Court Opinion

ID: 3216331
Source: CourtListenerOpinion
Date Created: 2016-06-23 14:10:37.990591+00
Date Added: 2024-06-11T14:30:12.468022
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
               APPROVAL OF THE APPELLATE DIVISION

                                     SUPERIOR COURT OF NEW JERSEY
                                     APPELLATE DIVISION
                                     DOCKET NO. A-2913-15T2
                                                 A-2929-15T2

CAPITAL HEALTH SYSTEM, INC.;
CENTRASTATE MEDICAL CENTER, INC.;
HOLY NAME MEDICAL CENTER, INC.;           APPROVED FOR PUBLICATION
THE COMMUNITY HOSPITAL GROUP,
INC., t/a JFK MEDICAL CENTER;                  June 23, 2016
ST. LUKE'S WARREN HOSPITAL, INC.;
TRINITAS REGIONAL MEDICAL CENTER;            APPELLATE DIVISION
and THE VALLEY HOSPITAL, INC.,

         Plaintiffs-Respondents,

v.

HORIZON HEALTHCARE SERVICES, INC.,

          Defendant-Appellant.
___________________________________

SAINT PETER'S UNIVERSITY
HOSPITAL,

         Plaintiff-Respondent,

v.

HORIZON HEALTHCARE SERVICES,
INC.,

          Defendant-Appellant.
____________________________________

         Argued June 8, 2016 – Decided June 23, 2016

         Before Judges Alvarez, Accurso and Haas.

         On appeal from Superior Court of New Jersey,
         Chancery Division, Bergen County, Docket No.
           C-369-15 and Chancery Division,             Middlesex
           County, Docket No. C-192-15.

           Michael O. Kassak argued the cause for
           appellant Horizon Healthcare Services, Inc.
           (White and Williams, LLP, attorneys; Robert
           Wright, Andrew I. Hamelsky, Edward M. Koch,
           and Victor J. Zarrilli, on the briefs).

           Michael K. Furey argued the cause for
           respondents in A-2913-15 (Day Pitney, LLP,
           attorneys; Mr. Furey and Dennis R. LaFiura,
           on the briefs).

           Jeffrey J. Greenbaum and Dennis J. Drasco
           argued the cause for respondent St. Peter's
           University   Hospital,  Inc.   in   A-2929-15
           (Sills Cummis & Gross, PC, and Lum Drasco &
           Positan, LLC, attorneys; Mr. Greenbaum,
           James M. Hirschhorn, Mr. Drasco and Elaine
           R. Cedrone, of counsel and on the briefs).

           William F. Maderer argued the cause for
           intervenor Robert Wood Johnson University
           Hospital, Inc. in A-2929-15 (Saiber LLC,
           attorneys;   Mr.  Maderer and Vincent  C.
           Cirilli, on the brief).

           Edwin F. Chociey, Jr., argued the cause for
           intervenor   Hackensack   University  Health
           Network and Inspira Health Network in A-
           2929-15 (Riker, Danzig, Scherer, Hyland &
           Perretti, LLP, attorneys; Glenn A. Clark and
           Mr. Chociey, on the brief).

    The opinion of the court was delivered by

HAAS, J.A.D.

    In these back-to-back cases, which we now consolidate for

purposes     of   this     opinion,     we   granted      appellant   Horizon

Healthcare     Services,    Inc.      (Horizon)   leave     to   appeal   from

discovery orders requiring it to turn over six categories of

                                        2                             A-2913-15T2
confidential       and     proprietary       business        documents       to        seven

hospitals concerning its implementation of the OMNIA two-tiered

provider network.          For the reasons that follow, we reverse and

remand for the entry of discovery orders which permit Horizon to

redact     these     documents      prior     to    disclosing        them        to    the

hospitals.

                                         I.

    Horizon currently provides health benefits to more than 3.8

million members, known as "subscribers."                     N.J.S.A. 17:48E-1(k).

Horizon provides these benefits to its subscribers through a

network    of   participating       providers      that,     as    authorized          under

N.J.S.A.     17:48E-10,         have   entered        into     "Network        Hospital

Agreements"     (Network        Agreements)    with    Horizon.          The      Network

Agreements are standard contracts approved by the Department of

Banking and Insurance (the Department), under which, in exchange

for membership in the network, the hospital agrees to receive

payment directly from Horizon on a set-fee basis.                     A schedule of

the payment rates for covered hospital services is attached to

the Network Agreement.

    St.     Peter's       University    Hospital       (St.       Peter's),       Capital

Health     System,       Inc.    (Capital),     Centrastate         Medical        Center

(Centrastate), Holy Name Medical Center, Inc. (Holy Name), and

The Community Hospital Group, Inc., t/a JFK Medical Center (JFK

                                         3                                        A-2913-15T2
Medical Center), entered into separate Network Agreements with

Horizon.     Section   2.7   of   each    of   these   Network   Agreements

provides:

            Other Networks.    HORIZON reserves the right
            to establish other networks or subnetworks
            for certain or all Hospital Services for one
            or more HORIZON clients, based on quality,
            cost, effectiveness or other criteria, which
            may    involve     differential      Copayments,
            Coinsurance, and Deductibles or other member
            incentives.     HORIZON agrees to provide
            HOSPITAL with written notice at least sixty
            (60) days in advance of implementation.
            Notwithstanding,    Horizon    represents   that
            Hospital shall participate in new networks
            or   subnetworks,    provided   there   are   no
            specific objections by a client organization
            and   hospital    meets    all    criteria   and
            standards   established     and   evaluated   by
            Horizon.

Section 2.8 of the Network Agreements states:

            New Products. HORIZON reserves the right to
            determine which new product(s) HOSPITAL
            shall participate in and does not guarantee
            HOSPITAL'S participation in new product(s)
            that HORIZON may introduce. Notwithstanding,
            Horizon   represents   that  Hospital   shall
            participate   in   new   products,   provided
            Hospital meets all criteria and standards
            established and evaluated by Horizon.

    Trinitas Regional Medical Center (Trinitas) entered into a

Network Agreement with Horizon that contained slightly different

language in these two sections.          The Trinitas Network Agreement

states:

            2.7 Other Networks.          HORIZON reserves the
            right  to  establish          other  networks  or

                                    4                              A-2913-15T2
              subnetworks for certain or all Hospital
              Services for one or more HORIZON clients,
              based on quality, cost, effectiveness or
              other    criteria,    which  may   involve
              differential Copayments, Coinsurance, and
              Deductibles or other member incentives.
              HORIZON agrees to provide HOSPITAL with
              written notice at least sixty (60) days in
              advance of implementation.

              2.8 New Products.      HORIZON reserves the
              right to determine which new product(s)
              HOSPITAL shall participate in and does not
              guarantee HOSPITAL'S participation in new
              product(s) that HORIZON may introduce.[1]

       Each   of    the    hospitals'      Network     Agreements   also   provides

that:     Horizon shall include the hospitals "in its published

list    of    Network       Hospitals      and    shall    market    and    promote

Subscription        Agreements       providing    an    incentive    for   Eligible

Persons      to    use    Network    Hospitals       instead   of   out-of-network

hospitals" (Section 2.5.2); payment rates and negotiations are

confidential (Section 7.3); and the Network Agreement is "non-

exclusive" and does not prohibit the parties from entering into

contracts with other hospitals (Section 7.5).

       On June 25, 2015, Horizon submitted an application to the

Department        for     approval    of    the   OMNIA     two-tiered     provider

1
  The parties did not include a recent Network Agreement between
Horizon and Valley Hospital, Inc. (Valley Hospital) in their
appendices. However, we assume that the language of the Valley
Hospital agreement is similar to the provisions quoted above.
The parties did include information concerning St. Luke's Warren
Hospital, Inc. However, that hospital voluntarily withdrew its
appeal on May 2, 2016.

                                            5                              A-2913-15T2
network.     Capital Health Sys., Inc. v. N.J. Dep't of Banking &

Ins., ___ N.J. Super. ___ (App. Div. 2016) (slip op. at 10).                          On

September 10, 2015, Horizon publicly announced its launch of the

OMNIA network, and the Department approved Horizon's application

on September 18, 2015.         Id. at 12-13.

    Through OMNIA, Horizon offers comprehensive health benefits

to its subscribers at lower premiums than under other Horizon

plans.     The OMNIA network has two tiers of in-network hospitals,

physicians,    and   specialists       under      which    a    subscriber's       cost-

share (deductibles, co-insurance, co-payments) are lower if the

member elects to use a Tier 1 provider.                   Id. at 3.          The Tier 1

hospitals    include    seven    "Alliance         partners"       (large      hospital

systems), all of which agreed to make financial concessions to

Horizon regarding reimbursement, in return for sharing in the

savings expected from the OMNIA product and benefiting from an

anticipated increased volume of patients.

    Horizon      asserts       that    it     assessed         potential       Alliance

partners not as individual hospitals, but as "Organized Systems

of Care."      In order to assist it in selecting the Alliance

partners and Tier 1 hospital providers under the OMNIA plan,

Horizon retained a consultant, McKinsey & Company (McKinsey).

McKinsey    submitted    a    report     to   Horizon      dated       May   20,   2014,

entitled    "Assessing       providers      for    value       based    partnerships:

                                         6                                     A-2913-15T2
Compendium."         To   identify    and       prioritize       potential        Alliance

partners,   Horizon       evaluated     the         network    hospitals      using     the

following      six    broad     criteria,            which     were        developed     in

consultation     with      McKinsey:                clinical     quality;      services;

consumer preference data; value-based care capabilities; size;

and willingness and ability to transition from a volume-based

reimbursement model to a value-based care delivery system.

      McKinsey then assisted Horizon in scoring the hospitals,

and in comparing the scores within each geographic service area

to determine which hospital in that area would be designated as

an   Alliance    partner      and    Tier       1    hospital.        In    the    report,

McKinsey    calculated      a   "Partnership            score"    for      each    of   the

network hospitals by applying a set of criteria (six categories)

and metrics (nineteen items), ranked the hospitals pursuant to

that criteria, and then on a series of graphs, compared their

Partnership     scores     to   their       "Performance         scores,"      or    cost-

effectiveness.

      Horizon ultimately did not use the Performance scores in

selecting   Alliance       partners     because          it    determined      that     the

Partnership scores were the best measure of projecting which

hospitals would be most effective in transitioning to a value-

based   care     delivery       system.              Thus,     McKinsey       identified

hospitals, based on Partnership scores only, to be targeted for

                                            7                                     A-2913-15T2
Alliance partnership (Tier 1), non-partner Tier 1 hospitals, and

Tier 2 hospitals.       Horizon added non-partner Tier 1 providers to

ensure geographic coverage, consistent with N.J.A.C. 11:24A-4.10

(network adequacy), "based on locations that were not already

covered by OMNIA Health Alliance partners, breadth of service,

and market preference[.]"

      Under the OMNIA plan, Horizon selected:                     seven Alliance

partners (Atlantic Health System, Barnabas Health, Hackensack

University    Health    Network     (Hackensack),        Hunterdon      Healthcare,

Inspira Health Network (Inspira), Robert Wood Johnson University

Hospital (RWJ), and the Summit Medical Group), which represent

twenty-two     Tier    1    hospitals;        thirteen      non-partner      Tier     1

hospitals; and thirty-two Tier 2 hospitals, including plaintiffs

St.     Peter's,   Capital,       Centrastate,       Holy    Name,     JFK   Medical

Center, Trinitas, and Valley Hospital.

      Horizon claims it executed "Letters of Intent" (LOIs) with

the   Alliance     partners   after       confirming     their   "commitment        to

pursue value-based care and willingness to offer unit costs that

would enable Horizon . . . to offer attractive premium rates to

[its]    customers."        The    LOIs    contain     the    framework      for    "a

proposed    strategic      relationship"       and   include     the    rates    that

would apply to the Alliance partner's participation as a Tier 1

                                          8                                  A-2913-15T2
provider.     Horizon      then      negotiated      "Alliance     Agreements"         and

attached rate agreements with the Tier 1 hospitals.

     By letters dated September 10, 2015, Horizon informed St.

Peter's, Capital, Centrastate, Holy Name, JFK Medical Center,

Trinitas,    and    Valley       Hospital       of   their    status      as    Tier     2

providers    in    the    OMNIA      plan.       Unlike      its   prior       practice,

however, Horizon did not disclose its standards for selection or

give the hospitals the opportunity to apply for Tier 1 status as

it did when it established its Advance Tiered Network, a prior

tiered network plan.            Horizon claims it chose not to proceed in

such fashion because "it would have signaled to the market,

including    competitors,            that    [it]    was     undertaking         a     new

competitive strategy."

     Those   seven       Tier    2   designated      hospitals     then    instituted

these two separate lawsuits against Horizon.

A.   The St. Peter's Litigation

     In November 2015, St. Peter's filed a verified complaint

against Horizon in Middlesex County alleging, in count one, that

Horizon breached Sections 2.7 and 2.8 of the Network Agreement

by: failing to provide it with sixty-days' advance notice of the

OMNIA plan; failing to disclose the criteria and standards used

in selecting the Tier 1 hospitals; failing to select it as a

Tier 1 provider or provide it with an opportunity to demonstrate

                                            9                                   A-2913-15T2
that    it   satisfied         the    criteria    for    Tier      1    status;      and

establishing criteria that excluded it from Tier 1 status and

favored RWJ.

       Based on that alleged conduct, St Peter's asserted claims

for    breach   of    the   implied     covenant    of    good     faith     and   fair

dealing (count two) and tortious interference with prospective

economic     advantage      (count    three).      St.    Peter's       also   alleged

defamation      and   trade     libel    (count   eight)     based      on   Horizon's

advertising that Tier 1 providers render better quality of care.

       St. Peter's also asserted claims for unfair competition and

civil conspiracy (count four), breach of fiduciary duty as a

"quasi-public entity" (count five), equitable estoppel (count

six), and consumer fraud (count seven).                      However, the trial

judge subsequently dismissed these counts of the complaint.

       St. Peter's sought to:            enjoin implementation of the OMNIA

plan;    compel      Horizon    to    disclose    the    written       standards     and

criteria it used to select the tiered providers; include it as a

Tier 1 hospital; and provide it with an opportunity to obtain

Tier 1 status.         On November 9, 2015, the trial judge issued an

order to show cause without temporary restraints and directed

the parties to engage in "expedited" discovery.

       On November 17, 2015, the trial judge issued a "Discovery

Confidentiality        Order    and     HIPAA    Qualified    Protective        Order"

                                          10                                   A-2913-15T2
("confidentiality order"), as negotiated and agreed to by the

parties, prohibiting the use of confidential information for any

business,     commercial,       competitive        or    personal       purpose,        and

limiting disclosure to counsel, parties, and outside experts who

signed a confidentiality agreement.

      In   December    2015,      St.    Peter's     moved      for    a       preliminary

injunction to compel Horizon to include it as a Tier 1 hospital.

In    opposition   to     the      application,          Horizon       submitted        the

affidavits of Jonathan Stout, Horizon's Director of Strategic

Partnership     Support     and    Implementation,             and    Gina       Basiakos,

Director of Network Management.                Stout claimed that including

St. Peter's as a Tier 1 provider would "effectively threaten[]

the entire OMNIA health plan."                 The judge denied St. Peter's

application for a preliminary injunction.

      In    December    2015,      St.     Peter's       also    sought         an   order

compelling     Horizon      to     produce       certain         "key          documents,"

including,    among     other     things:          the    McKinsey         report;      the

Alliance     Agreements;     the        formulation       of    Tier       1     criteria;

partnership and performance scores for all Tier 1 hospitals,

including RWJ; St. Peter's partnership and performance scores;

and   communications       between        Horizon       and     Alliance         partners.

Horizon objected to production of the documents on the basis of

                                          11                                      A-2913-15T2
relevancy   and   argued     the     information    should    be   protected    as

confidential and proprietary business information.

      After oral argument on the motion, the judge issued an

order on January 25, 2016, compelling Horizon to produce for his

in camera review the McKinsey report and engagement letter, and

the Alliance Agreement (including the agreed upon rates) between

Horizon and RWJ.       The judge also ordered Horizon to disclose

whether any of the Alliance Agreements contained "geographical

exclusivity" provisions, but reserved, pending that disclosure,

St. Peter's request for the production of the other Alliance

Agreements.     Horizon produced the documents for the judge's in

camera review.

      After oral argument on January 27, 2016, the judge issued

an order on January 29, 2016 granting St. Peter's request to

compel Horizon to produce, subject to the confidentiality order:

1) the unredacted McKinsey report; 2) Tier 1 hospital scores; 3)

RWJ's Alliance Agreement, including the rate agreement, LOI, and

template, except that provisions listing specific rates were to

be   produced   "for   the    eyes    of    St.   Peter's   counsel    only";   4)

Alliance    Agreements       executed      with   other     Alliance   partners,

subject to any application for a protective order by any third

                                           12                            A-2913-15T2
party    to    an     agreement;2       5)    Board       of   Director's      minutes;      6)

written       communications         between        Horizon      and    RWJ    relating       to

exclusivity as a Tier 1 hospital and its invitation to become an

Alliance member.

      Horizon moved for reconsideration of the January 29, 2016

order and for a limited protective order allowing it to redact

selected       portions      of    the       McKinsey      report      and    the    Alliance

Agreement template.               Horizon argued that the selected portions

of the documents should not be disclosed because the information

was     not    relevant      to     St.      Peter's       claims      and    because       they

contained       confidential            and        proprietary         information       about

Horizon's       business       and      its        arrangements        with    St.     Peter's

competitors.3           In   support          of    the    motion,      Horizon       attached

affidavits       by    Stout      and     Basiakos,        who   maintained          that   the

documents        sought        contained             protected         confidential          and

proprietary information.                On February 26, 2016, the judge denied

Horizon's       motion       for        reconsideration,            but       modified       the

confidentiality order to limit disclosure of the rate agreement

to St. Peter's counsel and its experts.

2
  Before the trial court, no third parties moved for a protective
order.     However, we granted motions filed by Hackensack,
Inspira, and RWJ to intervene in these appeals to contest the
release of information pertaining to them.
3
  For the first time, Horizon also argued that the template of
the Alliance Agreement and the rate agreement with RWJ, but not
the McKinsey report, should be protected as trade secrets.

                                               13                                     A-2913-15T2
       On    February    29,    2016,    the           trial   judge    issued    an    order

denying      Horizon's     motion       for        a    stay     pending      interlocutory

appeal.      In the attached statement of reasons, the judge stated

that   the     existing    confidentiality                order    provided      sufficient

protection       of       Horizon's           confidential             and      proprietary

information.

       The    judge     found    that     all          aspects    of    the    design     and

projected operation of the OMNIA plan, including the McKinsey

report, were relevant in determining "whether Horizon's choice

and application of criteria had a rational basis," and whether

Horizon "acted in good faith towards providers."                             Moreover, with

regard to the template of the Alliance Agreements, the judge

stated that:

              Horizon argues that certain provisions of
              the Template Partnership Agreement should
              not   be   disclosed   because    they   reveal
              "Horizon's long strategy for the OMNIA
              health plan," its "unique economic agreement
              with its partners," and its "pricing model."
              These provisions are relevant for precisely
              that reason.    Horizon has argued that the
              presence of more than one Tier 1 hospital in
              a geographic market will interfere with the
              Alliance   [p]artner's    ability   to   manage
              population   health,    but    it   has   never
              explained how or why.     Horizon has put all
              these factors at issue when it claimed in
              its Stout Certification that the entire
              OMNIA network will fall if Saint Peter's is
              added to Tier 1. Saint Peter's is entitled
              to    discover    exactly     what    financial
              incentives an Alliance [p]artner receives,
              how they relate to the management of

                                              14                                   A-2913-15T2
         population health through the avoidance of
         inpatient admissions, in what way those
         incentives depend on the Alliance [p]artner
         being the only Tier 1 hospital, and why
         Saint Peter's cannot be given the same
         incentives.   Moreover, Horizon's long term
         strategy is relevant to its exercise of
         fiduciary duty towards providers and the
         healthcare system, particularly insofar as
         Horizon has considered and pursued the
         migration of patients to its preferred
         hospital systems at the expense of Tier 2
         hospitals.

    Addressing the agreements with Horizon's Alliance partners,

the judge found that:

         Saint Peter's requested all agreements with
         all Tier 1 alliance members to explore all
         incentives given to such members to manage
         population health to determine whether those
         incentives will be undercut if Saint Peter's
         is admitted to Tier 1 or is also permitted
         to manage population health in the same way.
         Horizon has put all these agreements in
         issue when it claimed the entire OMNIA
         network will collapse if Saint Peter's is
         admitted to Tier 1.      Such agreements are
         also relevant to determine whether they
         contain geographic exclusivity provisions
         comparable to the terms of the Robert Wood
         Johnson agreement.      Horizon has claimed
         geographic exclusivity is part of a quid pro
         quo, in which the Alliance [p]artner is
         given a local monopoly in return for
         concessions it makes to Horizon.

    Finally, the judge found that the LOI was

         presumably a precursor to the agreement or
         agreements yet to be entered into between
         Horizon and Robert Wood Johnson.    For the
         reasons   stated  in  connection  with  the
         Template Partnership Agreement, information
         relating to Horizon's payment model is also

                              15                        A-2913-15T2
            relevant to Horizon's defense that having
            another Tier 1 hospital in an Alliance
            [p]artner's geographic market will interfere
            with the Alliance [p]artner's ability to
            manage   population    health.      Information
            relating to Horizon's strategy long term
            objectives for OMNIA is relevant to both the
            good faith with which it dealt with Saint
            Peter's   and   Horizon's     breach   of   its
            fiduciary   duty    to    providers   and   the
            healthcare system generally.

      Thus, the judge ordered Horizon to produce:            the McKinsey

report, the LOI, the template of the Alliance Agreements, the

Alliance Agreements, and the RWJ rate agreement.

      On March 22, 2016, we granted Horizon's emergent motion for

leave to appeal from the trial court's discovery order, and for

a stay pending appeal.4         Thereafter, the judge dismissed St.

Peter's claims for breach of fiduciary duty, consumer fraud,

unfair competition, and equitable estoppel.          However, the judge

did   not   revisit   the   prior   discovery   orders,   which   had   been

based, in significant part, on the alleged relevancy of the

requested documents to the dismissed claims.

4
  We also ordered Horizon to include the unredacted documents in
its appendix for our in camera review and a second set of
documents with the redactions it claims are necessary to protect
its confidential and proprietary information.      We entered a
similar order in the Capital litigation discussed below.

                                     16                            A-2913-15T2
B.   The Capital5 Litigation

     In    December      2015,    Capital     filed   a   verified      complaint

against Horizon in Bergen County alleging, in count one, that

Horizon breached Sections 2.7, 2.8, and 2.5.2 of the Network

Agreements by: failing to provide the hospitals with sixty-days'

advance    notice   of    the    OMNIA   plan;   failing       to    disclose     the

criteria and standards used in selecting the Tier 1 hospitals;

failing    to   provide     the     hospitals    with     an    opportunity        to

demonstrate that they satisfy the criteria for Tier 1 status;

establishing criteria that were designed to favor the largest

hospital systems; and marketing Tier 1 hospitals as providing

better care at a lower cost than Tier 2 hospitals.

     Capital    also     asserted    claims    for    breach    of    the   implied

covenant of good faith and fair dealing (count two), promissory

estoppel (count three), tortious interference with prospective

economic advantage (count four), breach of fiduciary duty as a

health services corporation (count five), and defamation (count

six).     Capital sought an injunction to compel Horizon to engage

in negotiations with the hospitals about their tier status and

to enjoin any marketing of OMNIA that suggested that Tier 1

5
  For ease of reference, we will hereafter collectively refer to
the remaining six hospitals, Capital, Centrastate, Holy Name,
JFK Medical Center, Trinitas, and Valley Hospital, as "Capital."

                                         17                                 A-2913-15T2
hospitals    provided    better       care    at    a   lower   cost     than    Tier    2

hospitals.

       On December 14, 2015, the trial judge issued an order to

show   cause   without     temporary         restraints,        which    contained       a

provision allowing expedited discovery and directed Horizon to

produce    within   five      days,   "all    consultant's        reports       used    in

developing and applying" the "criteria and standards" used in

determining Alliance membership and Tier 1 status, and the Tier

1 hospital scores derived from applying those criteria.

       Horizon moved for reconsideration.                On December 17, 2015, a

second judge issued an order denying the motion and compelling

Horizon,    upon    execution     of    a     protective        order,    to    provide

Capital with an explanation of the criteria and standards used

in determining Alliance membership and Tier 1 status, including

the production of consultant's reports and the Tier 1 hospital

scores.     The judge signed a "Discovery Confidentiality Order and

HIPAA Qualified Protective Order" ("confidentiality order") as

agreed to by the parties, prohibiting the use of confidential

information     for     any     business,          commercial,     competitive          or

personal purpose, and limiting disclosure to counsel, parties,

and outside experts who signed a confidentiality agreement.

       On January 13, 2016, the judge granted Capital's motion for

discovery and, among other relief, ordered Horizon to submit an

                                         18                                     A-2913-15T2
unredacted copy of the McKinsey report to the court for an in

camera review.           Horizon supplied the unredacted McKinsey report

to   the   court,        together      with    a     letter   detailing       which     pages

should be redacted because it alleged they contained information

not relevant to Capital's claims and protected confidential and

proprietary information.6

      Following      oral       argument      on     February      8,    2016,   the    judge

found that although the McKinsey report was "not 100 percent

understandable by a layperson" and was "an imposing thing to

digest," it was relevant to Capital's claims and thus subject to

discovery.        The judge also found that although the information

"looks     somewhat       confidential         and     proprietary,"        it   would      be

protected from disclosure by the confidentiality order.                                    The

judge issued an order on that same date directing Horizon to

produce the McKinsey report to the hospitals (and a limited

number     of    their    consultants),         subject       to   the    confidentiality

order and certain redactions, for the purpose of determining

whether any other portions of the report could be redacted.

      Horizon filed a motion seeking additional redactions to the

McKinsey        report    and    for    a     more    expansive         protective     order.

Capital filed a cross-motion to compel discovery.

6
  As in the St. Peter's litigation, Horizon did not allege that
the McKinsey report constituted a trade secret.

                                               19                                    A-2913-15T2
    In support of its motion, Horizon attached an affidavit by

Basiakos,      stating       that     the     McKinsey        report     contained

"confidential    and     proprietary     information        that    should   not    be

shared with the . . . hospitals."             Basiakos asserted that if the

McKinsey    report     was    disclosed,      the     hospitals       "would     know

specific unit cost structures of its direct competitors in the

market   and   utilize       this    information      to    their    advantage      in

negotiating rates with Horizon in the future."

    Horizon identified specific pages of the McKinsey report

that it argued should not be disclosed because the information

was not relevant to Capital's claims and contained protected

confidential and proprietary information.                  Specifically, Horizon

sought to redact:         the performance and partnership scores of

hospitals outside each hospital's geographic service area (pages

9-12);   the   ranking     information       (pages    15,    17-20);     financial

projections    (pages     23-29);     information      regarding       out-of-state

hospitals   (pages     31-38);      healthcare   costs       in    certain   regions

(pages     41-54);      analytical       tools      for      evaluating        future

performance (Pages 77-78); and the appendix (page 79).

    On March 8, 2016, the judge issued an order:                      1) directing

Horizon to produce the McKinsey report, subject to the existing

confidentiality      order,    and    allowing      additional      redactions      of

page 16, portions of pages 41-45, pages 52-54, and the screen

                                        20                                   A-2913-15T2
shots on page 77; 2) limiting the distribution of the redacted

McKinsey report to each hospital's counsel, each hospital's CFO

and CEO, one "technical person" at each of the hospitals who was

not   involved    in     contract,   rate,     or    price     negotiations       with

Horizon,   and     each      hospital's      outside    consultants;        and     3)

directing Horizon to produce the reports referenced on pages 77

and 78 of the McKinsey report limited to "attorney's eyes" only.

On March 22, 2016, we granted Horizon's emergent motion for

leave to appeal from the March 8, 2016 order and for a stay

pending appeal.

      Meanwhile, on March 15, 2016, Capital submitted a letter to

the trial judge seeking to compel Horizon to produce, among

other   things,    the    Alliance   Agreements        and   any     communications

between Horizon and the Alliance partners regarding the OMNIA

plan.      By    letter      dated   March     21,     2016,    Horizon      opposed

production of the documents based on relevancy, and because the

documents contained confidential, proprietary and trade secret

information, but did not request that the judge conduct an in

camera review of the Agreements.

      During oral argument, the judge, who had not reviewed the

Alliance   Agreements,        nevertheless     found     the    Agreements        were

relevant to Capital's claims, and should be produced subject to

a   redaction     of   the    financial     information        and    the   existing

                                       21                                   A-2913-15T2
confidentiality order.            On March 24, 2016, the judge entered an

order directing Horizon to produce:                 1) copies of the Alliance

Agreements, subject to the redaction of financial data; and 2)

all   communications          between       Horizon      and     Alliance     members

regarding their participation in OMNIA.

      We granted Horizon's motion for leave to appeal from the

March 24, 2016 order and for a limited stay, and joined this

appeal with Horizon's prior appeal from the March 8, 2016 order.

                                            II.

      On    appeal,    Horizon       contends     the   judges   misapplied     their

discretion by ordering it to produce the McKinsey report, the

Alliance Agreements, the template of the Alliance Agreements,

the   LOI   between        Horizon    and   RWJ,   RWJ's    rate     agreement,    and

Horizon's communications with its Alliance partners.7                         Horizon

asserts the information it seeks to redact in these documents is

not   relevant        to    the      hospitals'    claims      and    is    protected

7
  At oral argument, Capital's counsel stated that the hospitals
now wished to modify their request for communications between
Horizon and its Alliance partners. We interpret this statement
as a withdrawal of Capital's prior request for this information
and direct it to submit its new request to the trial judge for
review in the first instance. Therefore, we reverse the portion
of the judge's order that required Horizon to provide Capital
with unredacted copies of these communications.    We also note
that the judge did not review any of the requested documentation
to determine either its relevancy or confidentiality prior to
ordering its release.    Thus, even had Capital not apprised us
that it wished to formulate a new discovery request, we would be
constrained to reverse this portion of the order.

                                            22                               A-2913-15T2
confidential and proprietary business information that it should

not be required to disclose.             We agree.

      The principles governing our review of the trial judges'

decisions are well settled.              "[W]e apply an abuse of discretion

standard to decisions made by [the] trial courts relating to

matters    of    discovery."        Pomerantz     Paper     Corp.   v.    New   Cmty.

Corp., 207 N.J. 344, 371 (2011).

      At   the    outset,     it    is    important    to   note,    as   our    late

colleague Judge Sylvia Pressler observed over fifteen years ago,

that appellate courts begin their review of a judge's decision

on a discovery matter with an appreciation of "the broad scope

of permissible discovery."               K.S. v. ABC Prof'l Corp., 330 N.J.

Super. 288, 291 (App Div.), motion for leave to appeal denied,

174 N.J. 411 (2000).          Thus, "[w]e understand that discovery is

not   limited     to    obtaining    admissible       information    but,   rather,

includes    the        obtaining    of    any   information,        not   otherwise

privileged, that 'appears reasonably calculated to lead to the

discovery of admissible evidence[.]'"                  Ibid. (quoting R. 4:10-

2(a)).

      That having been said, it is equally well established that

"the scope of discovery is not infinite."                   Ibid.   Rather, it is

limited to information, "not privileged, which is relevant to

                                           23                               A-2913-15T2
the subject matter involved in the pending action[.]"                         R. 4:10-

2(a) (emphasis added).

       In determining whether documents are discoverable, courts

initially consider their relevance to the issues raised in the

litigation.       Payton    v.    N.J.    Tpk.   Auth.,      148 N.J. 524,   535

(1997).      Relevant evidence is defined under                    N.J.R.E.    401 as

"evidence having a tendency in reason to prove or disprove any

fact    of   consequence     to    the    determination         of    the     action."

However, in the context of pretrial discovery proceedings in a

civil    case,   the    concept   of     relevance     is    broader    than     under

N.J.R.E. 401; "the test is whether the [information] is useful,

or if it relates to issues in the case or to the credibility of

a party."        Biunno, Weissbard & Zegas, Current N.J. Rules of

Evidence, comment 1 on N.J.R.E. 401 (2016).

       In applying the rule in this case, it is important to note

that, at their core, the hospitals' claims are based on, and

inextricably tied to, the language of their respective Network

Agreements with Horizon.8           The hospitals contend that Horizon

breached     their     Network    Agreements     by,        among    other     things,

failing to: give them the opportunity to participate in the

OMNIA network as Tier 1 providers; disclose the criteria Horizon

used to select hospitals for each tier; and provide them with

8
    The pertinent language was quoted earlier in this opinion.

                                         24                                   A-2913-15T2
sixty days' advance notice of the implementation of the OMNIA

program.       The    hospitals        also       assert    that      Horizon    wrongfully

favored their competitors in its development of the criteria.

      Although we are not called upon in this appeal to rule on

the merits of the hospitals' claims, we cannot avoid analyzing

those claims in assessing the relevancy of the information St.

Peter's and Capital seek in discovery.                          Accordingly, we turn to

the   law    governing         the    interpretation            of    contracts     and     the

language of the Network Agreements.

      Courts     usually       enforce    contracts         as       written.       Kampf    v.

Franklin     Life       Ins.     Co.,     33 N.J. 36,       43   (1960).          The

interpretation of a contract, and the determination of whether a

party's     conduct     constituted           a    breach       thereof,    is    usually     a

question of law.           See Spring Creek Holding Co. v. Shinnihon

U.S.A.    Co.,    399    N.J.        Super.       158,    190    (App.     Div.),    certif.

denied, 196 N.J. 85 (2008).

      Here, Sections 2.7 and 2.8 of the Agreements clearly state

that Horizon is permitted to establish new networks, in which

the hospitals may participate if they meet "all criteria and

standards established and evaluated by Horizon."                             Thus, on its

face, the plain language of the Agreements does not appear to

support the hospitals' claims that Horizon was required to place

them in Tier 1 of the new program, or give them the opportunity

                                              25                                     A-2913-15T2
to apply for inclusion in that specific tier.                            As required by

the Agreements, all of the hospitals involved in this litigation

participate in the OMNIA network, albeit as Tier 2 providers.9

       The    non-exclusivity          provisions        of     Section        7.5    of    the

Agreements also gave Horizon the opportunity to enter into new

contracts     with       other    hospitals,       including         competitors       of    St.

Peter's      and    Capital.         Thus,      the    Agreements       do     not     require

Horizon      to    treat    all    hospitals      the    same    in     terms    of     future

products.

       It is also undisputed that Horizon notified the hospitals

on September 10, 2015 of the new OMNIA product and their tier

placement         more    than    sixty   days        before    the     OMNIA        program's

effective date.            Finally, Section 7.3 of the Agreements states

that    the       agreements,       payment       rates        and    negotiations           are

confidential,        which       belies   the     hospitals'         current    claim       that

they    should       be     entitled      to      information         concerning           their

competitors, including the rates those competitors will charge

under OMNIA.10

9
  We recently held that no statute or regulation required Horizon
"to allow [hospitals] to apply for Tier 1 status."        Capital
Health, supra, slip op. at 26.
10
  In Capital Health, supra, we also ruled that "[t]here is . . .
no requirement in the [governing statutes] that a carrier
publicly disclose the criteria it used to evaluate the hospitals
                                                     (continued)

                                             26                                       A-2913-15T2
    Therefore, based on the plain language of the Agreements,

the hospitals' claims appear to rest on the slenderest of reeds.

And, because the hospitals' claims will rise or fall on the

content of the Agreements themselves, it is difficult to discern

the relevancy of the far-ranging discovery they now seek.

    However, St. Peter's and Capital contend that the language

of their Network Agreements is ambiguous rather than clear and,

therefore,       they   are   entitled     to   seek   extrinsic      evidence     in

discovery to address these ambiguities, and to determine whether

Horizon breached the agreements.                See Conway v. 287 Corporate

Ctr. Assocs., 187 N.J. 259, 268-70 (2006) (discussing role of

extrinsic    evidence         in    contract     interpretation).           Horizon

disputes that the language used in the Network Agreements is

ambiguous    or     that      the    documents     sought      are    relevant     to

ascertaining its meaning.

    We are not called upon in these appeals to rule upon the

question of whether the Network Agreements are ambiguous, or if

a breach occurred.            However, as noted above, we must consider

whether    the    information       the   hospitals     seek    in   discovery      is

relevant    to    their    claims.        The   relevancy      of   this   material,

however, is only part of the equation.                 It is well settled that

(continued)
for inclusion in, or exclusion from, a particular tier" of the
OMNIA program. Id. at 27.

                                          27                                A-2913-15T2
"[a]lthough relevance creates a presumption of discoverability,

that    presumption         can    be   overcome         by     demonstrating        the

applicability of an evidentiary privilege."                     Payton, supra, 148

N.J.    at   539.      Horizon     argues       that    even    if    relevant,      the

documents the hospitals seek contain privileged trade secrets

and confidential business information not subject to discovery.

       Privileges reflect "a societal judgment that the need for

confidentiality       outweighs     the     need       for    disclosure."        Ibid.

Trade    secrets     are    privileged         under    N.J.R.E.      514     (N.J.S.A.

2A:84A-26), which provides that "[t]he owner of a trade secret

has a privilege . . . to refuse to disclose the secret and to

prevent other persons from disclosing it if the judge finds that

the allowance of the privilege will not tend to conceal fraud or

otherwise     work     injustice."             Confidential       and       proprietary

information,        while    not    privileged,          is    also     entitled      to

protection from disclosure, but not to the same level as trade

secret information.         Hammock v. Hoffmann-LaRoche, Inc., 142 N.J.
356, 383 (1995).       Further, the trade secret

             privilege is qualified in the sense that
             disclosure   will    be  compelled   when   the
             information is needed to try some issue in
             the proceeding.     This is a balancing test.
             Where the need is not strong, disclosure
             will not be compelled.     Where disclosure is
             required,   it    must   be   balanced   by   a
             protective order to prevent loss of the
             property interest.

                                          28                                   A-2913-15T2
          [Biunno,   supra,  Current N.J. Rules of
          Evidence at comment 3 on N.J.R.E. 514
          (emphasis added).]

      Applying       these    principles,           and    having     reviewed    the

contested documents, the pleadings, and the arguments of the

parties, we conclude that the information sought by St. Peter's

and   Capital     is    not    relevant        to    the     issues    of   contract

interpretation that dominate this litigation,11 and that, even if

relevant, the hospitals' asserted need for this discovery is

outweighed      by     Horizon's      greater         need     to     preserve     the

confidentiality        of     its    proprietary           business    information.

Therefore,   we      conclude       the   trial       judges    misapplied       their

discretion when they ordered Horizon to present this information

in unredacted form. We explain our conclusions on a document-by-

document basis and address specific redactions in each document

to be produced.

A.    The McKinsey Report

      Horizon argues that the trial judges erred in ordering the

disclosure of the McKinsey report, as redacted by the trial

11
   We recognize, of course, that the hospitals raised claims
other than breach of contract in their respective complaints,
and we have also considered the relevance of the discovery they
seek to those claims.   We highlight the breach of contract and
related claims, such as breach of the implied covenant of good
faith and fair dealing, because we determine that the terms of
the hospitals' Network Agreements control their rights and
Horizon's obligations in these matters.

                                          29                                A-2913-15T2
judge in the Capital litigation, and in unredacted form in the

St.    Peter's    litigation.      Based     upon   Basiakos's    and   Stout's

affidavits, Horizon asserts that the McKinsey report contains

proprietary,       confidential       business      information       regarding

assumptions and projections used in creating OMNIA and future

products;     information     about     hospitals   including     confidential

cost,    price   and   rate   information;     rankings    of   the   hospitals

pursuant to proprietary criteria developed by McKinsey; scores

of     the   hospitals   developed      by   McKinsey;    metrics     and   data

supporting       McKinsey's     strategy     and    assumptions;      estimated

healthcare costs; and financial projections for OMNIA and other

products.12

       Based upon our in camera review, we agree with Horizon that

this     information     is   clearly    subject    to    protection.13         As

12
  For the first time on appeal, Horizon argues that information
in the McKinsey report also constitutes privileged trade
secrets.   However, we usually decline to consider issues not
presented to the trial court, and we follow that general rule
here.    State v. Robinson, 200 N.J. 1, 19 (2009) ("The
jurisdiction of appellate courts . . . is bounded by the proofs
and objections critically explored on the record before the
trial court by the parties themselves.").
13
  Horizon did not, as argued by St. Peter's, waive any privilege
or right to secrecy by disclosing an unredacted version of the
McKinsey report in the Capital case because the disclosure in
that case was subject to a confidentiality order that contained
express obligations to keep the information confidential.    See
Biunno, supra, Current N.J. Rules of Evidence at comment 2 on
N.J.R.E. 514.

                                        30                              A-2913-15T2
explained     in     the       affidavits,            the     report       contains          highly

confidential,           "competitively            sensitive,"             and     proprietary

information        that       could        give      St.     Peter's        and       Capital        a

competitive edge in negotiating future rates with Horizon.                                        See

Lamorte    Burns     &       Co.    v.     Walters,        167 N.J. 285,        299     (2001)

("information need not rise to the level of trade secret to be

protected"); Platinum Mgmt., Inc. v. Dahms, 285 N.J. Super. 274,

295-96     (Ch.     Div.           1995)      (competitive             pricing    strategies,

marketing     plans,          product          strategies          and      customer           lists

constituted protected confidential information).                                  In fact, in

managed care plans "[t]he fee schedule provided to the health

care    provider        by    the     carrier        is     proprietary         and    shall        be

confidential."          N.J.S.A. 26:2S-9.2 (emphasis added).

       Contrary     to       the     hospitals'           contentions,       they       are       not

entitled    to     disclosure            of    this       protected       confidential            and

proprietary information "merely on the strength of having filed

a complaint."           Dixon v. Rutgers, The State Univ. of N.J., 110
N.J. 432, 454 (1988) (quoting Zaustinsky v. Univ. of Cal., 96
F.R.D. 622, 625 (1983)).                   Instead, we conduct a balancing test

to   determine      whether          the      hospitals'         asserted       need    for       the

confidential       information           as    relevant          and   necessary        to     prove

their    cause     of     action         outweighs        Horizon's       claim       of     injury

resulting from disclosure.                    See In re Liquidation of Integrity

                                                31                                          A-2913-15T2
Ins. Co., 165 N.J. 75, 94 (2000); Piniero v. N.J. Div. of State

Police,    404    N.J.     Super.       194,    204      (App.     Div.   2008);      Trump's

Castle Assocs. v. Tallone, 275 N.J. Super. 159, 164 (App. Div.

1994); see also Dendrite Int'l, Inc. v. Doe No. 3, 342 N.J.

Super. 134, 141-42 (App. Div. 2001) (in determining whether to

compel    the    identity       of   an   anonymous          Internet     poster,     courts

balance the defendant's First Amendment right of anonymous free

speech against the strength of the prima facie case).

       Here, the trial judge's decision compelling disclosure of

the    unredacted      McKinsey      report         in    the   St.   Peter's    case     was

based, in part, on the fact that the information was relevant to

prove    St.     Peter's       claims     for       unfair      competition     and    civil

conspiracy, breach of fiduciary duty, equitable estoppel, and

consumer fraud; claims that were all subsequently dismissed.                               At

present, the remaining claims (except defamation) relate to the

breach of the Network Agreement, that is, the claims for breach

of contract, breach of the implied covenant of good faith and

fair     dealing,      and      tortious        interference          with    prospective

economic advantage.

       While at this point, Capital's similar claims are still

extant in its case, we have already discussed how, as in the St.

Peter's case, the resolution of those allegations is largely

dependent       upon     the     provisions          of      the    hospitals'      Network

                                               32                                   A-2913-15T2
Agreements       with      Horizon.             Even          if    Capital's     non-contract

assertions       are    considered,            it    is       difficult      to   discern      the

relevancy of the disputed portions of the McKinsey report to

those claims.          Capital contends that the factual basis for its

implied   covenant         and    promissory             estoppel      claims     is    Horizon's

conduct in extracting lower rates from them in exchange for

promises of increased volume, while at the same time "secretly

planning to launch OMNIA, which would decimate the volume."                                    The

factual      basis     for   the        tort    claims             (which,   except      for   the

defamation claim were already dismissed by the judge in the St.

Peter's case) is based in part on Horizon's alleged duty, as a

"quasi-public        entity"       to    act        in    a    manner    that     advances     the

public good.           We are not aware of any case law that supports

that proposition.

    On the other side of the equation, the portions of the

McKinsey report that Horizon seeks to redact include scoring for

hospitals not in St. Peter's and Capital's geographic regions,

lists   of    hospitals          considered          as       alternatives,       the    specific

numerical estimates of volume growth, shared savings and cost

reductions, infrastructure investment, and a financial analysis

of the proposed Alliance partners.                                 All of this information

would     give       St.     Peter's       and            Capital       a    tremendous        and

                                                33                                       A-2913-15T2
unprecedented         advantage     over    their        competitors         in       future

negotiations with Horizon and other insurance carriers.

    Horizon        also   seeks    to    redact    information         in    the      report

concerning hospitals located in New York and Pennsylvania.                             This

unrelated      information,        together        with     Horizon's            strategy,

assumptions, and projections for developing the OMNIA program,

is not relevant to the hospitals' contract claims and, at best,

only marginally relevant to Capital's other claims, which have

already been dismissed in the St. Peter's litigation.

    Because the disputed information in the McKinsey report is

so clearly confidential and, just as clearly, of little or no

relevance to the hospitals' claims against Horizon, we conclude

the trial judges should have redacted the McKinsey report in

accordance     with     Horizon's       motions.         Thus,    we   reverse         their

orders   on    this    point,     and   direct     the    trial    courts        to    enter

orders permitting Horizon to redact the following information

before producing the McKinsey report:

              1.    Pages 9-12 (hospital scoring);

              2.    Pages 13-14 (physician scoring);

              3.    Pages 16-22 (other regions);

              4.    Pages 23-28 (financial projections);

              5.    Page 29 (shared savings);

              6.    Pages 31-38 (potential               value    from      NY
                    and PA hospitals);

                                           34                                      A-2913-15T2
           7.     Pages 41-45 (numbers only);

           8.     Pages 47-54 (numbers only);

           9.     Pages 57-58 (financial information);

           10.    Pages 77-78 (metrics); and

           11.    Page 79 (items 6 to 9 only).14

B.   Alliance Agreements

     In the Capital case, the judge ordered Horizon to provide

the hospitals with copies of all seven Alliance Agreements, with

the financial data redacted.          The judge did not review these

Agreements before he ordered Horizon to produce them.             In the

St. Peter's case, the judge ordered Horizon to give St. Peter's

copies of Hackensack's and Inspira's Alliance Agreements, with

no redactions.      Neither of these hospitals are in St. Peter's

geographic coverage area.

     Horizon and the two interveners, Hackensack and Inspira,

assert   the    judges   mistakenly    exercised   their   discretion   in

ordering the disclosure of this information.         We agree.

14
   These redactions are included in the copy of the redacted
McKinsey report that Horizon included in its confidential
appendix in the St. Peter's appeal, beginning at page Dca273.
Even with these redactions, St. Peter's and Capital will receive
significant information from the McKinsey report concerning the
OMNIA program, including the criteria used "to assess ability to
partner" as set forth on page eight of the report.

                                      35                         A-2913-15T2
       We     have     reviewed          the    unredacted          Alliance       Agreements

provided      by   Horizon        for    RWJ,    Hackensack,          Hunterdon,        and   the

Summit Medical Group.15             Based upon that review, we conclude that

there   is     nothing       in    the    Agreements         that   is     relevant      to   the

hospitals' contract claims.                   The Agreements do not relate to the

formation of OMNIA or the process of selecting Tier 1 providers.

In fact, the Agreements were created after the selection of the

Tier 1 partners, as a result of negotiations between Horizon and

each    individual           Alliance         partner,       and    contain       information

specific to each hospital.

       Any possible relevancy to the hospitals' other claims is

more than outweighed by the need to preserve the confidentiality

of    the    proprietary          information         contained      in    the    Agreements.

This    hospital-specific            information         is    also       protected      by   the

clear       confidentiality         provisions          contained         in    each     of   the

Agreements.           Moreover,          Horizon       has    agreed       to    provide      the

hospitals       with     a    copy       of     the    redacted        template         for   the

Agreements.          Therefore, the hospitals will be aware of most of

the    subjects      covered       by    the    Agreements,         and    of    many    of   the

15
  Horizon did not provide the three other Alliance Agreements it
was ordered to produce. We assume that is because they contain
information similar to that contained in the Agreements that are
included in the record.    If that is incorrect, production of
those documents are to be governed by further order of the trial
courts as guided by this opinion.

                                                36                                      A-2913-15T2
details concerning them.           Horizon has also agreed to provide the

hospitals with the exclusivity provisions in these Agreements to

address    their       claim     that    there       should     be    no      geographic

limitations      to    the     number   of     Alliance       partners     or    Tier    1

providers in each area of the State.

     Accordingly, we reverse and remand the trial courts' orders

concerning the Alliance Agreements, and direct that orders be

entered protecting them from disclosure with the exception of

the exclusivity provisions contained therein.

C.   Template of the Alliance Agreement

     In the St. Peter's case, the judge ordered that Horizon

give the hospital an unredacted copy of the template of the

Alliance     Agreement.          However,      our     review    of     the     template

confirms   Horizon's         contention      that     certain    sections       of   this

document     contain      non-relevant,         but    highly        confidential       or

proprietary business information.                   This information includes a

description of Horizon's responsibilities regarding utilization

management, and development of new products (Sections 4.1(a),

4.1(b),    and        4.1(e));    a     description       of     "hospital       system

restricted       activities"          (Section         4.6(a)(1));         information

concerning patient use data (Section 8.1); information regarding

the financial aspects of the Alliance partnership (Schedule 3);

and the Quality Metrics attachment.

                                          37                                    A-2913-15T2
    The information in these sections of the template is not

relevant     to    whether      Horizon    breached      its    agreement        with      St.

Peter's because it does not relate to either the formation of

OMNIA or the selection of Tier 1 providers.                         As was the case

with the Alliance Agreements, the template had not yet been

created when Horizon selected its Tier 1 partners.                                   Because

there   is    no    legally      cognizable       need    for    disclosure          of    the

confidential       and     proprietary      information         contained       in      these

parts of the template, the judge should not have ordered its

disclosure.         And,       even   if   the    information       could       be    deemed

relevant in some limited fashion, the need for confidentiality

of information that could give St. Peter's an unfair competitive

edge over its competitors clearly outweighs any presumption of

access.

    Finally on this point, we disagree with the trial judge's

determination that Horizon opened the door to disclosure of all

of the information in the unredacted template when it claimed

including St. Peter's as a Tier 1 provider in the OMNIA plan,

which provides for exclusivity in a geographic region, would

effectively threaten the entire plan.                      First, the fact that

Horizon      cannot      add    another    Tier    1     hospital    to     a    specific

geographic area is not relevant to whether Horizon breached the

Network Agreement, nor is it a defense to a claim for breach of

                                            38                                       A-2913-15T2
contract.           Instead,       as    Horizon    argues,      it   is    an    equitable

defense to the claim for specific performance St. Peter's seeks

should it establish its breach of contract claim.

       Further,       to    the     extent    the     exclusivity        provisions      are

relevant, Horizon provided St. Peter's with that information in

Section    4.6(b)      of    the        template,    which      provides    that    Horizon

agrees to limit the addition of any Tier 1 hospitals within a

geographic area.            Additionally, as discussed above, Horizon has

agreed    to    provide      St.        Peter's    with   the    specific    exclusivity

provisions of the executed Alliance Agreements and it should

provide this same information to Capital if requested.

       Therefore, we reverse the trial judge's order concerning

the template of the Alliance Agreement.                      We remand to the trial

court for the entry of an order permitting Horizon to redact

Sections 4.1(a), (b), and (e); Section 4.6(a)(1); Section 8.1;

Schedule       3,    and    the     Quality        Metrics      attachment       from   this

document.

D.     LOI Between Horizon and RWJ

       After reviewing the LOI between Horizon and RWJ, we believe

that   the     trial       judge    incorrectly       applied      his     discretion     by

ordering the release of the entire LOI to St. Peter's.                              Certain

sections of the LOI obviously contain protected proprietary and

confidential         information.           Specifically,         Section    1     contains

                                              39                                   A-2913-15T2
information concerning Horizon's long-term strategy; Section 2

contains     proprietary         information        regarding     Horizon's       product

portfolio;      Section      8     contains        information        regarding       future

products;      Section       9     contains       proprietary      and     confidential

economic     information         regarding        Horizon's     payment       model;     and

Section 10 contains proprietary information regarding Horizon's

private financial information.                This information is not relevant

to    St.    Peter's       claim     that     Horizon     breached        its     contract

regarding inclusion in the OMNIA network.                       Again, this document

was not even in existence at the time Tier 1 selections were

made.

      Therefore, we reverse and remand for the entry of an order

permitting Horizon to redact Sections 1, 2, 8, 9, and 10 from

the LOI before providing it to St. Peter's.

E.    RWJ's Rate Agreement

      Finally,      we     agree    with    Horizon      and    RWJ    that     the   judge

misapplied     his     discretion      in     requiring        Horizon    to    give    St.

Peter's an unredacted copy of RWJ's rate agreement with Horizon.

As RWJ correctly points out, the disclosure of this confidential

and   proprietary        information        to     its   direct       competitor       could

likely      cause    RWJ    severe     and        irreparable     harm.         The     rate

agreement sets forth the amounts RWJ agreed to accept as payment

                                             40                                   A-2913-15T2
for    healthcare    services   and   the    manner     in    which   it   will   be

reimbursed.

       RWJ contends that "[t]he amounts Horizon pays for services

and the basis upon which those payments are made are the product

of extensive research, analysis, and negotiation with Horizon by

RWJ, at considerable expense."               As a result, RWJ treats this

information as a trade secret and expects Horizon to do the

same.     See N.J.S.A. 26:2S-9.2(a) ("fee schedule provided to the

health care provider by the carrier is proprietary and shall be

confidential").       Clearly, no other hospital has access to RWJ's

rate    schedules    because    disclosure      of    this    information     could

likely harm RWJ's dealings with other insurance companies and

place it at a competitive disadvantage.

       The terms of RWJ's negotiated rate agreement with Horizon

are not relevant to whether Horizon breached its contract with

St. Peter's because it does not relate to either the formation

of OMNIA or the selection of Tier 1 providers.                  Thus, there was

no     basis   for   disclosure    of    this        highly   confidential        and

proprietary information.         Moreover, even if the information was

somehow relevant, the need for confidentiality of information

that could clearly give St. Peter's an unfair competitive edge

over its direct competitor in its geographic region outweighs

any presumption of access.

                                        41                                 A-2913-15T2
      Accordingly, we reverse the trial judge's determination and

remand for the entry of an order permitting Horizon to redact

the   specific   rate   information   contained   in   the   RWJ   rate

agreement.16

      Reversed and remanded for entry of amended discovery orders

in accordance with this opinion.      We do not retain jurisdiction.

16
   Because we have ordered that all the confidential and
proprietary business information described above should be
redacted, we need not address Horizon's alternate claim that a
more stringent protective order is needed.

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