Lipsky v. N.J. Ass'n of Health Plans, Inc.

474 N.J.Super. 447

288 A.3d 1273

Richard LIPSKY, and MHA, LLC d/b/a Meadowlands Hospital, Plaintiffs-Respondents,

v.The NEW JERSEY ASSOCIATION OF HEALTH PLANS, INC., Health Professionals and Allied Employees Union, Jeanne Otersen, Ann Twomey, Adrien Dumoulin-Smith, Harriet Rubenstein, Amerigroup, Inc., AmeriHealth Insurance Company of New Jersey, AmeriHealth HMO, Inc., United Healthcare Services, Inc., United Healthgroup Incorporated, Aetna, Inc., Horizon Blue Cross Blue Shield Insurance Company, and New Jersey Health Care Quality Institute, Defendants-Respondents.

New Jersey Department of Health, Appellant.

DOCKET NO. A-1611-21

Superior Court of New Jersey, Appellate Division.

Argued January 11, 2023

Decided January 18, 2023

Michael R. Sarno, Deputy Attorney General, argued the cause for appellant (Matthew J. Platkin, Attorney General, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel; Michael R. Sarno, Deborah Shane-Held, and Patrick Jhoo, Deputy Attorneys General, on the briefs).

William J. Hughes, Jr., Morristown, argued the cause for respondent MHA, LLC d/b/a Meadowlands Hospital (Porzio, Bromberg & Newman, PC, attorneys; Vito A. Gagliardi, Jr., and Brett S. Moore, of counsel and on the joint brief; Thomas J. Reilly, on the joint brief).

Robert A. Agresta, Englewood, argued the cause for respondent Dr. Richard Lipsky (The Agresta Firm, PC, attorneys; Robert A. Agresta and Anthony K. Modafferi, III, of counsel and on the joint brief).

Before Judges Haas, Gooden-Brown and Mitterhoff.

The opinion of the court was delivered by

HAAS, P.J.A.D.

In this opinion, we address 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. Having reviewed this issue in light of the record, the arguments of the parties, and the applicable law, we conclude that the trial court misapplied its discretion when it required the New Jersey Department of Health (Department) to give the cell phones to plaintiffs' expert for evaluation. The trial court's order violated civil discovery rules and case law by requiring the production of materials not in the Department's possession, custody, or control, not allowing for privilege and confidentiality review, and being unnecessary and unduly burdensome. The order also contravened the employees' constitutional right to privacy. Therefore, we reverse the court's order mandating that the Department turn over any State-issued or personal electronic devices for examination by plaintiffs' expert, and remand for resolution of any outstanding issues relating to the completeness of the Department's response to plaintiffs' subpoena.

I.

Plaintiffs Richard Lipsky, MD, and MHA, LLC d/b/a Meadowlands Hospital, initiated this litigation in federal court. In 2016, the federal court severed a number of claims, which plaintiffs then pursued in State court.

In July 2017, plaintiffs served a subpoena duces tecum on the Department, with an attached copy of their November 2016 State-court amended complaint. This subpoena is not at issue in this appeal. For the most part, this subpoena sought documents and communications relating to plaintiffs and several other named individuals from January 2010 to the present. Plaintiffs issued a modified subpoena in April 2018, and in May 2018 the court issued an order granting plaintiffs' motion to compel the production of responsive documents.

In August 2018, plaintiffs filed a third amended complaint in their State-court litigation, in which they asserted claims for violations of New Jersey's racketeering and antitrust statutes, tortious interference with prospective and ongoing economic advantage, civil conspiracy, common law and statutory unfair competition, and aiding and abetting. In a nutshell, plaintiffs alleged that defendants¹ conspired to target Meadowlands Hospital for elimination. They alleged:

44.... Meadowlands, a private for-profit OON [out-of-network] Provider, and its owners, have been targeted by the [d]efendants with the goal of eliminating Meadowlands as a competitor to in-network not-for-profit medical providers because Meadowlands generally refused to join all existing insurance companies networks, and also generally refused to voluntarily accept reduced payments from those insurers that Meadowlands does not have an in-network agreement with. As such, Meadowlands did not enable the health insurance companies to engage in an illegal scheme to pay themselves fees from the health insurance plans they are paid to administer. Furthermore, unhappy with how a for-profit health care facility must operate, Meadowlands and its owners were targeted by [defendant Health Professionals and Allied Employees Union ("HPAE")] and its members who intentionally coordinated efforts with health insurance companies through [defendant the New Jersey Association of Health Plans ("NJAHP")] to inflict financial and reputational harm on Meadowlands and its owners.

45. The [d]efendants targeted Meadowlands and its owners in a coordinated manner by engaging in a continuous negative media campaign to disparage Meadowlands and its owners, as well as using various measures to exert financial pressure on Meadowlands and its owners resulting in substantial damages to Meadowlands ....

As relates to the Department, which is not a party to the litigation, plaintiffs alleged that defendants: encouraged the Department to conduct inspections of Meadowlands Hospital for health-related violations; and used public records requests to obtain data about Meadowlands from the Department, as follows:

187. HPAE, and one or more of the other [d]efendants encouraged the [Department] to conduct frequent and unjustified inspections at Meadowlands for alleged health related violations. From the date that Dr. Lipsky and his fellow owners purchased Meadowlands in December 2010, the [Department] conducted over sixty-six inspections for alleged health violations (approximately one per month), and also compelled Meadowlands to hire a financial consultant resulting in the forced disclosure of additional financial and other information about Meadowlands' business operations. The [d]efendants were then able to obtain this information using "Transparency" as a messaging device, and used it to assist in their efforts to reduce reimbursements and strangle the hospital financially.

188. This number of inspections is far from common and well in excess of the number of inspections performed at most New Jersey hospitals.

189. For example, on January 29, 2014, Brenden Peppard of United Healthcare emailed Ward Sanders to ask him who he should contact at the [Department] to discuss Meadowlands Hospital.

190. Furthermore, HPAE, along with the NJAHP and other industry trade groups took steps, both in the media, and through direct communications to New Jersey State officials, to have a manager appointed to oversee Meadowlands' business operations.

A little over a year after the third amended complaint, in October 2019, the Department conducted an inspection survey at Columbus Hospital in Newark, which is one of plaintiffs' facilities. On October 23, 2019, plaintiffs' counsel wrote to Department Assistant Commissioner Stefanie Mozgai seeking an explanation as to the factual and legal basis for the inspection. Shortly thereafter, in November 2019, in response to counsel's letter, the Department advised certain Department employees to preserve documents and electronic data regarding the October 2019 inspection and also a June-July 2019 licensure survey.

On April 27, 2020, plaintiffs served a subpoena duces tecum on the Department in care of Mozgai. This subpoena, which the trial court and the parties to this appeal sometimes referred to as the "Columbus Subpoena," is the subpoena at issue. Through the subpoena, plaintiffs sought twenty categories of documents and communications, mostly (but not exclusively) concerning Columbus Hospital, inspections and surveys at Columbus Hospital, and any complaints made about Columbus Hospital.

In the "Definitions and Instructions" portion of the subpoena, plaintiffs made it clear that they were seeking data from both work and personal accounts and work and personal electronic devices. Indeed, plaintiffs defined "documents and communications" as including "all Documents and Communications wherever they may be stored including in personal devices, personal accounts, cloud-based accounts, corporate accounts, CD or DVD discs, government data storage of any kind, USB or other forms of attachable storage devices." (emphasis added).

Moreover, plaintiffs provided instructions for how individuals should conduct searches of various messaging applications on their personal and work devices. For example, the subpoena instructed:

K. In performing searches for communications of Apple iMessage or Messages, WhatsApp, Facebook Messenger, Instagram, Snapchat, [Gmail], [GChat] or [WeChat] data it is expressly requested that you conduct the relevant data request directly from each of these providers through your account and search each of the relevant data downloads from these providers and certify specifically that you have searched each of these downloads for relevant data and to the extent that you have erased any data, it is expressly requested that you certify as to any data which was erased either by automated processes or by yourself including deleting messages on your personal device or otherwise cancelling, disabling, suspending or deleting your accounts with any of these providers.

L. Apple iMessage and Messages data may reside on your personal devices including both computers and mobile phones as well as in iCloud Backups. It is expressly requested that you search message data on all devices which have access to your iMessage or Messages accounts as well as all iCloud

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