*1 The above-referenced cause of action was referred to the undersigned United States Magistrate Judge for pretrial purposes in accordance with 28 U.S.C. § 636. The following are pending before the Court:

The Court, having carefully considered the relevant briefing and hearing arguments of counsel September 9, 2021, is of the opinion the motion should be DENIED.

Plaintiff Beverly Williams (“Williams”) and Plaintiff Amy Johnson (“Johnson”) (collectively “Plaintiffs”) bring this putative class action on behalf of themselves and two proposed classes – the “Unauthorized Billing Class” and the “Excess Billing Class” – against Defendants Steward Health Care System, LLC and Medical Reimbursements of America (together, “Defendants”). Docket Entry # 64, Second Amended Complaint (“SAC”), ¶ 16. According to Plaintiffs, this case is an individual and putative class action arising from Defendants' scheme to deceptively collect unauthorized and illegal payments for hospital treatment resulting from motor vehicle accidents.

Plaintiffs bring this action on their own behalf and all others similarly situated as identified by the two proposed classes. Id., ¶ 88. In Count I, Plaintiffs allege violation of Texas Finance Code, §§ 392.001 et seq. Id., ¶¶ 101-111. In Count II, Plaintiffs allege violation of the Texas Deceptive Trade Practices Act (“TDTPA”). Id., ¶¶ 112-127. In Count III, Plaintiffs assert fraud claims. Id., ¶¶ 128-136. In Count IV, Plaintiffs allege mail and wire fraud in violation of RICO, 18 U.S.C. §§ 1961-1968, and 18 U.S.C. § 1962 (c) and (d). Id., ¶¶ 137-150.

Medical Reimbursements of America (“MRA”) brings this limited motion for protection to preclude Plaintiffs' attempt to take “burdensome discovery regarding claims for which they clearly lack Article III standing and which is not proportional to the needs of the case.” Docket Entry # 68 at p. 1. According to MRA, Plaintiffs' SAC challenges the manner in which they were billed for their care as patients at a hospital owned by Defendant Steward Health Care System LLC (“Steward”), and each Plaintiff had specific insurance coverage (Williams through Blue Cross Blue Shield of Texas; Johnson was a Medicaid recipient though Amerigroup). Id. While MRA does not object to providing discovery regarding its billing processes under its contract with Steward or with respect to the health insurance plans Plaintiffs had and has fully responded to Plaintiffs' discovery requests on those subjects, MRA objects to Plaintiffs' discovery requests regarding MRA's separate contracts with numerous non-party hospitals where Plaintiffs were never patients and sixteen health insurance plans they never had. Id.

*2 Plaintiffs' purported basis for seeking the discovery is that they have brought this case as a class action. According to MRA, Plaintiffs do not have Article III standing to challenge MRA's actions taken pursuant to contracts between MRA and non-Steward hospitals or health insurance plans other than those involving Plaintiffs. Id. at p. 4 (citing Walker v. Livingston, 381 F. App'x 477, 479, 480 n.3 (5th Cir. 2010) (plaintiffs' lack of standing “precludes such claims from affording any basis for continued discovery”); also citing Laufer v. Patel, 2021 WL 327704, at *1-2 (W.D. Tex. Feb. 1, 2021) (granting motion for protective order to prohibit discovery until court decided whether plaintiff had standing)). Thus, MRA asserts discovery about non-Steward hospitals and insurance plans other than Plaintiffs' plans is not relevant and proportional to the needs of the case under Federal Rule of Civil Procedure 26(b)(1).

Steward joins the motion and adopts and incorporates MRA's arguments that information about non-Steward hospitals and other health insurance plans is not proportional to the needs of the case, that Plaintiffs' requests are overly burdensome in some respects, and that Plaintiffs do not have standing to pursue claims concerning health insurance they do not have or related to any contracts between MRA and non-Steward hospitals where Plaintiffs were not treated. Defendants assert their pending Motion to Dismiss Second Amended Class Action Complaint (Docket Entry # 66) provides good cause to limit discovery because it presents a threshold question of subject matter jurisdiction, which could dispose of the case altogether.

What is more, MRA has since filed a separate Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction, seeking dismissal of Plaintiffs' class claims asserted on behalf of patients at non-party hospitals where Plaintiffs were never treated and never billed. Docket Entry # 95. In their opposition to Defendants' motion for protective order, Plaintiffs argued, among other things, that (i) MRA should have filed a motion to dismiss instead of a motion for protective order if it believed Plaintiffs lacked Article III standing to assert claims on behalf of patients of non-party hospitals, (ii) discovery about non-party hospitals was proper because the SAC included allegations about these hospitals, and (iii) MRA had not made the requisite showing of burden to warrant a protective order. See Docket Entry # 84.

The undersigned stated at the hearing that the Court intended to deny the motion for protective order, but did not expressly address the Article III issue. See Docket Entry # 93. Accordingly, MRA filed its separate Rule 12(b)(1) motion to dismiss on October 12, 2021.

A. Scope of discovery

Federal Rule of Civil Procedure 26(b) provides that the permissible scope of discovery includes “any nonprivileged matter that is relevantto any party's claim or defense and proportionalto the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties' relative access to relevantinformation, the parties' resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. Information within this scope of discovery need not be admissible in evidence to be discoverable.”[1] Matter of AET, Inc., Ltd., Civil Action No. 1:10-CV-51, 2018 WL 4201264, at *2 (E.D. Tex. June 8, 2018) (quoting FED. R. CIV. P. 26(b)(1)).

*3 In addition to being relevant, discovery must be proportional. Federal Rule of Civil Procedure 26(b) has been amended, effective December 1, 2015. Samsung Elecs. Am., Inc. v. Yang Kun Chung, 321 F.R.D. 250, 284 (N.D. Tex. June 26, 2017) (“Samsung II”). “Under Rule 26(b)(1), [as amended,] discoverable matter must be both relevant and proportional to the needs of the case—which are related but distinct requirements.”[2] Id. at 279. The burden is on the party resisting discovery to establish the discovery is not proportional. KAIST IP US L.L.C. v. Samsung Electronics Co. Ltd., No. 2:16-CV-01314-JRG-RSP, 2017 WL 9937760, at *1 (E.D. Tex. Dec. 21, 2017) (citing Samsung Elecs. Am., Inc. v. Yang Kun Chung, No. 3:15-CV-4108-D, 2017 WL 896897, at *11 (N.D. Tex. Mar. 7, 2017) (“Samsung I”)); see also Samsung II, 321 F.R.D. at 284 (explaining the amendments to Rule 26 do not alter the burdens imposed on the party resisting discovery).

“[J]ust as was the case before the December 1, 2015 amendments, under Rules 26(b)(1) and 26(b)(2)(C)(iii), a court can—and must—limit proposed discovery that it determines is not proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties' relative access to relevant information, the parties' resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit—and the court must do so even in the absence of a motion.” Samsung II, 321 F.R.D. at 284 (citing Crosby v. La. Health Serv. & Indem. Co., 647 F.3d 258, 264 (5th Cir. 2011)). Thus, as amended, Rule 26(b)(2)(C) provides that, “[o]n motion or on its own, the court must limit the frequency or extent of discovery otherwise allowed by these rules or by local rule if it determines that: (i) the discovery sought is unreasonably cumulative or duplicative, or can be obtained from some other source that is more convenient, less burdensome, or less expensive; (ii) the party seeking discovery has had ample opportunity to obtain the information by discovery in the action; or (iii) the proposed discovery is outside the scope permitted by Rule 26(b)(1).” Samsung II, 321 F.R.D. at 284 (quoting FED. R. CIV. P. 26(b)(2)(C)).

B. Protective orders

Federal Rule of Civil Procedure 26(c)(1) provides that “[a] party or any person from whom discovery is sought may move for a protective order in the court where the action is pending—or as an alternative on matters relating to a deposition, in the court for the district where the deposition will be taken.” Id. (quoting FED. R. CIV. P. 26(c)(1)). Rule 26(c)(1) further provides that the court “may, for good cause,” protect a party from “undue burden or expense” by issuing an order forbidding the disclosure or discovery of certain matters, specifying terms for the disclosure or discovery, or limiting the scope of disclosure or discovery. Matter of AET, 2018 WL 4201264, at *2 (quoting FED. R. CIV. P. 26(c)(1)(D)).

*4 In order to prevail on a motion for protective order, a party must specifically object and show that the requested discovery does not fall within Rule 26(b)(1)'s scope of discovery, that a discovery request would impose an undue burden or expense, or that a discovery request is otherwise objectionable. Tijerina v. Guerra, Civil Action No. 7:19-CV-285, 2020 WL 1663181, at *5 (S.D. Tex. Apr. 1, 2020) (citing Carr v. State Farm Mut. Auto. Ins. Co., 312 F.R.D. 459, 469 (N.D. Tex. 2015) (citing McLeod, Alexander, Powel & Apffel, P.C. v. Quarles, 894 F.2d 1482, 1485 (5th Cir. 1990))). The party resisting discovery must show specifically how each discovery request is not relevant or how each request is overly broad, burdensome, or oppressive. Tijerina, 2020 WL 1663181, at *5 (citing O'Bryant v. Walgreen Co., Civil Action No. 19-60363, 2020 WL 996464, at *5 (5th Cir. 2020) (citing McLeod, 894 F.2d at 1485) (“[T]he party resisting discovery must show specifically how ... each interrogatory is not relevant or how each question is overly broad, burdensome or oppressive.” (internal quotations omitted in Tijerina))).

Defendants argue Plaintiffs do not have standing to assert claims related to other insurance plans or non-Steward hospitals. Defendants assert discovery related to these matters is not relevant or proportional because it has no bearing on Plaintiffs' individual claims or on any potential class-wide claims on behalf of other Steward patients and/or other patients that participated in Plaintiffs' health insurance plans. According to Defendants, disclosure of such information—particularly information regarding MRA's relationships with non-party hospitals—would be unduly burdensome. Defendants request the Court prohibit Plaintiffs' inquiries regarding non-party hospitals and health insurance plans unrelated to Plaintiffs' claims. Defendants assert their pending motions to dismiss for lack of jurisdiction (Docket Entry #s 66, 95) demonstrate that good cause exists to limit discovery.

At the hearing on the motion for protective order, Plaintiffs' counsel argued as follows:

Docket Entry # 116 at 22:6-23:4.

Agreeing with Plaintiffs' counsel that Defendants had failed to meet their burden to show good cause for the issuance of a protective order, the undersigned orally denied Defendants' motion following oral argument and advised the parties she would enter a written order as soon as practicable.[3] Contemporaneously with this written Order Denying Defendants' Motions for Protective Order, the Court is entering a lengthy Report and Recommendation, recommending Defendants' motions to dismiss be denied. In the Report and Recommendation, the Court finds Rule 23, not Article III standing, is the better framework for analyzing differences between the named Plaintiffs and the absent class members.

*5 For purposes of this discovery motion, the Court finds the discovery sought is supported by the allegations in the SAC and necessary for the Rule 23 determination of whether class certification is proper. As indicated in the Report and Recommendation, Defendants are free to raise their concerns about whether these Plaintiffs can adequately represent the proposed classes and members during their briefing in opposition to the Plaintiffs' motion for class certification.

Based on the foregoing, it is

ORDERED that Defendant MRA's Rule 26(b)(2)(C)(iii) and Rule 26(c) Motion for Protective Order Regarding Non-Party Hospitals and Inapplicable Health Insurance Plans (Docket Entry # 68); and Defendant Steward Health Care System, LLC's Joinder in MRA's Motion for Protective Order (Docket Entry # 70) are DENIED.

SIGNED this 16th day of December, 2021.

In the Eastern District of Texas, Local Rule CV-26 also provides guidance in considering whether information is relevant for discovery. The rule provides information is relevant if:

The 2015 amendments to Rule 26 deleted “from the definition of relevance information that appears ‘reasonably calculated to lead to the discovery of admissible evidence’ because ‘[t]he phrase has been used by some, incorrectly, to define the scope of discovery’ and ‘has continued to create problems’ given its ability to ‘swallow any other limitation on the scope of discovery.’ ” Robroy Indus.-Tex., L.L.C. v. Thomas & Betts Corp., Civil Action No. 2:15-CV-512-WCB, 2017 WL 319064, at *4 (E.D. Tex. Jan. 23, 2017) (quoting FED. R. CIV. P. 26, 2015 comm. note).

Following the September 9, 2021 hearing on the motion for protective order, MRA filed its separate Rule 12(b)(1) motion to dismiss, the Court allowed Defendants to supplement the record on Defendants' Motion to Dismiss Second Amended Class Action Complaint, and the Court held a hearing on the motions to dismiss. The Court advised the parties at the October 21, 2021 hearing on the motions to dismiss that it intended to issue the written ruling on the motion for protective order at the same time as the Report and Recommendation on the motions to dismiss. Docket Entry # 112 at 92:25-93:1.