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Cost Containment Express, LLC v. Horizon Healthcare Services, Inc.

United States District Court, D. New Jersey

November 30, 2017



          JAMES B. CLARK, III United States Magistrate Judge

         THIS MATTER comes before the Court on a motion by Plaintiff Cost Containment Express, LLC (“CCE” or “Plaintiff”) to compel Defendant Horizon Healthcare Services, Inc. (“Defendant” or “Horizon”), to produce documents in response to Plaintiff's discovery requests [Dkt. No. 39]. Defendant opposes Plaintiff's motion [Dkt. No. 43]. For the reasons set forth below, Plaintiff's motion to compel [Dkt. No. 39] is GRANTED in part and DENIED in part.

         I. BACKGROUND

         This action arises from a Complaint filed by CCE on December 30, 2015, alleging that Horizon used its position as the insurer for Passaic County, New Jersey, and as the largest health insurer in the State of New Jersey, to prevent CCE from entering the New Jersey market, and asserting two causes of action against Horizon for tortious interference with prospective business advantage and unjust enrichment arising out of Horizon's alleged actions. See Dkt. No. 1. CCE is a Tennessee Corporation that provides medical out-of-network claims cost containment services to employers who have self-funded benefit plans to provide health insurance coverage to their employees. Id. at ¶ 10. According to CCE, when contracted by an employer, CCE works to reduce the out-of-network charges the self-funded benefit plan incurs when an employee who is covered under the plan goes to an out-of-network provider and is charged a fee for services that is not controlled by the terms of the plan's insurance agreement. Id. CCE utilizes its “Fair Market Re-Pricing Methodology” to review out-of-network claims, and based upon the result of that review, CCE sends the out-of-network provider an Explanation of Review and a check for the re-priced amount. Id. at ¶ 12. If the provider questions or appeals the Explanation of Review or demands a higher payment, CCE provides answers to the providers' questions and defends the appeals. Id.

         Passaic County maintains a self-funded employee benefit plan (the “Plan), of which Horizon is the Third-Party Administrator. Id. at ¶ 14. During the relevant time period, all in-network services provided to Passaic County employees were done through Horizon's preferred provider network and paid from the Plan. Id. Additionally, as Third-Party Administrator for the Plan, Horizon was responsible for settling claims involving out-of-network providers. Id. at ¶ 15. In early 2014, Passaic County issued a “Request for Proposal Competitive Contracting” inviting qualified vendors to submit proposals for “Medical Out-of-Network Claims Cost Containment Services.” Id. at ¶ 16. CCE submitted a proposal, and as a result of being the lowest bidder, on March 24, 2014, the contract was awarded to CCE. Id. at ¶ 17. Horizon also submitted a bid, which was rejected. Id. at ¶ 18.

         According to CCE, immediately after its bid was accepted, it began to make the necessary arrangements to perform its services under the contract, which required CCE having access to data related to out-of-network charges that were submitted to Horizon for payment from the Plan. Id. at ¶ 19-20. CCE claims that while Horizon initially indicated that it would cooperate in providing CCE access to such data, Horizon later stated that CCE would only be given access to the data in exchange for a fee paid to Horizon. Id. at ¶ 21. Although CCE asserts that the data belonged to Passaic County, and Horizon had no legitimate right to withhold it, Passaic County agreed to allow Horizon to charge an administrative fee to cover Horizon's cost to send billing information to CCE and CCE agreed to pay the fee in exchange for the data. Id.

         Even after Horizon and CCE had purportedly resolved their dispute regarding the cost of allowing CCE to access the necessary data, CCE claims that Horizon, in an effort to prevent CCE from performing the contracted services for Passaic County, falsely claimed that the process employed by CCE in handling out-of-network claims was in violation of New Jersey law and used an outstanding debt owed to Horizon by Passaic County to persuade Passaic County to terminate its arrangement with CCE and instead allow Horizon to continue performing the services for which CCE had won the bid. Id. at ¶ 23-25. Allegedly as a result of Horizon's conduct, Passaic County rescinded its award of the out-of-network cost containment services contract to CCE and instead contracted with Horizon, which had lost the bid, to perform those services.

         In the present motion, which was filed by Plaintiff after several failed attempts to resolve the parties' discovery disputes, Plaintiff seeks an Order compelling Defendant to provide information in response to Plaintiff's requests for information related to “Horizon's contracting with other third parties to perform the work promised to CCE.” Dkt. No. 39 at p. 2. Defendant opposes Plaintiff's motion. See Dkt. No. 43.


         Federal Rule of Civil Procedure 26 governs the scope of discovery in federal litigation and provides that:

Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties' relative access to relevant information, the parties' resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.
Information within this scope of discovery need not be admissible in evidence to be discoverable.

Fed. R. Civ. P. 26(b)(1). Rule 26 is to be construed liberally in favor of disclosure, as relevance is a broader inquiry at the discovery stage than at the trial stage. Tele-Radio Sys. Ltd. v. De Forest Elecs., Inc., 92 F.R.D. 371, 375 (D.N.J. 1981). While relevant information need not be admissible at trial in order to grant disclosure, the burden remains on the party seeking discovery to “show that the information sought is relevant to the subject matter of the action and may lead to admissible evidence.” Caver v. City of Trenton, 192 F.R.D. 154, 159 (D.N.J. 2000). Upon a finding of good cause, a court may order discovery of any matter relevant to a party's claims, defenses or the subject matter involved in the action. “Although the scope of discovery under the Federal Rules is unquestionably broad, this right is not unlimited and may be circumscribed.” Bayer AG v. Betachem, Inc., 173 F.3d 188, 191 (3d Cir. 1999). Discovery requests may be curtailed to protect a person from whom discovery is sought from “annoyance, embarrassment, oppression, or undue burden or expense.” Fed.R.Civ.P. 26(c)(1).

         Federal Rule of Civil Procedure 37 allows a party who has received evasive or incomplete discovery responses to seek a court order compelling additional disclosure or discovery. “The party seeking the order to compel must demonstrate the relevance of the information sought. The burden then shifts to the opposing party, who must demonstrate in specific terms why a discovery request does not fall within the broad scope of discovery or is otherwise ...

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