Advanced Physicians SC v. Connecticut General Life Insurance Company et al

Filing 130

Memorandum Opinion and Order. Denying 110 Motion to Compel filed by Advanced Physicians SC. While Plan beneficiaries assigned their claims for reimbursement under the Plan to Advanced, Advanced is not a "beneficiary" for the purpose of asserting the fiduciary exception to the attorney-client privilege under ERISA. Specifically, the Court finds that the assignment does not assign to Advanced the beneficiaries'right to assert the attorney-client privilege or sue for breach of fiduciary duty. (see order) (Ordered by Magistrate Judge Rebecca Rutherford on 4/17/2019) (mcrd)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
ADVANCED PHYSICIANS, S.C,

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Plaintiff,
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v.
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CONNECTICUT GENERAL LIFE
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INSURANCE COMPANY, CIGNA
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HEALTH AND LIFE INSURANCE
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COMPANY, CIGNA HEALTHCARE
MANAGEMENT, INC., GREAT-WEST §
HEALTHCARE-CIGNA and NFL
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PLAYER INSURANCE PLAN,
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Defendants.
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Case No. 3:16-cv-02355-G (BT)

MEMORANDUM OPINION AND ORDER
Before the Court is Plaintiff Advanced Physicians, S.C.’s (“Advanced”)
Motion to Compel (ECF No. 110), seeking to compel the production of documents
that Defendants Connecticut General Life Insurance Company, Cigna Health and
Life Insurance Company, Cigna Healthcare Management, Inc., Great-West
Healthcare-Cigna (collectively, “Cigna”), and NFL Player Insurance Plan, (together
with Cigna, “Defendants”) claim are protected by the attorney-client privilege. For
the reasons discussed below, the Court DENIES Advanced’s Motion.
Background
Advanced is a healthcare provider that provided chiropractic and medical
diagnostic services to certain beneficiaries of the NFL Player Insurance Plan (the
“Plan”). Mot. 1; Fourth Am. Compl. 3 (ECF No. 81). Cigna makes determinations
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on claims filed under the Plan. JSR 11 (ECF No. 116). Beginning in 2015, Cigna
denied the claims of beneficiaries who received services from Advanced because
Cigna determined the underlying injuries were “work-related” and treatment for
work-related injuries is not compensable under the Plan. Fourth Am. Compl. 6-7.
Those Plan beneficiaries assigned “their rights as participants or beneficiaries in
the Plan and their causes of action against the Plan to Advanced.” Id. 13; Defs.’ Ex.
A (ECF No. 127-1). Advanced then sued Cigna for violations of the Employee
Retirement Income Security Act of 1974 (“ERISA”) under 29 U.S.C. § 1132 to
recover benefits it claimed the beneficiaries were entitled to under the Plan. Mot.
1; Fourth Am. Compl. 2, 12-13. As part of this lawsuit, on August 8, 2018, Advanced
served written discovery, requests for production and interrogatories, on Cigna,
which objected on privilege grounds, among others. Mot. 1-2; JSR 5.
As a result, Plaintiff filed its Motion to Compel. In lieu of response and reply
briefs, the parties submitted a Joint Status Report per the Court’s January 29, 2019
Order. JSR; Order (ECF No. 111). At the March 19, 2019 hearing on the Motion, the
Court and the parties further narrowed the issues in dispute such that the only
remaining issue concerned whether Advanced could assert the fiduciary exception
to the attorney-client privilege to gain access to Cigna’s privileged documents.
Accordingly, the Court ordered the parties to submit supplemental briefs on that
issue and required Cigna to submit 25 representative documents from its privilege
log for in camera review. Order (ECF No. 129). The parties timely filed their
supplemental briefs, Pl.’s Supp. Br. (ECF No. 128); Defs.’ Supp. Br. (ECF No. 127),
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and Cigna submitted its in camera documents. The Motion is ripe for
determination.
Legal Standards
Federal Rule of Civil Procedure 26(b)(1) provides, “[u]nless otherwise
limited by court order, . . . [p]arties 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.” Fed. R. Civ. P. 26(b)(1). Under Rule 34,
“[a] party may serve on any other party a request within the scope of Rule 26(b):
(1) to produce and permit the requesting party or its representative to inspect,
copy, test, or sample the following items in the responding party's possession,
custody, or control: (A) any designated documents or electronically stored
information—including writings, drawings, graphs, charts, photographs, sound
recordings, images, and other data or data compilations—stored in any medium
from which information can be obtained either directly or, if necessary, after
translation by the responding party into a reasonably usable form.” Fed. R. Civ. P.
34(a)(1)(A). When a party fails to produce documents requested under Rule 34,
Rule 37 permits, “a party seeking discovery . . . [to] move for an order compelling
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production against another party.” Zenith Ins. Co. v. Tex. Inst. for Surgery, L.L.P.,
328 F.R.D. 153, 160 (N.D. Tex. 2018) (citing Fed. R. Civ. P. 37(a)(3)(B)(iv);
Crosswhite v. Lexington Ins. Co., 321 F. App'x 365, 368 (5th Cir. 2009)). Rule
26(b)(1), however, applies to nonprivileged matter, and a party withholding
discovery on privilege grounds, “‘must: (i) expressly make the claim; and (ii)
describe the nature of the documents, communications, or tangible things not
produced or disclosed—and do so in a manner that, without revealing information
itself privileged or protected, will enable other parties to assess the claim.’” Id. at
161 (quoting Fed. R. Civ. P. 26(b)(5)(A)). Rule 37 dictates “an evasive or incomplete
disclosure, answer, or response must be treated as a failure to disclose, answer, or
respond.” Fed. R. Civ. P. 37(a)(4).
Attorney-Client Privilege
“The Federal Rules of Evidence provide that evidentiary privileges ‘shall be
governed by the principles of the common law . . . in the light of reason and
experience.’” United States v. Jicarilla Apache Nation, 564 U.S. 162, 169 (2011)
(ellipses in original) (quoting Fed. R. Evid. 501). The attorney-client privilege “is
the oldest of the privileges for confidential communications known to the common
law.” Upjohn Co. v. United States, 449 U.S. 383, 389 (1981) (citation omitted). It
serves to promote the observance of law and administration of justice by
“encourag[ing] full and frank communication between attorneys and their clients.”
Id.

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For the attorney-client privilege to apply to a communication, “the
proponent ‘must prove: (1) that he made a confidential communication; (2) to a
lawyer or his subordinate; (3) for the primary purpose of securing either a legal
opinion or legal services, or assistance in some legal proceeding.’” E.E.O.C. v. BDO
USA, L.L.P., 876 F.3d 690, 695 (5th Cir. 2017) (emphasis in original) (quoting
United States v. Robinson, 121 F.3d 971, 974 (5th Cir. 1997)). Whether the privilege
applies is a “‘highly fact-specific’ inquiry, and the party asserting the privilege bears
the burden of proof.” Id. (citing Stoffels v. SBC Commc'ns, Inc., 263 F.R.D. 406,
411 (W.D. Tex. 2009)). To carry that burden, the party “must provide sufficient
facts by way of detailed affidavits or other evidence to enable the court to
determine whether the privilege exists”; only afterward is in camera review
appropriate. Navigant Consulting, Inc. v. Wilkinson, 220 F.R.D. 467, 473 (N.D.
Tex. 2004) (citation omitted) (conducting a privilege analysis under Tex. R. Evid.
503(b), which sets forth essentially the same elements as those articulated by the
Fifth Circuit in E.E.O.C., 876 F.3d at 695). Once the party asserting the privilege
has proven that it applies, the burden shifts to the other party to prove “any
applicable exceptions.” E.E.O.C., 876 F.3d at 695 (internal quotation marks
omitted) (quoting Perkins v. Gregg Cty., 891 F. Supp. 361, 363 (E.D. Tex. 1995)).
Because privileges shield relevant information from discovery, the attorney-client
privilege is to be construed narrowly, and “[a]mbiguities as to whether the
elements of a privilege claim have been met are construed against the proponent.”
Id. (citation omitted); see also Robinson, 121 F.3d at 974 (citations omitted).
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While “[t]he attorney-client privilege ranks among the oldest and most
established evidentiary privileges,” an exception exists “when a trustee obtains
legal advice related to the exercise of fiduciary duties” such that “the trustee cannot
withhold attorney-client communications from the beneficiary of the trust.”
Jicarilla Apache Nation, 564 U.S. at 165. This is because “the trustee has no
independent interest in trust administration” and “is subject to a general commonlaw duty of disclosure.” Id. at 166. The Fifth Circuit has recognized this “fiduciary
exception” in the ERISA context. See Wildbur v. ARCO Chem. Co., 974 F.2d 631,
645 (5th Cir. 1992) modified, 979 F.2d 1013 (5th Cir. 1992) (per curiam). An ERISA
plan administrator owes fiduciary duties to the plan’s beneficiaries. Id. (citing 29
U.S.C. §§ 1002(21); 1103(a), (c)(1); 1104(a)(1)). Thus, “[w]hen an attorney advises
a plan administrator or other fiduciary concerning plan administration, the
attorney’s clients are the plan beneficiaries for whom the fiduciary acts, not the
plan administrator.” Id. (citing Wash.-Balt. Newspaper Guild, Local 35 v. Wash.
Star Co., 543 F. Supp. 906, 909 (D.D.C. 1982)). As a result, “an ERISA fiduciary
cannot assert the attorney-client privilege against a plan beneficiary about legal
advice dealing with plan administration.” Id. (citing Wash.-Balt. Newspaper
Guild, 543 F. Supp. at 909).
Analysis
Advanced contends that all the documents listed on Cigna’s privilege log,
dated prior to the filing of this lawsuit, should be produced because the documents
relate to Cigna’s acts of Plan administration and the fiduciary exception to the
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attorney-client privilege applies. Specifically, Advanced contends Cigna denied its
reimbursement claims based on a benefits review conducted by Cigna’s legal
department that involved Plan interpretation, which is a fiduciary determination
conducted as a function of Plan administration. Advanced further contends that it
is entitled to invoke the fiduciary exception because it is an assignee of the
beneficiaries’ rights to make claims for medical services under the Plan and, as
such, it “takes all of the rights of the assignor for the thing assigned.” Pl.’s Supp.
Br. 6. Cigna disputes that Advanced is a beneficiary of the Plan entitled to invoke
the fiduciary exception to the attorney-client privilege. Cigna further asserts that
Advanced is not entitled to invoke the exception as the beneficiaries’ assignee
because “the rights the provider obtains are limited to those expressly set forth in
the assignment.” Defs.’ Supp. Br. 7.
Assuming, without deciding, for the purposes of Advanced’s Motion to
Compel that the documents on Cigna’s privilege log constitute confidential
communications concerning Plan administration, the Court concludes that
Advanced is not entitled to assert the fiduciary exception to the attorney-client
privilege on behalf of the beneficiaries because under Advanced’s “Assignment of
Benefits,” the beneficiaries did not assign their right to assert the attorney-client
privilege.
A.
There appears to be no Fifth Circuit authority directly addressing the
discrete issue presented. The parties have not identified any legal precedent
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holding that a third-party provider, such as Advanced, may compel otherwise
privileged communications under the fiduciary exception. Nor has the Court found
any such case in its own research. However, district courts in the circuit have issued
opinions that are instructive. In Klein v. Federal Insurance Company, 2014 WL
3408355, at *8 (N.D. Tex. July 14, 2014), the plaintiffs sought to compel Federal
Insurance to produce documents that Federal claimed were subject to the
attorney-client privilege in the plaintiffs’ class action law suit against CVS Revco
D.S., Inc.1 (“CVS”) and Retrac, Inc. Federal provided insurance coverage to CVS
and Retrac. Id. at *1. CVS assigned to the plaintiffs:
i) all of their rights, if any, under the Federal Policy to
seek indemnity coverage, limited to the Escrow Payment,
for the claims asserted against them in the Class Action;
and ii) all of their rights, if any, under the Federal Policy
or applicable law to seek attorney's fees and costs if
prevailing in the Consolidated Declaratory Judgment
Actions.
Id. at *11. The plaintiffs argued that Federal’s documents were not privileged as to
them because the documents belonged to CVS as Federal’s insured, and, therefore,
to the plaintiffs as CVS’s assignees. Id. at *8. Federal contended, however, that the
plaintiffs were not entitled to the documents “[b]ecause the assignment permits
the class plaintiffs to seek coverage under the Federal policy but does not otherwise
waive any attorney-client . . . privilege.” Id. The court found that “[n]othing in the
language of [the] assignment suggests that [CVS] intended to waive the attorneyKlein v. Fed. Ins. Co., 2012 WL 2886679, at *1 n. 1 (N.D. Tex. July 16, 2012) (noting that “[i]n 1997 Revco
merged with CVS Corporation and the new corporation was named CVS Revco D.S., Inc.”).
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client privilege or to assign to the class plaintiffs the right to assert the privilege,”
and that “by assigning its rights to the class plaintiffs without specific language
addressing the attorney-client or any other privilege, [CVS] did not waive [those]
privileges.” Id. at *11. Thus, the court denied the plaintiffs’ motion because only
CVS, the client, could waive the attorney-client privilege since it had not assigned
the right to assert the privilege. Id.; see also United States v. Hankins, 631 F.2d
360, 365 (5th Cir. 1980) (“In this country the [attorney-client] privilege has
belonged traditionally to the client . . . .” (quoting United States v. Jones, 517 F.2d
666, 674 (5th Cir. 1974)).
In this case, Advanced’s “Assignment of Benefits” is more limited than the
assignment at issue in Klein, wherein the defendants assigned “all of their rights,
if any, under the Federal Policy to seek indemnity coverage.” Klein, 2014 WL
3408355, at *11 (emphasis added). Here, the “Assignment of Right to Sue” section
of Advanced’s “Assignment of Benefits” reads:
3. In the event any insurance company or attorney,
obligated by contractual agreement to issue payments to
me for your service charges, refuses to pay upon demand
by you, I hereby assign and transfer to you the cause of
action that exists in my favor against any such company
or attorney and authorize you to prosecute said action
either in my name or your name as you otherwise resolve
said claim as you see fit. I understand that whatever
amounts you do not collect from said insurance proceeds
(whether it be all or part of what is due) shall be paid by
me.
4. I also assign to you, the medical provider, and grant the
right of lien against any and all claims against any third
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party whose negligence may have caused my injury,
including their insurance, up to the amount of the bill for
treatment.
5. If I refuse to pay any balance owed or if Advanced
Physicians, S.C. has to use an attorney, collection agency
or incured [sic] court costs to pursue any collections I will
be responsible for any fees. I also agree to pay prime
interest rate on any outstanding balances.
6. I waive the Statue [sic] of Limitations regarding my
doctor’s right to recover from me directly.
7. I hereby direct my attorney to cooperate, assist and not
interfere with you, the medical provider, in recovering any
Benefits that I may be entitled to.
Defs.’ Ex. A (ECF No. 127-1). The text of Advanced’s “Assignment of Benefits”
transfers to Advanced the patient’s cause of action against any insurance company
refusing to issue payment and any claim against a potentially negligent third party
responsible for the patient’s injury. Like in Klein, nothing in the assignment’s
language suggests that the beneficiaries, who assigned their claims for
reimbursement to Advanced, intended to assign their right to assert the attorneyclient privilege. In fact, Advanced’s “Assignment of Benefits” does not go as far as
the Klein assignment, which transferred “all of [defendants’] rights.” Accordingly,
though Plaintiff rightly asserts that “the ability of patients to assign their claims to
medical providers is both permissible and beneficial,” Pl.’s Br. Supp. 6, the Court
finds that the Plan beneficiaries who assigned their claims to Advanced did not
assign their right to assert the attorney-client privilege.

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B.
Advanced further argues that even though it “has not been assigned the
participant’s right to sue the Plan for breach of fiduciary duty,” it should still be
able to assert the fiduciary exception to the attorney client privilege because “[t]he
fiduciary duties Cigna owes when administering the Plan are separate and
independent of a claim for breach of fiduciary duty.” Pl.’s Supp. Br. 7-8. Cigna
responds that because “Advanced’s assignment does not assign the right to sue for
breach of fiduciary duty . . . by corollary, it does not assign the associated fiduciary
exception.” Defs.’ Br. Supp. 8. The Court concludes that Advanced’s inability to
bring a breach of fiduciary duty claim against Cigna evinces that it does not have
the right to assert the fiduciary exception to the attorney-client privilege on the
beneficiaries’ behalf.
The Fifth Circuit recognizes “a distinction between the rights of a
beneficiary, as referred to in ERISA, to receive covered medical services or
reimbursement therefor, and one entitled to receive payment as an assignee of
such a beneficiary.” Hermann Hosp. v. MEBA Med. & Benefits Plan, 959 F.2d 569,
576 (5th Cir. 1992), overruled in part by Access Mediquip, L.L.C. v.
UnitedHealthcare Ins. Co., 698 F.3d 229, 230 (5th Cir. 2012) (per curiam). The
assignee does not become a “beneficiary” for all purposes under ERISA by virtue
of the assignment. See id. (“Neither Mr. Nicholas’ act of authorizing the Plan to
make payments directly to Hermann, nor Mrs. Nicholas’ assignment of the right to
recover payments for benefits provided, elevated Hermann to the status of
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beneficiary under the Plan.”). And with respect to ERISA fiduciary-breach claims
in particular, “only an express and knowing assignment . . . is valid.” Tex. Life, Acc.,
Health & Hosp. Serv. Ins. Guar. Ass'n v. Gaylord Entm't Co., 105 F.3d 210, 218
(5th Cir. 1997) (citations omitted). This is “[b]ecause an assignment of a fiduciary
duty breach claim affects all plan participants, and unsuccessful claims can waste
plan resources that are meant to be available for employees’ retirements”;
therefore, “[those] claims are not assigned by implication or by operation of law.”
Id. For example, in Gaylord Entertainment Company, the Guaranty Act stated
“that anyone accepting benefits under the Act ‘is considered to have assigned the
rights under, and any causes of action relating to, the covered policy or contract to
the [Guaranty A]ssociation to the extent of the benefits received under this Act.’”
Id. at 219 (quoting Tex. Ins. Code Art. 21.28-D § 8(t)). The court found the Act’s
broad provision insufficient to assign the beneficiaries’ fiduciary-breach claims to
the Guaranty Association because it was not an express or knowing assignment.
Id.
Here, Advanced’s “Assignment of Benefits” generally assigns causes of
action against an insurance company and claims against potentially negligent third
parties; it does not expressly mention fiduciary-breach claims. Thus, the
beneficiaries did not assign any fiduciary-breach claim they might have to
Advanced. Because Advanced does not hold all of the rights of a Plan beneficiary
for all purposes under ERISA by virtue of its assignment, as evidenced by
Advanced’s inability to bring an ERISA fiduciary-breach claim against Cigna, the
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Court concludes that Advanced does not have the right to assert the fiduciary
exception to the attorney-client privilege on behalf of Plan beneficiaries.
Conclusion
While Plan beneficiaries assigned their claims for reimbursement under the
Plan to Advanced, Advanced is not a “beneficiary” for the purpose of asserting the
fiduciary exception to the attorney-client privilege under ERISA. Specifically, the
Court finds that the assignment does not assign to Advanced the beneficiaries’
right to assert the attorney-client privilege or sue for breach of fiduciary duty.
Accordingly, Plaintiff Advanced Physicians, S.C.’s Motion to Compel (ECF No. 110)
is DENIED.
SO ORDERED.
April 17, 2019.

_______________________________________________

REBECCA RUTHERFORD
UNITED STATES MAGISTRATE JUDGE

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