Opinion
Case No.: 2:20-cv-00552-JAD-BNW
07-01-2020
In re Subpoenas to Medport LA, LLC
ORDER
Movants filed a motion to compel information from non-party Medport pursuant to Fed. R. Civ. P. 45(2)(B)(i). ECF No. 1. Medport responded and filed a countermotion, asking this court to quash or modify the subpoena pursuant to Fed. R. Civ. P. 45(d)(3). ECF Nos. 4, 5. Movants responded to the countermotion. ECF No. 17. Medport filed its reply to its countermotion. ECF No. 18. This court held a hearing on May 26, 2020. ECF No. 23.
This court denies Movants' motion (ECF No. 1), as the amount Medport paid for accounts receivable is neither relevant to any of Movants' claims or defenses nor is it relevant to the issue of bias. While the court is inclined to believe that some of the other documents Movants subpoenaed may be relevant to bias, given the lack of specificity from Movants as to what categories of information fall within the arguments it makes, the court cannot fairly determine which documents, if any, are discoverable. Accordingly, the court will deny the remainder of Movants' motion to compel without prejudice. Because the court is denying Movant's motion to compel in its entirety, the court denies Medport's countermotion (ECF No. 5) as moot.
Background
Movants are the Defendants in the underlying personal injury case, which was filed in Alabama. The case was removed to federal court in the Northern District of Alabama. Plaintiff was treated for injuries in the state of Louisiana and had several medical procedures. He will claim the cost of these medical procedures as damages during trial in Alabama. Some of Plaintiff's providers sold their accounts receivable to non-party Medport, who purchases accounts receivable at a discounted rate. Movants seek access to these records, including the amount for which Medport purchased these accounts receivable. Medport opposes this request, arguing this information is irrelevant and disproportionate to the needs of the case.
Medport makes other arguments as part of its countermotion, which requests that this court quash or modify the subpoena. As explained below, this court is denying the Motion to Compel. Accordingly, court need not decide Medport's countermotion.
Movants' Argument
Movants' argument appears to be that the underlying plaintiff can only recover the amount Medport spent in purchasing the accounts receivable from the different medical providers, irrespective of the amount plaintiff may owe Medport. ECF No. 1 at 4-5. Movants cite to Bobo v. Tennessee Valley Authority, 855 F.3d 1294, 1311 (11th Cir. 2017), for the proposition that "Alabama does not permit recovery of medical charge amounts that are written off by healthcare providers under contractual agreements with insurers." ECF No. 1 at 4. In turn, Movants argue that Medport is a medical funding company and that, while not a health insurance company as that in Bobo, Medport should still be treated as such. Id. That is, Movants claim that Medport made payments to Plaintiff's medical providers on his behalf and seems to argue by analogy that, as a result, certain amounts were written off. Id. Given this, it appears Movants claim that Plaintiff's true measure of damages should not be what he was charged for medical services, but the amount that Medport paid for those services "on his behalf." Movants also cite to Ala. Code § 12-21-45, which provides that "evidence that the plaintiff's medical or hospital expenses have been or will be paid or reimbursed shall be admissible as competent evidence" in any lawsuit "where damages for any medical or hospital expenses are claimed...." Id. As a result Movants argue it is entitled to know how much Medport paid for these medical services.
In addition, Movants point to the connection between Medport and an entity by the name of MoveDocs to explain the need for certain documentation from Medport to show bias. ECF No. 17 at 3-6, 7-8. It argues that MoveDocs connects or refers patients to their medical providers associated with MoveDocs and that they are also involved in their treatment. Id. Movants refer to an e-mail from the medical provider to the Plaintiff's attorney, where MoveDocs is also copied, requesting "pre-approval" for services. Id. In turn, Movants argue this shows Medport directed and financed Plaintiff treatment. Id. To further prove this business entanglement between Medport and medical providers, Movants directs this court to MoveDocs' "facility map," contained on its online platform, which Movants argue shows MoveDocs directs patients to medical providers. Id. At bottom, Movants contend that Medport directed, financed, and potentially approved plaintiff's treatment. Id.
This court construes Movants' Response in Opposition to Medport's Countermotion to Quash (ECF No. 17) also as a Reply to its Motion to Compel (ECF No.1).
Given this relationship, Movants argue that they are entitled to probe the issue of bias. Id. at pp. 7-8. According to Movants, medical providers' favorable testimony at trial translates into verdicts for plaintiffs, which in turn leads to Medport referring more patients to these medical providers. Id. Conversely, the idea is that should these providers not provide favorable testimony, and should a verdict be entered for the defense, Medport might stop referring them patients and impact their business revenue. The argument seems to be that if Plaintiff loses, then MoveDocs could remove his medical providers from their facility map—affecting their ability to engage in business with patients and to sell accounts receivable to Medport.
Movants rely on ML Health Care Services, LLC v. Publix Super Markets, Inc., 881 F.3d 1293, 1302 (11th Cir. 2018), which held that payment arrangements between the third party and the medical provider were relevant to show bias. In that case, the third party was referring patients to the medical providers and then purchasing accounts receivable at a discount. The defendant in that case argued that the medical providers are beholden to the third party: they are willing to testify favorably at trial to continue obtaining referrals. In short, that case suggests that a verdict for a plaintiff is profitable to the third party, which in turn results in additional referrals to medical providers. Id. ML Health Care Services also held that this information was relevant for purposes of impeachment. Id. Movants argue the same incentive at play in ML Healthcare Services exists in this case.
Lastly, Movants seek payments of attorneys' fees for filing this motion.
Medport's Argument
Medport's requests that the court deny Movants' motion and argues that the information sought is irrelevant and disproportionate to the needs of the case. ECF No. 4 at 10-13. Medport first explains that it is neither a medical provider nor a health insurance provider and does not direct the medical care or treatment of any patient. ECF 4-2 (affidavit by Kenneth Fust, one of the principals of Medport). It explains that neither the plaintiff in the underlying action nor his attorneys participates in any negotiations between Medport and the medical providers. Id. Further, it contends that Medport was not involved with the charges billed by the medical providers nor was it involved in the procedures performed or recommended by providers. Id. Importantly, Medport does not "pay any of the patients' medical bills." Id. Instead, Medport purchased the rights to the receivable while the plaintiff is still responsible for the full amount he previously owed his medical providers (irrespective of the discounted rate for which Medport purchased those accounts receivable). Id. As a result, Medport argues that information concerning the amount Medport paid medical providers is irrelevant and inadmissible under Alabama law because these amounts were not "written off." That is, unlike the plaintiff in Bobo, the plaintiff in this case owes the third party (Medport) the full amount he was billed by his medical providers, irrespective of the negotiated price for which Medport purchased those accounts receivable. In addition, Medport points to Magrinat v. Maddox, 220 So.3d 1081 (Ala. Civ. App. 2016), which held that Ala. Code § 12-21-45 was not applicable and that the plaintiff was entitled to recover as damages the amount he owed the third party who purchased the accounts receivable from the medical providers, irrespective of the amount the medical provider agreed to accept from the third party purchaser.
See footnote 1 above.
As to Movants' argument regarding evidence of bias, Medport states it has no input as to the kind or length of treatment Plaintiff receives from providers. ECF No. 4-2. Medport represents that it does not refer patients to providers nor do their negotiations involve plaintiffs or their counsel. Id. In any event, they argue it is not the amount which Medport paid these providers that would establish bias. Rather, it is the relationship itself. Put differently, Medport states that it is not whether it bought these account receivables at a 30%, 50%, or 70% discount that would establish evidence of bias. Besides, they argue Movants can get this information by questioning medical providers instead of seeking these documents showing the amount paid for the medical services.
Analysis
Federal Rule of Civil Procedure 45 governs discovery of non-parties by subpoena. Rule 45 provides that a party may command a non-party to produce designated documents in that person's possession, custody, or control. Fed. R. Civ. P. 45(a)(1)(A)(iii). The place of compliance must be within 100 miles of where Medport regularly transacts business. See FRCP 45(c)(2). Medport is a limited liability company organized under Nevada laws and headquartered in Las Vegas, Nevada. As a result, compliance would have to take place within 100 miles of Medport's headquarters, and Movants' motion is properly before this court. FRCP 45(d)(2)(B)(i).
It is well established that the scope of discovery under a subpoena issued pursuant to Rule 45 is the same as the scope of discovery allowed under Rule 26(b)(1). Proficio Mortg. Ventures, LLC. v. Fed. Sav. Bank, 2016 WL 1465333, at *3 (D. Nev. Apr. 14, 2016). Rule 26 allows a party to obtain discovery concerning any nonprivileged matter that is relevant to any party's claim or defense. The party resisting discovery bears the burden of persuasion. U.S. Equal Emp't Opportunity Comm'n v. Caesars Entm't, Inc., 237 F.R.D. 428, 432 (D. Nev. 2006). If the discovery sought is not relevant, the court should restrict discovery by issuing a protective order. Roehrs v. Minnesota Life Ins. Co., 228 F.R.D. 642, 644 (D. Ariz. 2005) (citing Herbert v. Lando, 441 U.S. 153, 177 (1979)). The relevancy standard for Rule 26 also applies to third- party subpoenas. Beinin v. Ctr. for Study of Popular Culture, 2007 WL 832962, at *2 (N.D. Cal. Mar. 16, 2007).
Federal Rule of Civil Procedure 26(b)(1) provides for a broad scope of discovery, recognizing that the "mutual knowledge of all the relevant facts gathered by both parties is essential to proper litigation." Hickman v. Tavlor, 329 U.S. 495, 507-08 (1947). Accordingly, under this rule, relevance is broader than admissibility at trial, in the sense that "[i]nformation within the scope of discovery need not be admissible in evidence to be discoverable." Fed. R. Civ. P. 26(b)(1)). Under the previous version of Fed. R. Civ. P. 26(b)(1)—before the 2015 amendments—inadmissible evidence was discoverable if it "appear[ed] reasonably calculated to lead to the discovery of admissible evidence." The 2015 amendments, however, deleted that phrase from Fed. R. Civ. P. 26(b)(1) and replaced it with language that better represents the phrase's original intent: "Information within this scope of discovery need not be admissible in evidence to be discoverable." See Fed. R. Civ. P. 26(b)(1). The test is not whether information is "reasonably calculated to lead to admissible evidence," but whether evidence is "relevant to any party's claim or defense." In turn, relevance is defined in Rule 401 of the Federal Rules of Evidence, which states that "relevant evidence" is evidence having "any tendency to make [the existence of] a fact [that is of consequence to the determination of the action] more or less probable than it would be without the evidence." Fed. R. Evid. 401.
This court is persuaded by Medport's arguments and does not find that the amount Medport paid for the accounts receivable is relevant to the underlying case. The amount Medport paid for these account receivables is simply of no consequence to the determination of the case. That is because, irrespective of the discounted rate at which Medport purchased these accounts, under Alabama law, the plaintiff in the underlying case is entitled to recover the amount he owes. Maddox, 220 So.3d at 1086; see also Bobo 855 F.3d at 1311.
This court agrees with Movants that Bobo stands for the proposition that a plaintiff in Alabama cannot recover damages for medical expenses if he has not paid or if he is not liable to pay for those services. Bobo, 855 F.3d at 1311 (citing Jones v. Crawford, 361 So.2d 518, 521 (Ala. 1978)). In fact, the Eleventh Circuit explained that agreements between medical providers and health insurance companies that result in write-offs to the insurance company "are not amounts that a plaintiff has paid or is obligated to pay within the meaning of Alabama Supreme Court's decisions." Id. As a result, in Alabama, a plaintiff cannot recover more than he is actually liable for.
In this case, however, the plaintiff in the underlying case must pay Medport the full amount he was billed by his medical providers—irrespective of the price Medport paid for those accounts receivable. In that sense, unlike the plaintiff in Bobo, this plaintiff is not benefitting from any agreements between Medport and his medical providers. As a result, it appears he will be able to introduce the full amount he owes Medport as part of his damages calculation. See Bobo at 1311 (explaining that damages for medical expenses are allowed for medical bills "which the plaintiff has paid or has become obligated to pay" (citing Ala. Fram Bureau Mut. Cas. Ins. Co. v. Smelley, 329 Spo.2d 544, 546 (1976))). Likewise, Maddox supports this conclusion. See Maddox, 220 So.3d at 1086.
Given this, the amount Medport paid plaintiff's medical providers for medical services—in addition to not being admissible—is simply irrelevant to Movants' defense and, as a result, not discoverable. None of the other cases cited by Movants persuade this court otherwise. And the court does not need to reach Medport's countermotion on this issue given that it finds Movants have not met their burden of persuasion.
Movants raise for the first time in its response to Medport's countermotion the argument that the amount for which Medport purchased the accounts receivable is relevant to show the reasonableness of the medical bills. ECF No. 17 at 12. Because the court does not need to reach Medport's countermotion, it does not consider the argument (although it notes that even if it did, it would be difficult to do so given how undeveloped the argument is). --------
As to bias, the court agrees that evidence of bias is always relevant, and thus falls within the scope of Rule 26. It is not clear in this case whether Medport occupies the same place that the third party in ML Health Services did. That is, Medport's role seems much less involved than what Movants believe it is. Medport represents it does not refer patients to providers and is not involved in plaintiffs' treatment. ECF No. 4-2. Movants' argument that the e-mail (in which MoveDocs was copied) and their facility map show a deeper entanglement between Medport and medical providers was refuted by Medport in writing and during oral argument. In any event, the court agrees that the amount Medport paid for these services is not what will allow Movants to adduce evidence of bias. Rather, it is the relationship and course of dealing that may allow Movants to make that argument to the jury. As a result, while evidence of bias is relevant, the documents showing the amount paid for the medical services are not relevant, as they do not establish bias. As a result, they are not discoverable.
In sum, the court is persuaded that the amount Medport paid for Plaintiff's accounts receivable is not likely to establish evidence of bias and that there are other ways Movants can establish bias without having access to the amount paid for the accounts receivable. Specifically, Movants may be able to subpoena the necessary witnesses to testify at trial as to the relationship between the medical providers and Medport, the number of times they have dealt with one another, the type and degree of involvement on the part of Medport (if any) as to the medical treatment of plaintiffs, and whether having a verdict for the defense would diminish its prospects of dealing with Medport in the future.
The court is inclined to believe that some of the other documents that Movants subpoenaed may be relevant to show bias (e.g., documents showing Medport's corporate structure and documents showing any referrals between plaintiffs' counsel and Medport). However, given the lack of specificity from Movants as to what categories of information fall within the arguments it makes, the court cannot fairly determine which documents, if any, are discoverable. Accordingly, the court will deny the remainder of Movants' motion to compel without prejudice. ... ... ... ... ... ... ... ...
Fees
Movants ask for fees but do cite any authority or explain why they should be entitled to fees. The court will not manufacture arguments for Movant. And, in any event, given the court's findings, the court is hard pressed to believe fees would be merited.
Conclusion
IT IS ORDERED THAT ECF No. 1 is DENIED.
IT IS FURTHER ORDERED that ECF No. 5 is DENIED as moot.
DATED: July 1, 2020
/s/_________
BRENDA WEKSLER
UNITED STATES MAGISTRATE JUDGE