Good Cause Exists for Production of “Not Reasonably Accessible” Claims Information

W.E. Aubuchon Co., Inc. v. BeneFirst, LLC, 245 F.R.D. 38 (D. Mass. 2007)

In this case, plaintiffs sued the third-party administrator of their employee medical benefits plans, alleging that it breached its fiduciary duty and the underlying contract by failing to perform its duties in a reasonably prudent manner.  In an earlier motion to compel, plaintiffs had sought, among other things, to compel BeneFirst to produce all medical claims files, including the actual medical bills in BeneFirst’s custody or control.  The court ruled that BeneFirst was to provide those files and bills.  BeneFirst sought reconsideration of that ruling, arguing that the requested claims forms were not reasonably accessible within the meaning of FRCP 26(b)(2)(B) because of the high cost to retrieve such information (both in monetary terms and in terms of the man hours it would require to retrieve the information).

The court described in detail the process that BeneFirst had utilized for processing, storing and retrieving claims at the time it administered the subject plans.  BeneFirst would typically receive requests for payment from medical providers who had provided covered medical services to plaintiffs’ personnel.  These requests for payment were on claim forms, which would be sorted or “batched” into client groups for processing.  Once processed for payment, the claim forms were retained for a 60 day period.  After 60 days, the batch of claim forms would be scanned and stored as electronic images and then destroyed.  These scanned forms were stored in groups according to their processing date and the person who processed the claim.

If a claim needed to be retrieved after the 60 day period, the claim number, processor, and date of processing would be needed in order to retrieve the image.  It was particularly important to the search process to have the name of the person who processed the claim because on any given day, three to four claims examiners would process plaintiffs’ claims and during the relevant period, 14 different examiners were employed.  Furthermore, BeneFirst had used an outside vendor to process claims during the relevant time period.

The search process for retrieving claims was further complicated by the fact that there was no index of images per se.  The images were stored on BeneFirst’s server first, according to year of processing, then by claims examiner, then by the month of processing, and finally by the actual processing date.  The court observed:  “Inexplicably, BeneFirst’s system was not set up to for the wholesale retrieval of claim images on a group by group basis.”

The court stated that, during the relevant time period, BeneFirst was administering up to 48 different plans and, by its estimation, processed between 550,000 and 600,000 claims.  Of that number, 34,112 claims were submitted for processing under the plans that were subject to the lawsuit.  Of that number, plaintiffs narrowed their request, based upon a dollar value, to approximately 3,000 claims.  BeneFirst estimated that it would cost approximately $80,000.00 and take almost 4,000 hours to retrieve all 34,112 claims; it did not provide a cost/time estimate for the retrieval of the 3,000 claims.

The court deemed it “just and practicable” to apply the December 1, 2006 amendments to Rule 26 to the dispute, and adopted the amended rule’s two-part inquiry:  (1) Whether the information sought is reasonably accessible and (2) If the information is not reasonably accessible, whether good cause has been shown for requesting the information, taking into consideration the limitations of Rule 26(b)(2)(C).

The court relied on Zubulake I in finding that the claims were not reasonably accessible:

In Zubulake, the court found that the time and expense required to retrieve documents and electronic data depends primarily on whether such information “is kept in an accessible or inaccessible format … [furthermore,] [w]hether electronic data is accessible or inaccessible turns largely on the media on which it is stored."  Zubulake broke down electronic data into the following five categories, listed in order of most accessible to least accessible:  (1) active on-line data (hard drives, for example); (2) near-line data (typically, robotic storage devices such as optical disks); (3) offline storage/archives (removable optical disks or magnetic tape media which can be labeled and stored in a shelf or rack); (4) backup tapes (devices like tape recorders that read data from and write it onto a tape; they are sequential access devices which are typically not organized for retrieval of individual documents or files); and (5) erased, fragmented or damaged data (such data can only be accessed after significant processing). 

Generally, the first three categories of data are considered “accessible” and the last two categories are considered “inaccessible.”  That the data is deemed “accessible” does not mean it is readily obtainable, “the time it takes to actually access [such] data ranges from milliseconds to days, [however] the data does not need to be restored or otherwise manipulated to be usable”."  “‘Inaccessible’ data, on the other hand, is not readily usable.  Backup tapes must be restored … fragmented data must be defragmented, and erased data must be reconstructed.  That makes such data inaccessible.”

Because, as noted by Judge Sheindlin, the determination of whether the production of electronic data is expensive or unduly burdensome often depends on whether it is maintained in an “accessible” or “inaccessible” format, I find that it is instructive to apply this media based analytical approach in considering whether electronic data is “reasonably accessible” for purposes of the new Rule 26(b)(2)(B).  In this case, the records sought by the Plaintiffs are stored on a server used by BeneFirst in Pembroke Massachusetts, which is clearly an accessible format.  However, because of BeneFirst’s method of storage and lack of an indexing system, it will be extremely costly to retrieve the requested data.  I am hard pressed to understand the rationale behind having a system that is only searchable by year of processing, then claims examiner, then the month of processing, and finally the claims date.  None of these search criteria reflect the name of the individual claimant, the date that the claimant received the medical service, who the provider was, or even the company that employed the benefit holder.  It would seem that such a system would only serve to discourage audits and the type of inquiries that have led to the instant litigation.  Nevertheless, the retrieval of the records will be costly and for the purposes of this decision, I find that such retrieval would involve undue burden or cost.  Accordingly, the images are not reasonably accessible within the meaning of Fed. R. Civ. P. 26(b)(2)(B).

(Citations and footnote omitted.)

The court went on to find that plaintiffs had established good cause for requiring BeneFirst to produce the requested information.  It noted that plaintiffs had significantly narrowed their original request from approximately 34,000 claims to a list of approximately 3,000, and opined that this reduction should serve to reduce the time and expense of retrieving the requested information.  It also found that the files were an integral part of the litigation bearing upon BeneFirst’s culpability as well as the amount of damages to which plaintiffs may be entitled, and the claims were not available through any other source.  Thus, the court denied BeneFirst’s motion for reconsideration and ordered BeneFirst to produce the material at its own expense.