Peters v. Aetna Inc.
| Decision Date | 27 July 2018 |
| Docket Number | CIVIL CASE NO. 1:15-cv-00109-MR |
| Parties | SANDRA M. PETERS, on behalf of herself and all others similarly situated, Plaintiff, v. AETNA INC., AETNA LIFE INSURANCE COMPANY, and OPTUMHEALTH CARE SOLUTIONS, INC., Defendants. |
| Court | U.S. District Court — Western District of North Carolina |
THIS MATTER is before the Court on the Plaintiff's Motion to Compel Aetna and Optum to Produce Documents Improperly Redacted or Withheld as Privileged [Doc. 89].
This a putative class action brought by the Plaintiff Sandra M. Peters against the Defendants Aetna, Inc., Aetna Life Insurance Company (collectively, "Aetna"), and OptumHealth Care Solutions, Inc. ("Optum"), asserting claims pursuant to the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. § 1001, et seq. ("ERISA"). [Doc. 1].1
The Plaintiff is a former2 member of an ERISA plan ("the Mars Plan" or "the Plan") self-funded by her husband's former employer, Mars, Inc. ("Mars"), for its employees and retirees. Mars, through its benefits committee, is the "Plan Administrator" for the Plan. [Aetna Ex. 6: Summary Plan Description at 57]. Through a Master Service Agreement, the Mars Plan hired Aetna to perform certain enumerated administrative services for the plan, including a specific delegation to act as the Plan's "Claim Fiduciary" with respect to adjudicating benefits claims and the first two levels of appeals under the Plan. In that regard, Mars delegated "discretionary authority [to Aetna] to determine entitlement to benefits . . . including discretionary authority to determine and evaluate facts and evidence, and discretionary authority to construe the terms of the Plan." [Aetna Ex. 2: Master Service Agreement at 00002790]. In another section titled "Fiduciary Duty," the Master Service Agreement provides that Mars "retains complete authorityand responsibility for the Plan, its operation, and the benefits provided thereunder," and that Aetna is "empowered to act on behalf of [Mars] in connection with the Plan only to the extent expressly stated . . . ." [Id. at 00002772].
Beginning in 2012, Aetna entered into a series of provider contracts with Optum, by which Aetna agreed to pay Optum flat "per visit" rates for physical therapy, occupational therapy, and chiropractic services in particular markets. In exchange, Optum agreed to provide Aetna and its customers with access to Optum's network of treating providers, along with clinical oversight (also referred to as "patient management"), claims processing, and other administrative services related to this network. [Aetna Ex. 7: Aetna 30(b)(6) Dep. at 19; Aetna Exs. 12-15]. Optum would also pay its contracted providers for the services they performed. Because of this structure, there would often be a difference between the per visit rate paid by Aetna to Optum and the rate paid by Optum to its downstream treating provider, which would be paid to Optum as an "administrative fee."3
In her Complaint, the Plaintiff alleges that Aetna and Optum fraudulently misrepresented such administrative fees as medical expenses. The Plaintiff alleges that these misrepresentations allowed Aetna to illegally (i) obtain payment of Optum's administrative fees directly from insureds when the insureds' deductibles have not been reached; (ii) use insureds' health spending accounts to pay for these fees; (iii) inflate insureds' co-insurance obligations using administrative fees; (iv) artificially reduce the amount of available coverage for medical services when such coverage is subject to an annual cap; and (v) obtain payment of the administrative fees directly from employers when an insured's deductible has been exhausted or is inapplicable. [Doc. 1]. The Plaintiff alleges that in so doing, the Defendants breached their fiduciary duties as plan administrators, in violation of 29 U.S.C. § 1132(a)(2) (Count III) and 29 U.S.C. § 1132(a)(1), (a)(3), and/or 29 U.S.C. § 1104 (Count IV). [Id.].
In November 2016, the Plaintiff served discovery requests on Defendants, seeking the production of certain documents. In response, the Defendants served their initial privilege logs asserting the attorney-client privilege. After meeting and conferring, the Defendants agreed to serve revised privilege logs, and the Plaintiff agreed to provide a list of categories of documents that were of particular interest to the Plaintiff under thefiduciary exception to the attorney-client privilege. The Plaintiff's categories included legal advice related to the following topics:
Aetna advised that it was not aware of any legal advice aside from advice falling into categories 5 and 6 (communications with plans andmembers about the Optum arrangement or related plan changes and the Defendants' medical loss reporting obligations), and Optum advised that it was only aware of the existence of legal advice falling into category 4 (Defendants' use of CPT codes for services not performed by actual providers when administering claims for benefits). The Defendants, however, refused to stipulate that they received no legal advice regarding the other categories.
The Defendants served revised privilege logs on December 8 and 11, 2017, and Optum served a supplemental log on December 22, 2017. At the Defendants' request, the Plaintiff sought to further narrow the dispute by highlighting documents that the Plaintiff believed were either subject to the fiduciary exception to the attorney-client privilege or were likely to be subject to that exception. The parties met and conferred again but were unable to resolve the dispute.
The Plaintiff now moves to compel the Defendants to produce certain documents that the Defendants have redacted or withheld as privileged. The Plaintiff contends that such documents must be produced because they are subject to the fiduciary exception to the attorney-client privilege. The Plaintiff further contends that Aetna is also improperly asserting work product privilege with respect to certain notes taken by Aetna employee ShironHagens ("Hagens' Notes") regarding her communications with Optum employees concerning the Plaintiff's ERISA plan. Accordingly, Plaintiff asks the Court to: (1) compel Aetna and Optum to produce the withheld documents that fall within the fiduciary exception; (2) conduct an in camera review of certain withheld documents that appear likely to be subject to the fiduciary exception; and (3) compel Aetna to produce Hagens' Notes. [Docs. 89, 90 (sealed), 91 (redacted)]. The Defendants filed Responses in opposition [Docs. 100 (redacted), 101 (sealed), 102 (redacted), 103 (sealed)], and the Plaintiff filed Replies to each Response [Docs. 112 (sealed), 113 (sealed), 114 (redacted), 115 (redacted)]. The Court held a hearing on the Plaintiff's motion on June 19, 2018.
Rule 26 of the Federal Rules of Civil Procedure provides, in pertinent 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 ofdiscovery need not be admissible in evidence to be discoverable.
Fed. R. Civ. P. 26(b)(1). Under Rule 37 of the Federal Rules of Civil Procedure, "a party may move for an order compelling disclosure or discovery." Fed. R. Civ. P. 37(a)(1). The decision to grant or deny a motion to compel is generally an issue within the broad discretion of the trial court. See Lone Star Steakhouse & Saloon, Inc. v. Alpha of Va., Inc., 43 F.3d 922, 929 (4th Cir. 1995). However, the application of the attorney-client privilege presents a mixed question of law and fact for the Court. See In re Grand Jury Proceedings, 33 F.3d 342, 353 (4th Cir. 1994).
"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). "The privilege is intended to encourage full and frank communication between attorneys and their clients." United States v. Mett, 178 F.3d 1058, 1062 (9th Cir. 1999).
Because the attorney privilege "impedes the full and free discovery of the truth," the privilege must be "narrowly construed." Hawkins v. Stables, 148 F.3d 379, 383 (4th Cir. 1998) (). Thus, the Fourth Circuit has explained that the attorney-client privilege applies only when the following factors are met:
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