Medernix v. Snowden

903 S.E.2d 728

MEDERNIX, LLC

v.SNOWDEN et al.

Ortho Sport & Spine Physicians, LLC

v.Snowden et al.

A24A1046

A24A1047

Court of Appeals of Georgia.

June 21, 2024

John Philip Webb, Stockbridge, Brandon Filson Palmer, McDonough, for Appellant in A24A1046.

Yasha Heidari, Norcross, Evan Everett Smith IV, Atlanta, for Appellant in A24A1047.

Elenore Cotter Klingler, Alpharetta, Zachary Musholt Matthews, Luke Ryan Kennedy, for Appellee.

Barnes, Presiding Judge.

[1] In these companion appeals arising out of a discovery dispute in a personal injury case, two non-parties, Ortho Sport & Spine Physicians, LLC ("Ortho Sport") and Medernix, LLC, challenge the trial court’s order compelling them to produce a database report and other documents to the defendants ("Production Order") and a related protective order ("Protective Order").¹ For the reasons discussed below, we conclude that the trial court abused its discretion in requiring Ortho Sport and Medernix to create and produce a requested database report containing extensive financial and billing information because the report was overly broad and was not reasonably calculated to lead to admissible evidence. We therefore vacate the Production Order and Protective Order to the extent that they required Ortho Sport and Medernix to create and produce the database report and remand for further proceedings consistent with this opinion.

The record reflects that Glenda Ochoa sued John Ernest Snowden, New South Trucking, LLC, LAD Truck Lines, Inc., and Protective Insurance Company in the Superior Court of Oconee County for damages arising from an automobile accident.² As part of her damages, Ochoa sought to recover her past and future medical expenses, and she relied on medical treatment and bills she received from different providers, including Ortho Sport. Ortho Sport is an orthopedic medical practice with locations in several states. Ortho Sport provided medical treatment to Ochoa pursuant to a "letter of protection," a contractual arrangement under which a patient is permitted to undergo treatment and defer payment to a later date. Under such a contract, the patient’s outstanding medical debt is collateralized by any potential claim arising from the alleged injuries and is secured by a medical lien, but the patient remains personally liable for the balance. See generally OCGA § 44-14-470 et seq. (setting out the statutory framework for medical liens). Ochoa’s medical bills for treatment she received from Ortho Sport exceeded $18,000.

During the course of the litigation, the defendants served Ortho Sport and its claims manager, Medernix, with almost identical requests for production of records and database materials. Pertinent to those requests, Ortho Sport and Medernix utilized two software databases: eClinicalWorks, which was a medical billing and records software program, and Salesforce, which included information about any law firm associated with a patient. Among other materials, the defendants sought (1) communications between Ortho Sport, Ochoa’s attorneys, and any litigation funding companies involved in the case, including communications logged into eClinicalWorks and/or Salesforce; (2) all applicable contracts between Ortho Sport, Ochoa, Ochoa’s attorneys, and any litigation funding companies involved in the case; (3) "HIPAA audit logs"³ reflecting who had ac- cessed Ochoa’s medical files and any changes made to those files; and (4) a database report revealing Ortho Sport/Medernix’s billed charges or rates, as well as any adjustments made to those rates charges or rates, "categorized by associated law firm referral partner." Additionally, the defendants requested that Ortho Sport/Medemix generate eClinicalWorks Report 37.08, "Financial Analysis at CPT Level (With Everything)," which was a spreadsheet that would list, for every Ortho Sport patient, the amount billed for each visit or procedure at every Ortho Sport location, categorized by CPT code;⁴ the amount written-off, adjusted, or accepted in satisfaction for each such bill; the payor of each bill; and information about who referred each patient to Ortho Sport (the "Database Report" or "Report"). The defendants requested that the Database Report include information for the past three years, and further advised that all "HIPAA-protected personal identifying information," such as patient names and addresses, could be redacted.

When Ortho Sport and Medernix did not produce all of the requested materials, including the Database Report, the defendants filed a motion to compel their production. Among other things, the defendants argued that the Database Report was discoverable because it would reveal data pertaining to the reasonableness and necessity of Ortho Sport / Medemix’s medical bills issued for the treatment of Ochoa, and would reveal data pertaining to the scope of Ortho Sport’s relationship with personal injury law firms generally and Ochoa’s attorneys in particular, which would be relevant to issues of bias, intent, and motive. In connection with their motion to compel, the defendants submitted the affidavit of an expert in the eClinicalWorks software program, who provided instructions on how to generate the Database Report. The defendants specified that the names of any patients and other personal identifying information should be redacted from the Database Report, and the instructions provided by the software program expert explained how to generate a report with that information blacked out.

Additionally, the defendants submitted a sealed letter brief and two sealed exhibits to the trial court in chambers as part of their motion to compel.⁵ The sealed exhibits were attorney referral ledgers created by clinics that allegedly were analogous to Ortho Sport, and which the defendants argued could serve as exemplars for the type of information they were seeking to have produced in the present case. The defendants further argued that the sealed ledgers showed that Ochoa’s attorneys had extensive referral relationships with other, similar Atlanta orthopedic clinics.

Ortho Sport filed a response in opposition to the motion to compel and a motion for protective order, asserting, among other things, that the Database Report was not relevant to the issues of physician bias or the reasonableness and necessity of medical treatment; that it included confidential financial data, trade secrets, and collateral source information that were not discoverable; and that it was overly broad, unduly burdensome, and disproportionate to the needs of the case. In support of its position, Ortho Sport submitted the affidavit of its Chief Executive Officer detailing the confidential nature of the extensive medical and billing data contained in the Database Report. Medernix also filed a response in opposition to the motion to compel, raising arguments similar to those of Ortho Sport but also contending that it did not have possession of the documents and database materials sought by the defendants.

The trial court conducted a hearing on the competing motions. At the hearing, the defendants’ counsel commented on the entry of a protective order:

The one thing I would ask, the one thing about the protective order is this: If the Court sees fit to grant this discovery and put a protective order on it, bind my hands, bind [co-counsel’s] hands, tell us not to tell anybody, I am fine with that. No problem at all.

I would just ask the Court to include a clause that allows us to present that evidence in chambers to a court, as I have done with you, so that other judges have the benefit of understanding what we’re talking about and so there isn’t a circumstance where Ortho Sport or Medemix can revert to claiming this stuff doesn’t exists.

Following the hearing, the trial court granted the defendants’ motion to compel production of the Database Report and other requested materials, finding that "these specific materials are reasonably calculated to lead to admissible evidence," and that "these materials are uniquely in the possession of Ortho Sport and Medernix and thus good cause exists to compel their production according to OCGA § 9-11-34 (c) (2)." In conjunction with its order granting the motion to compel, the trial court entered a protective order requiring Ortho Sport and Medernix to redact personal health information of patients from the Database Report and other requested materials in accordance with HIPAA requirements. The protective order also specified that the Database Report should include data "for the three years prior to the date of [the defendants’ requests for production made to Ortho Sport and Medernix] through and including the date of production," which meant that, based on the date of the protective order, Ortho Sport and Medernix were required to produce approximately four years of financial data. The protective order did not otherwise place any restrictions on the use, dissemination, or confidentiality of the produced materials requested by the defendants.

These companion appeals by Ortho Sport and Medernix followed.⁶

Case No. A24A1047

1. Ortho Sport contends that the trial court abused its discretion by entering a protective order that failed to shield it from producing the Database Report. According to Ortho Sport, the Database Report was overly broad, and requiring it to create and produce the Report to the defendants constituted an unreasonable invasion of its privacy rights and was manifestly unjust and oppressive.

[2] "The scope of discovery under the Civil Practice Act [("CPA")] is broad." General Motors v. Buchanan, 313 Ga. 811, 814 (2) (a), 874 S.E.2d 52 (2022).

Under OCGA § 9-11-26 (b) (1), parties may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action, whether it relates to the claim or defense of the party seeking discovery or to the claim or defense of any other party. Pursuant to OCGA § 9-11-34 (a) (1), a party may request that another party

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