Opinion
Case Nos. 05-21945-CIV-ALTONAGA/Turnoff, 04-CV-02097, Eastern District of Pennsylvania.
August 29, 2005
ORDER DENYING MOTION TO QUASH THIRD-PARTY SUBPOENAS
THIS CAUSE came before the Court on Plaintiffs/Counterclaim Defendants, AMS Construction Co., Inc. and Brekenridge Enterprises, Inc.'s ("AMS['s]") Motion to Quash Third-Party Subpoenas, filed on July 18, 2005 [D.E.1]. Defendant, Reliance Insurance Company (in liquidation) ("Reliance") served three subpoenas dated July 8, 2005 on clients of AMS in the Southern District of Florida, seeking discovery related to an action pending in the Eastern District of Pennsylvania. That action involves a dispute between AMS and Reliance over payment of certain workers compensation claims under a workers compensation policy (the "Policy") issued by Reliance to AMS. Specifically at issue is whether AMS is required to reimburse Reliance for deductible payments that Reliance and/or the Florida Workers Compensation Insurance Guaranty Association made on AMS's behalf under the Policy. AMS claims that it has no obligation to reimburse Reliance for the payments based on a settlement agreement entered into by AMS and Reliance in a prior action.
Reliance served subpoenas on three of AMS's customers, Springs Roofing Company, Dependable Temps of Broward, and Dependable Temps, which each leased several AMS employees who were injured during the Policy period and who submitted workers compensation claims under the Policy. Reliance seeks discovery to determine whether AMS charged or passed on to its customers amounts that it now claims it does not owe under the Policy. AMS now moves to quash the subpoenas, arguing that they are unduly burdensome, confusing, and intended to harass AMS and its clients.
Under the Federal Rules of Civil Procedure, "[p]arties may obtain discovery regarding any matter, not privileged, that is relevant to the claim or defense of any party. . . ." Fed.R.Civ.P. 26(b)(1). However, a court shall quash or modify a subpoena if it:
(i) fails to allow reasonable time for compliance;
(ii) requires a person who is not a party or an officer of a party to travel to a place more than 100 miles from the place where that person resides, is employed or regularly transacts business in person . . .
(iii) requires disclosure of privileged or other protected matter and no exception or waiver applies, or
(iv) subjects a person to undue burden.
AMS first argues that Reliance's subpoenas are confusing and violate Federal Rule of Civil Procedure 45(c)(3)(A)(ii) because cover letters accompanying the subpoenas indicate that production of the subpoenaed documents should be made in Pennsylvania, while the subpoenas themselves provide a place of production in Florida. Reliance responds by stating that there was a "misprint" in the cover letters and that AMS's counsel never contacted Reliance's counsel to clear up any confusion. According to Reliance, the place of production indicated on each subpoena is within 100 miles of the subpoenaed party. The subpoenaed parties shall therefore disregard any cover letters, and the place of production shall be the place indicated on each subpoena.
AMS's second argument is that the subpoenas seek information which is irrelevant to a dispute about the scope of a release in a contract between AMS and Reliance. However, as Reliance points out, discovery from AMS's customers is relevant to determine whether AMS passed on to its customers amounts that it now claims it does not owe under the Policy.
AMS's third argument is that the information which Reliance seeks is protected from public disclosure under the Health Insurance Portability and Accountability Act of 1996 ("HIPAA"). Reliance responds by stating that it and/or the Florida Workers Compensation Insurance Guaranty Association already have in their possession the health information associated with the claims at issue and, therefore, disclosure of this same information would not violate HIPAA. Reliance also agrees that AMS's customers may redact any identifying information before producing documents in response to the subpoenas. Accordingly, to the extent that the subpoenaed documents contain health information protected by HIPAA, which is not already in Reliance's possession, the subpoenaed parties shall redact any identifying information.
Finally, AMS argues that the subpoenas are overly broad and burdensome because they seek AMS's pricing data, employee names, and other proprietary business information that should not be discoverable without appropriate protections from public disclosure. Reliance states that it is willing to enter into a confidentiality agreement to protect any sensitive material against disclosure outside of this litigation. Accordingly, it is
ORDERED AND ADJUDGED that AMS's Motion to Quash Third-Party Subpoenas [D.E. 1] is DENIED as follows:
1. Each subpoenaed party shall produce the subpoenaed documents at the location indicated on the subpoena.
2. The subpoenaed parties shall redact any identifying information to the extent that the subpoenaed documents contain health information protected by HIPAA, which is not already in Reliance's possession.
3. Reliance shall keep all proprietary business information contained in the subpoenaed documents confidential and may only use the documents for purposes of this litigation.
4. The Clerk of the Court is instructed to CLOSE the case.