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Wachtel v. Health Net., Inc. 239 F.R.D. 81 (D.N.J. 2006)

Wachtel v. Health Net., Inc. 239 F.R.D. 81 (D.N.J. 2006). Aug. 29, 2006, Argued December 6, 2006, Decided UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY. Plaintiffs: Zev & Linda Wachtel (individually) and

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Wachtel v. Health Net., Inc. 239 F.R.D. 81 (D.N.J. 2006)

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  1. Wachtel v. Health Net., Inc.239 F.R.D. 81 (D.N.J. 2006) Aug. 29, 2006, Argued December 6, 2006, Decided UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY

  2. Plaintiffs: Zev & Linda Wachtel (individually) and on behalf of their minor children, Tory, Jesse and Brett Wachtel, and on behalf of all others similarly situated. Defendant/s: HEALTH NET, INC.; Health Net of the Northeast, Inc. Health Net of New Jersey, Inc. Parties

  3. Facts • Underlying issue: P alleged Federal (ERISA) violations for breach of fiduciary duties stemming from re-imbursement claims. • E-discovery issues: • Non-production of responsive documents • Failure to preserve and search emails • Pattern of violation & disregard of Court discovery orders

  4. E-discovery Legal Framework& Rules effected • FRCP 26(b)(5) –withholding information claiming privilege • FRCP 37(B)(2)(A,B,C)-misconduct/imposition of sanctions • FRCP 37(C)(1)-failure to disclose • FRCP 37(d) –failure to respond • FRCP 53(a)(1)(C)-appointment of special discovery master • ERISA, 29 U.S.C. § 1001 et seq.

  5. Analysis of Case • Flagrance of non-compliance in discovery and with court orders forced the Court’s hand. • Harmed plaintiffs and the integrity of the judicial process

  6. Issues regarding E-discovery • D improperly withheld responsive documents: in excess of 20,000 • Spoliation • Failure to preserve emails • Deletion of emails > 30 days • Emails to backup tapes after 90 days • Lack of litigation hold • Allowed individual custodians to self-search their systems

  7. Conclusion/Outcome • Health Net repeatedly and systematically violated court orders • Sanctions intended to punish/remedy misconduct • Ordered to produce • Monetary sanctions • Reserved opinion on default judgment as a sanction until all the class action issues have been resolved

  8. Class discussion questions • What would you guess is the SOP for insurance companies’ management of ESI after this case? • Could anything have been done to contain the scope of these violations?

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