Replacements for dead plaintiff don't belong to class, American Family says

By Steve Korris | Mar 20, 2008



Chiropractors seeking to replace a dead plaintiff in a class action against American Family Mutual Insurance don't belong to the class, according to the insurer.

American Family moved March 6 to deny a Lakin Law Firm motion to substitute the chiropractors for the late Manuel Hernandez.

"Since movants cannot demonstrate they ever received a written assignment from an American Family insured, they are not members of the class as previously defined by the court," Anthony Martin of St. Louis wrote to Circuit Judge Daniel Stack.

Martin moved the same day to dismiss a sixth amended complaint that introduced the new plaintiffs and, according to American Family, introduced new claims.

"As a matter of law," he wrote, "the sixth amended class action complaint cannot amend the class definition, disregard the existing class definition, or alter the nature of the claims previously certified for class litigation."

Hernandez sued American Family in 2000, claiming it improperly reduced payouts on medical bills from car crashes.

In 2002 Stack, as associate judge, certified Hernandez to represent plaintiffs in 17 states.

In 2005 Stack narrowed the class to 11 states.

The Lakins, however, did not prepare a class notice for Stack's approval.

In 2006 American Family reported to Stack that Hernandez died in 2004.

Stack had held hearings and signed orders in the case after Hernandez died.

American Family argued that the class died with Hernandez because the class never received notice, but Stack gave the Lakins an opportunity to replace him.

The Lakins offered his widow, Nora Hernandez, but Stack decided last year that she did not belong to the class.

The sixth amended complaint nevertheless named Nora Hernandez as plaintiff along with the chiropractors, and on March 6 Martin moved to dismiss her.

"Manuel Hernandez suffered no damages," he wrote.

"None of the obligations satisfied by the estate included the payment of any sum to Mr. Hernandez's provider, Dr. King, for any purportedly unpaid medical bills," he wrote.

Also on March 6, Martin tried to chip away at the complaint with an unusual "motion to strike certain allegations."

"Many of the allegations in the complaint are inconsistent with each other, and/or with one or more of the 11 exhibits attached thereto, or address parties or matters that are not, and should not be, before the Court," Martin wrote.

Although plaintiffs allege that American Family had a duty to pay medical expenses, he wrote, no obligation to pay all bills in full appeared in Hernandez's policy.

He wrote, "…the insurance policy clearly shows the opposite is true."

He moved to strike allegations that American Family failed to disclose that it would review treatment expenses for necessity and reasonableness.

"Furthermore," he wrote, "such allegations are meaningless regarding the medical providers, who would not have had the policy and would not have relied on anything the policy did or did not state."

He moved to strike allegations that lump policyholders, passengers and providers together.

He wrote, "…there is a contractual relationship between American Family and its policyholders, but not with auto passengers and assignees of either policyholders or passengers."

He moved to strike allegations of conspiracy.

"There can be no conspiracy when there is only one alleged conspirator; moreover, the complaint contains no conspiracy count," he wrote.

He moved to strike allegations that American Family reduced bills to increase profits.

American Family is a mutual company owned by policyholders, he wrote, and "any excess over expenses inures to the benefit of policyholders."

Finally, Martin brought a motion to dismiss a new statutory fraud claim as an alternative to the motion to dismiss the entire complaint.

Plaintiffs seek to apply consumer fraud laws of other states, he wrote, but two of the states, Wisconsin and Ohio, prohibit consumer fraud claims against insurers.

"American Family is based in Wisconsin and therefore has a reasonable expectation that the legislative immunity conferred by Wisconsin's consumer fraud statute will be observed by courts throughout the United States," Martin wrote.

"In other words," he wrote, "if a court in Wisconsin is barred from applying the Wisconsin consumer fraud statute against American Family, then surely courts outside Wisconsin are likewise unable to do so."

American Family sent Martin's motions and briefs to Brad Lakin, Jeff Millar and Dennis Barton at the Lakin firm in Wood River.

They need not have sent the package to Barton. In February he notified the circuit court that he would leave the Lakin firm at the end of the month.

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