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CAFA Law Blog Information, cases and insights regarding the Class Action Fairness Act of 2005

Fifth Circuit Grants Petition to Determine The Meaning Of “Significant Relief” Under CAFA

Posted in Case Summaries

Opelousas General Trust Authority v. Multiplan, Inc., 2013 WL 3245169 (5th Cir. June 28, 2013).

Because it had yet to fully explore the meaning of “significant relief” in the context of CAFA’s local controversy exception, the Fifth Circuit granted the defendants’ petition for leave to appeal a remand order to consider the question.

Defendant American Lifecare, Inc. (“ALC”) is a Louisiana corporation that contracted with various healthcare providers.  The contracts authorized ALC to negotiate with entities like employer health-benefit plans, offering those plans discounted rates with healthcare providers.  ALC was acquired by defendant Private Healthcare Systems, Inc. (“PHCS”), and subsequently defendant Multiplan, Inc. (“MPI”) acquired PHCS, including ALC.

The plaintiffs, a class of Louisiana healthcare providers with preferred provider agreements, brought an action in Louisiana state court alleging violations by the defendants of notice provisions of the Louisiana PPO Act, and alleging that their medical bills had been improperly discounted without prior notice since May 2002.

The defendants removed the action to the District Court based on diversity, alleging improper joinder of ALC, and CAFA.  The plaintiffs moved to remand arguing that there was no improper joinder and the local controversy exception to CAFA applied.

The defendants contended that the local controversy exception applied only if the plaintiffs sought significant relief from ALC, and argued that whether the relief sought was significant depended on ALC’s ability to pay any judgment entered against it.

Although the District Court noted that ALC was the entity against whom most of the violations were claimed, it did not consider ALC’s ability to pay any judgment.  The District Court opined that the local controversy exception applied and remanded the case to Louisiana state court.

The defendants petitioned for leave to appeal the remand order, and the Fifth Circuit granted the motion.

The only contested piece of the local controversy exception was whether ALC is a defendant from whom significant relief is sought by members of the plaintiff class.  The Fifth Circuit noted that if the plaintiffs did not seek significant relief from ALC, then the exception did not apply, and the District Court erred when it remanded the case.

The Fifth Circuit remarked that the meaning of “significant relief” in this context had not yet been determined.  The defendants argued that leave to appeal should be granted so that the Fifth Circuit could determine whether a defendant which was not a going concern and which would not satisfy any judgment against it could be a defendant from whom significant relief was sought.

The Fifth Circuit granted the petition to consider the question.