Collective (Class) Actions in Healthcare

October 31, 2022

BRACE Law Firm ©

A collective or class action is a form of judicial process in which a group of plaintiffs collectively files a lawsuit against a single defendant. Given the increasing burden on the judicial system and the need for uniform consideration of cases, this institute is becoming particularly significant.

In foreign jurisdictions, the institute of class actions has been applied for a long time and more successfully than in the Russian Federation. In the arbitration process, the institute of group actions was introduced in 2009, but it did not find wide application due to the specifics of legal structures. On October 1, 2019, Federal Law No. 191-FZ dated July 18, 2019, On Amending Certain Legislative Acts of the Russian Federation, entered into force, which provided for the possibility of filing a group action in a court of general jurisdiction. These same amendments changed Chapter 28.2 of the APC RF, which regulates the procedure for considering group actions in the arbitration process, to ensure uniform consideration of cases.

This article examines what collective actions are, the conditions for filing and considering them, and cases where this method of protection has been applied in healthcare, including the provision of medical services and the circulation of medicinal products and medical devices.

What is a Collective Action?

A collective (class) action is a statement filed by a citizen or a legal entity in court to protect a group of persons.

The right to file a collective action arises if the following four conditions are met:

• A common defendant;
• The subject of the dispute involves common or homogeneous rights and legitimate interests of the members of the group;
• Similar factual circumstances of the case;
• The same method of protecting their rights.

The consideration of cases under these rules is allowed if, by the time the claim is filed, the group has been joined by:

• At least 20 persons (for a court of general jurisdiction);
• At least 5 persons (for an arbitration court).

Joining is carried out by submitting a written application to the person who applies to the court on behalf of the group. The law also allows joining the group after the lawsuit is filed but before the start of judicial pleadings by submitting an application to the court.

A person authorized to conduct the relevant case in the interests of the group (the "initiative person") files the claim. This person must also be a member of the group. In cases provided for by federal law, an authority, organization, or citizen who is not a member of the group may also apply to protect the rights of a group of persons. This right is granted, for example, to Rospotrebnadzor authorities (Article 40 of the Law of the Russian Federation No. 2300-1 dated February 7, 1992, On Protection of Consumer Rights (the "Law on Protection of Consumer Rights")), and public consumer organizations (Article 45 of the Law on Protection of Consumer Rights). In such cases, the statement of claim must additionally specify the norms that grant the right to file a lawsuit in defense of a group of persons.

Requirements for a Group Action and the Procedure for Filing It

A group action, in addition to general requirements, must comply with special requirements established in Articles 244.21 of the CCP RF and 225.13 of the APC RF. Thus, a statement of claim filed in defense of the rights and legitimate interests of a group of persons must additionally indicate:

• The person authorized to conduct the case on behalf of the group;
• The rights and legitimate interests of the group of persons in whose defense the claim is brought;
• The circle of persons who are members of the group and the grounds for such membership;
• Data of citizens and legal entities who joined the lawsuit:

1. For citizens: surnames, first names, and patronymics, their place of residence or stay, date and place of birth, place of work, or date and place of state registration as an individual entrepreneur;
2. For legal entities: name and address.

In addition to the documents mandatory for any other lawsuits, the claim must include applications from group members to join and documents confirming membership in the group.

The person representing the entire group pays the state duty and other legal costs. It is assumed that all plaintiffs will bear the costs proportionally. For this purpose, the plaintiffs may enter into a notarized agreement on the procedure for distributing legal costs. The amount of the state duty for collective actions is the same as for individual lawsuits.

The statement of claim within a collective action is filed with the court at the location of the defendant. This is an exclusive jurisdiction that cannot be changed. The question of the jurisdiction of arbitration courts over lawsuits filed by citizens who do not have the status of an individual entrepreneur against a defendant that is a legal entity is of interest. For a long time, arbitration courts did not have a unified opinion on this issue. The Supreme Court of the Russian Federation expressed what we believe to be an absolutely correct position: the criteria for classifying a case under the jurisdiction of an arbitration court are the economic nature of the dispute (the implementation of entrepreneurial or other economic activity) and the subject composition of its participants. If a dispute is not related to the group's entrepreneurial activity, it must be considered in a court of general jurisdiction.[1]

Specifics of Considering Group (Collective) Actions

In the ruling on the preparation of a case for trial, the court sets a deadline during which the initiative person must propose to other persons to join the group action. The proposal to join can be made by publishing it in the media or on the official website of the court. If this is not done, the court will leave the application without consideration. After the lawsuit is filed, one can join the group by submitting a written application to the court or in electronic form by filling out an application in the GAS Pravosudie (for courts of general jurisdiction) or in the My Arbiter information system (for arbitration courts).

In the preliminary hearing, the judge decides whether the group of persons meets the conditions established by law (commonality of the subject of the dispute, circumstances of the case, method of protection, and defendant), clarifies the composition of the group, determines the nature of the disputed legal relationship, and the requirements brought in defense of the group.

Unlike "ordinary" lawsuits, the rights of the initiative person and the rights of other participants who joined the group differ. As a general rule, the person who conducts the case in the interests of a group of persons enjoys all procedural rights and bears all procedural obligations of the plaintiff, including the obligation to pay legal costs. Other group members have a limited set of rights:

• To familiarize themselves with the case materials, make extracts from them, and take copies;
• To petition the court to replace the person conducting the case in the interests of the group;
• To be present in the court session;
• To withdraw their application to join the group action.

Separately, we note that this is how the institute of group actions differs from the institute of procedural joinder. Co-plaintiffs act independently in the process and possess all the rights and obligations of a party; in group actions, the full scope of rights is granted only to the person conducting the case.

In resolving a group action, the simplified procedure is not applied, and the parties do not resort to arbitration (tribunal) proceedings.

The terms for considering group actions, including the time for preparing the case for trial and making a decision, must not exceed eight months. We note that the legislator sets extended production terms, taking into account the procedural complexities of considering such lawsuits.

At the same time, even this period will be insufficient in most cases for a full consideration of collective actions. A variety of circumstances can affect the terms of consideration: from a significant volume of evidence that must be examined for each plaintiff and the need to notify a significant number of persons, to technical problems during court sessions.

the court makes the decision according to the general rules established by the procedural codes. At the same time, the operative part of the decision must contain conclusions regarding each of the group members separately.

Collective (Group) Actions in Healthcare and Related Fields

Regarding the healthcare sector, the practice of filing group actions is still sparse. The most frequent reasons for filing such lawsuits are the protection of consumer rights, the rights of citizens to a favorable environment, and the labor rights of healthcare workers. Let us look at some examples.

One of the collective actions in a court of general jurisdiction was filed against a company selling a cosmetic product. Citizen I. applied to the court to protect the rights and legitimate interests of 55 people, requesting to recover from the defendant the cost of the purchased acne serum and compensation for moral harm in the amount of 100,000 rubles for each member of the group. In the lawsuit, she stated that according to information on the defendant's official website and on the label, the specified cosmetic product is intended to cure a skin disease (acne), meaning it has a therapeutic effect. However, the specified product is not registered in the state register of medicinal products. Furthermore, complete information about this product is missing on both the primary and secondary packaging. The court of first instance rejected the claim. When considering the case in the appellate court, the court established that the labeling on some packages does not meet the requirements of the Technical Regulation of the Customs Union On the Safety of Perfumery and Cosmetic Products, which violates the consumer's right to be provided with necessary and reliable information about the product. However, it was not confirmed that such a discrepancy existed on the products purchased by other plaintiffs, since the group members bought them at different times and the labeling of the cosmetic product had changed. Additionally, several members of the group are registered as individual entrepreneurs and purchased the serum not for personal use; therefore, they cannot be recognized as consumers within the meaning of the Law on Protection of Consumer Rights. The appellate court modified the decision of the first instance court, recovering 1,000 rubles in compensation for moral harm in favor of one consumer and a fine of 500 rubles for non-compliance with the voluntary satisfaction of requirements. The court of cassation left the decision unchanged.[2]

Group actions filed by state authorities and public organizations in defense of consumers of medical and physical culture and health services are also becoming more common. For instance, in one case, a territorial administration of Rospotrebnadzor applied to the court with a claim against a dental clinic for the return of the cost of unrendered services, compensation for moral harm, and a fine for failing to satisfy consumer requirements voluntarily. During the case consideration, the court established that the clinic had entered into contracts with citizens for the provision of paid dental services. The services were partially provided to consumers. Under Article 28 of the Law on Protection of Consumer Rights, if the performer violates the deadlines for providing the service, the consumer has the right to refuse to perform the contract and demand a refund of the cost of unrendered services. The court recovered their cost, compensation for moral harm, and a fine for failing to satisfy the requirements voluntarily from the clinic.[3] In another case, the regional public organization Consumer Protection Chamber applied to the court in the interests of a group of consumers with a demand to recover from a fitness club the unused part of memberships, a penalty for violating the deadlines for providing services, compensation for moral harm in the amount of 10,000 rubles for each consumer, and a 50% fine for refusing to satisfy the requirements voluntarily. The court established that the fitness club suspended its activities due to restrictions introduced in the territory because of the threat of the spread of coronavirus infection. After the restrictions were lifted, activities to provide services did not resume immediately. The court made a reasoned conclusion that consumers have the right to a refund of the amounts paid under the contract for the unused period of the club card. It recovered the remaining cost of the membership in favor of each consumer in proportion to the days the services were not used, a penalty from the date the restrictions were lifted, compensation for moral harm in the amount of 500 rubles, and a fine for failing to satisfy the requirements voluntarily. As a result, between 8,000 and 25,000 rubles were recovered in favor of each consumer.[4]

Group (collective) actions have also begun to be applied to protect the rights of citizens to health protection and a favorable environment.

In one case, a group of persons filed a collective action against the MUP Vodokanal and expert organizations to declare invalid a project for organizing sanitary protection zones for drinking water supply sources and to recognize the location of a hazardous waste disposal plant in the sanitary protection zone as illegal. During the court session, the plaintiffs explained that the developed project included only two sanitary protection zones in the republic. During the development of the project, a plant currently being repurposed into a hazardous waste disposal and neutralization enterprise was intentionally excluded from the sanitary protection zones.

Under Article 18 of Federal Law No. 52-FZ dated March 30, 1999, On the Sanitary and Epidemiological Well-being of the Population, the use of a water body is allowed if there is a sanitary and epidemiological conclusion on the compliance of the water body with sanitary rules and conditions for the safe use of the water body for the health of the population. The court took into account the Rospotrebnadzor conclusion on the project's non-compliance with sanitary rules and declared it illegal; however, it refused to recognize the location of the hazardous waste disposal and neutralization plant in the sanitary protection zone as illegal, as the procedure for the location of facilities in the territory of sanitary protection zones is regulated by regulatory acts, the violation of which was not established.[5]

We note that group actions are also spreading in the field of protecting the labor rights of healthcare workers. For example, when filing collective claims for the recovery of arrears for overtime work and compensation for work in hazardous conditions,[6] for the recovery of a bonus,[7] etc. However, such lawsuits do not have any special features and can find application in protecting labor rights in any industry.

Prospects for Collective Actions in the Sphere of Medical Services, Circulation of Medicinal Products, and Medical Devices

In addition to the cases considered above, we believe that in the future, collective actions will also be used to protect other rights of citizens.

Undoubtedly, the filing of group actions has prospects in cases where medical centers impose expensive medical services, medicinal products, or unnecessary medical devices by misleading patients.

Furthermore, we recall that in accordance with Article 69 of Federal Law No. 61-FZ dated April 12, 2010, On the Circulation of Medicinal Products (the "Law on Circulation of Medicinal Products"), a manufacturer of a medicinal product must compensate for the harm caused to the health of citizens as a result of the use of a medicinal product if it is proven that:

1. The medicinal product was used for its intended purpose in accordance with the instructions for use, and the cause of harm was the release into civil circulation of a substandard medicinal product;
2. Harm to health was caused due to unreliable information contained in the instructions for use issued by the manufacturer of the medicinal product.

If harm is caused to the health of citizens as a result of the use of a medicinal product that has become unusable due to a violation of the rules for storing medicinal products, rules for wholesale trade in medicinal products, rules for dispensing medicinal products, or rules for manufacturing and dispensing medicinal products, compensation for harm is carried out respectively by the wholesale organization, pharmacy organization, individual entrepreneur with a pharmaceutical or medical license, or medical organization with a pharmaceutical license (or its separate subdivision located in a rural settlement where there is no pharmacy organization) that allowed the sale or dispensing of such a medicinal product (Part 2, Article 69 of the Law on Circulation of Medicinal Products).

Under Article 44 of the Law on Circulation of Medicinal Products and Article 98 of Federal Law No. 323-FZ dated November 21, 2011, On the Fundamentals of Health Protection of Citizens in the Russian Federation, similar requirements can be asserted in the event of harm to a patient's health during clinical trials of medicinal products or the provision of medical care using substandard medical devices. If such harm is caused to a group of persons, filing a collective action is quite feasible. Despite the current lack of judicial practice in such cases, one can predict that collective actions will have a much better chance of success than individual ones, as proving such disputes is difficult due to the specific nature of the relationships, requires a deep dive into the subject of proof and specialized knowledge, and requires expert examinations—all of which are easier to achieve by joining forces.

In conclusion, it should be noted that the institute of collective (group) actions has its advantages, such as:

• Establishing uniform judicial practice;
• Reducing the costs for plaintiffs to apply to court;
• The absence of time costs for the persons who joined.

However, we believe that one of the possible obstacles to wide distribution in the field of medical services is that legal relations in this sphere are mostly individual in nature, meaning there will be no commonality of interests. Furthermore, one cannot ignore disadvantages of group actions such as long consideration terms, difficulties in uniting into one group with the same requirements, and the complexities of conducting a case with a significant number of participants and documents.

Summing up, we can say that the introduction of the institute of group actions is of great practical importance for protecting the rights of certain categories of persons, but it will not find wide application in legal practice.

____________

References

[1] Ruling of the Supreme Court of the Russian Federation No. 305-ES20-18866 dated December 3, 2020.

[2] Ruling of the Judicial Chamber for Civil Cases of the Sixth Cassation Court of General Jurisdiction No. 8G-5262/2022[88-7589/2022] dated April 19, 2022.

[3] Decision of the Nizhny Novgorod District Court of Nizhny Novgorod, Nizhny Novgorod Region, in case No. 2-580/2022 dated January 12, 2022.

[4] Decision of the Kirovsky District Court of Yekaterinburg, Sverdlovsk Region, in case No. 2-61/2021 dated March 12, 2021.

[5] Decision of the Neftekamsk City Court of the Republic of Bashkortostan in case No. 2-333/2020 dated July 10, 2020.

[6] Decision of the Vakhitovsky District Court of Kazan, Republic of Tatarstan, in case No. 2-966/2020 dated August 5, 2020.

[7] Decision of the Ingodinsky District Court of Chita, Zabaikalsky Krai, in case No. 2-1436/2021 dated August 4, 2021.