THE MOSES H. CONE MEMORIAL HOSPITAL OPERATING CORPORATION v. CONIFER PHYSICIAN SERVICES, INC., No. 1:2013cv00651 - Document 68 (M.D.N.C. 2016)
Court Description: MEMORANDUM OPINION AND ORDER OF UNITED STATES MAGISTRATE JUDGE signed by MAG/JUDGE JOE L. WEBSTER on 2/3/2015; that parties' joint motion (Docket Entry 65 ) is GRANTED. The parties shall adhere to the Court's resolution of discovery disputes as set forth herein. As to Defendant's initial disclosure of damage computations pursuant to Federal Rule of Civil Procedure 26(a)(1)(A)(iii), Defendant shall supplement its disclosure no later than Wednesday, February 10, 2016 at 5:00 p.m. All other required supplementations shall be provided no later than Monday, February 29, 2016 at 5:00 p.m. FURTHER that pursuant to Federal Rule of Civil Procedure 37(a)(S), both parties shall bear their own costs and fees in making this joint motion. (Sheets, Jamie)
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THE MOSES H. CONE MEMORIAL HOSPITAL OPERATING CORPORATION v. CONIFER PHYSICIAN SERVICES, INC. Doc. 68 IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF NORTH CAROLINA THE MOSES H. CONE MEMORIAT HOSPITAI OPERATING CORPORATION d/b/a CONE HEAITH, Plaintiff, V CONIF'E,R PHYSICIAN SERVICES, INC., f/k/a SPRINGFIELD SERVICE CORPORATION, Defendant. ) ) ) ) ) ) ) ) ) ) ) ) ) ) 1,:1,3CY651, MEMORANDUM OPINION AND ORDER OF UNITED STATES MAGISTRATE JUDGE This mattet is before the coutt on the Parties'Joint Motion fot Resolution of Discovery Disputes. (Docket Entty 65.) The parties sought an expedited ptocedure pursuant to Local Rule 37.1. A heating in this matter was held on January 26, 2016. (À4inute Entry dated 01'/26/201,6.) Fot the teasons that follow, the Coutt will gtant the patties'motion and dispose of the pending discovery disputes as set forth herein. BACKGROUND Plaintiff Moses H. Cone Memodal Hospital Operating Cotpotation d/b/a Cone Health ("PlaintifP' or "Cone Health") filed this action alleging that Conifet Physician Sewices, I¡c. f/k/a Sptingfield Service Cotpotation ("Defendanl'ot "Conifet") bteached the patties' 1 Dockets.Justia.com Master Outsourcing Services Agteement and Supplement 1 ("AgreemenC').1 Accotding to the amended complaint, Cone Health provides health care seryices thtough a netwotk of hospitals and physicians in Notth Caroltna. (Am. Compl. 11 5, Docket Entry 45.) Conifer ptovides revenue management, health information management, and billing services ptoviders like Cone Health. (Id. 11 to health cate 6.) On August 8,201,1., Cone Health and Conifer enteted into a Mastet A.gteement under which Cone Health outsourced cettain claims management and accountteceivable functions to Conifet. (Id.flft9-10; Ex. A thereto.) The patties executed "Supplement 1" to the Master Agteement, under which Conifet began providing billing and claims mangement services to physicians owned by, 15; Ex. A or afîthated with, Cone Health. (Id.1l theteto.) Conifet also agteed to establish specified teams for teviewing denied claims and ptovide customet service to all of Cone Health's patients. (Id,1lll1,6-1,7; Ex. A thereto.) The term of the contrct undet Supplement 1 is five years. (Id, Ex. A.) On May 10,201,3, Cone Health notified Conifer of sevetal putpotted bteaches of the Agteement and threatened to tetminate it for cause if the breaches Health's satisfaction within sixty days. (1/. 1J 58 were not cured to Cone ) Under the Agreement, a. p^rry has sixty days to cure any alleged bteach befote the othet p^tty c n terminate the r\gteement fot cause. (Id. fl 56; Ex. A.) The patties then engaged in corespondence regarding Conifet's alleged breach of the Agteement, and Cone Health agreed to suspend termination of the Agreement until August 12,201,3 "while the Parties discussed tetmination ttansition tesolution." (Id.11 63.) Cone Health then filed this action on August 8,201,3. Conifer has assetted a counterclaim 1 Spdngfield Service Corporation ("SPi") entered the ,tgreement with Cone Health. In 201,4, SPi was putchased by Conifet Health Soludon, LLC d/b/a Conifet Health Solutions. Hereinaftet, SPi will be referted to as "Conifer." 2 against Cone Health. (,\nswet & Countetcl., Docket Entry 48.) Since late 201.4, the paties have engaged in extensive discovery, and an exceptional volume of documents have been ptoduced or reviewed by both paties. On December 30, 201,5, the parties filed the pending motion seeking resolution of discovery disputes ftom the Court. (Docket Entry 65.) DISCUSSION As a genetal tule, Fedetal Rule 26þ) ptovides general ptovisions regatding the scope of discovery: Patties may obtain discovery tegarding any nonptivileged m^ttet that is relevant to any patty's claim ot defense and ptoportional to the needs of the case, considering the impottance of the issues at stake in the action, the amount in controversy, the parties' telative access to relevant information, the parties' resources) the impotance of the discovery in resolving the issues, and whether the butden or expense of the proposed discovery outweighs its likely benefit. Information within this scope of discovery need not be admissible in evidence to be discovetable. FED. R. CIV. P. See 26þ)(1). Discovery tules are to be accorded broad and libetal construction. Herbert u. I-ando,441 U.S. 1.53,'1,77 (1,979); Hickman u. Tallor, 329 U.S. 495, 507 (1947). Nevertheless, a court may "issue an order to protect a paÍty or person from annoyance, embarassment, oppression, or undue burden or expense. . . ." FBo. R. Ctv. P. 26(c)(1). District courts genetally have broad disctetion in managing discovery, including whether to grant ot deny a motion to compel. l-nne Star Steakhoase dy Saloon, Inc. u. Aþha of Virginia, Inc., 43 F.3d 922,929 (4th Cir. 1,995); Erdmann u. Prefered Rcseanh, Inc. of Georgia,852F.2d788,792 (4th Cir. 1988). A. Initial Disclosure of Damages The parties ftst disagree with the adequacy of Conifet's initial damage disclosutes undet Federal Rule of Civil Procedute Z6(a)(t)(A)(ttt). Accotding to Rule Z6(a)(t)(A)(iÐ, 3 a party must disclose "a computato¡ of each category of damages claimed" and "make avallable fot inspection and copying . . . the documents or other evidentiary material. . . on which each computation is based." F'Bo. R. Crv. P. Z0(a)(t)(A)(u). Additionally, Rule 26(e) tequires a party to "supplement or coffect its disclosure or response" if it leatns in a timely manner that its disclosures or responses are "incomplete ot incorecC' and the corect infotmation is not known to the othet p^ty, ot by otder of the court. FB¡. R. Ctv. P. 26(e)(1); Fabrics Crp., Inc. u. Tietex 1,0,201,5). Here, it Int'/, Ltd., No. 1:13CV645,2015 of 4126866, at *3 (À4.D.N.C. Aug. has been 16 months since Defendant made its initial disclosures. hearing, Defendant agreed computation ìfL ¡ee also Precision to supplement damages by the end its Rule 26(a)(1xÐ(t1) initial At the disclosure of of January 201,6. If Defendant has not yet done so, Defendant must supplement its response no later than Febtuary 10, 20L6 at 5:00 p.m. B. Document Requests 67 and 68 and Interrogatories l0 andll Next, Plaintiff seeks to compel Defendant to produce documents pertaining to Document Requests 67 and 68, along with Intettogatories L0 and 11. Document Request 67 and 68 state the following: 67. All documents concetning or telated to the taining of fDefendant's] employees and representatives who ptovided customer service to fPlaintifÎs] patients pursuant to the Master Agreement andf or Supplement 1. 68. ,{.ll documents concerning or telated to fDefendant's] ptocedures andf or policies used to evaluate whethet the personnel providing service to fPlaintiffl were fully fam]har with the technology, process, and procedures used to deliver fDefendant's] services. (Ex. C,I)ocketEntty 65-3 at 5.) Interrogatories 10 and 11 state the following: 10. Please list the policies, ptocedures, metrics, quality standards ardf ot ptoduction standatds applicable to pefendant's] representatives, employees, or agents who ptovided service to fPlaintiffl. 4 1,1,. Please identify how fDefendant] determined whethet the representatives, employees, and agents who provided service to fPlaintiff] wete fully familiat with the technology, process, and procedutes used to delivet fDefendant's] service s. (E". E, Docket E.ttry 65-5 at 4.) In its otiginal response to Document Request No. Defendant states: In addition to its General Objections, fDefendant] objects to this request on the gtounds that it is overboatd, unduly butdensome, and seeks documents thatare not relevant and otherwise not teasonably calculated to lead to the discovery of admissible evidence. Among othet things, this tequest ask for all documents concerning or telated to the training of fDefendant's] employees and representatives who ptovided customer service to fPlaintifls] patients pursuant to the Master Agreement and Supplement 1, which is not an issue in the Complaint ot Counterclaim. (E*. C, Docket Ent y 65-3 at 5.) As to Document Request No. 68, Defendant's states: In addition to its Genetal Objecuons, fDefendant] objects to this request on the gtounds that it is overboatd, unduly burdensome, and seeks documents that arc not relevant and otherwise flot reasonably calculated to lead to the discovery of admissible evidence. Among other things, this request asks for all documents concetning ot telated to fDefendant's] ptocedutes andf or policies used to evaluate whethet the personnel ptoviding service to fPlaintiffl were fully famlltar with the technology, process, and procedutes used to deliver fDefendant's] services, which is not at issue in the Complaint ot Counterclaim. (d.) As to Intettog^tory No. 10, Defendant's states: fDefendant] objects to Intetrogatoty No. 10 because it seeks information that is: (a) outside the televant timeframe; and þ) neithet relevant to any claim or counterclaim assetted herein nor reasonably calculated to lead to the discovery of admissible evidence. (Er. E, Docket E.,try 65-5 at 4.) As to Interrogatory No. 11, Defendant states: lDetèndantJ ob¡ects to Intetrogatory No. 11 because it seeks infotmation that is: (a) outside the relevant timeftame; and þ) neithet relevant to any claim or counterclaim asserted herein nor reasonably calculated to lead to the discovery of admissible evidence. 5 67, (Id.) Document Requests 67 and 68, and Intettogatories 10 and'1.,1, concern a specific section of the Complaint which sets out the factual allegations of Defendant's failute to ptovide adequate customer service to patients. "fDefendant] agteed to field fPlaintiff s] (See Am. Compl. !H 48-54.) Plaintiff alleges that patients'requests for additional infotmation tegatding fPlaintiffs] charges and their questions regarding billing statements." (Id. n 49.) Plaintiff futther alleges that "fDefendant] tefered fPlaintiffs] patients to fPlaintiffs] Affiliated Health Cate Ptoviders to nswer billing questions fDefendant's] employees should have answered." (1d.n50.) Thus, Plaintiff seeks the information sought afterin intertogatories 67 and 68 to prove the allegations in the complaint pertaining to customer service. As to Document Request No. 67, the Court finds the request, as written, is ovetbroad. Howevet, the Court does find that is it appropriate for Defendant to ptoduce customer service training recotds specifically pettaining to patient biiling and claim denials as it is relevant to Plaintiff s claims. (See Compl. 1ln 28-29,35-40, 48-54.) Thus, Defendant shall supplement its response accordingly. As to Document Request No. 68, the Court compels Defendant to supplement its response. In its otiginal response, Defendant states that its policies and procedutes used to determine whethet an employee is competent to deliver Defendant's sewices is not at issue in the complaint ot the counterclaim. Flowevet, in its amended complaint, Plaintiff specifically alleges that Defendant"failed to use personnel who fwete] fully famlltar with the technology, process and procedures to be used to deliver its services." (Am. Compl. fl 53.) documents tegatding how Defendant's employees were evaluated ate televant 6 Because to these allegations, Defendant will be requited to supplement its response. Rryfield Auiaîion, I .[ C Llon Auiation, Inc., No. 1:1.1CV274, 201.2 WL 3095332, at *3 (À4.D.N.C. July 30, u. 201,2) (compelling defendant to provide documentation "which telate to the patties' dispute undet the [a]gteement"). As to Interc.ogatories 10 and issues highlighted 1.1., the Cowt fìnds that the inteffogatoties ate televant to in PlaintifFs complaint regarding Defendant's failure to use competent personnel. Thus, Defendant must supplement its responses, but only ptovide infotmation up to the date that the conttact u/as terminated on August 12,2013. C. Document Requests 1.07 and 108 Plaintiff request the Coutt to compel Defendant to ptoduce documents pettaining to Document Requests 107 and 108, which seek Defendant's profit and loss statements and tax reflúns fuom201,1, to present. (E*. C, Docket Etttty 65-3 at 6.) Defendant objects on gtounds of relevancy. Plaintiff contends that these documents ate needed to conduct a meaningful analysis of what profits were lost in respect to this contract as opposed to "something else." Defendant contends that a companywide tax return will not teveal revenue or expenses obtained speciûc to this contract. Defendant furthet argues that no allocation of revenue ot expenses would be identified on ^ company-wide profit and loss statement. At the hearing, Defendant advised the Court that it intends to ptoduce documents tegarding its tevenues and expenses ftom the contract. Defendant also intends to ptoduce documents concetning expected revenues not obtained as a result of tetmination of the conttact. The Coutt finds that Plaintiffs document requests, as writtefl, ate ovetbtoad and that company-wide financial statements and tax returns will not teasonably lead to televant information pertaining to the 7 contract benveen the parties. FB¡. R. Cry. P. 26(b)(1). However, the Coutt will tequire Defendant to supplement its responses and ptoduce documents solely to the extent that it contains information related to Moses Cone ftom years 201,1.-201,3. D. Production from Custodians After August 12,2013 and from New Custodians Plaintiffs have tequested defendants to "ptoduce, as appropriate, documents cteated latet than August 12,2013 from all of its custodians, as well as electronically stoted infotmation belonging to ffour new] document custodians . . . ." (À4ot. at3, Docket Etttty 65.) Accotding to Defendant, the paties "heavily negotiated for an extensive period of time" about how to ptoduce documents, what seatch terms wete going to be used, and which custodians would be subject to discovery. Accotding to the Defendant, in response to 138 document requests, Defendant reviewed apptoximately 500,000 tecords which totaled millions of pages. Subsequently, Defendant ptoduced ovet 100,000 documents and almost half a million pages. Moteovet, the panies agteed to a list of 22 custodians and that the documents ptoduced would be dated ftom November 1,8,201,0 to A.ugust 12,2013. E-Discovery that ^tI.A, (See Joint Stipulation and Otdet Re Docket Enry 44-1.) Although tefuted by Plaintiff, Defendant contends it would take months to produce the requested documents. In light of the parties' extensive negotiations regatding ptoduction and the burden placed on Defendant to ptoduce these documents, the Coutt will not compel Defendant to ptoduce documents pertaining to all of the listed custodians cteated latet than August 1,2,201,3. As to PlaintifPs request for documents ftom fout new custodians, two of custodians wete disclosed to Plaintiff a ye ï ago before ptoduction of discovery However, Plaintiff failed to include them in the list of 22 8 the began. custodtans requited to ptoduce documents. Furthermote, Plaintiff has aheady obtained 14,000 documents sent or received by these new custodians. Plaintiff also teceived an additional 5,000 documents pettaining to these custodians resulting from negotiations tequiring Defendant to produce documents fot Plaintiffs third party consultant for pdvate health infotmation undet HIPAA. Thus, gtanting PlaintifÎs tequest at this late pedod would unduly butden Defendant in light of Plaintiff aheady teceiving approximately 19,000 documents regatding the Baumann Prost Cole 1,622001, at dt Astocs., Inc. u. BBP ù Assocs. fout new custodians. LLC, No. \X/DQ-11-2478, Basile 201,3 WL *3 (D. Md. 9 Apt.2013) ("Futthet, all discovery is subject to the þtoportionaliry] limitations imposed by Rule 26þ)Q)ç)") (internal quotation and citation omitted). Thetefote, Defendant will not be compelled to supplement its tesponse. E. Requests to Clawback Documents Lasdy, pursuant to a "clawback ptovision" in the parties' stipulated otder (Docket Ent y 58 at3-4), Defendant seeks to clawback certain documents that Plaintiff teceived. The documents at issue are grouped into three categodes. The ftst categony is cottespondence between Conifer officers and board members regarding an estimate of the company's earnings before intetest, taxes, deptessions, and amorttzaion ("EBITDA"), a description of a convetsation between the CE,O and PlaintifPs attotney, and emails tegatding different contract ptovisions.2 The second category concerns an ematl. ftom the CEO to a boatd member about a settlement solution and nvo emails regatding how to respond to Plaintifls lettet tegatding Defendant's non-petformance and breach.3 The third category of documents These ate documents: SPI001721,72, SPI00169989, SPI00169994, SPI00173015, and SPI00173020. (|oint Motion of Resolution fl 7a, Docket E try 65-1.) 3 These ate documents: SPI001721.74, SPI00045872, and SPI00045873. (Id, T 7b.) 2 9 aÍe from powerpoints regarding Defendant's companywrde ptesentation for a ptoposed 2012 budget.a Defendant contends that the first and second categories are protected wotk ptoduct, ptotected by the attotney-client ptivileged, or irelevant documents. Defendant furthet contends that the thfud gtoup of documents are irtelevant to this matter. "In order for matetials to quali$r for the protection of the work-ptoduct doctrine, the proponent of the protection must demonstrate the matetials ate (1) documents or tangible things; Q) prepared in anticipation of litrgation ot for tnal; a¡d (3) by ot for the patty ot the party's representative." United States 39321,67, t x3 u. Bertie Ambalance Serv.,Inc., No. 2:14-CV-53-F, 2015 ìfL (E.D.N.C. June 25,201,5) (internal quotations and citations omitted). On the other hand, the attorney-client privilege: applies only if (1) the asserted holder of the pdvilege is ot sought to become a client; (2) the person to whom the communication was made (a) is a member of the bar of a coutt, or his subordinate and þ) i" connection with this communication is acting as a lawyet; (3) the communication telates to a fact of which the attotney was informed (u) by his client þ) without the presence of strangers (c) fot the purpose of securing pdmarily eithet (i) an opinion on law ot (ri) legal sewices ot (iii) assistance in some legal ptoceeding, and not (d) fot the purpose of committing a cdme or tott; and (4) the pdvilege has been (a) claimed and þ) not waived by the client. Uggttt Grp., Inc. u. Brown Regatding the dy ll/illianson Tobacco Corp.,116 F.R.D.205,210 (I\4.D.N.C. 1986). ftst c tegory of documents, the Coutt denies Defendant's request to clawback document 5PI001721,1,2. This document is an email between Conifet officets regarding Conifer's estimated EBITDA without Plaintiff. At the end of the document a Conifer officer suggest that Conifet "look at some additional ovethead expense teductions to a These documents ate: SPI00184803, SPI0011,8344, SPI00184463, SPI00184770, SPI001,84787, SPI001 8481 4, and SPI001 8481 1. (Id. I 7 c.) 10 reduce the expected shortfall." The documerit is televant because it descdbes how the termination of the contact directly impacts Defendant. The document is a convetsation between Conifer's officets. Thetefote, the attotney-client ptivilege does not apply. Lastly, the document is not protected wotk product because it was not "ptepated in anticipation of litigation ot fot tttaI." The officers ate discussing how to teduce the impact of the loss of the contract, not how to calculate damages fot litigation. Bertie Anbø/ance Serv., Inc., 201,5 WL 39321.67, at*3. Thus, Defendant's tequest to clawback document SPI001721,1.2 ts denied. However, the Court grants Defendant's request to clawback the other documents in category one (see footnote 2). The information contained in these documents ate either protected work product or protected by the attotney-client ptivilege. Thus, Defendant's clawback request for the documents other than SPI001721,12 in the frst category ^re granted. The second category includes three documents (tee footnote 3). The first document is a summary regatding a discussion between two of Conifer's officers about their efforts to settle the dispute benveen the patties. This document is protected work product because descdbes Defendant's strategy to setde the dispute it in anticipation of litigation. The second and third documents are emails desctibing edits to a revised tesponse to Plaintifls demand lettet fot non-petformance and breach. Because these documents concern tevising a response to a demand lettet, they wete made in anticipation of litigation. The Coutt concludes that documents in category two ate protected work product, thus Defendant's clawback tequest is gtanted. Finally, the thitd c tegoty of documents is irelevant. The documents are pottions a PowetPoint presentation regatding Defendant's companywide ptoposed 1,1 budget for of 201.2. The document is barely legible and rarely mentions Plaintiff. Futthetmore, the document does not reveal information about revenue ot expenses petaining to the contract. Therefote, the Court finds this document furelevant and grants Defendants request to clawback the documents. CONCLUSION For the reasons stated herein, IT IS HEREBY ORDERED that patties' joint motion (Docket Etrtry 65) is GRANTED. The patties shall adhete to the Coutt's tesolution of discovery disputes as set fotth hetein. As to Defendant's initial disclosute of damage computations pursuant to Federal Rule of Civil Procedure Z6(a)(t)(A)(Ð, Defendant shall supplement its disclosure no later than Wednesday, February 10, 2016 at 5:00 p.m. AII other required supplementations shall be ptovided no later than Monday, February 29r 2016 at 5:00 o.m. IT IS FURTHER ORDERED that pursuant to Fedetal Rule of Civil Procedure 37 - (a)(5), both patties shall beat theit own costs and fees in making this joint motion. ter United States Magisttate Judge J Febtuary 3,201.6 Dutham, Noth Carohna 12 e
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