United States District Court, W.D. Kentucky, Louisville Division
MARGARET WILSON, individually and on behalf of a Class of persons similarly situated, Plaintiffs
ANTHEM HEALTH PLANS OF KENTUCKY, INC. Defendant
MEMORANDUM OPINION AND ORDER
Rebecca Grady Jennings United States District Judge.
Margaret Wilson (“Wilson”) sues Defendant Anthem
Health Plans of Kentucky (“Anthem”) seeking
relief for alleged violations of Employee Retirement Income
Security Act of 1974, 29 U.S.C. §§1001, et
seq. (“ERISA”) and the Mental Health Parity
and Addiction Equity Act of 2008, 42 U.S.C.A. § 300gg-26
(“MHPAEA”). [DE 1 at 1]. Before the Court is
Wilson's unopposed Motion for Preliminary Approval of
Class Settlement, Approval of Notice to the Class, and
Scheduling Final Fairness Hearing (“Motion”). [DE
76]. The matter is ripe. For the reasons below, the Motion is
is the mother and legal guardian of M.W., a minor child with
Autism Spectrum Disorder (“ASD”). [DE 1 at 2].
According to Wilson's complaint, “Autism cannot be
cured, but it can be treated” and Applied Behavior
Analysis (“ABA”) is the “most common and
recognized method” of treatment. Id. at 3.
Wilson and her son are insured by Anthem. Id. at 2.
enrolled in the Highlands Center for Autism to receive ABA
treatment. Id. at 10. Wilson submitted claims to
Anthem “seeking coverage for the cost” of
M.W.'s treatment. Id. at 11. Anthem “paid
small amounts of some claims” but, because of coverage
limitations, did not reimburse most of the treatment costs.
Wilson has continued to seek treatment for M.W.'s ASD but
claims that “Anthem has continued to impose coverage
limitations on it.” Id. at 11. Wilson has
spent “tens of thousands of dollars in unreimbursed
expenses for the medically necessary care” of M.W.
filed a Class Action Complaint, arguing that Anthem violated
ERISA and MHPAEA by “routinely impos[ing] caps and
limits on benefits under its health insurance policies for
insureds seeking treatment for Autism Spectrum
Disorders.” Id. at 1. Because of Anthem's
allegedly unlawful practices, Wilson sought relief for
herself and on behalf of a class of similarly situated
Court certified the class requested by Wilson and named Robert R.
Sparks and Strauss Troy Co., L.P.A., as class counsel. [DE 47
at 3157]. The parties then “engaged in discovery
related to the merits of the class claims . . . includ[ing]
depositions of Anthem's representatives as well as the
exchange of reports of expert witnesses and the depositions
of those individuals.” [DE 76-1 at 3265].
parties then negotiated a Class Action Settlement Agreement
(the “Settlement”) with help from Magistrate
Judge King. The Settlement was “hotly contested by the
parties” with “each party required to evaluate
complex legal, factual, and procedural issues in evaluating
their settlement position.” [DE 76-1 at 3267]. During
negotiations, the parties considered: Wilson's ability to
prove the size of the class; the amount of damages the Court
could award; the time, expense, and difficulty of continued
litigation and trial; and the likelihood of success on the
merits and on appeal. Id.
compensatory terms of the Settlement are:
On behalf of the class members involved in this action,
Anthem has agreed to create a fund totaling $300, 000. No.
part of this fund reverts to Anthem. The settlement fund is
to be used to provide settlement to Class Members and pay
attorney fees, costs, and incentive awards approved by the
The Net Settlement Fund will be distributed to Class Members.
That fund is expected to total $175, 000. Class Members who
had claims denied by Anthem using the denial reason
description “Benefit Maximum Met” or “Units
exceed a utilization management authorization” shall
receive a pro rata share of the Net Settlement Fund or a
minimum payment of $250.00, whichever is greater. All other
Class Members shall receive $250.00.
Margaret Wilson, the Class Representative, will seek an award
of $10, 000. Class Counsel has agreed to apply to the Court
for approval of attorneys (sic) fees and costs, which will
not exceed $115, 000.00. Anthem has agreed not to oppose a
fee application which is in accord with the above referenced
procedure. The comprehensive settlement agreement is attached
and incorporated herein as Exhibit “A”.
Any funds remaining from uncashed settlement checks after 120
days following payments to Class Members shall be disbursed
as a cy pres award to Families for the Effective Treatment of
Autism (FEAT) of Louisville.
Id. at 3266
then filed her Motion [DE 76], attaching a Settlement
Agreement [DE 76-2], a Notice of Class Action Settlement (the
“Notice”) [DE 76-2], and an Order Preliminarily
Approving the Class Action Settlement Agreement, Scheduling
Final Approval Hearing, and Directing Notice to Class [DE
76-3]. After review, this Court entered an Order [DE 80]
granting Wilson leave to supplement the Motion to address two
questions: 1) does the $175, 000 in the net settlement fund
wholly or partially compensate the class? and 2) why do some
class members receive a pro rata share or a minimum payment
of $250.00 and others receive only $250.00? Wilson
sufficiently responded to the Court's questions in her
Supplemental Memorandum in Support of Plaintiff's Motion
for Preliminary Approval of Class Settlement, Approval of
Notice to Class, and Scheduling a Final Fairness Hearing (the
“Supplemental Memorandum”) [DE 82], and so the
Court will now GRANT the Motion.
action suits may be settled only with court approval.
Fed.R.Civ.P. 23(e). Approval of a class action settlement
involves two-stages: 1) “The judge reviews the proposal
preliminarily to determine whether it is sufficient to
warrant public notice and a hearing”; and 2) “If
so, the final decision on approval is made after the
hearing.” Ann. Manual Complex Lit. (Fourth)
§ 13.14 (2019); see also Thacker v. Chesapeake
Appalachia, L.L.C., 259 F.R.D. 262, 270 (E.D. Ky. 2009)
(referencing Tenn. Ass'n of Health Maint. Orgs., Inc.
v. Grier, 262 F.3d 559, 565-66 (6th Cir. 2001)).
“At the stage of preliminary approval, the questions
are simpler, and the court is not expected to, and probably
should not, engage in analysis as rigorous as is appropriate
for final approval.” Spine & Sports
Chiropractic, Inc. v. ZirMed, Inc., No. 3:13-CV-00489,
2015 WL 1976398, at *1 (W.D. Ky. May 4, 2015) (quoting
Ann. Manual Complex Lit. § 21.662 (4th ed.)).
Courts apply a degree of scrutiny to proposed settlement
agreements sufficient to avoid
“rubber-stamp[ing]” a proposed settlement
agreement, while still being “mindful of the
substantial judicial processes that remain to test the
assumptions and representations upon which the [proposed
settlement agreement] are premised.” In re Inter-Op
Hip Liab. Litig., 204 F.R.D. 330, 338 (N.D. Ohio 2001).
approve a proposed settlement, the court must determine
whether it is “fair, reasonable, and adequate.”
Whitlock v. FSL Mgmt., L.L.C., 843 F.3d 1084, 1093
(6th Cir. 2016). Rule 23(e) provides the court with factors
to consider when making this determination. The Advisory
Committee, in amending Rule 23(e), did not intend to displace
factors developed by the circuit courts in deciding whether
to approve a proposed settlement agreement, but rather to
“focus the court . . . on the core concerns . . . that
should guide” the court's determination. Federal R.
Civ. P. 23(e) advisory committee's note to 2018
amendment. This Court thus considers both the Rule 23(e)
factors and the factors set forth by the Sixth Circuit.
See Peck v. Air Evac EMS, Inc., No. CV 5:
18-615-DCR, 2019 WL 3219150, at *5 (E.D. Ky. July 17, 2019).
The Settlement is “Fair, Reasonable, and
the Court has already certified the class, appointed class
counsel, and approved the class representative, [DE 47], its
analysis here focuses on whether “giv[ing] notice is
justified by the parties' showing that the court will
likely be able to . . . approve the proposal under Rule
23(e)(2).” Fed.R.Civ.P. 23(e)(1)(B). Because the
parties' showing satisfies the Rule 23(e)(2) and Sixth
Circuit factors, the Court will likely be able to approve the
Settlement as “fair, reasonable, and adequate.”
1. Analysis Under Rule 23(e)(2).
Under the Rule 23(e)(2) factors, a settlement is “fair,
reasonable, and adequate” if:
(A) the class representatives and class counsel have
adequately represented the class;
(B) the proposal was negotiated at arm's length;
(C) the relief provided for the class is adequate, taking