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United States ex rel. Lutz v. Berkeley Heartlab, Inc.

United States District Court, D. South Carolina, Charleston Division

June 19, 2017

United States of America, et al, Plaintiffs, ex rel. Scarlett Lutz, et al., Plaintiffs-Relators,
Berkeley Heartlab, Inc., et al., Defendants.


          Richard Mark Gergel, Judge

         This matter is before the Court on Defendant Latonya Mallory's motion to compel the Government to respond fully to Mallory's first set of Requests for Production ("RFPs"). (Dkt. No. 406.) For the reasons set forth below, the motion is granted in part and denied in part.

         I. Background

         The Government has filed a complaint in intervention against Defendants Blue Wave Healthcare Consultants, Inc. ("BlueWave"), Floyd Calhoun Dent, III, and others alleging violations of the False Claims Act ("FCA"). (Dkt. No. 75.) The alleged FCA violations arise from Blue Wave's marketing of laboratory tests for two laboratory companies, Health Diagnostic Laboratory, Inc. ("HDL") and Singulex, Inc. ("Singulex"), between 2010 and 2014. The Government has alleged that Defendants violated the FCA when they engaged in multiple kickback schemes to induce physicians to refer blood samples to HDL and Singulex for large panels of blood tests, many of which were medically unnecessary. The Government alleges that the kickback schemes violated the Anti-Kickback Statute, resulted in false claims submitted to the Medicare and TRICARE programs, and caused the Government to pay HDL more than $330 million.

         II. Legal Standard

         Rule 26(b)(1) outlines the scope of discovery in a civil case:

Unless otherwise limited by court order, the scope of discovery is as follows: Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties' relative access to relevant information, the parties' resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.

Rule 34 allows a party to serve on another party a request for production as to any matter "within the scope of Rule 26(b)" as outlined above. Fed.R.Civ.P. 34(a). Parties' objections to document production requests must be stated with particularity and specificity; objections may not be boilerplate. Fed.R.Civ.P. 33(b)(4). "A party must produce documents as they are kept in the usual course of business or must organize and label them to correspond to the categories in the request." Fed.R.Civ.P. 34(b)(2)(E)(i). Rule 37(a)(3)(B) allows a party seeking discovery to move for an order compelling production or answers against another party when the latter has failed to produce documents requested under Rule 34. Fed.R.Civ.P. 37(a)(3)(B)(iii)-(iv). "[A]n evasive or incomplete disclosure, answer, or response must be treated as a failure to disclose, answer, or respond." Fed.R.Civ.P. 37(a)(4).

         III. Discussion

         Mallory has indicated that most of the issues raised in her motion to compel have been resolved, but she is still pursuing discovery with regard to RFP Nos. 3, 12, 22, 25, 26, 27, 28, 29, and 30. (Dkt. No. 467.)

         A. RFP No. 22

         Mallory's RFP No. 22 seeks "all documents related to each and every 'medically unnecessary' test as alleged in the complaint." (Dkt. No. 406-1 at 10.) The Government has represented that it is "producing all non-privileged documents that are reasonably responsive to this request." (Dkt. No. 406-2 at 16.) In her Reply brief, Mallory does not provide the Court with any details about which documents she believes the Government is still withholding and why the Court should compel it to produce those documents. The Court therefore assumes that RFP No. 22 was included in Mallory's reply brief due to a scrivener's error. The motion to compel as to RFP No. 22 is denied without prejudice.

         B. RFP Nos. 28 and 29

         Mallory's RFP No. 28 seeks "documents issued by the OIG, CMS, DOJ or the Government prior to June 25, 2014 specifically concluding the payment of P&H fees to physicians was an actual violation of the federal Anti-kickback Statute" and/or the federal False Claims Act. Mallory's RFP No. 29 seeks "all documents issued by the OIG, CMS, DOJ or the Government prior to June 25, 2014 specifically referencing the payment of P&H fees to physicians as potentially violating the federal Anti-kickback Statute" or the federal False Claims Act. (Dkt. No. 406-1 at 11.) The Government initially interpreted the term "issued by" as used in these requests to mean documents that were formally issued or published, and the Government asserts that it has produced all publicly available documents in response to these requests. (Dkt. No. 470 at 2.) Mallory has since clarified that she seeks internal government communications that are responsive to the request.

         The plain meaning of "issued" is to distribute, publish, or put out. While it is possible that an organization could issue a formal communication internally, in this case, Mallory's request is not reasonably interpreted to refer to an agency's internal issuance of formal directives. Further, the term would never be used to refer to communications in general among employees within an organization; one does not "issue" an email to his colleague. For this reason, the Court finds that the Government has complied with Mallory's RFP Nos. 28 and 29 by producing responsive documents that have been "issued." Mallory's request for internal government communications is a new discovery request that must be pursued in accordance with this Court's May 1, 2017 Order pertaining to new motions to compel. (Dkt. No. 438.)

         C. RFP No. 25

         Mallory's RFP No. 25 seeks documents in which "any attorney, law firm and/or Government agency has opined on the legality of the payment of P&H fees to physicians by any lab." (Dkt. No. 406-1 at 11.) This request is identical to Defendant Dent's RFP No. 30, which the Court ruled on in a previous order. (Dkt. No. 428 at 9-10.) In that Order, the Court explained that the documents targeted by this request (i.e., opinions on the legality of P&H fees) are privileged and that the Government ...

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