No Damage, No Case or Controversy, No Right to Sue in Federal Court

Assignee has no more Right to Sue than Assignor

No fault insurance was designed to save insurers and insureds money by removing automobile accident damages from the tort law system. Like all seemingly good ideas the no fault insurance systems, like Florida’s PIP system, were victims of the law of unintended consequences. One of those unintended consequences was the proclivity of health care providers to take assignments of the claims of the patients and then litigating to seek benefits plus tort damages. Often they succeeded. In the case that follows they forgot to sue for a case or controversy.

In A&M Gerber Chiropractic LLC, As Assignee Of Conor Carruthers, On Behalf Of Itself And All Others Similarly Situated v. GEICO General Insurance Company, No. 17-15606, United States Court of Appeals for the Eleventh Circuit (April 19, 2019) a chiropractor took an assignment from a patient, Conor Carruthers, who was involved in a car accident after which he sought medical services from A&M Gerber Chiropractic LLC.

At the time, Carruthers was covered under an automobile insurance policy issued by GEICO General Insurance Company. Pursuant to Florida’s Motor Vehicle No-Fault Law, the policy provided him with $10,000 in personal injury protection (PIP) benefits. To be entitled to the full $10,000, however, the statute required that Carruthers—like all PIP beneficiaries—be diagnosed by an authorized health care provider with an “emergency medical condition” (EMC); without such a diagnosis, he was limited to $2,500 in benefits.

Despite the lack of an EMC finding, GEICO paid Carruthers/Gerber $7,311 in PIP benefits pre-suit, well in excess of the $2,500 cap. Even though Carruthers received almost triple the amount in PIP benefits that he was entitled to, Gerber believed that GEICO had misinterpreted certain language in its automobile policies and that this misinterpretation resulted in GEICO consistently underpaying PIP benefits as a “general business practice.”

Carruthers assigned his rights to his treating chiropractic clinic, Gerber, which later filed a declaratory judgment class action suit in Florida state court. The complaint sought certification of a class (with Gerber as the class representative) along with a declaration (a) that GEICO’s interpretation of its policy language was wrong, and (b) that the misinterpretation “constitutes a breach of the insurance Policy.” Although the complaint sought a declaration that GEICO had breached the policy, the complaint stated that “there is no claim for monetary relief” in the case.

GEICO removed the case to the United States District Court. The District Court appointed Gerber as class representative and it certified the class to include all health care providers that received an assignment of benefits from a claimant and thereafter, pursuant to that assignment, submitted claims for no-fault benefits under GEICO PIP policies.

ANALYSIS

On cross motions for summary judgment, GEICO argued, inter alia, that Gerber lacked standing at the outset of the lawsuit because it was undisputed that GEICO had paid Gerber more than $2,500 before the case was filed, even though he had not been diagnosed with an EMC at that time. GEICO appealed arguing that Gerber lacked standing to bring this case.

If, as GEICO argued, there is no standing the court must end its analysis. Simply put, once a federal court determines that the plaintiff has no standing, the court is powerless to continue.

The case-or-controversy requirement of the U.S. Constitution sets fundamental limits on federal judicial power. Standing cannot be waived or conceded by the parties, and it may be raised (even by the court sua sponte) at any stage of the case. The party who invokes a federal court’s authority must show, at an irreducible minimum, that at the time the complaint was filed, he has suffered some actual or threatened injury resulting from the defendant’s conduct, that the injury fairly can be traced to the challenged action, and that the injury is likely to be redressed by favorable court disposition.

In order to demonstrate that there is a case or controversy the plaintiff must allege facts from which it appears that there is a substantial likelihood that he will suffer injury in the future. To obtain declaratory relief the plaintiffs must assert a reasonable expectation that the injury they have suffered will continue or will be repeated in the future.

In this case, Gerber, as assignee, stands in Carruthers’ shoes. It necessarily follows, then, that if Carruthers had no standing to file this case against GEICO, Gerber has no standing either.

Because GEICO paid much more than than it owed Carruthers/Gerber didn’t suffer harm as a result of GEICO’s alleged misapplication of its policy. When an insurance company has paid all benefits in full there is no case or controversy.

The district court erred by treating insurance coverage issues under the Policy as standing issues. Gerber argued—directly contrary to what it previously argued—that there is a risk of future injury. Whether and to what extent Gerber might be injured is beside the point because the proper inquiry in this case must focus on the potential future injury to Carruthers, not to Gerber or other members of the class.

In the absence of a claim for money damages or substantial likelihood that Carruthers will suffer a future injury—both of which Gerber was careful to avoid alleging—Gerber has no standing to pursue this case.

In the absence of standing, a federal court, like the Eleventh Circuit, is not free to opine in an advisory capacity about the merits of a plaintiff’s claims. Standing is perhaps the most important jurisdictional doctrine, and, as with any jurisdictional requisite, the appellate court is powerless to hear a case when it is lacking the decision is reversed and the case is dismissed.

ZALMA OPINION

Gerber picked the wrong patient to bring its class action. By so doing it, as the assignee, it had no standing because its assignor could not be damaged by the action of GEICO applying the terms and conditions of its policy. Class actions can be a major profit center for the law firm that brings it. This one failed because, regardless of a deep pocket defendant, it failed to establish standing and the U.S. Constitution prevented the court from deciding the issues raised.