Posted by Gordon Todd and Adam Farra
In a recent, sharply worded order, E.D. La. Magistrate Judge Joseph Wilkinson recently rejected the U.S. Justice Department’s objections of undue burden and expense, and ordered the Department to undertake a voluminous document review and production in response to FCA defendants’ discovery and motion to compel.
The Government alleges in United States ex rel. Deane v. Dynasplint Systems, Inc., et al. (E.D. La.), that defendants for over a decade knowingly submitted false Medicare payment requests. Medicare Part B covers the use of durable medical equipment in a patient’s home (out-patient care) but not in a certified skilled nursing home. The Government’s theory is that the defendants understood the distinction and billed the delivery of their durable medical equipment to Medicare Part B as though they were delivering that equipment to patients’ homes, when in reality they were delivering the equipment to uncovered skilled nursing homes.
To assist their experts’ analysis and testimony, defendants sought to discover the cost reports of the skilled nursing homes that allegedly received the durable medical equipment. The request was large: over 17,000 annual cost reports for 7,040 skilled nursing homes. The Government protested that the request was too expensive and that the defendants could obtain the same data because it was publicly available and easily accessible on the Healthcare Cost Report Information System (HCRIS).
Judge Wilkinson categorically rejected the Government’s objections. When a case threatens “the very business existence of the defendant company,” the court wrote that the Government “cannot be permitted to restrict defendant from receiving information its expert believes is necessary to mount an adequate defense.”
The court had a particularly low view of declarations submitted by the Government from its own experts. It questioned the Government expert’s objectivity and called the attendant submissions “arcane,” “self-serving,” “vague,” and “equivocal.” The court accepted the defense expert’s view that the data available on HCRIS is only an “extract” of the full cost report. And it rejected the Government expert’s submission that no specialized expertise is required to access the HCRIS data, noting that the Government expert’s declaration was “so arcane as to defy lay understanding and undermine his conclusion that ‘[n]o specialized expertise is required to utilize HCRIS data[.]'”
As the court noted, the case is a reminder that the Government cannot bring substantial litigation and then object to incurring the proportionate costs: “In light of the broad scope of this litigation, as framed by the government itself, the government must commit all resources necessary to comply with this order in a timely fashion, over and above the ‘normal scope of work’ of some of its agencies and contractors.”
Posted by Gordon Todd and Marisa West
In a recent decision, the Eastern District of Louisiana compelled the Federal Emergency Management Agency (“FEMA”) to produce a witness for deposition in a qui tam False Claims Act suit despite the agency’s Touhy regulations. Williams v. C. Martin Company Inc., et al., No. 07-6592, 2014 U.S. Dist. LEXIS 91802 (E.D. La. July 7, 2014). The Williams decision may have broad implications for Defendants seeking to discover evidence from Federal agencies in defending against FCA claims.
Robyn Williams filed an FCA suit against Medley Jarvis Defendants (“MJI”) and C. Martin Defendants (“CMC”), relating to contracts FEMA had awarded to CMC. The Supreme Court has held that government agencies may establish regulations to regulate the disclosure of documents and testimony during litigation. U.S. ex rel. Touhy v. Ragen, 340 U.S. 462, 468 (1951). On December 4, 2012, MJI filed a Touhy request with FEMA seeking documents related to the contracts. Over one year later and following litigation over the paucity of FEMA’s initial document production, FEMA produced 26,000 pages of documents responsive to MJI’s request on April 21, 2014. The documents were produced pursuant to a protective order filed with the district court.
On May 22, 2014, CMC noticed a Rule 30(b)(6) deposition of FEMA to discuss topics pertaining to FEMA’s production. FEMA invoked its Touhy regulations to avoid the deposition and CMC moved to compel. FEMA argued that sovereign immunity requires litigants to follow Administrative Procedures Act (“APA”) procedures to challenge its decision to withhold a witness for deposition. The district court found first that it had jurisdiction to review the agency’s decision because “sovereign immunity does not insulate a federal agency from complying with a Rule 45 subpoena.” Id. at *12 (quoting In re Vioxx Products Liability Litigation, 235 F.R.D. 334, 343 (E.D. La. 2006) (internal quotation marks omitted)). The court then held that FEMA’s refusal to comply with the subpoena had been arbitrary and capricious because it failed to set forth a satisfactory explanation for its refusal to comply with the deposition subpoena. Id. at *16. The district court granted the motion to compel and ordered the deposition. Williams v. C. Martin Company Inc., et al., No. 07-6592, 2014 U.S. Dist. LEXIS 91802, at *6-9 (E.D. La. July 7, 2014).
The Williams decision streamlines FCA defendants’ ability to compel Agency testimony in an FCA action by removing the need to file a separate APA challenge. If adopted more generally, this decision may rein in one avenue by which Government agencies avoid producing relevant materials in FCA cases.