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GRIDER v. KEYSTONE HEALTH PLAN CENTRAL

April 26, 2004.

NATALIE M. GRIDER, M.D. and KUTZTOWN FAMILY MEDICINE, P.C., Plaintiffs
v.
KEYSTONE HEALTH PLAN CENTRAL, INC., HIGHMARK, INC., JOHN S. BROUSE, CAPITAL BLUE CROSS, JAMES M. MEAD and JOSEPH PFISTER, Defendants



The opinion of the court was delivered by: JAMES KNOLL GARDNER, District Judge

OPINION

This matter is before the court on plaintiffs' motions to preclude defendants from presenting evidence or argument in opposition to plaintiffs' motion for class certification, on defendants' motions for sanctions seeking attorneys' fees and costs for preparation of their responses to plaintiffs' motions to preclude, and on the motion of defendants Keystone Health Plan Central, Inc. and Joseph Pfister (collectively "Keystone" or "Keystone defendants") for reconsideration of the January 14, 2004 Order of Magistrate Judge Arnold C. Rapoport directing Keystone to provide documents to plaintiffs. For the reasons expressed below, we deny each motion.

  BACKGROUND

  The pertinent facts underlying plaintiffs' original Complaint were succinctly addressed in our September 18, 2003 Opinion. We incorporate that full recitation of the facts herein. However, a brief recitation of the facts is helpful to address the discovery issues presented.

  Plaintiffs seek to certify this action as a class action pursuant to Rule 23 of the Federal Rules of Civil Procedure. Plaintiff Natalie M. Grider, M.D. is a family practitioner and President of plaintiff Kutztown Family Medicine, P.C. Plaintiffs and their affiliates provide medical services to about 4,000 patients who are insured by Keystone. Keystone is a Health Maintenance Organization ("HMO") organized under the Pennsylvania Health Maintenance Organization Act.*fn1

  Plaintiffs contend that defendants Capital Blue Cross and Highmark Inc., direct and control the operations of Keystone and receive all of its profits. Plaintiffs further contend that defendants, John S. Brouse, James M. Mead and Joseph Pfister are the Chief Executive Officers of Highmark, Capital and Keystone, respectively. Plaintiffs allege that defendants and various non-parties together form what is styled as the "Managed Care Enterprise", an entity which allegedly operates to defraud plaintiffs and the proposed class through a variety of illegal methods.

  Plaintiffs entered into an HMO-physician agreement with defendant Keystone in December 1998 to provide medical services to the HMO's members. In addition to a complex bonus system, the agreement provides for two basic methods by which plaintiffs are paid for rendering medical services: (1) capitation, and (2) fee for service.

  Plaintiffs allege a variety of ways in which defendants used the mail and wires to defraud plaintiffs by wrongfully delaying and denying compensation due under both methods of payment. Plaintiffs also assert that the HMO-physician agreement contains a number of misrepresentations and material omissions. Specifically, plaintiffs allege that defendants (1) "shave" capitation payments by purposefully under-reporting the number of patients enrolled in plaintiffs' practice group; (2) defraud plaintiffs of fees for medical services rendered by wrongfully manipulating CPT codes to decrease the amount of reimbursements; and (3) defraud plaintiffs of bonuses promised in the HMO-physician agreement.

  Plaintiffs also assert a number of RICO claims premised on extortion in violation of the Hobbs Act,*fn2 bribery,*fn3 and violations of the Travel Act.*fn4

  Finally, plaintiffs bring state law causes of action asserting that defendants violated the prompt-payment provision of Pennsylvania's Quality Health Care Accountability and Protection Act*fn5 and for breach of contract as noted above.

  PROCEDURAL HISTORY Plaintiffs filed their Complaint in the Court of Common Pleas of Philadelphia County on October 5, 2001. Defendants removed the action to this court on November 7, 2001. By Order and Opinion of the undersigned dated September 18, 2003, we granted in part and denied in part Defendants' Motion to Dismiss, which motion filed January 23, 2002.*fn6

  On January 14, 2004, a comprehensive Rule 16 Status Conference Order was entered by the undersigned based upon the status conference held before the undersigned December 30, 2003. In our Order, we set deadlines for class discovery, expert reports, and expert depositions regarding class discovery; defendants' deadline for a response to plaintiffs' motion for class certification; a hearing date for plaintiffs' motion for class certification; deadlines for trial expert reports and depositions; a dispositive motion deadline; a deadline for motions in limine; and a trial date.

  In addition, by separate Jury Trial Attachment Order dated January 14, 2004 we set deadlines for trial memoranda, exchange of exhibits, voir dire questions, a proposed verdict sheet, points for charge and other issues related to the trial of this matter.

  DISCUSSION

  Plaintiffs' Motion to Preclude

  Plaintiffs seek an Order for sanctions pursuant to Rule 37(b) of the Federal Rule of Civil Procedure for alleged deficiencies in the responses to plaintiffs' interrogatories and requests for production of documents served upon defendants Keystone and Highmark.*fn7 Specifically, plaintiffs contend that they served their discovery requests in September 2003 and have either received incomplete responses or no responses at all.

  More specifically, plaintiffs contend that the Keystone defendants have not provided all requested, discoverable documents in their possession, or have provided them well after the March 1, 2003 class discovery deadline. For example, plaintiffs contend that Keystone is withholding documents that they have allegedly unilaterally deemed "privileged", "non-responsive" and "non-relevant". Moreover, in the case of privileged documents, plaintiffs assert that the Keystone defendants have refused to provide a privilege log.

  Plaintiffs further assert that the Keystone defendants' withholding of documents are in violation of the January 14, 2004 Order of Magistrate Judge Rapoport and his letter dated January 27, 2004 which stated that "all documents are to be produced". With regard to Highmark, plaintiffs assert that the Highmark defendants have not produced any documents pursuant to their discovery requests.

  Plaintiffs seek to preclude defendants from opposing plaintiffs' claims for commonality, typicality and predominance at the class certification hearing.

  All defendants oppose plaintiffs' motions. Specifically, the Keystone defendants contend that they have complied with plaintiffs' discovery requests. Moreover, Keystone contends that over the past two months they have produced over 52,000 pages of documents and tens of thousands more on CD-ROM.*fn8 Furthermore, Keystone contends that certain categories of documents listed by plaintiffs have not been requested.

  Counsel for Keystone asserts that it has been attempting to work amicably with plaintiffs for months to work out discovery issues. Specifically, counsel asserts that plaintiffs' counsel propounded numerous interrogatories that were converted to document requests. Moreover, plaintiffs' counsel agreed to provide a "top ten" list of categories of the types of documents plaintiffs wanted most and defendants would produce those categories, but no "top ten" list has ever been communicated to defense counsel. In addition, Keystone contends that they have properly asserted ...


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