*1 Certain Defendants, including the Blue Cross and Blue Shield Association (“BCBSA”), filed their motion to compel (Doc. 1305) on June 27, 2017, seeking an order to compel several non-parties to respond to subpoenas duces tecum served in November and December of 2016, and to schedule deposition testimony. Non-parties Cedars-Sinai Medical Center, Tenet Healthcare, University of North Carolina Health Care, and Adventist Health System (“the Polsinelli Providers”[1]) filed their opposition to the motion to compel on July 14, 2017 (Doc. 1347), raising objections and seeking to quash[2] the subpoenas based on lack of relevance, burdensomeness, proportionality, the confidential nature of some business information sought, and the refusal of the subpoenaing Defendants to agree to pay for all costs (including outside counsel fees) incurred in responding to the subpoenas. Arguments on the motion were hearing on July 27, 2017.

Through negotiations, the scope of subpoenaed document discovery has been narrowed significantly.[3] As to Cedars-Sinai, the Defendants now seek the hospital's Chargemaster (which is publicly available) and “documents sufficient to show reimbursement rates by payor and procedure or category of procedure.” From Tenet, the Defendants seek (1) the Chargemasters for the subset of Tenet's Alabama providers, (2) documents regarding reimbursement rates for its Alabama providers, (3) financial documents for its Alabama providers, (4) documents related to Tenet's “decision to enter the Alabama market through the acquisition of the Brookwood-Baptist system,” including documents submitted to regulators concerning the merger and “documents sufficient to show how and why Brookwood-Baptist was identified as an acquisition target,” and (5) “documents regarding reimbursement rate negotiations with payors” for its Alabama providers. Finally, as to Adventist and University of North Carolina Health Care, Defendants now seek documents identified as subpoena requests 3, 5, 7, 9, 11, and 13, which are the following:

A. Relevance

The Polsinelli Providers first contend that the subpoenas should be quashed because their information is not relevant to the antitrust claims and defenses pleaded in this action. Although the Polsinelli Providers did not participate in earlier briefing, the court has already determined that nationwide discovery related to the healthcare-insurance market is inherently necessary, even in the streamlined case against Blue Cross Blue Shield of Alabama and the BCBSA. See Discovery Order No. 44, at pp. 5-6). The nature of the alleged antitrust conspiracy implicates the nationwide BCBSA business model and the defense that such a model has competitive benefits under the rule of reason. Moreover, two of these four non-parties have operations in states adjoining Alabama and which could impact the local market in the streamlined action. Not only does Tenet have healthcare facilities in Alabama, it also has them in Tennessee and Florida. Adventist has provider facilities in Florida, Georgia, and Tennessee. The discovery sought from them is relevant.

B. Burdensomeness and Proportionality

The court has strived (perhaps vainly) to keep the burden of discovery from non-parties as little as possible and well within the factors measuring proportionality. Nonetheless, given the stakes in this MDL, implicating a system of major health-insurance carriers and potential class members number over 100 million, discovery has proven to be unavoidably massive and expensive. In this particular dispute, the Defendants have negotiated a substantial reduction in the requests they have made, at least somewhat lessening the burden the non-parties must bear responding to the subpoenas. The requests made to Adventist and University of North Carolina Health Care have been reduced to six categories from the original eleven, and several of these are limited to production of “documents sufficient to show,” rather than full production.[4] The defendants have limited several of their requests to Tenet to facilities in Alabama only. Although the other non-party subpoena targets have no facilities in Alabama, the requests to Adventist can be limited to its facilities in states adjoining Alabama. The operations of Cedars-Sinai and University of North Carolina Health Care appear to be limited to specific geographic areas in southern California and the State of North Carolina. Unfortunately, as large as the collection of responsive documents might be, it is not unduly burdensome or disproportionate to the needs of this case.

C. Confidential Business Information

*3 An area of more serious concern, and one that is very understandable, is the requested production of payer reimbursement data, contracts, and negotiation strategy. The non-parties rightly note that they must negotiate with Blue Cross entities for reimbursement rates, and that revealing to them what other payers have agreed to reimburse the providers or the strategies used to negotiate those reimbursements competitively disadvantages them when next they negotiate again with Blue Cross. If the Blue Cross payers with whom they negotiate know what other payers reimburse the non-party providers, or learn of the non-parties' negotiation strategies, the Blue Cross entities are better equipped to leverage more favorable reimbursement discounts from the non-party providers.

Once again, the court has dealt with this precise problem in an earlier round of subpoenas served on non-party healthcare providers in Alabama. See Discovery Order No. 34 (Doc. 832). The court repeats what it wrote at that time:

Subject to that admonition and warning, previous non-party providers were required to respond to the same subpoena document requests 3, 7, 9, 11, and 13 within thirty days of Discovery Order No. 34. As to document request 5, the third-party providers were required to “produce ... 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 any such payer (such as documents discussing whether to accept Medicare or Medicaid).’ ” Pursuant to that Order, many non-party healthcare providers have produced, grudgingly to a greater or lesser degree, the documents sought by similar subpoenas, and there is no reason to believe that the problems faced by the instant non-party providers are qualitatively different from those faced by other providers. Reasonable compromises and attention to efficiency can accomplish this discovery as well.

To attempt to further reduce the risk of competitive harm to these non-parties, they will not be required to produce documents related to current rates of reimbursement or negotiation strategies related to future rates of reimbursement. Rather, their production is limited to their rates or reimbursement, by payer and procedure or category of procedure, between January 1, 2010, and December 31, 2015. Past rates of reimbursement, while still useful, are less likely to reveal information that is competitively damaging to the non-party Polsinelli Providers.

Also, to be clear, however, to the extent the Defendants and non-party providers have reached agreements to limit or define the discovery requested, those agreements remain in effect. Nothing in this Order should be read as voiding or undermining agreements already reached.

D. Costs of Production

A final issue is a dispute over shifting the costs of production from the non-party Polsinelli Providers to the requesting parties. Rule 45 clearly requires the court and parties to protect non-party targets of subpoenas from “undue burden and expense.” See Fed. R. Civ. P. 45(d)(1). The Rule allows the court to reduce the burden on non-parties by requiring requesting parties to pay the reasonable costs of production. Reasonable does not necessarily mean all. Requesting parties are not required to bear unreasonable costs for obtaining discovery from a non-party. Both the requesting parties and the non-party targets of subpoenas have an incentive to work together to complete the discovery as efficiently and inexpensively as possible. While the court is required to shift reasonable costs to the requesting parties, the failure of a non-party to work efficiently and in good faith to respond to a subpoena, causing the costs to rise unnecessarily, may result in a finding that some costs are simply unreasonable. Such costs will not be shifted to the requesting party. It behooves everyone to find a way to keep costs down.[5]

*4 To obtain the requested documents, the court will require the requesting parties[6] to pay a good-faith deposit of $25,000.00 to each non-party Polsinelli Provider from who documents are requests, and will reserve ruling on the reasonableness of remaining costs until after the document production is made. The court will be better able to assess the reasonableness of the full extent of costs after the production is made and the manner in which it is made become known. Upon payment of the good-faith deposit, the Polsinelli Providers shall begin rolling production consistent with this Order, to be completed by thirty (30) days after the payment.

Following these same standards previously utilized by the court, the Defendants' motion to compel is GRANTED IN PART and DENIED IN PART, as follows:

1. To the extent agreements have been reached to narrow or limit responses to the subpoenas duces tecum, those agreements remain in effect and the parties and non-party Polsinelli Providers are DIRECTED to proceed with discovery accordingly.

2. Insofar as Certain Defendants wish to receive document production from one or more of the non-party Polsinelli Providers, they shall pay to each such Provider a good-faith deposit of $25,000.00, as prepaid credit against the costs of production such Provider may incur responding to the subpoenas duces tecum. The court will reserve ruling on the reasonableness of any further request for reimbursement of costs claimed by any Polsinelli Provider until after the production is complete.

3. Upon payment of the good-faith deposit required herein, non-party Cedars-Sinai Medical Center shall produce, by not later than thirty (30) days following the payment, the various versions (to the extent they continue to exist) of its Chargemaster used between January 1, 2010, and December 31, 2015. Likewise, Cedars-Sinai shall produce documents sufficient to show its rates of payer reimbursement, by payer and procedure or category of procedure, from January 1, 2010, to December 31, 2015.

4. Upon payment of the good-faith deposit required herein, non-party Tenet Healthcare shall produce, by not later than thirty (30) days, the various versions (to the extent they continue to exist) of its Chargemaster used in Alabama medical facilities between January 1, 2010, and December 31, 2015; it most recent financial statement for Alabama medical facilities only; historical documents related to Tenet's decision to merge with or acquire Brookwood-Baptist facilities in Alabama, including all regulatory filings with respect to the acquisition; and documents sufficient to show its rates of payer reimbursement, by payer and procedure or category of procedure, for its Alabama facilities only from January 1, 2010, to December 31, 2015.

5. Upon payment of the good-faith deposit required herein to non-parties Adventist Health System and University of North Carolina Health Care, respectively, they shall produce, not later than thirty (30) days after such payment, documents sufficiently responsive to subpoena document requests 3, 5, 7, 9, 11, and 13, to fairly and accurately reflect the quality and nature of the information sought in each respectively request; provided, however, that the non-parties are not required to produce payer reimbursement rates for the time after December 31, 2015, or their anticipated or planned future reimbursement rate-negotiation strategies.

*5 6. 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. 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. By not later than September 1, 2017, the non-party Polsinelli Providers shall provide to the Certain Defendants dates before September 21, 2017, on which their Rule 30(b)(6) depositions may be commenced; provided, however, that they may not be questioned regarding anticipated or planned future reimbursement rate-negotiation strategies or about actual reimbursement rates after December 31, 2015.

DONE this 1st day of August, 2017.