*1 Pursuant to Rule 53(e) of the Federal Rules of Civil Procedure and the Stipulation and Order Governing Special Discovery Master Protocol (Doc. No. 93), the Special Discovery Master submits this Report and Recommendation regarding a discovery dispute involving defendants' alleged document production deficiencies.

On March 22, 2024, Relator submitted a discovery dispute letter to the Special Discovery Master, contending that defendants' document production efforts had been “woefully deficient.” Among the evidence Relator cited was defendants' failure to search a share drive used by defendants' actuarial team; the belated production of documents from defendants' former employee Dominic Duke shortly before Mr. Duke's deposition; the redaction of certain information from spreadsheets produced by defendants; the failure to produce certain audit reports; and the failure to produce certain work instructions and other documents referenced in documents defendants produced. Relator requested that defendants be ordered to provide a detailed accounting of all of their non-email data sources, including share drive files, identifying which ones had been searched and which ones had not, and that defendants produce the documents referred to in the documents identified in Relator's letter.

Defendants responded on March 27, 2024, contending that the belated actuarial file and Dominic Duke productions were not significant and demonstrated defendants' efforts to address any gaps in their production; noting that defendants had produced hundreds of audits documents and that only a small number of relevant audit-related documents had not been produced; and denying that the failure to produce certain documents referenced in documents defendants produced was evidence of any deficiencies in defendants' collection, review, and production of documents from non-email sources.

In an April 3, 2024 interim recommendation that the parties accepted, the Special Discovery Master required defendants to provide greater detail on their process for locating and producing relevant documents from share drive locations, and produce any relevant documents that Relator identified in its initial letter as referenced in produced documents. The interim recommendation also required the parties to meet and confer regarding these issues after defendants provided the required information.

Defendants provided the information on April 12, 2024. In their letter, defendants explained that, to determine which sources of electronically stored information (“ESI”) to review for relevant, responsive documents, they consulted with relevant employees, in-house counsel, IT personnel, and others, focusing on Relator's specific requests for production of documents and the allegations in Relator's complaint. Defendants also explained that, in addressing the specific categories of documents identified in Relator's initial letter (primarily audit materials and work instructions and other documents referenced in produced documents), defendants had identified certain documents that were inadvertently omitted from their review and production.

*2 On April 29, 2024, Relator submitted a supplemental letter to the Special Discovery Master regarding these issues.[1] In its supplemental letter, Relator argued that the information in defendants' April 12 letter regarding defendants' share drive collection and production process was vague and unhelpful. Relator also contended that the audit material and work instruction oversights that defendants identified in their April 12 letter significantly prejudiced Relator by substantially impairing its ability to prosecute its case. Relator argued that these oversights were “just the tip of the iceberg,” reiterating the actuarial share drive and Dominic Duke issues raised in Relator's initial letter, as well as two new issues: defendants' clawback of allegedly privileged documents and defendants' recent production of documents they obtained in response to a Freedom of Information Act (“FOIA”) request to CMS.

Relator argued that all of these “egregious failures” demonstrated that defendants' discovery process was flawed, and that the appropriate remedy was to order defendants to re-run their entire document collection and review process at their expense, using a neutral third-party vendor, and/or to sanction defendants, “up to and including issue sanctions.”

Defendants responded on May 2, 2024, conceding that both Relator and defendants had identified certain errors in defendants' production, but arguing that these errors were modest and that, even after these errors were corrected through additional productions, the vast majority of the documents defendants will end up producing will have been produced by December 2023. Defendants also responded to the specific issues raised in Relator's supplemental letter, including the new clawback and FOIA issues, arguing that none of these issues involved substantial numbers of documents or demonstrated fundamental flaws in defendants' document production process.

On May 7, 2024, two days before the parties' final conference with the Special Discovery Master regarding this dispute, Relator forwarded to the Special Discovery Master a letter defendants had sent to Relator, identifying additional documents that should have been reviewed for production but were not. In that letter, defendants noted that they had undertaken an effort to assess the document collection, review, and production efforts of defendants' vendor Consilio, in light of the document production issues raised by Relator. Through that effort, defendants learned that approximately 47,000 documents that should have been reviewed by Consilio had not been. About one-fourth of these documents were missed due to a typographical error made when entering search terms into defendants' e-discovery system, but the cause of the mistake for the remaining documents was not clear.

At a May 9, 2024 conference with the Special Discovery Master, the parties reiterated their positions outlined above. At that time, the primary dispute remained over the extent, effect, and import of the errors or omissions in defendants' document production process. Relator contended that these errors demonstrated that the process was so fundamentally flawed that only drastic relief, including a re-do of the entire process at defendants' expense, as well as certain procedural safeguards and remedies, would adequately address the issue. Defendants, on the other hand, contended that the errors were modest, reflecting some flaws in implementation but not in the process itself, and were easily remedied through the meet-and-confer process.

On May 16, 2024, the Special Discovery Master issued an informal written recommendation for resolution of this dispute. In that recommendation, the Special Discovery Master declined to order defendants to re-do their entire document collection and review process. Rather, the Special Discovery Master recommended that defendants provide Relator with a declaration or declarations outlining in detail the process defendants used to collect, search, review, and produce documents from non-email data sources, as well as provide details regarding defendants' audit of Consilio's work and a description of any errors, omissions, or other problems identified by the audit. On May 21, 2024, Relator informed the Special Discovery Master that it did not accept the informal recommendation. Defendants accepted the recommendation.

*3 The Special Discovery Master's recommended resolution of this dispute relies on certain general principles governing most discovery disputes in federal court. The threshold principles are outlined in Rule 26 of the Federal Rules of Civil Procedure, which defines the scope of discovery as “any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case.” FED. R. CIV. P. 26(b)(1). While Rule 26 “provides for liberal and broad discovery,” Thorpe v. City of Phila., No. 19-5094, 2021 WL 2554625, at *1 (E.D. Pa. June 22, 2021), the Rule includes limitations other than relevancy and proportionality. Among other things, a court “must limit the frequency or extent of discovery” that “is unreasonably cumulative or duplicative.” FED. R. CIV. P. 26(b)(2)(C)(i).

Moreover, it is well-established that a party responding to discovery requests is not required to achieve perfection in its efforts to locate and produce every relevant document in its possession; rather, its obligation is to “conduct a diligent search, which involves developing a reasonably comprehensive search strategy.” Winn-Dixie Stores, Inc. v. Eastern Mushroom Mktg. Coop., No. 15-6480, 2020 WL 3498161, at *2 (E.D. Pa. June 29, 2020) (internal quotation omitted); see also Enslin v. Coca-Cola Co., No. 2:14-cv-06476, 2016 WL 7042206, at *2-3 (E.D. Pa. June 8, 2016) (same).

The right and responsibility to determine the parameters for searching ESI and other document sources lie initially with the responding party. Only if the requesting party shows “that the party from whom documents were requested either withheld relevant documents or failed to conduct a reasonable search” may a court require the responding party to take additional steps such as searching new data sources. Winn-Dixie Stores, 2020 WL 3498161, at *2. “This burden is not trivial.” Id. It can be met by “evidence that affirmatively indicates that responsive documents exist,” id. at *3—i.e., “some concrete evidence pointing to the existence of missing documents.” Id. at *4.

The collection, review, and production of documents in complex litigation such as this seldom is carried out without a hitch. Mistakes occur. Relevant documents are missed. The local and federal rules make clear that the primary means of addressing such errors is the meet-and-confer process, i.e., a good-faith attempt by the requesting party to obtain the missing discovery. See, e.g., FED. R. CIV. P. 37(a)(1), (a)(5)(A)(i); E.D. PA. LOCAL CIV. R. 26.1(f). Only when such efforts fail is court intervention warranted.

Correction of such errors during the discovery process mitigates (though does not necessarily eliminate) the potentially prejudicial effect of such errors. As the Third Circuit has explained, “a failure to produce documents that is rectified many months before trial causes less prejudice and is less expensive to rectify than a failure to produce relevant documents that is discovered on the eve of the last day of a long and complicated trial.” Tracinda Corp. v. DaimlerChrysler AG, 502 F.3d 212, 241 (3d Cir. 2007). “Production errors discovered at the pre-trial stage of litigation will result in little, if any, expense or prejudice to the opposing party and therefore are not likely to warrant the imposition of sanctions.” Id. at 243.

Defendants do not dispute that they have produced additional relevant, responsive documents in recent weeks that should have been part of their initial productions in December 2023. The parties strenuously disagree, however, over the extent and effect of those delayed productions. Relator contends that the document production errors are systemic and require, in order to avoid significant prejudice, a complete re-doing of defendants' document collection, review, and production efforts (or substantial sanctions).[2] Defendants concede there were errors but contend they were relatively minor, involved few relevant documents, and are easily remediable through the meet-and-confer process.

*4 The reality appears to be somewhere between these two positions. There definitely have been multiple errors and gaps in defendants' document production efforts, and all such mistakes should be corrected. While defendants contend that Relator has exaggerated the scope and effect of most of these errors, the accumulation of errors over the past few months, whatever their scope, cannot be casually brushed aside.

But even taken as a whole, the mistakes do not demonstrate that defendants' entire document production process is flawed and must be redone from scratch. See, e.g., Lawson v. Love's Travel Stops & Country Stores, Inc., No. 1:17-CV-1266, 2019 WL 5622453, at *5 (M.D. Pa. Oct. 31, 2019) (describing request that court order party to engage e-discovery vendor at its own expense “both sweeping and largely unprecedented”); Weinstein v. Katapult Group, Inc., No. 21-cv-05175, 2022 WL 4548798, at *2 (N.D. Cal. Sept. 29, 2022) (finding that no court order was necessary where party was taking steps to remedy deficiencies in its initial document collection and production, even though such steps were only taken after “months of meet-and-confer efforts”). Relator treats each of defendants' alleged document production errors as egregious failures, but they are not all of the same magnitude or equally concerning. For example, issues such as the clawback of allegedly privileged documents—which is expressly contemplated by Rule 26(b)(5)(B) and the Protective Order in this case (Doc. No. 73)—and the production of CMS documents obtained through a FOIA request and only recently within defendants' possession do not appear to be as troubling as the failure to produce certain actuarial documents or work instructions or to search tens of thousands of custodial documents.

Some of defendants' document production errors are plainly more troubling than others, while as a whole, they paint a picture of problems that must be addressed and that have caused some prejudice to Relator; they do not demonstrate a large-scale failure severely prejudicing Relator and warranting the drastic relief Relator seeks.[3] While Relator has not demonstrated that there are systemic flaws in defendants' document production process as a whole, both Relator and defendants have identified sufficient specific deficiencies to warrant defendants' disclosure of additional information regarding the specifics of their process to ensure that they have conducted a reasonably comprehensive collection, review, and production process and to fill any gaps in their production. See, e.g., British Telecomms. PLC v. IAC/Interactivecorp, No. 18-366, 2020 WL 1043974, at *7 (D. Del. Mar. 4, 2020) (noting that inquiry into a party's discovery process is not warranted absent evidence of a “material deficiency” in that process).

*5 Given the Special Discovery Master's conclusion that the document production issues identified by the parties, while concerning, are not systemic, the remedy for the mistakes that have occurred should be two-fold: First, defendants should take all necessary steps to investigate and remedy the specific document production issues that the parties have identified, which they already are doing. And second, defendants must provide greater transparency regarding their document collection, review, and production process and how it led to the errors that have been identified, which is the aim of the Special Discovery Master's recommendation set forth below.[4]

The bulk of the errors identified by the parties involve defendants' production from non-email data sources. Although defendants provided additional information to Relator regarding these sources in response to the Special Discovery Master's February 4, 2024 recommendation regarding an earlier dispute and April 3, 2024 interim recommendation regarding this dispute, the extent of mistakes the parties have identified warrant the disclosure of greater detail than defendants have previously provided.

Thus, the Special Discovery Master recommends that, within two weeks of the Court's Order regarding this Report and Recommendation, defendants provide Relator with a declaration (or declarations) of a representative (or representatives) of the defendants, outlining in detail the process defendants used to collect, search, review, and produce documents from non-email data sources, providing as much information as possible regarding the process defendants used (without disclosing counsel's mental impressions, conclusions, opinions, or legal theories concerning this case, cf. FED. R. CIV. P. 26(b)(3)(B)), including a listing of the share drives or folders, by name or description, from which documents were collected, as well as an indication for each drive or folder (or groups of drives and folders) of the manner in which the files were reviewed (e.g., were all documents within a drive or folder reviewed? were only specific documents searched for within a drive or folder? were the agreed-upon search terms applied to documents within a drive or folder?).

Defendants also have acknowledged that there have been errors in their review of custodial files and that they are performing an audit of the processing, review and production steps undertaken by their vendor Consilio. Thus, the declarations should provide additional details regarding the audit of Consilio's work, as well as descriptions of any errors, omissions, or other problems identified by the audit.

Respectfully submitted,

WELSH & RECKER, P.C.

306 Walnut Street

Philadelphia, PA 19106

(215) 972-6430

bmerenstein@welshrecker.com