LIPSKY et al v. CONNECTICUT GENERAL LIFE INSURANCE COMPANY et al
Filing
193
OPINION re 181 MOTION to Enforce Litigant's Rights filed by CONNECTICUT GENERAL LIFE INSURANCE COMPANY. Signed by Magistrate Judge Mark Falk on 4/3/18. (LM, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
____________________________________
|
CONNECTICUT GENERAL LIFE
|
INSURANCE CO.,
|
|
Plaintiff,
|
|
-vs|
|
ROSELAND AMBULATORY
|
SURGERY CENTER LLC,
|
|
Defendant.
|
____________________________________|
|
RICHARD LIPSKY, ROSELAND
|
AMBULATORY SURGERY
|
CENTER LLC, and MHA, LLC d/b/a
|
Meadowlands Hospital,
|
|
Plaintiffs,
|
|
-vs|
|
CONNECTICUT GENERAL LIFE
|
INSURANCE COMPANY,
|
PHIL MANN and JOHN DOES 1-100,
|
|
Defendants.
|
____________________________________|
Hon. John M. Vazquez, U.S.D.J.
Civil Action No. 12-5941 (JMV)
(CLOSED)
Hon. John M. Vazquez, U.S.D.J.
Civil Action No. 13-105 (JMV)
(CLOSED)
OPINION
FALK, U.S.M.J.
Before the Court are Plaintiffs’ motion for contempt and Defendants and
Counterclaimants’ cross-motion seeking fees, both relating to Orders entered in the closed
cases captioned above. These cases, which were often acrimonious, were settled and
have been closed for more than a year. The contempt issue relates to events occurring in
a state court lawsuit pending in the New Jersey Superior Court in Hudson County.
The Federal Cases
The first case, Connecticut General Life Ins. Co. (“CIGNA”) v. Roseland
Ambulatory Surgery Ctr., 12-5941, involved CIGNA’s allegation that Roseland engaged
in fraudulent and/or deceptive billing practices by submitting claims for payment while
failing to collect co-insurance from its patients in violation of the terms of the applicable
employee benefit plans (this case is referred to by the parties as “the Recoupment
Action”).
The second case, Lipsky, et al. v. CIGNA, 13-105, involved claims of defamation
and trade libel against CIGNA and its corporate spokesperson, Phil Mann, arising out of
statements made by Mr. Mann in response to inquiries from the press regarding the
Recoupment Action.
As the parties are aware, the cases were litigated for years, and the proceedings
were often sprawling and difficult. So much so that then Chief Judge Simandle wrote to
the parties, four years into the case, that “[m]y review of the docket sheet confirms that
2
there has been an air of contentiousness exhibited from time to time in these cases that no
longer has a place in federal litigation. If you want your disputes resolved as quickly and
fairly as possible, you are to take responsibility to get to the heart of the matter and seek
judicial intervention only where your good faith efforts to resolve your procedural and
discovery disputes have been exhausted.” [ECF No. 139.] Ultimately, following a
lengthy settlement conference in court (with Special Master Joseph P. LaSala, Esq. and
the Undersigned), the cases settled. A consent order of dismissal was filed on February 7,
2017.
On December 1, 2017, CIGNA filed the present motion seeking to enforce
litigants’ rights arising out of events occurring in state court. CIGNA requests an order:
(i) holding certain counsel1 in contempt for violation of prior Orders and their
representations regarding the treatment of confidential information; (ii) compelling
counsel to destroy all documents in their possession that copy, quote, paraphrase or
summarize such information; and (iii) awarding liquidated damages under the parties’
Settlement Agreement and attorney’s fees under 28 U.S.C. § 1927. [ECF No. 182.]
MHA LLC and Dr. Richard Lipsky (the “MHA parties”) oppose the motion and have
filed a cross-motion for (i) costs, expenses and attorney’s fees; and to (ii) vacate existing
discovery confidentiality orders. [ECF No. 183.] For the reasons set forth below,
CIGNA’s motion is DENIED. The MHA parties’ cross-motion is also DENIED.
Anthony K. Modafferi III, Esq.; Robert Agresta, Esq.; and Vito A. Gagliardi,
Esq. (the “Respondent Attorneys”).
1
3
BACKGROUND
The background of these cases spans years and is convoluted. This section is
limited to the information necessary to decide the pending motions.
These motions involve CIGNA’s claim that the MHA parties have violated three
Court Orders entered at various times in the proceedings.
First, on December 16, 2014, Amended Consent Discovery Confidentiality Orders
(“DCO”) were negotiated between the parties and entered by the Court. These Orders
governed the exchange of discovery in the cases; what use could be made of material
designated with any one of multiple levels of “confidentiality” protection; and what
should happen to “confidential” material at the conclusion of the cases. The DCOs state,
in part:
4.
All material designated [Confidential] shall be used by
the receiving party solely for purposes of the
prosecution or defense of this action, shall not be used
by the receiving party for any business, commercial,
competitive, personal or other purpose, and shall not be
disclosed by the receiving party to anyone other than
those individuals set forth in Paragraphs 5 and 6 unless
and until the restrictions are removed either by written
agreement of counsel for the parties or by order of the
Court.
...
21.
Upon final conclusion of this litigation, including any
appeals, each party or other individual subject to the
terms hereof shall be under an obligation to assemble
and return to the originating source all originals and
unmarked copies of documents and things containing
Confidential Health Information, Confidential, or
Attorneys’ Eyes Only information and to destroy,
4
should such source so request, all copies of such
materials that contain and/or constitute attorney work
product as well as excerpts, summaries and digests
revealing such Confidential Health Information.
Confidential, or Attorney’s Eyes Only material;
provided, however, that counsel may retain complete
copies of all transcripts and pleadings including any
exhibits attached thereto for archival purposes . . .
(DCO ¶¶ 4, 21; Civ. A. No. 12-5941, ECF No. 82; Civ. A. No. 13-105, ECF No. 68.)
Second, an Order was entered on June 14, 2016, relating to the use of confidential
information. For context, this Order was entered following four formal hearings (May 11,
May 20, May 25, and June 14, 2016) relating to a motion by the MHA’s parties (and
others) to file an amended complaint. Ultimately, the motion to amend was granted in
part and denied in part. The aspect of the motion to amend that was denied involved
bringing entirely new claims into a then-four year old case. The denial was without
prejudice to MHA filing a new case, with a new Complaint, in state or federal court.
Underlying the repetitive and often amorphous proceedings was CIGNA’s concern over
the MHA parties using confidential information from this case in preparation of a new
complaint, especially if it were to be filed in New Jersey state court. CIGNA claimed this
was an issue because, in connection with the motion to amend, the MHA parties had
submitted a proposed pleading that contained extensive and excessive quotation of, and
citation to, allegedly confidential documents produced in discovery.
Accordingly, on June 14, 2016, the Court addressed the use of confidential
information in the connection with the preparation of pleadings. Following a lengthy
formal hearing, the Court issued an admittedly complex Order that sought to balance the
5
fact that the proposed pleading submitted with the motion to amend was based on
information designated confidential and learned during the course of the proceedings,
with the unfairness that could result if the MHA parties were required to start a new case
without the information. This was difficult because, had the motion to amend been
granted, there would have been no restriction on using the discovery information
produced in the case to prepare the amended complaint. The Court’s Order stated, in part,
as follows:
1.
The Roseland parties are permitted to use and rely on
discovery from this case in the preparation of a new
complaint. ‘Use and rely on’ means that the Roseland
parties are not expected to scrub from their memories
information learned during the course of these cases,
and may draw on the materials produced and
knowledge learned during the pendency of these cases,
through discovery or otherwise, mentally or in writing,
in preparation of a new complaint. However, this
Order does not authorize or permit the Roseland parties
to specifically cite, quote, or paraphrase any material,
designated as confidential, that has been produced in
discovery in this case.
2.
If the Roseland parties intend to directly quote or cite
any CIGNA materials designated with any level of
confidentiality in their new complaint, as they did in
the proposed pleadings submitted in connection with
the motions to amend, this Order does not authorize it.
Instead, the Roseland Parties would need to seek relief
from the Court, in the form of a dispute under the
Discovery Confidentiality Order (“DCO”), and identify
the specific material intended to be cited or quoted and
how that material is not confidential and/or that the
public interest in such material outweighs
confidentiality. This would amount to a discovery
dispute that implicates the meet-and-confer obligations
contained in Local Civil Rule 37.1, including manner
6
of presentation to the Court. Such disputes will be
referred to the Special Master. (Nothing in the
description of this potential dispute/ application alters
the burdens the parties have relating to establishing
confidentiality of information under the DCO, Federal
and Local Rules, and applicable Third Circuit case
law.)
3.
Nothing in this Order—or the Court’s comments on the
record on this date—should be construed to suggest
that discovery in this case will be admissible in any
other case that may be filed. What discovery will be
permitted in any other case is left to whichever Judge
may be presiding over such a case. If the Roseland
parties intend to submit discovery served in this case as
an exhibit or as a portion of the record in any new case,
nothing in this Order authorizes it, and counsel should
proceed however they ordinarily would in such
circumstances—whether that be an application by the
Roseland Parties for a modification of the DCO similar
to that referenced in paragraph 2 above, or a motion by
CIGNA to enforce the DCO.
(June 14, 2016 Order ¶¶ 1-3; No. 13-105, ECF No. 162.)2
Third, the Consent Order of Dismissal filed on February 7, 2017, states in part:
3.
The parties, counsel for all parties, and each individual
subject to the obligations of the terms of the [DCO]
entered in this case . . . shall comply in all respects with
the terms of paragraph 21 of the DCO and destroy or
return the originals and all copies of documents
designated Confidential Health Information,
Confidential or Attorney’s Eyes Only under the terms of
the DCO within 14 days of the date of this Consent
Order.
After the motion to amend was denied, on September 16, 2016, the MHA parties
filed a separate state court action captioned Meadowlands Hospital v. The New Jersey
Association of Health Plans, Inc., et al., Docket No. HUD-L-3723-16 (N.J. Super.) The
parties refer to this case, which is still pending, as the “Hudson County Action”
2
7
(No. 12-5941, ECF No. 216; No. 13-105, ECF No. 174.)3
Current Motion
CIGNA claims the MHA parties and Respondent Counsel are “flagrantly
violating” the Orders above by using confidential discovery material from this case in the
Hudson County Action. It contends that the MHA parties and the Respondent Attorneys
have engaged in “two discrete acts of defiance” of the Orders quoted above. (Pl.’s Reply
Br. 1.) The first is the allegation that the MHA parties have used confidential information
in the preparation of the Hudson County complaint. The second is the claim that, in the
Hudson County Action, Mr. Gagliardi submitted a certification from Mr. Modafferi in
opposition to a motion to quash a subpoena, and that the certification contains “a table
that paraphrases and quotes extensively from material designated confidential in the
above-captioned cases.” Due to these alleged violations, CIGNA requests an Order
adjudging the Respondent Attorneys in contempt; seeks certifications from the
Respondent Attorneys that all confidential materials of any type have been destroyed;
seeks a certification that any work-product supporting Mr. Modafferi’s certification has
been destroyed; and requests fees and costs pursuant to the settlement agreement and 28
U.S.C. § 1927.
The MHA parties oppose the motion on a number of grounds. First, they contend
that the Court’s Order allowed them to “use and rely” on confidential information in
In addition, Paragraph 4 of the Consent Order of Dismissal provides that “the
Court will retain jurisdiction over any disputes arising out of the Settlement Agreement
or with respect to the enforcement of the Discovery Confidentiality Order.” (Id.)
3
8
preparing the Hudson County complaint; therefore, there is no basis for a finding of
contempt. In support of this position, the MHA parties refer to extensive colloquy from
the three hearings in May 2016, and the hearing on June 14, 2016. (See Defs.’ Br. 6-15.)
Second, the MHA parties contend that CIGNA knew about the confidential
material used in preparation of the Hudson County complaint since September 2016 when
it was filed, and did nothing about it for more than a year, thereby waiving any objection
to the use of confidential information.
Third, the MHA parties contend that Mr. Modafferi’s certification was based on
attorney-work product created during the pendency of the two federal cases. According
to the MHA parties, this work-product was not previously destroyed because Mr.
Modafferi was under no obligation to destroy such information absent an express request,
which they claim was never made.
Fourth, the MHA parties contend that a finding of contempt requires a “clear and
convincing” showing that an order has be violated, and that, if any violation occurred
here, it was not clear and convincing because the orders were ambiguous.
Finally, the MHA parties seek to dissolve the DCOs entered in these cases, arguing
that they are more likely to cause additional future problems, and that CIGNA’s own
counsel has stated that the two federal cases were a matter of public interest,4 and that
there should not be any confidentiality associated with these proceedings.
Defendants’ refer to statements in a letter Plaintiffs’ counsel wrote to Chief Judge
Simandle on February 26, 2016, that stated in part, “[t]hese cases involve issues of true
public interest – from our client’s perspective, the application of key and widely-employed
terms of health plans and the control of medical costs.” [ECF No. 137 at 2.]
4
9
LEGAL STANDARD
A motion in aid of litigants’ rights is a means to compel compliance with a judicial
order or to enforce the terms of a settlement agreement. See In re New Jersey State Board
of Dentistry, 84 N.J. 582, 586 n.1 (1980). To hold a party in civil contempt, the
proponent must show by “clear and convincing” evidence that: (1) a valid order of the
court existed; (2) the opposing party had knowledge of the order; and (3) the opposing
party disobeyed the order. See FTC v. Lane Labs-USA, Inc., 624 F.3d 575, 582 (3d Cir.
2010).
The burden in a civil contempt proceeding is on the petitioning party. See Lawn
Doctor v. Rizzo, 646 Fed. Appx. 195, 197 (3d Cir. 2016). “Clear and convincing
evidence” is a stringent standard that requires evidence “so clear, direct and weighty and
convincing as to enable the fact-finder to come to a clear conviction without hesitancy, of
the truth of the precise facts in issue.” N.J. Sports Prods. v. Don King Prods., 15 F. Supp.
2d 546, 551 (D.N.J. 1988); see also Quinter v. Volkswagen of Am., 676 F.2d 969, 974 (3d
Cir. 1982) (“The plaintiff has a heavy burden to show a defendant guilty of civil
contempt. It must be done by ‘clear and convincing evidence’ and where there is ground
to doubt the wrongfulness of the conduct of the defendant, he should not be adjudged in
contempt.”).
Good faith is not a sufficient defense to an allegation of civil contempt, as “an
alleged contemnor’s behavior does not have to be willful for a court to reach a finding of
civil contempt.” Robin Woods Inc. v. Woods, 28 F.3d 396, 399 (3d Cir. 1994). However,
10
“civil contempt is a severe remedy, and should not be resorted to where there is a fair
ground of doubt.” Nelson Tool & Machine Co., Inc. v. Wonderland Originals, Ltd., 491
F. Supp. 268, 269 (E.D. Pa. 1980). “[S]pecificity” in terms of the order is a “predicate to
a finding of contempt,” because “‘a person will not be held in contempt unless the order
has given him fair warning.’” Harris v. City of Phil., 47 F.3d 1342, 1349 (3d Cir. 1995)
(quoting United States v. Christie Indus., Inc., 465 F.2d 1002, 1006 (3d Cir. 1972)).
Therefore, contemnors “are sometimes excused when they violate vague court orders:
there is a long standing salutary rule in contempt cases that ambiguities and omissions in
orders redound to the benefit of the person charged with the contempt.” Robin Woods
Inc., 28 F.3d at 399 (citing Eavenson, Auchmuty & Greenwald v. Holtzman, 775 F.2d
535, 544 (3d Cir. 1985)). In sum, a “contempt citation should not be granted if there is
ground to doubt the wrongfulness of the defendant’s conduct.” Harris, 47 F.3d at 1349
(citations omitted).
DECISION
Movants’ request for a finding of contempt is denied because it has not met the
applicable, stringent, clear and convincing standard. This is largely because the relied
upon Orders were not entirely clear, and were in some instances somewhat ambiguous
and vague.5 Upon reflection, this is so because of the following reasons.
For example, the Court’s June 14, 2016 Order states, in part, that “[i]f the Roseland
parties intend to submit discovery served in this case as an exhibit or as a portion of the
record in any new case, nothing in this Order authorizes it.” (June 14, 2016 Order ¶ 3; No.
13-105, ECF No. 162.) However, that arguably conflicts with comments made on the record,
such as: “It was always my feeling and it is my feeling that if Roseland, Lipsky is asking for
permission to use discovery obtained in this case and these cases for purposes of preparing
5
11
First, the Court was dealing with the issue of confidentiality in litigation and public
access to the courts, which has long been recognized to be a complex and controversial
subject. See, e.g., Arthur R. Miller, Confidentiality & Protective Orders and Public
Access to the Courts, 105 Harv. L. Rev. 427 (1991). In hindsight, complete precision was
ideal, but not realistic based on the speculative arguments presented to the Court.
The Orders were entered in abnormally contentious old cases that were not moving
toward a decision on the merits despite substantial court involvement and the devotion of
significant Court resources -- ultimately requiring the appointment of an experienced and
superlative Special Master. The Court believed it important to focus on the merits rather
than being endlessly stuck on trying to achieve absolute precision regarding something
that might or might not occur in the future.
Second, the Court’s decision to deny amendment in the four-year-old case was
partly a case management decision made to further the interests of justice; to try to adhere
to the goal of providing the prompt and efficient dispensation of justice to the litigants.
the pleadings requested to be brought in this case, which I denied, . . . I think that would be
perfectly appropriate . . . .” (Transcript of Hearing, dated May 20, 2016, at 5:20-6:13); see
also Transcript of Hearing, dated June 14, 2016, at 9:10-16 (“I was preserving the right to
file a new case. But if Roseland was not allowed to use the discovery in this case for
purposes of preparing pleadings in the new case it would have been in a worse spot pleading
wise and it would have had – had the amendment been allowed, and that certainly was never
my intention.”).
Although it apparently did not work, the idea was to try and balance the relevant
interests and allow the Roseland and MHA parties to use discovery in this case in the sense
that they could mentally draw on the material to prepare their pleadings, but not submit, cite,
quote, and affirmatively put such information before another court in connection with another
pleading.
12
However, doing so required the Court to protect the rights of the MHA parties to bring
their claims in a separate case without being restricted by the entire controversy doctrine
or by an overly restrictive protective order. Once again, had the amendment been
permitted, the protective order relied upon now would not restrict the pleading in this case
in the same way. (That is not to say the MHA parties’ proposed, detail-heavy pleading
would have been found to be entirely appropriate or not be partially stricken.) Thus, the
Court attempted to “thread the needle” between the Movants’ rights to confidentiality and
the MHA parties’ rights to plead their case. This made the Court’s Orders necessarily
subject to interpretation. This is especially so in light of Movants’ request for strict
confidentiality and its adversary’s penchant for what may be described as extremely
factual pleading. The idea was to allow MHA the basic use of (but not specific reference
to) confidential discovery as a means to plead its case. If a new case was brought, the
Judge presiding over any new case would then make the specific decisions as to what is
discoverable, what belongs in a particular pleading, etc.
Under these circumstances and after revisiting the language of the relevant Orders,
the Court cannot find the MHA parties in contempt, especially since Movant must meet a
universally agreed upon, stringent, clear and convincing standard. The denial of a
contempt finding is no endorsement of MHA’s counsel’s conduct. Indeed, delving into
the specifics, the Court suspects there were violations of at least the spirit (and in perhaps
some cases the letter) of the protective orders. However, justice demands that this issue
be put to rest at the moment, with the future guided by the following:
13
1.
All requests to hold counsel in contempt are DENIED, for the reasons set
forth above;
2.
Any remaining “work product” subject to the Order should be immediately
destroyed in light of the now express request by Movants;
3.
MHA’s request to dissolve the protective order is DENIED. Much time
was spent on the issue and the parties relied on same. Although, this could
lead to some further confusion, that is not a basis to dissolve the Orders. In
the future, the parties should bring flagrant violations of the Orders to this
Court – only after meeting-and-conferring and attempting to resolve any
confidentiality dispute with the Judge in charge of the case where the
dispute arises (if it arises in a case). And as stated, whether something is
discoverable in any other case – regardless of whether it is or is not
confidential – is an issue for the Judge handing such a case. Although the
Federal Courts retention of jurisdiction to enforce the Orders remains
extant, it will only be exercised as a last resort in the face of an
unambiguous violation.
SO ORDERED.
s/Mark Falk
MARK FALK
United States Magistrate Judge
DATED: April 3, 2018
14
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?