PH2\732404.24 

IN THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF PENNSYLVANIA 

THE CHESTER COUNTY HOSPITAL : CIVIL ACTION 

 : NO. 02-2746 

 v. : 

 : 

INDEPENDENCE BLUE CROSS, : 

QCC INSURANCE COMPANY, : 

KEYSTONE HEALTH PLAN EAST, and : 

KEYSTONE MERCY HEALTH PLAN :

PLAINTIFF THE CHESTER COUNTY HOSPITAL’S MOTION TO MODIFY THE 

PROTECTIVE ORDER

Pursuant to Federal Rule of Civil Procedure 26(c)(7) and Local Rule of Civil Procedure 

26.1, Plaintiff, The Chester County Hospital, by and through its undersigned counsel, hereby 

moves to modify the Protective Order. In support of this Motion, Plaintiff relies upon the 

attached Memorandum of Law and the exhibits attached thereto. 

 Respectfully Submitted, 

 _______________________________ 

 Lewis R. Olshin 

 Wayne A. Mack 

 J. Manly Parks 

 Keith J. Verrier 

 Duane Morris LLP 

 One Liberty Place 

 Philadelphia, Pennsylvania 19103-7396 

 

 Richard A. Feinstein 

 Daniel A. Kotchen 

 Kevin R. Anthony 

 Boies, Schiller & Flexner LLP 

 5301 Wisconsin Avenue, N.W. 

 Washington, D.C. 20015 

 Attorneys for 

 THE CHESTER COUNTY HOSPITAL 

Case 2:02-cv-02746-JP Document 57 Filed 05/30/2003 Page 1 of 11
 

PH2\732404.24 

IN THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF PENNSYLVANIA 

THE CHESTER COUNTY HOSPITAL : CIVIL ACTION 

 : NO. 02-2746 

 v. : 

 : 

INDEPENDENCE BLUE CROSS, : 

QCC INSURANCE COMPANY, : 

KEYSTONE HEALTH PLAN EAST, and : 

KEYSTONE MERCY HEALTH PLAN :

PLAINTIFF THE CHESTER COUNTY HOSPITAL’S MEMORANDUM OF LAW IN 

SUPPORT OF ITS MOTION TO MODIFY THE PROTECTIVE ORDER

Pursuant to Federal Rule of Civil Procedure 26(c)(7) and Local Rule of Civil Procedure 

26.1, Plaintiff, The Chester County Hospital (“The Hospital”), by and through its undersigned 

counsel, hereby moves to modify the Court’s January 24, 2003, Protective Order (the “Order”). 

Introduction

The Hospital files this Motion as a result of the objections of four insurers that operate in 

the five-county Philadelphia area, Aetna, Cigna, Coventry, and Multiplan (the “insurers”), to 

document subpoenas issued by the Hospital. These insurers have refused to produce two 

categories of documents – strategic plans and hospital contracts that contain reimbursement rates 

– unless certain changes to the Order are made. 

The Order defines the category “highly confidential” as information or the contents of 

any document which satisfies the definition of “confidential information,” and “(a) which the 

Disclosing Entity contends is either proprietary or a trade secret, or (b) which reveals health care 

provider reimbursement rates or the negotiation of such reimbursement rates with health care 

providers.” See Order at ¶ 7 attached as Ex. A. 

Case 2:02-cv-02746-JP Document 57 Filed 05/30/2003 Page 2 of 11
 2 

PH2\732404.24 

The Hospital seeks a modification to the Order limiting disclosure of category (a) 

material designated “highly confidential” by the insurers to Defendant Independence Blue Cross 

(“IBC”) in-house counsel who are not involved in making competitive business decisions. 

Second, the Hospital seeks a modification to the Order restricting disclosure of category (b) 

material designated by the insurers as “highly confidential,” the most competitively sensitive 

information – hospital contracts containing reimbursement rates, to outside counsel. The 

Hospital also seeks a number of other less fundamental but important changes to the Order. 

Background 

On May 8, 2002, the Hospital filed this lawsuit against IBC, alleging, among other 

things, that IBC violated the antitrust laws by acquiring and abusing market power in the fivecounty Philadelphia area. During the course of discovery, the Hospital issued subpoenas to 

Aetna, Cigna, Coventry, and Multiplan, insurers operating in the Philadelphia area, seeking their 

business plans, hospital contracts, and employer contracts. See Subpoenas attached as Ex. B. 

Each of these insurers objected to the Hospital’s requests on relevance/burden grounds and 

confidentiality grounds. 

The Hospital negotiated the scope of its subpoenas with the insurers and resolved the 

relevance/burden objections. The insurers’ confidentiality objections, however, have not been 

resolved. There are two barriers to their production. First, the insurers seek to restrict category 

(a) material designated “highly confidential” to IBC in-house counsel not involved in making 

competitive business decisions. Second, they seek to restrict access to category (b) information 

designated “highly confidential,” the most competitively sensitive information, to outside 

counsel only. The insurers also a seek a number of other less fundamental but important changes 

to the Order. IBC has been unwilling to agree to modify the Order to accommodate the insurers’ 

confidentiality concerns. 

Case 2:02-cv-02746-JP Document 57 Filed 05/30/2003 Page 3 of 11
 3 

PH2\732404.24 

Discussion

1. The Order Should Be Modified to Restrict Disclosure of Category (a) 

Material Designated “Highly Confidential” by the Insurers to IBC In-House 

Counsel Not Involved in Making Competitive Business Decisions. 

The same balancing test – risk of injury without the modification versus the need for the 

information – that is used in determining whether to grant protective orders should be applied by 

courts considering modifications to them. See Pansy v. Borough of Stroudsburg, 23 F.3d 772, 

790 (3rd 1994). The party seeking the modification must demonstrate that “good cause,” i.e., a 

clearly defined and serious injury, exists for the change. Id. at 786. 

“Prohibiting disclosure of confidential information to in-house counsel may be 

appropriate when in-house counsel is involved in ‘competitive decision making.’” See U.S. v. 

Dentsply Int'l, Inc., 187 F.R.D. 152, 159-60 (D. Del. 1999) (citing U.S. Steel Corp. v. United 

States, 730 F.2d 1465, 1468-69 (Fed. Cir. 1984). “Competitive decision making” means 

participating or advising in any or all of a client’s decisions made in light of information about a 

competitor. Dentsply, 187 F.R.D. at 159-60. 

The question is whether in-house counsel would have difficulty compartmentalizing 

knowledge gained from confidential information when participating in competitive business 

decisions. See Motorola Inc. v. Interdigital Tech. Corp., 1994 U.S. Dist. Lexis 20714, *10-11 

(D. Del. 1994) (citing Carpenter Tech. Corp. v. Armco., Inc., 132 F.R.D. 24, 27-28 (E.D. Pa. 

1990). If there is a risk that in-house counsel could inadvertently disclose confidential 

information, prohibiting their access to it is appropriate. See Dentsply, 187 F.R.D. at 159-62; 

Motorola, 1994 U.S. Dist. Lexis at *10-13; Carpenter, 132 F.R.D. at 27-28. 

In Dentsply, the Court granted a third-party’s motion for a protective order prohibiting 

disclosure of confidential information to the defendant’s general counsel because his affidavit 

alluded to his involvement in making competitive business decisions. 187 F.R.D. at 159-62. In 

Case 2:02-cv-02746-JP Document 57 Filed 05/30/2003 Page 4 of 11
 4 

PH2\732404.24 

Motorola, the Court amended the protective order to include a “Chinese Wall” separating the 

defendant’s in-house counsel involved in the litigation from other in-house counsel to avoid the 

inadvertent disclosure of confidential information during the defendant’s prosecution of patents 

in the subject area of the plaintiff’s patents. 1994 U.S. Dist. Lexis at *10-13. 

In Carpenter, the Court granted the defendant’s motion for a protective order in part and 

denied it in part based on the wording of affidavits of the plaintiff’s in-house counsel. 132 

F.R.D. at 27-28. The Court denied the protective order against one in-house lawyer, Peltz, 

because his affidavit stated he had “absolutely no involvement” in business decisions. Id. The 

Court granted the protective order against another in-house lawyer, Welty, because his affidavit 

stated he had “no direct responsibility or authority over competitive decisions.” Id. The Court 

concluded that Welty’s affidavit created the risk of inadvertent disclosure of confidential 

information because if Welty was not involved in making competitive business decisions, his 

affidavit would have used the same language as Peltz’s. Id. 

IBC admits that at least three of its in-house attorneys, Paul Tufano, General Counsel, 

Ellie Thompson, Deputy General Counsel, and Mark Dianno, Senior Counsel, are involved in 

making competitive business decisions. In a letter dated April 25, 2003, Keith Verrier, outside 

counsel for the Hospital, confirmed that “Mr. Tufano is involved in all aspects of IBC’s 

business.” (See Letter Verrier to Diamond dated April 25, 2003, attached as Ex. C). In a letter 

dated April 29, 2003, Paul Diamond, outside counsel for IBC, stated: 

“1. Ms. Thompson is Deputy General Counsel in charge of 

litigation; 

2. Although Ms. Thompson and Mr. Dianno are not involved in 

negotiating health care reimbursement rates, they are involved in 

counseling their client respecting competitive business decisionmaking, as they understand those terms.” 

(See Letter from Diamond to Verrier dated April 29, 2003, attached as Ex. D). 

Case 2:02-cv-02746-JP Document 57 Filed 05/30/2003 Page 5 of 11
 5 

PH2\732404.24 

As a result of Mr. Tufano’s, Ms. Thompson’s, and Mr. Dianno’s indisputable 

involvement in competitive business decisions, there is a clear risk that the insurers’ highly 

confidential information within category (a) could be inadvertently disclosed. Modifications to 

the Order prohibiting their access to this highly confidential information are therefore 

appropriate. Specifically, the Order should be changed to prohibit disclosure of category (a) 

material designated by the insurers as “highly confidential” to Mr. Tufano, Ms. Thompson, Mr. 

Dianno, and any other IBC in-house counsel with competitive business decision-making 

capacity. 

2. The Order Should Be Modified to Include a Designation Restricting 

Disclosure of Category (b) Information Designated “Highly Confidential” by 

the Insurers, Which Is the Most Competitively Sensitive Information, to 

Outside Counsel Only. 

The Hospital is also sensitive to the insurers’ concerns that access to the most 

competitively sensitive information – hospital contracts containing reimbursement rates – be 

restricted to outside counsel only. In Ball Memorial Hospital, Inc., et al. v. Mutual Hospital Ins., 

Inc., the Seventh Circuit upheld a decision that similar price data – prices bid by hospitals to 

obtain contracts with Blue Cross Blue Shield of Indiana – were “unquestionably sensitive trade 

secrets,” access to which was appropriately restricted to trial counsel only. 784 F.2d 1325, 1345-

46 (7th Cir. 1986). 

The Seventh Circuit’s decision rested on the fact that the plaintiffs, 80 hospitals, were 

competitors who could potentially use the price information in future negotiations. Id.; see also

C.A. Muer Corp. v. Big River Fish Co., 1998 U.S. Dist. LEXIS 12639 at * 10-12 (E.D. Pa. 1998) 

(Angell, M.J.) (requiring attorneys’ eyes only condition for release of confidential commercial 

documents in litigation between two competitors). To meet the insurers’ similar concerns 

concerning the disclosure of their price information to IBC, the Hospital proposes an additional 

Case 2:02-cv-02746-JP Document 57 Filed 05/30/2003 Page 6 of 11
 6 

PH2\732404.24 

designation to the Order restricting disclosure of category (b) information designated “highly 

confidential” by the insurers, which is the insurers’ most competitively sensitive information, to 

outside counsel only. 

3. The Order Should Be Modified to Incorporate Other Less Fundamental But 

 Important Changes Proposed by the Insurers. 

Finally, the insurers propose a number of other less fundamental changes to the Order. 

The Hospital agrees that these changes are important and therefore moves to modify the Order 

accordingly. These proposed changes include the following: 

a. With regard to the insurers, their strategic business plans and hospital 

contracts shall be considered highly confidential under the Order; 

b. Material designated as highly confidential by the insurers may not be 

disclosed to IBC or the Hospital, orally or otherwise, irrespective of 

settlement negotiations; 

c. The protections of Paragraph 10(a) shall apply with equal force to Cigna, 

Aetna, Multiplan, and Coventry as they do to IBC; 

d. Paragraph 11 of the current Order, addressing the filing of confidential and 

highly confidential information under seal, shall apply to any summary 

judgment motion; 

e. The insurers shall have the same notice and opportunity to object to the 

disclosure of confidential and highly confidential information to (1) 

deponents, and (2) pre-trial hearing and trial witnesses that they currently 

have with regard to (3) non-testifying experts; 

f. Counsel for each party shall maintain a list of all persons to whom any 

third party confidential or highly confidential information is disclosed and 

the agreements signed by such persons, and shall provide counsel for a 

Disclosing Entity upon request with a copy of the list and signed 

agreements; 

g. In the event that a party objects to an insurers’ designation of confidential 

or highly confidential information or documents, the procedural burden of 

moving the Court for relief shall be placed on the objecting party; 

h. Any outside counsel to whom an insurers’ highly confidential information 

is to be disclosed shall be provided with a copy of the Order (as modified), 

and be advised, and agree, that they are bound by the Order; 

Case 2:02-cv-02746-JP Document 57 Filed 05/30/2003 Page 7 of 11
 7 

PH2\732404.24 

i. No more than three (3) copies shall be made of documents produced by 

Aetna without Aetna’s express consent; 

j. At the conclusion of this litigation, the parties shall return to Aetna all 

documents produced by Aetna, and confirm in writing that as to those 

documents the Order has been abided; and 

k. Any notices that are to be provided to Aetna under the Order shall be sent 

via facsimile and 1st Class mail to: James C. Crumlish III, Elliott Reihner 

Siedzikowski & Egan P.C., 925 Harvest Drive, Suite 300, Blue Bell, PA 

19422; Facsimile Number: (215) 977-1099. 

Conclusion 

For all of the foregoing reasons, The Chester County Hospital respectfully moves the 

Court for an Order granting its Motion to Modify the Protective Order and to modify the Order 

according to the attached Plaintiff’s Proposed Modifications to the Protective Order. 

 Respectfully Submitted, 

 

 _______________________________ 

 Lewis R. Olshin 

 Wayne A. Mack 

 J. Manly Parks 

 Keith J. Verrier 

 Duane Morris LLP 

 One Liberty Place 

 Philadelphia, Pennsylvania 19103-7396 

 

 Richard A. Feinstein 

 Daniel A. Kotchen 

 Kevin R. Anthony 

 Boies, Schiller & Flexner LLP 

 5301 Wisconsin Avenue, N.W. 

 Washington, D.C. 20015 

 Attorneys for 

 THE CHESTER COUNTY HOSPITAL 

Case 2:02-cv-02746-JP Document 57 Filed 05/30/2003 Page 8 of 11
 

PH2\732404.24 

IN THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF PENNSYLVANIA 

THE CHESTER COUNTY HOSPITAL : CIVIL ACTION 

 : NO. 02-2746 

 v. : 

 : 

INDEPENDENCE BLUE CROSS, : 

QCC INSURANCE COMPANY, : 

KEYSTONE HEALTH PLAN EAST, and : 

KEYSTONE MERCY HEALTH PLAN : 

PLAINTIFF’S PROPOSED MODIFICATIONS TO THE PROTECTIVE ORDER

AND NOW, this _______ day of _____________ 2003, upon consideration of Plaintiff 

The Chester County Hospital’s Motion to Modify the Protective Order, it is hereby ORDERED 

that the Motion to Modify is GRANTED. It is further ORDERED that: 

1. Paragraph 10 of the Protective Order shall be modified as follows: 

j. With respect to that “highly confidential” information which third-party 

 insurers designate as proprietary or a trade secret: 

(i) Paul Tufano, Ellie Thompson, and Mark Dianno, in-house counsel 

for Defendant, shall not have access to this class of material 

designated “highly confidential.” 

(ii) Defendant shall attach to the Order a list of in-house counsel not 

involved in “competitive decision making” and only those 

attorneys shall have access to this class of material designated 

“highly confidential.” 

(iii) for the purpose of this paragraph (j), “Competitive decision 

making” shall mean participating or advising in any or all of a 

client’s decisions made in light of information about a competitor. 

k. With respect to that “highly confidential” information which third-party 

 insurers designate as revealing health care provider reimbursement rates or 

 the negotiation of such reimbursement rates with health care providers. 

(i) access to this class of information designated “highly confidential 

shall be restricted to outside counsel for the parties and according 

to the terms of paragraphs 10e-10i of the Order. 

Case 2:02-cv-02746-JP Document 57 Filed 05/30/2003 Page 9 of 11
 2 

PH2\732404.24 

2. The Protective Order shall be modified to incorporate the following changes: 

a. With regard to the insurers, their strategic business plans and hospital 

contracts shall be considered highly confidential under the Order; 

b. Material designated as highly confidential by the insurers may not be 

disclosed to IBC or the Hospital, orally or otherwise, irrespective of 

settlement negotiations; 

c. The protections of Paragraph 10(a) shall apply with equal force to Cigna, 

Aetna, Multiplan, and Coventry as they do to IBC; 

d. Paragraph 11 of the current Order, addressing the filing of confidential and 

highly confidential information under seal, shall apply to any summary 

judgment motion; 

e. The insurers shall have the same notice and opportunity to object to the 

disclosure of confidential and highly confidential information to (1) 

deponents, and (2) pre-trial hearing and trial witnesses that they currently 

have with regard to (3) non-testifying experts; 

f. Counsel for each party shall maintain a list of all persons to whom any 

third party confidential or highly confidential information is disclosed and 

the agreements signed by such persons, and shall provide counsel for a 

Disclosing Entity upon request with a copy of the list and signed 

agreements; 

g. In the event that a party objects to an insurers’ designation of confidential 

or highly confidential information or documents, the procedural burden of 

moving the Court for relief shall be placed on the objecting party; 

h. Any outside counsel to whom an insurers’ highly confidential information 

is to be disclosed shall be provided with a copy of the Order (as modified), 

and be advised, and agree, that they are bound by the Order; 

i. No more than three (3) copies shall be made of documents produced by 

Aetna without Aetna’s express consent; 

j. At the conclusion of this litigation, the parties shall return to Aetna all 

documents produced by Aetna, and confirm in writing that as to those 

documents the Order has been abided; and 

k. Any notices that are to be provided to Aetna under the Order shall be sent 

via facsimile and 1st Class mail to: James C. Crumlish III, Elliott Reihner 

Siedzikowski & Egan P.C., 925 Harvest Drive, Suite 300, Blue Bell, PA 

19422; Facsimile Number: (215) 977-1099. 

Case 2:02-cv-02746-JP Document 57 Filed 05/30/2003 Page 10 of 11
 3 

PH2\732404.24 

3. Except as set forth in this Order, the terms of the Protective Order dated January 

24, 2003, shall remain in full force & effect. 

 

 BY THE COURT: 

 ___________________________________ 

 JOHN R. PADOVA, J. 

Case 2:02-cv-02746-JP Document 57 Filed 05/30/2003 Page 11 of 11