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United States District Court, E.D. Pennsylvania

May 24, 2004.


The opinion of the court was delivered by: HARVEY BARTLE, III, District Judge


The Trustees of the AHP Settlement Trust ("Trust") involving Wyeth's diet drugs Pondimin and Redux have sued defendant Linda Crouse, M.D. under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1964, et sea., and for other wrongful conduct in connection with attestations that certain class members suffered from valvular heart disease ("VHD") entitling them to benefits from the Trust.

Before the court is the motion of the Trustees for entry of a protective order. At issue is certain "confidential information" which defendant Linda Crouse, M.D. seeks to obtain from the Trust through discovery. The Trustees contend the information is subject to the protective order entered by this court in Pretrial Order ("PTO") No. 2683 in connection with the Nationwide Class Action Settlement Agreement and the Multi-District Litigation No. 1203 involving Wyeth's diet drugs, Pondimin and Redux.*fn1 The Trustees maintain they cannot produce this information without a court order.

  In their supporting memorandum, the Trustees first point out that they do not intend to prevent the defendant, her legal team, prospective experts, or other agreed-upon and court-approved persons from having access to the "confidential information" designated in PTO No. 2683. The Trustees have also offered to narrow the definition of "confidential information" to reflect the less comprehensive delineation in PTO No. 2875. However, they argue that there is good cause to enter a protective order because one is necessary to effectuate the purposes of PTO No. 2683 and to prevent both parties and non-parties to the Diet Drugs litigation from obtaining information from the defendant that could not otherwise be obtained. The Trustees contend that the privacy interests of claimants under the Settlement Agreement, the Trust's development and implementation of internal policies and procedures, and the other concerns outlined in PTO No. 2683 are at stake.

  Dr. Crouse agrees that limited claimant-identifying information such as names, addresses, and social security numbers should be protected from public dissemination. Indeed, she too is withholding the same sort of information pending the entry of a protective order by the court. However, she argues that good cause does not exist to enter a more expansive order. Dr. Crouse's defense and counterclaims apparently rest at least to some extent on alleged deficiencies with internal policies and procedures of the Trust and the Trustees. She contends she should be entitled to share information with others who have or will themselves become targets of the Trust's investigations. In addition, she suggests that because the May 3, 2004 deadline to file claims has now passed, the rationale for keeping "confidential information" confidential no longer exists because claimants will not be able to use that information to "game the system." Finally, Dr. Crouse emphasizes that the Trustees' action against her is not actually part of the Diet Drugs litigation.

  Our evaluation of the Trustees' request is guided by the standard set forth by our Court of Appeals in Glenmede Trust Company v. Thompson, 56 F.3d 476 (3d Cir. 1995) ("Glenmede"), and Pansy v. Borough of Stroudsburq, 23 F.3d 772 (3d Cir. 1994). As articulated in Glenmede, "[a] party seeking a protective order over discovery materials must demonstrate that `good cause' exists for the protection of that material. . . . `Good cause' is established when it is specifically demonstrated that disclosure will cause a clearly defined and serious injury. Broad allegations of harm, unsubstantiated by specific examples, however, will not suffice." Glenmede, 56 F.3d at 483 (internal citations omitted). See also Fed.R. Civ. P. 26(c). Several factors are useful in making a determination of whether a protective order should be entered:

1) whether disclosure will violate any privacy interests;
2) whether the information being sought is for a legitimate purpose or for an improper purpose;
3) whether disclosure of the information will cause a party embarrassment;
4) whether confidentiality is being sought over information important to public health and safety;
5) whether the sharing of information among litigants will promote fairness and efficiency;
6) whether a party benefitting from the order of confidentiality is a public entity or official; and
  7) whether the case involves issues important to the public. Id. This list is not exhaustive, but "the analysis should always reflect a balancing of private versus public interests." Glenmede, 56 F.3d at 483.

  As stated in PTO No. 2683, the protective order in the related Diet Drugs litigation was necessary:

(i) to implement Section VIII.F.I of the Settlement Agreement, which requires that any information provided by or regarding a Class Member or otherwise obtained pursuant to the Settlement Agreement shall be kept confidential and disclosed to appropriate persons only to the extent necessary to process Claims or provide benefits under the Settlement Agreement; and (ii) to permit the successful and orderly implementation of the Settlement Agreement by preserving the confidentiality of proprietary information regarding the internal procedures and policies of the Trust and of the Trustees, the former Interim Claims Administrators, any Claims Administrator(s), and their employees, contractors, and advisors that has been or will be generated in the course of the implementation of the Settlement Agreement. The Court finds that the need to implement Section VIII.F.I of the Settlement Agreement, the need to protect the privacy of the medical information of Class Members included in their claims, and the need for the Trust to develop its procedures and policies internally, constitutes good cause for the entry of this Order.
PTO No. 2683. The Trustees seek protection of "confidential information" similar to that defined in PTO No. 2683.

  As to claimants' personal information, such as name, address, telephone number, e-mail address, social security number, and other personal identifying information, no one disputes the strong privacy interest at stake. We agree with both parties that good cause exists at this time to enter a protective order as to this information. The same reasoning also applies to the records of the Trust's employees.

  As to the internal procedures and policies of the Trust, we recognize that the Trust has an important interest in confidentiality, particularly in light of the large number of allegedly fraudulent claims filed and the steps it is taking in its investigations of those claims. Over eighty-four thousand Green Forms have been filed with the Trust under the Settlement Agreement. This is a number far in excess of what anyone ever expected when the Settlement Agreement was before the court for approval at the time of the Fairness Hearing in 2000. See PTO No. 2662. Although the Settlement Agreement originally called for a fifteen percent audit, based on a finding in November, 2002 that the number of claims submitted was "totally at odds with impressive and undisputed epidemiological evidence presented at the Fairness Hearing," the court found good cause to implement a one hundred percent audit requirement for all Fund B claims. Id.

  The Trust is a fiduciary for tens of thousands of claimants. In its attempts to protect the large but limited fund it holds for deserving claimants, the Trust has developed and is developing procedures and policies to discover and protect against fraud. This court has a compelling obligation to prevent the payment of finite Trust funds to claimants whose claims are not supported by a reasonable medical basis. Unlimited distribution of information relating to internal policies and procedures could greatly impede the Trust's efforts to combat fraud. Thus, there is good cause to protect such information from open-ended disclosure.

  At the same time, this information appears to be an inherent part of Dr. Crouse's defense and counterclaims. We reiterate that there is no objection to Dr. Crouse's obtaining the information to which she is entitled. We recognize that Dr. Crouse is entitled to the discovery she needs for adequate preparation of her defense and pursuit of her counterclaims against the Trust.

  Accordingly, we will allow the parties to share information relating to the internal policies and procedures of the Trust only as necessary to prosecute and defend this litigation. In the event that a party has a need to disclose confidential information to any person not designated as an "authorized person," that party shall first seek a stipulation by the other party in advance of intended production. We note that this requirement applies to disclosures to any attorneys not retained by the parties in this action and the agents and representatives of such other attorneys, all of whom are excluded from the definition of "authorized persons." If relief from the court is sought, the information may not be disclosed pending a court ruling. If the court approves the disclosure, the person will be deemed an authorized person under this order.

  Disclosure to any expert, contractor, accountant, auditor, or other authorized person retained by a party must, of course, be subject to a confidentiality agreement. Further, as set forth in the accompanying order, before disclosing any confidential information to an authorized person, the person making such disclosure shall provide a copy of the court's order to the authorized person and obtain a written statement from said person that he or she has read the order and agrees to abide by its terms.


  (2) "Authorized Persons" shall mean:

(A) the parties;
(B) employees of the AHP Settlement Trust;
(C) attorneys representing any of the parties to this action and the assisting employees of said attorneys;
(D) such other persons designated as authorized persons by the court as necessary; (E) a state or federal grand jury or such other person or entity identified as the lawful recipient of documents or information that is the subject of a state or federal grand jury subpoena, a valid criminal trial subpoena, or an administrative subpoena served on the Trust or any custodian of the records of the Trust (although this shall not in any way affect any party's right to contest a subpoena); and
(F) employees, independent contractors, advisors (including retained counsel, officers, directors, employees, agents, contractors, experts, accountants, and auditors), and the successors and assigns of any of the foregoing.
  (3) "Claim for Benefits" or "Claim for Settlement Benefits" or "Claim" shall mean: (a) the form submitted by class members who elected the Accelerated Implementation Option; (b) the form submitted by class members who sought to register for any of the benefits available to class members pursuant to the Settlement Agreement reached by the parties and approved by the court in In re Diet Drugs Litigation, MDL No. 1203 (E.D. Pa.) ("Settlement Agreement"); or (c) the form submitted by class members who sought Matrix Compensation Benefits pursuant to the matrices in the Settlement Agreement, along with all other materials, including correspondence, documents, and videotapes or disks of echocardiograms submitted with such forms or in support of such claims.

  (4) "Trust" or "Settlement Trust" shall mean the Trust established to receive funds to be paid by American Home Products Corporation ("AHP") as provided in the Settlement Agreement pursuant to a Trust Agreement.

  (5) "Trustees" shall mean those individuals approved by the court as Trustees of the Settlement Trust in accordance with Section VI.A.3 of the Settlement Agreement.

  (6) "Confidential information" as used in this order shall mean:

(A) except as to the class member (and the class member's attorney, if any) who provided the information, identifying information regarding a class member, such as name, address, telephone number, e-mail address, social security number, and other personal identifying information;
(B) the claim file regarding a class member, including all claim forms, the information reflected in such claim forms, and all medical information relating to the class member;
(C) all communications between employees of the Trust and the class member;
(D) information relating to the processing of the claim of the individual class member, including the benefits determinations relating to the claim, the class member's elections, any benefits paid or provided to the class member, and the disposition of the claim;
(E) information relating to the internal procedures and policies of the Interim Claims Administrators (as provided in § VI.A.2 of the Settlement Agreement) and/or the Trust, including claims processing policies and methods; employee records; minutes of meetings of the Interim Claims Administrators, the Trustees, and Trust employees or advisors; information regarding services rendered by the Interim Claims Administrators and/or the Trust by any of their employees, independent contractors, and advisors; and the work product and communications generated by any employees, independent contractors, and advisors of the Interim Claims Administrators and/or the Trust; and
(F) any other information designated as "confidential information" by the court or by authorized designees of the court.
"Confidential information" shall not apply to prevent disclosure of documents that set out substantive standards by which claims are decided and acted upon or disclosure of documents setting forth instructions to or procedures followed by auditing cardiologists or other personnel participating in the auditing of claims. Nor shall this order prevent disclosure of the identities of auditing cardiologists who perform audits of claims for the Trust. Persons who receive disclosure of auditing cardiologists are prohibited from contacting or subpoenaing or attempting to contact or subpoena any auditing cardiologist, except upon prior leave of court.

  Protection of Confidential Information

  (7) Confidential information relating to a particular class member may be disclosed as specifically authorized in writing and signed by that class member. Authorized disclosures under this paragraph are not subject to any of the restrictions imposed by this order.

  (8) Confidential information shall be kept strictly confidential and shall not be disclosed except as permitted under this order or by further order of this court.*fn2 When producing documents containing confidential information, the parties shall label such documents "CONFIDENTIAL — SUBJECT TO PROTECTIVE ORDER," or words to that effect, clearly indicating that the document is subject to the protections of this order.

  (9) Confidential information may be disclosed to authorized persons only to the extent reasonably necessary: (i) to respond to a state or federal grand jury subpoena, a valid criminal trial subpoena, or any administrative subpoena that is served on the Trust or any custodian of the records of the Trust (although this shall not in any way affect any party's right to contest a subpoena); (ii) to respond to discovery requests in the present action pursuant to the Federal Rules of Civil Procedure; and (iii) to analyze potential claims or defenses in connection with the present action. Such confidential information may be used for the foregoing purposes only and cannot be used for any other purpose.

  (10) Before disclosing any confidential information to an authorized person, the person making such disclosure shall provide a copy of this order to the authorized person and obtain a written statement from said person that he or she has read the order and agrees to abide by its terms. Immediately upon termination of their status as an authorized person for any reason, including termination or expiration of employment, contract, or agency, all authorized persons who have received any confidential information shall return to the person who provided it to them all confidential information in their possession, custody, or control, and the restrictions imposed by this order shall apply permanently to all such persons.

  (11) In the event that a party has a need to disclose confidential information to persons other than those authorized under the terms of this order in order to prosecute, defend, and/or appeal this litigation, the party must request a stipulation by the opposing party with respect to each additional person the party reasonably believes such disclosure is required, which stipulation shall not be unreasonably withheld. The stipulation would then be presented to the court for its approval. If the parties cannot resolve this matter, the requesting party may seek appropriate relief from the court. That the requesting party agreed to review of confidential information under restrictions imposed by this protective order shall not be used as or otherwise constitute evidence as to whether the information at issue warrants protection against disclosure under the Federal Rules of Civil Procedure.

  (12) At any deposition, when counsel for a party or witness deems that the answer to a question will result in the disclosure of confidential information, counsel shall have the option, in lieu of taking other steps available under the Federal Rules of Civil Procedure, to request that all persons other than authorized persons (and the court reporter) leave the room during the confidential portion of the testimony. The failure of such persons to comply with such requests shall constitute substantial justification for counsel to advise the witness that he or she need not answer the question pending.

  (13) Any individual receiving confidential information shall not disclose such information to any person who is not entitled to receive such information under this order. If confidential information is disclosed to any person not entitled to receive disclosure of such information under this order, the individual responsible for the disclosure must immediately bring all pertinent facts relating to such disclosure to the attention of counsel for the producing party and, without prejudice to other rights and remedies of any party, make a reasonable good faith effort to retrieve such material and to prevent use or further disclosure by such person or by the person who received such information.

  (14) The parties shall preserve all confidential information until further order of this court, provided, however, that the parties may dispose of duplicates of materials containing confidential information as the parties and/or this court deem necessary and appropriate, in accordance with Paragraph 15 of this order.

  (15) Any person or entity disposing of any materials containing any confidential information shall destroy such materials by shredding or such other means that renders the confidential information in such materials permanently illegible.

  (16) Any violation of this order by any person or entity may subject the violator to sanctions or other penalties as the court deems appropriate.

  (17) Inadvertent disclosure of confidential information to a person who is not an authorized person does not waive the status of that information as confidential information. If the disclosing party discovers that it has inadvertently provided confidential information to a person who is not an authorized person, it shall immediately provide notice of the inadvertent disclosure and request its return. The recipient shall immediately cooperate to return all copies and to take necessary steps to preserve the confidentiality of the information.

  (18) The Clerk of Court is requested to maintain under seal all documents, tangible objects, transcripts, and other materials filed with this court in this action by any party which are, in whole or in part, designated as confidential information, including all deposition, oral or hearing transcripts, exhibits, discovery responses, or memoranda purporting to contain or paraphrase such information. To the extent that any materials subject to this order (or any pleading, motion, or memorandum referring to them) are proposed to be filed or are filed with the court, those material and papers, or any portion thereof which discloses confidential information, shall be filed under seal (by the filing party) with the Clerk of Court in an envelope or other appropriately sealed container with a prominently marked "CONFIDENTIAL," the caption of the case, and the notation:

SUBJECT TO PROTECTIVE ORDER ENTERED IN CIVIL ACTION NO. 03-5252. This envelope is not to be opened nor are the contents thereof to be displayed or revealed except (1) to the court and then resealed, (2) by agreement of the parties, or (3) by prior order of this court.
The filing party must also file together with such confidential information a cover letter identifying the contents of the envelope and the word "SEALED" near the top margin of the letter, pursuant to the United States District Court for the Eastern District of Pennsylvania, Clerk's Office Procedural Handbook, section III, paragraph E, Sealed Pleadings.*fn3 A second copy of any pleading or paper specifically intended for review by the court may be hand-delivered for the court's chambers [via the Clerk's Office], appropriately marked, in order to assure that the same is brought promptly to the court's attention.

  (19) Any authorized person shall make confidential information available to the court and to any other person duly authorized by the court, as requested by the court. The court may also authorize disclosure of confidential information upon its own motion or the motion of any interested party, after notice to the parties, upon a hearing if the court deems it necessary and appropriate.

  (20) The restrictions imposed by this order shall remain in effect until further order of this court. (21) Nothing contained herein shall preclude any of the parties from applying to the court for an order prohibiting or restricting the use or disclosure of any information not covered hereunder upon a showing of good cause.

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