D. Mass.: Discovery Probing State of Mind Allowed in Breach of Contract Case for Healthcare SaaS

This past week, Judge Allison D. Burroughs issued a decision, Healthedge Software v. Sharp Health Plan, 2021 U.S. Dist. LEXIS 88061 (D. Mass. May 6, 2021), granting the Plaintiff's motion to compel the disclosure of how the Defendant collected and searched its ESI, and granting in part the Defendant's motion to compel document production in response to repeated requests. HealthEdge contracted to provide SaaS to Sharp, to be used in its business of providing healthcare service plans. Sharp complained that Healthedge took too long to implement the software, and that it was ineffective. Healthedge brought the action seeking a declaratory judgment that it did not breach the contract, and Sharp counterclaimed alleged breach of contract and fraud.

Judge Burroughs' opinion states that, "this case is a prime example of the discovery issues that can arise when the parties (and their counsel) fail to engage in cooperative planning regarding ESI." Id. at *7. She directed the parties to meet and confer on search terms and custodians to use in collection and review, and specifically ordered Sharp to submit a collection and search protocol with a list of terms and custodians. She acknowledged that it would be unduly burdensome to require Healthedge to review hundreds of thousands of documents, and gave it permission to make a counterproposal before proceeding with review. Despite this the Court rejected limiting the Plaintiff's discovery to its communications with Sharp. "Sharp is entitled to probe HealthEdge's state of mind in connection with the allegedly fraudulent representations contained in its response to the RFP, and it is possible that documents and communications not involving or directly concerning Sharp may be relevant to that issue." Id. at *9.

Sharp was ordered to disclose the custodians it collected data from, and reveal the date ranges, keywords, and deduplication techniques it used to pare down this data. Search terms are not to be considered privileged information. If Healthedge determines that Sharp's approach was deficient, the parties are required to negotiate a new protocol.

The Court also found that Healthedge's source code was relevant in this case and should be produced, and that a confidentiality stipulation could be devised that would provide adequate protection. Healthedge's objection to contention interrogatories about which documents support its claims was upheld since the requests were premature.