Opinion
CIVIL ACTION NO. 99-1767, SECTION "N" (3).
June 4, 2003.
ORDER AND REASONS
Before the Court are the following motions: (1) Motion of Dr. Stephen J. Flood and Dr. John O'Keefe to Compel Discovery [Rec. Doc. No. 139]; (2) Motion of Dr. Susan McSherry to Compel [Rec. Doc. No. 142]; (3) Motion of Drs. Phillips, Manale, Fattel and Watermeier to Compel [Rec. Doc. No. 154]; (4) Relator's Motion to Compel Discovery Response of Dr. Stephen Flood [Rec. Doc. No. 156]; (5) Relator's Motion to Compel Discovery Responses of Dr. John O'Keefe [Rec. Doc. No. 143]; (6) Relator's Motion to Compel Discovery Responses of Drs. Phillips, Manale, Fattel and Watermeier [Rec. Doc. No. 145]; (7) Relator's Motion to Compel Discovery Responses of Dr. Susan McSherry [Rec. Doc. No. 147]; (8) Relator's Motion to Determine Sufficiency of Responses to First Set of Requests for Admissions [Rec. Doc. No. 149]; (9) Relator's Motion to Enforce Subpoena [Rec. Doc. No. 151]; and (10) Relator's Motion to Compel Defendants' Responses to First Set of Requests for Production [Rec. Doc. No. 158]. Formal opposition was filed with respect to each of the parties' motions. The Court, having considered the background of this case, the record, the written submissions of the parties, the applicable law and, with the benefit of oral hearing, rules on each of the defendant physicians motions serially, herein below. As discussed at the hearing of this matter in Chambers, the Court will rule on the four major issues which have generated the discovery dispute regarding the relators' discovery requests propounded to the defendant physicians and to The Louisiana Clinic, and thereafter, counsel for the parties will meet for the purpose of resolving the remaining discovery disputes with the benefit of these rulings.
BACKGROUND
Relators, Mary Jane Stewart, Jr. and Margaret Catherine McGinty, initiated this qui tam action in June, 1999. Relators seeking damages on behalf of the United States, alleging that the defendants made false claims for Medicaid and Medicare reimbursements in violation of the False Claims Act ("FCA"). See 31 U.S.C. § 3729(a), 3730(b).
"Qui tam" is shorthand for the Latin phrase "qui tam pro domino rege quam pro se ipso in hac parte sequitur, which means `who pursues this action on our Lord the King's behalf as well as his own.'" Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765, 768 n. 1 (2000). In practice, the phrase means "an action under a statute that allows a private person to sue for a penalty, part of which the government or some specified public institution will receive." Garner, A Dictionary of Modern Legal Usage at 728 (2d ed. 1995).
Stewart worked for The Louisiana Clinic, as did McGinty, during the relevant time frame. Stewart began her employment as a cashier in 1995 and in 1997 became responsible for posting all charges for orthopedic surgeons in the New Orleans office with diagnosis codes. Eventually, Stewart became supervisor of the billing and auditing department of The Clinic. Stewart continued to serve as supervisor of the billing and auditing department until her resignation in February of 2001. In this capacity, she supervised staff in researching and resubmitting denials of Medicare and Medicaid. See Second Amended and Restated Complaint, at ¶¶ 20-34 [Rec. Doc. No. 50].
McGinty worked for The Louisiana Clinic from July 9, 1991 until January 8, 1999, when her position was eliminated. During that time, her duties included matching billing codes with diagnoses and doctor's dictation. McGinty later became extensively involved with patient billing for The Clinic. See Second Amended and Restated Complaint, at ¶¶ 20-28.
The False Claims Act establishes civil penalties for "[a]ny person" who, inter alia, "knowingly presents, or causes to be presented, to an officer or employee of the United States Government . . . a false or fraudulent claim for payment or approval," or who "conspires to defraud the Government by getting a false or fraudulent claim allowed or paid." 31 U.S.C. § 3729(a)(1), (3). Such a person "is liable to the United States Government for a civil penalty of not less than $5,000 and not more than $10,000, plus 3 times the amount of damages which the Government sustains because of the act of that person." Id. § 3729(a). The FCA may be enforced by the Attorney General, id. § 3730(a), or by a private person, known as a relator, who brings a qui tam suit "for the person and for the United States Government . . . in the name of the Government," id. § 3730(b).
Initially, a qui tam suit is filed in camera and usually remains under seal for sixty days. Id. § 3730(b)(2). Relators must present all material evidence to the Government during the sixty day period; the Government may then intervene and proceed with the action itself. Id. If the Government declines to assume responsibility for the suit, the relator may proceed on his or her own. Id. § 3730(b)(4)(B). If the suit is successful, the relator receives a portion of the Government's award. If the Government takes over, the relator will receive between 15 and 25 percent of the Government's proceeds, "depending upon the extent to which the person substantially contributed to the prosecution of the action," plus reasonable expenses. Id. § 3730(d)(1). If the relator proceeds on his or her own, he or she will receive between 25 and 30 percent of the proceeds, plus reasonable expenses. Id. The qui tam relator is also protected by a "whistleblower" provision which provides relief to any employee who suffers retaliation for bringing a claim under the FCA or assisting an employee-relator who does so. Id. § 3730(h). The whistleblower protection extends to any relator who brings a claim in good faith, whether or not it is successful. A qui tam suit requires presentation of a false claim, pleading same with particularity and evidence sufficient to identify such a claim. A flaw which is fatal to a qui tam action under the FCA is the failure to present the court with as much as one false claim.
On May 30, 2001, after three motions for extensions of time, the United States declined to intervene and the record in the matter was unsealed. Early on in the proceedings, the defendants each moved under Rule 12(b)(6) to dismiss the original six-count complaint against them on grounds that the relators had failed to plead fraud with the particularity required by Rule 9(b) of the Federal Rules of Civil Procedure. The upshot was Relators' Seven-Count Second Amended Restated Complaint which was filed to cure the original pleading and to comply with Rule 9(b) and the Act. See Relators' Second Amended And Restated Complaint filed against defendants, The Louisiana Clinic, formerly known as The New Orleans Orthopaedic Clinic, Dr. John J. Watermeier, Dr. Stuart I. Phillips, Dr. Bernard L. Manale, Dr. John B. O'Keefe, Dr. Ida Fattel, Dr. Robert Bernauer, Dr. Susan McSherry, and Dr. Stephen Flood [Rec. Doc. No. 50]. Relators' claims that survived Rule 9(b) scrutiny are outlined briefly below.
Amended and restated Count 1 alleged fraud on the part of all of the defendant physicians by "up-coding" ( i.e., assigning a CPT code commanding a higher level of compensation than the CPT code that corresponded to the procedure actually performed or the services actually rendered by the physician provider). The Court determined that, as to Drs. McSherry, Fattel, Flood and Bernauer, the allegations of Count One as amended were deficient and dismissed Count one as to those physician providers and The Louisiana Clinic. The district judge concluded that, insofar as submitting false CPT codes, relators sufficiently explained their allegations for purposes of the pleading stage as to only four physician providers, i.e., Drs. Phillips, Manale, O'Keefe and Watermeier. Judge Engelhardt then cautioned:
Medicaid and Medicare providers utilize the American Medical Association's Physician Current Procedural Terminology ("CPT") identifying codes in submitting claims reporting and reporting medical services and procedures for billing purposes in order to obtain payment or reimbursement for services rendered. Under the CPT system, each medical service and procedure is described and identified by a specifically assigned five-digit code number. Fee schedules utilized by the Government for reimbursement of medical providers' claims for reimbursement follow the CPT coding and assign a maximum allowable reimbursement for each service or procedure identified by a CPT code.
[R]elators should not view this ruling as carte blanche to conduct a fishing expedition. Although allowing relators to proceed with this `bare minimum' pleading, this Court will remain guided through discovery by the principles behind Rule 9(b).See Order and Reasons dated May 28, 2002, at p. 5 n. 3. More specifically, the court reminded relators of the gist of its citation at the outset of the Fifth Circuit's precedent in United States ex rel. Russell v. Epic Healthcare Mgmt. Group, 193 F.3rd 304, 308-09 (5th Cir. 1997), i.e., that the FCA grants a private right of action only to those citizens who "`have independently obtained knowledge of the fraud.'" Id. at p. 3.
Amended and restated Count 2 alleged that each and every one of the defendant physician providers and The Louisiana Clinic submitted false claims by "zoning" ( i.e., submitting bills that described services performed outside of New Orleans as having been performed in New Orleans in order to exact a higher rate of reimbursement from the Government). The court held that the particular allegation of fraud called "zoning" was sufficient only as to Dr. Flood and dismissed that count as to all other defendants. Id. at pp. 6.
Localities providing services are assigned Geographic Practice Cost Indices ("GPCI"), which index is utilized to calculate the fee for services or procedures for a given geographic locale. Localities outside of the New Orleans area are assigned a lower GPCI, and are thus reimbursed at a lower rate.
Amended and restated Count 3 claimed that the defendants engaged in the practice of "patient buying" ( i.e., waiver of the requirement of 20% co-payment without proof of financial hardship, posting the adjustment of the patient's responsibility as a "courtesy write-off"). Even as amended, the court determined that count 3 sufficiently alleged only one instance of fraud as to one physician, Dr. Fattel. As to all other defendant physicians and The Louisiana Clinic, the court found that the defendant failed to allege fraud with particularity and dismissed amended restated Count 3 as to all defendants, with the exception of Dr. Fattel. See Order and Reason dated May 28, 2002 at p. 7.
Medicare Guidelines and Regulations require a good faith attempt to determine the patient's actual financial condition.
Amended and restated Count 4 alleged "improper billing for evaluation and management services ("E M Services") ( i.e., the practice of separately billing for E M services, when the patient's condition does not require a separately identifiable evaluation and management service above and beyond the procedure or service actually performed). Relators alleged that the defendant physicians used a system of "canned comments" to falsely represent the nature of the services. The instances alleged only involved Dr. Manale, and thus, the court found the amended count claiming "improperly billed E M services" sufficient only as to the physician provider Dr. Manale. As to all other defendants including The Louisiana Clinic, the district judge dismissed Count 4 of relators' second amended and restated complaint. See Order and Reasons dated May 28, 2002.
Amended and restated Count 5, regarding billing under improper provider numbers, realleged that the defendants violated the FCA by submitting bills for services that medical assistants had actually performed, but under Dr. McSherry's provider number. These services were allegedly actually performed when Dr. McSherry was out of the office. Relators cured the deficiency by specifying Dr. McSherry's role in the alleged fraud, noting they personally observed the practice and that, upon returning to her office, Dr. McSherry would dictate the procedure notes to read as though she had performed the procedure herself. However, with exception of physician provider Dr. McSherry, the court found that the particular allegation of fraud was deficient as to all other defendants and that nothing in the complaint provides a factual basis for the supposition that there was a clinic-wide conspiracy to submit false claims.
As to Amended and restated Count 6, regarding fabricating ICD 9 Codes ( i.e., submitting bills with fabricated diagnosis codes), the court determined that the claim as restated remained deficient in toto. As to the amended and restated claim of conspiracy set forth in Count 7 and throughout relators' Second Amended and Restated Complaint, the death knell sounded early in the court's opinion. The court nixed the relators' separate amended restated claim of conspiracy under Count 7, as well all other allegations of conspiracy echoed throughout the aforesaid amended complaint.
Thus, the issues and defenses raised by the pleadings that remain include the following, to wit: (1) Count 1 — alleged "upcoding," but only on the parts of Drs. Phillips, Manale, O'Keefe and Watermeier; (2) Count 2 — alleged "zoning," but only on the part of Dr. Flood; (3) Count 3 — alleged "patient buying," but one instance and only on the part of Dr. Fattel; (4) Count 4 — alleged improper separately billed E M services but only on the part of Dr. Manale; and (5) Count 5 — alleged "billing medical assistants' services as a medical provider's services," but only on the part of Dr. McSherry. See Order and Reasons dated May 28, 2002.
Thereafter, in connection with discovery, the defendants sought a protective order concerning the disclosure of nonparty patient billing and medical records that may be responsive to the relators' requests for production. Defendants also argued that the United States, which has not elected to intervene, is not entitled to receive copies of nonparty patient records. Regarding the production of nonparty patient records, the court noted that this is a case arising entirely under federal law, and thus, Louisiana privilege law regarding the production of nonparty patient records does not apply. See Order and Reasons dated December 11, 2002, at p. 4 [Rec. Doc. No. 109]. Moreover, the defendants conceded that there is no federal physician/patient privilege. Id. at p. 5. Magistrate Judge Wilkinson determined that the parties have complied with the Health Insurance Portability and Accountability Act of 1996 ("HIPAA"), Pub.L. No. 104-191, §§ 261-264, 110 Stat. 1936 (1996) by seeking an appropriate protective order and that the court has the authority to order disclosure of nonparty patient information, subject to such a protective order, without conducting a contradictory hearing or having the parties obtain the patients' consent. Id. at 12.
Because the issue in this case is whether the defendants submitted false claims to the government for reimbursement for services rendered to Medicare and Medicaid patients, the court determined that relators must be allowed to see the patient names. Magistrate Judge Wilkinson also determined that because suit is brought in the name of the government, whether or not the Government opts to intervene, it is the real party in interest and is entitled to the discovery subject to the same protective order as the parties. Id. at 19.
In light of the background, the prior rulings and parameters placed on discovery and considering the purposes of Rule 9(b), the Court discusses the defendants' discovery motions serially herein below.
1. Motion of Dr. Stephen Flood and Dr. John B. O'Keefe to Compel Discovery
The motion concerns the following discovery requests, to wit: (1) Dr. Flood's Interrogatories (Exhibit "A"); (2) Dr. O'Keefe's Interrogatories (Exhibit "B"); (3) Dr. Flood's Requests for Production (Exhibit "C"); (4) Dr. O'Keefe's Requests for Production (Exhibit "D"); (5) Joint Interrogatories of all Defendants (Exhibit "E"); and (6) Joint Requests for Production of all Defendants (Exhibit "F").
As to Dr. Flood's Interrogatory No. 1, which seeks an explanation of any inquiry made by relators to determine that all factual allegations against Dr. Flood have evidentiary support and are warranted in law, relators object on the basis of attorney client privilege and that it clearly asks for conclusions of law. Unless a Rule 11 motion is filed, the information sought is irrelevant to any issue in the case and seeks information protected by the attorney-client privilege. Relator's objection to Interrogatory No. 1 is SUSTAINED.
As to Dr. Flood's Interrogatory No. 8, relators supplemented their responses to interrogatory No. 8 and the Court was advised at the oral hearing that the response as supplemented is satisfactory. See Exhibit's 1 and 2 to Relators' Opposition to the Motion to Compel. Therefore, as to Interrogatory No. 8, the motion to compel is MOOT.
As to Dr. Flood's Interrogatory and Request for Production No. 9, Dr. O'Keefe's Interrogatory and Request for Production No. 9, Defendants' Joint Interrogatory No. 7 and Defendants' Joint Request for Production No. 5, all seek information regarding the removal of documents from The Louisiana Clinic. Relators argue that the source of a document is utterly irrelevant. Relators submit that they have direct and independent knowledge of each of incidents listed in the Second Amended and Restated Complaint, as well as many other fraudulent charges submitted to Medicare/Medicaid. The defendants' argue that information source goes to the issue credibility; however, relators submit that this is simply a subterfuge to harass the relators by suggesting that the documents were "stolen," noting that it is undisputed that relators had full access to the documents during the period of their employment with the Clinic. The Court agrees and therefore the relators' objection is SUSTAINED.
2. Motion of Dr. Susan McSherry to Compel
As to her Interrogatory Nos. 1 through 5, Dr. McSherry argues that the relators' responses are not responsive and fail to identify the particular violations of fraud alleged relating to the particular patients of Dr. McSherry identified in the Complaint. Particularly, as to Interrogatory No. 5, Dr. McSherry argues that it does not ask for a legal conclusion, but rather seeks the factual basis of the claim that their claim that the Medicare or Medicaid regulation relative to the procedures performed for the patients of Dr. McSherry at the time alleged did not permit supervision by a medical assistant only. She believes she is entitled to know the Relators' basis for believing that her action constituted a violation.
As to Interrogatory Nos. 1 through 4, relators submit that their response was a thorough explanation of their claims and no other explanation is required because relators described therein how they learned of the fraudulent conduct of Dr. McSherry as it relates to each of the five patients listed in the complaint, as well as numerous other incidents of misconduct.
As to Interrogatory No. 5, relators note that they objected, but then responded to the best of their ability. Relators point out that the ultimate issue in the case is whether Medicare/Medicaid regulations and guidelines permit Dr. McSherry's practices. Relators state that based upon their understanding of the law and the facts, they believe that Medicare does not permit such billing practices. Relators do not believe that they are required to quote line and verse of the Medicare billing guidelines to the defendants.
Inasmuch as the five interrogatories propounded by Dr. McSherry have been answered by the Relators to the best of their ability, the relators' responses are considered satisfactory and Dr. McSherry's Motion to Compel is DENIED.
3. Motion of Drs. Phillips, Manale, Fattel and Watermeier to Compel
Drs. Phillips, Manale, Fattel and Watermeier believe that the relators' responses to interrogatories are evasive and incomplete. For their part, the relators believe that the documents they have already produced supporting their claims are sufficient and they should not have to also list these materials and documents that they have yet to receive from The Louisiana Clinic which support their claims against the defendants. These "identification of documents" interrogatories include Dr. Manale's Interrogatory Nos. 3, 6, 8 and 10; Dr. Phillips' Interrogatory Nos. 3, 6, and 8; Dr. Watermeier's Interrogatory Nos. 3, 6, 8; and Dr. Fattel's Interrogatory Nos. 6 and 8.
Relators point out that the Interrogatories served on Watermeier are identical to those served on Dr. Phillips and seek information concerning the claims against Dr. Phillips, not Dr. Watermeier.
As to the aforesaid "identification of documents" interrogatories, the Court agrees with relators that a narrative summary why and how each document supports each claim is burdensome and relators should not have to try their case in the context of a response to interrogatories. Relators response identifying the groups of documents which have been produced sufficiently identify the materials. Relators have produced 680 documents Bates Stamped to identify the defendant to whom the documents apply ( i.e., Manale 1 through 84, etc.). Because The Louisiana Clinic has failed to respond to Relators' Motion to Enforce Subpoena, which is discussed herein below, relators' are unable to produce additional documents and materials which support their claims against the defendant physicians at this time, but intend to so as soon as they are possessed of the materials themselves. Subject to the duty to supplement, the Court sustains the relators' objections and deems the aforesaid interrogatory requests regarding identification of documents satisfied.
As to Interrogatory No. 4 propounded by Drs. Manale, Phillips, Watermeier and Fattel: Subject to the relators' agreement to supplement with information not presently available concerning addresses and phone numbers of persons previously listed, the defendants' motion to compel is MOOT.
As to Interrogatories requesting formulation of the Relator's Claims and Allegations, the Court addresses each specifically, to wit:
As to Dr. Manale's Interrogatory Request No. 9 and Request for Production No. 7 seeking information as to how the claims were formulated against Dr. Manale, the motion to compel is DENIED. Relators point out that the second amended and restated claims against Dr. Manale make no claim of unnecessary services and rather alleged only "improper billing of E M Services". In any event, "unnecessary services" is not defined and is too ambiguous a term to permit response. Moreover, to the extent that the documents seek protected work product and communications protected by the attorney-client privilege, the relators are not required to divulge privileged information. Supplemental answers provided by the relators refer the defendant to the allegations set forth in the Second Amended and Restated Complaint, which identifies the patients (by initials), the type of charge, the CPT codes, the Provider (Dr. Manale), the dates, the locations, and a description of the "Analysis" of each claim. Accordingly, regarding Dr. Manale's Interrogatory No. 9 and Request for Production No. 7, the Court finds relators supplemental response satisfactory and the motion to compel is DENIED.
As to Dr. Manale's Interrogatory No. 11 and Request for Production No. 9, regarding identification of individuals who provided analysis of medical records and billings of Dr. Manale and determined that he was involved in submitting unnecessary services, to the extent it seeks the identification of a non-testifying expert, relators object on the basis of Fed.R.Civ.P.26(b)(4)(B), which allows the party seeking discovery to obtain facts or opinions from a non-testifying expert only "upon a showing of exceptional circumstances under which it is impracticable for the party to obtain facts or opinions on the same subject by other means." Relators advise that their consulting expert was retained in May of 1999 specifically for the purpose of analyzing medical records and bills in anticipation of litigation and will not be called to testify. Considering that the defendants have failed to make the requisite showing of "exceptional circumstances," the relators' objection is sustained and the Motion to Compel is DENIED in this regard.
As to Dr. Manale's Request for Production No. 8 which seeks all documents supporting Interrogatory No. 10, Relators submit that all relevant documents in their possession regarding the claims against Dr. Manale have been produced and are labeled Manale Nos. 1 through 84. Subject to the relators duty to supplement should more information or documents be made available, the Court finds the relators' response satisfactory and the Motion to Compel is DENIED.
4. Relator's Discovery Requests
See Relator's Motion to Compel Discovery Response of Dr. Stephen Flood [Rec. Doc. No. 156]; Relator's Motion to Compel Discovery Responses of Dr. John O'Keefe [Rec. Doc. No. 143]; Relator's Motion to Compel Discovery Responses of Drs. Phillips, Manale, Fattel and Watermeier [Rec. Doc. No. 145]; Relator's Motion to Compel Discovery Responses of Dr. Susan McSherry [Rec. Doc. No. 147]; Relator's Motion to Determine Sufficiency of Responses to First Set of Requests for Admissions [Rec. Doc. No. 149]; Relator's Motion to Compel Defendants' Responses to First Set of Requests for Production [Rec. Doc. No. 158]; and Relator's Motion to Enforce Subpoena against The Louisiana Clinic for Production of Records [Rec. Doc. No. 151].
Pursuant to the oral hearing in Chambers, the Court and counsel agreed that with respect to the relators' discovery requests, the better course was to rule on four main issues which drive the discovery disputes in large part. Thereafter the parties will meet, confer, and attempt to resolve any disputes with the benefit of the Court's rulings on main issues. Should their be any dispute remaining, the parties will contact the Court for the purpose of scheduling a special setting for a hearing in Chambers for the purpose of amicably resolving any remaining issues.
The broad issues that have brought the progress of relators' discovery to a complete halt concern the scope of permissible discovery and are listed below, to wit:
A. The scope of discovery: (1) whether discovery is limited to patients referenced in Relators' Second Amended and Restated Complaint or may be expanded to encompass other patients, including non-Medicare/Medicaid patient records; and (2) whether temporally, discovery may be reasonably limited to the time period from June of 1993 through June of 1999; and
B. Possession, custody and control within the meaning of Rule 34.
Relators submit that the general discovery requirements set forth in Rule 26(b)(1) control the disposition of their Motions to Compel. Rule 26(b)(1) of the Federal Rules of Civil Procedure provides in pertinent part as follows:
Parties may obtain discovery regarding any matter, not privileged, which is relevant to the claim or defense of any party, including the existence, description, nature, custody, condition, and location of any books, documents or other tangible things and the identity and location of persons having knowledge of any discoverable matter. For good cause, the court may order discovery of any matter relevant to the subject matter involved in the action. Relevant information need not be admissible at trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence. All discovery is subject to the limitations imposed by Rule 26(b)(2)(I), (ii), and (iii).
FED. R. Civ. PROC. 26(b)(1) (emphasis added). Rule 26(b)(1) was amended to narrow the scope of relevancy from "subject matter" of the action to "claims or defenses of any party." See id. Advisory Committee Note to 2000 Amendment. In order to compel the production of information which is relevant to the subject matter of the action generally, the rule requires that the party seeking discovery demonstrate good cause. See id.
In addition to Rule 26(b)(1) set forth above, this Court must consider the instructions of the district judge at the outset, indicating his intention to exercise much discretion in controlling the course and scope of discovery in this case. Noting the relators' "bare minimum pleading," Judge Engelhardt cautioned against "fishing" for additional claims and observed that the right of action granted to private citizens is quite limited, i.e., the right to proceed on behalf of the United States is limited to those citizens who "have independently obtained knowledge of the fraud." See Order and Reasons dated May 28, 2002 ( citing Russell, 193 F.3d at 308-09 and further noting that the court would remain guided through discovery by the principles behind Rule 9(b)). This Court observes that Amended Rule 26(b)(1) dovetails quite nicely with the dictates of Rule 9(b) regarding pleading special matters with particularity and the purposes underpinning the rule.
The district judge's written rulings are quite clear and caution against painting with too broad a brush. Those written instructions, which counsel in favor of narrowing the scope of discovery, are reiterated here for purposes of clarity, to wit:
[R]elators should not view this ruling as carte blanche to conduct a fishing expedition. Although allowing relators to proceed with this `bare minimum' pleading, this Court will remain guided through discovery by the principles behind Rule 9(b).See Order and Reasons dated May 28, 2002, at p. 5 n. 3. Against this backdrop, the Court now addresses the broad issues raised by the relators' discovery requests concerning the scope of discovery and possession/control of documents for purposes of Fed.R.Civ.P. 34.
(A) The Scope of Discovery
The essential elements of a claim under the False Claims Act are that: (1) defendants made a claim against the United States; (2) the claim was false or fraudulent; and (3) the claim was made with knowledge of the falsity or fraud. See United States ex rel. Aflatooni v. Kitsap Physicians Service, 314 F.3d 995, 1000 (9th Cir. 2002).
Evidence of an actual false claim is the sine qua non of an FCA violation. See Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 785 (4th Cir. 1999) (stating that for liability to attach, the FCA at least requires the presence of a claim, i.e., a call upon the government fisc); United States ex rel. Clausen v. Lab Corp. or Am., 290 F.3d 1301, 1311 (11th Cir. 2002).
Limiting the scope of the discovery to time period from June of 1993 through June of 1999 and to the Medicare patients referenced in Relators' Second Amended and Restated Complaint is quite proper. The issue of a menacing scheme or conspiracy is wholly absent in this case and all claims against The Louisiana Clinic have been dismissed. The claims that survived Rule 9(b) scrutiny involve isolated instances against individual physicians and but a handful of patients. The district judge specifically held that relators had been given ample opportunity to identify fraud, noted that the balance of the equities in this case weigh against further leave to amend, proscribed further proceedings bent on "finding fraud during the discovery process." Id. at p. 5. The False Claims Act focuses on the submission of a claim and is not concerned with whether or to what extent there exists a menacing underlying scheme. Moreover, this Court's order comports with the clear message of the district judge to narrowly focus discovery on proving the few claims that were alleged.
See In re Dr. Alfred Aflatooni, 314 F.3d at 1003 (noting that the FCA attaches liability not to the underlying fraudulent activity, but to the claim for payment, and the FCA focuses on the submission of a claim and does not concern itself with whether and to what extent there exists an underlying scheme); United States v. Rivera, 55 F.3d 703, 709 (1St Cir. 1995).
Relators argue that they face a daunting task of proving intent with respect to the very few actionable instances which survived Rule 9(b) scrutiny. It is noteworthy Congress changed the knowledge element of the offense, lessening the burden of proof and making the chances of success more likely. The definition now sets forth a fairly low standard, and no proof of specific intent to defraud is required. Congress adopted § 3729(b) which defines knowing and knowingly to mean that a person "(1) has actual knowledge of the information; (2) acts in deliberate ignorance of the truth or falsity of the information; or (3) acts in reckless disregard for the truth or falsity of the information, and no proof of specific intent to defraud is required." 31 U.S.C. § 3729(b). The Court also notes that relators' burden should not should not enure to the detriment of the defendants by subjecting them to temporally unrelated, unduly broad and burdensome discovery, involving wholly irrelevant patient populations. Such discovery would yield evidence of questionable, if any, relevance at all as explained hereinbelow.
See In re ex rel. Janet Chandler, Ph.D., 277 F.3d 969, 976 (7th Cir. 2002) ("This definition set a fairly low standard, making it easier for relators to prevail in qui tam action.").
The Court is not persuaded by relators' argument that a comparison the alleged instances of wrongful billing practices with the physician defendants' billing practices involving non-Medicare patients provides fertile ground for proof of fraudulent intent. As previously discussed, the issue in this qui tam proceeding is not to what extent that the particular defendant physician uniformly engaged in a practice adjudged wrongful by Medicare regulations. Indeed, medical payment claims dubbed wrongful by Medicare standards may or may not be considered false or fraudulent by another health insurer's standards. Resorting to discovery of billing practices with respect to other patient populations will most assuredly prove misleading and inject confusion into the simple issue presented — i.e., whether a particular claim for payment constitutes a "false claim" within the meaning of the Act. The issue of "intent" must be adjudged in light of the circumstances presented with respect to the particular patient claim. Circumstances and factors driving medical decisions and, concomitantly, claims made to private insurers with respect to other patient populations that are so remote in time as to lend no assistance, are not reasonably related to the adjudication of the claims identified and deemed actionable by the district judge
Relators argue that Judge Engelhardt's comment that the relators had three years since the complaint was filed to "muster their facts" lends support to their position that the discovery window must be expanded to include the two-year post-complaint period. The court's statement merely connotes that information gathered by relators during the post-complaint time period may be considered pertinent and relevant to the allegations made in the complaint. It provides no fuel for relators' contention that patient information and billings generated during the post-complaint time frame are relevant to allegations of pre-complaint false claims.
As to the Relators' continuing refrain — "continuous conduct," or "pattern and practice" — the district judge eliminated the issue upon dismissing all of relators' conspiracy claims. At issue are six different types of alleged false claims by eight different individual medical providers. Simply stated, the issue of pattern and practice or scheme to defraud is no longer extant and reference to same is surely a source of confusion.
In other settings, such as conspiracies or complaints involving allegations of a continuing pattern of wrongful conduct/practice ( i.e., Title VII employment discrimination cases), the temporal scope of discovery may pose a perplexing problem, which does not easily admit a lapidary solution. However, in the case at bar, involving relatively few individual instances of alleged past false claims being submitted for payment by individual physician medical providers, the answer to the question of the temporal scope of discovery is pellucid. The time period ending as of the time of the filing of relators' complaint is clearly appropriate and consistent with the district judge's intent to control discovery pursuant to Fed.R.Evid. 26(b)(2), inter alia, considering the facts, circumstances and bare bones allegations which survived the Rule 9(b) inquiry. The undersigned Magistrate Judge is bound by the district court's instructions in this regard. In any event, considering the premises, this Court has been given no reason to disagree.
See Pleasants v. Allbaugh, 208 F.R.D. 7, 9-10 (D. D.C. 2002); EEOC v. Kansas City Southern Railway, 2000 WL 33116752 (D. Kan.) ("Information which may establish a pattern of discrimination is discoverable even when the action seeks only individual relief.").
Cases cited by relators which argue in favor of a much more expansive scope of discovery are inapposite. The case of Pleasants v. Allbaugh, 208 F.R.D. 7 (D.C. 2002) involved Title VII employment discrimination claims, which necessarily have been accorded a very broad scope of discovery. The Pleasants court liberally drafted the temporal scope of discovery, so as to include a window of time after the plaintiff retired from his job. The court further allowed discovery relative to the duties assigned to other employees, specifically noting that this information was directly relevant to the plaintiff's claim of unique treatment. Id. at * 11. United States ex rel. Regan v. Medtronic, Inc., 2000 WL 14784767 (Kan.) involved a qui tam case against a manufacturer of cardiac pacemakers for withholding warranty credits due hospitals. Objecting to relator's nationwide discovery covering all aspects of defendant's cardiac-related business spanning a twenty year period, Medtronic sought a protective order limiting the broad scope of discovery. The court sustained Medtronic's objection, noting that Regan narrowly avoided dismissal under Rules 12(b)(6) and 9(b) only after adding specific allegations concerning his claim of "nationwide" fraud. Focusing specific factual allegations, the Medtronics court highlighted that the false claims unequivocally addressed only events in the Wichita sales district. The court determined that the burden of answering for other than the Wichita sales district far outweighed the possible relevance of such evidence and limited discovery accordingly. The Medtronic court chastised Regan for brandishing "a broadsword where a scalpel would suffice" and also limited the temporal scope of discovery to a five (5) year period. The court's decision in Medtronic hurts, rather than helps, the relators position in the case at bar.
See also Bryant v. Farmers Insurance Co., Inc., 2002 WL 1796045 * 1 (D. Kan.). Bryant is yet another Title VII employment discrimination case, wherein the court notes that the scope of discovery in such cases is particularly broad and necessarily so. The court explained that an employer's general practices are relevant to the issue of the employer's "discriminatory intent," even when a plaintiff is asserting an individual claim for disparate treatment. Id.
Finally, the instant case is distinguishable in pertinent part from the decision in United States ex rel. Roberts v. QHG of Indiana, Inc., 1998 WL 1756728 * 1 (N.D. Ind.). QHG involved a physician, Dr. Chen, who together with QHG Lutheran Hospital's neonatal intensive care unit allegedly intentionally mistreated infant patients so that they would remain in NICU longer than necessary, thereby enabling "the physician and the hospital to bill third party insurers, including Medicaid, for greater amounts than they would have been billed had Dr. Chen provided the infants with proper care." Id. (all emphasis added). Most notably, the QHG case involves far more than allegations of Medicare fraud and includes allegations fraud against other insurers. A physician's intentional mistreatment of patients for personal gain is proscribed as fraudulent, if not, criminal, by any set of standards, including the Hippocratic oath. Understandably, the QHG court allowed discovery to venture forth into non-Medicare patient populations, as infant patients insured by other providers were clearly the subject of the relators' allegations. The broad scope of discovery was consistent with and directly related to the allegations of "intentional mistreatment" across the board. Nevertheless, even the court in QHG found it necessary to and did in fact impose some limits on the discovery proposed by the relators.
Unlike QHG, supra, defendants in the case at bar have sufficiently demonstrated that compliance with temporally and topically overly broad discovery requests would threaten the normal operation of their respective businesses and that the result of such a costly exercise would likely yield voluminous data of no significance to the alleged false claims. This case does not involve nationwide, statewide, parish-wide, or even citywide claims of fraudulent billing practices. Instead, it involves several instances of alleged false claims as to each individual defendant physician.
B. Fed.R.Civ.P. 34 Possession, Custody and Control
Rule 34(a) of the Federal Rules of Civil Procedure, states that "[a]ny party may serve on any other party a request (1) to produce . . . any designated documents . . . which are in the possession, custody or control of the party upon whom the request is served." FRCP Rule 34(a). Federal courts have consistently held that documents are deemed to be within the "possession, custody or control" of a party for purposes of Rule 34 if the party has actual possession, custody or control, or has the legal right to obtain the documents on demand or has the practical ability to obtain the documents from a non-party to the action.
Typically what must be shown is a relationship, either because of some affiliation, employment or statute, such that a party is able to command release of certain documents by the non-party person or entity in actual possession. The applicable test is whether the litigant has the ability to obtain the documents on request to a related party, either as a matter of law or as a matter of practical fact.
Generally a "party is charged with knowledge of what its agents know or what is in records available to it." See Poole v. Textron, Inc. 192 F.R.D. 494, 501 (Md.). Rule 34 is broadly construed and documents within a party's control are subject to discovery even if owned by a nonparty. See Commerce and Industry Insurance Co. v. Grinnell Corp., 2001 WL 96377 * 3 (E. D. La.). The burden is on the party seeking discovery to make a showing that the other party has control over the material sought. When determining the sufficiency of control of material for purposes of Rule 34, the nature of the relationship between the party and the non-party is the key. See Goh v. Baldor Electric Co., 1999 WL 20943 at * 2 (N.D. Tex.).
Considering that the relationship between physician defendants and the Louisiana Clinic, the Court expects the defendant physicians to do their level best to respond to discovery propounded in light of the general guidelines set forth above. Actual possession is not the key, but rather, it is the practical ability to obtain documents ( i.e., documents regarding each of the defendant physicians' own patients, patients' records, individuals handing those records, etc.).
Accordingly,
IT IS ORDERED that the defendants' general objections regarding the scope of discovery are SUSTAINED as more specifically set forth hereinabove.
IT IS FURTHER ORDERED that the defendants' general objections regarding "possession" of discovery materials are OVERRULED as more specifically set forth hereinabove.
IT IS FURTHER ORDERED regarding the Motion of Dr. Stephen J. Flood and Dr. John O'Keefe to Compel Discovery [Rec. Doc. No. 139], the Motion of Dr. Susan McSherry to Compel [Rec. Doc. No. 142], and the Motion of Drs. Phillips, Manale, Fattel and Watermeier to Compel [Rec. Doc. No. 154], they are DENIED IN PART and GRANTED IN PART as more specifically set forth hereinabove.