*1 Before the Special Master is an application submitted by Defendants seeking an order requiring production of documents and the deposition of an individual, Steven Zeigler. While submitted in letter form, Defendants have effectively filed a discovery motion and the Special Master will treat it as such.

In deciding this application, the Special Master has reviewed and considered Defendants’ letter of September 14, 2022 requesting this relief and Plaintiffs’ email response of October 6, 2022 including the transcript memorializing arguments advanced by parties at the status conference conducted before the Special Master on August 30, 2022.

After considering all of the submissions and arguments, it is the opinion of the Special Master that Defendants’ motion is DENIED to the extent set forth below.

I. Procedural and Factual Background

The litigants are, of course, closely familiar with the procedural posture and underlying facts which forms the basis of this application, therefore the Special Master will only briefly provide a summary of the facts pertinent to this motion.

Plaintiffs are MSP Claims Series, LLC; MAO-MSO Recovery II, LLC; Series PMPI; and MSPA Claims I, LLC (“Plaintiffs” or “MSP”). They are assignees of Medicare C and D healthcare regulated entities. Their assignors are entities who provide health benefits for Medicare beneficiaries. As such, Plaintiffs are acting as the assignors’ debt collectors whose assignments they are prosecuting in this litigation.

Defendants manufacture analog insulin. Plaintiffs contend that Defendants employed a pricing scheme that has unlawfully increased the purchase price of insulin for the benefit of the manufacturers and to the financial detriment of the assignors.

This litigation has been managed by the Special Master and has included regular status conferences to regulate discovery. Additionally, the litigants have filed motions when discovery disputes arise. This application effectively arises out of one dispute which was addressed at the status conference which took place on August 30, 2022. Simply put, the application centers on one individual, Steven Zeigler, who is both a custodian of records and general counsel for one of MSP's assignors, AvMed Inc. Defendants contend that during ongoing discovery, Zeigler has been shown to possess highly-probative, non-privileged custodial documents that go to the heart of MSP's claims and, according to Defendants, undercut Plaintiffs’ core theory that their assignors had no knowledge about or failed to benefit from rebates that Defendants paid to pharmacy benefit managers (“PBMs”).

Zeigler was among 42 other custodians as to whom Defendants moved to compel discovery in October 2021. On February 8, 2022, the Special Master granted Defendants’ motion and ordered Plaintiffs to produce documents from the custodial files of the 42 individuals. This was to be done by March 10, 2022 but, following a motion for reconsideration, the deadline was extended 30 days. Thereafter, at a status conference held on June 4, 2022, counsel for MSP indicated that Plaintiffs themselves did not have access to Zeigler's custodial emails and that AvMed, the assignor, would not give permission to do so. AvMed's reason for doing so is an assertion that the emails – all of the emails – were privileged.

*2 Plaintiffs have also sought to hold off Zeigler's deposition “until such time that Defendants have an opportunity to depose all of AvMed's fact witnesses and their 30(b)(6) corporate representative.”

Consequently, Defendants request that the Special Master order MSP to produce Zeigler's documents and, if not produced within 30 days, impose sanctions including the dismissal of AvMed's claims. Additionally, Defendants seek an order directing MSP to produce Zeigler for deposition within 30 days after this production.

II. Defendants’ Argument

Defendants argue that MSP's assertion of privilege over all of Zeigler's custodial documents is inappropriate. That is, in the Third Circuit, claims of attorney-client privilege must be asserted on a document-by-document basis, not by way of a blanket assertion, citing Takahashi v. Cuyco, 18-cv-4594, 2019 WL 2028715, at *5 (D.N.J. May 8, 2019). Additionally, under Federal Rule of Civil Procedure 26(b)(5), a litigant must create a privilege log “that describe[s] the nature of the documents, communications, or tangible things not produced or disclosed[,] and do so in a manner that...will enable other parties to assess the claim.” Here, say Defendants, Plaintiffs have failed to do so and have even conceded that they have not reviewed Ziegler's documents due to AvMed's position that all the materials are privileged.

Defendants insist Zeigler possesses relevant, non-privileged documents. They point to MSP's legal theory which asserts that its various assignors do not know about or benefit from rebates that Defendants pay to PBMs and deceive third party payers, such as Plaintiffs’ assignors, by fraudulently inflating the list price of insulins and failing to disclose the full extent of rebates. Defendants assert that discovery has established that AvMed has a contract with PBMs Express Scripts (ESI) for which Zeigler has the “second signed original” within his files and that documents related to this agreement such as communications and negotiations about the contract “which by definition are not privileged” are documents that this Court ordered MSP to produce from Zeigler's files. Defendants also emphasize that this is but one example and that many of the AvMed documents produced thus far obtained from other custodians involve Zeigler who was heavily involved with MSP's assignment of the AvMed claims and thus he would be the person most knowledgeable at that company about these issues.

Defendants argue that while MSP has stated that AvMed will not agree to cooperate, this failure is not an excuse. First, this Court has previously found that Plaintiffs are under an obligation to produce documents from each assignor pertinent to the claims they are advancing in this lawsuit. Hence, the assignors are required to provide the discovery. Further, AvMed's agreement with MSP requires cooperation in this litigation. As to a concern that the emails will be collected and disseminated, all custodial documents will be reviewed as to privilege by counsel, then logged, and, if disseminated, will be governed by the protective order in this case.

Finally, given that Zeigler has relevant information about this matter, once documents are produced, there is no justification for delaying his deposition until fact witnesses and 30(b)(6) designees are deposed. Defendants intend to depose other AvMed witnesses before Zeigler, but that has no bearing on whether Defendants should be allowed to depose Zeigler based upon his unique knowledge.

III. Plaintiffs’ Response

*3 It is Plaintiffs’ position that the issue regarding Steven Zeigler was effectively resolved at the time of the Court's August 30, 2022 status conference.

At that time, Plaintiffs’ counsel advised the Special Master as to the outstanding issue with AvMed's general counsel, reiterating that the entity, over whom Plaintiffs have no direct control, was going to stand firm with regard to releasing what was felt to be privileged documents maintained by its attorney. Plaintiffs’ counsel proposed an alternative plan so as to avoid an immediate production and deposition of this witness. That is, the parties would first move ahead and conduct the depositions of other AvMed's personnel in an effort to determine whether this information could be obtained through these fact witnesses and the Rule 30(b)(6) designees. After that, if Defendants felt it was still necessary, efforts could go forward with the deposition of AvMed's general counsel. In short, Plaintiffs proposed a wait and see approach and thereby (possibly) narrow the scope of what Defendants sought from this witness by holding off on his production and deposition until further information had been gathered.

IV. Findings

The issue at the heart of this application regarding AvMed's general counsel was addressed at and the subject of argument at the time of August 30, 2022 status conference. While not reduced to a formal order, as the transcript reflects, it was the opinion of the Special Master that Plaintiffs’ counsel's proposal (in effect, a compromise) was the best method to resolve this particular dispute as to this single records custodian. That is, given that the parties are already in the process of conducting depositions of the assignors, including fact witnesses and Rule 30(b)(6) designees, including such witnesses from AvMed, it would be prudent and expedient to move ahead with those depositions before directly confronting the production of records from and the deposition of Zeigler. Going forward in this manner could, as Plaintiffs suggest, result in a situation in which discovery from this witness could be more narrowly defined. At that point, if Zeigler's documents and deposition are still at issue – and if Defendants still intend to move forward with that discovery – this issue will be addressed.

To be clear, at this juncture, the Special Master is making no ruling on the validity of AvMed's contention that all of its general counsel's documents are privileged. Indeed, the Special Master has already ruled that Zeigler, as one of 42 individuals identified as records custodians, is indeed obligated to produce relevant, non-privileged documents from his custodial file. Nor are Defendants prohibited from taking the deposition of this witness. Instead, the Special Master's Order is intended to narrow and streamline this process in light of the fact that the custodian at issue, as general counsel for AvMed, likely is in possession of undoubtedly privileged documents concerning that entity in addition to non-privileged documents which may be relevant and bear on the claims and defenses in this lawsuit.

Accordingly, for the reasons previously set forth, Defendants’ application is DENIED. The Special Master directs the parties to move forward with conducting the depositions of the other AvMed witnesses. At the conclusion of that process, if the production of documents maintained by Zeigler and the need for his deposition are still issues, Defendants may then apply for an order compelling production of those documents and his testimony.

V. Conclusion

*4 For the reasons set forth above, it is the finding of the Special Master that Defendants’ application is DENIED to the extent set forth in this Order.