Healy v. Milliman, Inc.

JAMES HEALY, on behalf of himself and all others similarly situated, Plaintiff, v. MILLIMAN, INC., d/b/a INTELLISCRIPT, Defendant.

CASE NO. C20-1473-JCC

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE

May 14, 2021

THE HONORABLE JOHN C. COUGHENOUR

ORDER

This matter comes before the Court on Defendant Milliman, Inc.'s motions for a protective order and for summary judgment (Dkt. Nos. 19, 24) and Plaintiff James Healy's motion to seal (Dkt. No. 34). Having thoroughly considered the parties' briefing and the relevant record, the Court finds oral argument unnecessary and hereby GRANTS in part and DENIES in part Defendant's motion for a protective order (Dkt. No. 24), DENIES Defendant's motion for summary judgment (Dkt. No. 19), and DENIES as moot Plaintiff's motion to seal (Dkt. No. 34) for the reasons explained herein.

I. BACKGROUND

Defendant, through its IntelliScript service, provides reports to life insurance and other risk-management companies containing insurance applicants' medical and prescription histories. (Dkt. Nos. 19 at 4, 32 at 8.)¹ Defendant relies on a variety of sources to compile the information included in the reports, including Pharmacy Benefit Managers, pharmacies, and health insurance companies. (Dkt. No. 19 at 4.) Defendant captures a significant volume of data and has prepared over 40 million reports in the last six years. (Id. at 19.) As a result, Defendant relies heavily on automated processes to gather the information and then applies algorithms to analyze it. (Dkt. Nos. 19 at 4-5, 32 at 8-9.)

Defendant relies on a system to match individuals' personal identifying information to their medical and prescription records to ensure that the information included in its reports relates to the appropriate individual. (Dkt. No. 19 at 6.) This identifying information includes an individual's name, social security number, date of birth, and zip code. (Id. at 6.) But in order "to account for misspelling and other [potential] errors" in the data it receives, it also includes information for individuals with near names, i.e., "same consonants, reversing first and last names, [and] nicknames." (Id. at 5.) In some instances, Defendant also "remov[es] the suffix or hyphen" in an individual's name (Id.) This indisputably results in the inclusion of erroneous information in Defendant's reports, the frequency of which is the subject of this suit. (Compare Dkt. No. 19 at 2, with Dkt. No. 32 at 12.)

Plaintiff applied for life insurance in 2020 and was denied coverage based on a report from Defendant to his prospective insurer that listed several conditions Plaintiff never had. (Dkt. Nos. 19 at 6, 32 at 9.) The errors were substantial and included the following wrongly attributed conditions: osteoarthritis, diabetes, liver disease, chest pains, and sleep apnea. (Dkt. No. 40 at 5-14.) Plaintiff contacted Defendant regarding the erroneous report. (Dkt. No. 32 at 9.) Yet despite what Defendant describes as its "rigorous reinvestigation protocols," it is undisputed that it did not correct the report in a timely manner. (Dkt. No. 19 at 6.) As a result, when Plaintiff reapplied for life insurance with the same insurer, he was again denied. (Dkt. No. 32-1 at 3.) Defendantindicates that its failure to timely correct Plaintiff's report was human error on the part of its staff and not reflective of a systematic failure. (Dkt. No. 19 at 2.)

Plaintiff filed a class-action complaint asserting that Defendants' actions violated the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681 et seq. (Dkt. No. 1). In it he alleged violations of § 1681e(b) for inaccurate reporting, §1681i(a) for a failure to adequately investigate errors, § 1681i(f) for a failure to forward disputed items for resolution to source consumer reporting agencies, and § 1681g(a)(2) for a failure to disclose to Plaintiff the sources of the information that Defendant included in the report. (Dkt. No. 1 at 13-15.)

Litigation in this putative class action is still in its early stages. Defendant answered Plaintiff's complaint in December 2020. (Dkt. No. 14.) The parties held their Rule 26(f) conference and made initial disclosures in February 2021. (Dkt. No. 33 at 2.) At the time, Plaintiff lodged 63 requests for production ("RFP"). (See Dkt. No. 25 at 9-38.) In general, they address how Defendant gathers and processes the data included in its reports, its quality control system, and how it resolves disputed items. (Id.) In response, Defendant produced just nine documents. (Dkt. No. 25 at 9-38.)² Following two discovery conferences, Defendant moved for a protective order and for summary judgment. (See Dkt. Nos. 19, 24). Defendant argues that Plaintiff's suit is nothing more than a "fishing expedition based on a hunch" that Defendant's systems and procedures are inadequate under the FCRA. (Dkt. No. 24 at 5.) In response, Plaintiff asks the Court to deny summary judgment pursuant to Federal Rule of Civil Procedure 56(d) and to strike certain declarations in support of Defendant's summary judgment motion. (Dkt. Nos. 32at 15, 47 at 1; see generally Dkt. No. 29.) Plaintiff also moves to seal certain documents Defendant labeled as "confidential" pursuant to the protective order filed in this case (Dkt. No. 28) that Plaintiff referenced and/or included in support of its opposition brief. (See Dkt. No. 34.)

II. DISCUSSION

Congress enacted the FCRA to "protect consumers from the transmission of inaccurate information about them." Guimond v. Trans Union Credit Info. Co., 45 F.3d 1329, 1333 (9th Cir. 1995). Liability under the Act is "predicated on the reasonableness of the [reporting agency's] procedures in obtaining [] information." Id. at 1333. It is not a strict liability statute. Id.

Defendant argues that its procedures are reasonable, that Plaintiff's experience was unique, and that Plaintiff has no colorable FCRA claims. (See generally Dkt. Nos. 19, 24.) Defendant suggests that it should not be forced to incur the expense of full-blown discovery, given its allegedly reasonable procedures. (See generally Dkt. No. 24) However, because the FCRA's requirements are generally premised on the reasonableness of Defendant's procedures, the discovery Plaintiff seeks is just as applicable to the class-wide allegations as it is to Plaintiff's individual claims. The Court FINDS, for the reasons described below, that Plaintiff has met his burden to establish that the discovery sought by Plaintiff is appropriate at this time and that summary judgment prior to such discovery would be premature.

A. Defendant's Motion for a Protective Order

The Court may "issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense" from unnecessary and irrelevant discovery requests. Fed. R. Civ. P. 26(c). Where class discovery is sought, "[t]he availability and scope of pre-certification discovery lie within the discretion of the Court." Heredia v. Eddie Bauer LLC, 2017 WL 1316906, slip op. at 1 (N.D. Cal. 2017). "[O]ften the pleadings alone will not resolve the question of class certification and that some discovery will be warranted." Vinole v. Countrywide Home Loans, Inc., 571 F.3d 935, 942 (9th Cir. 2009). Before obtaining pre-certification discovery, "Plaintiff must 'either make a prima facie showing that the Rule 23 classaction requirements are satisfied, or . . . show that discovery is likely to produce substantiation of the class allegations.'" Lieberg v. Red Robin Gourmet Burgers, Inc., 2016 WL 1588381, slip op. at 1 (W.D. Wash. 2016) (quoting Ogden v. Bumble Bee Foods, LLC, 292 F.R.D. 620, 622 (N.D. Cal. 2013)).

Defendant seeks to limit its responses to RFPs 8, 11, 14-15, 24-25, 31-34, and 36 solely to materials related to Plaintiff and to not produce any materials responsive to RFPs 12-13, 17-23, 26-27, and 57-63, on the basis that those RFPs relate solely to class allegations. (Dkt. No. 24 at 3.) Defendant contends that Plaintiff cannot make the required prima facie showing or demonstrate that this discovery is likely to substantiate the class allegations because Plaintiff "lacks a cognizable claim under the FCRA." (Id. at 2.) Defendant separately argues that the requests for production are "vastly overbroad, unduly burdensome, and disproportionate to the needs of the case." (Id.)

1. § 1681e(b) Claim

"Whenever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates." 15 U.S.C. § 1681(e)(b). Plaintiff seeks a variety of discovery relevant to the issue of known errors in Defendant's reports. (See generally Dkt. No. 25 at 11-38.) Defendant argues that Plaintiff is not entitled to that discovery at this stage because Plaintiff's claim based on a violation of this requirement is "without merit" in that it has "reasonable procedures in place that ensure the accuracy of the information it provides." (Dkt. No. 24 at 8-9.)

Nevertheless, in this instance those "reasonable procedures" resulted in an inaccurate report. Moreover, by Defendant's own admission, 1.9% of the 81,464 consumers who requested reports from Defendant between January 1, 2015 through December 31, 2020 had errors in their reports. (Dkt. No. 23 at 1-2.) Without further discovery, it is impossible to say what the actual number of erroneous reports over this time was. But it could be significant. Extrapolating theknown error rate for that subset of reports to all reports prepared by Defendant during the same period would result in over 800,000 erroneous reports. (Id. (calculated as 42,781,776 reports x 1.9%).)

This is sufficient to demonstrate that the discovery Plaintiff seeks relevant to Plaintiff's § 1681e(b) claim is permissible at this stage.

2. § 1681i(a) Claim

Within 30 days of a dispute lodged by a consumer, a reporting agency must, "free of charge, conduct a reasonable investigation to determine whether...