*1 Before the Court is Insys’ motion to compel (Doc. 155), which challenges Anthem's: (1) claims of privilege pertaining to certain documents prepared during the course of internal investigations, and (2) the adequacy of its privilege log.[1] The motion has been fully briefed. For the reasons stated below, Insys’ motion is granted in part and denied in part.

I. Background

Plaintiffs (“Anthem”) brought this suit seeking recoupment of $19 million in damages for Subsys prescriptions that were allegedly overpaid by Anthem. The alleged overpayment was discovered as a result of internal investigations. According to Defendant Insys Therapeutics Incorporated (“Insys”), in 2014, Anthem's Special Investigations Unit (“SIU”) Investigator, James Brown, initiated the “New Hampshire Investigation” after learning that a provider, Physician's Assistant (“PA) Christopher Clough, was disciplined for excessively prescribing narcotics. (Doc. 155 at 4.) Based on the findings of the New Hampshire Investigation, Mr. Brown began an Enterprise-Wide Subsys Investigation (“ESI”) into Anthem's payments of Subsys prescriptions. (Id.) In conjunction with the ESI, a Related Cost of Care Initiative (“RCCI”) was created to track “savings associated with the issues identified in the [ESI] and for the purpose of satisfying internal metrics.” (Id.) More specifically, the RCCI attempted to: (1) “identify all Subsys claims reimbursed by Anthem despite the fact that Anthem's clinical criteria for Subsys had not been met,” and (2) “identify the cause(s) for such improper reimbursements, including but not limited to failures by Anthem's [Pharmacy Benefits Manager], [Express Scripts], in the prior authorization process; misrepresentations made by Insys; and misrepresentations made by providers.” (Id.) Plaintiff's Actuarial Department calculated savings attributed to the RCCI. (Id. at 7.)

During his investigations, Mr. Brown worked with a medical director named Dr. Ruggieri, who reviewed adverse prior authorization determinations. Mr. Brown created spreadsheets of Subsys claims and Dr. Ruggieri reviewed them to determine if the medical records for each patient met Anthem's clinical criteria for preauthorization. Neither Mr. Brown not Dr. Ruggieri are attorneys nor do they work in Anthem's legal department. However, Anthem's in-house attorneys directed and oversaw the investigations. According to the declaration of Linda Kearney:

(Doc. 170-1 at 34-35.)

In response to requests to produce, Anthem claims to have produced all the underlying data prepared by its employees involved in the investigations (pharmacy and medical claims data) but not the documents and testimony related to the analysis of that data. Anthem claims that analysis of that material was performed at the direction of its attorneys to assist in rendering legal advice. As such, Anthem withheld the production of that material based on claims of attorney-client and attorney work product privileges. It is the privilege claimed by Anthem concerning documents containing the analysis of the underlying data that Insys challenges in its motion to compel.

II. Privilege Standards[2]

A. Attorney-Client Privilege

The starting point for the attorney-client privilege is an attorney-client relationship. See Alexander v. Sup. Ct. Maricopa Cty., 685 P.2d 1309, 1314 (Ariz. 1984). To be privileged, “the communication must be made to or by the lawyer for the purpose of securing or giving legal advice[.]” Samaritan Found. v. Goodfarb, 862 P. 2d 870, 874 (Ariz. 1993). The attorney-client privilege exists “to encourage free exchange of information between the attorney and the client and to promote the administration of justice.” State v. Holsinger, 601 P. 2d 1054, 1058 (Ariz. 1979). “As a matter of common law and legislative policy, the privilege serves as a narrow impediment to the search for the truth[.]” Accomazzo v. Kemp, 319 P.3d 231, 234 (Ariz. Ct. App. 2014).

*3 In Arizona, communications between a corporation's attorney and its employees, done for the purpose of providing legal advice to the corporation, are protected by the attorney-client privilege. That protection is codified in Arizona Revised Statute Section 12-2234, which provides, in pertinent part:

Like in Arizona, it is a well-accepted principle in federal courts that communications between corporate employees and corporate counsel, related to a corporate investigation to gather information for purposes providing legal advice, is protected by the attorney-client privilege. See, e.g., Upjohn Co. v. United States, 449 U.S. 383, 395-398 (1981); In re Pac. Pictures Corp., 679 F.3d 1121, 1126 (9th Cir. 2012). A privileged communication can be implicitly waived, however, when a party takes a position in litigation or makes a claim that makes it unfair to protect that party's attorney-client communications. See Bittaker v. Woodford, 331 F.3d 715, 719 (9th Cir. 2003). Stated differently,

Throop v. F.E. Young & Co., 382 P. 2d 560,568 (Ariz. 1963) (citing 8 Wigmore on Evidence 855, § 2388).

B. Attorney Work-Product Privilege

The attorney work-product privilege, codified in Rule 26(b)(3) of the Federal Rules of Civil Procedure, does not pertain to privileged communications between attorney client, but instead pertains to the discovery of “documents and other 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 ...,or agent).” When deciding whether material was prepared in anticipation, courts apply a series of factors:

Brown v. Sup. Ct. Maricopa Cty., 670 P.2d 725, 733 (Ariz. 1983).

Although it is generally true that materials prepared in anticipation of litigation or for trial are not discoverable, unlike the attorney-client privilege, the protection afforded by the work-product doctrine is only qualified. The protection from discovery may be overcome by a showing of “substantial need for the materials to prepare its case” and an inability “without undue hardship to obtain the substantial equivalent by other means.” Fed. R. Civ. P. 26(b)(3)(A)(ii).

III. Discussion

A. Documents Withheld Relating to Investigations

Insys seeks a blanket finding that none of the documents listed in the privilege log qualify as privileged attorney-client communications. (Doc. 155 at 11.) Insys first contends that the documents at issue are not attorney-client communications because they were created as the result of investigations that were routine business operations and did not involve the legal department or legal advice. The Court disagrees.

The subject investigations originated after revelations of a “high dollar amount and a high level of Subsys” associated with PA Clough who was under investigation by the New Hampshire Medical Board for his prescription of opioid drugs, including Subsys. Because of the medical board investigation into PA Clough and media reports of similar conduct by other providers, in-house counsel and Mr. Brown determined that a company-wide investigation was necessary. Although Anthem's SIU regularly conducts investigations that do not lead to litigation nor involve attorneys, based on the nature of the information of fraud and the high dollar amount that lead to the investigation, it was unlikely that this investigation would not lead to litigation. Moreover, in-house counsel was involved in the decision to start the investigation.

Next, Insys argues that the data analysis contained in the spread sheets is not covered by either the attorney-client or work product privilege because the investigation was not performed, and the spreadsheets were not created at the direction of Anthem's lawyers. Stated differently, because there was no communication involving counsel, as a matter of law, none of the communications are privileged.

As a factual matter, the Court disagrees. That is, based on the depositions and affidavit produced by Anthem, the Court finds that Anthem's lawyer was involved in the investigation and creation of charts. Notably, the assertions about counsel's involvement in the investigation set out in the Kearney affidavit is unimpeached. Moreover, the Court credits the context offered in Anthem's response to deposition testimony cited by Insys as support for its contention that Anthem's lawyers lacked involvement. As such, the Court finds that certain charts prepared by Mr. Brown and Dr. Ruggieri are protected by the attorney-client privilege because, although the investigation and the preparation of the charts was not performed by the attorneys themselves, it is a well-accepted principle that communications between corporate employees and corporate counsel related to a corporate investigation to gather information for purposes providing legal advice is protected by the attorney-client privilege. See Upjohn Co., 449 U.S. at 395-98. Likewise, the subject charts are protected by the attorney work-product privilege because the privilege protects from discovery “documents and other tangible things that are prepared in anticipation of litigation ... by or for another party ....” Fed. R. Civ. P. 26(b)(3).

B. Waiver of Privilege and Substantial Need

*5 Alternatively, Insys argues that if the Court finds Anthem's communications protected by privilege, the Court should still order disclosure. (Doc. 155 at 17 n.3.) Specifically, Insys argues that “Anthem must be deemed to have impliedly waived any privilege by instituting this action against Insys.” (Id.) The Court disagrees.

First, Insys’ fails to cite any facts in support of its position that Anthem implicitly waived its attorney-client privilege. (Id.) Nor has Insys shown that it is unfair for Anthem to withhold the subject spread sheets, containing Anthem's analysis of the material gathered in its investigation, particularly in light of the fact that the underlying data has been disclosed.

Next, Insys has failed to show that it has a substantial need for materials protected by the work-product privilege to prepare its case. Anthem has represented to the Court that it is not relying on the privileged documents to prove any element of its claim. Although the Court recognizes that Anthem's intent regarding the use of the documents does not define substantial need, Insys failed to explain why, if Anthem is not relying on the documents, that it has a substantial need for them.

C. Privilege Log

The Court has found that the spread sheets that were prepared under the direction of counsel and/or in preparation of litigation are privileged. It is not obvious from Anthem's privilege log, however, that all documents listed therein meet that description. Although the Court has found that Insys is not entitled to a blanket finding that none of the documents listed in the privilege log are privileged, the Court agrees that the privilege log inadequately describes the documents. A privilege log must provide “reasonable detail” as to why the documents are privileged. Simply put, Anthem's privilege log fails to provide enough detail to discern the basis for the assertion of the privilege. At a minimum the privilege log should identify the attorney and client, nature of the document, the person who sent all those who received it, and the date of the document. Accordingly,

IT IS ORDERED that Defendant's motion to compel (Doc. 155) is GRANTED in part and DENIED in part as follow:

Dated this 13th day of March, 2019.

Insys’ request for material from ESI has been withdrawn. According to Insys’ reply, “[i]n light of Anthem's submission of the Declaration of Jamie Kurtz ..., Insys accepts Anthem's representation that it has produced the entirety of Anthem's investigations and audits related to its litigation against ESI.” (Doc. 177 at 5 n.1.)

Anthem notes in its response that the majority of its communications occurred outside of Arizona. (Doc. 170 at 10 n. 6.) Anthem, however, contends that regardless of which state law applies, communications between its attorneys and employees, for purposes of rendering legal advice, remain privileged.