Buncombe County, North Carolina v. Team Health Holdings, Inc. et al

Filing 109

MEMORANDUM OPINION AND ORDER granting in part and denying in part (76 in 3:23-cv-00111-DCLC-DCP, 82 in 3:22-cv-00420-DCLC-DCP) MOTION to Compel filed by Buncombe County, North Carolina. (Status Conference continued to 4/24/2025 10:00 AM in Courtroom 420 - Greeneville before District Judge Clifton L Corker.) Signed by District Judge Clifton L Corker on 3/10/2025. Associated Cases: 3:22-cv-00420-DCLC-DCP, 3:23-cv-00111-DCLC-DCP(MKM)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TENNESSEE
KNOXVILLE DIVISION
BUNCOMBE COUNTY, NORTH
CAROLINA and CITY OF
PLAQUEMINE, individually and on
behalf of those similarly situated,
Plaintiffs,
v.
TEAM HEALTH HOLDINGS, INC.,
AMERITEAM SERVICES, LLC, and
HCFS HEALTH CARE FINANCIAL
SERVICES, LLC,
Defendants.

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3:22-CV-00420-DCLC-DCP

MEMORANDUM OPINION AND ORDER
In these consolidated putative class actions, Plaintiffs Buncombe County (“the County”)
and City of Plaquemine (“the City”) (together, “Plaintiffs”) assert claims for unjust enrichment
and civil violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18
U.S.C. § 1962. In a general sense, Plaintiffs allege that Defendants sent bills for emergency room
(“ER”) services to third party administrators (“TPAs”) and other payors that were inflated due to
upcoding, i.e., assigning a Current Procedural Terminology (“CPT”) code at a higher level than
what the patient’s medical chart supported. The Court consolidated both cases for purposes of
discovery relative to class certification under Fed.R.Civ.P. 23 (“pre-certification discovery”) [See
Doc. 63]. Now, the County moves to compel the production of certain discovery responses from
Defendants [Doc. 82]. As directed, the parties conferred and filed a status report reflecting the
outstanding discovery disputes requiring judicial resolution. Additionally, the parties presented
oral argument on their respective positions. Thus, the motion is ripe for review.
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I.

BACKGROUND
Defendants Team Health Holdings, Inc. (“Team Health Holdings”), Ameriteam Services,

LLC (“Ameriteam”), and HCFS Health Care Financial Services, LLC (“HCFS”) (collectively,
“TeamHealth”), in relevant part, provide emergency department (“ED”) “staffing and
administrative services through a network of subsidiaries, affiliates, and nominally independent
entities and contractors” [Doc. 30, ¶ 25]. Specifically, “TeamHealth and its affiliated medical
groups contract with numerous hospitals to replace local ED practice groups with TeamHealth’s
outsourced staff and attendant administrative, operational, coding and billing infrastructure” [Id.
at ¶ 31]. After TeamHealth’s ED staff provide services to a patient, they submit medical records
to a central administrative group, i.e., HCFS [Id. at ¶¶ 34, 48]. The administrative group “generates
a health insurance claim by reviewing [the] medical record . . . and assigning a CPT billing code
for the services provided” [Id. at ¶ 34]. The claim is sent to the applicable payor, which could be
an insurer, a TPA of a self-funded plan, or the patient [Id.]. Payments are remitted directly to
TeamHealth, which then pays the ED staff a fixed hourly rate or a “per patient fee” [Id. at ¶ 35].
Through the foregoing structure, the County alleges that TeamHealth “submit[s] upcoded
health insurance claims to payors” and “keep[s] the difference between the amount received . . .
and the amount that would have been received had the claim been properly coded” [Id. at ¶ 134].
The County further contends that TeamHealth “insulate[s] its activities” by billing payors under
the name of the TeamHealth affiliate rather than its own name [Id. at ¶¶ 8, 49, 143, 144]. 1 The
County and other payors have “used their cohort of claims data to engage in statistical analysis
and elucidate the systematic nature of the overbilling” [Id. at ¶¶ 2, 53].

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“TeamHealth’s numerous provider groups staffing hospitals across the nation [are split up]
into over 200 ostensibly separate and independent local practice entities” which are each
“seemingly disconnected from the others, going by many different names” [Doc. 30, ¶ 6].
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A statistical analysis of ED visits billed by TeamHealth providers for the County’s plan
members demonstrates a distribution of the assignment of CPT codes which is “heavily skewed
towards higher level codes” [Id. at ¶ 86]. For instance, in 2021, TeamHealth providers billed 60%
of the visits as CPT code 99285 (“level 5”), which is “only meant to be used for serious, lifethreatening conditions requiring high levels of medical decision making by the medical
professional[,]” but comparable ED providers billed only 39% of the members’ visits as level 5
[Id. at ¶¶ 78, 80]. Similarly, in 2019, TeamHealth billed 63% of members’ ED visits as level 5,
while other providers billed 40% of the members’ visits at level 5 [Id. at ¶ 88]. According to the
County, the distribution of the assignment of CPT codes from level 1 to level 5 should follow a
normal bell-shaped curve [Id. at ¶ 85]. The County further alleges that “[t]he degree and
consistency of TeamHealth’s upcoding of claims utilizing CPT code 99285 demonstrates that
TeamHealth used a uniform policy or practice of upcoding such claims” [Id. at ¶ 81].
Based on the foregoing, the County initiated this action “to recover damages and
disgorgement reflecting the wrongful overbilling and to seek declaratory and injunctive relief, on
behalf of itself and a putative class of others similarly situated” [Id. at ¶ 10]. Thereafter, the City
initiated a similar putative class action, City of Plaquemine v. Risk Management, Inc., et al., 3:23CV-00111, and the Court consolidated the two cases for the purpose of pre-certification discovery
[Doc. 63]. From July 8, 2024 to November 4, 2024, the County served TeamHealth with four
different requests for production of documents and electronically stored information (“ESI”)
pursuant to Rule 34 [See Docs. 84-3, 84-4, 84-5]. TeamHealth produced numerous documents
and a substantial volume of data but objected to a handful of the requests [Doc. 88, pg. 6]. Now,
the County seeks to compel production of ESI, contracts, prior testimony, and other documents
which it claims to be critical to proving the requirements for Rule 23 class certification [Doc. 83].

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II.

ANALYSIS
“The general principals of discovery apply to pre-certification discovery,” Peters v. Credit

Prot. Ass’n LP, No. 2:13-CV-767, 2014 WL 6687146, at *5 (S.D. Ohio Nov. 26, 2014), and “[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). Generally, a party “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[.]” Fed.R.Civ.P. 26(b)(1). At the pre-certification stage,
“discovery should be broad enough to give plaintiffs a realistic opportunity to satisfy the Rule 23
requirements, but narrow enough to prevent defendants from being unduly burdened by discovery
that is irrelevant, privileged, or confidential.” Firneno v. Nationwide Mktg. Servs., Inc., No. 14CV-10104, 2016 WL 11582360, at *2 (E.D. Mich. Mar. 24, 2016) (citing Nash v. City of Oakwood,
90 F.R.D. 633, 636 (S.D. Ohio 1981)).
Rule 23 requirements are twofold. First, under Rule 23(a), a plaintiff must demonstrate
the following: “‘(1) the class is so numerous that joinder of all members is impracticable; (2) there
are questions of law or fact common to the class; (3) the claims or defenses of the representative
parties are typical of the claims or defenses of the class; and (4) the representative parties will
fairly and adequately protect the interests of the class.’” In re Whirlpool Corp. Front-Loading
Washer Prods. Liab. Litig., 722 F.3d 838, 850 (6th Cir. 2013) (quoting Fed.R.Civ.P. 23(a)).
Additionally, “the proposed class must also meet at least one of the three requirements listed in
Rule 23(b).” Id. In relevant part, Rule 23(b)(3) requires “that the questions of law or fact common
to class members predominate over any questions affecting only individual members and that the
class action is superior to other available methods to adjudicate the controversy fairly and
efficiently.” Id. at 850–51 (internal quotations omitted).

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Here, the County seeks to compel the production of (1) nationwide claims data; (2)
contracts with TPAs, insurers, or payors; (3) documents reflecting prior similar claims of upcoding
for ER services; (4) testimony and expert reports from prior lawsuits; (5) the sampling protocol
referenced in United Healthcare Services, Inc., et al. v. Team Health Holdings, Inc., et al., 3:21CV-364 (E.D. Tenn.) [Doc. 84-1]. The County asserts that each of the foregoing requests are
relevant to its ability to establish commonality, typicality, predominance, and other Rule 23
requirements [Doc. 83, pg. 2]. Each of the requests are examined in turn.
A.

Nationwide Claims Data

TeamHealth, namely HCFS, “maintains claims data associated with primary and secondary
Financial Status Classifications (“FSCs”) in its IDX billing system” [Doc. 96-1, ¶ 3]. “The FSCs
are designations for the entities that HCFS sends claims to and receives payments from” [Id.].
TeamHealth produced data reflecting every non-governmental FSC that received or paid a claim
for ER services between January 1, 2018 and March 31, 2024 (“FSC spreadsheet”) [Id. at ¶ 4].
TeamHealth also produced detailed transactional data for claims sent to or paid by Plaintiffs. Now,
the County requests production of nationwide claims data, i.e., transactional data for every ER
claim paid by any of the FSCs included on the FSC spreadsheet during the relevant time period.
TeamHealth asserts that the request is overly broad, unduly burdensome, and disproportionate to
the needs of pre-certification discovery [Doc. 88, pgs. 9, 10].
As an initial matter, the requested data is neither overly broad nor disproportionate to the
needs of the case. Although the request is broad in that it seeks transactional data on a nationwide
basis, it is limited in time to claims during the relevant period, i.e., after January 1, 2018, and in
scope to only those claims paid by non-governmental FSCs where ER CPT codes (9928x) were
billed. Thus, in light of the class allegations in this matter, the request is not overly broad. The

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data is also proportional to the requirements for class certification. Based upon a review of its own
transactional data, the County believes that the nationwide data will demonstrate whether the
upcoding was systematic, whether it can satisfy the commonality and predominance requirements,
and whether it can establish a reasonable and reliable damages methodology. In support, the
County offers the declaration of Rena Conti, Ph.D., an expert in health policy and health economics
[Doc. 97-1]. Dr. Conti states that, without nationwide data, it would be “impossible to establish
whether [TeamHealth’s] billing practices followed consistent patterns across regions, payors, or
facilities” and the requested data is “necessary to analyze whether or not [TeamHealth’s] alleged
upcoding practices were systemic and pervasive across the class” [Id. at ¶¶ 14, 15]. To be sure,
the patterns and nature of TeamHealth’s billing practices are directly relevant to establishing the
Rule 23 requirements of numerosity, commonality, typicality, and predominance.
As for the burden on TeamHealth, it is axiomatic that transactional data on a nationwide
basis for claims spanning a six-year period will be voluminous. “HCFS issues millions of claims
for [ER] services to non-public payors each year” and “[e]ach claim typically includes numerous
transactional-level events . . . which must be reflected in a separate line of data” [Doc. 96-1, ¶ 5].
The nationwide data requested by the County “would likely run hundreds of millions—if not over
one billion—lines” [Id. at ¶ 6]. Nonetheless, TeamHealth has failed to show that the data is “not
reasonably accessible because of undue burden or cost.” Fed.R.Civ.P. 26(b)(2)(B). TeamHealth
admits that it possesses the requested data. And TeamHealth has expressly represented that its
emergency medicine services “operate on a uniform billing system using a state of the art billing
and accounts receivable software package with comprehensive reporting capabilities.” Team
Health Holdings, Inc., Form 10-K for the fiscal year ended December 31, 2015, available at
https://www.sec.gov/Archives/edgar/data/1082754/000108275416000054/tmh-201510k.htm.

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Moreover, Dr. Conti provides that “modern database systems are specifically designed to
store, retrieve, and process large transactional claims datasets” and “there is nothing particularly
burdensome about producing the requested claims data” [Doc. 97-1, ¶ 9]. Thus, the County’s
request for nationwide claims data is not unduly burdensome. Considering the requested data is
relevant to the County’s ability to satisfy the Rule 23 requirements and would not unduly burden
TeamHealth, the County’s motion is GRANTED to the extent it seeks to compel production of
nationwide claims data.
B.

Contracts with TPAs, Insurers, or Other Payors

The County also requests production of documents sufficient to identify all in-network and
out-of-network FSCs and all agreements between TeamHealth or its affiliated entities and any FSC
for network participation or in-network status [Doc. 84-1, ¶ 3]. The County, however, represented
that production of the nationwide claims data would obviate the need for the requested contracts.
Given the foregoing ruling compelling production of the nationwide claims data, the County’s
request regarding contracts with payors is DENIED WITHOUT PREJUDICE.
C.

Documents Reflecting Prior Similar Claims of Upcoding for ER Services

Next, the County requests production of documents reflecting prior similar claims of
upcoding for ER services during the relevant time period, including lawsuits, complaints,
arbitration, mediation, other alternative disputes resolution claims, audits, special investigations
unit investigation, email, letter, refusal to pay, phone complaints, or other proceedings [Doc. 841, ¶ 4]. TeamHealth agrees to produce a list of claims in public litigation but argues that the
remaining information sought is not relevant to class certification and is protected from disclosure
[Doc. 88, pg. 21]. The County takes the position that if TeamHealth is going to use previously
resolved upcoding claims to refute the predominance requirement for class certification, then it

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should have access to the universe of those prior claims. However, the County also recognizes
that the national claims data may reveal prior settlements and obviate the need for the instant
request. Thus, the motion is DENIED WITHOUT PREJUDICE. To the extent the national
claims data does not reflect prior similar claims of upcoding, the County may renew the request.
D.

Testimony and Expert Reports from Prior Lawsuits

The County requests production of documents reflecting prior testimony of key persons
with knowledge identified by TeamHealth and in prior similar cases, along with expert materials
from those cases [Doc. 84-1, ¶ 5]. Specifically, the County requests production of past deposition
testimony, written affidavits or declarations, live testimony transcripts, expert reports from certain
individuals relating to ER coding or billing [Id.]. The County asserts that the requested materials
are sought to demonstrate a common pattern of conduct and the uniform failure of TeamHealth’s
internal audit systems to prevent upcoding—which is relevant to commonality, typicality, and
predominance [Doc. 83, pg. 22]. At this stage of the litigation, however, the County has failed to
demonstrate how the requested information is proportional to the needs of the case. The County
has presented no reason why it cannot obtain the requested information, which would be more
narrowly tailored to the instant matter, by deposing the individuals itself. Accordingly, the
County’s motion is DENIED to the extent it seeks production of testimony and expert reports from
prior lawsuits.
E.

United Sampling Protocol

Finally, the County requests production of the sampling protocol referenced in United
Healthcare Services, Inc., et al. v. Team Health Holdings, Inc., et al., 3:21-CV-364 (E.D. Tenn.)
[Doc. 84-1, ¶ 6]. The County asserts that the methodology used to sample claims in United is
relevant to the assessment of similar data that offers class-wide proof of damages in the instant

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matter [Doc. 83, pg. 24]. As TeamHealth points out, however, the sampling plan in United is
unilateral—it has not been agreed upon by both parties [Doc. 88, pg. 30]. Moreover, the sampling
plan is only useful and relevant to the specific claims in that case and would be useless when
applied to the claims in the instant matter. Accordingly, the requested sampling plan is not relevant
to County’s damages methodology in this case, and the County’s motion is DENIED to the extent
it requests to compel production of the sampling plan.
III.

CONCLUSION
Accordingly, for the reasons stated herein, the County’s motion to compel [Doc. 82] is

GRANTED IN PART and DENIED IN PART. It is further ORDERED that the status
conference currently set for March 19, 2025 [See Doc. 103] is CONTINUED to April 24, 2025,
at 10:00 a.m. EST.
SO ORDERED:

s/ Clifton L. Corker
United States District Judge

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