The following papers were read on this motion: Notice of Motion to Compel Discovery, Affirmation with Exhibits 1-2, 3-8 Affirmation in Opposition with Exhibits 9, 10-21 Reply Affirmation with Exhibits 22, 23-24 DECISION AND ORDER In this breach of contract case the plaintiff, the former medical biller for the defendants, seeks an order of this Court: (1) pursuant to CPLR 3124, to compel the defendants to comply with and answer plaintiff’s notice of discovery demands served on the defendants on August 31, 2019 and to produce all documents demanded by the plaintiff; (2) pursuant to CPLR 3126, to strike and dismiss the defendants’ answer and counterclaim with prejudice and preclude the defendants from proffering any evidence or testimony in opposition to the complaint, and related relief, at any trial or inquest thereon, due to the defendants’ willful failure to disclose information and produce documents for inspection in response to the plaintiff’s notice of discovery demands; and (3) pursuant to 22 NYCRR Part 130, Subpart 130-1, Section 130-1.1 to require that the defendants pay $2,500.00 to the plaintiff as the costs of making the instant motion due to the defendants’ willful and frivolous failure to disclose. Specifically, the plaintiff demands that the defendants be compelled to answer completely and fully the plaintiff’s discovery demands #1, 4, 6, 11, 12, 14, 15-23, 24 and 25, or to preclude the defendants from proffering any evidence or testimony in opposition to the related claims in the complaint and counterclaim. The plaintiff asserts that the defendants’ responses and document production were incomplete and included documents that were not relevant. The defendants oppose the instant application and contend that they have timely complied with the plaintiff’s first request for discovery when the defendants’ responses were served and filed on September 24, 2019, along with producing 331 pages of business records that were demanded by the plaintiff. Moreover, the defendants assert they did not engage in any “frivolous conduct” inasmuch as they were timely with their responses and production of documents. Thus, there is no basis for the Court to impose any sanctions. DISCUSSION CPLR §3101 In civil cases, CPLR §3101 (a) requires “full disclosure of all matter material and necessary in the prosecution or defense of an action, regardless of the burden of proof.” The Court of Appeals has repeatedly interpreted “material and necessary” very liberally and includes any good faith request for information that will assist in the preparation for trial. (See, Forman v. Henkin 30 NY3d 656, 661 [2018]; Andon v. 302-304 Mott St. Assoc., 94 NY2d 740, 746 [2000]; Allen v. Crowell-Collier Publ’g Co., 21 NY2d 403, 406-07 [1968]). Simply, the test is “usefulness and reason”. (Allen, 21 NY2d at 406). This includes the discovery of documents even if they are not admissible in evidence, provided that the production of such documents may lead to disclosure of admissible evidence. (Fell v. Presbyterian Hospital in New York at Columbia-Presbyterian Med. Ctr., 98 AD2d 624, 625 [1st Dept 1983]). The threshold requirement that a party seeking discovery must satisfy is that “the request is reasonably calculated to yield information that is ‘material and necessary’ — i.e., relevant — regardless of whether discovery is sought from another party (see CPLR 3101[a][1]) or a nonparty (CPLR 3101[a][4]).” (Forman v. Henkin, 30 NY3d at 661; citing Matter of Kapon v. Koch, 23 NY3d 32 [2014]). Moreover, “a document request will be found proper as long as it is sufficiently specific to apprise the defendant of the category of documents which must be produced and is relevant to the plaintiff’s cause of action.” (During v. City of New Rochelle, 55 AD3d 533, 534 [2d Dept 2008]; see also Fausto v. City of New York, 17 AD3d 520, 522 [2d Dept 2005]). CPLR §3101 “embodies the policy determination that liberal discovery encourages fair and effective resolution of disputes on the merits, minimizing the possibility for ambush and unfair surprise.” (Spectrum Sys. Intl. Corp. v. Chemical Bank, 78 NY2d 371, 376 [1991]). The Court has thoughtfully reviewed the plaintiff’s discovery demand which include 26 requests. Pursuant to CPLR §3101, the Court finds that the plaintiff herein is entitled to full disclosure of all matter material and necessary in the prosecution of her action as her first request for discovery and inspection and production of documents fairly apprises the defendants of what documents she seeks and overall the items requested appear to be relevant to her claim or her defense to the defendants’ counterclaim. CPLR §§3124 and 3126 CPLR §3124 provides that a party who has not received the discovery demanded may move to compel compliance or a response. CPLR §3126 sets forth the penalties which a court may impose on a party, or a person who is otherwise under a party’s control, for refusal to obey a disclosure order or wilful failure “to disclose information which the court finds ought to have been disclosed pursuant to this article”, including striking a pleading, precluding use of any evidence or testimony of undisclosed information by the disobedient party. The plaintiff asserts that the defendants’ responses to her first request for discovery are insufficient and incomplete and, pursuant to CPLR §3126, seeks an order to compel the defendants to comply with and answer same. The Court has carefully reviewed the defendants’ response to the plaintiff’s document production requests and notes, the following: The defendants object to request # 1, 4, 6, 14, and 15-23 and do not produce any documents, asserting that the document requests are “overbroad, not properly limited in time or scope, vague, and not reasonably calculated to lead to the discovery of admissible evidence”, as well as asserting the “attorney-client privilege and/or attorney work product doctrine.” The defendants object to request # 5, 7, 8, 9, 10, 13, 14, 24, and 25 asserting the same objections as listed above, but indicate that despite these objections they have produced documents numbered D-001 through D-331. The defendants object to requests # 11 and 12 and do not produce any documents, asserting the same objections as listed above but also include an objection that “the requested patient documentation is HIPPA [sic] protected and can only be produced upon the execution of a release by each patient.” HIPAA and The Privacy Rule The defendants allege they are prohibited from producing the documents in request #11 and 12 pursuant to the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), 45 CFR Parts 160, 162, and 164, and the regulations promulgated thereafter by the Department of Health and Human Services (the “Privacy Rule”). The Privacy Rule generally provides that a covered entity, such as a provider, may not use or disclose an individual’s protected health information to third parties without a valid authorization, except as otherwise permitted or mandated under the Privacy Rule. (45 CFR 164.508[a]). Protected health information encompasses any individually identifiable health information held or transmitted by a covered entity in any form or medium, whether electronic, paper or oral, including documents used for claims billing purposes. (45 CFR 160.103). The Privacy Rule also permits covered entities to use or disclose protected health information without the patient’s authorization pursuant to a court or administrative order (45 CFR 164.512[e][1][i]); or in response to a subpoena, discovery request or other lawful process if the entity has received satisfactory assurances that the party seeking the disclosure has, inter alia, made reasonable efforts to secure a qualified protective order from a court or administrative tribunal (45 CFR 164.512[e][1][ii]). In the instant matter, there is no dispute that the defendants are a covered entity subject to the Privacy Rule and that the documents demanded by the plaintiff contain protected health information and are, therefore, covered by the Privacy Rule. There is also, as discussed above, no doubt that the documents demanded in request #11 and12 are material and necessary to both the plaintiff’s claims and the plaintiff’s defense to the defendants’ counterclaim. In the instant matter, the defendants’ reliance upon HIPAA to excuse their non-production is misplaced. The defendants should have requested that the plaintiff enter into a qualified protective stipulation, in accordance with the Privacy Rule, and request the Court so-order it to address any HIPAA concerns. This would have been an appropriate way of providing the documents to which the plaintiff is entitled while complying with the Privacy Rule. The Court hereby issues an order which, in accordance with the above, directs the defendants to produce the documents while permitting the defendants to comply with the Privacy Rule. (See, 45 CFR 164.512[e][1][i]). After reviewing the parties submissions, the Court finds the following: (1) plaintiff has not shown that request #4 is relevant to the plaintiff’s claim or the defendants’ counterclaim and the defendants do not need to respond further; and (2) plaintiff has shown request # 1, 6, 11, 12, 14, 15-23, 24 and 25 are relevant and support a particular allegation contained in the compliant or goes to the basis of the defendants’ counterclaim. Accordingly, the Court hereby grants plaintiff’s motion pursuant to CPLR §3124 to the extent that the defendants are required to furnish responses to discovery demands request # 1, 6, 11, 12, 14, 15-23, 24 and 25 within 20 days or be subject to having the defendants’ answer stricken and/or having their counterclaim dismissed and/or precluding the defendants from proffering any evidence or testimony in support of or in opposition to the related claims in the complaint or the counterclaim in the Answer. Moreover, pursuant to CPLR §3126, the plaintiff asserts that the failure to disclose information and produce documents by the defendants has been wilful and the Court should penalize the defendants. The Court, however, does not find, at this juncture, that the plaintiff has established that the defendants’ failure to disclose or produce documents requested was wilful or in bad faith. Accordingly, the plaintiff’s motion pursuant to CPLR §3126 for the imposition of penalities is hereby denied without prejudice to renew upon leave of Court. Costs and Sanctions 22 NYCRR §130-1.1 The plaintiff also moves for costs of $2,500.00 in making the instant motion. Pursuant to 22 NYCRR §130-1.1, a court, in any civil action, has the discretion to award an aggrieved party costs incurred and/or sanctions resulting from frivolous conduct. Conduct is defined as frivolous for the purposes of Part 130, if: (1) it is completely without merit in law and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law; (2) it is undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another; or (3) it asserts material factual statements that are false. (22 NYCRR §130-1.1[c]). As stated above, the Court does not find, at this juncture, that the plaintiff has established that the defendants’ failure to disclose or produce documents requested was wilful or in bad faith. Accordingly, the plaintiff’s motion pursuant to 22 NYCRR §130-1.1 for the imposition of costs and sanctions is hereby denied without prejudice to renew upon leave of Court. DECISION ACCORDINGLY, for the foregoing reasons, it is hereby ORDERED that the plaintiff’s motion, pursuant to CPLR §3124 is granted solely to the extent that the defendants shall produce to the plaintiff, on or before June 9, 2020, responses to the following discovery demands to request # 1, 6, 11, 12, 14, 15-23, 24 and 25; and it is further ORDERED with respect to request #11 and 12, the parties are directed to comply with the court’s related confidentiality addendum to preserve the confidentially of the protected health information; and it is further ORDERED that the branches of the plaintiff’s motion seeking penalties pursuant to CPLR §3126 and costs/sanctions pursuant to NYCRR §130-1.1 are denied without prejudice and may be renewed upon the defendant’s failure to comply with the Court’s Order to compel production of documents; and it is further ORDERED that counsel for both parties appear1 for a status conference on June 16, 2020, at 2:00 pm, in Part 2; and it is further ORDERED that no further motions shall be permitted without leave of this Court. The foregoing constitutes the Decision and Order of the Court. Dated: May 18, 2020
