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Wernikoff v. Health Care Service Corp.

September 28, 2007

SHELDON WERNIKOFF, INDIVIDUALLY AND ON BEHALF OF A CLASS OF SIMILARLY SITUATED INDIVIDUALS, PLAINTIFF-APPELLANT,
v.
HEALTH CARE SERVICE CORPORATION, A MUTUAL LEGAL RESERVE COMPANY D/B/A BLUECROSS BLUESHIELD OF ILLINOIS, DEFENDANT-APPELLEE.



Appeal from the Circuit Court of Cook County No. 00 L 6856 Honorable David R. Donnersberger, Judge Presiding.

The opinion of the court was delivered by: Justice Karnezis

Published opinion

Plaintiff, Sheldon Wernikoff, individually and on behalf of a class of similarly situated individuals, appeals from an order of the circuit court granting the motions of defendant, Health Care Service Corporation d/b/a BlueCross BlueShield of Illinois, to decertify the class and for summary judgment. On appeal, plaintiff contends that the circuit court's order decertifying the class and granting summary judgment was erroneous. For the following reasons, we reverse the circuit court's decertification order and affirm the circuit court's order granting summary judgment as to class representative Wernikoff.

The record contains the following pertinent information. Defendant utilizes a "generational rating structure" in determining its policyholders' premium rates. When an applicant applies for a policy, defendant's underwriters consider the application and determine whether the applicant qualifies for a policy. When an applicant initially qualifies for a policy, the applicant and all dependents are charged the "new business" premium rate. That rate is guaranteed for one year. After the one-year period, a policyholder may renew the policy at a "Generation 1" premium rate, which is higher than the new business rate. After the second year, a policyholder may renew at a "Generation 2" rate, which is higher than the Generation 1 rate. After the third year, a policyholder may renew at a "Generation 3" rate, which is higher than the Generation 2 rate. Rather than renewing, an existing policyholder may again qualify for the initial, lower new business rate if the policyholder submits a new application for coverage and the application is approved by defendant's underwriters. Some policyholders may be offered the new business rate conditioned upon acceptance of a coverage exclusion rider, which would exclude coverage for a particular medical condition. Policyholders can learn of premium increases in written materials such as rate change notices. The written notices provide a telephone number to contact a customer service representative if policyholders have questions about their premiums. If policyholders call the reference number and ask how to lower their premiums, a customer service representative might discuss the option of applying as a new applicant and, if approved, receiving the new business rate. Policyholders may also learn about the new business rate through insurance brokers from whom they purchased their policy.

Plaintiff filed his initial complaint in 2000 and a first amended complaint in 2001. The amended complaint alleged claims for violation of the Illinois Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 et seq. (West 2000)) (count I) and common law fraud (count II). Plaintiff alleged generally that defendant utilized a fraudulent scheme of increasing policyholders' premiums each year and as a result of the scheme, thousands of policyholders paid higher premiums than they needed to pay. According to the complaint, defendant failed to disclose to policyholders the option of reapplying as a new policyholder and, if approved, paying the new business rate premium. Specifically, plaintiff alleged that defendant's "standard written materials" omitted the fact that defendant would automatically increase policyholders' premiums each year. Plaintiff also alleged that defendant's written materials misrepresented and falsely stated that the premiums were increased because defendant had conducted a "review of the rates" or a "review of our policy premiums and claim utilization."

This case was initially certified as a class action in 2003 by Judge Lester D. Foreman. The court certified the following class:

"All persons who purchased individual health insurance policies from [the defendant] and thereafter renewed those policies, on one or more occasions, without reapplying for the new business rate even though the option to apply would have been available."

Subsequently, in 2004, the case was reassigned to Judge Deborah Mary Dooling, who modified the class definition to include only those individuals who would have qualified for the new business rate had they applied.

In March 2006, after the case was reassigned to Judge David R. Donnersberger, defendant simultaneously filed a motion to decertify the class and a motion for summary judgment pursuant to section 2-1005 of the Code of Civil Procedure (735 ILCS 5/2-1005 (West 2000)).*fn1 On June 23, 2006, the court granted defendant's motions.

On appeal, plaintiff contends that the circuit court's order decertifying the class and granting summary judgment was erroneous. We first address plaintiff's contentions regarding the court's decertification order.

An action may be maintained as a class action in Illinois only if the court finds:

"(1) The class is so numerous that joinder of all members is impracticable.

(2) There are questions of fact or law common to the class, which common questions predominate over any questions ...


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