Connecticut General Life Insurance Company et al v. Advanced Surgery Center of Bethesda LLC et al

Filing 159

MEMORANDUM OPINION. Signed by Judge Deborah K. Chasanow on 12/7/2016. (sat, Chambers)

Case 8:14-cv-02376-DKC Document 159 Filed 12/07/16 Page 1 of 14

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
:
CONNECTICUT GENERAL LIFE
INSURANCE COMPANY, et al.,

:

v.

:

Civil Action No. DKC 14-2376

:
ADVANCED SURGERY CENTER
OF BETHESDA, LLC, et al.,

:

MEMORANDUM OPINION
Presently pending and ready for resolution are two motions
to

compel,

one

filed

by

Plaintiffs/Counter-Defendants

Connecticut General Life Insurance Company and Cigna Health and
Life Insurance Company (collectively, “Cigna”) (ECF No. 138),1
and

the

other

filed

by

Defendants/Counter-Plaintiffs

(ECF

No

139).

Defendants are twenty ambulatory surgical care facilities

doing

business

in

Maryland

(collectively,

“the

ASCs”),2

and

1

Plaintiffs’ Corporate Disclosure Statements reveal that
they are both subsidiaries of “Connecticut General Corporation,
which is a wholly-owned subsidiary of Cigna Holdings, Inc.,
which is a wholly-owned subsidiary of Cigna Corporation.” (ECF
Nos. 18; 19).
Although Plaintiffs repeatedly refer to
themselves as “Cigna” as if they are a singular entity, it is
unclear what relationship these subsidiaries share, and whether
they can be treated as one and the same for the purpose of this
action.
2

Defendant ASCs are Advanced Surgery Center of Bethesda,
LLC; Bethesda Chevy Chase Surgery Center, LLC; Deer Pointe
Surgical
Center,
LLC;
Hagerstown
Surgery
Center,
LLC;
Leonardtown Surgery Center, LLC; Maple Lawn Surgery Center, LLC;
Maryland Specialty Surgery Center, LLC; Monocacy Surgery Center,
LLC; Piccard Surgery Center, LLC; Riva Road Surgical Center,
LLC; SurgCenter at National Harbor, LLC d/b/a Harborside Surgery

Case 8:14-cv-02376-DKC Document 159 Filed 12/07/16 Page 2 of 14

Surgical Center Development, Inc. d/b/a SurgCenter Development
(“SurgCenter”),
establish

a

the

Nevada
ASCs

corporation

and

that

consults

purportedly

in

their

helped

businesses

(collectively, the ASCs and SurgCenter are “Defendants”).
No. 1 ¶ 33).

(ECF

The issues have been fully briefed, and the court

now rules, no hearing being deemed necessary.

Local Rule 105.6.

For the following reasons, Defendants’ motion will be granted
and Cigna’s motion will be granted in part and denied in part.
I.

Background
A

complete

recitation

of

the

factual

background

can

be

found in the court’s prior memorandum opinion in response to the
parties’ cross motions to dismiss.

(ECF No. 63, at 1-10).

The

underlying basis of the dispute stems from the ASCs’ policy of
matching the in-network price for Cigna’s patients, even though
they were an out-of-network provider and charged Cigna the outof-network

rates.3

discovery.
parties

parties

have

been

participating

in

After reaching an impasse on several issues, the

each

attempted

The

to

served

motions

resolve

to

their

compel

disputes

on

one

through

another

and

conference.

Center; SurgCenter of Glen Burnie, LLC; SurgCenter of Greenbelt,
LLC; SurgCenter of Silver Spring, LLC; SurgCenter of Southern
Maryland, LLC; SurgCenter of Western Maryland, LLC; SurgCenter
of White Marsh, LLC; Timonium Surgery Center, LLC; Upper Bay
Surgery Center, LLC; and Windsor Mill Surgery Center, LLC.
3

The parties refer to the billing scheme as “price
matching,” “fee forgiveness,” and “dual-pricing.”
These terms
are used interchangeably in this opinion.
2

Case 8:14-cv-02376-DKC Document 159 Filed 12/07/16 Page 3 of 14

Pursuant to Local Rule 104.8, each side filed certificates of
conference

and

submitted

remaining issues.
II.

briefing

on

the

motions

for

the

(ECF Nos. 138; 139).

Standard of Review
“Parties may obtain discovery regarding any nonprivileged

matter that is relevant to any party’s claim or defense and
proportional
26(b)(1).

to

the

Pursuant

needs
to

of

the

Fed.R.Civ.P.

case[.]”
33,

a

Fed.R.Civ.P.

party

may

serve

interrogatories on the other party into any matter that may be
inquired into under Rule 26(b).

Under Fed.R.Civ.P. 34, a party

may serve a request for production of designated documents or
electronically

stored

information,

described

with

reasonable

particularity, that are within the scope of discovery and in the
responding party’s possession, custody, or control.
fails

to

respond

to

interrogatories

or

to

If a party

produce

documents

requested under these Rules, the party seeking discovery may
move

for

an

order

37(a)(3)(B)(iii-iv).

compelling

production.

Fed.R.Civ.P.

Under Local Rule 104.8(a), the memorandum

in support of a motion to compel “shall set forth, as to each
response to which the motion is directed, the discovery request,
the

response

thereto,

and

the

asserted

basis

for

the

insufficiency of the response.”
“Perhaps the single most important word in Rule 26(b)(1) is
‘relevant,’

for

it

is

only

relevant
3

matter

that

may

be

the

Case 8:14-cv-02376-DKC Document 159 Filed 12/07/16 Page 4 of 14

subject of discovery.”

8 Charles Alan Wright, Arthur Miller, et

al., Federal Practice and Procedure § 2008 (3d ed. 2016).

Even

if information is relevant, however, the court must consider the
proportionality

factors

in

Fed.R.Civ.P.

26(b)(1):

“the

importance of the issues at stake in the action, the amount in
controversy,

the

information,

the

parties’
parties’

relative

resources,

access
the

to

importance

relevant
of

the

discovery in resolving the issues, and whether the burden or
expense of the proposed discovery outweighs its likely benefit.”
Because “[f]airness in the disposition of civil litigation is
achieved when the parties to the litigation have knowledge of
the relevant facts, . . . the discovery rules are given ‘a broad
and

liberal

treatment.’”

Nat’l

Union

Fire

Ins.

Co.

of

Pittsburgh, Pa. v. Murray Sheet Metal Co., 967 F.2d 980, 983 (4th
Cir.

1992)

(quoting

Hickman

v.

Taylor,

329

U.S.

495,

507

(1947)).
III. Analysis
A.
Transcripts from Other Litigation Involving Cigna and
Out-of-Network Providers
Defendants move to compel Cigna to provide transcripts of
depositions by its employees, officers, and agents from other
litigation between Cigna and other out-of-network providers.

In

their reply to the motion, Defendants clarify that they seek
only

testimony

from

cases

involving

4

allegations

of

fee

Case 8:14-cv-02376-DKC Document 159 Filed 12/07/16 Page 5 of 14

(ECF No. 139-3, at 6).4

forgiveness.

They argue that the

transcripts are relevant as “other incidents of the same type”
under Rule 26(b)(1).

See Fed.R.Civ.P. 26 advisory committee’s

note to 2000 Amendment.

They suggest that the transcripts will

show whether Cigna had prior knowledge of the billing procedures
and

therefore

Defendants’

cannot

false

claim

to

reasonably

(ECF

statements.

have

No.

relied

139-1,

at

on
10).

Defendants further explain that the transcripts will assist them
in

preparing

for

Investigations

Unit”

depositions
and

in

about

exploring

Cigna’s

“potential

impeachment” for Cigna’s witnesses in this case.

“Special
areas

for

(Id. at 12).

Cigna does not aver that the transcripts are not relevant,
but instead suggests that the scope of Defendants’ request is
too broad, even in light of the limitation to fee forgiveness
cases.

If Defendants sought to determine whether it had prior

knowledge

of

their

billing

schemes,

Cigna

argues

that

their

request should be limited to transcripts relating to Cigna’s
knowledge

of

other

“SurgeCenter-affiliated”

schemes.

These transcripts were apparently previously produced

to Defendants in another case.

centers’

(ECF No. 139-2).5

billing

But Defendants

4

Defendants also previously limited their request to cases
from the five years prior to filing this case. (ECF No. 139-10,
at 3).
5

Defendants do not dispute that Cigna produced such
transcripts in the prior litigation, Arapahoe Surgery Center,
5

Case 8:14-cv-02376-DKC Document 159 Filed 12/07/16 Page 6 of 14

seek evidence beyond Cigna’s knowledge of their specific billing
schemes.

They also want transcripts from other cases involving

fee forgiveness, which they maintain were being “employed by
out-of-network healthcare providers across the United States.”
(ECF No. 139-1, at 3).

Because even non-SurgCenter affiliates

might have used billing practices that would have made Cigna
aware of fee-forgiveness policies like their own, information
from other similar cases is relevant.
Cigna

also

contends

that

transcripts is considerable.
contention

that

“electronic

the

burden

of

producing

these

It does not dispute Defendants’
copies

of

such

documents

can

be

gathered with relative ease and efficiency by the attorneys who
represented Cigna in such matters.”
139-2,

at

6).

Instead,

it

(ECF Nos. 139-1, at 12;

suggests

that

producing

these

transcripts would be burdensome because of the confidentiality
orders in place in those other cases.

It would be a significant

burden, Cigna argues, to confer with counsel from dozens of
other

cases

in

order

to

ensure

that

it

is

not

violating

confidentiality orders in those cases. (ECF No. 139-2, at 6-7).
Defendants counter this argument by pointing to Tucker v.
Ohtsu Tire & Rubber Co., 191 F.R.D. 495, 498 (D.Md. 2000),
which

another

judge

LLC, et al., v
(D.Colo. 2015).

in

Cigna

this

district

Healthcare,
6

addressed

Inc.,

80

a

in

similar

F.Supp.3d

1257

Case 8:14-cv-02376-DKC Document 159 Filed 12/07/16 Page 7 of 14

assertion

that

documents

related

to

another

case

cannot

be

produced because doing so would violate a confidentiality order.
That

court

found

it

important

to

consider

the

text

of

the

confidentiality order, the nature of its issuance, the age and
disposition of that case, and which party it sought to protect.
Id.

at

498-501.

Here,

identified the cases.

Cigna

may

not

yet

have

(ECF No. 139-10, at 3).6

even

fully

Given that it

has not provided the court with specific information about any
protective orders, it has not sufficiently “allege[d] specific
facts

that

indicate

the

nature

and

extent

of

the

burden.”

Tucker, 191 F.R.D. at 498.
Accordingly, Defendants’ motion to compel will be granted
with

respect

to

transcripts

unless

Cigna

can

provide

such

information about the specific confidentiality orders in place
in those cases and that information shows that the transcripts
warrant nondisclosure under Tucker.

As noted above, Cigna must

produce such documents even if they come from litigation with
non-SurgCenter affiliates, so long as the cases involve similar
claims of fee forgiveness.

See Capital Ventures Int’l v. J.P.

6

In prior correspondence, Defendants complain that Cigna
has provided a list of thirty-seven case names and numbers, but
failed to provide the court where the case took place for
thirty-four of them, apparently preventing Defendants from being
able to identify all the cases.
(ECF No. 139-10, at 3).
Because Cigna will be compelled to provide the transcripts
requested unless it can show that the confidentiality orders
warrant nondisclosure, the dispute over the court locations
presumably will be mooted.
7

Case 8:14-cv-02376-DKC Document 159 Filed 12/07/16 Page 8 of 14

Morgan

Mortg.

1431124,

at

Acquisition
*1

(D.Mass.

Corp.,
Apr.

No.

14,

12-10085-RWZ,

2014)

2014

(emphasizing

WL

that

discovery of materials from other litigation should be limited
to materials from cases with “sufficient similarity,” in light
of the specific claims and the bases of those claims).
B.
Documents and Communications as to ASCs’ Decision
Whether to Join Provider Networks
Cigna first seeks to compel the ASCs to produce documents
and

communications

provider networks.

related

to

their

decision

not

to

join

Cigna contends this information is relevant

because it will show that the ASCs specifically chose to stay
out-of-network so that they could execute their fee-forgiveness
scheme.

It

also

avers

that

SurgCenter’s

encouragement,

consulting, and support of such a decision are relevant to its
aiding

and

abetting

claim.

The

ASCs

counter

that

all

such

evidence could possibly show is that Cigna and the ASCs were
unable to find mutually agreeable terms.

(Id. at 8).

Cigna

points out that the ASCs’ position may be that the two sides
were unable to come to an agreement, but its position is that
the ASCs never wanted to join provider networks because they
would no longer be able to benefit from their fraudulent scheme
if they became in-network providers.

(ECF No. 138-4, at 6-7).

It argues that the difference in these two positions is the
exact reason that this discovery is needed.

8

Whether the ASCs

Case 8:14-cv-02376-DKC Document 159 Filed 12/07/16 Page 9 of 14

chose not to join networks because they could make more money by
misrepresenting their dual pricing scheme is relevant to the
question of the ASCs’ intent.

Although this information may

include some proprietary business considerations that Defendants
would like to keep confidential, the confidentiality order in
this case should sufficiently protect that interest.

Therefore,

Cigna’s motion to compel will be granted as to these requests.
C.
Documents and Communications Related to the ASCs’
Investors and Financial Relationships
Cigna

also

moves

to

compel

Defendants

to

provide

information about their investors and financial arrangements.
Specifically, it seeks (1) information given to investors about
profitability

and

their

business

model;

(2)

the

names

and

contact information of all investors; (3) financial information
related to the ASCs’ physician investors and their returns on
investment;

and

(4)

the

financial

relationship

between

SurgCenter and the ASCs.
Cigna begins by suggesting that discovery related to the
ASCs’

investors

is

likely

to

include

representations

profitability resulting from the pricing scheme.
2, at 17).

about

(ECF No. 138-

The ASCs may be correct that the representations

made to investors have no bearing on whether they misrepresented
material aspects of their billing practices to Cigna (ECF No.
138-3, at 6), but, because Cigna will be forced to show that the

9

Case 8:14-cv-02376-DKC Document 159 Filed 12/07/16 Page 10 of 14

ASCs knew their representations to Cigna were false and made the
misrepresentations

for

information

to

given

the

purpose

investors

of

defrauding

Cigna,

while

discussing

the

such

pricing

scheme would certainly be relevant to proving its fraud claim.
As written, however, the request for production is too broad.
The request includes, for example, “any communications relating
to investments with any investor.”
Such

a

helpful

request
to

will

the

(ECF No. 138-2, at 13).

unnecessarily

resolution

of

capture

the

far

issues

more

in

than

this

is

case.

Therefore, Cigna’s motion will be denied with regard to investor
communications.
Defendants

Cigna’s

investors

Defendants’

investors

are
are

interrogatories
much

more

likely

to

with

regard

concrete.
possess

to

Because
discoverable

information that would be relevant to the fraud claim for the
same reasons stated above, Cigna’s motion to compel with regard
to SCD Interrogatory No. 5 and ASC Interrogatory No. 4, seeking
investor identities, will be granted.
ASC Interrogatory No. 5, however, asks the ASCs to identify
former

investors

shareholders.

who

were

disassociated

by

a

vote

of

the

Cigna provides no explanation why it would be

relevant to know which former investors were disassociated by a
shareholder vote.

Indeed, its only reference in the motion to

former investors emphasizes the value of those investors who
disassociated of their own accord because of the billing scheme,
10

Case 8:14-cv-02376-DKC Document 159 Filed 12/07/16 Page 11 of 14

not investors who were disassociated by the other investors.
Therefore,

the

motion

to

compel

the

ASCs

to

respond

to

ASC

Interrogatory No. 5 will be denied.
Next,

Cigna

moves

to

compel

disclosure

of

financial

information related to the ASCs’ physician investors and their
returns on investment.

According to Cigna, physician investors

were “an important – if not essential – part” of the billing
scheme because the physician investors participated in Cigna’s
network and referred patients to the out-of-network ASCs.
No. 138-2, at 19).
physician

investors

billing scheme.
payments

to

physicians’

(ECF

Cigna first argues that distributions to
show

the

ASCs’

motives

in

pursuing

the

This argument misses the mark, however, because

those
motive

physicians
for

by

the

participating

in

ASCs
the

would

show

the

not

the

scheme,

ASCs’ motive.
The cooperation of physician investors may well have been
relevant to how Cigna patients wound up in at the ASCs, but
Defendants’ entire business model is not necessarily relevant to
the

claims

here.

Notably,

the

physician

investors

are

not

accused of participating or aiding in the fraud.

Had the ASCs

used

then

physician

investors

to

get

referrals

and

charged

Cigna’s patients normal out-of-network rates, there would be no
cause for the claims in this case.

Alternatively, if the in-

network doctors had referred their patients to the ASCs simply
11

Case 8:14-cv-02376-DKC Document 159 Filed 12/07/16 Page 12 of 14

because they were offering the best services to the physicians’
patients, but the ASCs still engaged in fee forgiveness, the
claims here would remain intact.

Thus, whether and how those

physicians were paid does not bear on whether the ASCs’ billing
scheme

was

fraudulent.

Because

the

court

considers

the

“importance of the discovery [request] in resolving the issues,”
and in “proportion[] to the needs of the case,” Fed.R.Civ.P.
26(b)(1) (emphasis added), the discovery here has such minimal
value

to

the

disputed

issue

that

it

cannot

meet

the

Rule’s

requirements.7
Cigna

also

avers

that

the

information

about

the

relationship between the ASCs and their physician investors is
relevant to its damages and its unjust enrichment claim.

7

(Id.

To the degree that the role of the physician investors is
relevant, it is also noteworthy that the ASCs do not dispute
that they reduced rates for patients.
Rather, Defendants’ own
motion to compel admits that the ASCs aimed “to make medical
care affordable to their patients by attempting to match their
patients’ in-network cost-sharing responsibilities (i.e., copayments, deductibles, and co-insurance).”
(ECF No. 139-1, at
3).
The crux of Defendants’ arguments is that this pricing
scheme was lawful, emphasizing that these “price reductions
[were] identified in their bills,” and that “[v]ariations of
this price-matching policy are employed by out-of-network
healthcare providers across the United States.”
(Id.).
Therefore, the proper focus is on facts relevant to the
resolution of the dispute over whether the price-matching
conduct was fraudulent.
See Marfork Coal Co. v. Smith, 274
F.R.D. 193, 204 (S.D.W.Va. 2011) (denying a motion to compel the
identification of witnesses likely to have relevant information
because the “Defendants [we]re basically willing to admit” that
they had committed the alleged act, and therefore the plaintiff
did not need the information to prove its claim).
12

Case 8:14-cv-02376-DKC Document 159 Filed 12/07/16 Page 13 of 14

at 19-20).

Defendants rightly point out that because Cigna

knows exactly what it paid to each of the ASCs, the measure of
damages will be the amount that it paid in excess of what it
should have paid.

This same amount will constitute the benefit

conferred on Defendants under Cigna’s unjust enrichment claim.
The profits made by Defendants or their investors are therefore
not relevant, and the motion will be denied with regard to these
requests.
Finally,

Cigna

relationship

between

reasons

forth

put

information

is

the
in

received

discovery

ASCs

and

Cigna’s

relevant

aiding and abetting.
SurgCenter

seeks

to

the

SurgCenter.

motion

its

of

case

financial

None

demonstrate
against

of

that

the
this

SurgCenter

for

First, it argues that the amount of money
is

“probative

of

the

magnitude

of

the

‘substantial assistance’” it provided to the ASCs.

(ECF No.

138-2,

that

at

19).

Of

course,

there

is

no

certainty

the

amounts the ASCs paid are an accurate reflection of the services
that SurgCenter rendered, but even if those payments could be
used to determine the value of the services SurgCenter provided,
these figures would not show what amounts, if any, of those
payments were for SurgCenter’s role in the billing scheme at
issue
Second,

and

what

Cigna

amounts

suggests

were

that

for

“to

other

the

services

extent

any

rendered.

payments

to

SurgCenter depended on the volume of patients that the ASCs
13

Case 8:14-cv-02376-DKC Document 159 Filed 12/07/16 Page 14 of 14

obtained

.

.

.

‘encouragement.’”

,

such

arrangements

(Id.).

would

clearly

amount

to

Cigna again seems to have reversed

the roles of the various players.

The pertinent question in its

aiding and abetting claim is whether SurgCenter encouraged the
ASCs

to

commit

fraudulent

billing

practices.

Payments

to

SurgCenter would presumably provide encouragement for SurgCenter
to act in a certain way, not vice versa.
the

amount

that

SurgCenter

made

from

the

Third, Cigna claims
billing

important to the measure of damages in this case.
as

discussed

above,

the

damages

will

be

scheme
(Id.).

determined

not

is
But
by

looking at Defendants’ profits, but by comparing what Cigna paid
with what it should have paid.8

Therefore, Cigna’s motion will

be denied with regard to these requests.
IV.

Conclusion
For the foregoing reasons, the motions will be granted in

part and denied in part.

A separate order will follow.

/s/
DEBORAH K. CHASANOW
United States District Judge

8

In its reply, Cigna adds the argument that the financial
relationship
between
the
ASCs
and
SurgCenter
would
be
demonstrative of SurgCenter’s motive to aid and abet the ASCs in
the fraudulent billing scheme. (ECF No. 138-4, at 8). To the
degree that motive could be used to show intent, Cigna’s failure
to argue this reason until its reply precludes consideration of
the argument here.
14