A. Subpoenas duces tecum to Non-Party Providers

On or about July 6, 2016, defendant Blue Cross Blue Shield of Michigan (“BCBS-MI”) served subpoenas on multiple non-party health care providers and medical insurance subscribers, seeking production of documents and deposition testimony with respect to the relevant time period from January 1, 2010, to the present.[3] Five health-care provider targets of these subpoenas objected: (1) Andrews Sports Medicine and Orthopaedic Center; (2) Grandview Medical Center; (3) the Health Care Authority of the City of Huntsville; (4) Dr. John B. Waits; and (5) Russellville Hospital, Inc.[4] Except for the name of the entity to which each subpoena was directed, all of the subpoenas to provider entities were identical. The provider subpoenas sought the following documents from each provider:

The court has previously discussed the standards by which document-production subpoenas to non-parties must be measured. These include the requirements that the sought documents are necessary in the litigation, the request is not unduly burdensome or expensive, it is narrowly drawn, and it can be processed without the need of counsel. The court already has determined as a preliminary matter that some of these requests are necessary, but, equally so, some are unduly burdensome. None of them is capable of being responded to without the need of counsel, but given the size and complexity of this case, that really is not surprising.

Two principal concerns motivate the court's decisions in this matter. First is the need to avoid unnecessary burden and expense to the non-parties. Burden and expense considerations can be offset somewhat by shifting the cost of non-party production to the requesting defendant.[5] Second and more important is the concern that the disclosure of the confidential and proprietary information sought in these subpoenas will damage the ability of the non-parties to compete in the economic marketplace. For these health-care providers, Blue Cross is the legendary 800-pound gorilla with whom they must simultaneously cooperate and compete. Year after year, they must negotiate reimbursement rates with Blue Cross, and requiring them to reveal to Blue Cross their negotiating strategy leaves them in a far weaker position during their negotiations. Indeed, at least one target provider has expressed the concern that the subpoenas have an intimidating effect because they potentially provide the Blue Cross entities with information that may increase their negotiating leverage to the detriment of the providers. While it may be true that the attorneys and experts for the defendants need some of this information to present a fuller picture of competition in the health-care marketplace(s), great care must be taken to prevent this information from crippling the ability of the non-party providers to deal with Blue Cross as one of their major payors. The Blue Cross entities have no legitimate business interest for gaining this inside information vital to the ongoing business of the non-party providers. This discovery must not result in Blue Cross gaining a business advantage against the non-party providers.

*4 To meet this concern, Fed. R. Civ. P. 45(d)(3)(B)(i) authorizes the court to modify the subpoenas to protect or limit disclosure of “a trade secret or other confidential research, development, or commercial information.” For this reason, the provider targets are not required to produce their internal strategic or tactical thinking, planning, or analyses, even though factual and statistical data must be produced. What the non-party providers think about competition and the marketplace in relation to reimbursement by payors, as distinct from the basic statistical or factual data, may shed some relevant light on the anti-competition issues in this case, but the risk of harm to the non-party providers is too great to countenance.

While it is necessary and appropriate to require the non-party targets of these subpoenas to respond to certain identified category of documents, it is important to note that they are not required to create any documents or records that do not exist in the ordinary course of each target's business. If there are existing documents or electronically stored information (“ESI”) responsive to subpoena requests, as modified herein, the subpoena targets may be required to produce the documents or ESI. Moreover, the non-party targets are not required to create (or purchase) any special software or computer applications for purposes of extracting information from their native ESI; they may be required only to extract such ESI and documents as are readily available in the ordinary course of their business.

Attempting to balance these factors as applicable to each discovery request, it is ORDERED as follows:

(1). The provider non-party subpoena targets (Andrews Sports Medicine and Orthopaedic Center; Grandview Medical Center; the Health Care Authority of the City of Huntsville; Dr. John B. Waits; and Russellville Hospital, Inc.) shall, within the limitations of this Order, respond to and produce existing and available documents and ESI, if any, with respect to document categories 1, 3, 4, 7, 8, 9, 10, 11, and 13, as set forth in their respective subpoenas within thirty (30) days following this Order.

(2). With respect to document category 5, the provider non-party subpoena targets shall produce, within thirty (30) days, only those documents, if any, “that discuss any decision you made to join, not join, or leave the provider network of any insurer or other third party payer, or to participate in or accept payment from any such payer (such as documents discussing whether to accept Medicare or Medicaid).” In all other respects, the subpoena to produce other documents potentially responsive to category 5 is quashed.

(3). With respect to document category 12 related to mergers, acquisitions, and other joint ventures involving the target providers, each provider shall produce only “documents [submitted] to any state or federal agency, trade association or other organization about any such transaction.” The providers are not required to produce any documents reflecting their internal analyses or strategic opinions about the advantages or disadvantages of such transactions.

(4). With respect to document categories 2, 6, 14, and 15, the subpoena to the provider non-parties to produce potentially responsive document is quashed, and the non-party providers shall not be required to produce documents or ESI responsive to these requests.

(5). The documents and ESI produced as a result of these subpoenas shall be subject to all protective orders previously entered by the court in this action. The producing providers may designate any document, category of documents, or ESI as “Confidential–Outside Counsel Only,” to prevent any such documents or ESI from being shown to, described to, or summarized for any person involved in the business decisions of any Blue Cross defendant or affiliated entity.[6] COUNSEL FOR SUCH BLUE CROSS DEFENDANTS AND AFFILIATED ENTITIES ARE OBLIGED TO TAKE ACTIVE AND CAREFUL STEPS TO PREVENT THE CONFIDENTIAL AND PROPIETARY BUSINESS INFORMATION OF THE NON-PARTY PROVIDERS FROM BEING EXPOSED TO THE BUSINESS SIDE OF ANY BLUE CROSS DEFENDANT OR AFFILIATED ENTITY, OR FROM BEING USED FOR ANY BUSINESS PURPOSE OF SUCH ENTITIES.

*5 (6). Pursuant to Fed. R. Civ. P. 45(d)(3)(C)(ii), the requesting defendant shall reimburse the producing provider targets their reasonable expenses incurred in searching for and producing the documents and ESI requested. The non-party providers may withhold production of the requested documents and ESI until they are paid such reasonable reimbursement of their expenses, but shall otherwise promptly produce, consistent with this Order, those documents and ESI responsive to the subpoena requests upon payment.

B. Deposition Subpoenas to Non-Party Providers

BCBS-MI also has subpoenaed various non-party health-care providers to appear and give deposition testimony on the following subjects:

The non-party health-care providers seek to quash the subpoenas requiring them to appear and provide a Rule 30(b)(6) deposition into these areas of inquiry.[7] For many of the reasons already addressed, their objections and motions to quash are GRANTED IN PART and DENIED IN PART.

As already noted, Rule 45 authorizes the court to quash or modify a subpoena, or specify alternative conditions for enforcement of the subpoena, under certain circumstances. Rule 45(d)(3) states:

The same considerations apply to the deposition testimony of the non-party providers as was discussed above with regard to document production. While the non-party providers may be required to provide testimony about historical facts, statistics, and data, inquiries by Blue Cross defendants into the non-party providers' negotiation and business strategies risks putting them at a severe market disadvantage when dealing with such a large payor as Blue Cross. Limits and great care are necessary to prevent these non-parties from suffering damage to their ability to negotiate effectively with Blue Cross and other health-care payors and to compete in the health-care markets.

With these considerations in mind, and within the limitations previously described in this Order, it is ORDERED as follows:

(1). The provider non-party subpoena targets (Andrews Sports Medicine and Orthopaedic Center; Grandview Medical Center; the Health Care Authority of the City of Huntsville; Dr. John B. Waits; and Russellville Hospital, Inc.) shall provide deposition testimony through appropriate Rule 30(b)(6) designees with respect to areas of inquiry 1, 3, 5, and 6 as set forth in their respective subpoenas within forty-five (45) days following this Order.

(2). The non-party providers shall provide deposition testimony through appropriate Rule 30(b)(6) designees with respect to area of inquiry 2, but limited only to “reimbursement rates you ... accept from any insurer, government program, rental network, other third-party payer, or from self-paying patients,” within forty-five (45) days following this Order. The non-party provides shall not be required to testify concerning their negotiations with other payors or the reimbursement they may seek to the extent it is different from what they accept.

(3). The non-party providers shall provide deposition testimony through appropriate Rule 30(b)(6) designees with respect to area of inquiry 4, excluding any testimony with regard to “mergers, acquisitions or other consolidations,” as to which they shall not be required to testify.

(4). The testifying providers may designate any portion of their testimony or any exhibit referred to as “Confidential–Outside Counsel Only,” to prevent any such testimony, document, or ESI from being heard, shown to, described to, or summarized for any person involved in the business decisions of any Blue Cross defendant or affiliated entity.[8] In the event a testifying provider wishes to so designate a portion of testimony or an exhibit, only outside counsel for Blue Cross entities may remain in the room; all other corporate representatives and in-house counsel shall be excluded. COUNSEL FOR SUCH BLUE CROSS DEFENDANTS AND AFFILIATED ENTITIES ARE OBLIGED TO TAKE ACTIVE AND CAREFUL STEPS TO PREVENT THE CONFIDENTIAL AND PROPIETARY BUSINESS INFORMATION OF THE NON-PARTY PROVIDERS FROM BEING EXPOSED TO THE BUSINESS SIDE OF ANY BLUE CROSS DEFENDANT OR AFFILIATED ENTITY, OR FROM BEING USED FOR ANY BUSINESS PURPOSE OF SUCH ENTITIES.

*7 (5). Pursuant to Fed. R. Civ. P. 45(d)(3)(C)(ii), the requesting defendant shall reimburse the testifying provider targets their reasonable expenses incurred in researching and preparing for deposition. The non-party providers may decline to appear for deposition until they are paid such reasonable reimbursement of their expenses, but shall otherwise promptly appear and testify consistent with this Order upon payment.

(6). Absent good cause, these providers' depositions shall be completed within forty-five days following the entry of this Order.

DONE this 2nd day of November, 2016.

A number of health-care coverage subscribers served with subpoenas did not object or move to quash the subpoenas to them: Wiley Sanders Trucking Co.; Jack's Family Restaurants, Inc.; Samford University; Perdido Beach Resort; Royal Cup Coffee; Sister Shuberts; Big Oak Ranch, Inc.; and Tate Services. The only subscriber to object was Regions Bank.

Regions Bank initially filed its objections to the subpoena duces tecum on August 10, 2016. (Doc. 697). Thereafter, on August 17, 2016, Regions filed a response to the subpoena, describing certain documents in produced in response to it and identifying other categories of requests to which it had no responsive documents. (Doc. 709). Regions supplemented that response on August 30, 2016. (Doc. 736). Following a hearing, the court directed the non-parties to meet and confer with counsel for the defendants and to report back to the court on the result of the meetings. Regions filed its report to the court on September 2, 2016 (Doc. 747), reporting that it believed its supplemental response to be a full and adequate response to the subpoena and that the defendants had not expressed any position opposing that view of the production. The court is unaware of any further motion to compel or filing by the defendants contending that Regions has not fully and sufficiently responded to the document subpoena. This is confirmed by the BCBS-MI's Supplemental Response to the objections of the provider targets (Doc. 750) where it was reported, “There are no objections to Defendants' document subpoenas from any subscribers that need to be resolved by this Court at this time.”

To reduce the burden on the non-parties, the court hereby limits the relevant time period to January 1, 2010, to November 1, 2016. Responsive documents, ESI, and testimony are limited to this time period.

The court notes that three other providers served with identical subpoenas did not object or move to quash: DCH Medical Center, Dr. Swaid N. Swaid, and Mostellar Medical Center.

The court is somewhat disappointed that the “meet and confer” process required in earlier Orders resulted in so little resolution of the subpoena issues, particularly in light of the repeated arguments made by defendant BCMS-MI that it could work with the non-parties to specifically identify the information needed in the most efficient and least expensive manner. Counsel repeatedly argued that if the non-party targets of the subpoenas would simply meet and talk with them, they could discuss and agree on the documents the non-parties have that meet the defendant's needs. That process seems to have been a bust.

See Fed. R. Civ. P. 45(d)(3)(C): “In the circumstances described in Rule 45(d)(3)(B), the court may, instead of quashing or modifying a subpoena, order appearance or production under specified conditions if the serving party: (i) shows a substantial need for the testimony or material that cannot be otherwise met without undue hardship; and (ii) ensures that the subpoenaed person will be reasonably compensated.” (Italics added).

Curiously, Dr. Waits simply filed objections to the deposition subpoena, not a formal motion to quash it. (Doc. 700). Nevertheless, because he argues essentially the same grounds for objecting to the subpoena as the other non-party providers, the court will treat it as a motion to quash the subpoena.

See Fed. R. Civ. P. 45(d)(3)(C): “In the circumstances described in Rule 45(d)(3)(B), the court may, instead of quashing or modifying a subpoena, order appearance or production under specified conditions if the serving party: (i) shows a substantial need for the testimony or material that cannot be otherwise met without undue hardship; and (ii) ensures that the subpoenaed person will be reasonably compensated.” (Italics added).