Antitrust Law Daily Wrap Up, ANTITRUST—D. Nev.: Distribution of settlement fund approved as cy pres award in action over health care provider monopoly, (Feb 4, 2014)

By Linda O’Brien, J.D., LL.M.

The federal district court in Las Vegas has granted approval to distribute unclaimed funds from a consumer antitrust class action settlement against a managed health care provider as a cy pres award to a Nevada legal aid center (Forsyth v. Humana, Inc., January 31, 2014, Navarro, G.).

Humana, Inc., a managed health care company, operated a local hospital in Nevada. Humana Health Insurance of Nevada, Inc. issued group health insurance policies under which the insurer would pay a portion of the hospital charges over a designated deductible. Mary Forsyth, a beneficiary of a policy issued by Humana Health who received medical care at Humana’s hospital, filed a class action suit against Humana and Humana Health for overcharging her co-payments for medical care and for monopolizing the market for major acute care hospitals in Nevada in violation of Sections 1 and 2 of the Sherman Act. Following litigation, the parties reached a settlement, which was approved by the court and complied with. However, unclaimed funds remained. The plaintiff moved to distribute the remaining funds as a cy pres award to a Nevada legal aid center.

In approving the disbursement of the unclaimed funds, the court found that the proposed recipient would provide a range of significant and long-term benefits to the class members. Under the cy pres doctrine, an award must retain some connection between the class and the underlying claims, and qualify as the “next best distribution” to giving funds directly to the class members.

A cy pres distribution was appropriate because it satisfied the deterrence and disgorgement goals of the consumer protection statutes underlying the litigation and benefited the absent class members and consumers as a whole. The legal aid center had a substantial record of service and dedicated consumer rights project that assisted clients in obtaining the types of remedies which were in accordance with the remedies in the case. Furthermore, the center was geographically located in the same area as the majority of the class members and could benefit absent class members with the various services it provides. Finally, the goal of deterrence was achieved by distributing the fund to a public service organization that may help prevent the same harms from being perpetrated on future, similarly situated consumers.

The case is No. 2:89-cv-00249-DWH.

Attorneys: J. Randall Jones and Will Kemp (Harrison, Kemp & Jones, Chtd.) for Mary Forsyth and Marietta Cade. David R. Garcia (O’Melveny & Myers LLP) for Humana Health Insurance of Nevada, Inc.

Companies: Humana, Inc.; Humana Health Insurance of Nevada, Inc.

Cases: Antitrust NevadaNews