American Med. Sec. Inc. v. Parker

Appellees in these companion cases filed an action in a Georgia court seeking to enjoin the proposed settlement in an Alabama class action suit against appellants. The proposed settlement was to bind both Alabama and Georgia plaintiffs that were part of the Alabama class. It would not, however, bind appellees because they had been excluded from the Alabama class. Notwithstanding this fact, the Georgia trial court granted appellees’ request for an injunction against the settlement and held appellants in contempt for violating the injunction. Because appellees had been excluded from the Alabama class, they lacked standing to challenge the settlement. Therefore, we reverse. On June 11, 2002, an Alabama class action was initiated against American Medical Security, Inc. and United Wisconsin Life Insurance Company appellants over the rating schemes used in certain group medical insurance policies sold by appellants. The plaintiff sought certification of a class that would include both Alabama and Georgia residents insured by appellants. Appellants and plaintiff negotiated a settlement of the claims and submitted a stipulation of settlement to the Alabama court on March 11, 2004. This stipulation included the method by which to evaluate and settle claims by the different claimants, and excluded all “persons that have pending against one or more of the named defendants on the date of the Court’s certification order any individual action wherein recovery sought is based in whole or in part on the type of claims asserted in this Action.”

On March 15, 2004, almost two years after the Alabama suit was initiated, Stephen and Anne Parker, on behalf of themselves and others insured by appellants in Georgia appellees, filed suit against appellants in Georgia challenging the same insurance policies based on the same facts at issue in the Alabama suit. Appellees alleged that the policies were illegal under Georgia law, asserted a RICO claim,1 and sought injunctive relief plus compensatory and punitive damages for breach of contract, fraud, and conspiracy, among other allegations.