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United States ex rel. Jacobs v. CDS, P.A.

United States District Court, D. Idaho

August 3, 2016

CDS, P.A. d/b/a POCATELLO WOMEN’S HEALTH CLINIC; POCATELLO HOSPITAL, LLC, d/b/a PORTNEUF MEDICAL CENTER, LLC, a Delaware limited liability company; LHP POCATELLO, LLC, a Delaware limited liability company, Defendants.



         Pending before the Court is Plaintiff-Relator Dr. Jeffrey Jacobs’ Motion to Compel (Dkt. 45) as well as defendants’ motions for a protective order (Dkts. 44, 46). For the reasons explained below, the Court will grant in part and deny in part all pending motions.


         Dr. Jeffrey Jacobs filed this action on behalf of the United States pursuant to the qui tam provisions of the False Claims Act, 31 U.S.C. § 3724 et. seq. Jacobs alleges that the Pocatello Women’s Health Clinic (“CDS” or “the clinic”) and the Portneuf Medical Center (“Portneuf” or the “Medical Center”) have submitted patient claims to the Medicare and Medicaid programs, falsely certifying that such claims were in compliance with the Stark Act, 42 U.S.C. § 1395nn and the Anti-Kickback Act, 42 U.S.C. § 1320a-7b.

         The parties are in the midst of discovery. Following an unsuccessful attempt to informally mediate their discovery disputes, the parties filed the pending motions. The parties’ disputes are discussed more fully below, but the key to resolving many of the issues raised by the pending motions is to identify and clarify the temporal and substantive scope of this lawsuit. Defendants say the relevant time period is roughly three years (January 2010 through January 31, 2014) while plaintiff says that a much longer period of time (2009 to present) is relevant for purposes of discovery. Substantively, defendants say discovery should focus on Dr. Jacobs’ dealings with the defendants. Dr. Jacobs, by contrast, argues that the substantive focus is much broader. He characterizes his complaint as alleging a scheme potentially involving the defendants’ dealings with numerous physicians - not just him.


         Dr. Jacobs moves to compel defendants to answer various interrogatories and to produce various categories of documents. CDS and the Medical Center have separately filed motions for a protective order.

         1. The Governing Legal Standards

         Federal Rule of Civil Procedure 26(b)(1) governs the scope and limits of discovery. It provides that “[p]arties may obtain discovery regarding any nonprivileged matter” if the information is both (1) “relevant to any party's claim or defense” and (2) “proportional to the needs of the case.” Fed.R.Civ.P. 26(b)(1). Information “relevant to any party's claim or defense, ” need not be admissible into evidence in order to be discoverable. Id. When determining whether discovery is “proportional to the needs of the case, ” the court examines the information requested in light of six factors: “[1] the importance of the issues at stake in action, [2] the amount in controversy, [3] the parties' relative access to relevant information, [4] the parties' resources, [5] the importance of the discovery in resolving the issues, and [6] whether the burden or expense of the proposed discovery outweighs its likely benefit.” Id.

         If, as here, a party resists discovery, the requesting party may file a motion to compel. See Fed. R. Civ. P. 37(a)(1). A facially valid motion to compel has two components. First, the motion must certify that the movant has “in good faith conferred or attempted to confer” with the party resisting discovery. Id. Second, the motion must include a threshold showing that the information in controversy is relevant and discoverable under Rule 26. See, e.g., Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 352 (1978).

         Protective orders are governed by Rule 26(c), which provides that “[t]he court may, for good cause, issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense.” Fed.R.Civ.P. 26(c)(1). “To justify a protective order, the moving party cannot rely on “[b]road allegations of harm, unsubstantiated by specific examples or articulated reasoning, . . . .” Beckman Indus., Inc. v. Int'l Ins. Co., 966 F.2d 470, 475 (9th Cir.1992) (citing Cipollone v. Liggett Group, Inc., 785 F.2d 1108, 1121 (3rd Cir.1986)).

         2. The Temporal Scope of Discovery

         Defendants have resisted plaintiff’s discovery efforts to the extent he seeks information and documents falling outside the period January 1, 2010 to January 31, 2014. The allegations of the complaint logically shape the scope of discovery and, in this case, plaintiff is seeking discovery for a far broader time period than that detailed in the complaint. As already noted, plaintiff wishes to obtain documents and information beginning in 2009 and continuing into the present. The complaint, however, focuses on the period August 2010 through May 2013.

         Dr. Jacobs executed an employment agreement with CDS in June, 2010. At the same time, he executed a Physicians Recruitment Agreement with CDS and the Medical Center, along with a security agreement and a promissory note. Jacobs began seeing and treating patients in August 2010 at CDS and the Medical Center. He remained employed by CDS and continued seeing patients until May 2013, when his employment ended. Second Am. Compl., Dkt. 38, ¶ 15. Dr. Jacobs’ Physicians Recruitment Agreement - and the payments made during the time it was in effect - are at the heart of this lawsuit. That is, Dr. Jacobs repeatedly alleges that every claim for Medicare or Medicaid reimbursement during the period August 2010 to May 2013 violated the FCA. See, e.g., Id. ¶¶ 95-96 (alleging that “from the time period of August 2010 to May 2013” CDS falsely certified that information contained in relevant forms was “‘true, accurate, and complete.’”); id. ¶ 102 (alleging that “[a]ll payments made by the United States to Defendants for services provided to Medicare and Medicaid patients between August 2010 and May 2013 are subject to recoupment by the paying agency”). Given these allegations, defendants’ identification of a slightly larger time period for discovery purposes (January 1, 2010 through January 31, 2014) is reasonable.

         Plaintiff’s efforts to avoid the limitations established by the complaint are not persuasive. Plaintiff’s key argument is that in a qui tam action, it is unfair to limit the discovery period to the time of the relator’s employment See Motion Mem., Dkt. 45-1, at 7. He cites United States ex rel Fiederer v. Healing Hearts Home Care, Inc., 2014 WL 4666531 (D. Nev. Sept. 18, 2014) to support this argument. In Fiederer, the relator had worked as a nurse for 28 days. The Court rejected defendants’ attempt to restrict discovery to that 28-day period, observing that plaintiff’s allegations implicated a larger time frame. Here, by contrast, the complaint does not directly implicate a larger time frame; to the contrary, it repeatedly focuses on the time period August 2010 through May 2013 and seeks recovery for payments made during that period. See, e.g., Second Am. Compl. ¶¶ 44, 55, 59, 90, 93-97, 102, 110-14, 120, 131, 139. Indeed, one of Dr. Jacobs’ central allegations is that “[a]ll payments made by the United States to Defendants for services provided to Medicare and Medicaid patients between August 2010 and May 2013 are subject to recoupment by the paying agency.” Id. ¶ 102.

         Lastly, the Court is not persuaded by plaintiff’s other arguments offered in support of his efforts to reach back to 2009 in his discovery efforts. As an example, plaintiff says he should be allowed to examine all physician recruitment agreements (PRAs) dating back to 2009 because defendants identified “physician recruitment agreements (plural) between LHP/Portneuf and CDS” in their initial disclosures. Plaintiff says that defendants cannot fairly “identify documents it claims it may use to support its defenses and then claim Jacobs cannot seek them in discovery.” Motion Mem., Dkt. 45-1, at 9. This does not change the fact that the complaint very specifically focuses on the period 2010 to 2013.

         Likewise, the Court is not persuaded by plaintiff’s related contention that he should be allowed to examine all physician recruitment agreements dating back to 2009 to help demonstrate “knowledge and intent.” Here, plaintiff speaks in broad generalities, saying simply that he should be permitted examine these additional agreements because “the changes throughout the years to the physician recruitment agreements will be instrumental to demonstrating knowledge and intent.” Motion to Compel., Dkt. 45-1, at 9. He goes on to say that, “because the Stark Law was implemented in stages, the physician recruitment agreements should show those incremental changes, illustrating Defendants’ knowledge of the law and its requirements.” Id. Plaintiff further says that “the actual Additional Incremental Costs paid to other physicians and how that was managed and evaluated by Defendants would assist in showing the necessary knowledge related to a fraudulent scheme.” Id. Based on these general statements, plaintiff says “Defendants should be required to produce documents and information related to the financial relationships between the parties, the prohibited financial relationships arising out of the physician recruitment agreements between Defendants, associated documents showing the Additional Incremental Costs, and how they were handled during the 2009 to present time frame.” Preliminarily, these arguments are not specific enough to be persuasive. Among other things, plaintiff should have further explained how and when the law changed, why it changed, and how the relevant agreements might be expected to change. The Court does not find these sorts of arguments persuasive, and it is not inclined to force defendants to turn over the broad categories of documents plaintiff is demanding.

         For all these reasons, the Court will deny Dr. Jacobs’ motion to compel to the extent it generally seeks to compel defendants to produce documents and information outside the time period January 1, 2010 through January 31, 2014. See United States ex rel. Spay v. CVS Caremark Corp., No. 09-4672, 2013 WL 4525226, at *2 (E.D. Pa. Aug. 27, 2013 (limiting temporal scope of discovery in a false claims act to the two-year period repeatedly referenced in the ...

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