NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-2031-23
ATLANTIC ER PHYSICIANS TEAM PEDIATRIC ASSOCIATES, PA, EMERGENCY CARE SERVICES OF NJ, PA, EMERGENCY PHYSICIAN ASSOCIATES OF NORTH JERSEY, PC, EMERGENCY PHYSICIAN ASSOCIATES OF SOUTH JERSEY, PC, EMERGENCY PHYSICIAN SERVICES OF NEW JERSEY, PA, MIDDLESEX EMERGENCY PHYSICIANS, PA, and PLAINFIELD EMERGENCY PHYSICIANS, PA,
Plaintiffs-Respondents,
v.
UNITEDHEALTH GROUP, INC., UNITEDHEALTHCARE INSURANCE COMPANY, OXFORD HEALTH PLANS (NJ), INC., MULTIPLAN, INC., and UMR, INC.,
Defendants-Appellants. _______________________________ Argued January 22, 2025 – Decided March 13, 2025
Before Judges Gilson, Firko, and Augostini.
On appeal from an interlocutory order of the Superior Court of New Jersey, Law Division, Gloucester County, Docket No. L-1196-20.
Jonathan D. Hacker (O'Melveny & Myers LLP) of the District of Columbia and Maryland bars, admitted pro hac vice, argued the cause for appellants (Stradley Ronon Stevens & Young, LLP, and Jonathan D. Hacker, attorneys for appellants UnitedHealth Group, Inc., UnitedHealthcare Insurance Company, Oxford Health Plans (NJ), Inc. and UMR, Inc.; Sweeney & Sheehan, attorneys for appellant MultiPlan, Inc.; Jonathan D. Hacker, Greg Jacob (O'Melveny & Myers LLP) of the District of Columbia bar, admitted pro hac vice, Ethan Scapellati (O'Melveny & Myers LLP) of the New York bar, admitted pro hac vice, Francis X. Manning, Neal A. Thakkar, Errol J. King, Jr. (Phelps Dunbar LLP) of the Louisiana bar, admitted pro hac vice, Katherine C. Mannino (Phelps Dunbar LLP) of the Louisiana bar, admitted pro hac vice, Taylor J. Crousillac (Phelps Dunbar LLP) of the Louisiana bar, admitted pro hac vice, Craig L. Caesar (Phelps Dunbar LLP) of the Louisiana bar, admitted pro hac vice, and Brittany H. Alexander (Phelps Dunbar LLP) of the Louisiana bar, admitted pro hac vice, of counsel; Robert J. Norcia, on the joint briefs).
Justin C. Fineberg (Lash Goldberg Fineberg LLP) of the Florida bar, admitted pro hac vice, argued the cause for respondents (Lowenstein Sandler, LLP, and Justin C. Fineberg, attorneys; Justin C. Fineberg, Jonathan E. Siegelaub (Lash Goldberg Fineberg LLP) of the Florida bar, admitted pro hac vice, and Kent D. Anderson, of counsel and on the briefs).
A-2031-23 2 Camille Joanne Rosca (Orrick, Herrington & Sutcliffe LLP), Wendy Butler Curtis (Orrick, Herrington & Sutcliffe LLP) of the District of Columbia bar, admitted pro hac vice, Andrew D. Silverman (Orrick, Herrington & Sutcliffe LLP) of the New York bar, admitted pro hac vice, attorneys for amicus curiae Lawyers for Civil Justice; (Wendy Butler Curtis, Andrew D. Silverman and Camille Joanne Rosca, on the brief).
Stone Conroy LLC, attorneys for amici curiae the Chamber of Commerce of the United States of America and the New Jersey Civil Justice Institute (Shalom D. Stone and Rebekah R. Conroy, on the brief).
Shook, Hardy & Bacon LLP and Robert D. Owen (Robert D. Owen LLC) of the Illinois bar, admitted pro hac vice, attorneys for amicus curiae Electronic Discovery Institute (Philip S. Goldberg Robert D. Owen, and Patrick Oot (Shook, Hardy & Bacon LLP) of the District of Columbia bar, admitted pro hac vice, on the brief).
PER CURIAM
This interlocutory appeal involves discovery disputes concerning
electronically stored information (ESI). Defendants UnitedHealth Group, Inc.,
UnitedHealthcare Insurance Company, Oxford Health Plans (NJ), Inc., and
UMR, Inc. (collectively, the United defendants) and MultiPlan, Inc. (MultiPlan)
(collectively, defendants) appeal from a September 12, 2023 order concerning
document review and production of ESI (the ESI Order). The ESI Order directs
the parties to produce all documents identified by their agreed-upon ESI search
A-2031-23 3 terms, except those which are privileged or contain highly proprietary business
information, regardless of whether they are responsive or relevant. Because the
ESI Order violates Rule 4:10-2(a) by compelling defendants to produce
irrelevant documents, and because the order constitutes an abuse of discretion,
we vacate the ESI Order and remand for the entry of an order limiting production
to relevant documents.
I.
Plaintiffs provide emergency medical services to patients throughout New
Jersey, without regard to a patient's ability to pay or their insurance status in
accordance with 42 U.S.C. § 1395dd and N.J.S.A. 26:2H-18.64. The United
defendants are insurers or administrators of employer-sponsored health benefit
plans. In providing medical services, plaintiffs routinely care for patients whose
insurance coverage is either issued, administered, or underwritten by the United
defendants.
On May 23, 2022, plaintiffs filed an amended complaint alleging that the
United defendants leveraged plaintiffs' legal obligation to care for emergency
patients to enrich themselves by forcing plaintiffs out-of-network and
reimbursing plaintiffs for their services at "shockingly low rates." Plaintiffs also
allege that co-defendant MultiPlan, a cost management company, conspired with
A-2031-23 4 the United defendants to underpay claims by offering fraudulent health claim
pricing services.
In their amended complaint, plaintiffs asserted four causes of action: (1)
breach of an implied-in-fact contract (count one); (2) remuneration for quantum
meruit services (count two); (3) violations of the New Jersey Health Claims
Authorization, Processing and Payment Act (HCAPPA), N.J.A.C. 11:22-1.1 to
-1.16 (count three); and (4) violations of the New Jersey Anti-Racketeering Act
(RICO), N.J.S.A. 2C:41-1 to -6.2 (counts four and five).
Plaintiffs' action is related to a series of nationwide litigations between
the United defendants and plaintiffs' affiliates. Indeed, plaintiffs' action in New
Jersey is one of at least ten related civil actions filed against the United
defendants in various jurisdictions since 2017.
On April 3, 2023, the trial court in this matter entered an electronic
discovery stipulation and order to "govern the discovery of [ESI] and any
electronically stored or maintained information." That order required the parties
to collaborate to identify "custodians whose email[s] [were] reasonably believed
to contain relevant ESI for collection" and develop "search parameters, i.e.,
search terms" to search the agreed-upon custodians' records. Thereafter, on
April 21, 2023, the trial court entered an amended discovery-confidentiality
A-2031-23 5 order granting the parties the right to designate as "Confidential" and "Attorneys'
Eyes Only" any document, or portion of a document, containing "highly
sensitive business or personal information."
On April 25, 2023, the trial court conducted a discovery hearing with
counsel for all parties. At the hearing, several discovery issues were addressed,
including relevance objections made by both sides. Specifically, plaintiffs'
counsel "raised an issue that had come up with United in other litigation: that
United was producing documents but making selective redactions based on
purported 'relevance' of information contained within the produced documents."
In response, the trial court stated that "relevance is not a reason to withhold
documents."
Throughout March, April, and May 2023, the parties engaged in search
terms negotiations. The purpose of those negotiations was to refine the search
terms to minimize the number of irrelevant documents generated by the search
criteria. The United defendants maintain that they negotiated
with the understanding that the terms themselves would necessarily be overbroad but that [they] would have the opportunity . . . to review and remove documents that were not responsive to . . . [p]laintiffs' requests for production and that have no bearing on the claims or defenses in this litigation.
A-2031-23 6 On May 1, 2023, the court appointed a special discovery facilitator
pursuant to Rule 4:41-1, "to hear and recommend resolution of all discovery
disputes" between the parties.
On July 6, 2023, the trial court held an unrecorded case management
conference to discuss the status of the parties' discovery efforts, including their
ESI negotiations. During the conference, the trial court directed the parties to
produce all documents returned by the agreed-upon ESI search terms, regardless
of whether they were responsive or relevant (July 6 Directive). Further, the trial
court directed the parties that they could only withhold documents based on
privilege. Those directives were issued even though no party had requested
them.
Thereafter, the United defendants requested a pre-motion conference to
discuss the July 6 Directive, which was held on August 24, 2023. At th at
conference, the United defendants raised several concerns, including that the
July 6 Directive would lead to the production of thousands of irrelevant
documents and require them to conduct a burdensome privilege review.
Additionally, the United defendants raised privacy concerns stemming from a
related litigation in Nevada where plaintiffs' affiliates posted documents on a
public website designated as "Attorneys' Eyes Only" and "Confidential."
A-2031-23 7 The trial court was not moved by those concerns. As an initial matter, the
court noted that "ESI is fundamentally different than just paper documents
because ESI is voluminous." Then, in response to the United defendants'
relevancy arguments, the trial court stated:
The purpose is to produce all the relevant documents and if in producing all the relevant documents there are fifty percent of them which are irrelevant, I don't see the harm and I understand [defense counsel's] point that the rules say that relevancy is the touchstone but this is not -- this is something different.
ESI is different, and I'm not saying that we're suppose[ed] to be producing, you know, a mass of irrelevant stuff but the problem is that relevancy shouldn't be decided by the people who are producing the documents because their view of relevance and the other side's view of relevance is different . . . .
Further, regarding the United defendants' privacy concerns, the trial court
reasoned:
[W]ith the appropriate confidentiality orders, [and] clawback provisions of the like in the confidentiality orders, I don't see the harm, and I mean, I understand that the plaintiffs would end up getting some significant number of documents that they haven't requested, a significant number of documents that are not relevant, and I do understand that there's going to be a large number, and it's argued that maybe sixty to seventy percent of the documents aren't going to be relevant, but again, the gatekeeper . . . to decide what is relevant and what is not shouldn't be the ones producing the
A-2031-23 8 documents; it should be the ones receiving the documents because all the search terms are agreed to.
On September 12, 2023, the trial court issued the ESI Order, which
memorialized its July 6 Directive. The ESI Order expressly states that "[a] party
may not withhold or redact non-privileged ESI documents, even if the producing
party believes the document is wholly non-responsive or that it contains only
irrelevant information." The ESI Order does, however, exempt privileged
documents and provide a limited exception for "a small subset of ESI documents
that contain information so propriety that their production could result in
business losses or disruption."
Shortly after the ESI Order was entered, defendants moved for leave to
appeal to us. We denied the motion, but the Supreme Court granted defendants'
motion and remanded the matter to this court for consideration on the merits of
the ESI Order.
II.
On appeal, defendants make two arguments, each of which is augmented
by several sub-arguments. First, defendants contend that the ESI Order violates
Rule 4:10-2(a) by compelling them to produce irrelevant documents. In support
of this argument, defendants assert that the language of Rule 4:10-2(a) prevents
courts from treating ESI differently than other forms of discovery. Additionally,
A-2031-23 9 defendants argue that the ESI Order erroneously deprives them, as the producing
parties, of their gatekeeping role.
Second, defendants argue that the trial court abused its discretion by
ordering discovery that will be unduly invasive and burdensome. Defendants
assert that the trial court's order violates their privacy rights, particularly
considering their allegation that, in a related matter, plaintiffs' affiliates
uploaded defendants' confidential documents to a public website. Additionally,
defendants contend that the ESI Order imposes an undue and substantial
financial burden on them.
Four amici have filed briefs in support of defendants' positions: Lawyers
for Civil Justice, the Chamber of Commerce of the United States of America,
the New Jersey Civil Justice Institute, and the Electronic Discovery Institute.
The amici contend that the ESI Order violates Rule 4:10-2(a)'s relevancy
standard, disregards the role of the producing party, and raises serious privacy
and cybersecurity concerns.
In response, plaintiffs argue that the trial court did not misapply Rule
4:10-2(a) and appropriately exercised its broad discretion to manage discovery,
especially considering "the troubled history between the parties in exchanging
ESI discovery in similar cases in other jurisdictions."
A-2031-23 10 III.
We begin by acknowledging that appellate courts generally "defer to a
trial judge's discovery rulings absent an abuse of discretion or a judge's
misunderstanding or misapplication of the law." Cap. Health Sys., Inc. v.
Horizon Healthcare Servs., Inc., 230 N.J. 73, 79-80 (2017) (citing Pomerantz
Paper Corp. v. New Cmty. Corp., 207 N.J. 344, 371 (2011)). Moreover, "New
Jersey's discovery rules are to be construed liberally in favor of broad pretrial
discovery." Lipsky v. N.J. Ass'n of Health Plans, Inc., 474 N.J. Super. 447, 463
(App. Div. 2023) (quoting Payton v. N.J. Tpk. Auth., 148 N.J. 524, 535 (1997))
(internal quotation marks omitted); Trenton Renewable Power, LLC, v. Denali
Water Sols., LLC, 470 N.J. Super. 218, 227 (App. Div. 2022). Our court system
adheres to the view that "essential justice is better achieved when there has been
full disclosure so that the parties are conversant with all the available facts."
Lipsky, 474 N.J. Super. at 464 (quoting Jenkins v. Rainner, 69 N.J. 50, 56
(1976)) (internal quotation marks omitted). "Consequently, to overcome the
presumption in favor of discoverability, a party must show 'good cause' for
withholding relevant discovery . . . ." Cap. Health Sys., 230 N.J. at 80.
Rule 4:10-2(a), which applies to electronic discovery, states:
Parties may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter
A-2031-23 11 involved in the pending action, whether it relates to the claim or defense of the party seeking discovery or to the claim or defense of any other party, including the existence, description, nature, custody, condition and location of any books, documents, electronically stored information, or other tangible things and the identity and location of persons having knowledge of any discoverable matter. It is not ground for objection that the information sought will be inadmissible at the trial if the information sought appears reasonably calculated to lead to the discovery of admissible evidence . . . .
See Est. of Lasiw by Lasiw v. Pereira, 475 N.J. Super. 378, 392 (App. Div. 2023)
(applying R. 4:10-2(a) to a discovery dispute concerning ESI).
"Nevertheless, the parties' discovery rights are not unlimited." Piniero v.
N.J. Div. of State Police, 404 N.J. Super. 194, 204 (App. Div. 2008). Relevancy
is the starting point for what is discoverable, and it constrains what a party can
seek and what the responding party needs to produce. See In re Liquidation of
Integrity Ins. Co., 165 N.J. 75, 82 (2000).
"In addition to the privilege and relevance limitations provided under
Rule[] 4:10-2(a) . . . , Rule 4:10-2(g) addresses matters the court should consider
when limiting discovery between parties . . . ." Lipsky, 474 N.J. Super. at 464.
Subsection (g) gives "the court the express authority to limit discovery in the
circumstances enumerated by the rule in an effort to curb the proliferating
discovery abuses attending modern litigation practice." Pereira, 475 N.J. Super.
A-2031-23 12 at 393 (quoting Pressler & Verniero, Current N.J. Court Rules, cmt. 8 on R.
4:10-2 (2007)) (internal quotation marks omitted). So, a court should limit
discovery if it determines that:
(1) the discovery sought is unreasonably cumulative or duplicative, or is obtainable from some other source that is more convenient, less burdensome, or less expensive; (2) the party seeking discovery has had ample opportunity by discovery in the action to obtain the information sought; or (3) the burden or expense of the proposed discovery outweighs its likely benefit, taking into account the needs of the case, the amount in controversy, the parties' resources, the importance of the issues at stake in the litigation, and the importance of the proposed discovery in resolving the issues.
[R. 4:10-2(g).]
A. Whether the ESI Order is Consistent With Rule 4:10-2(a).
"To determine whether the materials sought by the [parties] are
discoverable, their potential relevance is the initial inquiry." Liquidation of
Integrity Ins. Co., 165 N.J. at 82. See also Payton, 148 N.J. at 535 (explaining
that a court "must evaluate, as an initial matter, [discovery requests'] relevance
to the issues raised in [the] litigation"); Pereira, 475 N.J. Super. at 404
("Relevancy remains the touchstone of permissible discovery."). N.J.R.E. 401
defines relevant evidence as "evidence having a tendency in reason to prove or
disprove any fact of consequence to the determination of the action."
A-2031-23 13 "[D]iscovery is not limited to obtaining admissible information but,
rather, includes the obtaining of any information, not otherwise privileged, that
'appears reasonably calculated to lead to the discovery of admissible evidence .'"
Cap. Health Sys., Inc. v. Horizon Healthcare Servs., Inc., 446 N.J. Super. 96,
114 (App. Div. 2016) (quoting K.S. v. ABC Prof'l Corp., 330 N.J. Super. 288,
291 (App. Div. 2000)) (internal quotation marks omitted). See Pereira, 475 N.J.
Super. at 404. Consistent with these principles, we have repeatedly ruled that
discovery should be limited to information that is relevant to the claims or
defenses involved. Cap. Health Sys., 446 N.J. Super. at 118 (concluding that
the trial court abused its discretion by ordering the production of irrelevant
evidence); K.S., 330 N.J. Super. at 291-92 (reversing the denial of a protective
order because the information sought was "not relevant to plaintiffs' hostile work
place theory against defendants"). See also Pressler & Verniero, Current N.J.
Court Rules, cmt. 1 on R. 4:10-2(a) (2024) (identifying various cases where the
"relevancy standard" was applied to "bar[] pretrial discovery").
In this matter, the trial court erroneously ordered the parties to produce
irrelevant documents in violation of Rule 4:10-2(a). The trial court
acknowledged that it "under[stood] that there's going to be a large number . . .
maybe sixty to seventy percent of the documents [that] aren't going to be
A-2031-23 14 relevant." The trial court appeared to base its ESI Order on two concepts: (1)
that ESI is "fundamentally different" than other forms of discovery and,
therefore, that Rule 4:10-2(a)'s relevancy standard should not apply; and (2) that
"relevancy shouldn't be decided by the people who are producing the
documents." Both concepts are incorrect under well-established law.
We have recently applied Rule 4:10-2(a)'s relevancy standard to the
discovery of ESI. See Pereira, 475 N.J. Super. at 392, 404. In so doing, we
addressed the express language of Rule 4:10-2(a), stating that "[p]arties may
obtain discovery regarding any matter, not privileged, which is relevant to the
subject matter involved in the pending action," and then pointed out that the
Rule had been amended in 2006 to add the term "electronically stored
information (ESI) . . . to subsection (a)." Id. at 392 (quoting R. 4:10-2(a))
(internal quotation marks omitted). Accordingly, the trial court erred in
concluding that the nature of ESI somehow precluded the relevancy standard
under Rule 4:10-2(a) from applying.
We have also rejected the trial court's second rationale because it has
always been the producing party's obligation to conduct a relevancy review prior
to production. See Lipsky, 474 N.J. Super. at 468-69. In other words, the
producing party is the initial reviewer of what is relevant and what needs to be
A-2031-23 15 produced. In that regard, we favorably quoted the following language from a
Florida appellate court:
In civil litigation, we have never heard of a discovery request which would simply ask a party litigant to produce its business or personal filing cabinets for inspection by its adversary to see if they contain any information useful to the litigation. Requests for production ask the party to produce copies of the relevant information in those filing cabinets for the adversary.
[Id. at 468 (quoting Menke v. Broward Cnty. Sch. Bd., 916 So. 2d 8, 10 (Fla. Ct. App. 2005)) (internal quotation marks omitted).]
In Lipsky, we addressed "the novel issue of whether a party to a pending
litigation may compel a non-party State agency to turn over its employees' State-
issued and personal cell phones to that party's expert for forensic examination,
even when the agency has already produced the relevant records from the
devices." Id. at 451. We ultimately reversed the order requiring production,
holding that discovery rules do "not anticipate that the requesting party will be
permitted to search through their opponents' electronic devices for responsive
data, any more than [they] anticipate[] that the requesting party would be
permitted to search through their opponent's filing cabinets for responsive
documents." Id. at 468.
A-2031-23 16 Thus, Lipsky clearly acknowledged that the producing party has a
gatekeeping role in deciding whether evidence is relevant and, therefore, subject
to discovery. Accordingly, the trial court erred in reasoning that "relevancy
shouldn't be decided by the people who are producing the documents."
Of course, both the requesting party and the court have roles if there is
evidence that a producing party is improperly withholding relevant discovery.
The requesting party can move to compel the withheld discovery. See
Brugaletta v. Garcia, 234 N.J. 225, 249-50 (2018) (explaining that "[w]hen a
responding party declines to turn over requested documents, the requesting party
may file a motion to compel discovery[] [pursuant to] R[ule] 4:23-5(c)"). The
court can then review the specific facts and compel relevant discovery and,
where appropriate, impose sanctions, including reasonable costs. See Salazar v.
MKGC + Design, 458 N.J. Super. 551, 560-61 (App. Div. 2019) (citing R. 4:24-
5).
Plaintiffs argue that the trial court's order was an appropriate exercise of
its discretion to "address[] fact-specific circumstances -- the troubled history
between the parties in exchanging ESI discovery in similar cases in other
jurisdictions -- to ensure the production of all relevant information." They
concede, however, that the "production of irrelevant documents [is] an inherent
A-2031-23 17 and inevitable byproduct" of the trial court's ESI Order. This argument is flawed
for two reasons: (1) the record in this case does not reflect that either party has
wrongfully withheld responsive documents; and (2) a court may not use its
discretion to compel the production of irrelevant documents in violation of Rule
4:10-2(a). See Pereira, 475 N.J. Super. at 404.
B. Whether the ESI Order was Unduly Invasive and Burdensome.
"The frequency or extent of use of the discovery methods otherwise
permitted under these rules shall be limited by the court if it determines that . .
. the burden or expense of the proposed discovery outweighs its likely benefit,
taking into account the needs of the case . . . ." R. 4:10-2(g). Accordingly, a
court can and should deny ESI discovery that is "unduly invasive and
burdensome." Lipsky, 474 N.J. Super. at 470 (citing R. 4:10-2(g)).
Defendants argue that complying with the trial court's order would be
unduly invasive and burdensome in violation of Rule 4:10-2(g). They claim that
the order violates their privacy rights, particularly considering their allegation
that, in a related case, plaintiffs' affiliates uploaded defendants' confidential
documents to a public website. Additionally, defendants assert that the ESI
Order imposes a substantial financial burden on them as they would have to
"conduct a burdensome review of tens of thousands of wholly irrelevant
A-2031-23 18 documents to determine which contain information that 'could result in business
losses or disruption.'" The three amici briefs echo these "privacy considerations
and accompanying data security risks," and raise concerns about the privacy
rights of numerous third parties.
Because we have reversed and vacated the ESI Order on the grounds that
it compels the production of irrelevant documents, we need not get into the fact-
specific question of whether the order would be "unduly invasive and
burdensome" to defendants under Rule 4:10-2(g). Nevertheless, we note that
there would be invasions and burdens on both defendants and plaintiffs if the
ESI Order was enforced.
Moreover, we point out that plaintiffs never requested the production of
all documents identified by the ESI search terms. Plaintiffs, however, now
support the ESI order while conceding that much of the discovery would be
irrelevant. In doing so, they effectively acknowledge that all parties would be
required to produce irrelevant documents, and that process would be invasive,
burdensome, and expensive.
A-2031-23 19 IV.
We, therefore, reverse and vacate the ESI Order and remand with direction
that the trial court enter a new order governing ESI discovery, limited to
producing relevant information.
Reversed, vacated, and remanded. We do not retain jurisdiction.
A-2031-23 20