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Coy v. Country Mutual Insurance Co.

December 4, 2006


The opinion of the court was delivered by: Reagan, District Judge


Before the Court is Plaintiffs' Motion to Remand to State Court (Doc. 13). A hearing was held on this matter on November 17, 2006. The matter being fully briefed and the parties having been heard, the Court will deny Plaintiffs' motion for the reasons set forth below.

I. Factual Background/Procedural History:

On August 10, 2006, Defendant Country Mutual Insurance Company a/k/a Country Casualty Insurance Company d/b/a Country Companies ("Country Mutual") removed this action from the Circuit Court, Third Judicial Circuit, Madison County, Illinois. This putative nationwide class action is based on Country Mutual's alleged improper discounting of healthcare providers' bills for medical services rendered to persons covered by Country Mutual property and casualty insurance policies.

Plaintiffs allege that Country Mutual wrongfully and deceptively reduces payments to Plaintiffs by claiming the benefits from purported Preferred Provider Organization ("PPO") agreements without any evidence that valid PPO agreements exist and/or without performing the associated obligation of "preferring" the effected healthcare providers to their insureds/beneficiaries through financial incentives designed to channel patients to Plaintiffs. Plaintiffs state that Country Mutual is not entitled to retain these monies, nor is it otherwise entitled to any PPO discounts from Plaintiffs and the Class. Plaintiffs state that the improper practice employed by Country Mutual is known in the insurance industry as a "silent PPO."

The Class Action Fairness Act of 2005, Pub. L. 109-2, 119 Stat. 4 (Feb. 18, 2005) ("CAFA"), expressly applies to class actions commenced on or after its enactment. This class action was commenced on February 10, 2005, a week before the enactment of CAFA. The original complaint alleged breach of contract, unjust enrichment, and consumer fraud and deceptive business practices. Country Mutual moved to dismiss based on lack of standing, failure to attach the applicable written instruments upon which the claims were founded and failure to plead the requisite elements of consumer fraud and unjust enrichment. Instead of proceeding on the motion to dismiss, the state court granted Plaintiffs leave to file an amended complaint. Plaintiffs' First Amended Class Action Complaint, filed on or about July 10, 2006, alleged common law fraud, consumer fraud and deceptive business practices, unjust enrichment and breach of contract. The amended complaint also adds Plaintiff Jason Talley, D.C., and additional factual allegations. After the filing of the amended complaint, on August 10, 2006, Country Mutual removed the case.

Plaintiffs' arguments for remand are fourfold: 1) the Court lacks jurisdiction because the amended complaint relates back to the original complaint filed prior to the enactment of CAFA; 2) the Court lacks jurisdiction because CAFA does not apply to cases commenced before its enactment*fn1 ; 3) Country Mutual failed to present competent evidence of the amount in controversy; and 4) Country Mutual's removal is untimely.

Country Mutual responds that the amended complaint's new contract claim and the addition of a common law fraud count, based on allegedly fraudulent conduct not previously pled, commenced a new action for the purposes of CAFA. Country Mutual's arguments in opposition to remand are fivefold: 1) developments in a case after the complaint is filed can commence a new action for purposes of CAFA; 2) Plaintiffs' amended complaint commenced a new action; 3) the amount in controversy is above $5 million; 4) Plaintiffs' speculations about the number of class members who are Illinois citizens is irrelevant; and 5) removal was timely.

II. Legal Standard

A. Removal

Removal of actions from state court to federal court is governed by 28 U.S.C. § 1441, which provides that "any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending." 28 U.S.C. § 1441(a). Defendant has the burden of establishing that an action is removable, and doubts concerning removal must be resolved in favor of remand to the state court. See Brill v. Countrywide Home Loans, Inc., 427 F.3d 446, 448 (7th Cir. 2005).

B. Diversity Jurisdiction Under CAFA

Under CAFA, federal courts have jurisdiction in diversity, with exceptions not at issue here, see 28 U.S.C. § 1332(d)(3), (d)(4), (d)(5), (d)(9), over class actions with one hundred or more class members, see 28 U.S.C. § 1332(d)(5)(B), in which any member of the plaintiff class is a citizen of a state different from that of any defendant, or any member of a plaintiff class or any defendant is a foreign state or a citizen or subject of a foreign state. See 28 U.S.C. § 1332(d)(2). In a class action in which CAFA's requirement of minimal diversity is met, a federal court has jurisdiction if, after aggregating class members' claims, more than $5 million, exclusive of interest and costs, is in controversy. See 28 U.S.C. ...

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