Plaintiffs asserted breach-of-contract claims against insurance companies, alleging that the provider lists were materially inaccurate, thereby causing the named plaintiffs and proposed class members to pay artificially inflated premiums. The district court denied class certification after concluding the plaintiffs lacked standing due to their failure to establish an injury-in-fact.  The U.S. Fifth Circuit, adopting the so-called “class certification” approach, reversed and remanded for further consideration.  Specifically:

“Identifying the appropriate test for standing in the class-certification context is important because that determines the appropriate lens through which to measure the manner and degree of evidence required. The line between the issues of standing and class certification is hazy, as they both aim to measure whether the proper party is before the court to tender the issues for litigation. The confusion stems from the disjuncture that may arise where the class representative may seek to litigate harms not precisely analogous to the ones she suffered but harms that were nonetheless suffered by other class members. There is a circuit split regarding the appropriate test for determining a plaintiff’s standing at the class-certification stage, and our court has not yet weighed in on the correct approach. There is the (1) more forgiving ‘class certification’ approach, and (2) more intensive ‘standing approach.’ We adopt the class certification approach for the reasons discussed below.

“The class certification approach evaluates only a named plaintiff’s individual standing. The court’s determination that the named plaintiff demonstrated individual standing concludes the inquiry. Only then should the court address the question whether the named plaintiffs have representative capacity, as defined by Rule 23(a), to assert the rights of others….

“Conversely, the standing approach compares the injuries or interests of the named plaintiff with those of the putative class and will hold that the named plaintiff lacks standing for the class claims if his or her harms are not sufficiently analogous to those suffered by the rest of the class. Under this approach, there are three different avenues for determining whether the plaintiff’s injury is sufficiently similar to that of the class. The first avenue, the Lewis test, requires courts to analyze whether Plaintiffs alleged a harm that is unique to them, such that it would be unsuitable to permit other nonrelated harms in the same lawsuit. Second, the Gratz test requires us to evaluate if Plaintiffs’ injury implicates a significantly different set of concerns from the other potential class members. Finally, the third avenue, employed by the Second and Eleventh Circuits, is a hybrid version of the Lewis and Gratz tests,” which “requires courts to evaluate (1) whether the plaintiff personally suffered some actual injury from the defendant’s illegal conduct, and (2) if that conduct implicates the same set of concerns as the conduct alleged to have caused injury to other members of the putative class….

“We conclude that the class-certification approach appropriately serves the distinct functions and rationales of Article III standing and class certification under Rule 23. First, and most obviously, the class-certification approach simplifies the analysis, allowing the standing and class-certification inquiries to serve their respective functions. The standing doctrine is primarily concerned with ensuring that a real case or controversy exists, while Rule 23(a)’s requirements are designed precisely to address concerns about the relationship between the class representative and the class. Insofar as the standing approach incorporates Rule 23 considerations, it prematurely and unnecessarily muddies the waters for the threshold constitutional issue of justiciability.”

The Court then went on to discuss the level of proof necessary to establish injury-in-fact to the named plaintiffs / proposed class representatives:

“The district court concluded ‘Plaintiffs had not adequately established that the value of the service for which they paid is measured primarily by network size, and that the premiums they paid were inflated as a result of the alleged discrepancy between promised network size and actual network size.’ Put simply, the court did not find the Plaintiffs’ expert’s damages model convincing.

“As noted, a plaintiff must demonstrate standing with the manner and degree of evidence required at the successive stages of the litigation. Thus, while general factual allegations of injury may suffice for a motion to dismiss, by the time a court reaches the summary-judgment stage, for example, the plaintiff must set forth by affidavit or other evidence specific facts, which for purposes of the summary judgment motion will be taken to be true. This appeal arises at the class-certification stage — beyond the motion-to-dismiss stage but before a motion for summary judgment.

“In considering a plaintiff’s Article III standing in the Rule 23 context, courts must assume arguendo the merits of his or her legal claim. Because the Plaintiffs’ ability to recover for a claim under governing law is a separate question from standing, it is sufficient for standing purposes that the Plaintiffs seek recovery for an economic harm that they allege they have suffered. A court is generally free to weigh the evidence and resolve factual disputes in order to satisfy itself that it has the power to hear the case. We agree with an earlier panel of this court that caution should be exercised when assessing evidence of standing at the class-certification stage, especially when some elements of standing might be said to be intertwined with the merits. In Robertson, a panel of this court held that where there is substantial overlap between standing and the merits of a plaintiff’s claim, the better course is to treat the attack on standing as an attack on the merits — and therefore outside the scope of our Rule 23(f) review of class certification decisions — rather than as a question of standing. We agree with that analysis.

“Here, despite concluding the Plaintiffs’ expert opinion was admissible and questions about the ‘basis’ of the expert opinion or its assumptions ‘go to the weight of and not admissibility’ of the opinion, the district court used the expert opinion to conclude the Plaintiffs failed to establish a sufficient connection between network size and price. The court characterized the Plaintiff’s injury argument as an ‘overcharge-by-fraud’ theory, under which the Plaintiffs seek to recover for a purported economic injury rather than any risk of physical injury. In noting that overcharge injuries typically require plaintiffs to plead facts sufficient to demonstrate plausible expectations or affirmative misrepresentations as the basis of their injury, the district court stated that the Plaintiffs did not plead facts sufficient to show they had reasonable expectations with respect to the size of the provider network such that the prices paid for access to the network were inflated….

“The district court determined the Plaintiffs failed to establish injury-in-fact because their expert report did not prove a causal connection between the size of the network and premium price, which is what the Plaintiffs would have to prove to prevail on the merits of their breach-of-contract claim. This merits-based evaluation of expert reports to determine standing at the class-certification stage is precisely what Robertson cautioned against….  The Plaintiffs have alleged and provided evidence for an injury-in-fact (overcharges for a health insurance policy that contained materially inaccurate and insufficient provider lists), causation (the amount of overcharge is fairly traceable to the discrepancy between the promised network size and the actual network size), and redressability (if the Plaintiffs are successful, they will be refunded their overpayment). The district court’s standing determination was, in substance, a determination on the merits of the ‘overcharge-by-fraud’ theory….

“The district court’s evaluation of the Plaintiffs’ expert report likely does not fall within the limited, merits-based inquiries permissible at the class-certification stage. It can hardly be said that the expert opinion was relevant to the district court’s decision to certify, as it did not reach the certification question due to its standing determination. Moreover, even assuming the district court ventured into a certification analysis when it evaluated the Plaintiffs’ expert’s damages model, none of the purported deficiencies were related to the relationships among class members to the alleged liability or damages….

“As discussed above, where there is substantial overlap between standing and the merits of a plaintiff’s claim, the better course is to treat the attack on standing “as an attack on the merits — and therefore outside the scope of our Rule 23(f) review of class certification decisions — rather than as a question of standing. Adopting the class-certification approach reinforces this view that merits-based evaluations of standing at this stage are premature. Accordingly, the district court erred insofar as it made merits-based evaluations of the Plaintiffs’ expert’s opinion at this stage. Although the Plaintiffs will ultimately have to prove whether and to what extent they were overcharged based on the inadequacy of the network, they do not need to prove how to measure that injury in dollars at the class-certification stage.”

 

Wilson v. Centene Management Company, No.24-50044, 2025 WL 1981287 (5th Cir. July 17, 2025).