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New Jersey District Court Judge Waldor ordered the insurer to produce its Master Services Agreement (MSA) with its third party administrator (TPA).

The insured brought a breach of contract and bad faith suit for failure to pay long-term care benefits.  The insurer and its TPA were defendants. As part of the claim handling, the TPA was delegated powers to evaluate the insured’s claim.

In discovery, the insured sought the master agreement between the insurer and the TPA, and the insurer objected to this production. The insured moved to compel production of the MSA, arguing “the MSA is relevant because [the TPA] may have a financial incentive to delay or deny benefit payments to Plaintiff[,] which Plaintiff believes supports her bad faith claim.” (Internal quotation marks omitted.)  The carrier opposed “the production of the MSA because it is a confidential and proprietary business arrangement and is irrelevant to Plaintiff’s allegations in the Complaint.”

The court required production, subject to an attorneys’ eyes only production limitation.

  1. “First, the specific terms of the MSA are relevant to the facts surrounding the handling of Plaintiff’s claim for long term care benefits by [the TPA] instead of [the insurer], the claims process and eligibility review, and Plaintiff’s appeals, all of which were delegated by [the insurer] to [the TPA] through the MSA.”

  2. “Second, the MSA is relevant … because it is the agreement that governs [the insurer’s] relationship with another Defendant in this action that effectively denied Plaintiff’s claim for benefits, which Plaintiff alleges includes terms that incentivized the denial of Plaintiff’s claims for coverage.”

  3. “Finally, the Court does not find that providing the MSA will be unnecessarily cumulative as suggested by [the insurer], the fact that Plaintiff will have an opportunity to conduct depositions of [the TPA’s and insurer’s] employees concerning the delegation of duties does not obviate [the insurer’s] duty to produce relevant information, including the MSA.”

  4. In granting the motion to compel, however, the court added “given [the insurer’s] concerns regarding the confidential and proprietary nature of the MSA, the MSA shall be produced with an Attorneys’ Eyes Only designation.”

Date of Decision: December 23, 2020

Jaffe v. The Prudential Insurance Company of America, U.S. District Court for the District of New Jersey No. 219CV18067KSHCLW, 2020 WL 7640884 (D.N.J. Dec. 23, 2020) (Waldor, J.)