Eavenson, D.C. v. Selective Insurance Company, ., ____ F. 3d ____, 2007 WL 489206, No. 06-731-MJR, (S.D. Ill. Feb. 12, 2007).
Two months after ruling on the case of Coy v. County Mutual Ins., Co., the Southern District of Illinois remanded a case filed by a class of doctors against health care insurer Selective Insurance Company of America in which the doctors alleged Selective improperly discounted medical bills submitted to the insurers. (Editors’ Note: See the CAFA Law Blog analysis of Coy posted on February 23, 2007).
In the case of Coy, the same Court declined to remand an almost identical case filed by a group of doctors against County Mutual Insurance Company. At first glance, one might think that the holdings in Eavenson and Coy are contradictory as the subject matter of the cases are virtually identical. A closer look reveals that the Southern District of Illinois applied the exact same analysis, but reached different diagnosis in each of these doctors’ cases.
As reported by the Law Bog on February 23, 2007, the Southern District of Illinois in Coy denied a motion to remand a class action holding that a post-CAFA amendment to the plaintiff’s petition “commenced” a new cause of action. Dr. Richard Coy initially filed his nationwide class action against Country Mutual Insurance Company the week before CAFA was enacted. The claims asserted by the doctors in Coy in their original petition included breach of contract based on the contracts between Country Mutual and the insureds.
The plaintiffs filed a post-CAFA amended petition in which they included additional causes of action for breach of contract based on two contracts not mentioned in the original petition. The amended complaint also added a new named plaintiff and new factual allegations. However, it retained the identical causes of action as the original complaint. The Coy Court found that because the amended petition included breach of contract claims based on contracts not mentioned in the original petition, the amendment did not relate back to the pre-CAFA filed original petition. The plaintiffs in Coy were stuck in Federal Court.
In Eavenson, the plaintiffs filed a pre-CAFA suit against Selective alleging the insurance company improperly discounted their bills alleging causes of action for unjust enrichment, breach of contract, deceptive trade practices and declaratory judgment. The plaintiffs filed two amendments to their original petition, the last filed after the enactment of CAFA. Upon filing of the second amended petition, Selective removed the case alleging the amendments included new, removable causes of action. The plaintiffs moved to remand the case back to state court.
The Eavenson Court analyzed whether the post-CAFA filed second amended petition included a removable cause of action. As it did in Coy, the Court in Eavenson relied on the state law of the jurisdiction, in this case Illinois, to determine whether the amended petition related back to the original petition and was thus not subject to CAFA citing to Schillinger v. 360 Networks USA Knudsen v. Liberty Mutual Insurance Co. (Knudsen I), and Santamarina v. Sears, Roebuck & Co. (Editors’ Note: See the CAFA Law Blog analysis of Schillinger posted on August 24, 2006; the CAFA Law Blog analysis of Knudsen I posted on September 3, 2005; and the CAFA Law Blog analysis of Santamarina posted on November 6, 2006).
Under both Federal and Illinois law, an amendment “relates back” when it arises out of the same transaction or occurrence set up in the original petition. The focus is not on the nature on the cause of action plead, but rather, whether the defendant has been made aware of occurrence or transaction which is the basis of the claim so that he is able to defend himself against the plaintiff’s claims, whatever theory it may be predicated upon.
As in Coy, the Court’s focus in Eavenson was whether a new breach of contract cause of action had been asserted in the amended petition. In Eavenson, the Court determined that a new breach of contract cause of action had not been asserted in the amended petition because, unlike Coy, no new contract was identified in the amended petition. Although the plaintiffs in Eavenson did include additional factual allegations regarding the breach of contract claim, the Court found that the basic allegations of the plaintiffs’ claims remained the same. The Court remanded Eavenson back to state Court finding the post-CAFA amendment related back to the pre-CAFA filed original petition.