I. INTRODUCTION

This matter is now before the Court upon Plaintiffs' “Motion to Compel Defendants to Search Additional Custodians and to Answer Interrogatory Nos. 1-3.” Docket No. 185. Plaintiffs have also filed a Supporting Memorandum and multiple supporting documents. Docket Nos. 186; 187; 187-1 to 187-20; 190; 190-1 to 190-114.[1] Defendants have filed a Response in Opposition and multiple supporting documents. Docket Nos. 196 (199); 197; 197-1 to 197-6, 200, 200-1 to 200-4. Plaintiffs have filed a Reply. Docket No. 204. For the reasons set forth below, Plaintiffs' Motion (Docket No. 185) is GRANTED IN PART and DENIED IN PART.

II. BACKGROUND[2]

In these consolidated securities fraud cases, Plaintiffs allege that between February 3, 2014 and October 31, 2017 (the “Class Period”) Defendant Envision Healthcare Corporation (“Envision”) engaged in misrepresentations and omissions related to its out-of-network billing practices. Docket No. 88 (Consolidated Class Action Complaint), p. 5-6. The actions are brought on behalf of all persons who purchased or otherwise acquired Envision common stock during the Class Period. Id. at 1. During the Class Period, Envision was a publicly-traded healthcare company whose largest business segment, EmCare, provided outsourced emergency department and hospitalist physician services. Id. at 5, 68.

Plaintiffs allege that EmCare engaged in an “out-of-network strategy” that enabled it to bill both health insurers and patients at vastly higher rates than its industry peers, and to nearly double its annual revenue between 2013 and 2016. Id. at 5-6. This is alleged to have involved reliance on “out-of-network” or “non-par” billing, which is medical billing that occurs when a healthcare provider does not have a contract or agreement with a patient's insurance plan. Docket No. 186, p. 4, n.2. Plaintiffs contend that in the later part of the Class Period, Envision began facing opposition from initiatives designed to limit out-of-network fees and prohibit physicians from billing patients for out-of-network charges not paid by their insurers (so called “balance billing”). Id. at 8, 38. Plaintiffs allege that Envision's billing practices came into the public light in July 2017, when Yale University researchers published a study in the National Bureau of Economic Research that revealed that while the rate of out-of-network billing for most hospitals in the United States was less than 5%, the rate of out-of-network billing for hospitals managed by EmCare was more than 12 times higher, or 62%. Id. at 22. Then, The New York Times published a front-page article discussing the study and reporting how numerous patients were being “ambushed” by EmCare's out-of-network business strategy. Id. at 10. In September 2017, former U.S. Senator Claire McCaskill and the Senate Committee for Homeland Security and Government Affairs (the “Senate Committee”) initiated an inquiry into EmCare's billing practices – directly citing the study and The New York Times article. Id. at 10, 21-22. Plaintiffs allege that these disclosures caused a precipitous and immediate decline in Envision's stock price. Id. at 77-78.

Defendants deny the allegations and moved to dismiss the Complaint, arguing that Plaintiffs fail to plead any of the core elements of a securities fraud claim: an actionable misrepresentation or omission, intent to defraud or loss causation. Docket Nos. 122, 123, 125, 126. The Court ruled on Defendants' Motions, finding that some of Plaintiffs' claims survived, including: (1) EmCare's undisclosed reliance on out-of-network billing as a driver or revenue and earnings throughout the Class Period; and (2) the underperformance of certain hospital contracts that EmCare entered into in 2014-2015. Docket No. 152, p. 21-25, 37-39.

III. LAW AND ANALYSIS

A. Discovery Requests and Motions to Compel

Discovery in federal court is governed by the Federal Rules of Civil Procedure, which provide that a party may request production of documents or other tangible items as long as the information sought is within the scope of discovery. Fed. R. Civ. P. 34(a); see also Fed. R. Civ. P. 26(b)(1). Interrogatories are covered by Rule 33, which provides that “[e]ach interrogatory must, to the extent it is not objected to, be answered separately and fully in writing under oath.” Fed. R. Civ. P. 33(b)(3). Interrogatories are used to help parties prepare for trial, narrow issues to help determine necessary evidence for trial, and reduce the likelihood of surprise at trial. 8A Charles Alan Wright, Arthur R. Miller & Richard L. Marcus, Federal Practice and Procedure § 2162, at 217 (2d ed. 1994). “An interrogatory answer should be complete in itself and should not refer to the pleadings, or to depositions or other documents, or to other interrogatories, at least where such references make it impossible to determine whether an adequate answer has been given without an elaborate comparison of answers.” United States ex rel. Martin v. Life Care Ctrs. of Am., Inc., No. 1:08-CV-251, 2016 U.S. Dist. LEXIS 79892, at *8 (E.D. Tenn. Mar. 24, 2016), quoting United States ex rel. O'Connell v. Chapman Univ., 245 F.R.D. 646, 650 (C.D. Cal. 2007) (internal quotation marks and citation omitted).

In general, the scope of discovery extends to nonprivileged information that is relevant to any party's claim or defense, regardless of whether the information sought is admissible, that is “proportional to the needs of the case.” Fed. R. Civ. P. 26(b)(1). The Rules were amended, effective December 1, 2015, in part to address the alleged costs and abuses attendant to discovery. Under Rule 26, “[t]here is now a specific duty for the court and the parties to consider discovery in the light of its ‘proportional[ity] to the needs of the case ....’ ” Turner v. Chrysler Grp. LLC, No. 3:14-1747, 2016 U.S. Dist. LEXIS 11133, at *2, (M.D. Tenn. Jan. 27, 2016), quoting Fed. R. Civ. P. 26(b)(1). The following factors are relevant to a consideration of whether the scope of discovery is proportional:

Fed. R. Civ. P. 26(b)(1) (numbering added). “Nevertheless, the scope of discovery is, of course, within the broad discretion of the trial court.” United States v. Carell, No. 3:09-0445, 2011 U.S. Dist. LEXIS 57435 at *5 (M.D. Tenn. May 26, 2011), quoting Lewis v. ACB Bus. Servs., Inc., 135 F.3d 389, 402 (6th Cir. 1998) (internal quotation marks omitted).

After making a good faith effort to resolve a dispute, a party may move for an order compelling discovery. Fed. R. Civ. P. 37(a)(1). The moving party “must demonstrate that the requests are relevant to the claims or defenses in the pending action.” Carell, 2011 U.S. Dist. LEXIS 57435 at *5, quoting Anderson v. Dillard's, Inc., 251 F.R.D. 307, 309-10 (W.D. Tenn. 2008) (internal quotation marks omitted). “Relevance for purposes of discovery is broadly construed and the information sought need not be admissible to be discoverable.” T.C. ex rel S.C. v. Metro Gov't of Nashville & Davidson Cty., No. 3:17-01098, 2018 WL 3348728, 2018 U.S. Dist. LEXIS 113517, at *17 (M.D. Tenn. July 9, 2018). “If relevancy is shown, the party resisting discovery bears the burden of demonstrating why the request is unduly burdensome or otherwise not discoverable under the Federal Rules.” Carrell, 2011 U.S. Dist. LEXIS 57435, at *5 (internal quotation marks and citation omitted).

B. The Parties' Discovery Dispute

1. Proposed Additional ESI Custodians

Plaintiffs ask the Court to compel Defendants to search for responsive documents in the Electronically Stored Information (“ESI”) of an additional 24 custodians. Docket Nos. 186, 204. Plaintiffs argue that:

Docket No. 186, p. 14.

Defendants argue that “[t]his justification would apply to any employee at Envision with an email address and cannot credibly support relevance.” Docket No. 196, p. 13 (emphasis in original). Further, Defendants contend that:

Docket No. 196, p. 5 (emphasis in original).

Plaintiffs seek relevant and responsive ESI from four categories of proposed new ESI custodians: (a) division level management; (b) “RTI” (EmCare's internal billing subsidiary); (c) accounting and internal audit; and (d) business development. Docket No. 186, p. 4, 15-21.

(a) Division Level Management

As the movants, Plaintiffs have the burden to establish that the discovery sought from these custodians is relevant to the claims or defenses of any party. To that point, Plaintiffs contend that:

Docket No. 186, p. 15-16. While Defendants argue that none of these division-level managers “are alleged to have had any role in the alleged misstatements or any role in developing or overseeing Envision's corporate strategic initiatives, accounting controls or revenue reporting” (see Docket No. 196, p. 14), it is not necessary for Plaintiffs to allege those types of involvement in order to establish that they may have relevant ESI. Additionally, although Defendants argue that Plaintiffs have attempted to establish relevance “by offering broad generalizations about the relevance of these additional custodians,” (Docket No. 196, p. 12), Plaintiffs acutally provide extensive specific information, including supporting documentation, regarding the relevance of each proposed division level management custodian. Docket No. 186, p. 16-19. For example, Plaintiffs allege that:

Docket No. 186, p. 17, citing Docket Nos. 190-23 to 190-32.

As an initial matter, Defendants incorrectly state that in order to successfully compel discovery, Plaintiffs must carry a “well-established burden” to “point[ ] to any substantive deficiencies in Defendants' productions.” Docket No. 196, p. 12. Instead, the movant's burden is to establish that the discovery sought is relevant to any Party's claim or defense. Carrell, 2011 U.S. Dist. LEXIS 57435, at *5. Despite the language found in an unreported opinion from one of our sister districts, there is no controlling authority for the proposition that Plaintiffs must provide “evidence that [Defendants'] narrowed search is defective or otherwise inconsistent with the Federal Rules of Civil Procedure.” Docket No. 196, p. 18, quoting Little Hocking Water Assn., Inc. v. E.I. Du Pont De Nemours & Co., No. 2:09-CV-1081, 2013 WL 608154, at *10 (S.D. Ohio Feb. 19, 2013) (quotation marks omitted; alteration in original).

Plaintiffs have provided specific and particular information about all 19 of the proposed division level management custodians. See id. at 16-19. The Court has reviewed this information and concludes that, particularly given the principle of broadly construing relevance in discovery, Plaintiffs have met their burden to demonstrate that the discovery sought is relevant to the Parties' claims or defenses.

(b) RTI

Plaintiffs assert that “EmCare's billing subsidiary, RTI, was involved in every level of the Company's out-of-network billing process – i.e., forecasting non-par (i.e. out-of-network) and balance billing upsides, negotiating contracts to remain non-par, analyzing collections, and addressing customer complaints.” Docket No. 186, p. 19-20. There is only one proposed new custodian in this category, described by Plaintiffs as “a key individual ... involved in negotiating EmCare's out-of-network status.” Id. Plaintiffs contend that:

Docket No. 186, p. 20, citing Docket Nos. 190-91 to 190-94.

Defendants argue that Ms. Zimmerman is unlikely to have relevant documents because “she was one of many contractors working on practice-level contracts for individual hospitals.” Docket No. 196, p. 14-15. Defendants assert that “Ms. Zimmerman was not a decision maker regarding EmCare's overall contracting policies; rather, she took directions from senior EmCare executives, ran projections for specific contracts and was in charge of implementing billing systems for her practices.” Id. at 15. Plaintiffs reply that Defendants “misconstrue the scope of relevance and the supporting documents for the remaining five custodians” (Ms. Zimmerman, as well as Ronald Matthews, Kory Harvey, Jay Taylor, and David Copple, discussed below) as “[t]hese custodians possess materials evidencing how Envision's out-of-network strategy affected its contracting, accounting, audit, and business development functions.” Docket No. 204, p. 5, n.6. Considering the broad scope of relevance in discovery, the Court finds that Plaintiffs have adequately established that Ms. Zimmerman may have relevant ESI. For example, if Ms. Zimmerman “took directions from senior EmCare executives” and was then “in charge of implementing billing systems for her practices,” it is possible that she has ESI that would reveal the directions from senior EmCare executives regarding out-of-network billing or the implementation of such billing systems in her practices.

(c) Accounting and Internal Audit

Plaintiffs seek to add two custodians from accounting and internal audit. Plaintiffs assert that:

Docket No. 186, p. 20, citing Docket Nos. 190-95 to 190-100.

Defendants contend that Plaintiffs have not established relevance for these two individuals, arguing that “[t]he exhibits relating to Mr. Matthews primarily relate to an outside billing vendor contracted and EmCare-managed anesthesia practices, which is completely irrelevant to the claims in this case,” and that “[t]he referenced exhibits for Mr. Harvey are entirely nondescript and do not demonstrate Mr. Harvey possesses relevant information.” Docket No. 196, p. 15.

Having examined the referenced exhibits, the Court agrees with Defendants as to Mr. Harvey. The cited exhibits do not establish that Mr. Harvey may possess relevant ESI. The Court comes to a different conclusion regarding Mr. Matthews. The documents Plaintiffs point to in his case contain numerous references to out-of-network (or “OON”) and balance billing, including an email to Mr. Matthews from a colleague stating “I am actually working on the OON we discussed yesterday now.” Docket No. 190-98, p.2; see also Docket Nos. 190-95 to 190-97. Considering the broad definition of relevance in discovery, Plaintiffs have met their burden.

(d) Business Development

Plaintiffs also seek to have the custodial files searched of two people “involved in the development of new emergency department contracts at the Company:”

Docket No. 186, p. 20-21, citing Docket Nos. 190-36; 190-96; 190-102 to 190-107.

Defendants argue that the documents cited “are a combination of irrelevant documents relating to specific hospital contracts, documents referencing decisions made ‘above all of [their] respective pay grades,’ discussions of anesthesia billing, and an email blast advertising Envision's mid-year sales meeting to a large distribution list.” Docket No. 196, p. 15 (internal citations omitted; alteration in original).

Having examined the referenced documents (particularly Docket Nos. 190-104 to 190-107), and considering the broad definition of relevance in discovery, the Court finds that Plaintiffs have met their burden with regard to Mr. Copple. But the Court agrees with Defendants that Plaintiffs have not met that burden with regard to Mr. Taylor. The documents cited as support for the proposition that he may have relevant ESI do not appear to be related to any Party's claim or defense.

Because Plaintiffs have demonstrated relevance (except for Mr. Harvey and Mr. Taylor), the burden passes to Defendants to show that the requested discovery would be unduly burdensome to produce or is otherwise not discoverable under the Federal Rules. Carell, 2011 U.S. Dist. LEXIS 57435 at *5. Defendants do not address this burden on a custodian-by-custodian basis, but rather as to all proposed new custodians. First, Defendants argue that the discovery sought from the proposed new custodians “largely duplicates that of existing custodians and each other.” Docket No. 196, p. 16. Defendants base this argument, at least in part, on the fact that “[t]hroughout their motion, Plaintiffs repeatedly rely on multiple iterations of the same email chains to support their arguments for different custodians” and that these email chains were also sent to or by existing custodians. Id. In reply, Plaintiffs concede that their supporting documents were pulled from searches of the current custodian's files – because those are the only documents that Defendants have produced, they are the only documents that Plaintiffs have. Docket No. 204, p. 6. The Court does not find that an overlap of custodians on some already-produced documents is, on its own, sufficient to establish that the proposed custodians will have no new responsive discovery.

Second, Defendants argue that producing responsive discovery from the proposed new custodians' files would impose an undue burden. Docket No. 196, p. 18-19. As Defendants state, the Advisory Committee notes indicate that the party claiming undue burden or expense “ordinarily has far better information – perhaps the only information – with respect to that part of the determination.” Docket No. 196, p. 18, quoting Fed. R. Civ. P. 26(b)(1), Advisory Committee note to 2015 amendment. Yet, Defendants have not provided that information to the Court. Instead, Defendants have shared details about their discovery efforts to date, which have apparently been extensive. See id. at 19. Defendants have not explained what the new and additional burden of the proposed discovery would be. Id. They have not provided estimates of time or cost. See id. Without this information, the Court cannot find that Defendants have met their burden of demonstrating that the discovery sought would be unduly burdensome. See Anderson, 251 F.R.D. at 311 (“a general statement that the discovery is overly broad and unduly burdensome ... by itself is insufficient to deny discovery”); McNeil v. Cmty. Prob. Servs., LLC, No. 1:18-cv-00033, 2019 U.S. Dist. LEXIS 200393, at *5 (M.D. Tenn. Oct. 29, 2019). Further, the Court has considered the requested discovery in light of the proportionality factors set forth in Rule 26(b), and finds that the discovery is proportional to the needs of the case.

Because Plaintiffs have demonstrated the relevance of the discovery sought (with the exception of the files of Mr. Harvey and Mr. Taylor) and Defendants have not demonstrated that its production would be unduly burdensome or that it is otherwise undiscoverable under the Federal Rules, the Court finds that Defendants must search the files of the proposed new custodians (except for Mr. Harvey and Mr. Taylor) using the Parties' agreed-upon search terms and produce any responsive, non-duplicative, non-privileged documents.

2. Interrogatories

The Parties dispute whether Defendants have adequately responded to Plaintiffs' Interrogatories Nos. 1, 2, and 3:

Docket No. 190-21, p. 7-12.

To establish the relevance of this discovery, Plaintiffs contend that:

Docket No. 186, p. 21. Defendants do not argue that the discovery sought by these Interrogatories is irrelevant (see Docket No. 196) and the Court finds that the information is relevant to Plaintiffs' claims and Defendants' defenses. See Docket Nos. 88; 152, p. 5.

Defendants contend that they have already “provided all available information responsive to Plaintiffs' Interrogatory Nos. 1-3” and cannot provide any more information without incurring an undue burden. Docket No. 196, p. 19-27. Defendants argue that contrary to Plaintiffs' assertions, Envision “does not track or report out-of-network revenues or the percentage of out-of-network claims.” Id. at 20. Defendants contend that Envision has already provided responsive information “by directing Plaintiffs to its responses to the McCaskill inquiry which provide [response information].” Id. at 19-20. Plaintiffs argue that “Defendants' own documents, and ... public statements that Defendants issued throughout the Class Period” demonstrate that Envision should be able to answer the Interrogatories. Docket No. 186, p. 23. Specifically, Plaintiffs contend that “the documents Defendants cite to in their interrogatory response clearly show that Envision can readily generate the requested information.” Docket No. 186, p. 22. As an example, Plaintiffs point to Envision's response to a request from the Senate Committee for “the percentage of emergency department visits delivered by EmCare physicians to privately insured patients [that] were billed as out-of-network.” Id., quoting Docket No. 190-108, p. 3 (quotation marks omitted). In response, Envision was apparently able to give the Senate Committee a total number of billable patient encounters and the percentage of those encounters that were out-of-network, privately insured patients. Id., quoting Docket No. 190-109. Plaintiffs insist that “[a]ll Defendants have to do to answer Interrogatory No. 1 is to use these same reports or data sets to provide for each fiscal year from 2013-2017 [the information sought by the Interrogatory].” Id. at 22-23.

Defendants make a distinction between the numbers Envision provided the Senate Committee, which Defendants characterize as “estimates,” and the “specific amounts in revenue for each fiscal year” that Plaintiffs seek. Docket No. 196, p. 24. Regardless, Plaintiffs indicate that they would consider such estimates to be satisfactory responses. See Docket No. 204, p. 9 (“Defendants should be ordered to provide their best estimates in response to these interrogatories using the same methodologies they used to provide this information to investors and to the Senate Committee”).

Defendants argue that “[t]he undertaking required for Envision to supplement its responses to Interrogatory Nos. 1 and 3, or to respond to Interrogatory No. 2, would be extremely burdensome.” Docket No. 196, p. 26. While Plaintiffs argue that there is evidence showing that “Envision has some sort of automated process to calculate this information” (Docket No. 204, p. 12), Defendants insist that they do not. Specifically, Defendants contend that “Envision would need to employ a team working 250,000 hours to compile and generate the requested information, if it is even possible.” Docket No. 196, p. 26. Defendants assert that:

Id. at 26. Defendants argue that “[i]n order to derive the exact information Plaintiffs are requesting, as discussed below, Envision would need to collect and review millions of individualized EmCare patient claims and associated documentation ... to investigate whether the claim was paid at in-network or out-of-network rates.” Id. at 22-23. Defendants contend that this burden would be particularly difficult to shoulder at the current time because “Envision is a first-line provider of health care services in the midst of a global pandemic, whose resources are particularly scarce.” Id. at 27. Envision asserts that “[m]any of [its] employees are currently furloughed, and the remaining employees are burdened with covering both the furloughed functions and the continuing work necessary for a first-line health care provider.” Id.

Based on the documents and information provided by both Parties, the Court cannot determine whether Envision has tracked the requested information; however, it is clear that Envision was able to arrive at some numbers in response to nearly identical questions from the Senate Committee. See Docket No. 190-109. Although Defendants' brief asserts that the requested information cannot be provided because Envision does not track out-of-network revenue by fiscal year, Defendants' Amended Interrogatory Responses are ambiguous on this point. In response to Interrogatories Nos. 1 and 2, Defendants do not state that they cannot answer because they do not have the information, but rather that the information “may be identified from documents that will be produced.” Docket No. 190-21, p. 7-8. The Court finds that Plaintiffs have provided evidence that Defendants may have some information of this kind. See, e.g., Docket Nos. 190-5; 190-109; 190-111 to 190-114.[4] To the extent that Defendants have any other such responsive information, even if Defendants would characterize that information as “estimates,” they are ordered to produce it in supplemental response to these Interrogatories. If necessary, Defendants can explain any assumptions that the estimates are based on, or offer any other necessary background on how they arrived at these numbers. Defendants have averred that arriving at additional numbers not currently known to them would be unduly burdensome, necessitating 250,000 of labor. Therefore, if Defendants do not have the information, they may supplement their responses to state as much.

Defendants must also supplement their Interrogatory responses to be more specific as to where Plaintiffs can find the business records that they contend will allow Plaintiffs to ascertain the Interrogatory answers. Rule 33(d) requires that Defendants must specify the records that must be reviewed “in sufficient detail to enable the interrogating party to locate and identify them as readily as the responding party could ....” Fed. R. Civ. P. 33(d)(1). Defendants' descriptions of “documents to be produced in this action, including but not limited to ....” is insufficient. Defendants must remove the language “including but not limited to” and references to other discovery requests and identify the documents by Bates range.

IV. CONCLUSION

For the foregoing reasons, Plaintiffs' “Motion to Compel Defendants to Search Additional Custodians and to Answer Interrogatory Nos. 1-3” (Docket No. 185) is GRANTED IN PART and DENIED IN PART. Using the Parties' agreed-upon search terms, Defendants must search for and produce relevant, responsive, non-duplicative and non-privileged documents from the custodial files of 22 of Plaintiffs' 24 proposed new custodians. Mr. Harvey's and Mr. Taylor's files are excepted from this Order. Defendants must also supplement their responses to Interrogatories Nos. 1, 2, and 3 to either include their best estimates of the numbers requested (if Defendants already have that knowledge) or to answer the Interrogatories by stating unequivocally what Defendants have told the Court: that Defendants do not know the answer to the question and could not even attempt to arrive at the answer without employing a team working 250,000 hours to compile and generate the requested information.

IT IS SO ORDERED.