Opinion
No. CV 054034076
April 20, 2010
MEMORANDUM OF DECISION RE: APPLICATION FOR AN ORDER FOR COMPLIANCE
On July 29, 2009, the Connecticut Attorney General (CAG) served interrogatories and a subpoena duces tecum upon the respondent, Anthem Health Plans, Inc. (Anthem). The admitted focus of the investigation is Anthem's agreements with Connecticut hospitals, especially its "most favored nation" provisions in those contracts. Anthem produced the vast majority of information requested but declined to produce certain information in response to document request #3, which relates to, inter alia, its Connecticut contracts with health care providers other than hospitals. Anthem also redacted documents supplied in response to other document requests to the extent that the information pertained to states other than Connecticut.
The CAG availed himself of his statutory remedy to seek a court order of compliance, to force Anthem to fully answer the discovery request, by an order to show cause filed on November 10, 2009. The parties argued the issue of compliance on December 14, 20009, and Anthem filed a sur-reply brief, as authorized by the court, on December 21, 2009. It is the CAG's position that he is entitled to the information requested as to all types of health insurances sold by Anthem in Connecticut both because he needs to understand the health insurance market in Connecticut to weight the impact of the hospital agreements in a market context and because the pro forma language at the outset of the interrogatories and subpoena duces tecum stated that the CAG is investigating unlawful restraint of trade or competition in "health insurance in Connecticut." He also claims that Anthem may not redact any supplied documents, even if the redacted information relates only to other jurisdictions.
Anthem responds that the subpoena request is, inter alia, overly broad and seeks irrelevant material to the extent it seeks information other than its agreements with hospitals and information as to other jurisdictions. In addition, it claims that the stated focus upon the hospital contracts, and not the broader pro forma language cited above, governs the scope of the investigation.
The two dispositive issues the court must address are: (1) whether the CAG may seek discovery as to Anthem's sale of health insurance in Connecticut, including its dealings with other Connecticut medical providers, in addition to Connecticut hospitals, and (2) whether the CAG may seek discovery as to Anthem's dealings in other states.
The CAG's authority to subpoena documents or testimony under the Connecticut Antitrust Act (General Statutes § 35-24 et seq.) is created by § 35-42. Like the federal antitrust act, the Connecticut Antitrust Act affords the CAG with a form of pretrial discovery that allows him or her, as an investigator, "to discover and procure evidence, not to prove a pending charge or complaint." Ajello v. Moffie, 179 Conn. 324, 326, 426 A.2d 295 (1979).
General Statutes § 35-42 provides in relevant part: "(a) Whenever the Attorney General, his or her deputy, or any assistant attorney general designated by the Attorney General, has reason to believe that any person has violated any of the provisions of this chapter, he or she may, prior to instituting any action or proceeding against such person, issue in writing and cause to be served upon any person, by subpoena duces tecum, a demand requiring such person to submit to him or her documentary material relevant to the scope of the alleged violation. For the purposes of this section, `documentary material' includes, but is not limited to, any information in a written, recorded or electronic form. (b) Such demand shall (1) state the nature of the alleged violation, (2) describe the class or classes of documentary material to be reproduced thereunder with such definiteness and certainty as to be accurately identified, and (3) prescribe a date which would allow a reasonable time to assemble such documentary material for compliance . . . (e) The Attorney General, his or her deputy, or any assistant attorney general designated by the Attorney General, may during the course of an investigation of any violations of the provisions of this chapter by any person (1) issue in writing and cause to be served upon any person, by subpoena, a demand that such person appear before him or her and give testimony as to any matters relevant to the scope of the alleged violations . . ."
"The purpose of the state Anti-Trust Act is to enable the attorney general, who is charged with the enforcement of the state's antitrust laws, to obtain documentary information to determine if there has been a violation of the antitrust laws and, if there has, to issue a civil complaint based thereon . . . As it envisions a pre-complaint procedure, the attorney general is not required to allege with precision such facts in his demand as would be necessary to set forth a cause of action in a formal complaint. By utilizing the statute, the attorney general is acting in an investigative role rather than as an enforcement officer. Accordingly, it cannot be required of him that he specify in advance the exact nature of the conduct under investigation for that would defeat the purpose of the statute . . . [The attorney general] cannot be charged with a duty to know in advance what he cannot know until the investigation is completed." Citations omitted; internal quotation marks omitted.) Ajello v. Hartford Federal Savings Loan Ass'n., 32 Conn.Sup. 198, 205-06, 347 A.2d 113 (1975). Indeed, the Connecticut Antitrust Act, "like the federal act, has virtually eliminated the `no fishing' signs where civil subpoenas under its aegis are issued." Mobil Oil Corp. v. Killian, 30 Conn.Sup. 87, 95, 301 A.2d 562 (1973).
In cases to enforce investigative subpoenas, the initial determination of whether a particular person or entity comes within the coverage of a regulatory statute is made by the agency, not by the court." Shulansky v. Cambridge-Newport Financial Services Corp., 42 Conn.Sup. 439, 442, 623 A.2d 1078 (1992). See also Ajello v. Moffie, supra, 179 Conn. 326 ("While courts which enforce such subpoenas may inquire into most questions of legality, they may not inquire into questions concerning the coverage or even the probable coverage of the statute under which the attorney general is acting"). "Courts have required a showing that an agency's investigation is conducted pursuant to its statutory authority, that materials sought are relevant to the inquiry, and that the request is specific and not unduly burdensome." Shulansky v. Cambridge-Newport Financial Services Corp., supra, 42 Conn.Sup. 443.
A defendant subjected to subpoena under § 35-42 may challenge the subpoena on the grounds that it is "overbroad, or burdensome, or irrelevant, or privileged . . ." Ajello v. Moffie, supra, 179 Conn. 327. The standard of specificity required of an investigative subpoena under both the federal and Connecticut antitrust acts is well-established: "The test . . . must be whether the statement in the demand as to the nature of the conduct under investigation is sufficient to inform adequately the person being investigated and sufficient to determine the relevancy of the documents demanded for inspection." Petition of Gold Bond Stamp Co., 221 F.Sup. 391, 397, affd, 325 F.2d 1018 (1963); Mobil Oil Corp. v. Killian, supra, 30 Conn.Sup. 92.
Here, the defendant has challenged as overbroad document request #3, which demands it produce: "For each year since January 1, 2006, all annual (or other periodic) strategic plans, business plans, long-range plans, and marketing plans or strategies relating to your company's sale of any type of health insurance or its purchase of hospital services in Connecticut." (Emphasis added.) This document request stems from the CAG's "investigation concerning whether certain contractual provisions in Anthem's agreements with Connecticut hospitals have the effect of unreasonably restraining trade by reducing competition in the Connecticut market for health insurance services." (Application for Order for Compliance with Interrogatories and Subpoena Duces Tecum, 11/10/2009, ¶ 2.)
The interrogatories and subpoena duces tecum of July 29, 2009, sufficiently informs the defendant of the nature of the conduct being investigated. Even if the hospital insurance agreements (and not the broader language of the prologue) are taken to be the alleged violation being investigated under § 35-42, the information sought as to Anthem's plans "relating to [its] sale of any type of health insurance . . . in Connecticut" is relevant to the CAG's inquiry. As the CAG persuasively argues, he needs a broad range of materials about the general health insurance market to understand how the "most favored nation" clauses in the defendant's hospital contracts will affect the health insurance market. These materials are relevant to the "rule of reason" inquiry for antitrust investigations, which considers the following factors in determining whether antitrust laws have been violated: "the defendant's intent and purpose for adopting the practice; the structure and competitive circumstances within the relevant market; the relevant competitive strengths of the defendants; the existence of economic hurdles undermining a competitor's ability to counteract the challenged practice; and the legitimate economic justifications for the practice." United States v. Delta Dental of Rhode Island, 943 F.Sup. 172, 186 (D.R.I. 1996) (Sherman Antitrust Act claim based on health insurer's use of "most favored nation" clauses).
Document request #3 requests strategy documents related to both the defendant's "sale of any type of health insurance or its purchase of hospital services in Connecticut." The goal of this comprehensive inquiry is to allow the attorney general to fully understand the relevant insurance market. This request sufficiently informs the defendant what documents are relevant to the inquiry. The court finds it neither unduly burdensome, overbroad or irrelevant. The defendant must submit strategic planning and marketing documents related to its sale of health insurance in this state, as well as its purchase of hospital services in this state. To that extent, the application for an order for compliance is granted.
The court will next address whether the CAG may seek discovery of the defendant medical insurer's data and strategy as to other states. In the present case, the CAG seeks documents from Anthem that describe Anthem's dealings in other states. Anthem has redacted references to those jurisdictions in the materials it has provided to date.
The only judicial guidance comes from a Superior Court case, which stated that § 35-42 "circumscribes the subpoena's reach to the state of Connecticut." Mobil Oil Corp. v. Killian, supra, 30 Conn.Sup. 94. While that court found that the attorney general's subpoena in that case related solely to the state of Connecticut, it also stated that "even if the subpoena sought information covering information beyond Connecticut's borders, it would be invalid to this extent and need not be answered." Id. The Mobil Oil court's interpretation of the limited geographic scope of § 35-42 has been adopted by commentators. See D. Belt, "The Connecticut Anti-Trust Act: A Guide to Interpretation," 54 Conn.B.J. 348, 382 n. 222 (1980).
Commentators have recognized that "[the Connecticut Antitrust Act] provides that it applies to every contract, combination or conspiracy in restraint of trade or to monopolize, to every attempt to monopolize, or to every monopolization of any part of trade or commerce `when any part thereof was entered into or effectuated in whole or in part' in Connecticut." D. Belt, supra, 54 Conn.B.J. 350. The Connecticut Antitrust Act, however, does not provide the CAG with the subpoena authority to investigate antitrust violations beyond the state's borders.
The attorney general's power derives from statute. See Blumenthal v. Barnes, 261 Conn. 434, 463, 804 A.2d 152 (2002). "It is well established that the [A]ttorney [G]eneral has no common law authority to act, and his powers are strictly limited by statute . . . If the subpoena in question is not authorized by statute, or if its scope exceeds a narrow statutory grant of authority, then the subpoena is invalid and not enforceable by the judicial authority." (Citations omitted.) Blumenthal v. Galasso Holdings, LLC, Superior Court, judicial district of Hartford, Docket No. CV 044004260 (December 20, 2004, Beach J.) [ 38 Conn. L. Rptr. 443].
Consistent with the position that the CAG's antitrust authority is limited to Connecticut, General Statutes § 35-42 does not explicitly indicate that the attorney general may subpoena documents or testimony dealing with out-of-state "persons." The fact that the legislature chose not to include extraterritorial subpoena powers in the Connecticut Antitrust Act confirms an intent to limit the attorney general's authority. When the legislature has chosen to authorize the state's executive branch agencies to obtain documents or testimony from out-of-state witnesses, it has explicitly given this authority by statute. See General Statutes §§ 31-61(b); 54-203(b); and 13b-231.
Interpreting the subpoena to require Anthem to furnish information dealing with health care insurance or providers in other jurisdictions would be irrelevant to the CAG's authorized scope of inquiry, burdensome to Anthem and an overbroad reach by this subpoena. Accordingly, Anthem need not provide information as to other jurisdictions and may redact such information from documents that are otherwise produced pursuant to the subpoena duces tecum and document requests. To that extent, the application for an order of compliance is denied.