

For a more detailed analysis of this case, please visit the Barger Wolen Insurance Litigation & Regulatory Law Blog.
 

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HIPAA-covered entities need to be aware of new regulations issued this week that require public disclosure of data breaches. The U.S. Department of Health and Human Services has issued new regulations that require providers, health plans, and other HIPAA-covered entities to notify individuals when their health information is breached.

Data breaches involving protected health information must be reported to the Department of Health and Human Services. Breaches affecting less than 500 individuals can be reported to the HHS secretary on an annual basis. However, breaches that affect more than 500 individuals must be promptly disclosed to the affected individuals, the HHS secretary, and the media.

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In Griffin Dewatering Corporation v. Northern Insurance Company of New York, __ Cal. App. 4th __, 2009 WL 2344762 (July 31, 2009), the Court of Appeal in the Fourth Appellate District issued a lengthy opinion explaining that an insurer’s incorrect, but objectively reasonable, claim denial decision cannot be retroactively rendered unreasonable as a result of a post-denial judicial decision. In other words, there can be no bad faith if there is substantial case law in favor of the insurer’s position at the time it makes its decision, even if that case law is later overturned.

Northern Insurance Company of New York (“Northern”) issued a comprehensive general liability policy to Griffin Dewatering Corporation (“Griffin”), a company that was involved in certain sewer bypass projects. The policy contained a “total pollution exclusion,” which Northern contended excluded sewage release from coverage. Northern relied on this provision in denying coverage and defense to Griffin.

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In Dupree v. Holman Prof'l. Counseling Ctrs., ___ F.3d ___, 2009 WL 2245219 (9th Cir. July 29, 2009), the Ninth Circuit Court of Appeals held that an ERISA-governed health plan, which repeatedly asserted that non-contracted services were generally not covered, unambiguously excluded coverage of non-emergency treatment at a non-contracted residential treatment center. In doing so, the Ninth Circuit employed the well-established canon of contract interpretation, applicable in ERISA cases, that a contract should be read as a whole, giving effect to every part. The court rejected Plaintiff’s attempt to pick out policy provisions and read them out of context to find ambiguity where none exists.

Plaintiff’s employer contracted with Holman Professional Counseling Centers (“Holman”) for behavioral health insurance coverage. Holman agreed to provide behavioral health services “through Providers pursuant to the Schedule of Benefits” and that if enrollees chose to use non-contracted providers, they would do so at their own expense “except as otherwise provided in this Group Plan Contract.”

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