Simplifi Health Benefit Management, LLC v. Cayman Islands National Insurance Company

Filing 71

OPINION AND ORDER denying 44 Motion to Compel. Signed by Magistrate Judge Elizabeth Preston Deavers on 7/15/2015. (mas)

UNITED STATES DISTRTICT COURT
SOUTHER DISTRICT OF OHIO
EASTERN DIVISION
SIMPLIFI HEALTH BENEFIT
MANAGEMENT, LLC,
Plaintiff,
Civil Action 2:13-cv-714
Judge Michael H. Watson
Magistrate Judge Elizabeth P. Deavers

v.

CAYMAN ISLANDS NATIONAL
INSURANCE COMPANY,
Defendant.

OPINION AND ORDER
Plaintiff, Simplifi Health Benefit Management, LLC (“Simplifi”), brings this state-law
breach-of-contract action against Defendant, Cayman Islands National Insurance Company
(“CINICO”). Because Simplifi is a domestic plaintiff and CINICO is a foreign defendant, this
Court has jurisdiction over this action pursuant to 28 U.S.C. § 1330. This matter is before the
Court for consideration of Simplifi’s Motion to Compel Discovery (ECF No. 44), CINICO’s
Response in Opposition (ECF No. 46), and Simplifi’s Reply in Support (ECF No. 56). For the
following reasons, Simplifi’s Motion is DENIED.
I.
Plaintiff Simplifi is a third-party administrator (“TPA”) that provides claims
administration services to sponsors or administrators of self-insured employee health benefit
plans. Defendant CINICO is a government-owned insurance company that provides health
insurance coverage to residents of the Cayman Islands. This cause of action arises from the
alleged breach of an Administration Services Agreement (“ASA”) between the parties.

According to the Complaint, Simplifi and CINICO entered into an ASA effective July 1,
2011. The ASA established Simplifi as a TPA for CINICO. As a TPA, Simplifi handled the
processing, payment, and settlement of claims for healthcare services provided to CINICO’s
insureds. The initial term of the ASA began on July 1, 2011, and ran for a period of twenty-four
months. Thereafter, the ASA renewed for successive twelve-month periods absent termination
pursuant to Section 9 of the agreement. Section 9 provides that either party may terminate the
ASA “by giving written notice of intent to terminate to the other party at least [120] days prior to
the end of the Initial Term or any Renewal Term.” (ASA at § 9.2, ECF No. 2-1.) Section 10 of
the ASA required that any such notice “be (a) delivered in person, (b) mailed, by certified mail,
return receipt requested, postage prepaid, (c) delivered by a commercial overnight courier, or (d)
transmitted by facsimile.” (Id. at § 10.12.)
On February 6, 2013, Stoddard Lawrence, a member of Simplifi’s management, received
an email from Lonny Tibbetts, CINICO’s Chief Executive Officer. In this email, Tibbetts asked
Lawrence to “accept this e-mail as formal notice of termination of services on May 31, 2013.”
(Compl. ¶ 13, ECF No. 2.) Simplifi alleges that on February 7, 2013, Lawrence sent an email to
Tibbetts pointing out that the Initial Term of the ASA ran through June 30, 2013, not May 31,
2013. Lawrence also asked Tibbetts to send a formal written termination notice and requested to
speak with him regarding transition issues. Tibbetts did not respond this email. In March 2013,
Lawrence sent another email to Tibbetts seeking to schedule a time to discuss transition issues.
In April 2013, Tibbetts forwarded Lawrence’s February 7, 2013 email and asked if they could
talk now. In a subsequent phone conversation, Tibbetts informed Lawrence that CINICO had
not yet selected a new TPA, but that he would call Simplifi when the selection had been
finalized.

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On May 29, 2013, Tibbets emailed Lawrence and shared that CINICO was finalizing the
contract with the new TPA and would update Simplifi. Simplifi responded with an email telling
CINICO that the ASA had renewed automatically for another year because CINICO had failed to
provide written notice of the termination as required under the ASA.
On June 13, 2013, Simplifi invoiced CINICO for the month of July and continued to
provide services to CINICO through July 11, 2013. CINICO refused to pay the June 2013
invoice. Simplifi consequently suspended services. On July 19, 2013, Simplifi brought the
instant breach-of-contract action against CINICO. Plaintiff asserts that CINICO “materially
breached the [ASA] by failing to pay [the June 2013] invoice and by failing to provide Simplifi
with proper notice of [CINICO’s] intent to terminate the [ASA].” (Id. at ¶ 27.) In regards to the
propriety of the termination notice, Simplifi points to the ASA’s provisions relating to the proper
delivery method of such a notice and contends that CINICO failed to comply with any of them.
In the subject Motion to Compel, Simplifi asks the Court to compel production of a copy
of any agreement or contract with the replacement TPA all communications between CINCICO
and the replacement TPA between January 1, 2012, and December 31, 2013, as requested in two
of its requests for production of documents. Simplifi asserts that given that CINICO’s purported
termination notice and follow-up communications were ambiguous, the requested documents are
relevant because it “needs to investigate CINICO’s contention that it was prepared to terminate
the relationship with Simplifi.” (Pl.’s Mot. to Compel 4, ECF No. 44.) Simplifi adds that the
documents are “necessary to verify the accuracy of [Tibbetts’ deposition testimony] concerning
the timing of Simplifi’s replacement.” Simplifi submits that the documents at issue are also
relevant to confirm the accuracy of CINICO’s statement that Simplifi should have been on notice

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earlier that the ASA would not be renewed based upon the fact that it had lost an earlier Request
for Proposal (“RFP”) covering the same services that it had been supplying. (Id.)
CINICO opposes Simplifi’s Motion, asserting that “[g]iven the nature of Simplifi’s
claims, [its] contract with its replacement TPA and its communications with it have absolutely
no relevance to any claim or defense asserted in this action.” (Def.’s Mem. in Opp. 2, ECF No.
46.) CINICO adds that Simplifi’s assertion that the termination notice is ambiguous constitutes a
new theory that if failed to include in its Complaint and maintains that raising a new theory at
this late stage of the litigation demonstrates bad faith.
In its Reply, Simplifi attempts to demonstrate the validity of its contention that the
termination email and the parties’ subsequent communications were ambiguous. Proceeding
from the premise of this purported ambiguity, Simplifi asserts that the discovery it seeks to
compel could reveal that CINICO did not have a replacement TPA lined up when it sent the
termination email. Simplifi contends that such a discovery “belies [Tibbetts’] stated intention to
terminate the [ASA] with the [February 6, 2013] e-mail.” (Pl.’s Reply 7, ECF No. 56.) Simplifi
therefore concludes that the documents it seeks to compel are relevant.
II.
Federal Rule of Civil Procedure 37 permits a party to file a motion for an order
compelling discovery if another party fails to respond to discovery requests, provided that the
motion to compel includes a certification that the movant has, in good faith, conferred or
attempted to confer with the party failing to respond to the requests. Fed. R. Civ. P. 37(a)(1).
The Court is satisfied that this prerequisite to a motion to compel has been met in this case.
Determining the scope of discovery is within the Court’s discretion. Bush v. Dictaphone
Corp., 161 F.3d 363, 367 (6th Cir. 1998). As the United States Court of Appeals for the Sixth

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Circuit has recognized, “[t]he scope of discovery under the Federal Rules of Civil Procedure is
traditionally quite broad.” Lewis v. ACB Bus. Serv., Inc., 135 F.3d 389, 402 (6th Cir. 1998). In
particular, discovery is more liberal than the trial setting, as Rule 26(b) allows any “line of
interrogation [that] is reasonably calculated to lead to the discovery of admissible
evidence.” Id. (quoting Mellon v. Cooper-Jarrett, Inc., 424 F.2d 499, 501 (6th Cir. 1970)). The
Court construes discovery under Rule 26 “broadly to encompass any matter that bears on, or that
reasonably could lead to other matter that could bear on, any issue that is or may be in the
case.” Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978). In considering the scope
of discovery, the Court should balance a party’s “right to discovery with the need to prevent
‘fishing expeditions.’” Conti v. Am. Axle and Mfg., Inc., 326 F. App’x 900, 907 (6th Cir. 2009)
(quoting Bush, 161 F.3d at 367).
III.
Simplifi’s assertion that the discovery it seeks to compel is relevant is unavailing. “[T]he
proponent of a motion to compel discovery bears the initial burden of proving that the
information sought is relevant.” Guinn v. Mount Carmel Health Systems, No. 2:09-cv-226, 2010
WL 2927254, at *5 (S.D. Ohio July 23, 2010) (Kemp, J.) (quoting Clumm v. Manes, No. 2:08–
cv–567 (S.D. Ohio May 27, 2010) (King, J.)); see also Berryman v. Supervalu Holdings, Inc.,
No. 3:05-cv-169, 2008 WL 4934007, at *9 (S.D. Ohio Nov. 18, 2008) (“At least when the
relevance of a discovery request has been challenged, the burden is on the requester to show the
relevance of the requested information.”) (internal citation omitted)).
Simplifi has failed to satisfy its burden to demonstrate relevancy with regards to the
documents it seeks to compel. As Simplifi highlights in its Complaint, at issue in this action is
whether the February 6, 2013 email operated to terminate the ASA given its deviations from the

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requirements set forth in Section 10 of the ASA. As the Court pointed out in its August 16, 2014
Amended Order, resolution of this issue could also necessitate an inquiry into whether Simplifi
received actual notice of termination. (ECF No. 28 at 3.) But the timing of when CINICO began
and/or finalized negotiations with the new TPA has no bearing on either of these issues,
regardless of whether the February 6, 2013 email is characterized as ambiguous. Similarly, the
Court cannot discern how the content of CINICO’s agreement with its replacement TPA—a
document Simplifi has never reviewed—could bear on whether Simplifi was on actual notice of
CINICO’s termination of the ASA. Finally, with regard to Simplifi’s request that CINICO
produce a year’s worth of its communications with the replacement TPA, the Court finds that
any marginal or tangential relevance is outweighed by the burdensome nature of requiring
CINICO to make such a production, especially given that Simplifi has already obtained
deposition testimony on this topic.
IV.
For the reasons set forth above, Plaintiff’s Motion to Compel Discovery is DENIED.
(ECF No. 44.)
IT IS SO ORDERED.

Date: July 15, 2015

/s/ Elizabeth A. Preston Deavers
ELIZABETH A. PRESTON DEAVERS
UNITED STATES MAGISTRATE JUDGE

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