In re Blue Cross Blue Shield Antitrust Litig.
In re Blue Cross Blue Shield Antitrust Litig.
2016 WL 11504080 (N.D. Ala. 2016)
September 9, 2016
Putnam, T. Michael, United States Magistrate Judge
Summary
The court determined that the Subscriber Plaintiffs could not obtain Carden's report, notes, and work papers due to opinion work-product protection. The court also noted that the Subscriber Plaintiffs may identify to the court and BCBS-AL, within fifteen (15) days, the information they lack that Carden may have used to perform his analysis, including any ESI containing emails between counsel and Carden.
Additional Decisions
IN RE: BLUE CROSS BLUE SHIELD ANTITRUST LITIGATION (MDL No.: 2406)
Master File No.: 2:13-CV-20000-RDP
United States District Court, N.D. Alabama, Southern Division
Signed September 09, 2016
Putnam, T. Michael, United States Magistrate Judge
DISCOVERY ORDER No. 33
*1 A discovery issue raised for the first time in the Subscriber Plaintiffs' Discovery Status Report of August 8, 2016 (Doc. 687), relates to whether Blue Cross Blue Shield of Alabama (BCBS-AL) has produced all documents requested by plaintiffs related to BCBS-AL's filed-rate defense. This issue was debated at the August 17, 2016, discovery status conference, at which the court directed the parties to file briefs on the matter by August 24 (later extended to August 26). They have now done so.
The specific focus of this dispute is an analysis performed (and being performed) by BCBS-AL's chief actuary, Noel Carden, to attempt to identify and quantify variances between the premium rates filed with the Alabama Department of Insurance and those actually charged to and paid by BCBS-AL insurance subscribers from 2008 through 2013. Subscriber Plaintiffs assert that BCBS-AL has produced nothing related to this Carden analysis,[1] and they insist that the defendant should be compelled to produce[2] any written reports, analyses, emails, work papers, correspondence, and supporting source documentation related to it. BCBS-AL responds that the materials have never been formally requested by plaintiffs and they are subject to work production protection and the attorney-client privilege.[3]
The parties dispute whether plaintiffs' formal discovery requests have ever called for BCBS-AL to produce the Carden analysis papers. The Subscriber Plaintiffs point to their earlier document requests. For example, RFP No. 2 in Plaintiffs' Second Set of Requests for Production, served on March 6, 2015, requested production of all databases and documents currently in existence in any form that contain information used to perform “any analysis or study of Premiums charged by Defendants separately or severally.” Also, in serving a Rule 30(b)(6) notice of deposition on BCBS-AL, plaintiffs requested production of periodic audits, including “quality control assessments or reviews” concerning BCBS-AL's “proposed or actual” rates and “all premium workbooks, spreadsheets, formulas, algorithms, software or data models, databases, and/or other electronic or physical documents” used to ascertain “actual rates charged to any subscriber group with up to 199 employees from 2008 through present.” BSBC-AL replies that the Carden analysis is not “periodic audits” or “quality control assessments or reviews” because it was not something BSBC-AL regularly performed but, rather, was a special project requested by counsel to provide legal advice. Also, BCBS-AL notes that the court has previously limited document-production discovery to documents existing on or before December 31, 2013, and that the Carden documents, whatever they consist of, were first created in 2016.
*2 The court is satisfied that, in the context of the issues raised in this case and the discussions between the parties, the Subscriber Plaintiffs' discovery requests sought production of the Carden analysis documents. They are plainly seeking structured data and statistical information related to how BCBS-AL calculated the various insurance rates it filed with the Alabama Department of Insurance and where and how those filed rates differed from the actual rates charged to insurance subscribers. But it also seems clear that what is at issue here is not the production of source documents, financial databases, or basic statistical information about premiums charged and collected. BCBS-AL asserts that such basic historical information, in the form of voluminous databases and rating workbooks, already has been produced to the Subscribers, and the plaintiffs do not seriously contest this assertion.[4] Rather, what really is in dispute is production of Noel Carden's written report,[5] containing his own analyses and conclusions derived from the source data related to filed, charged, and collected insurance rates.
Setting aside the basic source materials, which the court believes have already been produced to the Subscribers, and focusing on the documentation of the variance analysis performed and being performed by Carden, the court believes that any written report by Carden and closely related process documents are covered by either or both the opinion work-product protection of Rule 26(b)(3) or the attorney-client privilege. Plainly, any communication between BCBS-AL counsel and Carden or other BCBS-AL employees directing, soliciting, or guiding the analysis are attorney-client communications. While such communications cannot operate to shield the basic, historic, or underlying factual matter communicated,[6] the fact and content of the communications themselves are privileged. Thus, insofar as BCBS-AL possesses documents or ESI reporting or memorializing actual communications between counsel and employees of BCBS-AL related to the Carden analysis, they are likely protected by the privilege. The court is not persuaded that BCBS-AL has waived any attorney-client privilege in such communications simply because there is no evidence that the defendant has intentionally revealed the fact or content of such communications. Merely saying that BCBS-AL has consulted with counsel about the Carden analysis through its employees does not disclose the content of the communications any more so than discussing underlying factual matter that might at some point have been discussed with counsel. The communication is privileged, not the factual matter communicated.
*3 Other documents not directly reflecting communications with counsel remain shielded from disclosure by the work-product protection. Work-product protection extends to “documents and tangible things that are prepared in anticipation of litigation or for trial by or for another party or its representative (including the other party's attorney, consultant, surety, indemnitor, insurer, or agent).” Fed. R. Civ. P. 26(b)(3)(A). Certain types of work product, nevertheless, may be subject to discovery if they are “otherwise discoverable” and “the [requesting] party shows that it has substantial need for the materials to prepare its case and cannot, without undue hardship, obtain their substantial equivalent by other means.” Fed. R. Civ. P. 26(b)(3)(A)(i) and (ii). Notwithstanding this potential for discovery, the court “must protect against disclosure of the mental impressions, conclusions, opinions, or legal theories of a party's attorney or other representative concerning the litigation.” Fed. R. Civ. P. 26(b)(3)(B). Thus, courts have identified at least two distinct forms of work-product materials, “factual” work product and “opinion” work product. While the former may be subject to discovery under a proper showing by the requesting party, the latter is almost absolutely immune from discovery. The court of appeals has written:
Material that reflects an attorney's mental impressions, conclusions, opinions, or legal theories, is referred to as “opinion work product.” In re Murphy, 560 F.2d 326, 336 (8th Cir. 1977); cf. Hickman, 329 U.S. at 511, 67 S. Ct. at 393; Upjohn Co. v. United States, 449 U.S. 383, 399, 101 S. Ct. 677, 687, 66 L.Ed. 2d 584 (1981). “Not even the most liberal of discovery theories can justify unwarranted inquiries into the files and the mental impressions of an attorney.” Hickman, 329 U.S. at 510, 67 S. Ct. at 393. In Upjohn, the Supreme Court made clear that an attorney's notes and memoranda of a witness's oral statements is considered to be opinion work product. Upjohn, 449 U.S. 383, 399–400, 101 S. Ct. 677, 687–88, 66 L.Ed. 2d 584 (1981). As Rule 26(b)(3) makes apparent, “opinion work product can not be discovered upon a showing of substantial need and an inability to secure the substantial equivalent of the materials by alternate means without undue hardship.” Murphy, 560 F.2d at 336; see also National Union Fire Ins. Co. v. Murray Sheet Metal Co., Inc., 967 F.2d 980, 983 (4th Cir. 1992); In re Sealed Case, 676 F.2d 793, 809–10 (D.C. Cir. 1982). Instead, “opinion work product enjoys a nearly absolute immunity and can be discovered only in very rare and extraordinary circumstances.” Murphy, 560 F.2d at 336.
Cox v. Administrator, U.S. Steel & Carnegie, 17 F.3d 1386, 1422 (11th Cir.), opinion modified on reh'g, 30 F.3d 1347 (11th Cir. 1994).
The threshold question raised by every invocation of the work-product protection is whether the requested materials are, in fact, work product. By its terms, the work-product doctrine protects only those documents and tangible things “prepared in anticipation of litigation or for trial.” Documents and tangible things created for other purposes, even if useful in pending or anticipated litigation, are not work product. The well-established rule for assaying that question in the Eleventh Circuit originated in United States v. Davis, 636 F.2d 1028 (5th Cir. 1981), where its predecessor court wrote:
It is admittedly difficult to reduce to a neat general formula the relationship between preparation of a document and possible litigation necessary to trigger the protection of the work product doctrine. See Kent Corp. v. NLRB, 5 Cir. 1976, 530 F.2d 612, 623, cert. denied, 1976, 429 U.S. 920, 97 S. Ct. 316, 50 L.Ed. 2d 287; In re Grand Jury Investigation (United States), 3 Cir. 1979, 599 F.2d 1224, 1229. We conclude that litigation need not necessarily be imminent, as some courts have suggested, see, e. g., Home Insurance Co. v. Ballenger Corp., N.D.Ga.1977, 74 F.R.D. 93, 101; In re Grand Jury Investigation (Joseph B. Sturgis), E.D.Pa.1976, 412 F. Supp. 943, 948, as long as the primary motivating purpose behind the creation of the document was to aid in possible future litigation. SeeOsterneck v. E. T. Barwick Industries, Inc., N.D.Ga.1979, 82 F.R.D. 81, 87, citing 8 C. Wright & A. Miller, FEDERAL PRACTICE AND PROCEDURE § 2024, at 198 (1970).
*4 Id. at 1040. “Under this element, the Court must determine why the documents were created in order to assess the applicability of the work product doctrine.” United States ex rel. Bibby v. Wells Fargo Bank, N.A., 2015 WL 10550963, at *3 (N.D. Ga. Nov. 16, 2015); see also Tillman v. C.R. Bard, Inc., 2015 WL 1062182, at *3 (M.D. Fla. Mar. 11, 2015). A document or tangible thing is work product if the primary motivation for its creation is for use in pending or anticipated litigation.[7] It need not be the only reason for the creation of the material, but it must be the primary reason for its preparation. This means, of course, that documents or tangible things created primarily for some reason unrelated to litigation, even if prepared at the direction of an attorney and believed to be useful in potential litigation, is not work product.[8]
Applying this “primary motivating purpose” test, first, to the source materials for the analysis, it is obvious that BCBS-AL's databases of structured information and statistical data related to rates filed and charged were not created primarily for purposes of litigation. Such financial and rating data are an ordinary part of BCBS-AL's insurance business. Thus, work production protection does not extend to the basic financial and statistical data used by Carden as the raw materials for his analysis. In any event, it appears that this material has already been produced.
Carden's report(s), work notes, and related papers, however, appear to have been created precisely due to this pending litigation. Carden has proffered in an affidavit that this rate-variance analysis is not something that BCBS-AL ordinarily performs, and that it was done here at the request and direction of counsel. The court notes, however, the email Carden sent to the Alabama Department of Insurance on July 21, 2016, in which he acknowledged performing an analysis of BCBS-AL's “hold/cap logic,” and that
BCBSAL is working to finalize the number of small groups impacted and time period over which the analysis can be calculated with reasonable accuracy. We expect to have this process completed within one to two months, and we will let you know the results as soon as they are available.
While this email suggests the possibility that the analysis was being performed, and the related reports and documents created, for some reason other than the instant litigation, such as to fulfill BCBS-AL's obligation to regulators, the court is not persuaded that the primarymotivating purpose for the analysis was anything other than this case. Carden's affidavit says as much. He explicitly testifies that he undertook the variance analysis at the direction of in-house and outside counsel. (Doc. 730-1). Accordingly, Carden's analysis report, notes, and working papers all are work product protected by Rule 26(b)(3).
*5 Moreover, they are “opinion work product,” entitled to extraordinary protection from disclosure.[9] The Carden analysis reports, notes, and work papers (as distinct from the underlying statistical and financial-data source materials) all reflect Carden's mental impressions, conclusions, and opinions about the extent and scope of the rate variance. Such opinion work product enjoys near absolute protection from disclosure, and Subscriber Plaintiffs have not presented the court with any reason to depart from that protection, particularly in light of the fact that the Subscribers may perform their own analysis of the variance issue from the same source materials used by Carden.[10]
Finally, having concluded that the Carden analysis reports, notes, and work papers are protected opinion work product, they are not vulnerable to subject matter waiver of the protection. While such materials actuallydisclosed no longer are protected, mere disclosure of some protected documents does not mandate the disclosure of other undisclosed opinion work product documents related to those disclosed. Subject-matter waiver simply does not apply to opinion work product documents. See Cox v. Administrator, U.S. Steel & Carnegie, 17 F.3d 1386, 1422 (11th Cir.), opinion modified on reh'g, 30 F.3d 1347 (11th Cir. 1994) (“[T]he subject-matter waiver doctrine does not extend to materials protected by the opinion work product privilege.”) (citing In re Martin Marietta Corp., 856 F.2d 619, 625–26 (4th Cir. 1988), cert. denied, 490 U.S. 1011, 109 S. Ct. 1655, 104 L.Ed.2d 169 (1989) ). “Unlike waiver of attorney-client material, work-product waiver ... is not a broad waiver of all work-product related to the same subject matter. Instead, it extends only to ‘factual’ or ‘non-opinion’ work-product concerning the same subject matter as the disclosed work-product.” QBE Ins. Corp. v. Jorda Enterprises, Inc., 286 F.R.D. 661, 666–67 (S.D. Fla. 2012) (citing In re EchoStar Communications Corp., 448 F.3d 1294, 1301–1303 (Fed. Cir. 2006) ). See also Canel v. Lincoln Nat. Bank, 179 F.R.D. 224, 227 (N.D. Ill. 1998) (“[C]ourts have consistently held that there exists no subject matter waiver for the kind of work product expressly defined in Fed.R.Civ.P. 26(b)(3) as ‘mental impressions....’ ”) (citing Neal v. Honeywell, Inc., 1995 WL 591461, at *7 (N.D. Ill. Oct. 4, 1995); Abbott Labs. v. Airco, Inc., 1985 WL 3596, at *8 (N.D. Ill. Nov. 4, 1985); Nye v. Sage Prods., 98 F.R.D. 452, 454 (N.D. Ill. 1982) ). Thus, BCBS-AL's reference to the analysis papers (without disclosure of the papers themselves) to either the Alabama Department of Insurance or this court does not work a subject matter waiver of the opinion work product protection so as to allow the Subscribers to obtain Carden's report, notes, and work papers not otherwise disclosed to anyone.
Conclusion
*6 The court believes that the Subscriber Plaintiffs have received through discovery all of the underlying financial and statistical data they need to perform the same essential analysis of rate variance as has been performed by BCBS-AL's chief actuary. If that is not the case, they may identify to the court specific data, ESI, or documents they assert they have not received and that they need to perform a rate-variance analysis comparable to Carden's. On the other hand, Carden's own mental impressions and work conclusions, whether embodied in a written report or notes or work papers, is protected opinion work product and not, under these circumstances, subject to discovery. To the extent the Subscribers seek production of such opinion work-product materials, their motion is DENIED.
Done this 9th day of September, 2016.
The collection of papers, files, and ESI associated with this analytical process by Mr. Carden has been collectively referred to as the “Carden analysis” or the “variance analysis.” Those terms are used here interchangeably to represent not only any written reports created by Mr. Carden, but also work papers, correspondence, and source documents used to conduct the analysis.
The parties agree that no Rule 37 motion to compel production has been filed by the Subscriber Plaintiffs with respect to the Carden analysis papers, but BCBS-AL agrees that it does not insist on the filing of a formal motion in order to move this issue toward resolution quickly. BCBS-AL does reserve the right, however, to argue that these papers have never been requested in a formal discovery request by the plaintiffs.
Subscriber Plaintiffs contend that BCBS-AL has not previously asserted any attorney-client privilege over these analytical papers and should not be allowed to do so now in its brief.
If the court is mistaken about this, the Subscriber Plaintiffs may point out specific statistical documents or databases they contend must be produced to them to enable them to conduct their own analysis of variances in BCBS-AL's filed and charged rates. If the Subscriber Plaintiffs contend they do not have the same basic source materials for performing a variance analysis that Carden has available to him, they may identify to the court and BCBS-AL, within fifteen (15) days after this Order, the information (other than Carden's own reports and related documents) they contend they lack but that Carden may have used to perform his analysis.
Beyond the written report, there also are likely to be “process” documents, such as emails between counsel for BCBS-AL and Carden and other employees, in which the direction, manner, and results of the analysis are discussed or reported. The court differentiates between these sorts of documents closely related to the report itself and basic statistical source information, such as the raw rating and financial materials and databases used to perform the analysis. Such “process” documents closely related to the report itself are considered the same as or part of the report.
The attorney-client privilege does not shield a basic fact from discovery simply because that basic fact also was communicated between an attorney and client. “The privilege only protects disclosure of communications; it does not protect disclosure of the underlying facts by those who communicated with the attorney.” Upjohn Co. v. United States, 449 U.S. 383, 395, 101 S. Ct. 677, 685, 66 L.Ed. 2d 584 (1981). Although discovery cannot compel a party to disclose if or what he talked to his attorney about, discovery still reaches the underlying factual matters known to the party.
“Other circuits have adopted a potentially broader ‘because of’ test that asks if, ‘in light of the nature of the document and the factual situation in the particular case, the document can be fairly said to have been prepared ... because of the prospect of litigation.’ Adlman, 134 F.3d at 1202 (citing Charles Alan Wright, Arthur R. Miller, and Richard L. Marcus, 8 FEDERAL PRACTICE & PROCEDURE § 2024, at 343 (1994) ) (emphasis removed).” United States ex rel. Bibby v. Wells Fargo Bank, N.A., 2015 WL 10550963, at *3 (N.D. Ga. Nov. 16, 2015).
The 1970 Committee Comments relating to Rule 26(b)(3)(A), the year in which the work product provisions were added to the Rule, confirm this view. “Materials assembled in the ordinary course of business, or pursuant to public requirements unrelated to litigation, or for other nonlitigation purposes are not under the qualified immunity provided by this subdivision.”
It may be argued that opinion work-product protection extends only to the mental impressions, opinions, and conclusions of “a party's attorney or other representative,” not those of the party itself. Rule 26(b)(3)(B) says the court must protect from disclosure “the mental impressions, conclusions, opinions, or legal theories of a party's attorney or other representativeconcerning the litigation.” (Italics added). Conspicuously missing from this language, unlike Rule 26(b)(3)(A), which explicitly mentions work product protection for documents prepared “for a party,” is any reference to the party's mental impressions or conclusions. Nothing in the Committee Comments illuminates whether the drafters of the rule meant to exclude protection for the mental impressions of a party, as distinct from the party's attorney or “other representative.” Clearly, Carden is not BCBS-AL's “attorney,” but the case law establishes that he is regarded as its “representative.” The case law is scant, but a few cases have addressed situations in which the material at issue was created by a non-lawyer employee of the party. These cases generally conclude for Rule 23(b)(3)(B) purposes that an employee is a “representative” of the party. See Canel v. Lincoln Nat. Bank, 179 F.R.D. 224, 227 (N.D. Ill. 1998) (with respect to an analysis performed by the bank's employee, the court said “[C]ourts considering this issue have held that ‘opinion’ work product protection extends to a party's representative.”); Smedley v. Travelers Ins. Co., 53 F.R.D. 591, 592–93 (D.N.H. 1971) (party defendant's inter-office memorandum regarding potential liability in a car wreck case was opinion work product); Pittman v. County of San Diego, 2010 WL 4570252, at *5 (S.D. Cal. Nov. 3, 2010) (“[R]eports were prepared by the County's employees and are eligible for the doctrine's protection.”); Caliber One Indem. Co. v. Millard Chicago Window Cleaning, LLC, WL 573895, at *2 (N.D. Ill. Mar. 6, 2006) (reserve calculations prepared by defendant's employees “contain Caliber One's mental impressions,” and are protected).
The court reiterates that if the Subscriber Plaintiffs contend they have not received the underlying statistical and financial database information related to the rate variance, they may identify to the court specific documents, data, or information they contend have not been produced to them and on which Carden might have based his analysis.