Eagle Air Med et al v. Sentinel Air Medical Alliance et al
Filing
166
MEMORANDUM DECISION AND ORDER denying coverted 127 Motion to Quash (Protective Order). Signed by Magistrate Judge Evelyn J. Furse on 2/1/18 (alt)
IN THE UNITED STATES DISTRICT COURT
DISTRICT OF UTAH, CENTRAL DIVISION
EAGLE AIR MED CORPORATION, a Utah
corporation; and VALLEY MED FLIGHT
MEMORANDUM DECISION AND ORDER
INC., a North Dakota corporation,
DENYING DEFENDANTS’ CONVERTED
MOTION FOR PROTECTIVE ORDER
Plaintiffs,
(ECF NO. 127)
v.
Case No. 2:16-cv-00176-TC-EJF
SENTINEL AIR MEDICAL ALLIANCE,
LLC, a Wyoming limited liability company;
JEFFREY FRAZIER, an individual; and
DOES 1 through 10,
Judge Tena Campbell
Magistrate Judge Evelyn J. Furse
Defendants.
Defendants Sentinel Air Medical Alliance and Jeffrey Frazier (collectively,
“Sentinel”) filed a Motion to Quash Subpoenas to Sentinel Clients seeking to
prevent Plaintiffs Eagle Air Med Corporation (“Eagle”) and Valley Med Flight Inc.
(“Valley”) from serving subpoenas on ten Sentinel clients. (ECF No. 127). On
September 19, 2017, the Court held a hearing on Sentinel’s Motion. (ECF No.
133.) During the hearing, Sentinel converted its motion to quash into a motion
for protective order. (ECF No. 140 at 14.) At the conclusion of the hearing, the
Court asked the parties to submit additional briefing on three issues: (1) the
Court’s authority to modify or order withdrawal of the subpoenas issued in other
jurisdictions; (2) how Eagle and Valley selected the Sentinel clients they
subpoenaed; and (3) the relevance of the documents sought in the subpoenas
concerning other air medical transport providers to Sentinel’s good faith defense.
(Id. at 41–43.) After a careful review of the parties’ filings and papers, and
consideration of the parties’ arguments during the hearing, the Court DENIES
Sentinel’s Motion for the reasons addressed below.
BACKGROUND
On April 7, 2017, the Court ordered Sentinel to provide Eagle and Valley
with a list of Sentinel’s clients since January 1, 2013. (ECF No. 34.) Sentinel
provided the client list on June 23, 2017. (ECF No. 145 at 3.) In July 2017,
Eagle and Valley’s counsel noticed and served subpoenas on three entities—
Builders Trust of New Mexico, New Mexico Casualty Company, and The Benefit
Group—that Defendant Jeffrey Frazier identified as “top five” Sentinel clients.
(Id. at 3, 6; ECF No. 145-3.) Sentinel did not object to the subpoenas until filing
its motion to quash (now a converted motion for protective order) on September
11, 2017. (ECF No. 145 at 4.) The July subpoenas requested four types of
documents: (1) communications with Sentinel referring to Eagle or Valley; (2)
other communications with any person referring or relating to Eagle or Valley
since January 1, 2013; (3) agreements with Sentinel regarding Sentinel’s
evaluations or recommendations concerning the medical necessity of, and
reasonableness of charges and appropriate reimbursement for, any air medical
transport; and (4) documents relating to services Sentinel rendered in connection
with Eagle or Valley transports since January 1, 2013. (Id. at 3-4; ECF No. 1273.)
In August 2017, Eagle and Valley served an additional seven subpoenas
on Sentinel clients—Summit Management Services, Inc., Mutual Assurance
Administrators, Inc., Meritain Health, Inc., UMR, Inc., CoreSource, Inc., Gilsbar,
2
LLC, and HealthSmart Benefit Solutions, Inc.—that they identified from the client
list that Sentinel provided. (ECF No. 145 at 4-5; ECF No. 127-2.) The August
subpoenas requested three specific types of documents: (1) documents
regarding any review, evaluation, or recommendation that Sentinel provided from
January 1, 2013 to December 31, 2015; (2) communications referring to Eagle or
Valley from January 1, 2013 to December 31, 2015, including any with Sentinel;
and (3) documents regarding Sentinel’s expertise, skill, or qualifications. (Id.)
LEGAL STANDARD
Parties may conduct discovery on “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.”
Fed. R. Civ. P. 26(b)(1). “The court may, for good cause, issue an order to
protect a party or person from annoyance, embarrassment, oppression, or undue
burden or expense.” Fed. R. Civ. P. 26(c)(1). A protective order may “forbid[]
inquiry into certain matters, or limit[] the scope of disclosure or discovery to
certain matters.” Fed. R. Civ. P. 26(c)(1)(D). The party seeking the protective
order bears the burden of showing good cause. McBride v. Medicalodges, Inc.,
250 F.R.D. 581, 583 (D. Kan. 2008). “Whether to enter a protective order lies
within the court's discretion.” Id.
3
DISCUSSION
As an initial matter, the Court has jurisdiction to decide Sentinel’s motion,
including as it relates to subpoenas issued to third parties in other jurisdictions,
since Sentinel converted its motion to quash into a motion for protective order. 1
See, e.g., Straily v. UBS Fin. Servs., Inc., No. 07-CV-00884-REB-KMT, 2008 WL
5378148, at *2 (D. Colo. Dec. 23, 2008) (unpublished) (court has authority to
enter a protective order relating to discovery sought in other jurisdictions because
“the broad outlines of discovery in a civil case are controlled by the court where
the case is filed”); Rajala v. McGuire Woods, LLP, No. 08-2638-CM-DJW, 2010
WL 4683979, at *7 (D. Kan. Nov. 12, 2010) (unpublished) (court has authority to
entertain motion for protective order “where (1) the issues raised are central to
the case and extend beyond the specifics of the particular subpoena, and (2) the
requested ruling is necessary to insure that general discovery issues will receive
uniform treatment, regardless of the district in which the discovery is pursued”).
Eagle and Valley do not dispute that the Court has this authority. (ECF No. 145
at 2 n.1.)
With respect to the merits of its motion, Sentinel sets forth a number of
arguments concerning the subpoenas, which it claims necessitate the issuance
of a protective order. First, Sentinel argues that during the April 7, 2017 hearing
the Court imposed limits on the scope of third party subpoenas sent to Sentinel
clients. (ECF No. 127 at 2-3.) Specifically, Sentinel claims the Court limited the
1
Eagle and Valley served Meritain Health, Inc., UMR, Inc., CoreSource, Inc., Gilsbar,
LLC, and HealthSmart Benefit Solutions, Inc. in the District of Utah, so the Court would
also have jurisdiction to quash those subpoenas. See Fed. R. Civ. P. 45(d)(3).
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scope of subpoenas to documents between Sentinel and the subpoenaed party
concerning Eagle and Valley. (Id.; ECF No. 136 at 2.) While the Court
discussed anticipated discovery directed to Sentinel clients during the hearing, it
did not impose a hard limitation on the scope of subpoenas. The hearing
addressed Eagle and Valley’s motion to compel production of Sentinel’s client
list. The Court did not have before it a motion concerning the scope of actual
subpoenas directed at specific Sentinel clients, and the parties did not address
the impact of the elements of the claims and affirmative defenses on the
necessary scope of discovery directed to third parties. Therefore, the Court
declines to use any of the statements made at the April 7 hearing to limit the
scope of the subpoenas directed to Sentinel clients. Instead, the Court assesses
the discovery sought through the subpoenas for relevance and proportionality.
Second, Sentinel argues that Eagle and Valley are attempting to harass
Sentinel’s clients through issuance of subpoenas. (ECF No. 127 at 2, 4; ECF
No. 136 at 3, 5.) The Court does not find any evidence to support this assertion
and is satisfied with Eagle and Valley’s explanation concerning the method it
used to select entities to subpoena from the client list Sentinel produced. As
Eagle and Valley point out, during his deposition, Defendant Jeffrey Frazier
identified three of the clients subpoenaed—Builders Trust of New Mexico, New
Mexico Casualty Company, and The Benefit Group—as “top five” Sentinel
clients. (ECF No. 145 at 3, 6; ECF No. 145-3.) Sentinel’s counsel also identified
New Mexico Casualty and The Benefit Group as entities for which Sentinel
performed claims reviews relating to Eagle and Valley. (ECF Nos. 145 at 3 n.2 &
5
127-4.) Therefore, the issuance of subpoenas to these entities is reasonable.
Of the seven other entities subpoenaed, Eagle and Valley’s counsel
compared the Sentinel client list 2 with a list containing Eagle and Valley payors
during the relevant timeframe to identify entities that were both Sentinel clients
and Eagle and Valley insurance payors. (ECF No. 145 at 6-7.) Six of the seven
entities that Eagle and Valley’s counsel identified as clients and payors in
common, and issued subpoenas to, underpaid Eagle or Valley. (Id.) In all, Eagle
and Valley subpoenaed 10 out of 188, or less than 5%, of the entities identified
on the Sentinel client list. (Id. at 7.) Eagle and Valley also indicate their intention
to subpoena nine additional Sentinel clients that substantially underpaid Eagle
and Valley during the relevant time period. (Id. at 7 n.5.) If Eagle and Valley
issue these subpoenas, they will have subpoenaed approximately 10% of the
total number of Sentinel clients.
While the Court understands Sentinel’s concerns regarding subpoenas to
certain of its clients, the Court cannot conclude that Eagle and Valley have acted
unreasonably in selecting the clients to subpoena or that they are engaging in a
“fishing expedition.” Instead, the evidence indicates that Eagle and Valley’s
counsel have acted in good faith to limit the number of subpoenas issued to
Sentinel clients and to issue subpoenas only to those clients who may have
relevant information. 3
2
Sentinel designated the client list as Confidential-Attorney’s Eyes Only. (ECF No. 145
at 6-7.) Therefore, Eagle and Valley’s counsel could not enlist the help of its clients in
selecting the entities to subpoena. (Id.)
3
Sentinel filed an addendum to its brief attaching an e-mail that it claims shows Eagle
and Valley intend to issue a subpoena to every Sentinel client. (ECF No. 142, Ex. 1.)
6
Importantly, as Eagle and Valley point out, Sentinel’s document
destruction policies have made third party discovery the only reasonable method
for them to obtain many of the relevant documents in this case. (ECF No. 145 at
8, 10–12.) Had Sentinel employed different document retention policies, and had
Eagle and Valley received the documents directly from Sentinel, then in all
likelihood Eagle and Valley would not have needed to subpoena Sentinel clients.
Thus, in considering the parties’ relative access to relevant information, Eagle
and Valley have no other alternative from which to obtain the relevant
information.
Finally, Sentinel argues that the requests in the subpoenas are overbroad
and seek irrelevant information. (ECF No. 127 at 3; ECF No. 136 at 6-9.)
Sentinel’s objections relate to the requests which seek (1) documents regarding
any review, evaluation, or recommendation Sentinel provided from January 1,
2013 to December 31, 2015 (Request No. 1 in August subpoenas); (2)
agreements with Sentinel regarding Sentinel’s evaluations or recommendations
concerning the medical necessity of, and reasonableness of charges and
appropriate reimbursement for, any air medical transport (Request No. 3 in July
subpoenas); (3) communications referring to Eagle or Valley from January 1,
2013 to December 31, 2015, including any with Sentinel (Request No. 1 in
August subpoenas); and (4) communications with any person referring or relating
to Eagle or Valley since January 1, 2013 (Request No. 2 in July subpoenas).
This information is irrelevant to the issue at hand. Eagle and Valley have not
subpoenaed every Sentinel client; they have subpoenaed only a small subset of
Sentinel clients. The Motion addresses the propriety of the subpoenas actually issued.
7
(See ECF No. 127 at 3; ECF No. 136 at 6-9; 9/19/17 Hr’g Tr. 17:24–19:11, ECF
No. 145-1.)
Sentinel objects to the first two categories of documents because they do
not relate specifically to Eagle and Valley or reviews that Sentinel performed
relating to Eagle and Valley. (ECF No. 127 at 3; ECF No. 136 at 6-9.) Eagle and
Valley argue that documents relating to reviews of non-Eagle/Valley transports
relate to three of the elements necessary to establish their defamation claim.
(ECF No. 145 at 8-12.) The Court agrees with Eagle and Valley.
To establish a claim for defamation, a plaintiff must demonstrate, among
other things that “the statements were false,” that “the statements were not
subject to privilege,” and that “the statements were published with the requisite
degree of fault.” Oman v. Davis Sch. Dist., 2008 UT 70, ¶ 68, 194 P.3d 956, 972.
Eagle and Valley point to one of Sentinel’s review letters as defamatory for
stating that Eagle and Valley’s “charges for this transport . . . in comparison to
charges by other providers, [] are not reasonable. In fact, they are egregious.”
(ECF No. 145 at 8–9; ECF No. 149 at Ex. E.) To prove the falsity of this
statement—one of the elements of a defamation claim—Eagle and Valley would
need to present evidence concerning the rates other providers charged. If they
can show that the other providers charged the same or similar rates, then they
may be able to show the falsity of the statement that Eagle and Valley’s rates
were “egregious” in comparison.
In addition, evidence concerning Sentinel’s state of mind—i.e., whether
Sentinel knew about other providers’ charges when it made the statements that
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Eagle and Valley’s charges were “egregious” in comparison to those of other
providers—relates to the defamation elements requiring Eagle and Valley to
show that the statements were not subject to a privilege and were published with
the requisite degree of fault.
As Eagle and Valley point out, and Sentinel admits, Sentinel asserts
privilege as a defense in this case. (ECF No. 136 at 6-7; ECF No. 145 at 9.)
Courts “ha[ve] long been held that communications between persons who share
a common business interest are qualifiedly privileged and not libelous in the
absence of malice.” Lind v. Lynch, 665 P.2d 1276, 1278 (Utah 1983). Sentinel
has indicated that it intends to argue that it acted in good faith, which does not
meet the malice standard. Eagle and Valley must present evidence to overcome
the common interest privilege. See Russell v. Thomson Newspapers, Inc., 842
P.2d 896, 905 n.28 (Utah 1992) (“Plaintiff has the burden of presenting evidence
to overcome the privilege.”). To do so, Eagle and Valley must show that Sentinel
acted with common law malice or actual malice in publishing the statements.
See id. at 904–05 (describing how plaintiff can show common law malice with
evidence that “the statements were made with ill will . . . or the defendant did not
reasonably believe his or her statements were true”); Ferguson v. Williams &
Hunt, Inc., 2009 UT 49, ¶ 28, 221 P.3d 205, 214–15 (stating test for showing
actual malice with evidence that the defendant “made a defamatory statement
knowing it to be false or . . . acted in reckless disregard as to its falsity”).
Because Eagle and Valley have to show malice, documents bearing on
Sentinel’s state of mind in making the statement that Eagle and Valley’s charges
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were “egregious” compared to other providers’ charges are relevant. If
documents relating to other providers show that they charged the same or similar
rates as Eagle and Valley, these documents may support a finding of malice, i.e.,
that Sentinel did not reasonably believe the statements regarding Eagle and
Valley’s charges, or that it knew the statements to be false or acted in disregard
as to their falsity. Therefore, the Court finds that the requests for documents and
agreements relating to Sentinel’s reviews, evaluations, and recommendations for
other providers are relevant and important to the resolution of the issues in this
case. However, the Court limits the requests to the relevant period of January 1,
2013 to December 31, 2015. 4 This date restriction helps to limit the burden and
expense of the discovery to the period most likely to bear on the case.
Sentinel also objects to the requests seeking communications concerning
Eagle and Valley because the requests are not limited to communications
between Sentinel and the subpoenaed party regarding Eagle and Valley. The
Court does not find the requests for other communications referencing Eagle and
Valley objectionable. Communications with persons other than Sentinel
concerning Eagle and Valley could contain relevant information. For example,
internal communications of the subpoenaed parties may refer to and discuss
Eagle and Valley’s charges and the basis for not paying the claims in full, which
could include references to allegedly defamatory statements in Sentinel’s review
letters. Any such documents would have significance to the causation element.
Therefore, the Court finds the requests for communications referring to Eagle
4
The August subpoenas are limited to this period, but the July subpoenas are not.
10
and Valley relevant and proportional to the needs of the case. However, the
Court limits the requests to the relevant period of January 1, 2013 to December
31, 2015. 5
CONCLUSION
For the foregoing reasons, the Court DENIES Sentinel’s Motion.
However, the Court cautions Eagle and Valley that they should issue additional
subpoenas to Sentinel clients sparingly and only to those clients for which Eagle
and Valley’s counsel has a good faith belief that those clients have relevant
documents. Further, the subpoenas should be narrowly tailored to seek only
relevant documents relating to the relevant time period in this case.
DATED this 1st day of February, 2018.
Evelyn J. Furse
United States Magistrate Judge
5
The August subpoenas are limited to this period, but the July subpoenas are not.
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