Amended complaint belongs in federal court under CAFA, defense argues

Steve Gonzalez Sep. 22, 2006, 10:30am

Selective Insurance removed a three-year-old class action pending in Madison County to federal court claiming a second amended complaint is so different from previous pleadings that it "commenced" a new action under the Class Action Fairness Act.

Represented by the Lakin Law Firm, Mark Eavenson, a Granite City chiropractor, alleges Selective Insurance only paid part of a claim he filed. He accuses the insurance company of using computer software to uniformly reduce benefits paid to doctors.

The class action suit was filed in October 2003.

Eavenson has filed 21 class action suits to date in Madison County. In this case he claims that prior to treating a Selective Insurance-insured patient for personal injuries sustained in a workplace accident in 2001, he had obtained a valid assignment of claim from the insurer and received partial payment of the expenses.

Eavenson claims he billed Selective Insurance more than $1,000 for reasonable medical treatment. Selective Insurance, he alleges, only paid him part of the claim.

Eavenson claims that biased software used by Selective Insurance arbitrarily lowers the cap that does not reflect actual reasonable expenses of practitioners. He claims the insurer uses this database knowing it is biased and designed to reduce what are in fact reasonable charges.

Selective, the 54th largest property and casualty insurance company in the United States, is represented Mark Bauman of Belleville.

Bauman claims under Illinois law, an amended complaint that adds a new claim for relief that arises from a new set of operative facts that was not alleged in the original complaint, does not relate back.

"Federal courts have consistently concluded that an amended complaint that adds an entirely new claim for relief does not relate back and will "commence" a new action under CAFA," Bauman claims.

Bauman claims the new amended complaint alleges – contrary to the crux of Eavenson's earlier complaints – that Selective Insurance did not process Plaintiff's invoices.

"Plaintiff has revised his causes of action to conform to his new, fundamentally different claims," Bauman writes. "The Consumer Fraud Act claim now alleges that it is the Explanation of Benefits forms that CorVel generated and sent to the Plaintiff, not Selective's policy, that contains improper representations that a PPO discount is proper."

CorVel is the provider of the software that Eavenson claims Selective Insurance uses to lower the amount of payment.

"What is oddest about the new breach of contract claim is that it alleges that Plaintiff fully performed its obligations under the 'agreement' with Selective, but that the 'agreement' obligated Selective to 'steer' or 'channel' patients to it, and Selective did not do so," Bauman writes.

Selective Insurance contends the real contractual nexus that forms the basis for the second amended complaint is the contractual relationship between Eavenson and CorVel.

"That is the lynchpin between both the source of Selective's alleged duty to 'steer' and its contested authorization to take the PPO discount," Bauman writes.

Selective Insurance claims that since Eavenson amended his complaint and commenced a new action under CAFA, a new window for removal opened.

Selective Insurance argues that the aggregate amount in controversy exceeds $5 million, that there are over 100 class members and that a minimal diversity exists.

The case has been assigned to District Judge Michael Reagan.

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