CAPITAL HEALTH SYSTEM, INC.; THE COMMUNITY HOSPITAL GROUP, INC., t/a JFK MEDICAL CENTER; ST. LUKE'S WARREN HOSPITAL, INC.; TRINITAS REGIONAL MEDICAL CENTER, Plaintiffs,
HORIZON HEALTHCARE SERVICES, INC., Defendant-Respondent. and CENTRASTATE MEDICAL CENTER, INC.; HOLY NAME MEDICAL CENTER, INC.; and THE VALLEY HOSPITAL, INC., Plaintiffs-Appellants, SAINT PETER'S UNIVERSITY HOSPITAL, INC., Plaintiff-Appellant,
HORIZON HEALTHCARE SERVICES, INC., Defendant-Respondent.
June 20, 2017.
Health System v. Horizon Healthcare (A-29/30-16); On appeal
from the Superior Court, Appellate Division, whose opinion is
reported at 6 N.J.Super. 96');">446 N.J.Super. 96 (App. Div. 2016).
Peter's University Hospital v. Horizon Healthcare
(A-59-16); On appeal from the Superior Court, Appellate
Michael K. Furey argued the cause for appellants Centrastate
Medical Center, Inc., Holy Name Medical Center, Inc., and the
Valley Hospital Group, Inc., in Capital Health System v.
Horizon Healthcare (A-29/30-16) (Day Pitney, attorneys;
Michael K. Furey and Dennis R. LaFiura, on the briefs).
Jeffrey J. Greenbaum and Dennis J. Drasco argued the cause
for appellant Saint Peter's University Hospital, Inc. in
Capital Health System v. Horizon Healthcare (A-29/30-16) and
Saint Peter's University Hospital v. Horizon Healthcare
(A-59-16) (Sills Cummis & Gross and Lum Drasco &
Positan, attorneys; Jeffrey J. Greenbaum, James M.
Hirschhorn, Jason L. Jurkevich, Megan L. Wiggins, Dennis J.
Drasco, and Elaine R. Cedrone, of counsel and on the briefs).
Michael 0. Kassak argued the cause for respondent Horizon
Healthcare Services, Inc. in Capital Health System v. Horizon
Healthcare (A-29/30-16) and Saint Peter's University
Hospital v. Horizon Healthcare (A-59-16) (White and Williams,
attorneys; Michael 0. Kassak, Robert Wright, Andrew I.
Hamelsky, Edward M. Koch, and Victor J. Zarrilli, on the
B. Joseph argued the cause for respondent McKinsey &
Company, Inc. in Saint Peter's University Hospital v.
Horizon Healthcare (A-59-16) (Drinker Biddle & Reath,
attorneys; Andrew B. Joseph, on the brief).
F. Chociey, Jr. argued the cause for intervenor Hackensack
University Health Network and Inspira Health Network in
Capital Health System v. Horizon Healthcare (A-29/30-16)
(Riker, Danzig, Scherer, Hyland & Perretti, attorneys;
Edwin F. Chociey, Jr., and Glenn A. Clark on the brief).
William F. Maderer argued the cause for intervenor Robert
Wood Johnson University Hospital in Capital Health System v.
Horizon Healthcare (A-29/30-16) (Saiber, attorneys; William
F. Maderer and Vincent C. Cirilli, on the brief).
P.J.A.D. (temporarily assigned), writing for the Court.
these appeals, the Court reviews interlocutory orders
requiring Horizon's turnover to plaintiffs of discovery
materials despite Horizon's objections.
Horizon Healthcare Services, Inc., New Jersey's largest
health insurer, maintains a two-tiered provider-hospital
system. Plaintiff Saint Peter's University Hospital,
Inc., and plaintiff Capital Health System, Inc. and others,
commenced separate lawsuits in different vicinages, claiming
Horizon treated them unfairly and in a manner that
contravened their agreements when they were placed in the
less advantageous Tier 2.
claims are based on the clear disadvantage of being placed in
Tier 2 because Horizon "adopted strong financial
incentives to encourage" its subscribers "to go to
Tier 1" hospitals, i.e., seven large hospital systems
referred to as "Alliance partners." Horizon
retained McKinsey & Company to assist in the selection of
the Alliance partners. Plaintiffs claim that the method and
manner of Horizon's tiering of hospitals constituted a
breach of their network hospital agreements. Plaintiffs also
claim that Horizon breached the implied covenant of good
faith and fair dealing, and assert other tort and contract
theories, as well. In both suits, the chancery judges
directed expedited discovery and executed confidentiality
orders, the terms of which were consented to by the parties.
disputes quickly arose. After an in camera review, Chancery
Judge Frank M. Ciuffani ordered-subject to the
confidentiality order-Horizon's production of the
unredacted McKinsey report, the Tier 1 hospital scores, the
Alliance agreements, minutes of the board of director's
meetings, and written communications between Horizon and
Robert Wood Johnson University Hospital (RWJ), an Alliance
partner which neighbors Saint Peter's in New Brunswick.
The proceedings in the Capital Health matter under Chancery
Judge Robert P. Contillo were not dissimilar.
Appellate Division granted leave to appeal and reversed the
discovery orders in both matters. 6 N.J.Super. 96');">446 N.J.Super. 96 (App.
Div. 2016). Although the panel cited the deferential standard
of review applicable in discovery matters, it reversed
because, having balanced the right to discovery against what
it viewed as relatively weak claims, panel found it
"difficult to discern the relevancy of the far-ranging
discovery" sought. And the panel determined that
Horizon's need for protection outweighed plaintiffs'
need for disclosure.
that decision, Saint Peter's pursued additional
discovery. Judge Ciuffani ordered a turnover of other alleged
proprietary materials. The judge also required that McKinsey
comply with Saint Peter's subpoena and that Horizon
produce the discovery turned over in the Capital Health
matter that Saint Peter's had requested.
a series of expedited orders, the Appellate Division granted
Horizon's and McKinsey's motions for a stay and for
leave to appeal. The panel determined the orders compelling
additional discovery were inconsistent with its prior
determination in the first appeal and that Saint Peter's
had failed to alter the panel's "prior
assessment" of Saint Peter's "likelihood of
success" on the merits. The panel did not dispose of the
interlocutory appeal it ...