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

West Virginia District Court Remands Putative Class Action because Defendants Failed to Establish the Requisite Amount in Controversy

Posted in Case Summaries

Crookshanks v. Healthport Technologics, LLC, 2016 WL4099296 (S.D. W.Va. Aug. 2, 2016).

In Crookshanks v. Healthport Technologies, a district court in West Virginia remanded an action to state court because the defendants’’ calculation of the amount in controversy was insufficient to satisfy CAFA’’ s jurisdictional threshold.

In this case, Crookshanks, representing himself and others similarly situated, filed a class action complaint in the Circuit Court of Kanawha County, West Virginia against Charleston Area Medical Center, Inc. (“”CAMC”” ) and HealthPort Technologies, LLC (“”HealthPort”” ). Crookshanks was a patient at a CAMC facility in 2015. He subsequently sent a letter to CAMC requesting copies of his medical records and bills. HealthPort, acting as CAMC’’ s medical records manager, charged Crookshanks $4,463.43 for the records. This payment was passed on HealthPort’’ s $0.55 per page fee.

Plaintiffs filed the class action lawsuit arguing that the fee was not a “” reasonable, cost-based fee”” as required by section 16-29-2 of the West Virginia Code. Plaintiffs defined the class as any person who (1) requested copies of his or her medical records from any health care provider in West Virginia during the class period; (2) had his request handled by HealthPort; and (3) paid fees charged by CAMC or HealthPort. The defendants removed the action to the federal court pursuant to CAFA and alleged minimum diversity of citizenship, an aggregate amount in controversy in excess of $5 million (exclusive of interest and costs), and a class size greater than 100 persons. The plaintiffs moved to remand.

On remand, the defendants argued that they satisfied the amount in controversy requirement under the West Virginia Consumer Credit and Protection Act (“” WVCCPA”” ). The defendants stated that since June 6, 2014, the be ginning of the class period, HealthPort responded to over 35,000 requests for medical records by patients and patient representatives. The defendants argued that because recovery under WVCCPA permits actual damages or $200, whichever is greater, they can demonstrate an amount in controversy over $7 million based on the minimum statutory damages alone.

The district court rejected the defendants’’ argument and noted that the total number of medical record requests were inconsequential because the class included only those who actually paid for their records. The defendants provided no evidence of the number of requests actually paid for. Instead, the defendants provided evidence that from June 6, 2014, until mid-March 2016, HealthPort received $918,745 in payment after billing over $2 million. Accordingly, the district court stated that it was not convinced that the defendants had met their burden that the amount in controversy exceeded $5 million.

The defendants then argued that the case satisfied the $5 million amount in controversy requirement because the cumulative value of the case –– including the money collected by the defendants, plaintiffs’’ attorney’’ s fees, punitive damages, and a declaratory judgment –– exceeded $5 million. The district court rejected this argument as well because the defendant’’ s calculation of attorney’’ s fees amounted to pure speculation. The district court next observed that the declaratory judgment simply declared the rights and obligations of the parties, and that the defendants failed to cite any case or statute that permitted a plaintiffs’’ demand for a declaratory judgment to be considered in the determination of whether the amount in controversy requirement under the CAFA is satisfied.

Finally, the defendants argued that the amount in controversy was satisfied because the plaintiffs requested punitive damages. The district court, however, found that the defendants did not provide the court with facts regarding the potential for an award of punitive damages in this case. Instead, they argued that that the possibility of the award must be considered. The district court found this argument grossly insufficient, and accordingly, held that the defendants failed to demonstrate by a preponderance of the evidence that the requisite amount in controversy was satisfied solely because the plaintiffs sought punitive damages.

Accordingly, the court remanded the action back to state court.

Posted by Camille R. Bryant