:: TPA Ordered To Assimilate Claims Data Demanded By Employer At TPA’s Expense
I agree with the Plaintiffs that the requested claim forms and medical bills are clearly an integral part of the litigation; the requested information goes not only to BeneFirst’s culpability, but also to the amount of damages, if any, to which the Plaintiffs may be entitled. There can be no serious contention that the information is not highly relevant. In fact, it is difficult to imagine how this case could be prosecuted or defended without the claims forms and attendant bills. W.E. Aubuchon Co., Inc. v. BeneFirst, LLC, 245 F.R.D. 38 (D. Mass. 2007)
In litigation between an employer and its third party administrator, access to claims data will often be vital to the determination of who wins and who loses. Given the volume of claims information and the relative unfamiliarity with the claims adjudication process by the courts, the litigants have a sizable chore in resolving discovery issues.
The Issue
The plaintiffs alleged that its third party administrator, BeneFirst, mishandled their employees’ medical claims by failing to determine eligibility for payment, the availability of co-payment and co-insurance, and subrogation. The processing of the claim forms was presumably the mechanism for making these determinations. While the Amended Complaint and subsequent pleadings are silent, the relevant time period appears to be from 2001 to 2004.
Thus the plaintiffs stated their claims in the following terms:
- that BeneFirst failed to perform its duties in a reasonably prudent manner, thereby breaching its fiduciary duty (Counts I and II) and
- that it breached the underlying contract by failing to provide services accurately and completely (Counts III and IV).
According to the opinion, the discovery issue arose as follows:
Plaintiffs sought, among other things, to compel BeneFirst to produce all medical claims files, including the actual medical bills in BeneFirst’s custody or control. This Court ruled that BeneFirst was to provide those files and bills. It is that ruling that is the subject of this motion for reconsideration.
A Question Of Accessibility And Justification
The rules of engagement were derived from F.R.C.P. 26(b)(2)(B):
On December 1, 2006, Rule 26 was amended, in relevant part, to provide the following limitation to the general rule that a party may obtain discovery of any matter, not privileged, that is relevant to such party’s claim or defenses:
A party need not provide discovery of electronically stored information from sources that the party identifies as not reasonably accessible because of undue burden or cost. On motion to compel discovery or for a protective order, the party from whom discovery is sought musts show that the information is not reasonably accessible because of undue burden or cost. If that showing is made, the court may nonetheless order discovery from such sources if the requesting party shows good cause, considering the limitations of Rule 26(b)(2)(C). The court may specify conditions for the discovery.
Though the dispute arose before the amendment’s effective date, the court noted that the parties cited to the analysis in Zubulake v. UBS Warburg, 217 F.R.D. 309, 311 (2003) and that the amendment “to a large degree” adopted the analysis in that case, thus making application of the amendment equitable.
The factor by factor analysis of the court provides thoughtful insights for those involved in claims administration litigation. The order is available on the K & L Gates website here.
Documents Inaccessible . . .
The requested information was determined to be inaccessible forr purposes of the rule:
Because, as noted by Judge Sheindlin, the determination of whether the production of electronic data is expensive or unduly burdensome often depends on whether it is maintained in an “accessible” or “inaccessible” format, I find that it is instructive to apply this media based analytical approach in considering whether electronic data is “reasonably accessible” for purposes of the new Rule 26(b)(2)(B). In this case, the records sought by the Plaintiffs are stored on a server used by BeneFirst in Pembroke Massachusetts, which is clearly an accessible format.
However, because of BeneFirst’s method of storage and lack of an indexing system, it will be extremely costly to retrieve the requested data. I am hard pressed to understand the rationale behind having a system that is only searchable by year of processing, then claims examiner, then the month of processing, and finally the claims date. None of these search criteria reflect the name of the individual claimant, the date that the claimant received the medical service, who the provider was, or even the company that employed the benefit holder. It would seem that such a system would only serve to discourage audits and the type of inquiries that have led to the instant litigation.
Nevertheless, the retrieval of the records will be costly and for the purposes of this decision, I find that such retrieval would involve undue burden or cost. Accordingly, the images are not reasonably accessible within the meaning of Fed.R.Civ.P. 26(b)(2)(B).
But Good Cause Is Shown . . .
The Court noted that:
According to BeneFirst, the original claim forms and medical bills were processed by hand, kept for 60 days, converted to a digital image and then destroyed. Therefore, digital images which constitute the information requested by the Plaintiffs are in the custody and control of BeneFirst and are not available through any other source.
Further, the information sought was central to the case:
I agree with the Plaintiffs that the requested claim forms and medical bills are clearly an integral part of the litigation; the requested information goes not only to BeneFirst’s culpability, but also to the amount of damages, if any, to which the Plaintiffs may be entitled. There can be no serious contention that the information is not highly relevant. In fact, it is difficult to imagine how this case could be prosecuted or defended without the claims forms and attendant bills. As previously found, they are not available from any other source (a determination which is uncontroverted).
On balance, therefore, the Court determined that the TPA had to produce the information, and at its own cost:
On balance, I find that the Plaintiffs have clearly established good cause for requiring BeneFirst to produce the requested information. As noted above, the Plaintiffs have significantly narrowed their original request from approximately 34,000 claims to a list of approximately 3,000. This reduction should serve to reduce the time and expense of retrieving the requested information. Under the circumstances, I find that the requested information should be produced by BeneFirst at its own expense.
Note: The contractual arrangement played an important role in this decision.
In addition to the above 7 factors, it is important to note that a provision in the Service Agreement between the parties provided that: “… The Records are the property of the Plan Sponsor. The Plan Sponsor has the right of continuing access to their records….”. In other words, although in the custody and control of BeneFirst, the records at issue are the property of the Plaintiffs.
This raises two interesting theoretical points – what would the effect be if the TPA returned the data (assuming this practical and possible) or if the administrative agreement addressed the records ownership and/or disposition more specifically?
For More Information - For electronic discovery issues, take a look at the K&L Gates’ e-Discovery Analysis & Technology Group. That’s where I picked up on the Aubuchon case through a discussion here. I also like what Larry Wescott is doing at The Electronic Discovery Blog.
TPA Litigation - If you represent claims administrators or employers in contractual disputes, you are going to find it very important to know what to ask for and when. And e-discovery know-how will largely determine if and how you can obtain what is needed for your case.
