A.F. et al v. Providence Health Plan

Filing 147

Opinion and Order - Plaintiffs' Motion to Compel (Dkt. 134 ) is GRANTED IN PART, as described on pages 26-30 of this Opinion and Order. Signed on 3/24/2016 by Judge Michael H. Simon. (mja)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON

A.F., by and through his parents and
guardians, Brenna Legaard and Scott
Fournier; A.P., by and through his parents
and guardians, Lucia Alonso and Luis
Partida; S.W., by and through his parents
and guardians, Kody Whipple and Jamie
Whipple; S.S., by and through his parents
and guardians, David Smith and Brooke
Kennelley; I.F., by and through his parents
and guardians, Bryan Fowler and Susan
Rogers Fowler; and on behalf of similarly
situated individuals,

Case No. 3:13-cv-00776-SI
OPINION AND ORDER

Plaintiffs,
v.
Providence Health Plan,
Defendant.
Keith S. Dubanevich, Joshua L. Ross, and Nadine A. Gartner, STOLL STOLL BERNE LOKTING &
SCHLACHTER P.C., 209 S.W. Oak Street, Fifth Floor, Portland, OR 97204; Megan E. Glor,
MEGAN E. GLOR ATTORNEYS AT LAW, 621 S.W. Morrison Street, Suite 900, Portland, OR 97205.
Of Attorneys for Plaintiffs.
William F. Gary, Arden J. Olson, J. Aaron Landau, and Jens Schmidt, HARRANG LONG GARY
RUDNICK P.C., 360 E. Tenth Avenue, Suite 300, Eugene, OR 97401. Of Attorneys for Defendant.

PAGE 1 – OPINION AND ORDER

Michael H. Simon, District Judge.
Plaintiffs A.F., A.P., S.W., S.S., and I.F. (collectively, “Plaintiffs”) bring this action
against Defendant Providence Health Plan (“Providence”) alleging claims under the Employee
Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001, et seq. Before the Court is
Plaintiffs’ Motion to Compel pursuant to Federal Rule of Civil Procedure 37(a). For the reasons
stated below, Plaintiffs’ motion is granted in part.
STANDARDS
Federal Rule of Civil Procedure 26(b)(1) provides in relevant part as follows:
Parties may obtain discovery regarding any nonprivileged matter
that is relevant to any party’s claim or defense and proportional to
the needs of the case, considering the importance of the issues at
stake in the action, the amount in controversy, the parties’ relative
access to relevant information, the parties’ resources, the
importance of the discovery in resolving the issues, and whether
the burden or expense of the proposed discovery outweighs its
likely benefit. Information within this scope of discovery need not
be admissible in evidence to be discoverable.
Federal Rule of Civil Procedure 37(a) provides that a party may move for an order compelling
discovery if the movant, in good faith, has “conferred or attempted to confer with the person or
party failing to make disclosure or discovery in an effort to obtain it without court action.”
BACKGROUND
A. The Parties
Plaintiffs are insured as dependent-beneficiaries under group health plans in Oregon
issued by Providence. Plaintiffs have been diagnosed with Autism Spectrum Disorder and
prescribed Applied Behavioral Analysis (“ABA therapy”) by their treating physicians. Autism
Spectrum Disorder is a pervasive developmental disorder that begins to appear during early
childhood and is characterized by impairments in communication and social skills, severely
restricted interests, and repetitive behavior. ABA therapy is an intensive behavior therapy that,
PAGE 2 – OPINION AND ORDER

among other things, measures and evaluates observable behaviors. Evidence shows that ABA
therapy may help autistic children with cognitive function, language skills, and adaptive
behavior. Evidence also suggests that the benefits of ABA are significantly greater with early
intervention for young autistic children.
Between January 2007 and January 2014, Providence denied requests for coverage for
ABA therapy on the basis that its Plans exclude mental health services “related to developmental
disabilities, developmental delays, or learning disabilities” from coverage (the “Developmental
Disability Exclusion”). Providence did so regardless of whether the member sought
reimbursement for payments for ABA therapy or pre-authorization of coverage. Until 2014,
Providence also denied Plan beneficiaries ABA therapy coverage on the basis that it was
experimental and investigational (the “Experimental Exclusion”). These Exclusions are listed in
the member handbook given to all members that describe the governing terms of their Plans.
B. Procedural History
On May 8, 2013, A.F. and A.P. filed this class action lawsuit alleging that Providence’s
denial of ABA therapy coverage violated federal and state law. A.F. and A.P. moved to certify
an injunctive class, which the Court granted. On August 8, 2014, the Court held that
Providence’s use of the Developmental Disability Exclusion violated the Paul Wellstone and
Pete Domenici Mental Health Parity and Addiction Equity Act (the “Federal Parity Act”),
29 U.S.C. § 1185a; the Oregon Mental Health Parity Act, Or. Rev. Stat. (“ORS”) § 743A.168;
and the Oregon Mandatory Coverage for Minors with Pervasive Developmental Disorders Act,
ORS § 743A.190; and was therefore prohibited under 29 U.S.C. § 1132(a)(3)
(“Section 1132(a)(3)”) of ERISA.1
1

The Federal Parity Act requires that for group health plans, financial requirements and
treatment limitations to mental health benefits must be “no more restrictive” than the
PAGE 3 – OPINION AND ORDER

On June 29, 2015, A.F. and A.P. filed a second amended class action complaint, naming
S.W., S.S., and I.F. as additional plaintiffs. Plaintiffs’ second amended class action complaint
alleges three claims under ERISA: (1) injunctive relief under Section 1132(a)(3), prohibiting
Providence from continuing to process and pay claims under its insured Plans in a manner that is
inconsistent with the Federal Parity Act and Oregon law and requiring Providence to provide the
class with corrective notice and information, on behalf of all named Plaintiffs and all members of
the class (“First Claim”); (2) equitable relief under Section 1132(a)(3) sufficient to redress
Providence’s violations of its fiduciary duties, on behalf of all named Plaintiffs (“Second
Claim”); and (3) recovery of benefits due and declaration of future benefits under 29 U.S.C.
§ 1132(a)(1)(B) (“Section 1132(a)(1)(B)”) on behalf of named Plaintiffs A.F., A.P., S.W.,
and I.F. (“Third Claim”).2
In the second amended class action complaint, Plaintiffs allege that Providence
established and carried out a deliberate company-wide policy to deny all claims for ABA
treatment in violation of federal and state law, thus dissuading parents from seeking treatment for
their children. Dkt. 102 ¶¶ 8-9. Plaintiffs assert that Providence has advertised and represented
that its health Plans include coverage for mental health services and that autism is a covered
mental health diagnosis under the Plans. Id. ¶¶ 58-63. Additionally, Providence represented that
its Plans “will cover medical services necessitated by autism.” Id. ¶ 61 (quotation marks
predominant requirements or limitations applied to substantially all medical and surgical
benefits. 29 U.S.C. § 1185a(a)(3)(A)(ii). The Oregon Mental Health Parity Act requires parity
among the services and treatment covered for medical conditions and the services and treatment
covered for mental health and chemical dependency related conditions. ORS § 743A.168. The
Oregon Mandatory Coverage for Minors with Pervasive Developmental Disorders Act requires
health benefit plans to cover treatment of pervasive developmental disorders for children. ORS
§ 743A.190.
2

Named Plaintiff S.S. does not join in Plaintiffs’ Third Claim because S.S. did not incur
any out-of-pocket expenses for ABA therapy.
PAGE 4 – OPINION AND ORDER

omitted). Plaintiffs assert that by denying coverage for ABA therapy, “Providence systemically
and uniformly failed properly to process claims and administer the Plans it insured and
administered.” Id. ¶ 7. Thus, Plaintiffs allege that the Plans “fail[ed] to receive all of the benefits
of the coverage which has been purchased from Providence for the purpose of providing benefits
to the beneficiaries, and the beneficiaries [did] not receive the benefits they [were] entitled to
under the Plans.” Id.
Plaintiffs allege that Providence initially denied claims for ABA therapy in bad faith on
the basis that ABA is experimental or investigative “despite a multitude of studies showing the
efficacy of ABA treatment, [and] despite repeated rulings by State Insurance Commissioners that
ABA is a reasonable, safe, necessary, and mainstream treatment for children with autism. . . .”
Id. ¶ 130. Additionally, Providence continued to deny ABA therapy coverage under the
Experimental Exclusion even after a January 5, 2010 decision by a court in this District that held
“‘that the weight of the evidence demonstrates that ABA therapy is firmly supported by decades
of research and application and is a well-established treatment modality of autism . . . . It is not
an experimental or investigational procedure.’” Id. ¶ 39 (quoting McHenry v. PacificSource
Health Plans, 679 F. Supp. 2d 1226, 1237 (D. Or. 2010)).
Plaintiffs allege that Providence “failed to provide any unbiased explanation or evidence
in support of its claim that ABA treatment is experimental or investigative.” Id. ¶ 131. Instead, in
finding that ABA therapy is experimental or investigational, Plaintiffs assert, Providence
wrongfully relied upon a 2010 report from an independent organization called Hayes, even
though the report contains a disclaimer stating that it “is intended to provide research assistance
and general information only. It is not intended to be used as the sole basis for determining
coverage policy.” Id. (quotation marks omitted).

PAGE 5 – OPINION AND ORDER

After medical doctors conducting Internal Review Organization (“IRO”) reviews ruled
that ABA therapy was not experimental or investigative, Providence began to deny claims based
upon the Developmental Disability Exclusion. Id. ¶¶ 132, 154. Plaintiffs assert that Providence
knew that autistic children’s parents would no longer be entitled to IRO review and would
instead have to hire an attorney to litigate the Developmental Disability Exclusion. Id. ¶ 132.
Plaintiffs allege that Providence followed this course of conduct in order to discourage parents
from pursuing their claims. Id. Plaintiffs assert that Providence additionally knew that litigating
the Developmental Disability Exclusion would be a slow process and that any judicial order
would come long after an IRO would have issued a decision, thereby shortening the time period
for which Providence would have to provide coverage for the treatment. Id.
Plaintiffs also allege that in October 2013, Providence decided that because A.F. and
A.P.’s parents had initiated litigation, Providence would resort to using the Experimental
Exclusion in conjunction with the Developmental Disability Exclusion in a deliberate move to
again trigger IRO review. Id. ¶ 137. At about this same time, Providence’s medical staff
evaluated the literature regarding the efficacy of ABA therapy and concluded that ABA was not
experimental or investigational. Id. ¶ 138. Plaintiffs allege that despite coming to this conclusion
in fall 2013, Providence continued to deny ABA therapy coverage on the basis that it was
experimental and investigational until January 2014. Providence did not notify Plaintiffs that it
would approve coverage for ABA therapy until February 2014.
Plaintiffs assert that they have been forced to pay out-of-pocket for treatment and forego
necessary care because they and their Plans have not received all of the benefits owed to them by
Providence. Id. ¶ 122. Plaintiffs state that because ABA therapy is especially helpful for children
who receive early intervention and the positive benefits of ABA therapy are less likely to occur if

PAGE 6 – OPINION AND ORDER

a child does not receive early intervention, they have suffered permanent and irreparable harm by
not receiving ABA therapy at a time when it would have been most beneficial to them. Id.
¶¶ 30-32. Plaintiffs additionally allege that Providence wrongfully and inequitably retained and
reinvested funds that it should have paid for ABA therapy coverage and thus profited by denying
Plaintiffs the care they needed and were lawfully entitled to under their Plans. Id. ¶ 156.
On January 7, 2016, the Court granted in part and denied in part Plaintiffs’ motion for
summary judgment on their Third Claim under Section 1132(a)(1)(B). Section 1132(a)(1)(B)
provides that a participant or beneficiary may bring a civil action “to recover benefits due to him
under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his
rights to future benefits under the terms of the plan.” Under Section 1132(a)(1)(B), a beneficiary
may seek reimbursement for out-of-pocket expenses for medical treatment following a wrongful
claim denial. See Aetna Health, Inc. v. Davila, 542 U.S. 200, 211-12 (2004). Plaintiffs argued
that they are entitled to reimbursement for out-of-pocket expenses for ABA therapy because of
this Court’s prior ruling that Providence’s Developmental Disability Exclusion violated the
Federal Parity Act, Oregon law, and ERISA. S.W. and I.F. additionally argued that they are
entitled to reimbursement for out-of-pocket expenses because Providence reversed its denial of
ABA therapy coverage on the basis of the Experimental Exclusion in their cases. The Court held
that Plaintiffs are entitled to reimbursement to the extent that Plaintiffs provided evidence that
Providence timely received their claims for ABA therapy.
Also on January 7, 2016, the Court denied Providence’s motion to dismiss Plaintiffs’
Second Claim under Section 1132(a)(3). Section 1132(a)(3) provides that a participant or
beneficiary may “enjoin any act or practice which violates any provision of this subchapter or the
terms of the plan, or . . . to obtain other appropriate equitable relief . . . to redress such violations

PAGE 7 – OPINION AND ORDER

or . . . to enforce any provisions of this subchapter or the terms of the plan[.]” Plaintiffs’ Second
Claim seeks “appropriate equitable relief” under Section 1132(a)(3) including, but not limited to,
restoration of funds allegedly improperly in Providence’s possession as a result of Providence’s
wrongful denial of ABA therapy coverage, unjust enrichment, disgorgement, restitution,
reparation, surcharge, and estoppel. In the alternative, Plaintiffs seek an amount equal to the
amount that Providence should have paid for ABA therapy. Plaintiffs allege that they have
suffered permanent harm because of Providence’s unlawful application of the Developmental
Disability Exclusion and arbitrary and bad faith use of the Experimental Exclusion that is not
remediable solely through their Third Claim for reimbursement for out-of-pocket expenses.
Plaintiffs assert that they received only a fraction of the treatment that they needed—and S.S. did
not receive any treatment at all—because of Providence’s unlawful and bad faith denial of ABA
therapy coverage, which resulted in Providence’s unjust enrichment.
Section 1132(a)(3) is “a ‘catchall’ or ‘safety net’ designed to ‘offer[] appropriate
equitable relief for injuries caused by violations that [Section 1132] does not elsewhere
adequately remedy.’” Wise v. Verizon Commc’n Inc., 600 F.3d 1180, 1190 (9th Cir. 2010)
(quoting Varity Corp. v. Howe, 516 U.S. 489, 512 (1996)). The Court denied Providence’s
motion to dismiss Plaintiffs’ Second Claim, holding that Plaintiffs sufficiently pled that
reimbursement under Section 1132(a)(1)(B) does not provide them with “adequate relief” to
remedy Providence’s unlawful use of the Developmental Disability Exclusion and alleged breach
of its fiduciary duties. See Varity, 516 U.S. at 515.

PAGE 8 – OPINION AND ORDER

C. Discovery
Plaintiffs’ counsel deposed Providence’s Senior Director of Service Operations, Mark
Jensen (“Jensen”), on August 29, 2013.3 Dkt. 135-2 at 1-10. Jensen refused to answer questions
regarding Providence’s use of the Developmental Disability Exclusion during the deposition.
Dkt. 135-2 at 4-5. Although he referenced conversations with counsel about the Developmental
Disability Exclusion, he did not reveal the substance of those conversations. Id.
On September 18, 2014, Plaintiffs served Providence with their Third Request for
Production of Documents for Electronically Stored Information. Dkt. 135 ¶ 10. Plaintiffs
requested, among other information, documents relating to Providence’s decision to draft,
implement, and apply the Developmental Disability Exclusion and Providence’s decision to
cease denying coverage for ABA therapy on the basis of the Experimental Exclusion. Dkt. 1354. In Providence’s January 19, 2015 response to these requests, Providence stated: “There are
certain minutes of meetings between Providence executives and their legal counsel in which . . .
[those subjects were] discussed; a privilege log of those documents is being prepared.” Id.
On January 22, 2015, Providence submitted a privilege log to Plaintiffs that claimed the
attorney-client privilege for meeting minutes of Providence’s Ethics & Risk Management
Committee (“ERMC”). Dkt. 135-5. The log also claimed lack of relevance as a reason for
refusing to produce the documents. On April 23, 2015, Providence submitted an amended
privilege log which provided more detail about the contents of the documents. Dkt. 135-1 at 1-5.
On June 2, 2015, Plaintiffs’ counsel again deposed Jensen. Dkt. 135-2 at 11-20. During
the second deposition, Jensen mentioned several discussions that he and other Providence

3

Jensen testified under Federal Rule of Civil Procedure 30(b)(6) on behalf of Providence
in this action, and his testimony is that of Providence’s. See Dkt. 135-2 at 1, 2 (August 29, 2013
Jensen Deposition); id. at 11-12 (June 2, 2015 Jensen Deposition).
PAGE 9 – OPINION AND ORDER

employees had with Providence’s counsel regarding Providence’s use of the Developmental
Disability Exclusion. Id. at 13-15, 18-20. According to Plaintiffs, Plaintiffs’ counsel did not ask
for details about these discussions because prior to the June 2, 2015 deposition, Providence’s
counsel stated that it considered the discussions to be protected by the attorney-client privilege.
Dkt. 135 ¶ 11.
In July and August 2015, Providence produced additional documents to Plaintiffs in
response to Plaintiffs’ requests for production. Id. ¶ 6. Many of these documents were email
strings among Providence, its counsel, and Optum. Dkt. 135-3. Providence outsources behavioral
health and mental health services to Optum, and Optum processes behavioral and mental health
claims on behalf of Providence. Dkt. 135-2 at 17 (June 2, 2015 Jensen Deposition). Providence
redacted portions of the email strings, citing attorney-client privilege. Dkt. 135-3. On August 13,
2015, Providence produced a privilege log of only emails, again citing attorney-client privilege
as the reason for not disclosing the documents. Dkt. 135-1 at 6-29.
DISCUSSION
Plaintiffs move the Court pursuant to Federal Rule of Civil Procedure 37(a) for an Order
compelling Providence to produce the following:
Request Number One: Documents listed in Providence’s April 23,
2015 Amended Privilege Log, and documents listed in Providence’s
August 13, 2015 Emails Privilege Log, with exceptions for documents
described as “AF Lawsuit Discussion” and “Lawsuit RFPs;”4
Request Number Two: Documents and communications of any type
relating to Providence’s conversations with counsel about
Providence’s use of the Developmental Disability Exclusion not
4

In Providence’s response to Plaintiffs’ motion to compel, Providence states that its
assertion of the attorney-client privilege as to the following documents was in error:
PHP007513-26, PHP007531-38, PHP007541-47, PHP007554-55, PHP007559-61, and
PHP007566-71. Dkt. 139 at 17 n.4. Provides states that it has provided these documents to
Plaintiffs. Id.
PAGE 10 – OPINION AND ORDER

related to litigation, as referred to in the August 29, 2013, and June 2,
2015, Jensen depositions;
Request Number Three: Testimony from deponents, including
Jensen and witnesses whom Plaintiffs plan to depose after the Court
rules on this Motion, relating to Providence’s conversations with
counsel about Providence’s use of the Developmental Disability
Exclusion not related to litigation; and
Request Number Four: Redacted portions of email strings previously
produced by Providence and Bates labeled PHP005857, PHP005859,
PHP005861, PHP005862, PHP006316, PHP006342-44, PHP006374,
PHP006378, PHP006387, PHP006896-8, PHP006906, PHP006919,
PHP006923, PHP006927, PHP006929, PHP007725, PHP007799-800,
PHP7806-09, PHP007814-15, PHP007820-23, PHP007828,
PHP007834-36, PHP007846-49, PHP007859-62, PHP007867,
PHP007871-73, PHP007878-80, PHP007884-85, PHP007889,
PHP007893-94, PHP007899-901, PHP007906-08, PHP007919-20,
and PHP007924.
Providence refuses to produce the requested documents and testimony. Providence asserts that
the documents and testimony are not discoverable for two alternative and independent reasons:
(1) they are not relevant to any claim nor calculated to lead to the discovery of relevant evidence;
and (2) they are protected under the attorney-client privilege.
Plaintiffs argue that the documents and testimony are relevant to the resolution of their
Second Claim, and that documents and testimony are discoverable because they fall within the
fiduciary exception to attorney-client privilege. Under the fiduciary exception, one “acting in the
capacity of ERISA fiduciary is disabled from asserting the attorney-client privilege against plan
beneficiaries on matters of plan administration.” United States v. Mett, 178 F.3d 1058, 1063
(9th Cir. 1999). Plaintiffs assert that the requested documents and testimony relate to plan
administration because they concern Providence’s consideration and use of the Developmental
Disability Exclusion and the Experimental Exclusion to deny coverage for ABA therapy.
Plaintiffs alternatively argue that Providence has waived the attorney-client privilege with
respect to the requested documents and testimony because Providence shared its written
PAGE 11 – OPINION AND ORDER

communications with counsel regarding the Developmental Disability Exclusion and the
Experimental Exclusion with Optum, a third party. See Weil v. Inv./Indicators, Research &
Mgmt., Inc., 647 F.2d 18, 24 (9th Cir. 1981) (stating that “it has been widely held that voluntary
disclosure of the content of a privileged attorney communication constitutes waiver of the
privilege as to all other such communications on the same subject.”).
First, the Court considers whether the documents and testimony Plaintiffs seek are
relevant to their Second Claim. Second, the Court considers whether the fiduciary exception to
attorney-client privilege applies to the requested documents and testimony. Third, the Court
considers whether Providence waived the attorney-client privilege with respect to the requested
documents and testimony.
A. Whether the Requested Documents and Testimony Are Relevant
1. The Parties’ Arguments
Plaintiffs argue that the requested discovery is relevant to determining the following
issues central to resolution of their Second Claim:
1. Did Providence breach its fiduciary duty to Plaintiffs?
2. Are Plaintiffs entitled to “other appropriate equitable relief” under
Section 1132(a)(3)?
3. If Plaintiffs are entitled to “other appropriate equitable relief”
under Section 1132(a)(3), which specific remedies are they entitled
to and what are the possible monetary values of those remedies?
Plaintiffs argue that in determining what, if any, “other appropriate equitable relief” should be
awarded, the Court will have to examine the actions and decisions made by Providence relating
to its consideration and use of the Developmental Disability and Experimental Exclusions.
Providence argues that to the extent that any questions of fact still remain at issue on
Plaintiffs’ Second Claim for relief, the discovery Plaintiffs request is neither relevant to those

PAGE 12 – OPINION AND ORDER

questions nor calculated to lead to the discovery of relevant evidence. Providence asserts that the
documents and testimony Plaintiffs seek bear on Providence’s motive, which is irrelevant in an
ERISA claim for breach of fiduciary duty because the duties that ERISA imposes on plan
administrators are judged under an objective standard. In support of this assertion, Providence
cites Washington v. Bert Bell/Pete Rozelle NFL Retirement Plan, 504 F.3d 818 (9th Cir. 2007),
in which the Ninth Circuit discussed the duty of loyalty as “one of the common law trust
principles that apply to ERISA fiduciaries . . . [and that] encompasses a duty to disclose.” Id.
at 823 (citation omitted). Under the duty of disclosure, “[t]rustees must ‘deal fairly’ and
‘communicate to the beneficiary all material facts the trustee knows or should know in
connection with the transaction.” Id. (quoting Peralta v. Hispanic Bus., Inc., 419 F.3d 1064,
1070 n.7 (9th Cir. 2005)). The Ninth Circuit described the test of whether a fiduciary violates the
duty of loyalty as “objective.” Id. at 824. Thus, Providence argues, the duties imposed upon
fiduciaries under ERISA concern plan administrators’ objective conduct and not their subject
motives.
2. Analysis
Plaintiffs’ Second Claim seeks “appropriate equitable relief” under Section 1132(a)(3)
including, but not limited to, restoration of funds allegedly improperly in Providence’s
possession as a result of Providence’s improper denial of claims for ABA therapy, unjust
enrichment, disgorgement, restitution, reparation, surcharge, and estoppel. Under
Section 1132(a)(3), a plaintiff must prove “both: (1) that there is a remediable wrong, i.e., that
the plaintiff seeks relief to redress a violation of ERISA or the terms of a plan;” and “(2) that the
relief sought is ‘appropriate equitable relief.’” Gabriel v. Ala. Pension Fund, 773 F.3d 945, 954
(9th Cir. 2014) (citing Mertens v. Hewitt Assocs., 508 U.S. 248, 254 (1993), and quoting
29 U.S.C. § 1132(a)(3)(B)).
PAGE 13 – OPINION AND ORDER

The Court has already held, on cross-motions for summary judgment on Plaintiff’s First
Claim, that Providence’s use of the Developmental Disability Exclusion violated the Federal
Parity Act and Oregon law and is thus prohibited under Section 1132(a)(3). The Court has not
yet ruled, however, on what, if any, remediable wrong Plaintiffs have established under their
Second Claim. Although this wrong may include Providence’s unlawful application of the
Developmental Disability Exclusion, Plaintiffs allege additional violations of Providence’s
fiduciary duties relating to Providence’s consideration and use of the Developmental Disability
and Experimental Exclusions in their second amended class action complaint, such as
Providence’s use of the Experimental Exclusion after it knew or should have known that ABA
therapy is not an experimental or investigative treatment.
ERISA describes the duties of a fiduciary as follows:
(a) Prudent man standard of care
(1) Subject to [other sections of ERISA], a fiduciary shall
discharge his duties with respect to a plan solely in the
interests of the participants and beneficiaries and—
(A) for the exclusive purpose of:
(i) providing benefits to participants and
their beneficiaries; and
(ii) defraying reasonable expenses of
administering the plan;
(B) with the care, skill, prudence, and diligence
under the circumstances then prevailing that a
prudent man acting in a like capacity and familiar
with such matters would use in the conduct of an
enterprise of a like character and with like aims[.]
29 U.S.C. § 1104 (“Section 1104”). Section 1104(a)(1)(A), or the “Exclusive Benefit Rule,” is
based on the trust law duty of loyalty. Peter J. Wiedenbeck, ERISA in the Courts 155 (Federal
Judicial Center 2008). As Providence points out, the trust law duty of loyalty is governed by an
PAGE 14 – OPINION AND ORDER

objective test. See Washington, 504 F.3d at 824. Unlike the trust duty of loyalty, however, the
Exclusive Benefit Rule looks to the fiduciary’s subjective motivation in determining whether the
fiduciary is in compliance with the rule. Wiedenbeck, at 156; see also id. at 165 (“In making the
fiduciary’s ‘exclusive purpose’ the touchstone, ERISA demands assessment of a conflicted
decisionmaker’s state of mind. Subjective purpose, of course, is necessarily inferred from
objective facts.”).5 Thus, following Wiedenbeck, Providence’s motivation regarding its
consideration and use of the Developmental Disability Exclusion and the Experimental
Exclusion is relevant to a determination of whether it breached its fiduciary duties under the
Exclusive Benefit Rule.
The extent to which Providence may have breached its fiduciary duties or otherwise
violated ERISA, however, is only the first prong of Plaintiff’s Second Claim. Plaintiffs must also
establish that they are entitled to “appropriate equitable relief.” The Supreme Court interprets
“appropriate equitable relief” as referring to “those categories of relief that, traditionally
speaking (i.e., prior to the merger of law and equity) were typically available in equity.” CIGNA
Corp. v. Amara, 563 U.S. 421, 439 (2011) (emphasis in original) (quotation marks omitted).
“Equitable relief may take the form of a surcharge, or monetary compensation for loss resulting
from a fiduciary’s breach of duty or to prevent the fiduciary’s unjust enrichment.” Mullin v.
Scottsdale Healthcare Corp. Long Term Disability Plan, 2016 WL 107838, at *4 (D. Ariz.
Jan. 11, 2016) (citing Gabriel, 773 F.3d at 957). “To obtain relief by way of surcharge, a
beneficiary must show a breach of fiduciary duties by an ERISA trustee, that the violation
5

Providence additionally cites Byrne v. Calastro, 205 Fed. App’x 10 (3d Cir. 2006)
(unpublished), and Bauer-Ramazani v. Teachers Insurance & Annuity Ass’n of America-College
Retirement & Equities Fund, 2013 WL 6189802 (D. Vt. Nov. 27, 2013), in support of its
argument that motive is irrelevant in an ERISA claim for breach of fiduciary duty. In discussing
the objective standard of care, however, both cases referred to 29 U.S.C. § 1104(a)(1)(B). Byrne,
205 Fed. App’x at 15; Bauer-Ramazani, 2013 WL 6189802, at *5.
PAGE 15 – OPINION AND ORDER

injured her or him, and that the remedy of surcharge is available for the claimed injury by
reference to traditional equitable principles.” Monper v. Boeing Co., 104 F. Supp. 3d 1170, 1185
(W.D. Wash. 2015) (citing Gabriel, 773 F.3d at 958). The Supreme Court explains that an
ERISA fiduciary “can be surcharged under [Section 1132(a)(3)] only upon a showing of actual
harm—proved (under the default rule for civil cases) by a preponderance of the evidence.”
CIGNA, 563 U.S. at 444.
The Restatement (Third) of Trusts instructs as follows with regard to surcharge:
In determining whether and to what extent to grant a trustee relief
from surcharge, it would be appropriate for the court to consider all
circumstances of the breach and of the trustee, such as: . . . the
sincerity of the trustee’s efforts to understand and perform the
responsibilities in question; and whether the trustee reasonably
relied on guidance from legal or other advisers[.]6
Id. § 95 cmt. d (2012). Thus, evidence of the sincerity of Providence’s efforts to understand and
perform its responsibilities, as well as its actions and decisions, is relevant in determining
whether and to what extent to award Plaintiffs make-whole relief in the form of surcharge.
The documents and testimony Plaintiffs seek concern the sincerity of Providence’s efforts
to understand and perform its responsibilities regarding ABA therapy coverage and its
consideration and use of the Developmental Disability Exclusion and the Experimental
Exclusion. The requested documents and testimony, therefore, are relevant to determining
whether there is a remediable wrong for which “other appropriate equitable relief” is warranted

6

“Ordinarily, the fiduciary’s good faith is not a defense to a claim of breach of fiduciary
liability.” Ronald J. Cooke, 2 ERISA Practice and Procedure § 6:79. The Restatement (Third) of
Trusts suggests, however, that the extent to which the fiduciary reasonably—or, in good faith—
relied on legal or other authoritative guidance may be relevant to fashioning the equitable relief
of surcharge for a breach of fiduciary duty. See id. § 95 cmt. d. Both the Supreme Court and the
Ninth Circuit have relied upon the Restatement (Third) of Trusts in interpreting the remedy of
surcharge under Section 1132(a)(3). CIGNA, 563 U.S. at 441-42; Skinner v. Northrop Grumman
Ret. Plan B., 673 F.3d 1162, 1167 (9th Cir. 2012).
PAGE 16 – OPINION AND ORDER

and, if so, what form that relief should take. Thus, the Court finds that the discovery Plaintiffs
seek is relevant to their Second Claim.
B. Whether the Fiduciary Exception Applies
The party asserting attorney-client privilege bears the burden of proving each element of
an eight-part test used to determine whether information is covered by the attorney-client
privilege:
(1) Where legal advice of any kind is sought (2) from a
professional legal adviser in his capacity as such, (3) the
communications relating to that purpose, (4) made in confidence
(5) by the client, (6) are at his insistence permanently protected (7)
from disclosure by himself or by the legal adviser, (8) unless the
protection be waived.
United States v. Ruehle, 583 F.3d 600, 607 (9th Cir. 2009) (quoting In re Grand Jury
Investigation, 974 F.2d 1068, 1071 n.2 (9th Cir. 1992)). In Providence’s response, Providence
states that Plaintiffs do not dispute that the materials they seek would ordinarily be protected
from disclosure by attorney-client privilege. The Court has reviewed Plaintiffs’ opening brief
and agrees that Plaintiffs did not challenge the presumptive test of attorney-client privilege. In
Plaintiffs’ reply, however, Plaintiffs assert that Providence has failed to meet its burden of
proving that the attorney-client privilege applies to the requested documents and testimony. In
light of the fact that Plaintiffs did not challenge that the attorney-client privilege applies in their
opening brief, the Court finds that Providence’s initial burden is satisfied.
1. The Fiduciary Exception Generally
The Ninth Circuit instructs that “‘the attorney-client privilege is, perhaps, the most sacred
of all legally recognized privileges.’” Mett, 178 F.3d at 1062 (quoting United States v. Bauer,
132 F.3d 504, 510 (9th Cir. 1997)). The Supreme Court explains the justification for attorneyclient privilege as follows:
PAGE 17 – OPINION AND ORDER

Its purpose is to encourage full and frank communication between
attorneys and their clients and thereby promote broader public
interests in the observance of law and administration of justice.
The privilege recognizes that sound legal advice or advocacy
serves public ends and that such advice or advocacy depends upon
the lawyer’s being fully informed by the client.
Upjohn Co. v. United States, 449 U.S. 383, 389 (1981). The privilege, however, is strictly
construed “[b]ecause it impedes full and free discovery of the truth.” Weil, 647 F.2d at 24.
The Ninth Circuit recognizes a fiduciary exception to attorney-client privilege. Mett,
178 F.3d at 1062. “As applied in the ERISA context, the fiduciary exception provides that ‘an
employer acting in the capacity of ERISA fiduciary is disabled from asserting the attorney-client
privilege against plan beneficiaries on matters of plan administration.’” Id. at 1063 (quoting
Becher v. Long Island Lighting Co., 129 F.3d 268, 272 (2d Cir. 1997)). The fiduciary exception
applies to insurance companies serving as ERISA fiduciaries. Stephan v. Unum Life Ins. Co. of
Am., 697 F.3d 917, 931-32 (9th Cir. 2012). Cf. Wachtel v. Health Net, Inc., 482 F.3d 225, 236
(3d Cir. 2007) (stating that “we do not believe that Congress intended to impose upon insurance
companies doing business with ERISA-regulated plans the same disclosure obligations that have
been imposed upon trustees at common law”).
The Ninth Circuit explains that the fiduciary exception has two distinct rationales. First,
some courts have characterized the exception as derived from an ERISA trustee’s duty to
disclose all information regarding plan administration to plan beneficiaries. Mett, 178 F.3d
at 1063. Thus, “the fiduciary exception can be understood as an instance of the attorney-client
privilege giving way in the face of a competing legal principle.” Id. Second, other courts “have
focused instead on the role of the trustee and have endorsed the notion that, ‘as a representative
for the beneficiaries of the trust which he is administering, the trustee is not the real client in the
sense that he is being personally served.’” Id. (quoting United States v. Evans, 796 F.2d 264, 266
PAGE 18 – OPINION AND ORDER

(9th Cir. 1986)). Thus, under the second rationale, the exception is not really an exception at
all—“[r]ather, it merely reflects the fact that, at least as to advice regarding plan administration, a
trustee is not ‘the real client’ and thus never enjoyed the privilege in the first place.” Id.
The fiduciary exception to attorney-client privilege is limited. The Ninth Circuit explains
that “while the fiduciary exception does apply to advice on matters of plan administration, the
attorney-client privilege reasserts itself as to any advice that a fiduciary obtains in an effort to
protect herself from civil or criminal liability.” Id. at 1066. The Ninth Circuit describes two ends
of a spectrum:
On the one hand, where an ERISA trustee seeks an attorney’s
advice on a matter of plan administration and where the advice
clearly does not implicate the trustee in any personal capacity, the
trustee cannot invoke the attorney-client privilege against the plan
beneficiaries. On the other hand, where a plan fiduciary retains
counsel in order to defend herself against the plan beneficiaries (or
the government acting in their stead), the attorney-client privilege
remains intact.
Id. at 1064. A “communication-by-communication” analysis is required to determine where
discovery falls on this spectrum. Id. at 1065.
Two Ninth Circuit cases, United States v. Mett and Stephan v. Unum Life Insurance Co.
of America, illustrate the boundaries of the fiduciary exception in the ERISA context. In Mett,
two criminal defendants, Mett and Wiseman, were officers and directors of Center Art Galleries
(“CAG”), which established two pension benefit plans for its employees. Id. at 1060. Mett and
Wiseman served as trustees for the plans, and CAG served as the plans’ administrator. Id. After
CAG fell upon difficult financial times, Mett and Wiseman withdrew about $1.6 million from the
pension plans and deposited the money into CAG’s general operating accounts without
informing their employees of the transactions or disclosing the withdrawals to the IRS. Id.
at 1061. A jury found Mett and Wiseman guilty of embezzling from their employees’ pension
PAGE 19 – OPINION AND ORDER

benefit plans, among other crimes. Id. Mett and Wiseman argued at trial that they did not possess
the requisite specific intent when they withdrew the funds from the pension plans, and that they
intended their actions to benefit their employees. Id.
On Mett and Wiseman’s appeal of their convictions, the Ninth Circuit considered
whether two legal memoranda that had been admitted at trial should have been excluded in light
of the attorney-client privilege. Id. The two memoranda, which were prepared before the
government took any legal action against Mett and Wiseman, related to potential civil and
criminal consequences of the pension plan withdrawals. Id. at 1062. The memoranda described
the potential civil and criminal exposure that Mett and Wiseman might face in light of the
withdrawals and the civil and criminal penalties associated with the transactions. Id. The Ninth
Circuit held that the fiduciary exception did not apply as “[b]oth the text and content of the . . .
memoranda indicate that they ought to have been treated as privileged matter.” Id. at 1064. The
Ninth Circuit explained that although the memoranda were prepared before any legal action was
taken against Mett and Wiseman, “[t]rouble was in the air” and the defendants had “good
reason” to seek advice concerning potential liabilities arising from the withdrawals. Id.
Additionally, the advice rendered in the memoranda “was not prepared for the benefit of the plan
or the beneficiaries, nor was it advice regarding administration of the plan.” Id. Rather, the
memoranda served to advise Mett and Wiseman “regarding their own personal civil and criminal
exposure in light of undocumented withdrawals that had already occurred.” Id.
On the other end of the spectrum is the Ninth Circuit’s decision in Stephan. In Stephan,
the plaintiff was insured under his employer’s long-term disability plan. 697 F.3d at 921. The
defendant was the plan administrator. Id. The plaintiff disputed the defendant’s calculation of his
pre-disability earnings upon which his disability benefits were based. Id. The district court

PAGE 20 – OPINION AND ORDER

denied the plaintiff’s motion to compel discovery of a series of internal memoranda created by
the defendant’s in-house counsel regarding the plaintiff’s claim, holding that the fiduciary
exception did not apply because “the interests of the plaintiff and defendant had sufficiently
diverged at the time the disputed memoranda were created.” Id. at 923 (quotation marks
omitted).
Upon review, the Ninth Circuit reversed, holding that the fiduciary exception did apply
because “[u]nlike the memoranda in Mett, the disputed documents offer advice solely on how the
Plan ought to be interpreted. They do not address any potential civil or criminal liability [the
defendant] might face, nor is there any indication that they were prepared with such liability in
mind.” Id. at 932. Rather, “the documents here were prepared to advise [the defendant’s] claims
analysts about how best to interpret the Plan, and were communicated to the analysts before any
final determination of [the plaintiff’s] claim had been made.” Id. at 933. The Ninth Circuit
rejected the defendant’s argument that the fiduciary exception should not apply because the
documents were created after the defendant had been contacted by the plaintiff’s counsel, and
therefore “after there was an indication that the parties may become adverse.” Id. at 932-33
(quotation marks omitted). The Ninth Circuit explained that the communications occurred in
advance of the defendant’s decision on the plaintiff’s benefits appeal and that “[m]ost courts
have held that it is not until after the final determination—that is, after the final administrative
appeal—that the interests of the Plan fiduciary and the beneficiary diverge for purposes of
application of the fiduciary exception,” and that the Ninth Circuit agreed “with the weight of
authority.” Id. at 933. The Ninth Circuit concluded that the fiduciary exception applied to the
documents because “advice on the amount of benefits [the plaintiff] was owed under the Plan,

PAGE 21 – OPINION AND ORDER

given before [the defendant] had made any final determination on his claim, constitutes advice
on plan administration.” Id.
2. The Parties’ Arguments
Plaintiffs argue that the attorney-client privilege does not protect the requested
documents and testimony because the fiduciary exception applies. Providence responds that the
fiduciary exception does not apply because most of the discovery Plaintiffs seek does not fall
within the limited time periods during which Providence acted as a fiduciary with respect to each
Plaintiff. Providence also asserts that to the extent that any of the discovery Plaintiffs seek falls
within the relevant time periods, as defined by Providence, the materials contain no information
concerning the administration of Plaintiffs’ Plans.
Providence argues that unless and until a claim is made under an employer’s benefit Plan,
Providence’s fiduciary duty to a particular individual is not triggered. According to Providence,
this is because each of five ERISA Plans at issue in this lawsuit purchased health insurance from
Providence under a one-year contract. Before each purchase, Providence created group health
coverage products available for purchase. Providence asserts that when it created these products,
it was acting solely on its own behalf and not on behalf of any employer-sponsored Plan because
its product had not yet been purchased. Thus, Providence argues, attorney-client communications
regarding benefit design and limitations are undertaken to further Providence’s business interests
and not to fulfill a fiduciary duty.
Providence argues that to the extent that it sought to protect its own interests as the
insurer, as opposed to acting purely as a trustee for the interest of the beneficiaries, the basis for
any fiduciary exception is absent. Providence cites to Wachtel v. Health Net, Inc., in support of
this argument. In Wachtel, the Third Circuit held that the fiduciary exception does not apply to
insurance companies making benefits determinations in part because “an insurer which sells
PAGE 22 – OPINION AND ORDER

insurance contracts to ERISA-regulated benefit plans is itself the sole and direct client of counsel
retained by the insurer, not the mere representative of client-beneficiaries, and not a joint client
with its beneficiaries.” 482 F.3d at 235. Notably, the Ninth Circuit reached the opposite
conclusion in Stephan, holding that the fiduciary exception does apply to insurance companies
making benefits determinations. 697 F.3d at 931-32. The Ninth Circuit noted that ERISA has
broad disclosure requirements and that neither ERISA nor its implementing regulations “provide
any reason why the disclosure of information is any less important where an insurer, rather than
a trustee or other ERISA fiduciary, is the decisionmaker.” Id. at 932 (explaining that ERISA
requires that “upon request, a claimant be provided all ‘information relevant to the claimant’s
claim for benefits,’ 29 C.F.R. § 2560.503-1(h)(2)(iii)”). The Ninth Circuit concluded that there is
“no principled basis for excluding insurers from the fiduciary exception” because “the obligation
that an ERISA fiduciary act in the interest of the plan beneficiary does not differ depending on
whether that fiduciary is a trustee or an insurer.” Id.
Plaintiffs argue that Providence was acting as a fiduciary to all Plaintiffs when it created
the documents in question and held discussions about its policies regarding ABA therapy
coverage. Accordingly, Plaintiffs state that Providence’s fiduciary duties to each Plaintiff are not
limited in scope and subject matter in the manner that Providence describes. The Court agrees.
ERISA describes a “fiduciary” as follows:
[A] person is a fiduciary with respect to a plan to the extent (i) he
exercises any discretionary authority or discretionary control
respecting management of such plan or exercises any authority or
control respecting management or disposition of its assets, (ii) he
renders investment advice for a fee or other compensation, direct
or indirect, with respect to any moneys or other property of such
plan, or has any authority or responsibility to do so, or (iii) he has
any discretionary authority or discretionary responsibility in the
administration of such plan.
29 U.S.C. § 1002(21)(A). The Plans applicable to each Plaintiff state in relevant part:
PAGE 23 – OPINION AND ORDER

To the extent this Group Contract relates to an employee benefit
plan that is governed by the Employee Retirement Income Security
Act of 1974 (ERISA), as amended, the Employer’s responsibilities
and Providence Health Plan responsibilities include the following:


The Employer is responsible for furnishing summary plan
descriptions, annual reports and summary annual reports to
plan participants and to the government as required by
ERISA.



The Employer and not Providence Health Plan is the “Plan
Administrator” as defined in ERISA. . . .



The Employer gives Providence Health Plan, acting for the
“Plan Administrator,” the discretionary authority to
interpret the terms of the related ERISA plan, to make
factual determinations relevant to benefit determinations
and to otherwise decide all questions regarding eligibility
for benefits under the plan.

Benefits shall be payable to a Member under the ERISA plan and
this Group Contract only if Providence Health Plan, in its
discretion, determines that such benefits are payable.
Dkts. 114, 114-1. In addition, Providence has admitted that when carrying out its delegated
authority, it has the responsibilities of a fiduciary under ERISA. Dkt. 144 ¶ 5 (Answer to Second
Amended Complaint); see also Dkt. 143-2 at 6 (August 29, 2013 Jensen Deposition) (testifying
that Providence serves a fiduciary to beneficiaries, and that Plan members are beneficiaries).
The evidence in this case reveals that Providence’s decisions regarding ABA therapy
coverage were made on a company-wide basis and not on an individual Plan beneficiary basis.
First, the governing documents for Plaintiff’s individual Plans are identical in all material
respects. All of Providence’s Oregon member handbooks and group contracts contain identical
provisions regarding Mental Health Services, including the definition of Mental Health; and
identical Exclusions specific to Mental Health Services, including the Developmental Disability
Exclusion and Experimental Exclusion. Dkt. 143-3 at 4-7.

PAGE 24 – OPINION AND ORDER

Second, Jensen repeatedly testified on behalf of Providence that Providence made
decisions regarding plan administration and ABA benefits determinations on a company-wide
basis. See, e.g., Dkt. 143-2 at 7-8 (August 29, 2013 Jensen Deposition) (testifying that
Providence doesn’t administer ERISA and non-ERISA Plans differently); id. at 9-10 (testifying
that Providence has an obligation to apply Plan exclusions uniformly to all Plan members);
Dkt. 143-4 at 9 (June 2, 2015 Jensen Deposition) (testifying that Providence made a companywide decision to cover ABA therapy beginning January 2014).
Additionally, Jensen testified in 2013 that Providence always denies claims for ABA
therapy on the basis of the Developmental Disability Exclusion. Dkt. 63-1 at 3, 14-15
(August 29, 2013 Jensen Deposition). This was because Providence interpreted Autism Spectrum
Disorder as a developmental disability or involving developmental delay in all cases in which a
member sought ABA treatment. Id. at 14; see also Dkt. 119-2 at 7-8 (August 29, 2013 Jensen
Deposition) (testifying that Providence applied the Developmental Disability Exclusion “across
the board as to all of its members who have autism”); Id. at 10 (testifying that the basis for
Providence’s denial of coverage for A.F.’s case was exactly the same as the basis for
Providence’s denial of coverage in A.P.’s case).
Thus, Providence made decisions “regarding eligibility for benefits” for ABA therapy
and “interpret[ed] the terms of the [Plans]” relating to ABA therapy coverage and the
Developmental Disability and Experimental Exclusions not on an individual member or Plan-byPlan basis, but on a company-wide basis. Dkt. 114-1. Accordingly, Providence’s argument that it
only undertook a fiduciary duty with respect to each Plaintiff when they filed a claim for ABA
therapy is unavailing. Providence acted as a fiduciary with respect to each Plaintiff’s Plan when
it made its company-wide decisions regarding ABA therapy coverage. See Firestone Tire &

PAGE 25 – OPINION AND ORDER

Rubber Co. v. Bruch, 489 U.S. 101, 113 (1989) (emphasis in original) (stating that in the ERISA
context, “one is a fiduciary to the extent he exercises any discretionary authority or control”).
3. Application of the Exception to the Requested Discovery
a. Request Number One
In Request Number One, Plaintiffs seek to compel production of documents listed in
Providence’s April 23, 2015 Amended Privilege Log, and documents listed in Providence’s
August 13, 2015 Emails Privilege Log.7
The documents listed in Providence’s April 23, 2015 Amended Privilege Log are minutes
of ERMC meetings dated January 12, 2009 through September 8, 2014. The Amended Privilege
Log indicates that ABA therapy was discussed at most of the meetings.8 Providence asserts that
the fiduciary exception does not apply to the minutes from the ERMC meetings because the
ERMC is not an ERISA fiduciary. Dkt. 140 ¶ 5. This argument is unavailing. The ERMC is not
an entity that is separate from Providence; rather, the ERMC is a committee comprised of
Providence officers and employees, including Providence’s Chief Operating Officer, Chief
Executive Officer, and Chief Medical Officer. Dkt. 143-4 at 10-13 (June 2, 2015 Jensen
Deposition); Dkt. 143-5 at 1. The ERMC engaged in discussions regarding ABA therapy
coverage for Plan participants, including discussions concerning the use of the Experimental
Exclusion. Dkt. 143-4 at 15 (June 2, 2015 Jensen Deposition) (testifying that the ERMC
repeatedly discussed ABA therapy); id. at 5-6 (testifying that the ERMC discussed ending the

7

Plaintiffs do not seek production of documents that the August 13, 2015 Emails
Privilege Log describes as “AF Lawsuit Discussion” and “Lawsuit RFPs.”
8

Plaintiffs state that to the extent that the topics discussed at the meetings do not relate to
Autism Spectrum Disorder, ABA therapy, or the Developmental Disability Exclusion, Plaintiffs
do not object to Providence redacting the minutes. Such redaction is appropriate.
PAGE 26 – OPINION AND ORDER

practice of denying ABA therapy claims on the basis of the Experimental Exclusion in order to
avoid IRO review).
The Court grants Request Number One in part, as follows: First, Providence must
produce all requested documents to the extent that they concern plan administration, such as how
the Plan or Plans ought to be interpreted or applied, and “do not address any potential [or actual]
civil or criminal liability . . . [or] were prepared with such liability in mind.” Stephan, 697 F.3d
at 932. Second, this obligation by Providence is not limited to documents that provide advice
regarding how the Plan or Plans ought to be applied to any specific or named participant or
claimant, but also include advice regarding how the Plan or Plans are to be interpreted or applied
in general. Third, the Court notes that the interests of the ERISA fiduciary and the beneficiary
diverge for purposes of the fiduciary exception after the final administrative appeal, id. at 933,
and that the earliest date of the final determination of any Plaintiff’s final administrative appeal
is April 30, 2013.9 Thus, Providence need not produce otherwise responsive documents dated
after April 30, 2013. If there is any uncertainty or continuing dispute regarding whether any
particular document needs to be produced under this ruling, Providence shall provide such
document or documents to the Court-Appointed Special Master for in camera review, subject to
further review, if necessary and upon objection, by the Court.

9

The Court additionally notes that this lawsuit was filed soon afterward, on May 8, 2013.
The Court recognizes that the final determination of S.W. and I.F.’s claims did not occur until
February 2014, and that S.W., S.S., and I.F. were not named as Plaintiffs in this action until the
second amended class action complaint was filed on June 29, 2015. Plaintiffs, however, have not
provided the Court with any authority or argument regarding how to distinguish between
Plaintiffs’ interests for purposes of the fiduciary exception. The interests of A.F. and Providence
diverged on April 30, 2013, when Providence denied A.F.’s second-level appeal. A.F. and the
rest of the Plaintiffs bring essentially the same claims and seek essentially the same remedies.
Accordingly, the Court finds no reasoned basis for distinguishing among Plaintiffs’ interests for
purposes of the fiduciary exception.
PAGE 27 – OPINION AND ORDER

b. Request Number Two
In Request Number Two, Plaintiffs seek to compel production of documents and
communications of any type relating to Providence’s conversations with counsel about
Providence’s use of the Developmental Disability Exclusion not related to litigation, as discussed
in the August 29, 2013, and June 2, 2015, Jensen depositions.
The Court grants Request Number Two in part, as follows: First, Providence must
produce all requested documents and communications to the extent that they concern plan
administration, such as how the Plan or Plans ought to be interpreted or applied, and “do not
address any potential [or actual] civil or criminal liability . . . [or] were prepared with such
liability in mind.” Id. at 932. Second, this obligation is not limited to documents or
communications that provide advice regarding how the Plan or Plans ought to be applied to any
specific or named participant or claimant, but also include advice regarding how the Plan or
Plans are to be interpreted or applied in general. Third, the Court notes that the interests of the
ERISA fiduciary and the beneficiary diverge for purposes of the fiduciary exception after the
final administrative appeal, id. at 933, and that the earliest date of the final determination of any
Plaintiff’s final administrative appeal is April 30, 2013. Thus, Providence need not produce
otherwise responsive documents or communications dated after April 30, 2013. If there is any
uncertainty or dispute regarding whether any particular document or communication needs to be
produced under this ruling, Providence shall provide such document or communication to the
Court-Appointed Special Master for in camera review, subject to further review, if necessary and
upon objection, by the Court.
c. Request Number Three
In Request Number Three, Plaintiffs seek to compel production of testimony from
deponents, including Jensen and witnesses whom Plaintiffs plan to depose after the Court rules
PAGE 28 – OPINION AND ORDER

on this Motion, relating to Providence’s conversations with counsel about Providence’s use of
the Developmental Disability Exclusion not related to litigation.
The Court grants Request Number Three in part, as follows: First, Plaintiffs may depose
witnesses regarding Providence’s conversations with counsel about Providence’s use of the
Developmental Disability Exclusion to the extent that counsel offered advice concerning plan
administration, such as how the Plan or Plans ought to be interpreted or applied, and “d[id] not
address any potential [or actual] civil or criminal liability . . . .” Id. at 932. Second, this
obligation is not limited to conversations with counsel that provide advice regarding how the
Plan or Plans ought to be applied to any specific or named participant or claimant, but also
include advice regarding how the Plan or Plans are to be interpreted or applied in general. Third,
the Court notes that the interests of the ERISA fiduciary and the beneficiary diverge for purposes
of the fiduciary exception after the final administrative appeal, id. at 933, and that the earliest
date of the final determination of any Plaintiff’s final administrative appeal is April 30, 2013.
Thus, Providence’s witnesses need not answer otherwise responsive questions regarding
Providence’s conversations with counsel that occurred after April 30, 2013. If there is any
uncertainty or dispute regarding whether any particular deposition question needs to be answered
under this ruling, Providence shall provide the question and the presumptive answer to the
Court-Appointed Special Master for in camera review, subject to further review, if necessary and
upon objection, by the Court.
d. Request Number Four
In Request Number Four, Plaintiffs seek to compel production of redacted portions of
email strings previously produced by Providence and Bates labeled PHP005857, PHP005859,
PHP005861, PHP005862, PHP006316, PHP006342-44, PHP006374, PHP006378, PHP006387,
PHP006896-8, PHP006906, PHP006919, PHP006923, PHP006927, PHP006929, PHP007725,
PAGE 29 – OPINION AND ORDER

PHP007799-800, PHP7806-09, PHP007814-15, PHP007820-23, PHP007828, PHP007834-36,
PHP007846-49, PHP007859-62, PHP007867, PHP007871-73, PHP007878-80, PHP007884-85,
PHP007889, PHP007893-94, PHP007899-901, PHP007906-08, PHP007919-20, and
PHP007924.
The Court grants Request Number Four in part, as follows: First, Providence must
produce the redacted portions of the specified emails to the extent that they concern plan
administration, such as how the Plan or Plans ought to be interpreted or applied, and “do not
address any potential [or actual] civil or criminal liability . . . [or] were prepared with such
liability in mind.” Id. at 932. Second, this obligation is not limited to redactions that provide
advice regarding how the Plan or Plans ought to be applied to any specific or named participant
or claimant, but also include advice regarding how the Plan or Plans are to be interpreted or
applied in general. Third, the Court notes that the interests of the ERISA fiduciary and the
beneficiary diverge for purposes of the fiduciary exception after the final administrative appeal,
id. at 933, and that the earliest date of the final determination of any Plaintiff’s final
administrative appeal is April 30, 2013. Thus, Providence need not produce the redacted portions
of otherwise responsive emails dated after April 30, 2013. If there is any uncertainty or dispute
regarding whether any particular document (or portion of a document) needs to be produced
under this ruling, Providence shall provide such document or documents (or relevant portions
thereof) to the Court-Appointed Special Master for in camera review, subject to further review,
if necessary and upon objection, by the Court.
C. Whether Providence Waived the Attorney-Client Privilege
Plaintiffs alternatively argue that Providence waived the attorney-client privilege with
respect to the requested documents on the grounds that Providence voluntarily disclosed its
communications with counsel to Optum, a third-party corporate entity. A party may waive
PAGE 30 – OPINION AND ORDER

attorney-client privilege by voluntary disclosure. United States v. Plache, 913 F.2d 1375, 1379
(9th Cir. 1990); see also Weil, 647 F.2d at 24 (stating that “it has been widely held that voluntary
disclosure of the content of a privileged attorney communication constitutes waiver of the
privilege as to all other such communications on the same subject.”). Voluntary disclosure of a
privileged attorney communication waives the privilege on all other communications on the
same subject. Plache, 913 F.2d at 1380 (citing Weil, 647 F.2d at 25); see also Paul R. Rice,
2 Attorney-Client Privilege in the United States § 9:32 (“The voluntary disclosure of a privileged
communication not only waives the privilege protection for that communication, it may also
destroy the privilege that protects other communications relating to the same subject matter.”).
The party asserting attorney-client privilege bears the burden of proving that the privilege applies
and that the privilege has not been waived. See Ruehle, 583 F.3d at 607-08.
Plaintiffs identify an email dated July 19, 2012, in which Jensen forwarded his
communications with counsel to Optum. The email from Jensen to Optum reads as follows:
Jack & Lisa—I need your help in changing the denial language in
your letters for members who are seeking ABA services.
Today PBH denies them as being “experimental/investigational”.
Our position on this has not changed, however when we deny them
this way it makes them eligible for IRO (who is overturning them).
We are no longer allowing them to go to the IRO, but need to have
the language changed in your letter.
How quickly can this be done?
Mark
Dkt. 135-3 at 19-20 (Bates Numbers PHP006315-16). Below this text was the forwarded email
from Providence’s counsel, which Providence redacted when it produced the email string to
Plaintiffs. Plaintiffs argue that by voluntarily disclosing the contents of counsel’s email to

PAGE 31 – OPINION AND ORDER

Optum, Providence waives attorney-client privilege “as to all other such communications on the
same subject.” See Weil, 647 F.2d at 24.
Plaintiffs also identify an email dated October 25, 2013 from Jensen to Optum in which
Jensen describes this lawsuit and requests that Optum start denying ABA therapy coverage based
on both the Developmental Disability Exclusion and the Experimental Exclusion. Dkt. 135-3 at 8
(Bates Number PHP006244). Jensen copied Providence’s counsel in the October 25, 2013 email.
Providence responds that it did not waive the attorney-client privilege with respect to the
requested documents and testimony by sending these two emails to Optum because the
information Providence shared with Optum was not privileged attorney-client communication.
“The disclosure of nonprivileged communications . . . does not affect the status of other related
privileged communications.” Rice, § 9:29 (emphasis in original). The October 25, 2013 email is
not privileged. In addition, Providence already disclosed the entire email, without redactions, to
Plaintiffs. Providence did not waive the attorney-client privilege with respected to the requested
documents and testimony by sending the October 25, 2013 email to Optum or to Plaintiffs
because this email was a nonprivileged communication.
Providence, however, asserts the attorney-client privilege with regard to the attachment to
the email dated July 19, 2012, that Providence sent to Optum. Providence redacted the entirety of
the forwarded message from counsel, citing the attorney-client privilege, when it disclosed the
document to Plaintiffs. Dkt. 135-3 at 20 (Bates Number PHP006316). Thus, Providence
voluntarily disclosed a privileged attorney-client communication when it forwarded an email
from its counsel to Optum on July 19, 2012.
Providence argues that this voluntary disclosure does not result in waiver of the attorneyclient privilege because Optum is Providence’s agent and thus operates within the scope of

PAGE 32 – OPINION AND ORDER

Providence’s attorney-client privilege. In support of this argument, Providence cites In re Bieter
Co., 16 F.3d 929 (8th Cir. 1994), where the Eighth Circuit held that communications between
corporate counsel and the corporation’s independent consultant were covered by attorney-client
privilege. Id. at 937-38. The Eighth Circuit discussed John E. Sexton’s article A Post-Upjohn
Consideration of the Corporate Attorney-Client Privilege and Sexton’s theory that, following
Upjohn,10 the attorney-client privilege extends to “‘an employee, agent, or independent
contractor with a significant relationship to the corporation and the corporation’s involvement in
the transaction that is the subject of legal services.’” Id. at 937 (quoting John E. Sexton, A PostUpjohn Consideration of the Corporate Attorney-Client Privilege, 57 N.Y.U. L. Rev. 443, 487
(1982)); see also Rice, § 9:29 (stating that waiver by voluntary disclosure does not apply to
“agents of either the attorney or the client”).
The Eighth Circuit reasoned that “too narrow a definition of ‘representative of the client’
will lead to attorneys not being able to confer confidentially with nonemployees who, due to
their relationship to the client, possess the very sort of information that the privilege envisions
flowing most freely.” Id. at 937-38. The independent consultant in Bieter was involved on a daily
basis with the development company and was the company’s “sole representative at meetings
with potential tenants and local officials.” Id. at 938. The Eighth Circuit explained that “his
involvement in the subject of the litigation makes him precisely the sort of person with him a
lawyer would wish to confer confidentially” and “he was in all relevant respects the functional

10

In Upjohn Co. v. United States, the Supreme Court held that a corporation’s attorneyclient privilege “extends to communications between corporate employees and corporate counsel
as long as the communications are ‘made at the direction of corporate superiors in order to secure
legal advice.’” United States v. Graf, 610 F.3d 1148, 1158 (9th Cir. 2010) (quoting United States
v. Chen, 99 F.3d 1495, 1502 (9th Cir. 1996) (citing Upjohn, 449 U.S. at 390-94)).
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equivalent of an employee.” Id. (citing Upjohn, 449 U.S. at 389; McCaugherty v. Siffermann,
132 F.R.D. 234, 239 (N.D. Cal. 1990)).
In ASU Students for Life v. Crow, 2007 WL 2725252 (D. Ariz. Sept. 17, 2007), the court
applied Bieter and held that the attorney-client privilege applied to communications between
counsel and members of student groups who were not direct clients of the attorneys. Id. at *3.
The court explained as follows:
It is true that several others were copied with the communications
from [the plaintiff] to [counsel]. However, all of those copied were
either other attorneys or directly involved in the . . . project . . . .
[the] communications were shared with those having a reasonable
need to know about the content of the communications.
Id. (citing Bieter, 16 F.3d at 939). After ASU Students was decided, the Ninth Circuit adopted the
principles announced in Bieter and held that an independent consultant was covered by a
company’s attorney-client privilege. United States v. Graf, 610 F.3d 1148, 1159 (9th Cir. 2010).
Although Optum is a separate company from Providence, Providence has a contract with
Optum and Optum processes mental and behavioral health claims on behalf Providence.
Dkt. 135-2 at 17 (August 29, 2013 Jensen Deposition) (testifying that “Providence contracts with
Optum as a partner, vendor/partner, to provide all behavioral health and mental health services”
and that Optum handles the claims for mental and behavioral health). On July 19, 2012,
Providence forwarded an email from its counsel to Optum in the context of asking Optum to
change its language regarding ABA therapy coverage in letters Optum sends to Plan members on
behalf of Providence. Subsequent emails between Providence and Optum reveal that Providence
was changing the denial language “based on an opinion of their legal consul [sic]”. Dkt. 135-3
at 18 (Bates Number PHP006314). Thus, Optum had a “significant relationship to [Providence]
and [Providence’s] involvement in the transaction that is the subject of legal services,” and
Optum had a “reasonable need to know about the content of the communications.” See Sexton,
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at 487; ASU Students, 2007 WL 2725252, at *3. Accordingly, the Court concludes that because
Optum was acting as Providence’s agent, Providence did not waive the attorney-client privilege
when it forwarded the email from its counsel to Optum.
CONCLUSION
Plaintiffs’ Motion to Compel (Dkt. 134) is GRANTED IN PART, as described on
pages 26-30 of this Opinion and Order.
IT IS SO ORDERED.
DATED this 24th day of March, 2016.
/s/ Michael H. Simon
Michael H. Simon
United States District Judge

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