In a decision maintaining the Texas Supreme Court’s aversion to the “certify now and worry later” approach to class-certification, the Austin Court of Appeals has reversed and remanded a Travis County trial court’s class-certification order, citing a failure to meet Rule 42(b)(3)’s predominance burden.
Progressive County Mutual Insurance Company v. Brian Koetter and Elyssa Parven, Individually, and on behalf of themselves and for all others similarly situated (No. 03-22-00275-CV; December 31, 2024) arose from automobile insurance carrier Progressive’s late handling of appellees’ personal injury protection (PIP) claims, which appellees argue violated the statutory deadlines of the Texas Prompt Payment of Claims Act (Tex. Ins. Code §§ 542.056, 542.058) and PIP Statute (Tex. Ins. Code § 1952.156). These sections mandate that after receiving all necessary documents, insurers must (1) “notify a claimant in writing of the acceptance or rejection of a PIP claim within fifteen business days” (§ 542.056), and (2) “issue payment within thirty days” (§ 542.058 and the PIP Statute).
Plaintiffs asserted that Progressive had failed to timely pay three PIP claims for medical services that class representative Koetter submitted in 2018. Koetter submitted his first claim for $7,635.00 in medical services on May 14, 2018, which Progressive partially paid on June 26, 2018. Koetter made a second claim on June 25, which Progressive partially paid on July 19. Progressive paid about 10% of Koetter’s final claim, submitted on July 25 for $4,705.00, on August 27. Plaintiffs argued that Progressive’s partial payment of Koetter’s claims admitted liability and triggered the obligation to meet the Act’s deadlines. Consequently, they contended that Progressive failed to: (1) accept, in writing, the claims within 15-day deadline prescribed by § 542.056, (2) request additional information in support of the amount claimed (§ 542.055), and (3) meet the 30-day deadline imposed by § 542.058 and the PIP statute. Plaintiffs presented similar evidence regarding Parven’s claims and moved to certify a class action purporting to represent similarly situated policyholders.
As to the alleged violations of the 15-day deadline under § 542.056, Plaintiffs asserted that the common issue among class members was determining “whether class members [were] owed 18% interest on the paid amount” pursuant to § 542.060 and “whether [§] 542.056 applie[d] to Progressive’s handling of bills or opening of PIP coverage.” Similarly the issue common to the 30-day class was determining (1) whether class members were owed 18% interest on the amount of the claim and the 12% penalty § 542.060 and § 1952.157, respectively, and (2) whether those remedies were cumulative under § 542.061. Concluding that “the only non-common issue affecting individual class members is determining the exact amount of interest and statutory penalty owed to each class member,” the trial court certified the 15-day and 30-day classes. Progressive filed an interlocutory appeal.
In a majority opinion by Justice Smith, the court of appeals reversed and remanded. The court first considered Progressive’s contention that the trial court improperly certified a “legally baseless” claim. Progressive asserted that the 15-day class claims were legally baseless because they did not meet the definition of a “claim” under the Texas Prompt Payment of Claims Act, which requires the policyholder to request for a specific type of coverage under a policy (such as liability or PIP coverage). The court disagreed, pointing to §§ 542.051(2) and 542.057(a), which require no such specificity. Furthermore, the court noted, “the fact that an insured received payment demonstrates that Progressive accepted the claim.” Consequently, the court concluded that the lower court did not certify a legally baseless claim.
Turning to Progressive’s second issue, the court agreed that the trial court failed to conduct a rigorous Rule 42 analysis when certifying the 15-day class. Progressive argued the court did not assess “whether appellees’ claims were provable by common evidence.” According to TRCP 42(a), class actions must satisfy: (1) numerosity, (2) commonality, (3) typicality, and (4) adequate representation, as well as at least one of the subdivisions of Rule 42(b). Pertinent here was Rule 42(b)(3), which requires that “the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and a class action is superior to other available methods for the fair and efficient adjudication of the controversy.” The court determined that the lower court failed to resolve the issue of law or fact common to the 15-day class, that is, “[w]hether Tex. Ins. Code § 542.056 applies to Defendant’s handling of bills or opening of PIP coverage.” This ruling required remand.
Progressive’s third issue challenged the basis of the trial court’s “commonality” finding for the 30-day class: whether or not Progressive had requested additional information after receiving a medical bill. Progressive argued this would require individual inquiries into each file. The court noted, however, that this logic misinterpreted the basis for commonality as instances when Progressive did not request additional information, when, in fact, the class’ claims were limited to paid PIP claims for which Progressive was already liable. Finally, Progressive argued the trial court failed to conduct rigorous Rule 42 analysis prior to class certification. As mentioned before,the trial court certified on grounds that the common question of law—whether PIP statute remedies were cumulative to those under Section 542.058—predominated over individual issues of determining how much statutory interest and penalty needed to be paid. However, because Progressive’s interest payment system (prior to 2019) was not automated, the question of whether Progressive had paid interest before 2019 would still require individual file review. Since the lower court did not clarify further how statutory damages could be resolved class-wide, the Court found it abused its discretion with regard to predominance.
In a dissenting opinion, Justice Triana argued common issues still predominated since the issues Progressive raised on appeal merely concerned damage calculations to be made after liability had been determined.
