Methodist Health Services Corporation v. OSF Healthcare System d/b/a Saint Francis Medical Center
Filing
88
ORDER granting in part and denying in part 68 Motion to Compel; denying 69 Motion to Compel. See written order. Entered by Magistrate Judge Jonathan E. Hawley on 4/22/2014. (KZ, ilcd)
E-FILED
Tuesday, 22 April, 2014 03:22:14 PM
Clerk, U.S. District Court, ILCD
IN THE UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF ILLINOIS
PEORIA DIVISION
METHODIST HEALTH SERVICES
CORPORATION
Plaintiff,
No. 13-1054
v.
OSF HEALTHCARE SYSTEM
d/b/a SAINT FRANCIS
MEDICAL CENTER
Defendant.
Order
Now before the Court are the Defendant OSF Healthcare System’s (OSF)
Limited Motion to Compel Discovery (Doc. 68) and its Motion to Compel
Discovery of UnityPoint (Doc. 69).
The Motions are fully briefed.
For the
reasons stated herein, OSF’s Limited Motion to Compel Discovery (Doc. 68) is
GRANTED IN PART AND DENIED IN PART. Its Motion to Compel Discovery
of UnityPoint (Doc. 69) is DENIED.
In its Complaint, the Plaintiff Methodist Health Services Corporation
(Methodist) alleges that the Defendant has engaged in predatory and
exclusionary conduct to reduce competition and raise prices at the expense of
consumers in two relevant product markets in the tri-county area of Peoria,
Tazewell, and Woodford: 1) the sale of general acute-care inpatient hospital
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services to commercial health insurers; and 2) the sale of outpatient surgical
services to commercial health insurers. The Plaintiff specifically alleges that OSF
has leveraged its size and status to force commercial health insurers to enter into
exclusionary contracts to preclude those insurers from contracting with other
hospitals and healthcare facilities.
The Complaint specifically identifies six
commercial health insurers including Blue Cross Blue Shield of Illinois (BCBS),
Humana, Health Alliance, Aetna, United Healthcare, and Coventry Health Care. 1
The Plaintiff brings claims for violations of Sections 1 and 2 of the Sherman Act,
the Illinois Antitrust Act, the Illinois Consumer Fraud Act, and for tortious
interference with prospective economic advantage.
The federal discovery rules are to be construed broadly and liberally.
Herbert v Lando, 441 U.S. 153, 177 (1979); Jefferys v LRP Publications, Inc., 184 FRD
262, 263 (ED Pa 1999). Parties are allowed to obtain discovery regarding any
unprivileged matter relevant to the claim or defense of any party. FRCP 26(b)(1).
Relevant information need not be admissible at trial if the discovery appears to
be reasonably calculated to lead to the discovery of admissible evidence. Id.
District courts have broad discretion in matters relating to discovery. See Brown–
The Defendant notes in its Memorandum of Law in Support of its Limited Motion to Compel Discovery
(Doc. 68-1) that the “Group of 8 Payors” identified in discovery requests is an agreed group of
commercial payors which the parties used to mutually narrow other written discovery requests. The
Group of 8 Payors includes Blue Cross Blue Shield of Illinois, Aetna, Inc., Humana, Inc., Health Alliance
Midwest, Inc., Cigna Healthcare of Illinois, Inc., United Healthcare Services, Inc., Conventry Healthcare
of Illinois, Inc., and Caterpillar, Inc.
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2
Bey v United States, 720 F2d 467, 470–71 (7th Cir 1983). For discovery purposes,
relevancy is construed broadly to encompass “any matter that bears on, or that
reasonably could lead to other matter[s] that could bear on, any issue that is or
may be in the case.” Chavez v DaimlerChrysler Corp., 206 FRD 615, 619 (SD Ind
2002), quoting Oppenheimer Fund, Inc. v Sanders, 437 US 340, 351 (1978)).
The party opposing discovery has the burden of proving that the
requested discovery should be disallowed.
Carrigan v K2M Inc., 2011 WL
1790423, *4 (CD Ill), citing Etienne v Wolverine Tube, Inc., 185 FRD 653, 656 (D Kan
1999); Golden Valley Microwave Foods, Inc. v Weaver Popcorn Co., 132 FRD 204, 207
(ND Ind 1990). The objecting party must do more than simply recite boilerplate
objections such as overbroad, burdensome, oppressive or irrelevant. See, for
example, Telco Group Inc v Ameritrade Inc., 2006 WL 560635 (D Neb); Roesberg v
Johns-Manville Corp., 85 FRD 292, 297 (D Pa 1980).
If the basis for an objection is lack of relevance, “the party resisting the
discovery has the burden to establish the lack of relevance by demonstrating that
the requested discovery is of such marginal relevance that the potential harm
occasioned by discovery would outweigh the ordinary presumption in favor of
broad disclosure.” Chavez, 206 FRD at 619; Sheehan v Kruger, 2012 WL 6049007
(ND Ind).
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I.
Limited Motion to Compel Discovery (Doc. 68)
In its Limited Motion to Compel, the Defendant requests that the Plaintiff
be ordered to turn over: 1) documents related to Methodist’s physician staffing,
compensation, and recruitment (Document Requests 20, 21, 23, and 24); and 2)
materials concerning certain meetings of Methodist’s Board of Directors that OSF
says relate directly to the product markets alleged in this lawsuit (Document
Request 52). The Plaintiff objected to Requests 20, 21, 23, 24, and 52 as “overly
broad, vague, irrelevant, or not likely to lead to admissible evidence.” After the
Defendant narrowed Requests 20, 21, 23, and 24 following a meet and confer, the
Plaintiff objected to the amended Requests 21, 23, and 24 for the additional
reason that they unnecessarily invaded the privacy of physicians within the
Peoria community. After the Defendant sent an Amended Request 52 to the
Plaintiff, Methodist objected to one subpart of the amended request as overly
broad, vague, and unduly burdensome, and another subpart as overly broad and
unduly burdensome.
A.
Amended Requests 20, 21, 23, and 24
First, the Court finds that the Defendant seeks relevant information
via Amended Requests 20, 21, 23, and 24.
The Defendant set forth twelve
affirmative defenses in its Answer including that there is no direct or proximate
causal connection between any harm or injury the Plaintiff alleged and any of
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OSF’s alleged acts.
See (Doc. 12 at pp. 55-57).
The Defendant points to
Paragraphs 32 and 102 of the Plaintiff’s Complaint in order to show the relevance
of the information requested via Amended Requests 20, 21, 23, and 24.
Paragraph 32 states:
A new hospital must recruit and hire qualified staff and physicians.
Hospitals also rely on referrals from physicians. A new hospital in
the Tri-County Area would need to convince area physicians to
change their referral patterns. This would be difficult enough if all
physicians in the area had independent practices. Here, it would be
even more difficult because Saint Francis has sewn up the loyalties
of many physicians through its OSF Medical Group, which owns the
practices of referring physicians, and other physician groups
controlled by Saint Francis or its affiliates.
(Doc. 1 at pp. 9-10). Paragraph 102 states:
Furthermore, Saint Francis’ conduct adversely impacts physician
referral patterns and hospital affiliations. Physicians treating
patients covered by commercial health insurers that have been
forced into exclusionary contracts by Saint Francis likely have
referred more patients to Saint Francis, and more patients likely
have chosen to use Saint Francis. Physician productivity mandates
that they fill their daily schedule. Many doctors engage in
“blockbooking,” finding it most efficient to perform all of a given
day’s surgeries and other procedures at the same facility. If they
cannot see the majority of their commercial insurance patients at a
facility, such as Methodist, they will shift their patients elsewhere to
try to maximize productivity. Thus, absent Saint Francis’
exclusionary conduct, its competitors would receive higher patient
volumes and utilization, increased revenues, and substantially
higher profits.
(Doc. 1 at pp. 26-27). The Defendant summarizes Methodist’s allegations in
Paragraph 32 to allege that the effects of OSF’s conduct on physician practices are
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a barrier to the entry of new competitive hospitals or surgical centers. The
Defendant summarizes the allegations of Paragraph 102 to allege that OSF’s
actions have the goal and effect of dissuading physicians from affiliating with
Methodist and ultimately decreasing Methodist’s revenues. Thus, the Defendant
says that it is entitled to defend itself against such allegations and to demonstrate
that Methodist has only itself to blame for its alleged woes.
The Plaintiff counters that Paragraph 32 does not allege that Methodist
was inadequately staffed or that it was not able to recruit physicians, but rather
that OSF’s relationship with its physicians creates a barrier to market entry. The
Plaintiff says that Paragraph 102 also does not allege that Methodist was
inadequately staffed or was not able to recruit physicians, but instead relates
solely to the inability of patients to receive medical care at Methodist due to
OSF’s anticompetitive conduct.
The Court cannot discern how the Defendant’s reading of the allegations
in Paragraphs 32 and 102 is a “blatant” misreading upon which it attempts to
argue the relevance of the documents responsive to Amended Requests 20, 21,
23, and 24. OSF’s reading of those paragraphs does not suggest that it perceives
this lawsuit to be about physician compensation or recruitment. Instead, its
interpretation evinces OSF’s clear understanding of the claims actually raised in
this case.
The Amended Requests touch upon the issue of whether OSF’s
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allegedly anticompetitive conduct (versus some other reasons) caused the
problems of which the Plaintiff complains and for which it seeks damages, and
thus the Amended Requests seek relevant information.
Second, the Court does not find that responding to the Amended Requests
would impose an undue burden on Methodist. As for the Plaintiff’s objection
that responding to the requests would impose an undue burden upon Methodist,
especially given the timeframe of January 1, 2005 to the present for the requested
documents, the Court notes that the submitted exhibits indicate that it was the
parties themselves who agreed to change the default cutoff for document
requests to at least January 1, 2005 to the present. See (Doc. 68-8 at p. 3); (Doc. 763 at p. 5). If the Court were to permit the Plaintiff’s relevance and undue burden
objections to prevail, the Court would be ignoring the fact that it must be
mindful of the defenses as well as the claims that the parties pursue when ruling
on discovery motions.
See FRCP 26(b)(1) (“Parties may obtain discovery
regarding any nonprivileged matter that is relevant to any party's claim or
defense”).
Here, amended Requests 20, 21, 23, and 24 may be somewhat
burdensome, but the Court cannot find that they are unduly burdensome in light
of the claims and defenses the parties are litigating.
Finally, though the Plaintiff makes a strong argument in support of its
objection to amended Requests 21, 23, and 24 that those requests seek
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information that “unnecessarily invades the privacy of physicians within the
Peoria community,” the potential invasion can be avoided.
Specifically, the
Court must balance any privacy interests against the probative value of the
information to the party seeking that information.
Arenson v Whitehall
Convalescent and Nursing Home, Inc., 161 FRD 355, 358 (ND Ill 1995). For the
reasons set forth above, the Amended Requests here seek relevant information.
As for the physicians’ privacy interests, those may be preserved by the redaction
of their names in any documents the Plaintiff produces and by the protective
order entered by the Court on June 7, 2013.
By requiring that the Plaintiff
respond to the Defendant’s Amended Requests 21, 23, and 24 with physicians’
names (and physician groups’ names) redacted, any waiver of the physicians’
privacy interests will be avoided. Furthermore, should the Plaintiff believe that
the current protective order is insufficient to prevent dissemination of the
responsive documents or otherwise prevent waiver of the physicians’ privacy
interests, the Plaintiff may request amendments to the protective order. OSF’s
footnote is worth mention; namely, that if it attempted to misuse physician
information, doing so could harm its own efforts to recruit and retain physicians.
(Doc. 68-1 at p. 13 n.5).
In the Court’s previous ruling on the motion to quash a subpoena to a nonparty, it noted that OSF’s discovery request meant that the non-party would be
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shouldered with the clearly onerous burden of redacting personal identifiers
from all responsive documents. However here, Methodist is a party to this
litigation and the information sought is relevant, so the burden attendant with
redaction is not so “onerous” as to militate against production.
Accordingly, the Plaintiff is directed to provide its redacted responses to
the Defendant’s Amended Requests 20, 21, and 24 within 21 days of this Order’s
date. Because the Plaintiff informed the Defendant subsequent to November 27,
2013 2 that it does not have any documents responsive to Amended Request 23, it
will not be compelled to respond any further. In the event that the Plaintiff’s
continuing investigation reveals documents responsive to that request, it must
promptly turn over those documents, redacted in accordance with this Order.
B.
Amended Request 52
The parties remain at an impasse as to only two subsections of Amended
Request 52. The Plaintiff objects to subpart (b) that seeks “Methodist’s provision
of inpatient hospital services or outpatient surgical services” as overly broad,
vague, and unduly burdensome. The Plaintiff also objects to subpart (i) that
seeks “all summaries, minutes, handwritten notes or other memorialization, in
any form, of the contents or discussions of that meeting of the Methodist Board
of Directors” for the same reasons. Methodist did state that it would produce
The Plaintiff’s Responses to Defendant’s Amended First Set of Requests for the Production of
Documents is dated November 27, 2013. (Doc. 68-9).
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non-privileged,
responsive
Board
minutes
to
the
extent
any
existed.
Furthermore, Methodist agreed to produce agendas, documents provided,
exchanged or used during the meetings, and documents identifying attendees at
those meetings that were relevant to the issues in this case including those that
addressed: 1) Methodist’s relationship with any member of the Group of 8
Payors; 2) Methodist’s expansion or growth strategies; 3) Methodist’s
consideration of OSF; and 4) competition.
The Defendant argues that subpart (b) is not overly broad or unduly
burdensome where the request uses the very two product markets that
Methodist alleged are at issue in this case. It further argues that the Plaintiff has
not made an effort to explain why responding to subpart (i) would be overly
broad or unduly burdensome. The Plaintiff counters that responding to subpart
(b) would be like requesting a law firm to produce all materials related to the
provision of legal services, such that the request is too broad and not tailored to
the issues in this case. The Plaintiff says in any event, the documents it has
agreed to produce provide OSF the information it seeks in subpart (b).
Subpart (i) of the Amended Request 52 seeks duplicative information and
is insufficiently tailored to the claims and defenses in this case, and subpart (b) is
insufficiently tailored to the claims and defenses in this case. When considered
with subpart (ii) seeking documents provided, exchanged or used during any
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meeting of the Methodist Board of Directors and subpart (iii) seeking agendas
created or used for any such meeting, subpart (i) seeks duplicative information,
albeit within a much broader scope. This is particularly so when considered with
the extent and variety of documents that Plaintiff has agreed to produce in
response to the other subparts. The fact that subpart (b) uses terms “inpatient
hospital services” and “outpatient surgical services” that Methodist itself used in
the Complaint is not sufficient reason to justify the extremely broad scope of
subpart (b). The Defendant does not attempt to explain why a more tailored
request would be insufficient.
This case involves two hospitals, and so a
document request seeking all meetings of one of the party hospital’s Board of
Directors addressing the provision of inpatient hospital services or outpatient
surgical services is overly broad on its face, without even taking into
consideration what a search for responsive documents would entail.
The chance of duplication if the Plaintiff is compelled to respond to
subparts (b) and (i) before the Defendant has reviewed the documents the
Plaintiff has agreed to produce responsive to Amended Request 52, and the
broad sweep of subparts (b) and (i) make those requests overly burdensome at
this time. As the Plaintiff notes, the Defendant will have an opportunity to issue
further, properly tailored discovery requests.
therefore denied as to Amended Request 52.
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The Defendant’s Motion is
II.
Motion to Compel Discovery of UnityPoint (Doc. 69) 3
A party issuing a subpoena has the burden to ensure that the subpoena
does not impose undue burden or expense, and that is especially so where the
subpoena is issued to a non-party.
Wetherell v ClimateMaster, Inc., 2009 WL
1470374, *2 (SDIL) (explaining that non-parties are particularly protected from
undue burden where the burden likely outweighs the benefit of compelling
compliance with a discovery request); see also FRCP 45(d)(1) (party or attorney
issuing subpoena “must take reasonable steps to avoid imposing undue burden
or expense on a person subject to the subpoena”); Cusumano v Microsoft Corp., 162
F3d 708, 717 (1st Cir 1998) (“[C]oncern for the unwanted burden thrust upon
non-parties is a factor entitled to special weight in evaluating the balance of
competing needs”). The non-party objecting to a subpoena on the basis of undue
burden must present affirmative and compelling proof of the burden. U.S. v
Amerigroup Illinois, Inc., 2005 WL 3111972, *2 (ND Ill).
Federal Rule of Civil Procedure 26 still guides the inquiry into whether the
discovery sought from a non-party is proper, namely, that the information
sought is relevant or reasonably calculated to lead to the discovery of admissible
As explained in UnityPoint’s Response in Opposition to Defendant OSF Healthcare System’s Motion to
Compel Discovery (Doc. 75), the Defendant’s Motion to Compel (Doc. 69) originally sought to compel the
production of a category of documents in addition to the category of “Contracting Documents.”
However, UnityPoint agreed to produce documents in response to that other category, and so the
Defendant filed a Notice of Partial Withdrawal of Motion to Compel Discovery of UnityPoint (Doc. 71)
indicating its withdrawal of Sections II.B.I and III.B of its Motion to Compel.
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evidence. FRCP 26(b)(1); Williams v. Blagojevich, 2008 WL 68680, *3 (NDIL) (“The
scope of material obtainable by a Rule 45 subpoena is as broad as permitted
under the discovery rules”). Thus, the Court here must assess the relevance of
the subpoenaed information to the underlying case when inquiring into whether
the requested discovery imposes an undue burden on UnityPoint. Northwestern
Memorial Hospital v Ashcroft, 362 F3d 923, 927 (7th Cir 2004); Pacific Century
International, Ltd. v Does 1-37, 282 FRD 189, 200 (ND Ill 2012). Moreover, the
Court should specifically consider the needs of the case, the amount in
controversy, the parties’ resources, the importance of the issues involved, and the
importance of the discovery in resolving those issues, and whether the discovery
sought is unreasonably cumulative or duplicative or can be obtained from some
other more convenient source. FRCP 26(b)(2)(C)(i), (iii).
Here, the Defendant argues that the “Contracting Documents” 4 it requested
of UnityPoint are relevant to show that UnityPoint’s own hospitals and third party
payors regularly lawfully engage in the very contracting practices that the Plaintiff
complains about in this lawsuit, and that such practices serve legitimate
procompetitive purposes. Requests 15 and 16 seek such documents covering the
time period of January 1, 2006 to the present. The Defendant disputes the undue
This is the term the Defendant uses to refer to the collective of documents it sought pursuant to
paragraphs 15 and 16 of the subpoena sent to UnityPoint, including any contract or agreement or
proposed contract or agreement between any UnityPoint hospital and third party payor containing an
exclusivity clause or any other provision making reference to any other hospital and/or another
hospital’s services.
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burden objection, pointing out that UnityPoint is the sole member of Methodist, has
the ability to appoint Methodist board members, and UnityPoint’s and Methodist’s
boards now partially overlap. The Defendant also disputes the duplicative objection
where the Contracting Documents it seeks are not in Methodist’s possession because
the documents relate to the contracting practices of other UnityPoint affiliates.
UnityPoint is a health system based in West Des Moines, Iowa and includes
11 hospitals in Iowa, four hospitals in Illinois (two in Peoria, one in Moline, and one
in Rock Island), and a health system in Madison, Wisconsin. The Defendant refers
to UnityPoint’s affiliate hospitals in Peoria and “in similar areas in Iowa and
Illinois.” UnityPoint says that OSF’s request for Contracting Documents reaches far
beyond the parties to this action, any reasonable geographic market, and the types
of health insurance payors at issue in this case.
The Defendant has not sufficiently explained the relevance of the documents
responsive to Requests 15 and 16 insofar as the documents may pertain to hospitals
outside of Illinois, or at the very least, outside the tri-county area identified in the
Complaint.
While it refers to UnityPoint’s affiliate hospitals in Peoria and “in
similar areas in Iowa and Illinois,” the Defendant does not elaborate in its Motion to
Compel to demonstrate the similarity. 5
Nor has the Defendant sufficiently
explained the relevance of the responsive documents involving additional and
different payors from the Group of 8 Payors the Plaintiff and the Defendant used to
The Defendant’s counsel’s November 25, 2013 letter discussing Requests 15 and 16 does not sufficiently
do so either. See (Doc. 69-6 at p. 5).
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mutually narrow written discovery requests between them. UnityPoint notes that
Methodist has already agreed with OSF to produce documents that relate to its
contracting with the Group of 8 Payors and Methodist’s Payor Advisory Group.
There is no indication as to the relevance of responsive documents covering a period
dating back to 2006, five years before Methodist’s and UnityPoint’s affiliation. The
Court accordingly finds that Requests 15 and 16 reach too far in terms of timeframe
and market scope.
Ultimately, the burden that responding to Requests 15 and 16 would impose
upon UnityPoint outweighs the attenuated relevance of the responsive documents.
UnityPoint has sufficiently articulated why just the search itself for responsive
documents to Requests 15 and 16 would be burdensome. The Court finds that it
would be unduly burdensome for UnityPoint to respond to Requests 15 and 16, and
so the Motion to Compel Discovery of UnityPoint is denied. The Court need not
address UnityPoint’s argument that Requests 15 and 16 could invade the privacy of
non-parties to this lawsuit where the Court has already determined that responding
to the Requests would be unduly burdensome. Finally, whether narrower requests
in amended versions of Requests 15 and 16 would be received more favorably by
UnityPoint is not for the Court to inquire into at this time.
Entered on April 22, 2014
s/Jonathan E. Hawley
U.S. MAGISTRATE JUDGE
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