510902 

IN THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF PENNSYLVANIA 

THE CHESTER COUNTY HOSPITAL 

 v. 

INDEPENDENCE BLUE CROSS, 

QCC INSURANCE COMPANY, 

KEYSTONE HEALTH PLAN EAST, and 

KEYSTONE MERCY HEALTH PLAN 

NO. 02-CV-2746 

O R D E R

AND NOW, this ______ day of ________________, 2004, upon consideration of 

Defendants, Independence Blue Cross, QCC Insurance Company, Keystone Health Plan East, 

and Keystone Mercy Health Plan’s motion to compel Aetna, Inc. (“Aetna”) to produce 

documents, and any response thereto, it is hereby ORDERED and DECREED that: 

 1. The Motion is GRANTED.

2. Aetna shall (a) produce without objection all of the strategic planning documents 

and contracts with hospitals showing reimbursement rates required by Magistrate 

Judge Smith’s December 22, 2003 Order, at the offices of Obermayer Rebmann 

Maxwell & Hippel LLP within ten (10) days of the date of this Order. 

 BY THE COURT: 

 

 J. 

Case 2:02-cv-02746-JP Document 197 Filed 01/30/2004 Page 1 of 23
510902 

IN THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF PENNSYLVANIA 

THE CHESTER COUNTY HOSPITAL 

 v. 

INDEPENDENCE BLUE CROSS, 

QCC INSURANCE COMPANY, 

KEYSTONE HEALTH PLAN EAST, and 

KEYSTONE MERCY HEALTH PLAN 

NO. 02-CV-2746 

DEFENDANTS’ MOTION TO COMPEL AETNA, INC. TO 

PRODUCE DOCUMENTS

For the reasons set forth in the accompanying memorandum of law, Defendants, Independence 

Blue Cross, QCC Insurance Company, Keystone Health Plan East, and Keystone Mercy Health Plan, 

submit this motion for an Order compelling Aetna, Inc. (“Aetna”) to produce documents. 

WHEREFORE, Defendants, Independence Blue Cross, QCC Insurance Company, Keystone Health 

Plan East, and Keystone Mercy Health Plan, respectfully request that the Court enter an order compelling 

Aetna to produce without objection all of the strategic planning documents and contracts with hospitals 

showing reimbursement rates required by Magistrate Judge Smith’s December 22, 2003 Order, at the offices 

of Obermayer Rebmann Maxwell & Hippel LLP within ten (10) days of the date of the Court’s order. 

Respectfully submitted, 

OBERMAYER REBMANN MAXWELL & HIPPEL LLP 

BY: 

THOMAS A. LEONARD 

PAUL S. DIAMOND 

WILLIAM J. LEONARD 

RICHARD P. LIMBURG 

KENNETH L. RACOWSKI 

One Penn Center, 19th Floor 

1617 John F. Kennedy Boulevard 

Philadelphia, PA 19103 

(215) 665-3000 

Case 2:02-cv-02746-JP Document 197 Filed 01/30/2004 Page 2 of 23
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HOWREY SIMON ARNOLD & WHITE LLP 

JOHN DeQ BRIGGS 

JAMES G. KRESS 

1299 Pennsylvania Avenue, N.W. 

Washington, DC 20004 

(202) 383-7015 

Attorneys for Defendants, 

Independence Blue Cross, 

Keystone Health Plan East, 

QCC Insurance Company, and 

 Keystone Mercy Health Plan 

Dated: January ____, 2004 

Case 2:02-cv-02746-JP Document 197 Filed 01/30/2004 Page 3 of 23
510902 

IN THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF PENNSYLVANIA 

THE CHESTER COUNTY HOSPITAL 

 v. 

INDEPENDENCE BLUE CROSS, 

QCC INSURANCE COMPANY, 

KEYSTONE HEALTH PLAN EAST, and 

KEYSTONE MERCY HEALTH PLAN 

NO. 02-CV-2746 

DEFENDANTS’ MEMORANDUM IN SUPPORT OF THEIR 

MOTION TO COMPEL AETNA, INC. TO 

PRODUCE DOCUMENTS

Defendants, Independence Blue Cross, QCC Insurance Company, Keystone Health Plan 

East and Keystone Mercy Health Plan (collectively “IBC”), respectfully submit this 

memorandum of law in support of IBC’s motion to compel Aetna, Inc. (“Aetna”) to produce 

documents. 

Preliminary Statement 

IBC served Aetna with a document subpoena on July 25, 2003 (“the July 25 subpoena”), 

which was issued out of the District Court for the District of Connecticut. On December 3, 2003, 

IBC filed a motion to compel,1 which Magistrate Judge Smith granted by Order of December 22, 

2003. Aetna filed objections to that Order on January 7, 2004. 

During the December 16, 2003 hearing on IBC’s December 3 motion to compel, 

Magistrate Judge Smith directed IBC to issue a second subpoena out of the Eastern District of 

Pennsylvania as a means of addressing Aetna’s jurisdictional objections to the July 25, 2003 

subpoena. IBC did so on December 17, 2003 (“the December 17 subpoena”). A copy of IBC’s 

December 17, 2003 subpoena is attached hereto as Exhibit “A.” 

 

1

 See Docket Entry 173 (version filed under seal) and Docket Entry 174 (version not filed under seal). 

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Instead of treating the December 17 subpoena as a substitute for the July 25 subpoena, 

Aetna has taken the position that the December 17 subpoena superseded the July 25 subpoena, 

mooting both IBC’s December 3 motion to compel and the Order of December 22, 2003. Aetna 

has also refused to comply with the December 17 subpoena, raising essentially the same 

objections that it raised to the July 25 subpoena (with the exception of objections based on 

jurisdiction). 

Aetna’s objections to the Order of December 22, 2003 are pending before Judge Padova. 

IBC anticipates that the Court will reject Aetna’s jurisdictional objections to the July 25 

subpoena as well as Aetna’s argument that the December 17 subpoena superseded the July 25 

subpoena. Ordinarily, IBC would await the Court’s determination before taking further action. 

However, the discovery deadline is about to expire. Thus, IBC is filing the present motion to 

compel Aetna’s compliance with the December 17 subpoena as a precautionary measure, 

pending a decision on Aetna’s objections to the Order of December 22, 2003. 

In the present motion to compel, IBC makes frequent reference to previous filings, 

including but not limited to its December 3, 2003 Motion to Compel, and IBC’s December 22, 

2003 Reply Brief. 

I. Efforts to Resolve the Discovery Dispute 

IBC served a subpoena duces tecum on Aetna, over three (6) months ago, on July 25, 

2003. (Exhibit B to IBC’s 12/3/03 Motion to Compel). 

Aetna responded to the July 25 Subpoena in a letter dated July 31, 2003, objecting on the 

grounds of, inter alia, confidentiality, relevance, burden and vagueness. (Exhibit D to IBC’s 

12/3/03 Motion to Compel). Aetna further stated that it would not produce any documents listed 

Case 2:02-cv-02746-JP Document 197 Filed 01/30/2004 Page 5 of 23
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in the Subpoena, characterizing the subpoena as “unnecessarily burdensome, vexatious, and 

harassing.” Id. 

Extensive litigation followed, in which Aetna was a leading participant, and culminated in 

the August 18th Amended Protective Order – an Order specifically entered to resolve the 

confidentiality issues of non-parties like Aetna. In that regard, the Court expressly advised Aetna 

not to obstruct discovery with additional arguments of confidentiality. 

The suggestion is that [Aetna]... go away... . 

... 

We have addressed... [third-party insurers’] concerns and if there 

is nothing new with respect to the other hospitals, if there is 

nothing new,... – I would expect that Aetna would understand that 

its concerns have already been addressed and resolved. 

N.T. Aug. 7, 2003, at 36-37 (Exhibit E to IBC’s 12/3/03 Motion to Compel). 

The Court further stated that Aetna’s contracts, the rates contained in those contracts and 

documents exchanged between CCH and Aetna discussing rates were relevant and discoverable. 

I do see that information as either being relevant information or 

certainly leading to relevant information by virtue of the issues that 

have been raised in this lawsuit. 

. . . . 

[T]he information is information that’s relevant to the issues in this 

case and will have to be reviewed and considered and perhaps part 

of the proof in this case as the case goes forward. 

Id., at 10. 

By letter dated August 27, 2003, IBC redefined the geographic scope of their July 25 

subpoena to reduce the burden on Aetna. (Exhibit F to IBC’s 12/3/03 Motion to Compel). IBC 

urged Aetna to begin producing its non-party insurer documents and requested that Aetna mark 

them “Highly Confidential,” to assure that only outside counsel, outside counsel’s experts, and 

the Court would have access to Aetna’s highly confidential information. 

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By letter dated September 2, 2003, Aetna refused to produce any of the requested 

documents. (Exhibit C to IBC’s 12/3/03 Motion to Compel). Aetna stated that despite IBC’s 

efforts to narrow the geographic scope, the subpoena remained “outrageously broad,” and in 

particular complained about IBC’s request for information extending to certain specific counties. 

(Id.) 

By letter dated September 15, 2003, IBC further narrowed the geographic scope of the 

document subpoena, eliminating eight additional counties, and explaining precisely which 

paragraph of the Amended Complaint necessitated discovery into the remaining counties. 

Defendants also otherwise simplified their document requests. (Exhibit G to IBC’s 12/3/03 

Motion to Compel). 

Bt letter dated September 27, 2003, Aetna again refused to produce any documents in 

response to IBC’s subpoena, essentially restating its arguments from its September 3 letter. 

(Exhibit H to IBC’s 12/3/03 Motion to Compel). 

Although Aetna refused to produce documents in response to IBC’s subpoena, it did 

promise to produce documents in response to a subpoena served by CCH more than one year ago, 

on November 8, 2002. Specifically, Aetna’s letter dated September 2, 2003, stated that it would 

“provide documents that are relevant, responsive and non-oppressive in response to Plaintiff’s 

subpoena and are hopeful that such documents can be [produced] by the end of the week or shortly 

thereafter.” (Exhibit C to IBC’s 12/3/03 Motion to Compel). 

By letter dated October 8, 2003, IBC again requested Aetna to produce responsive 

documents. (Exhibit I to IBC’s 12/3/03 Motion to Compel). Aetna responded with a letter dated 

October 14, 2003, accusing IBC of not trying to resolve the discovery dispute, repeating its prior 

objections, and—for the first time—refusing to produce documents in response to the CCH 

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subpoena unless IBC agreed to effectively withdraw its own subpoena. (Exhibit J to IBC’s 

12/3/03 Motion to Compel). 

 In a final attempt to resolve the discovery dispute informally, IBC counsel, William 

Leonard and James Kress, conferred via telephone with Aetna counsel, James Crumlish, on 

November of 2003. IBC focused the discussion on the two document categories IBC could not 

do without—reimbursement rates and strategic plans. Mr. Crumlish stated unequivocally that 

Aetna would not produce strategic planning documents and would only produce rates for 

hospitals other than CCH if it could do so without identifying the hospitals to which its rates 

applied. This was unacceptable to IBC. 

On December 3, 2003, IBC filed a motion to compel Aetna to produce documents (Dkt. 

Entries 173 & 174). IBC’s motion sought to compel the following documents: 

Documents constituting or reflecting Aetna’s strategic business 

plans that relate to the Southeastern and Central Pennsylvania 

Counties, including but not limited to marketing plans, business 

plans, and market assessments. 

Documents sufficient to demonstrate Aetna’s reimbursement rates 

for hospital services in the Southeastern and Central Pennsylvania 

Counties. 

Aetna answered IBC’s motion to compel on December 16, 2003 (Dkt. Entry 178). IBC and 

Aetna argued the motion before Magistrate Judge Smith on December 16, 2003. (A transcript of 

the oral argument is attached Exhibit B to IBC’s 1/16/04 Motion for an Order of Contempt and 

Sanctions Against Aetna as Exhibit “B”). During the oral argument, Magistrate Judge Smith 

directed IBC to address Aetna’s procedural/jurisdictional objections to the subpoena by issuing a 

substitute subpoena out of the Eastern District of Pennsylvania. See id. at 39-41. Magistrate 

Judge Smith further directed IBC to file a reply brief with an affidavit discussing IBC’s efforts to 

obtain Aetna’s reimbursement rates from non-party hospitals. See id. at 41. As directed, IBC 

Case 2:02-cv-02746-JP Document 197 Filed 01/30/2004 Page 8 of 23
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issued a substitute subpoena out of the Eastern District of Pennsylvania on December 17, 2003. 

(Exhibit A hereto). IBC filed its reply brief on December 22, 2003. (A copy of IBC’s 12/22/03 

Reply Brief without exhibits is attached hereto as Exhibit “B”). 

On December 22, 2003, Magistrate Judge Smith entered an Order (Dkt. Entry 183) 

directing Aetna to produce the following documents by January 12, 2003: 

(1) Contracts with hospitals in the five-county Southeastern Pennsylvania 

region reflecting Aetna’s reimbursement rates to those hospitals; 

(2) Summary level documents sufficient to demonstrate Aetna’s hospital 

reimbursement rates in the Central Pennsylvania region (Adams, Berks, 

Centre, Columbia, Cumberland, Dauphin, Franklin, Fulton, Juniata, 

Lancaster, Lebanon, Lehigh, Mifflin, contour, Northampton, 

Northumberland, Perry, Schuylkill, Snyder, Union, and York counties) 

broken down by hospital type (community, teaching, or regional) and 

hospital size (by licensed bed counts), without prejudice to IBC’s right to 

later seek the complete hospital contracts in this region; and 

(3) Documents reflecting Aetna’s strategic planning for the healthcare 

insurance markets in the Southeastern Pennsylvania counties. 

(Dkt. 183). 

By letter dated December 29, 2003, Aetna objected to the substitute subpoena that 

Magistrate Judge Smith had directed IBC to issue. (A copy of Aetna’s letter of December 29, 

2003 is attached hereto as Exhibit “C”). In that letter, Aetna raised the same objections that it 

had previously raised in its answer to IBC’s motion to compel, which objections were resolved 

against Aetna by the Order of December 22, 2003. Aetna also stated in the letter that it would 

not comply with the December 17 subpoena. 

On January 7, 2004, Aetna filed objections to the Order of December 22, 2003 (Dkt. 186-

7), but failed to seek a stay of the Order of December 22, 2003. On January 16, 2004, IBC filed 

a Motion for an Order of Contempt and Sanctions Against Aetna, Inc. (Dkt. 191). 

Case 2:02-cv-02746-JP Document 197 Filed 01/30/2004 Page 9 of 23
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The parties have spent more than a reasonable amount of time and effort attempting to 

resolve this discovery dispute without the intervention of the Court. No further efforts to resolve 

this discovery dispute informally between the parties are possible. 

II. The Standard for Discovery of Confidential Commercial Information under 

Fed.R.Civ.P. 45 

Under Fed.R.Civ.P. 45(c)(3)(B)(i), the party issuing the subpoena must show that its 

requests are relevant to its claims or defenses. The person opposing the subpoena must show 

that the information is subject to a privilege or is otherwise entitled to protection. The issuing 

party then has the burden of showing a substantial need for the testimony or other material that 

cannot otherwise be met without undue hardship.” Mycogen Plant Science, Inc. v. Monsanto 

Co., 164 F.R.D. 623, 625-626 (E.D.Pa. 1996). “Substantial need” means “reasonably necessary 

for a fair opportunity to develop and prepare [the] case for trial.” American Standard, Inc. v. 

Pfizer, Inc., 828 F.2d 734, 743 (Fed.Cir. 1987); see also Mannington Mills, Inc. v. Armstrong 

World Industries, Inc., 206 F.R.D. 525, 532 (D.Del. 2002). 

The balancing test under Rule 45 is tilted in favor of disclosure. Coca-Cola Bottling Co. 

v. Coca-Cola Co., 107 F.R.D. 288, 292-93 (D.Del. 1985). “[O]rders forbidding any disclosure of 

trade secrets or confidential commercial information are rare. More commonly, the trial court 

will enter a protective order restricting disclosure to counsel or to the parties.” Federal Open 

Market Committee v. Merrill, 443 U.S. 340, 362 n.24 (1979). 

Courts have long-recognized that the disclosure of confidential proprietary information 

may be necessary during a lawsuit to enable a party to adequately defend itself. See E.I. Du Pont 

De Nemours Powder Company v. Masland, 244 U.S. 100, 103 (1917) (holding that it is within 

the court’s discretion to determine whether, to whom, and under what precautions, it should 

become necessary for trade secrets to be revealed to experts or other witnesses during a party’s 

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preparation of its defense). Thus, trade secrets are not privileged and are not immune from 

discovery. Coca-Cola Bottling, supra, 107 F.R.D. at 292. In Coca-Cola Bottling, the court 

stated that “discovery is virtually always ordered once the movant has established that the secret 

information is relevant and necessary.” Id. 

III. The Relevance of Aetna’s Reimbursement Rate Information and Strategic Plans 

CCH specifically alleges in its first amended complaint that IBC “leverages” its 

“monopoly power” to gain “monopsony power,” by which it “compels” hospitals in the fivecounty area to accept reimbursement rates that are below competitive levels. Amended 

Complaint at ¶23. 

CCH further alleges that the Central Pennsylvania Counties (Adams, Berks, Centre, 

Columbia, Cumberland, Cumberland, Dauphin, Franklin, Fulton, Juniata, Lancaster, Lebanon, 

Lehigh, Mifflin, Montour, Northampton, Northumberland, Perry, Schuylkill, Snyder, Union, and 

York Counties) constitute a “benchmark” competitive market, with which CCH seeks to 

compare the Southeastern Pennsylvania Counties (Bucks, Chester, Delaware, Montgomery, and 

Philadelphia counties). Amended Complaint at ¶55. CCH alleges that there is increased 

competition in the Central Pennsylvania Counties and that hospital reimbursement rates have 

risen. CCH’s Motion to Compel Capital Blue Cross To Produce Documents, pp. 8-9 (Attached 

to IBC’s Reply Brief as Exhibit “D”); CCH’s Motion For Leave to File a Second Amended 

Complaint, p. 8 (Dkt. Entry 99). 

Based on CCH’s specific allegations, the hospital reimbursement rates that insurers pay 

to hospitals that compete in the five-county Philadelphia region and the twenty-two county 

Central Pennsylvania region are what this case is about. Aetna competes in both Central 

Pennsylvania and Southeastern Pennsylvania. Thus, Aetna’s reimbursement rates are relevant to 

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CCH’s claims that hospital reimbursement rates are higher in Central Pennsylvania than in 

Southeastern Pennsylvania. 

Aetna’s strategic plans for Southeastern Pennsylvania are likewise relevant to CCH’s 

specific allegations concerning Aetna and competition the Southeastern Pennsylvania healthcare 

market. See pages 14-15, below. 

IBC agrees that Aetna’s rate information and strategic plans are confidential commercial 

information. However, that does not end the inquiry. Aetna’s rate information and strategic 

plans are discoverable if they are reasonably necessary for IBC’s development and preparation of 

its defense to CCH’s claims, and the need cannot otherwise be met without undue hardship. 

A. IBC’s Need for Aetna’s Reimbursement Rate Information 

According to CCH, IBC has reduced reimbursement rates in southeastern Pennsylvania 

below competitive levels through the exercise of monopoly power, and higher reimbursement 

rates in the Central Pennsylvania market reflect competition among insurers for hospital 

contracts. To defend itself against CCH’s allegations and theories, IBC must analyze 

reimbursement rates that insurers pay to hospitals in both the Southeastern and the Central 

Pennsylvania counties. Aetna’s position as a substantial insurer in both markets is unique. Thus, 

the rate information that Aetna can supply will be crucial in evaluating CCH’s claims as to both 

the Southeastern and Central Pennsylvania markets. 

Within the Southeastern Pennsylvania market, IBC intends to show that its reimbursement 

rates to hospitals are fair, reasonable and competitive. The only means of doing so is to compare 

IBC’s reimbursement rates with other insurers’ rates. IBC has sought rate information and strategic 

plans from the various insurers competing in those regions, including Aetna. Since the entry of the 

Amended Protective Order, all but Aetna have complied. 

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Significantly, Aetna has conceded the relevance of its reimbursement rates in Chester 

County (Aetna’s Response to IBC’s 12/3/03 Motion to Compel, Dkt. 178, p. 23), although it objects 

to producing rate information for any other counties in Southeastern Pennsylvania. Id. at pp. 23-24. 

However, if Aetna’s rates are relevant in Chester County, they must also be relevant in any other 

county where Aetna competes with IBC. CCH specifically alleges that IBC “leverages” its 

“monopoly power” to gain “monopsony power,” by which it “compels” hospitals in the “Greater 

Philadelphia area” to accept reimbursement rates that are below competitive levels and do not cover 

CCH’s costs. Amended Complaint at ¶¶17, 23, 29 (emphasis supplied).2 The Court already 

determined that this case is not limited to Chester County when it dismissed IBC’s objection to the 

deposition of Grand View Hospital on the ground that Grand View Hospital could not be considered 

part of the same market as CCH. Thus, IBC has a substantial need for Aetna’s reimbursement rates 

in all five counties in the Southeastern Pennsylvania market. 

IBC also needs to compare Aetna’s reimbursement rates in Central Pennsylvania with 

Aetna’s reimbursement rates in the Southeastern Pennsylvania market. CCH has alleged that 

“reimbursement rates to hospitals operating in Central Pennsylvania have increased,” but that 

hospital reimbursement rates in Southeastern Pennsylvania are artificially depressed. CCH’s 

Motion to Compel Capital Blue Cross To Produce Documents, p. 8 (Exhibit D to IBC’s 12/22/03 

Reply Brief); CCH’s Motion For Leave to File a Second Amended Complaint, p. 8 (Dkt. 99). 

The reimbursement rates of a third-party competitor in both markets, such as Aetna, are highly 

relevant to such allegations. 

As an accommodation to Aetna, IBC indicated in its 12/22/03 Reply Brief that, for 

Central Pennsylvania only, it would accept summary level documents sufficient to demonstrate 

 

2

 In its Amended Complaint, CCH defines the “relevant geographic market as the greater Philadelphia area, which 

includes Bucks, Chester, Delaware, Montgomery and Philadelphia counties in Pennsylvania.” Amended Complaint 

at ¶29. 

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Aetna’s hospital reimbursement rates broken down by hospital type (community, teaching, or 

regional) and hospital size (by licensed bed counts) for Central Pennsylvania – rather than Aetna 

having to identify particular hospitals and produce contracts for all hospitals in Central 

Pennsylvania. IBC assumed it would be easier and more palatable for Aetna to produce 

summary information. (IBC reserved the right to seek additional information if Aetna’s 

summary information turned out to be incomplete or if the summary information proved to be 

inadequate for purposes of the litigation.) If, as Aetna now appears to complain, it is more 

burdensome to produce summary rate information than it is to produce detailed rate information 

on a hospital by hospital basis, then IBC is prepared to accept the detailed information. 

B. IBC’s Need for Hospital Reimbursement Rate Information Cannot Be Met 

from Other Sources 

Individual private insurer reimbursement rates are not publicly available. Aggregate 

reimbursement rates are also not publicly available. The reason for this is that every private 

insurer requires the hospitals with which it does business to keep its rates confidential. Aetna’s 

Response to 12/3/03 Motion to Compel, Dkt. 178, Exhibit 5, Declaration of R. Franzoi, at ¶¶5 (“I 

can attest to the fact that in Aetna’s industry, information such as rate schedules are uniformly 

considered to be proprietary and confidential.”) and ¶8 (“Because such information is confidential 

and proprietary, Aetna always includes in its provider contracts provisions as to Confidentiality 

and Non-Disclosure, prohibiting direct or indirect disclosure to any third parties of, specifically, 

the rate schedules or other financial terms of such contracts.”) See also ¶¶9, 11, 12 and 13. 

IBC has no other means of acquiring Aetna’s rate information, except by serving every 

hospital in Southeastern and Central Pennsylvania with a subpoena requesting disclosure of their 

contracts with Aetna. In fact, IBC has sought rate information (including but not limited to Aetna 

rates) from a number of CCH’s closest competitors in Chester, Montgomery, and Delaware 

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Counties. Half of them raised relevancy objections, asserted contractual obligations not to 

disclose the rates, and ultimately forced IBC to file motions to compel. See the Affidavit of H. 

David Seidman, Esquire (Exhibit E to IBC’s 12/22/03 Reply Brief). Indeed, Riddle Memorial 

Hospital (“Riddle”) stated in its Response to a motion to compel by IBC that it “had been notified 

by counsel for insurers, including Aetna . . ., cautioning Riddle against production of its contract 

materials.” Riddle’s Response, p. 2 (Exhibit E to IBC’s 12/22/03 Reply Brief).3

 At the November 

13, 2003 hearing on IBC’s motions to compel, Riddle reiterated this concern: “The other major 

concern . . . is that we — as with other hospitals — have been quite frankly, threatened with 

litigation by other insurers. . . .” 11/13/03 Tr. at p. 36 (Exhibit F to IBC’s 12/22/03 Reply Brief). 

Paoli Memorial Hospital received the very same threat: “[Aetna] . . . holds the confidentiality 

agreement and we have been directed in writing by them that we are at risk of liability if we 

produce them.” 11/13/03 Tr. at p. 10 (Exhibit F to IBC’s 12/22/03 Reply Brief). If IBC must 

subpoena individual hospitals for reimbursement rate information, instead of getting that 

information from insurers directly, history suggests that nearly half of the hospitals will object to 

IBC’s request, refuse to provide reimbursement rate information, burden the parties and the Court 

with motion practice, and make it all but impossible for the parties to discover critical data. 

 In its Response to the 12/3/03 Motion to Compel, Aetna suggested that IBC could 

adequately defend itself using published information that Aetna attached to its Response. 

Exhibit 7 to Aetna’s Response to IBC’s 12/22/03 Motion to Compel consisted of two pages from 

a website maintained by HealthLeaders Research. The website purports to provide data 

concerning health plans in 22 states, including Pennsylvania. However, there is no reference to 

data concerning hospital reimbursement rates either on a statewide basis or on a regional basis 

 

3

 IBC incorrectly identified and labeled Riddle’s Response as Exhibit E in its Reply Brief. Riddle’s Response is the 

second Exhibit E. The first Exhibit E is the Affidavit of David Seidman. 

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within particular states. Exhibit 8 consisted of four pages advertising a subscription database 

service maintained by InterStudy Publications. The second page refers to data concerning HMO 

enrollment by product, number of physician and hospital contracts, HMO contact information, 

hospital utilization indicators, reimbursement methods for primary and specialty care physicians, 

market composition and characteristics. There is no reference to data concerning hospital 

reimbursement rates by insurer or otherwise. Exhibit 9 was a page from the Philadelphia 

Business Journal ranking twenty-three HMOs by number of local members. This page contains 

no information concerning hospital reimbursement rates by insurer or otherwise. Exhibit 10 

included pages 29-45 of the Pennsylvania Health Care Cost Containment Council’s publication 

entitled “Financial Analysis 2002.” The Financial Analysis 2002 displays net patient revenue, 

the Medicare and Medical Assistance share of net patient revenue, the operating margins and 

total margins, the operating income and total income, and the total operating revenues for 

individual hospitals. However, the Financial Analysis 2002 displays no information concerning 

hospital reimbursement rates paid by private insurers. Exhibit 11 consisted of 8 pages describing 

Milliman’s Hospital Efficiency Index. The Hospital Efficiency Index purports to present 

actuarial analysis of hospital inpatient admissions, length of stay and days. There is no reference 

to hospital reimbursement rates paid by private insurers. Exhibit 11 also contained two pages 

from two websites maintained by Milliman, one concerning the Hospital Efficiency Index and 

the other concerning the Health Cost Index Report, which discusses trends in the market average 

rate of increase in medical costs for a typical health insurance package. Again, there is no 

reference to any hospital reimbursement rates by insurer or otherwise. 

During the December 16, 2003 hearing, IBC’s counsel challenged Aetna’s counsel to 

show which, if any, of Exhibits 7 through 11 contain any hospital reimbursement information. 

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Aetna’s counsel failed to do so. (See 12/16/03 Tr. at pp. 35-36, attached as Exhibit B to IBC’s 

1/16/04 Motion for an Order of Contempt and Sanctions Against Aetna) Thus, it is evident that 

Aetna cannot obtain reimbursement information from any published sources. 

C. IBC’s Need for Aetna’s Strategic Plans 

CCH alleges in its first amended complaint that IBC has erected barriers that caused 

Aetna to reduce its presence in Southeastern Pennsylvania. Specifically, CCH alleges, “In the 

relevant market(s), [IBC has erected] significant barriers to entry and/or expansion by new or 

smaller managed care and health benefits companies that might seek to compete with IBC.” 

(Amended Complaint at ¶31) In support of its claim, CCH states that “[t]his is evidenced by ... 

the reduced presence of IBC’s largest competitor, Aetna.” (Amended Complaint at ¶31). CCH 

further alleges, that “[a]s a result of [IBC’s] ... conduct, ... [c]ompetitors of ... IBC have been 

and will be hindered and obstructed in their ability to compete in the relevant market(s), as IBC 

activities ... have had the effect of either increasing rivals’ costs or providing incentives for 

potential competitors not to enter the market.” (Amended Complaint at ¶57a). 

Taken together, these allegations state that IBC hindered Aetna’s ability to compete in the 

Southeastern Pennsylvania market by either increasing Aetna’s costs or providing incentives for 

Aetna to leave the market. Thus, Aetna’s strategic plans for the Southeastern Pennsylvania 

market are essential for IBC to prepare a response to CCH’s specific allegations concerning 

Aetna. 

IBC must also prepare to refute CCH’s overall analysis of the Southeastern Pennsylvania 

market. CCH has characterized the Southeastern Pennsylvania market for commercial payors as 

a duopoly controlled by IBC and Aetna. (Exhibit A to IBC’s 12/3/03 Motion to Compel Aetna 

to Produce Documents) (Dkt. 173) (excerpts from CCH internal presentations, filed under seal). 

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Thus, any analysis of the market without Aetna’s strategic plans would be incomplete for 

purposes of addressing CCH’s allegations and theories. 

D. IBC’s Need for Aetna’s Strategic Plans Cannot Be Met from Other Sources 

By its own declaration, Aetna’s strategic plans are not publicly available and can only be 

obtained from Aetna. Aetna’s Response to 12/3/03 Motion to Compel, Exhibit 6, Supplemental 

Declaration of R. Franzoi, at ¶5 (“Because [Aetna’s strategic plans] are so sensitive, Aetna never 

reveals this information to third parties, directly or indirectly.”) Thus, IBC has a substantial need 

for Aetna’s strategic plans that cannot otherwise be met. 

IV. The Court Should Compel Aetna to Produce the Documents Sought by IBC 

 Aetna’s principle “justification” for not producing the subject documents is that they are 

of a highly confidential nature, contain trade secrets, and should not be turned over to 

competitors. The proprietary nature of Aetna’s documents is acknowledged. It was 

acknowledged months ago when Aetna brought the exact same issue before Judge Padova — 

then in the context of Aetna’s efforts to prevent hospitals from disclosing reimbursement rates. 

At that juncture it was acknowledged that such information was highly proprietary — but also 

highly relevant and subject to discovery. (Discussion, supra, at pp. 4-5.) Accordingly, the Court 

crafted a modification to the Protective Order so that the proprietary materials of Aetna and other 

non-parties would receive protections above and beyond the protections given to the proprietary 

materials of the parties. (Amended Protective Order, entered on August 18, 2003, Docket No. 

121.) 

Because this issue was fully adjudicated, with Aetna’s participation, and ruled on by the 

Court, Aetna’s objections to the December 17 subpoena based on confidentiality should be 

overruled. 

Case 2:02-cv-02746-JP Document 197 Filed 01/30/2004 Page 18 of 23
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IBC has substantial need for Aetna’s reimbursement rates in Central and Southeastern 

Pennsylvania and Aetna’s strategic plans in Southeastern Pennsylvania. CCH has alleged that 

IBC is a monopolist, that it has no significant competitors, and that there are barriers to entry in 

the health care insurance market in the Southeastern Pennsylvania Counties. It is difficult to 

conceive of evidence more closely related to these allegations than the analyses and business 

plans of IBC’s competitors and would-be competitors—let alone IBC’s largest competitor, 

Aetna—with respect to these counties. United States Football League v. National Football 

League, 605 F.Supp. 1448, 1461 (S.D.N.Y. 1985) (business plans, economic organization, and 

prospective market position are particularly relevant in antitrust cases). Similarly, CCH has 

alleged that IBC’s “monopsony” has caused a region-wide depression in reimbursement rates 

(Amended Complaint at ¶¶ 17, 23, 43). In these circumstances, IBC must be able to compare its 

rates to those of its competitors throughout the Delaware Valley. “The price data are 

unquestionably relevant, and parties are entitled to information as important as this was.” Ball 

Memorial Hosp., Inc. v. Mutual Hosp. Ins., Inc., 784 F.2d 1325, 1347 (7th Cir. Ind. 1986) (citing 

Deitchman v. E.R. Squibb & Sons, Inc., 740 F.2d 556 (7th Cir. 1984) (antitrust action brought by 

hospitals to enjoin implementation of Blue Cross Blue Shield PPO). 

Aetna’s objections based on burdensomeness should also be overruled. Merely stating, in 

response to a subpoena, that the request for discovery is “overly broad, burdensome, or 

oppressive” is not adequate to voice a successful objection to discovery. “The onus is on the 

party alleging that the subpoena violates Rule 45. Moreover, that party must establish the burden 

with specificity. Merely asserting that a party will suffer an undue burden without ‘specific 

estimates of staff hours needed to comply’ will be ‘categorically rejected.’” Gabe Staino Motors 

v. Volkswagen of Am., 2003 U.S. Dist. LEXIS 3194, 5-6 (E.D. Pa. 2003) (quoting Association 

Case 2:02-cv-02746-JP Document 197 Filed 01/30/2004 Page 19 of 23
510902 17

of Am. Physicians & Surgeons v. Clinton, 837 F. Supp. 454, 458 n. 2 (D.D.C. 1993) (citations 

omitted). Even aside from the fact that Aetna did not state adequate objections, IBC submits that 

seeking Aetna’s reimbursement rate information indirectly from the hospitals, instead of getting 

that information from Aetna directly, will unnecessarily burden the hospitals, IBC and the Court. 

Based on IBC’s experience in seeking reimbursement rates from hospitals, roughly half of the 

hospitals will object to IBC’s request, refuse to provide reimbursement rate information, burden 

the parties and the Court with motion practice, and make it all but impossible for the parties to 

discover critical data. It is far less burdensome for Aetna to produce the information than it is to 

require the many hospitals with whom Aetna contracts to produce it. 

CONCLUSION

For the foregoing reasons, IBC requests the entry of an Order compelling Aetna, within 

ten (10) days of the Court’s Order, to produce, without objection all of the strategic planning 

documents and contracts with hospitals showing reimbursement rates required by Magistrate 

Judge Smith’s December 22, 2003 Order, at the offices of Obermayer Rebmann Maxwell & 

Hippel LLP. 

Respectfully submitted, 

OBERMAYER REBMANN MAXWELL & HIPPEL LLP 

BY: 

THOMAS A. LEONARD 

PAUL S. DIAMOND 

WILLIAM J. LEONARD 

RICHARD P. LIMBURG 

KENNETH L. RACOWSKI 

One Penn Center, 19th Floor 

1617 John F. Kennedy Boulevard 

Philadelphia, PA 19103 

(215) 665-3000 

Case 2:02-cv-02746-JP Document 197 Filed 01/30/2004 Page 20 of 23
510902 18

HOWREY SIMON ARNOLD & WHITE LLP 

JOHN DeQ BRIGGS 

JAMES G. KRESS 

1299 Pennsylvania Avenue, N.W. 

Washington, DC 20004 

(202) 383-7015 

Attorneys for Defendants, 

Independence Blue Cross, 

Keystone Health Plan East, 

QCC Insurance Company, and 

 Keystone Mercy Health Plan 

Dated: January ___, 2004

Case 2:02-cv-02746-JP Document 197 Filed 01/30/2004 Page 21 of 23
510902 

IN THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF PENNSYLVANIA 

THE CHESTER COUNTY HOSPITAL 

 v. 

INDEPENDENCE BLUE CROSS, 

QCC INSURANCE COMPANY, 

KEYSTONE HEALTH PLAN EAST, and 

KEYSTONE MERCY HEALTH PLAN 

 CA No. 2:02CV2746 

 

 

CERTIFICATE OF SERVICE

I hereby certify that copies of the foregoing Defendants’ Motion To Compel Aetna, Inc. To 

Produce Documents and Memorandum of Law in support thereof was served, this _____ day of January 

2004 as follows: 

VIA FACSIMILE & FEDERAL EXPRESS

James C. Crumlish, III, Esquire 

Union Meeting Corporate Center V 

P.O. Box 3010 

925 Harvest Drive 

Blue Bell, PA 19422 

Counsel for Aetna, Inc. 

VIA HAND DELIVERY VIA FIRST CLASS MAIL

Lewis R. Olshin, Esquire Richard A. Feinstein, Esquire 

Duane Morris, LLP Daniel A Kotchen, Esquire 

One Liberty Place, Suite 4200 Boies, Schiller & Flexner, LLP 

Philadelphia, PA 19103-7396 5301 Wisconsin Avenue, N.W., Suite 800 

Counsel for Plaintiff, Washington, DC 20015 

Chester County Hospital Facsimile No. (202) 237-6131 

 Counsel for Plaintiff, 

 Chester County Hospital 

 WILLIAM J. LEONARD 

Case 2:02-cv-02746-JP Document 197 Filed 01/30/2004 Page 22 of 23
510902 

IN THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF PENNSYLVANIA 

THE CHESTER COUNTY HOSPITAL 

 v. 

INDEPENDENCE BLUE CROSS, 

QCC INSURANCE COMPANY, 

KEYSTONE HEALTH PLAN EAST, and 

KEYSTONE MERCY HEALTH PLAN 

NO. 02-CV-2746 

CERTIFICATION PURSUANT TO LOCAL 

RULE OF CIVIL PROCEDURE 26.1(f)

 I do hereby certify that after reasonable efforts, the parties are unable to resolve the 

discovery dispute addressed in the attached Motion to Compel Aetna, Inc. to Produce 

Documents. 

OBERMAYER REBMANN MAXWELL & HIPPEL LLP 

BY: 

WILLIAM J. LEONARD 

Dated: January ___, 2003

Case 2:02-cv-02746-JP Document 197 Filed 01/30/2004 Page 23 of 23