Answering a question left undecided in other circuits, the Eleventh Circuit held in South Florida Wellness, Inc. v. Allstate Insurance Co., No. 14-10001 (Feb. 14, 2014) that a complaint seeking only declaratory relief “can be up to the task” of satisfying the Class Action Fairness Act’s $5 million amount-in-controversy requirement.

In an alleged class action filed in Florida state court, South Florida Wellness claimed that Allstate underpaid it for treatment provided to a patient who Allstate insured under a personal injury protection (PIP) policy.  Rather than paying 80% of the total amount billed, as Florida law generally requires of PIP payments, Allstate allegedly paid 80% of only certain amounts set forth in a statutory fee schedule.  South Florida Wellness argued that this was impermissible because Allstate failed to “clearly and unambiguously indicate in the insurance policy” that it was opting out of the general requirement in favor of the statutory fee schedule.  South Florida Wellness did not seek money damages, but rather “only a declaration that the form language Allstate used in the class members’ PIP insurance policies did not clearly and unambiguously indicate that payments would be limited to the levels provided for” in the statutory fee schedule.

Allstate removed the case to federal court under the CAFA.  In support of removal, Allstate submitted an employee affidavit asserting an amount in controversy of over $68 million.  Allstate arrived at this number by calculating the difference between 80% of the total amounts billed under the relevant policies (approximately $195 million) and 80% of the total amounts actually paid based on Florida’s statutory fee schedule (approximately $126 million).  This difference represented “the additional amount of benefits the putative class would be eligible to recover in the event that they received the declaratory judgment.”  But the district court found the CAFA’s amount-in-controversy requirement unsatisfied, and remanded the case to state court.  In the district court’s view, the value of the declaratory relief was “too speculative” because Allstate had not shown that a declaratory judgment would “necessarily trigger a flow of money to [the] plaintiffs.”

The Eleventh Circuit reversed, finding that South Florida Wellness failed to “provide any evidence to rebut Allstate’s . . . affidavit or to controvert its calculations.”  And it rejected South Florida Wellness’ argument that, because “a party seeking to file a suit to recover PIP benefits must first submit a pre-suit demand letter to the insurer” and then prove three elements at trial, the amount in controversy was too speculative.  The court found this argument “contrary to human nature and the nature of lawyers,” expressing skepticism that “most insureds and medical care providers, who may be collectively owed [over $68 million], would leave the vast majority of that money on the table if a federal court declared that they were entitled to it.”  Accordingly, the presence of an “extra step or two” to obtaining recovery did not render the amount in controversy too speculative.

South Florida Wellness shows that class action defendants’ amount-in-controversy calculations need not be perfect.  “Estimating the amount in controversy,” the Eleventh Circuit explained, “is not nuclear science; it does not demand decimal-point precision.”  Even the estimated value of a declaratory judgment may suffice.