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UnitedHealth Grp. Inc. v. Columbia Cas. Co.

2010 WL 11519975 (D. Minn. 2010)

November 23, 2010

Nelson, Susan R., United States Magistrate Judge

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Summary

The court denied the motion to compel the production of redacted email header information, finding that the benefit of the requested documents was slight and the burden of production was significant. The court also directed the defendants to meet and confer with the plaintiff if they believe a narrower universe of exhaustion discovery is needed.

UNITEDHEALTH GROUP INCORPORATED, Plaintiff and Counterdefendant,
v.
COLUMBIA CASUALTY COMPANY, Fireman's Fund Insurance Company, American Alternative Insurance Corporation, Executive Risk Specialty Insurance Company, First Specialty Insurance Corporation, Starr Excess Liability Insurance International Limited, Liberty Mutual Insurance Company, Steadfast Insurance Company, National Union Fire Insurance Company of Pittsburgh, PA, Defendants and Counterclaimants

Civil No. 05–1289 (PJS/SRN)

United States District Court, D. Minnesota

Signed November 23, 2010

Counsel

David B. Goodwin and Michael S. Greenberg, Covington & Burling, LLP, One Front Street, San Francisco, California 94111, and Jeffrey J. Bouslog and Christine Lindblad, Oppenheimer, Wolff & Donnelly, LLP, 45 South Seventh Street, Suite 3300, Minneapolis, Minnesota 55402, for Plaintiff UnitedHealth Group Incorporated.
J. Robert Hall, Michael M. Marick, Rebecca R. Haller and Jeffrey A. Berman, Meckler, Bulger, Tilson, Marick & Pearson, LLP, 123 North Wacker Drive, Suite 1800, Chicago, Illinois 60606, and Charles E. Spevacek, Tiffany M. Brown and Katrina M. Giedt, Meagher & Geer, PLLP, 33 South Sixth Street, Suite 4400, Minneapolis, Minnesota 55402, and, for Defendant Columbia Casualty Company.
Louise M. McCabe and Louis Segreti, Troutman Sanders LLP, 550 West B Street, Suite 400, San Diego, California 92101, and Alison Grounds, Troutman Sanders LLP, 600 Peachtree Street NE, Suite 5200, Atlanta, Georgia, and Milind Parekh, Troutman Sanders LLP, 55 West Monroe Street, Suite 3000, Chicago, Illinois 60603, and William L. Davidson, Lind, Jensen, Sullivan & Peterson, P.A., 150 South Fifth Street, Suite 1700, Minneapolis, Minnesota 55402, for Defendant Fireman's Fund Insurance Company.
Ronald P. Schiller, Daniel J. Layden, Jacqueline R. Dungee and Sozi Tulante, Hangley, Aronchick, Segal & Pudlin, One Logan Square, 27th Floor, 130 North 18th Street, Philadelphia, Pennsylvania 19103, and Alan L. Kildow and Sonya R. Braunschweig, DLA Piper US, LLP, 90 South Seventh Street, Suite 5100, Minneapolis, Minnesota 55402, for Defendants Executive Risk Specialty Insurance and First Specialty Insurance Corporation.
Adam H. Fleischer and Bonny S. Garcha, Bates & Carey, LLP, 191 North Wacker Drive, Suite 2400, Chicago, Illinois 60606, and John M. Anderson and Jeffrey R. Mulder, Bassford Remele, 33 South Sixth Street, Suite 3800, Minneapolis, Minnesota 55402, for Defendant American Alternative Insurance Corporation.
David P. Pearson, Thomas H. Boyd and Erin A. Oglesbay, Winthrop & Weinstine, PA, 225 South Sixth Street, Suite 3500, Minneapolis, Minnesota 55402, for Defendants Starr Excess Liability Insurance International, Limited and National Union Fire Insurance Company of Pittsburgh.
Harvey Weiner, Michael P. Duffy, E. Joseph O'Neil and Jill M. Brannelly, Peabody & Arnold, LLP, 600 Atlantic Avenue, Boston, Massachusetts 02210, and Bethany K. Culp, Hinshaw & Culbertson, LLP, 333 South Seventh Street, Suite 2000, Minneapolis, Minnesota 55402, for Defendants Liberty Mutual Insurance Company and Steadfast Insurance Company.

Nelson, Susan R., United States Magistrate Judge

ORDER

This matter is before the Court on Defendants' Joint Motion to Compel Discovery (Doc. No. 580). This case has been referred to the undersigned for resolution of pretrial matters pursuant to 42 U.S.C. § 636and Local Rule 72.1

I. BACKGROUND

In this insurance coverage action, Plaintiff UnitedHealth Group Incorporated (“UHG”) seeks an adjudication that costs and expenses it incurred in defending and settling underlying litigation, including the AMA and NYAG actions, are covered by the various layers of coverage that UHG purchased as part of its 1998–2000 managed care liability program. The underlying actions challenged UHG's use of the Ingenix database to determine the usual, customary, and reasonable (“UCR”) costs of medical treatment by out-of-network health care providers.[1]

Under UHG's 1998–2000 managed care liability insurance program, Lexington Insurance Company (“Lexington”) provided the primary managed care liability policy to UHG, and Reliance Insurance Company of Illinois (“Reliance”) issued an excess policy, which attached above the Lexington policy. (Second Am. Complaint ¶¶ 22–23.) Lexington is not a party to this lawsuit, as Plaintiff contends that Lexington fully paid and exhausted its applicable per claim and aggregate limits of liability. (Id. ¶ 22.) Reliance, which was placed in liquidation, also is not a party to this lawsuit. The following Defendants provided the additional layers of excess insurance coverage, in the following order: Columbia Casualty Company (“Columbia”), Fireman's Fund Insurance Company (“Fireman's Fund”), American Alternative Insurance Corporation (“AAIC”), Executive Risk Specialty Insurance Company (“Executive Risk”), First Specialty Insurance Corporation (“First Specialty”); Starr Excess Liability Insurance International Limited (“Starr Excess”), Liberty Mutual Insurance Company (“Liberty Mutual”), Steadfast Insurance Company (“Steadfast”) and National Union Fire Insurance Company of Pittsburgh, PA (“National Union”). (Id. ¶¶ 25–33.)

Defendants served their First Set of Common Requests for the Production of Documents on Plaintiff on July 27, 2009. (Defs.' Doc. Requests, Ex. A to Decl. of Erin A. Oglesbay in Supp. Defs.' Mot. Compel.) At issue in this motion to compel are documents responsive to Defendants' Request Nos. 28 and 42, which seek the following:

*2 Request No. 28: All documents relating to exhaustion of any layer of United's self-insurance or liability insurance coverage for the 1998–2000 year, including the exhaustion United alleges in Paragraphs 41–43 and 76–79 of United's First Amended Supplemental Complaint.

Request No. 42: All documents relating to any investigation by any regulatory or governmental agency or entity, relating to the Ingenix database and/or United's determination of usual, customary and reasonable (“UCR”) rates for out-of-network services.

Defendants contend that they need additional discovery responsive to Request No. 28 regarding the issue of exhaustion because prior productions did not fully explore the exhaustion of the Reliance layer of coverage. With respect to Request No. 42, the insurers argue that they do not have sufficient information, particularly regarding state attorney generals follow-on investigations.

In addition, Defendants move to compel the production of certain information redacted from Plaintiff's production of electronically stored information (“ESI”), specifically email header electronic metadata that is found in a limited subset of documents for which Plaintiff has claimed privilege. These documents consist of header information regarding email chains which contain an initial non-privileged communication, but which were subsequently forwarded with privileged information to Plaintiff's counsel.

Plaintiff opposes Defendants' motion on a variety of grounds, including that Defendants failed to engage in discussion about these requests until recently and that their motion therefore comes too late. In addition, Plaintiff argues that Defendants already possess the relevant, non-privileged discovery that they seek, and that this Court's prior rulings on similar requests, if not dispositive, are persuasive authority against granting the production of some of the requested discovery. Also, Plaintiff argues that Defendants' requests are extremely overbroad and extraordinarily burdensome as written.

The parties have met and conferred in an effort to resolve their disagreements about this discovery, but have reached an impasse and have presented these matters to the Court for resolution.

II. DISCUSSION

The scope of discovery is liberal under Federal Rule of Civil Procedure 26(b), however, the proper inquiry is whether the information sought is “relevant to the subject matter involved in the pending action.” Onwuka v. Federal Express Corp., 178 F.R.D. 508, 515–16 (D. Minn. 1997) (citation omitted). Federal Rule of Evidence 401 defines “relevant evidence” as that which has “any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence.” Relevancy should be broadly construed at the discovery stage of litigation. See Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978). The relevant information need not be admissible at trial if the discovery appears to be reasonably calculated to lead to the discovery of admissible evidence. Fed. R. Civ. P. 26(b)(1). A party opposing discovery bears the burden of showing that a particular discovery request has no bearing on the subject matter of the litigation or is otherwise objectionable. Mead Corp. v. Riverwood Natural Resources Corp., 145 F.R.D. 512, 515 (D. Minn.1992) (“Courts have consistently held that an objection to a discovery request cannot be merely conclusory....”).

*3 However, “even when dealing with requests for relevant information, the Rules recognize that discovery may be limited when the benefits to be obtained are outweighed by the burdens and expenses involved.” Onwuka, 178 F.R.D. at 516. Pursuant to Federal Rule of Civil Procedure 26(b)(2), courts may limit discovery upon a determination that:

(i) the discovery sought is unreasonably cumulative or duplicative, or is obtainable from some other source that is more convenient, less burdensome, or less expensive; (ii) the party seeking discovery has had ample opportunity by discovery in the action to obtain the information sought; or (iii) the burden or expense of the proposed discovery outweighs its likely benefit, taking into account the needs of the case, the amount in controversy, the parties' resources, the importance of the issue at stake in the litigation, and the importance of the proposed discovery in resolving the issues.

Fed. R. Civ. P. 26(b)(2); see also Onwuka, 178 F.R.D. at 516. This Court has ruled that “these factors are not talismanic,” but should instead be applied in a common-sense, practical manner. Onwuka, 178 F.R.D. at 516. Among the circumstances courts are to consider, after the threshold relevance requirement is satisfied, are whether the potential significance of the information justifies the burden of production, whether the discovery tool selected is the most efficacious means of acquiring the desired information, and whether the timing of the discovery request is sensible. Id. (citing In re Convergent Tech. Securities Litigation, 108 F.R.D. 328, 331 (D.Cal.1985)).

A. Request No. 28: Exhaustion Discovery

Plaintiff alleges that it has exhausted the limits of its self-insured retention (“SIR”) underlying the primary Lexington insurance policy and the first layer excess Reliance policy, such that it has reached the attachment point of the Columbia policy. (See Second Am. Complaint ¶¶ 41–44.) Defendants contend that proper exhaustion of the underlying layers of coverage is a fundamental precondition to coverage and that if UHG cannot make this showing, the insurers' policies are not implicated in this action. (Defs.' Mem. Supp. Mot. Compel at 4.) To support their argument that UHG has failed to exhaust the SIR underlying the Lexington and Reliance layers of coverage, Defendants therefore seek the production of documents relating to the amounts appearing on an insurance loss run that UHG previously produced for the December 1, 1998–December 1, 2000 period, as well as all documents relating to the defense of these claims, including pleadings, discovery, orders, non-privileged communications and settlement agreements. (Id.) Nearly 900 claims are listed on UHG's loss run for this period. In addition, the insurers seek the production of all documents that UHG provided to its third-party auditor, HLB Tautges Redpath (“Tautges”), which audited claims for UHG in 2004 and 2005 to confirm the accuracy of the amounts reflected on the loss runs.

Plaintiff objects to producing this information and argues that the burden of producing this discovery far outweighs its relevance, particularly as this Court has previously ruled on the scope of exhaustion discovery and UHG has provided discovery accordingly. Plaintiff refers to the Court's rejection of arguments in support of broad exhaustion discovery, both in a September 7, 2006 ruling by Magistrate Judge Graham in which UHG sought loss run discovery from Lexington, and in Special Master Fraser's Report No. 5, in which Columbia sought extensive loss run discovery from UHG. While Defendants contend that Special Master Report No. 5 should not apply to those insurers who were not part of this case at the time, Plaintiff argues that the insurers have not articulated any reason to deviate from it, or from Magistrate Judge Graham's ruling.

*4 As to the relevance of the requested information, UHG argues that the insurers' exhaustion argument runs counter to their pre-litigation conduct “in which they paid nearly tens of millions of dollars in insurance proceeds without requesting information about nearly 900 underlying claims.” (Pl.'s Opp'n Mem. at 13.) For example, with respect to the Shane MDL, UHG contends that Columbia paid its $30 million per-claim limit after determining that the SIR and Lexington's $60 million aggregate limits were exhausted. Plaintiff also contends that Columbia is not contesting coverage of Shane or seeking the return of any portion of the $30 million it paid. Moreover, UHG contends that before Columbia paid, it did not demand the level of proof that the underlying layers were exhausted that it now seeks, but rather, relied on UHG's loss runs and statements from the underlying insurers that those layers had been exhausted. (Id.) (citing Bouslog Aff. ¶ 4.) In addition, UHG argues that although Defendant Fireman's Fund has asserted a counterclaim against it to recover amounts it paid for Shane, Fireman's Fund independently concluded in 2005 that the underlying limits had been exhausted before paying anything for Shane, and then it paid almost all of its $30 million policy limit for Shane defense costs. (Id.) (citing Bouslog Aff. ¶¶ 9–10.) As a practical matter, Plaintiff argues that if the AMA and NYAG claims are covered, those claims alone would more than exhaust the retained limits, twice over, making Defendants' “proof of exhaustion” argument irrelevant. (Id. at 14.)

In any event, Plaintiff contends that it has already produced the necessary documents bearing on exhaustion of the underlying SIR and insurance policies. Plaintiff identifies the previously-produced discovery as follows: (1) Lexington's comprehensive audits of claims that exhausted the SIR; (2) non-privileged documents related to an audit conducted by Tautges, a third party retained by UHG to audit the accuracy of the defense and indemnity payments reflected on the loss runs, including schedules and work papers that Columbia previously subpoenaed in this case; (3) all of the documents relating to the Denied Claims, “open claims” and the additional 20 sample claims from the loss run that the Special Master ordered were to be produced to allow the insurers to test exhaustion; and (4) correspondence with insurers in which they indicated their satisfaction with exhaustion of the SIR and underlying coverage. (Pl.'s Mem. Opp'n Mot. Compel at 6) (citing Aff. of Jeffrey J. Bouslog, ¶¶ 4–11, 15–18 & Exs. A–E, G–I; Aff. of Katherine M. Wilhoit, ¶¶ 13, 17.) Plaintiff objects to the scope of Request No. 28 as “staggering,” as it purportedly calls for every document about all of the nearly 900 claims on UHG's loss run.

The two prior rulings in this case involving exhaustion-related discovery provide persuasive authority in resolving the instant dispute. Magistrate Judge Graham first addressed the permissible scope of exhaustion discovery in ruling on UHG's motion to obtain such discovery from Lexington. (See Order of 9/7/06, Doc. No. 121.) At that time, Lexington claimed that it had exhausted its $60 million aggregate limit while UHG could only account for approximately $58 million in payments by Lexington. Plaintiff moved to compel documents supporting Lexington's claimed $60 million payments, which Magistrate Judge Graham denied, “to the extent that they [sought] documents and information about each and every payment made by Lexington under the policy's $60 million aggregate limit.” (Id. at 4.) Magistrate Judge Graham found that this request was “excessively broad and unduly burdensome,” and instead limited the relevant discovery to the gap between the sums, including any specific payments on Lexington's loss run that UHG disputed. (Id. at 5.) If UHG subsequently identified a questionable payment, Lexington was then required to produce all of the underlying documentation relating to the payment. (Id.)

Later in the case, Columbia sought all of UHG's underlying defense documents for the claims on UHG's 1998–2000 loss run. After UHG objected to this request, Columbia moved to compel, seeking all such documents for the denied claims at issue, as well as a sample of 50 other claims. Columbia submitted a thorough memorandum, accompanied by multiple exhibits, in support of its motion. (See Columbia's Mem. Supp. Mot. Compel, Doc. No. 250.) After conducting a hearing on the motion, Special Master Fraser concluded that the request for all defense documents in all cases was excessive, finding that “a detailed review of every underlying claim is neither consistent with the normal course of business between an insured and an excess carrier, nor is it warranted by litigation when there is other indicia of reliability in the form of claim reviews by others and litigation of the exhaustion issue in this very suit.”(Sp. Master Report No. 5 at 5, Doc. No. 267.) Special Master Fraser therefore required UHG to produce only certain documents from defense counsel's files for the Denied Claims, open claims and for 20 additional sample claims from the loss run. After its review of the files, if Columbia concluded that it had good cause to seek additional claims files, Special Master Fraser ruled that he would entertain possible future motions brought by Columbia to seek further discovery. (Id. at 10.)

*5 UHG complied with Special Master Report No. 5 and substantially completed its document production by November 2009. (Wilhoit Aff., Ex. D.) The produced documents included pleadings, motions, orders, written discovery responses, depositions, settlements and judgments. (Id. ¶ 13.) Although the production was limited to 41 claims, it was a labor-intensive, costly process, taking over eighteen months to complete at a cost of $224,867. (Id. ¶¶ 13–14 & Ex. D.)

In addition to the claims files at issue in Special Master Report No. 5, the record reflects that Plaintiff produced other documents concerning exhaustion. Plaintiff produced a more detailed loss run, showing payments at an invoice level for claims that exhausted the SIR and underlying policies, as well as documents relating to Lexington's audits of UHG's claims files. Lexington audited UHG's files three times, concluding each time that UHG had exhausted its $30 million aggregate SRI. Lexington's claims supervisor, Howard Tripolsky, and its independent auditor, Keith Burke, produced their findings, along with descriptive narratives of nearly 200 claims. (Bouslog Aff., Ex. 1.) Plaintiff produced these reports to the insurers in October 2009, as well as the deposition transcripts of Mr. Tripolsky and Mr. Burke. In addition, UHG produced non-privileged documents relating to the audit conducted by its own outside auditor, Tautges, from which Columbia had subpoenaed work papers. (Bouslog Aff. ¶¶ 15–17 & Exs. F–H.)

With all of this exhaustion-related information before them, and at this late stage in discovery, the insurers now seek access to nearly 900 claims on UHG's loss run for the 1998–2000 period. While it is true that the prior rulings in this case from Magistrate Judge Graham and Special Master Fraser are not binding on those insurers who were not part of the litigation at the time, the insurers do not identify any failings in the record, nor do they persuasively articulate any reason that would persuade this Court to depart from its prior rulings in this case, on the very same discovery. While they apparently concede that Co–Defendant Columbia capably argued for exhaustion discovery before Special Master Fraser, the insurers nevertheless argue that they are entitled to test whether UHG has demonstrated proper exhaustion. Yet the insurers fail to point to any evidence in the record that challenges or contradicts the audit results and the sample claims data that UHG has produced.

To the extent that the insurers argue that the landscape has changed since the earlier rulings because the current group of insurers must consider other “untested” layers of coverage, Special Master Report No. 5 considered that more leeway might be proper with respect to proof of exhaustion of the Reliance layer, and took that into consideration in determining the parameters and scope of sample claims discovery. Moreover, as Plaintiff notes, the facts available now show that at least one insurer did monitor exhaustion of the Reliance layer, as Fireman's Fund refused to pay for the Shane defense before it confirmed exhaustion of all underlying coverage. Having done so, it paid nearly $30 million for Shane, having determined that the underlying layers, including the Reliance layer, were exhausted, although Fireman's Fund did reserve its right to recoup any payments not covered by the policy.

In addition to the fact that the Court's prior rulings constitute persuasive authority and the insurers have presented no evidence justifying deviation from them, the relevance of the exhaustion-related information may be largely academic. As Plaintiff points out, it is seeking coverage for the over $400 million it incurred in connection with the AMA and NYAG claims. But if those claims are covered, they alone would exhaust the retained limits, the primary and first layer polices and every policy at issue in this case, making discovery of this information moot.

*6 Under Rule 26, the Court must balance the burden of production to UHG against the benefit of the production to the insurers. Given the $224,867 cost associated with producing the requested information for 41 claims, Plaintiff estimates that the overall cost of producing just the complaints, pleading and discovery indices for the nearly 900 claims on the loss run would exceed one million dollars, because much of the information is held in long-term storage sites, is held by outside defense counsel, and would likely involve at least two million pages of documents. (See Wilhoit Aff. ¶¶ 20–23; Ex. I at ¶¶ 14, 16.) Plaintiff has fully documented and demonstrated the burden of producing even this “limited subset” of complaints, pleading and discovery indices for the nearly 900 claims on its loss run, whereas Defendants have not successfully articulated a need for this information that outweighs the extraordinary burden. Therefore, as to Defendants' motion to compel the production of documents responsive to Document Request No. 28, and as modified – by seeking the subset of complaints, pleading and discovery indices for almost 900 claims – it is denied.[2]

B. Request No. 42: Governmental Investigations

Defendants seek all documents relating to every regulatory or governmental investigation directed to any UHG subsidiary that includes a reference to UCR or that concerns the two Ingenix databases that UHG used to determine UCR health care provider charges. In particular, the insurers have identified three categories of investigations: (1) a Senate investigation; (2) follow-on state attorneys general investigations; and (3) “market conduct examinations.” Defendants contend that such documents are relevant for two reasons. First, with respect to investigations by other states attorneys general that post-date the NYAG and AMA actions, Defendants argue that such documents may reveal UHG's perception of its exposure and basis for liability in the NYAG and AMA actions. Second, Defendants contend that these documents are relevant to the timing of Plaintiff's knowledge of facts giving rise to the AMA and NYAG actions.

1. Market Conduct Examinations

The insurers seek all market conduct examinations, arguing that UHG has produced at least one document to date reflecting its possession of market conduct examinations triggered by citizen complaints about UCR determinations. (Defs.' Mem. at 18.) Specifically, Defendants cite to a letter dated June 24, 1997 from the State of Montana to a third party, the Health Insurance Association of America, mentioning several citizen complaints about UCR determinations. (Id.) (citing Ex. M to Oglesbay Decl.)

UHG contends that because it and its subsidiaries operate in a heavily regulated industry, they are subject to regular, routine market conduct examinations into a variety of health care activities, including, for example, eligibility, marketing, financial, sales and claims processing. (Pl.'s Opp'n Mem. at 27.) UHG maintains that market conduct examinations focus on general business patterns or practices of a health plan, and such examinations do not generally originate from allegations of wrongdoing, but are instead a standard regulatory practice. (Aff. of Michelle Huntley Dill in Supp. Pl.'s Opp'n Mem. ¶ 3.) Market conduct examinations usually begin with a notice of examination describing one or more areas of review (e.g., broker and agent licensing, sales and marketing), after which the examiner may send written questions, conduct an on-site inspection and/or meet with relevant personnel. (Id. ¶ 4.) After the examiner's review, the findings are documented in a written report. (Id. ¶ 5.)

As described in the Affidavit of Michelle Huntley Dill, former Compliance Officer for UnitedHealthcare, a business division of UnitedHealth Group, from 2001 through 2006, and now Senior Associate General Counsel at UHG, neither UCR determinations nor Ingenix databases are a standard part of any market conduct investigations. (Dill Aff. ¶ 6.) Moreover, Ms. Dill avers:

*7 I cannot recall any market conduct examination that specifically related to UCR determinations and the Ingenix databases. I also cannot recall any that made inquiries about flaws about the Ingenix databases. Based on the reports that I have reviewed over the years, had an examiner found any issues in regards to UCR determinations or Ingenix databases, the examiner would have included such findings in the report.

(Id.)

In addition to the apparent lack of market examinations on the subjects of the Ingenix databases or UCR determinations, Ms. Dill also states that, until fairly recently, UHG did not have any centralized or regional units that handled such examinations and therefore Ms. Dill is unable to quantify all of the UHG subsidiaries' market examinations. Even excluding those examinations that UHG eliminated as unrelated to the Ingenix databases or UCR determinations, UHG estimates that there have been more than 200 such examinations from 1999 onwards. (Id. ¶ 3.) Ms. Dill also maintains that since 2001, UHG has maintained an electronic list of the market conduct examinations that have occurred. Many of the entries, but not all, identify the general areas of examination, and Ms. Dill explains that there is no way, apart from looking though all the files, to identify which, if any, market conduct examinations involved UCR determinations and/or the Ingenix databases. (Id. ¶ 10.) Prior to 2001, each subsidiary handled market conduct examinations separately and had its own record keeping procedures. Ms. Dill is unaware of any lists of market conduct examinations for the pre-2001 period and is consequently unaware of any way to determine the number of market conduct examinations that occurred during that time. (Id.) Even after 2001, Ms. Dill avers that no centralized document repository houses the documents provided to examiners and documents, likely kept by individual employees, would likely be stored offsite. Ms. Dill maintains that to find all market conduct reports, particularly those from before 2001, would be an extraordinarily burdensome task. (Id. ¶ 11.) As to the final reports themselves, which are issued by the particular state conducting the examination, Ms. Dill represents that she has often found it more expedient to request them directly from the insurance department of the state in question. (Id.)

As to the 1997 letter from the State of Montana to a third party, UHG notes that it was not involved in the communication and the letter was not part of a market study examination, in any event. In addition, UHG argues that any additional discovery into market study examinations would be duplicative and cumulative. In response to Document Request No. 42, UHG contends that it has provided correspondence exchanged between it and the New York Attorney General, who was conducting “a very targeted, very aggressive investigation into the very matters that are the subject of Request No. 42.” (Pl.'s Opp'n Mem. at 29.)

Here, balancing the benefit of the requested market conduct examinations against the relative burden of production, as Rule 26 provides, the Court finds that the benefit is slight and the burden of production is significant. Market conduct examinations are routine, regulatory matters that are not generally performed in response to specific consumer complaints. Moreover, UHG has produced information directly relevant to Request No. 42 in the form of correspondence between UHG and the New York Attorney General involving the Ingenix databases and UCR determinations.

*8 The one document identified by the insurers in support of their request for the discovery of all market conduct examinations – the State of Montana letter – predates UHG's acquisition of a particular Ingenix database and was not in UHG's possession before its acquisition of the database. Notably, this letter does not involve a market conduct examination and Defendants do not otherwise identify any market conduct of which they are aware to justify this burdensome discovery. Moreover, Ms. Dill, who oversaw UHG's responses to market conduct examinations, cannot recall any examinations having to do with the Ingenix databases and UCR determinations or any reports addressing these issues. Ms. Dill refers to an electronic list of market conduct examinations that occurred from 2001 onwards. While it appears that Ms. Dill has reviewed this list to determine whether it refers to Ingenix or UCR-related issues, to the extent that she has not, she should do so. In all other respects, the Court denies Defendants' motion to compel the production of market conduct examinations, as the burden of production greatly outweighs the limited, if any, benefit of the requested information.

2. Senate Investigation and State Attorney Generals' Investigations

Defendants seek the production of documents related to an investigation that the United States Senate conducted following the New York Attorney General's investigation, as well as follow-on investigations conducted by six to eight state attorneys general after the New York Attorney General's investigation. The insurers contend that these documents potentially could address the timing of UHG's knowledge of claims similar to those in the AMA and NYAG actions and UHG's knowledge of liabilities for UCR short payments. (Defs.' Mem. in Supp. Mot. Compel at 16-17.)

In response, Plaintiff argues that this discovery is irrelevant, duplicative and unduly burdensome. Plaintiff contends that to the extent that any documents demonstrate their “proof of knowledge,” they would most likely be produced in response to other document requests, including the insurers' narrowed Request Nos. 39 and 40, to which UHG agreed to respond. (Pl.'s Opp'n Mem. at 34) (citing Brand Decl. ¶ 13 & Ex. G.) These requests call for documents created after UHG's acquisition of the “Benchmarking Databases” up to December 1, 2000 – the inception date of the policies. As to the portion of this motion calling for the Senate Report, Plaintiff argues that the Senate Report, hearing transcripts, testimony of the New York Attorney General and UHG employees and related documents are publicly available, however UHG offers to provide such publicly available documents in an effort to resolve this dispute.

The Court finds that this information arguably may lead to admissible evidence. Therefore, as it has offered, Plaintiff shall provide all publicly-available documents to Defendants and Plaintiff shall also ensure that it has provided to Defendants all non-privileged documents that it submitted to the Senate and to the six to eight state attorneys general. To the extent that those earlier productions (to the Senate and the state attorneys general) included documents produced in the NYAG matter, which Defendants already possess, UHG need not reproduce them. This portion of Defendants' motion is therefore granted in part, and denied in part.

C. Redaction of Email Headers

Defendants seek to compel the production of redacted email header information found in a limited subset of electronic discovery. The redactions in question involve a subset of email communications in which an email chain includes a non-privileged communication that was subsequently forwarded to counsel with privileged communications. Thus, UHG claims that portions of these email chains are privileged, whereas other portions are not. With respect to these documents, UHG redacted the names of specific senders, recipients, dates and the email headers that might reveal the privileged subject matter at issue. UHG produced the non-privileged portions of such emails, but, as noted, redacted the email header metadata on grounds of attorney-client or work product privilege. Defendants' request for email header information therefore implicates this Court's earlier rulings with respect to privilege logs and the parties' ESI metadata production protocol.

*9 An email header contains more specific information regarding the sender and recipient than that found on the face of an email or on a computer screen, and includes the IP address assigned to the sender by his or her internet service provider, as well as the name of the computer from which the email was sent. See Air Prods. & Chemicals, Inc. v. Inter–Chemical, Ltd., No. Civ. A. 03–CV–6140, 2005 WL 196543, *4, n. 3 (E.D. Pa. Jan. 27, 2005). In addition, the header identifies the sender, recipient and date and time of communication: “An email header gives the opposing party three pieces of potentially valuable information to which it would not otherwise have access: the topic of discussion between certain people, the identities of those people, and the time at which the discussion took place.” Schuler v. Invensys Building Systems, Inc., No. 07–50085, 2009 WL 425923, *2 (N.D. Ill. Feb. 20, 2009).

With respect to privileged communications, this Court previously ruled that UHG properly asserted, and did not waive, the attorney-client and work product privileges with respect to certain requested categories of discovery, including, inter alia, Plaintiff's communications with counsel, communications with non-testifying experts and communications regarding settlement of the underlying actions. (See Order of 8/10/10 at 23–33.) In light of Plaintiff's demonstrated showing of burden, the Court ruled that it need not produce a document-by-document privilege log, but could produce a categorical privilege log instead. (Id.at 52–54.) The Court ordered that the log be as detailed as possible, describing the general category of withheld document (e.g., billing records, attorneys' notes), and indicate whether any documents were shared with third parties and if so, with whom. (Id. at 54.)

Absent any specification as to the form of electronic discovery production, Federal Rule of Civil Procedure 34(b)(2)(E)(ii) provides that a party must produce electronically stored discovery in the form in which it is ordinarily maintained, or in a reasonably useable form. The responding party is not required to accede to the requesting party's specified form of production, but may instead object and offer a counter proposal. See Fed. R. Civ. P. 34(b)(2)(D). In this case, the parties discussed and agreed upon the form of electronic metadata production, although Defendants belatedly objected to the scope of metadata provided by Plaintiff in its ESI production, arguing that Plaintiff was improperly withholding certain metadata fields. In response, Plaintiff directed Defendants to the June 1, 2010 email from Plaintiff's counsel Esta Brand to defense counsel, in which Ms. Brand set forth UHG's proposed protocol for the production of ESI. (Brand Email of 6/1/10, attached to Letter of 9/20/10 from D. Goodwin to Mag. J. Nelson.) Although Ms. Brand did not use the term “metadata” in her email, her email contained the “proposed protocol for the production of ESI,” which, this Court ruled, necessarily includes the production of metadata. Included in that protocol was a list of fields to be provided with UHG's electronic production, which include the following: “BegDoc, EndDoc, ProdBegAttach, ProdEndAttach, ConfDesignation, Custodian.” (Id.) Based on what Plaintiff understood to be Defendants' acquiescence to that proposal, Plaintiff began its production. At the September status conference, the Court verbally found that the June 1, 2010 agreement clearly encompassed metadata, and that the agreement was accepted by the insurers. The Court observed that the proposed fields were limited because UHG anticipated that the production of certain metadata fields implicated its assertions of privilege. The Court therefore required the parties to abide by the agreement, however, it required UHG to produce additional requested metadata fields for which it asserted no claims of privilege, going forward and backward.

*10 Defendants consider the withheld email header information to be “basic, non-privileged information,” and argue that they will be prejudiced without it. (Defs.' Mem. Supp. Mot. Compel at 23.) First, they argue that by withholding the information, UHG is frustrating the insurers' ability to test Plaintiff's claims of privilege, which is “exacerbated by United's refusal to provide an itemized privilege log.” (Id.) The insurers acknowledge that this Court has not required such an itemized log with respect to privileged documents, but complain that UHG has placed them in the “unprecedented position” of reviewing documents that contain redactions of communications between undisclosed parties, on unidentified dates, with no opportunity to decipher this information. Defendants claim that this prejudices their ability to adequately prepare for depositions because the lack of header information hinders the efficient searches of discovery. The insurers also argue that they do not know who received certain forwarded emails and therefore cannot properly authenticate or elicit testimony about such emails. Defendants also contend that the redacted header information may bear on their notice defense.

With respect to the production of these documents, UHG contends that it has left intact the non-privileged parts of the email chain, but redacted all of the information about who forwarded the email to whom, and when, along with headers that might reveal privileged communications. (Pl.'s Mem. Opp'n Mot. Compel at 37.) Plaintiff opposes the production of email headers for several reasons. First, UHG argues that requiring it to un-redact the details of each privileged communication would undermine the Court's prior privilege ruling in which the Court held that while UHG must provide a categorical privilege log, it need not provide a document-by-document privilege log. (Id.) Second, UHG argues that header information is not categorically non-privileged, citing Schuler, 2009 WL 425923 at *2-3, in which the court upheld the redaction of email headers (and the substance of the related emails) because the header might contain information subject to the attorney-client privilege or work product doctrine. Third, UHG disputes the insurers' purported claim that the header information is necessary in order to identify additional document custodians. UHG claims that not only did it answer the insurers' interrogatories seeking to identify persons responsible for the settlement of the AMA, NYAG and Malchow claims, but that it has produced thousands of unredacted, responsive emails revealing the names of its employees and defense counsel involved in the settlement of these matters. UHG likewise rejects Defendants' claim that the header information is necessary to authenticate and elicit non-privileged information about the redacted emails, arguing:

United produced these documents along with metadata identifying the custodian from which the document came. Most, if not all, will likely be the subject of authenticity stipulations when the time comes to do so. Moreover, United left intact the name of the latest (in time) recipient of the non-privileged portions of the email strings, so the Insurers know two people that they could seek to question about the non-privileged part of the email chain, the custodian and the “sender” of the forwarded email that was redacted as privileged.

(Id. at 39.) Fourth, UHG argues that Defendants' objection to the production comes too late, contending that it has followed the same redaction practices since January 2010 and has produced thousands of documents with similar redactions. (Id.) (citing Decl. of Esta Brand ¶11, Doc. No. 618.) Finally, Plaintiff objects to the insurers' motion on grounds of burden, arguing that this request implicates over 4,500 documents and 19,000 pages produced by UHG that have been redacted in some part. (Id.) (citing Brand Dec. ¶ 12.) Plaintiff estimates that, conservatively, it would take 300 attorney hours to re-do the redactions, at a cost of $27,000. (Id.).

1. Email Header–Specific Discovery

Little case law addresses the specific issue of whether email header information is discoverable. (SeeDefs.' Mem. Supp. Mot. Compel at 22.) Defendants cite to one case for the proposition that “the few courts who have examined this issue have required disclosure of email header information.” (Id.) (citing Nicholas v. Wyndham Int'l, Inc., No. Civ. 2001/147–M/R, 2003 WL 23198845, at *4 (D. Virgin Islands May 19, 2003), vacated on other grounds, 224 F.R.D. 370, 371 n. 2 (D. Virgin Islands 2004)). Yet, as Defendants acknowledge, in that case, the objecting party conceded that the headers reflected no substance and were obviously irrelevant. Id.

*11 A few courts have recognized that the information contained within email headers may implicate privileged or work product-protected information. As noted, Plaintiff cites to Schuler, 2009 WL 425923 at *2–3, in which the redaction of certain email headers was permitted under the attorney-client and work product privileges, with the court finding that the headers, “especially taken with the other privileged portions in the email chain, are part of and contain information regarding a confidential correspondence relating to legal advice.” In a case involving the constitutionality of the statute then governing the Federal Bureau of Investigation's (FBI) issuance of administrative subpoenas called National Security Letters (NSLs) to wire or electronic communication service providers, the court commented in dicta that if an NSL recipient interpreted the NSL broadly as “requiring production of all e-mail header information, including subject lines, for example, some disclosures conceivably may reveal information protected by the subscriber's attorney-client privilege, e.g., a communication with an attorney where the subject line conveys privileged or possibly incriminating information.” Doe v. Ashcroft, 334 F. Supp.2d 471, 508 (S.D.N.Y. 2004), vacated on other grounds, Doe v. Gonzales, 449 F.3d 415, 417 (2d Cir. 2006).

2. Metadata Discovery in General

Because few cases specifically address the production of email header information, the Sedona Principles, developed by the members of the Sedona Conference to apply the basic principles of discovery to the medium of ESI, and decisions concerning the general production of metadata, provide guidance. In Aguilar v. Immigration and Customs Enforcement Division of U.S. Dept. of Homeland Sec., 255 F.R.D. 350, 354 (S.D.N.Y. 2008), a group of Latino immigrants in a Bivens action sought to compel the production of ESI with corresponding metadata from the government. The court observed that there are several distinct forms of metadata, including system metadata which “reflects information created by the user or by the organizations information management system.” Id. (citing Sedona Principles - Second Edition: Best Practices Recommendations and Principles for Addressing Electronic Document ProductionComt 12a (Sedona Conference Working Group Series 2007) (“Sedona Principles 2d”). Examples of system metadata include data regarding the author, date and time of creation and the date a document was modified. Id. While noting that most courts have commented that system metadata lacks evidentiary value because it is not relevant, the Aguilar court recognized that it is relevant if the authenticity of a document is in question or if establishing ‘who received what information and when’ is important to parties' claims or defenses. Id. (citations omitted). The court in Aguilar also observed that system metadata is also useful as an electronic discovery search tool because “it significantly improves a party's ability to access, search, and sort large numbers of documents efficiently.” (Id.) (citing Sedona Principles 2d Cmt. 12a.)

a. Timing of Request for Production

Reviewing the case law on the production of metadata, the Aguilar court observed a clear pattern based on the stage at which the request for production of metadata arises and the parties' practices with respect to the production of metadata. Thus, the court in Aguilar found that courts generally order production of metadata “when it is sought in the initial document request and the producing party has not yet produced the documents in any form.” Id. at 357 (citations omitted). However, if metadata is not sought in the initial request and the producing party has already produced documents in another form, “courts tend to deny later requests, often concluding that the metadata is not relevant.” Id. (citations omitted). As the court in Aguilar noted, generally, “if a party wants metadata, it should ‘Ask for it. Up front. Otherwise, if [the party] ask[s] too late or ha[s] already received the document in another form, [it] may be out of luck.’ ” Id. at 355 (quoting Adam J. Levitt & Scott J. Farrell, Taming the Metadata Beast, N.Y.L.J., May 16, 2008, at 4)).

*12 Applying this precedent to the facts before it, the Aguilar court considered the timing of the discovery request. While the first request for the production of documents was made on February 15, 2008, the plaintiffs made no mention of metadata even though the defendants had started to “harvest their documents.” Id. at 359. In fact, the court found that by the time the plaintiffs first informed the defendants of their desire for metadata, the document collection efforts were largely complete and many of the electronic documents had been produced without the accompanying metadata. As to specific email metadata involving the blind copy field, the plaintiffs argued that the process of searching the emails would be more efficient if they had the underlying “bcc” metadata. Id. The court refused to order the production of the requested email metadata. Id. at 360.

In Ford Motor Co. v. Edgewood Properties, Inc., 257 F.R.D. 418, 425 (D. N.J. 2009), the court observed that the producing party must ordinarily take into account the need for metadata to make otherwise unintelligible information useable. However, the court found, citing Aguilar, that this principle “would be better applied in a case where production had not yet commenced.” Id. Applied to the facts before it, the court held that the delay on the part of the requesting party in seeking certain metadata was “patently unreasonable,” observing:

One may reasonably expect that if a document production is proceeding on a rolling basis where the temporal gap in production is almost a half a year apart, a receiving party will have reviewed the first production for adequacy and compliance issues for a reason as obvious as to ensure that the next production of documents will be in conformity with the first production or need to be altered.

Id. at 426. The court found it unreasonable and “beyond cavil,” for the receiving party to wait eight months before lodging its objection regarding the lack of metadata, observing that “this entire problem could have been avoided had there been an explicit agreement between the parties as to production, but as that ship has sailed, it is without question unduly burdensome to a party months after production to require that party to reconstitute their entire production to appease a late objection.” Id. (emphasis in original).

b. Cost–Shifting

Cost-shifting is one approach that courts have utilized with respect to the production of electronic metadata. In Aguilar, the court considered other requested metadata in word processing documents to be arguably relevant, therefore, it ordered its production, provided the requesting party agreed to pay the costs associated with producing those files a second time. Aguilar, 255 F.R.D. at 362. Similarly, in Chevron Corp. v. Stratus Consulting, Inc., 10–cv–00047–MSK–MEH, 2010 WL 3489922 *4), the court there likewise found certain information requested in a subpoena could be probative (although the subpoena failed to designate the preferred format of electronic production), but due to the burden imposed on the producing party, the court ordered the requesting party to pay for both reproduction and future production.

Here, Ms. Brand contends that with respect to the email chains at issue, UHG has been following the same redaction practices since January 2010 – including the redaction of headers – and has produced thousands of documents with redactions like the ones at issue in the instant motion to compel. (Brand Decl. ¶ 11.) Ms. Brand attests that she is unaware of any complaint by the insurers about this redaction process until recently. (Id.) The insurers' argument as to the need for the email header information is essentially a reiteration of their argument at the September status conference that they did not agree to Plaintiff's proposed metadata protocol. In any event, UHG agreed to provide non-privileged metadata and that information, in combination with what is found in the documents themselves, should alleviate some of the insurers' concerns about the efficiency of their search processes. However, the insurers argue that even with the provided information, the documents are difficult to search without the specific email header information.

*13 As to burden, Ms. Brand estimates the cost of re-doing the redactions of over 4,500 documents (19,000 pages) to be $27,000. (Id. ¶ 12.) Moreover, in addition to the burden, this Court has previously ruled that Plaintiff need not produce an itemized privilege log. To require UHG to provide the requested metadata would essentially require it to provide an itemized privilege log.

Balancing the benefit of this discovery against the burden of production, the Court considers the timing of this request, as other courts facing motions to compel the production of metadata have similarly done. Here, the parties discussed and reached an agreement regarding the production of ESI discovery, including metadata, over five months ago. Even before that time, Plaintiff had redacted email headers and produced such discovery to Defendants, without objection, since January 2010. Now, the parties are nearing the completion of document discovery and will soon begin to take depositions. Through the agreed-upon ESI protocol and the Court's requirement that Plaintiff produce non-privileged metadata fields, Defendants have received much of the information that they claim to need. Defendants' primary identified need for email headers is to track the journey of the documents, to determine who received them. Because UHG claims that the header information is privileged, as is the redacted content of the emails, Defendants essentially seek the email header information to track Plaintiff's claims of privilege. This would require Plaintiff to essentially produce a document-by-document “privilege log,” in the form of email header metadata, which this Court has expressly ruled it need not provide. Coupled with the significant burden of producing the email header metadata, the Court will not require Plaintiff to produce and bear the cost of this production.

THEREFORE, IT IS HEREBY ORDERED THAT:

Defendants' Joint Motion to Compel Discovery (Doc. No. 580) is DENIED in part, and GRANTED in part, consistent with this Order.

Footnotes

[1]

Although AMA and NYAG are the major underlying cases in this action, another case that may impact coverage in this case is the Shane litigation, an MDL filed in the Southern District of Florida brought against a number of defendants, including UHG. Here, certain Defendants, notably Columbia and Fireman's Fund, have argued that if the claims in AMA and NYAG are determined to be “interrelated” to the claims alleged in the Shane litigation, they will have no coverage obligation in this case, because, as interrelated cases, those cases would be subject to the same per claim limit of liability which Columbia has exhausted through payment of defense costs in Shane, and Fireman's Fund has nearly exhausted through payment of defense costs in Shane.

[2]

To the extent that the insurers believe that a far narrower universe of exhaustion discovery is needed and can identify specific evidence in the record raising a genuine concern about certain facts regarding exhaustion that are specifically related to the Reliance layer of coverage, they are directed to meet and confer with Plaintiff.