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United States v. Berkeley Heartlab, Inc.

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

November 8, 2017

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


          Richard Mark Gergel United States District Court Judge.

         This matter is before the Court on a Motion to Compel filed by Defendants Floyd Calhoun Dent, III, Robert Bradford Johnson, and Blue Wave Healthcare Consultants, Inc. (the "BlueWave Defendants"). (Dkt. No. 677.) For the reasons set forth below, the Motion to Compel is DENIED.

         I. Background

         The Government has filed a Complaint in Intervention against the Blue Wave Defendants, LaTonya Mallory, and others alleging violations of the Anti-Kickback Statute ("AKS"), 42 U.C.S. § 1320(a)-7b(b)(1)(A) and False Claims Act, 31 U.S.C. §§ 3729-3733 ("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 2015. The Government has alleged that Defendants violated the FCA when they orchestrated 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. Relevant Facts

         On August 30, 2017, the Government produced a privilege log identifying 2029 documents as privileged. At a hearing on September 20, 2017, the Court said that "to the extent that this privilege log is over-inclusive" and includes documents that are not responsive to Defendants' discovery requests, it will "help all of us to pare it down." (Dkt. No. 664 at 14.) On October 5, 2017, the Government produced an edited privilege log with approximately 139 entries. On October 11, 2017, the government served the Blue Wave Defendants with a list of 557 documents that it removed from the August 30 privilege log because they were not responsive to any document request.[1]

         The BlueWave Defendants filed a Motion to Compel the Government to produce "Escobar" documents that they allege the Government may have been withholding among those 557 documents. (Dkt. No. 677-1.) As none of Defendants' requests for production specifically referred to "Escobar" documents, the Court asked Defendants to supplement their Motion to Compel to set forth the following: (1) the specific request(s) for production upon which the motion is based; (2) a specific description of the documents which are sought pursuant to the identified request(s) for production; and (3) the specific bases the Defendants assert for arguing that responsive documents have not been produced by the Government. (Dkt. No. 679.) The BlueWave Defendants submitted a supplement claiming that no fewer than twenty-four (24) of their requests for production "sought the Government's knowledge of the facts underlying each of their claims of liability" (Dkt. No. 680 at 2-3.) The Blue Wave Defendants claim that each of the 557 documents the Government removed when it pared down its privilege log may be relevant to their "Escobar" defense or, if not, they "are, or may be, responsive to at least one of the BlueWave Defendants' discovery requests above." (Id. at 9.) In their supplement, the Blue Wave Defendants described several groups of documents that the Government had removed from its privilege log and the bases for their belief that these documents could be responsive to one of their requests for production. (Id. at 6-7.)

         The Government has filed a Response to Defendants' Motion to Compel claiming that (1) it has produced to Defendants or listed on its October 5 privilege log all documents in the August 30 log that are responsive to any request for production and (2) the 557 documents on the August 30 privilege log that were not produced to Defendants or listed on the October 5 privilege log are not responsive to any viable request for discovery. (Dkt. No. 685.) The Government went on to address the four groups of documents that Defendants identified in their brief as examples of potentially responsive documents they believed the Government improperly removed from its privilege log. The Government described each group of documents, explained why the documents are not responsive to any viable discovery request, and, in some cases, explained why those documents may have been included on the privilege log in the first place (for example, that the documents were likely identified through the use of certain search terms to identify responsive documents but were not, upon close review, actually responsive to any request). Defendants did not file a reply.

         The Government has defined "viable" requests as those that have "survived the past year of objections, lengthy negotiations, multiple agreements (with the Government and with third parties), mediation and complicated motions practice." (Dkt. No. 685 at 2.)

         The Court then ordered the Government to produce a random sample (with document identification numbers provided by the Court) of the documents at issue in order to conduct an in camera review to determine whether the Government's descriptions were accurate and, in turn, whether the Court has any reason to doubt that the Government acted in good faith when it followed the Court's instructions to pare down the privilege log.

         III. Legal Standard

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

[U]nless 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). "[A]n evasive or incomplete disclosure, answer, or response must be treated ...

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