                                                       SYLLABUS

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the
convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the
interest of brevity, portions of any opinion may not have been summarized.)

           Capital Health System, Inc. v. Horizon Healthcare Services, Inc. (A-29/30-16) (077998);
        Saint Peter’s University Hospital, Inc. v. Horizon Healthcare Services, Inc. (A-59-16) (079097)

Argued June 20, 2017 -- Decided July 24, 2017

FISHER, P.J.A.D. (temporarily assigned), writing for the Court.

         In these appeals, the Court reviews interlocutory orders requiring Horizon’s turnover to plaintiffs of discovery
materials despite Horizon’s objections.

         Defendant Horizon Healthcare Services, Inc., New Jersey’s largest health insurer, maintains a two-tiered
provider-hospital system. Plaintiff Saint Peter’s University Hospital, Inc., and plaintiff Capital Health System, Inc.
and others, commenced separate lawsuits in different vicinages, claiming Horizon treated them unfairly and in a
manner that contravened their agreements when they were placed in the less advantageous Tier 2.

          Plaintiffs’ claims are based on the clear disadvantage of being placed in Tier 2 because Horizon “adopted
strong financial incentives to encourage” its subscribers “to go to Tier 1” hospitals, i.e., seven large hospital systems
referred to as “Alliance partners.” Horizon retained McKinsey & Company to assist in the selection of the Alliance
partners. Plaintiffs claim that the method and manner of Horizon’s tiering of hospitals constituted a breach of their
network hospital agreements. Plaintiffs also claim that Horizon breached the implied covenant of good faith and fair
dealing, and assert other tort and contract theories, as well. In both suits, the chancery judges directed expedited
discovery and executed confidentiality orders, the terms of which were consented to by the parties.

          Discovery disputes quickly arose. After an in camera review, Chancery Judge Frank M. Ciuffani
ordered—subject to the confidentiality order—Horizon’s production of the unredacted McKinsey report, the Tier 1
hospital scores, the Alliance agreements, minutes of the board of director’s meetings, and written communications
between Horizon and Robert Wood Johnson University Hospital (RWJ), an Alliance partner which neighbors Saint
Peter’s in New Brunswick. The proceedings in the Capital Health matter under Chancery Judge Robert P. Contillo
were not dissimilar.

          The Appellate Division granted leave to appeal and reversed the discovery orders in both matters. 446 N.J.
Super. 96 (App. Div. 2016). Although the panel cited the deferential standard of review applicable in discovery
matters, it reversed because, having balanced the right to discovery against what it viewed as relatively weak claims,
panel found it “difficult to discern the relevancy of the far-ranging discovery” sought. And the panel determined
that Horizon’s need for protection outweighed plaintiffs’ need for disclosure.

          Following that decision, Saint Peter’s pursued additional discovery. Judge Ciuffani ordered a turnover of
other alleged proprietary materials. The judge also required that McKinsey comply with Saint Peter’s subpoena and
that Horizon produce the discovery turned over in the Capital Health matter that Saint Peter’s had requested.

          Through a series of expedited orders, the Appellate Division granted Horizon’s and McKinsey’s motions
for a stay and for leave to appeal. The panel determined the orders compelling additional discovery were
inconsistent with its prior determination in the first appeal and that Saint Peter’s had failed to alter the panel’s “prior
assessment” of Saint Peter’s “likelihood of success” on the merits. The panel did not dispose of the interlocutory
appeal it permitted, no doubt because the Court had already granted leave to appeal its earlier published
determination.

         The Court granted leave to appeal these interlocutory orders. 228 N.J. 516 (2017); 228 N.J. 519 (2017);
___ N.J. ___ (2017).


                                                            1
HELD: Having closely examined the record, the Court rejects the Appellate Division’s determination that the chancery
judges encharged with these matters abused their discretion.

1. Disposition of these interlocutory appeals is driven by the familiar abuse-of-discretion standard applicable when
appellate courts review discovery orders: appellate courts are not to intervene but instead will defer to a trial judge’s
discovery rulings absent an abuse of discretion or a judge’s misunderstanding or misapplication of the law. In
applying this standard, appellate courts must start from the premise that discovery rules are to be construed liberally
in favor of broad pretrial discovery. To overcome the presumption in favor of discoverability, a party must show
good cause for withholding relevant discovery. Broad allegations of harm, unsubstantiated by specific examples or
articulated reasoning, are insufficient. (pp. 8-9)

2. The Appellate Division panel recognized that the maintainability of plaintiffs’ claims was not before it but
nevertheless found it “[could] not avoid analyzing those claims in assessing the relevancy of the information”
sought. 446 N.J. Super. at 115. The panel’s skeptical view of the merits was a basis for its conclusion that the
discovery in question was “not relevant,” id. at 118. And the panel, without any discernible regard for the
confidentiality orders, concluded that—“even if relevant”—plaintiffs’ need for this discovery was “outweighed by
Horizon’s greater need to preserve the confidentiality of its proprietary business information.” Ibid. The Appellate
Division exceeded the limits imposed by the standard of appellate review both by assessing the information’s
relevance against the panel’s own disapproving view of the merits and by giving no apparent weight or
consideration to the protections afforded by the confidentiality orders. (pp. 10-11).

3. Judge Ciuffani found, as Judge Contillo similarly determined in the companion action, that discovery geared
toward unmasking Horizon’s methodology and particular determinations during the selection process, as well as
other information illuminative of Horizon’s acts and intentions, was relevant to plaintiffs’ contractual and implied-
contractual claims, and that any legitimate claim asserted by Horizon, RWJ, or McKinsey that the material was
proprietary would be adequately protected by the confidentiality order. The chancery judges’ determinations were
soundly and logically reached and should not have been second-guessed because the Appellate Division harbored a
different view of the merits. The Court has never held that, when dissemination may be adequately protected by a
confidentiality order, a party’s right to relevant discovery is governed by a court’s impression of that party’s
likelihood of success on the related claim or defense. (pp. 11-14)

           The orders under review in these interlocutory appeals are REVERSED, and the matters REMANDED to
the trial courts for proceedings.

       CHIEF JUSTICE RABNER; JUSTICES LaVECCHIA and ALBIN; and JUDGE FUENTES
(temporarily assigned) join in JUDGE FISHER’s opinion. JUSTICES PATTERSON, FERNANDEZ-VINA,
SOLOMON, and TIMPONE did not participate.




                                                           2
                                     SUPREME COURT OF NEW JERSEY
                                    A-29/30 September Term 2016
                                       A-59 September Term 2016
                                           077998 and 079097

CAPITAL HEALTH SYSTEM, INC.;
THE COMMUNITY HOSPITAL GROUP,
INC., t/a JFK MEDICAL CENTER;
ST. LUKE’S WARREN HOSPITAL,
INC.; TRINITAS REGIONAL
MEDICAL CENTER,

    Plaintiffs,

         and

CENTRASTATE MEDICAL CENTER,
INC.; HOLY NAME MEDICAL
CENTER, INC.; and THE VALLEY
HOSPITAL, INC.,

    Plaintiffs-Appellants,

         v.

HORIZON HEALTHCARE SERVICES,
INC.,

     Defendant-Respondent.
____________________________

SAINT PETER’S UNIVERSITY
HOSPITAL, INC.,

    Plaintiff-Appellant,

         v.

HORIZON HEALTHCARE SERVICES,
INC.,

    Defendant-Respondent.


         Argued June 20, 2017 – Decided July 24, 2017


                                1
Capital Health System v. Horizon Healthcare
(A-29/30-16); On appeal from the Superior
Court, Appellate Division, whose opinion is
reported at 446 N.J. Super. 96 (App. Div.
2016).

Saint Peter’s University Hospital v. Horizon
Healthcare (A-59-16); On appeal from the
Superior Court, Appellate Division.

Michael K. Furey argued the cause for
appellants Centrastate Medical Center, Inc.,
Holy Name Medical Center, Inc., and the
Valley Hospital Group, Inc., in Capital
Health System v. Horizon Healthcare (A-
29/30-16) (Day Pitney, attorneys; Michael K.
Furey and Dennis R. LaFiura, on the briefs).

Jeffrey J. Greenbaum and Dennis J. Drasco
argued the cause for appellant Saint Peter’s
University Hospital, Inc. in Capital Health
System v. Horizon Healthcare (A-29/30-16)
and Saint Peter’s University Hospital v.
Horizon Healthcare (A-59-16) (Sills Cummis &
Gross and Lum Drasco & Positan, attorneys;
Jeffrey J. Greenbaum, James M. Hirschhorn,
Jason L. Jurkevich, Megan L. Wiggins, Dennis
J. Drasco, and Elaine R. Cedrone, of counsel
and on the briefs).

Michael O. Kassak argued the cause for
respondent Horizon Healthcare Services, Inc.
in Capital Health System v. Horizon
Healthcare (A-29/30-16) and Saint Peter’s
University Hospital v. Horizon Healthcare
(A-59-16) (White and Williams, attorneys;
Michael O. Kassak, Robert Wright, Andrew I.
Hamelsky, Edward M. Koch, and Victor J.
Zarrilli, on the briefs).

Andrew B. Joseph argued the cause for
respondent McKinsey & Company, Inc. in Saint
Peter’s University Hospital v. Horizon
Healthcare (A-59-16) (Drinker Biddle &
Reath, attorneys; Andrew B. Joseph, on the
brief).


                      2
         Edwin F. Chociey, Jr. argued the cause for
         intervenor Hackensack University Health
         Network and Inspira Health Network in
         Capital Health System v. Horizon Healthcare
         (A-29/30-16) (Riker, Danzig, Scherer, Hyland
         & Perretti, attorneys; Edwin F. Chociey,
         Jr., and Glenn A. Clark on the brief).

         William F. Maderer argued the cause for
         intervenor Robert Wood Johnson University
         Hospital in Capital Health System v. Horizon
         Healthcare (A-29/30-16) (Saiber, attorneys;
         William F. Maderer and Vincent C. Cirilli,
         on the brief).


    Judge FISHER (temporarily assigned) delivered the opinion

of the Court.

    Defendant Horizon Healthcare Services, Inc., New Jersey’s

largest health insurer, maintains a two-tiered provider-hospital

system known as OMNIA approved by the Department of Banking and

Insurance.   Capital Health Sys., Inc. v. Dep’t of Banking &

Ins., 445 N.J. Super. 522, 532 (App. Div. 2016).   Plaintiff

Saint Peter’s University Hospital, Inc., and plaintiff Capital

Health System, Inc. and others, commenced separate lawsuits in

different vicinages, claiming Horizon treated them unfairly and

in a manner that contravened their agreements when they were

placed in OMNIA’s less advantageous Tier 2.   Plaintiffs assert

Horizon’s tiering procedures were pre-fitted or wrongfully

adjusted to guarantee selection of certain larger hospitals for

the preferential Tier 1.

                                 3
    In discovery, the chancery judges in the two matters

required Horizon’s turnover to plaintiffs of the same or similar

materials despite Horizon’s objections.    The Appellate Division

granted leave to appeal and reversed those discovery orders by

way of a reported decision, Capital Health Sys., Inc. v. Horizon

Healthcare Servs., Inc., 446 N.J. Super. 96 (App. Div. 2016),

and later granted leave to appeal and stayed subsequent orders

compelling Horizon’s production of additional discovery to Saint

Peter’s.   We granted leave to appeal these interlocutory orders,

228 N.J. 516 (2017), 228 N.J. 519 (2017), ___ N.J. ___ (2017),

and now reverse the Appellate Division in all respects.

    Plaintiffs’ claims are based on the clear disadvantage of

being placed in Tier 2 because Horizon “adopted strong financial

incentives to encourage” its subscribers “to go to Tier 1”

hospitals, i.e., seven large hospital systems referred to as

“Alliance partners.”    These Alliance partners agreed to

financial concessions on reimbursement in return for sharing in

the savings expected from OMNIA and an increase in patient-

volume.    And Horizon “aggressively promoted Tier 1 hospitals as

providing better care at a lower cost.”

    Horizon retained McKinsey & Company to assist in the

selection of the Alliance partners.    McKinsey’s May 20, 2014

report identified and prioritized potential Alliance partners

through the use of broad criteria.    McKinsey also assisted

                                  4
Horizon in the scoring of hospitals.    Plaintiffs claim that the

method and manner of Horizon’s tiering of hospitals constituted

a breach of their network hospital agreements (NHAs), which

contain Horizon’s representations that each hospital “shall

participate in new networks or subnetworks” and “in new

products,” provided the hospital “meets all criteria and

standards established and evaluated by Horizon.”   Plaintiffs

also claim that Horizon breached the implied covenant of good

faith and fair dealing, and assert other tort and contract

theories, as well.   In both suits, the chancery judges entered

orders to show cause without restraints, directed expedited

discovery, and executed confidentiality orders, the terms of

which were consented to by the parties; these confidentiality

orders prohibited the use of proprietary information for any

business, commercial, competitive, or personal purpose and

limited disclosure to counsel, the parties, and outside experts.

    Discovery disputes quickly arose.    Saint Peter’s moved for

Horizon’s production of the McKinsey report, the Alliance

agreements, documents relating to the formulation of Tier 1

criteria, the partnership and performance scores for all Tier 1

hospitals, its own partnership and performance scores, and

information regarding communications between Horizon and the

Alliance partners.   Horizon argued these materials were

irrelevant and confidential.   After an in camera review,

                                5
Chancery Judge Frank M. Ciuffani ordered -- subject to the

confidentiality order -- Horizon’s production of the unredacted

McKinsey report, the Tier 1 hospital scores, the Alliance

agreements, minutes of the board of director’s meetings, and

written communications between Horizon and Robert Wood Johnson

University Hospital (RWJ),1 an Alliance partner which neighbors

Saint Peter’s in New Brunswick.       The judge also denied Horizon’s

motion for reconsideration, except he further limited disclosure

of the rate agreement to Saint Peter’s counsel and experts.

     The proceedings in the Capital Health matter were not

dissimilar.    Chancery Judge Robert P. Contillo examined the

McKinsey report in camera and authorized some redactions prior

to turnover.   The judge also limited disclosure of proprietary

information to each hospital’s attorney, each hospital’s CFO and

CEO, one “technical person,” and each hospital’s outside

consultant.    Plaintiffs later sought production of the Alliance

agreements and communications between Horizon and the Alliance

partners regarding OMNIA.    Horizon argued these materials were

irrelevant and contained confidential, proprietary and trade




1  The judge required that Horizon produce not only its Alliance
agreement with RWJ, but also the rate agreement, letter of
intent, and template, while limiting -- “for the eyes of St.
Peter’s counsel only” -- the specific rates. Turnover of the
Alliance agreements with other hospitals was subject to any
applications by those hospitals for a protective order; no
affected Alliance partner sought relief from disclosure.
                                  6
secret information.   Judge Contillo ordered a turnover subject

to some redactions.

    The Appellate Division granted leave to appeal and reversed

the discovery orders in both matters.   Although the panel cited

the deferential standard of review applicable in discovery

matters, Capital Health Sys., supra, 446 N.J. Super. at 114, it

reversed because, having balanced the right to discovery against

what it viewed as relatively weak claims, id. at 116 (noting the

claims “rest[ed] on the slenderest of reeds”), the panel found

it “difficult to discern the relevancy of the far-ranging

discovery” sought, ibid.   And, recognizing that the presumption

of discoverability of relevant information may be overcome by a

demonstration that an evidentiary privilege applies, Payton v.

N.J. Tpk. Auth., 148 N.J. 524, 539 (1997), the panel determined

that Horizon’s need for protection outweighed plaintiffs’ need

for disclosure.

    Following the Appellate Division’s published decision,

Saint Peter’s pursued additional discovery.   Judge Ciuffani

ordered a turnover of other alleged proprietary materials,

concluding that the Appellate Division’s decision was limited to

certain specific documents and that information relating to

Horizon’s criteria for rating the hospitals was relevant to the

theory that Horizon had crafted and implemented the tiering

process to reach a predetermined result.   The judge also

                                7
required that McKinsey comply with Saint Peter’s subpoena and

that Horizon produce the discovery turned over in the Capital

Health matter that Saint Peter’s had requested.

     Through a series of expedited orders, the Appellate Division

granted Horizon’s and McKinsey’s motions for a stay and for leave

to appeal.   The panel determined the orders compelling additional

discovery were inconsistent with its prior determination in the

first appeal and that Saint Peter’s had failed to alter the panel’s

“prior assessment” of Saint Peter’s “likelihood of success” on the

merits.   The panel did not dispose of the interlocutory appeal it

permitted, no doubt because we had already granted leave to appeal

its earlier published determination.

     Our disposition of these interlocutory appeals from the

Appellate Division’s published opinion and later unpublished

orders is driven by the familiar abuse-of-discretion standard

applicable when appellate courts review discovery orders:

appellate courts are not to intervene but instead will defer to

a trial judge’s discovery rulings absent an abuse of discretion

or a judge’s misunderstanding or misapplication of the law.

Pomerantz Paper Corp. v. New Cmty. Corp., 207 N.J. 344, 371

(2011).

     In applying this standard, appellate courts must start from

the premise that discovery rules “are to be construed liberally

in favor of broad pretrial discovery,” Payton, supra, 148 N.J.

                                 8
at 535, because “[o]ur court system has long been committed to

the view that essential justice is better achieved when there

has been full disclosure so that the parties [may become]

conversant with all the available facts,” Jenkins v. Rainner, 69

N.J. 50, 56 (1976).   Consequently, to overcome the presumption

in favor of discoverability, a party must show “good cause” for

withholding relevant discovery by demonstrating, for example,

that the information sought is a trade secret or is otherwise

confidential or proprietary.   See R. 4:10-3; Hammock by Hammock

v. Hoffmann-LaRoche, Inc., 142 N.J. 356, 369 (1995).    Not every

proprietary claim will meet this standard.   The party attempting

to show that “secrecy outweighs the presumption” of

discoverability must be “specific[] as to each document”;

“[b]road allegations of harm, unsubstantiated by specific

examples or articulated reasoning, are insufficient.”   Id. at

381-82.

    In ruling on the discovery disputes in the Saint Peter’s

action, Judge Ciuffani invoked and applied these principles when

he compelled a turnover of the discovery in question.   In his

opinion, which the Appellate Division quoted at length, Capital

Health, supra, 446 N.J. Super. at 108-09, Judge Ciuffani

thoroughly and logically explained why the McKinsey report and

other information that illuminated Horizon’s decision to place

hospitals in either Tier 1 or Tier 2 were relevant to the claim

                                9
that Horizon’s “choice and application of criteria” lacked “a

rational basis,” and were relevant as well to whether Horizon

“acted in good faith towards providers.”   Id. at 108.   Even

though, as the panel recognized, the judge later dismissed the

claims of breach of fiduciary duty, consumer fraud, unfair

competition, and equitable estoppel, id. at 109, the discovery

sought by Saint Peter’s remained relevant to its claims that

Horizon breached the terms of the NHA, as well as the implied

covenant of good faith and fair dealing.

    The panel recognized that the maintainability of

plaintiffs’ claims was not before it but nevertheless found it

“[could] not avoid analyzing those claims in assessing the

relevancy of the information” sought.   Id. at 115.   The panel’s

skeptical view of the merits -- evidenced by the observation

that the contractual claims “rest[ed] on the slenderest of

reeds,” id. at 116 -- was a basis for the panel’s conclusion

that the discovery in question was “not relevant,” id. at 118.

And the panel, without any discernible regard for the

confidentiality orders, concluded that -- “even if relevant” --

plaintiffs’ need for this discovery was “outweighed by Horizon’s

greater need to preserve the confidentiality of its proprietary

business information.”   Ibid.

    We conclude the Appellate Division exceeded the limits

imposed by the standard of appellate review both by assessing

                                 10
the information’s relevance against the panel’s own disapproving

view of the merits and by giving no apparent weight or

consideration to the protections afforded by the confidentiality

orders.   Having closely examined the record, we reject the

Appellate Division’s determination that the chancery judges

encharged with these matters abused their discretion.     It was

not an abuse of discretion for the chancery judges to find the

information sought was relevant to plaintiffs’ claims that

Horizon violated either the NHA’s contractual terms, or the

overarching implied covenant of good faith and fair dealing,

when they were relegated to the less desirable Tier 2.

    In his initial decision compelling the turnover of the

unredacted McKinsey report, Tier 1 hospital scores, Alliance

agreements, and other related materials, Judge Ciuffani cogently

explained, as recounted in the Appellate Division’s opinion, id.

at 107-09, the relevance of those items to the claims asserted.

Although some of the pleaded causes of action, which formed part

of that determination’s foundation, have since been dismissed,

the judge’s reasoning is equally applicable to the alleged

breaches of the NHA’s expressed and implied terms.   Judge

Ciuffani also recognized that the confidentiality order

sufficiently protected Horizon’s proprietary concerns.    He

amplified his reasoning when ruling on the later discovery

disputes -- a determination which led to the Appellate Division

                                11
again granting leave to appeal.    For example, as Judge Ciuffani

explained in denying the motion to quash the subpoena issued by

St. Peter’s to McKinsey:

              McKinsey worked with Horizon at every
         stage of OMNIA’s formation and development.
         McKinsey developed suggested structures for
         the proposed tiered network and, with Horizon,
         jointly developed the criteria that Horizon
         should consider in evaluating hospitals for
         the preferred Tier 1.         McKinsey never
         suggested   geographic   exclusivity    as   a
         criterion and, in fact, proposed a model for
         OMNIA in Middlesex County that did not rely on
         having only one Tier 1 partner.

              Saint Peter’s subpoenaed McKinsey to
         obtain documents related to its work for
         Horizon on the formation and development of
         OMNIA, including the development of the
         proposed structure of the tiered networks, the
         development of the criteria, and how and when
         that criteria changed.      Saint Peter’s is
         looking for information regarding the timing
         of when the hospitals were rated each time,
         the conversations between Horizon and McKinsey
         regarding the ratings, who at Horizon ordered
         the changes in criteria and their weights, and
         who at Horizon was involved in these
         discussions.

              Saint Peter’s alleges that Horizon pre-
         selected RWJ as the Tier 1 partner for the
         Middlesex County area, and adjusted the
         criteria for Tier 1 participation to obtain a
         predetermined result.    In so doing, Horizon
         [is alleged to have] breached the explicit
         terms of the [NHA], which guaranteed that
         Saint Peter’s could participate in any new
         network, subnetwork, or product introduced by
         Horizon as long as it met the “criteria and
         standards” for participation.    Horizon [is]
         also [alleged to have] breached the implied
         covenant of good faith by arbitrarily choosing
         criteria, and then changing them ex post facto

                                  12
          in order to exclude Saint Peter’s from the
          preferred Tier 1 network.

               The timing of changes to the criteria or
          the hospital ratings are all relevant to the
          preselection[-]of[-]partners     theory    and
          whether Horizon adjusted the criteria to
          obtain a predetermined result.       Moreover,
          information on who at Horizon knew about [or]
          participated in these changes [or both,] in
          order to deprive Saint Peter’s of its
          bargained-for right of participation is also
          relevant to [the claim of] Horizon’s bad faith
          and its intent to harm Saint Peter’s.

               The . . . [c]onfidentiality [o]rder
          already in place in this action sufficiently
          protects any confidentiality interest Horizon
          purports to have in these documents.

     In short, Judge Ciuffani found, as Judge Contillo similarly

determined in the companion action, that discovery geared toward

unmasking Horizon’s methodology and particular determinations

during the selection process, as well as other information

illuminative of Horizon’s acts and intentions, was relevant to

plaintiffs’ contractual and implied-contractual claims, and that

any legitimate claim asserted by Horizon, RWJ, or McKinsey that

the material was proprietary would be adequately protected by

the confidentiality order.2

     The chancery judges’ determinations were soundly and

logically reached and should not have been second-guessed




2  Whether the class of recipients of the specific rates -- so far
ordered turned over only “for the eyes of St. Peter’s counsel” --
might be appropriately expanded in the future is not before us.
                               13
because the Appellate Division harbored a different view of the

merits.    We have never held that, when dissemination may be

adequately protected by a confidentiality order, a party’s right

to relevant discovery is governed by a court’s impression of

that party’s likelihood of success on the related claim or

defense.

    The orders under review in these interlocutory appeals are

reversed, and the matters remanded to the trial courts for

further proceedings.



     CHIEF JUSTICE RABNER; JUSTICES LaVECCHIA and ALBIN; and
JUDGE FUENTES (temporarily assigned) join in JUDGE FISHER’s
opinion. JUSTICES PATTERSON, FERNANDEZ-VINA, SOLOMON, and
TIMPONE did not participate.




                                 14
