Somnia, Inc. v. Change Healthcare Technology Enabled Services, LLC

Background

Somnia brought claims against Change Healthcare for allegedly breaching a Master Services Agreement. Under that agreement, Change Healthcare managed revenue-cycle services for approximately 20 Somnia clients, including payer contracting and enrollment, provider credentialing, billing, collections, and appeals. The parties entered the agreement in December 2013, began the services in March 2014, and ended their relationship in July 2018.

After the court decided Change Healthcare’s motion to dismiss in February 2021, the parties exchanged written discovery and began producing documents. Change Healthcare made several productions totaling approximately 30,000 documents, or 90,000 pages, from 10 custodians and served a privilege log on February 25, 2022. Somnia stated that it had collected documents from at least 22 custodians and produced more than 3 million pages on a rolling basis.

Discovery Dispute 1: Additional Custodians

Somnia asked the court to require Change Healthcare to search the files of at least 64 additional custodians. Somnia argued that Change Healthcare had not searched for documents from employees who performed the underlying billing, coding, and collection work. Somnia also argued that its request was timely because Change Healthcare’s production was ongoing and its discovery responses did not reveal that entire groups of custodians had been excluded.

Change Healthcare opposed the request as late. It said that its June 2021 discovery responses committed it to a reasonable search of accessible records where relevant documents were most likely to be found. Change Healthcare said Somnia did not object to those responses, negotiate search terms, or challenge the production until February 18, 2022, after multiple discovery extensions and after the parties had agreed to an April 18 fact-discovery deadline. Change Healthcare also said it had indicated after its October 2021 production that its production was substantially complete.

Discovery Dispute 2: Database Access

Somnia also requested read-only access to data Change Healthcare collected while performing the services. Somnia said the data was difficult to analyze without the software that generated it because the software’s reporting and internal-reference features connected patient ledgers, billing notes, outside documents, insurance responses, and related records. Somnia asserted that read-only access would prevent the data from being altered or deleted and that Change Healthcare had not identified meaningful prejudice from providing access.

Change Healthcare opposed access to its proprietary database, particularly because the parties agreed that Somnia had possessed the underlying data since July 2018. Change Healthcare said Somnia could hire an expert to make the data readable and offered during the parties’ discussions to make the database available to Somnia’s expert if that would resolve both disputes. Somnia rejected that offer.

Court’s Action

The court did not decide whether Change Healthcare had to search the additional custodians or provide database access. Instead, Judge Philip M. Halpern scheduled a courtroom conference for April 7, 2022, at 3:30 p.m. and directed the parties to jointly submit, by March 31, 2022, any additional materials—such as discovery requests and responses—needed to decide the disputes. The court also directed the clerk to terminate the motion sequence pending at docket entry 88.

Result

The order set a process for addressing the discovery disputes rather than granting or denying either request. The supplied case metadata identifies Cathy Seibel as the judge, but the opinion text is addressed to Judge Halpern and is signed by Philip M. Halpern; this summary follows the judge identified in the opinion text.