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Duffy v. Lawrence Memorial Hospital

United States District Court, D. Kansas

February 7, 2017

MEGEN DUFFY, Relator/Plaintiff,


          Teresa J. James, U.S. Magistrate Judge

         This matter is before the Court on Relator/Plaintiff[1] Megen Duffy's Motion to Compel (ECF No. 116). Pursuant to Federal Rule of Civil Procedure 37 and D. Kan. Rules 37.1 and 37.2, Plaintiff asks the Court to overrule objections and order Defendant Lawrence Memorial Hospital to produce documents responsive to Qui Tam Plaintiff's Second Request for Production of Documents to Defendant/Counter Claimant. Defendant opposes the motion. As set forth below, Plaintiff's motion is granted in part and denied in part.

         I. Relevant Background

         Plaintiff served her second document requests on October 7, 2016, and Defendant responded on November 4, 2016. Defendant's response contained objections to nineteen of the twenty-one requests. On December 2, 2016, Plaintiff provided written notice to Defendant that Plaintiff believed certain responses were inadequate and certain objections were improper. Plaintiff obtained an extension of time to file a motion to compel, and the parties conferred and resolved their disagreement on two of the disputed requests. Ultimately, differences remained with respect to the vast majority of Plaintiff's second document requests and Plaintiff filed the instant motion. Based on the parties' efforts, the Court finds they have complied with the requirements of D. Kan. Rule 37.2.

         Plaintiff requests in her motion that the Court overrule Defendant's objections and order Defendant to produce documents responsive to seventeen requests for production.[2] Throughout counsel's written exchanges concerning these discovery requests, Defendant has not withdrawn any of its objections. Accordingly, the Court has examined those objections and Plaintiff's responses thereto. The Court is now prepared to rule on the disputes at issue in Plaintiff's motion to compel.

         II. Summary of the Parties' Arguments

         Plaintiff brings this qui tam action under the False Claims Act (“FCA”), 31 U.S.C. § 3729 et seq., against her former employer, Lawrence Memorial Hospital (“LMH”), alleging in part that LMH submitted false information to the federal government in order to maximize reimbursement from federal medical care programs. As required by the FCA, Plaintiff served a “copy of the complaint and written disclosure of substantially all material evidence and information” she possessed on the United States Attorney for the District of Kansas to permit the government an opportunity to elect to intervene in the action.[3] After the government elected not to prosecute the action, [4] Plaintiff's Second Amended Complaint was unsealed and Plaintiff served LMH. Defendant answered the Second Amended Complaint and asserted counterclaims against Plaintiff for breach of contract and fraud.[5]

         III. Defendant's Approach

         The discovery topics in Plaintiff's second request for production of documents, and Defendant's objections thereto, are much the same as those addressed in Plaintiff's first motion to compel.[6] Consequently, Plaintiff's motions are quite similar, as are Defendant's briefs in response. In this round, however, Defendant devotes an even greater share of its brief to arguing it should not have to respond to Plaintiff's discovery because Plaintiff's deposition testimony does not provide evidence to support allegations in her Second Amended Complaint. Defendant relies heavily on dicta in Koch v. Koch Industries, 203 F.3d 1202, 1238 (10th Cir. 2000), to buttress its contention that Plaintiff's pleading has no factual basis to support its “broad and nonspecific allegations” and the Court should therefore curtail Plaintiff's discovery and deny the instant motion.

         The procedural history of Koch is instructive to an understanding of the Tenth Circuit opinion in the case. The district judge ruled that plaintiffs' fraud claims could proceed only with respect to allegations that defendants had misrepresented and concealed information about three particular wells, finding the complaint's allegations of misrepresentations to conceal stock value did not satisfy the particularity pleading requirement of Federal Rule of Civil Procedure 9(b).[7]The district judge granted plaintiffs leave to amend their complaint, and used the amended pleading in determining whether plaintiffs' later discovery requests were relevant. The Tenth Circuit's review of the district judge's relevancy ruling is what Defendant LMH relies upon to oppose the instant motion.

         Included in plaintiffs' discovery in Koch were subpoenas to six banks and one additional non-party seeking documents relating to loans and oil and gas reserves involving the corporate defendant. The magistrate judge limited the subpoenas to require the non-parties to produce documents related to certain properties and assets held by the corporate defendant, and the district judge affirmed. In so doing, the district judge determined that the amended complaint did not delineate allegations of financial impropriety with sufficient particularity under Rule 9(b) “to justify discovery into all accounting documents and practices of [the corporate defendant] during the relevant time period.”[8] The district judge also found the burden and expense to the non-parties in producing the documents far outweighed plaintiffs' “mere hope” that they might find something upon which to base a claim.[9]

         The Tenth Circuit, reviewing the discovery rulings under an abuse of discretion standard, concluded the two paragraphs of the amended complaint plaintiffs relied on to argue that their discovery requests were relevant, contained only broad allegations that defendants had not provided financial information to plaintiffs in accordance with generally accepted accounting principles. The court affirmed the district judge's rulings, which “appropriately recognized that the likely benefit of this attempted fishing expedition was speculative at best, ” and demonstrated an understanding “that to require the six banks and the [other non-party] to produce the massive amount of documents requested, first weeding out privileged and confidential records, would impose a serious burden and expense on these non-parties.”[10]

         As it did in response to the last motion to compel, Defendant LMH quotes the following dicta from Koch:

When a plaintiff first pleads its allegations in entirely indefinite terms, without in fact knowing of any specific wrongdoing by the defendant, and then bases massive discovery requests upon those nebulous allegations, in the hope of finding particular evidence of wrongdoing, that plaintiff abuses the judicial process.[11]

         This Court recognizes the applicability of that statement in the context of Koch, but in “carefully applying the Koch decision, ” as Defendant urges, [12] the Court finds it does not control. The issue Koch raises is relevancy.

         IV. Whether the Discovery Sought is Relevant and Discoverable

         Federal Rule of Civil Procedure 26(b)(1) sets out the general scope of discovery and provides 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. Information within this scope of discovery need not be admissible in evidence to be discoverable.[13]

         Relevancy is to be “construed broadly to encompass any matter that bears on, or that reasonably could lead to other matter that could bear on” any party's claim or defense.[14]Information still “need not be admissible in evidence to be discoverable.”[15] When the discovery sought appears relevant, the party resisting discovery has the burden to establish the lack of relevancy by demonstrating that the requested discovery (1) does not come within the scope of relevancy as defined under Fed.R.Civ.P. 26(b)(1), or (2) is of such marginal relevancy that the potential harm occasioned by discovery would outweigh the ordinary presumption in favor of broad disclosure.[16] Conversely, when the relevancy of the discovery request is not readily apparent on its face, the party seeking the discovery has the burden to show the relevancy of the request.[17] Relevancy determinations are generally made on a case-by-case basis.[18]

         In this action, the Court finds that the relevancy of the discovery called for by Plaintiff's second request for production of documents is apparent on its face. The requests directly relate to the claims Plaintiff asserts or to the defenses raised by Defendant. Unlike in Koch, Plaintiff's claims have not been narrowed by a ruling challenging the sufficiency of her original or first amended complaints. And here, the discovery is sought from a party, rather than from non-parties as in Koch. Finally, the subpoenaed entities in Koch provided evidence of the burdensome and costly undertaking they would each undergo if forced to comply with the subpoenas. Here, Defendant objects to every document request as being unduly burdensome, but provides no facts to support the objection. Neither does Defendant provide evidence of the costs it would incur in responding to the requests.

         Defendant argues that the discovery requests to which it objected, looked at through a variety of ways, [19] are not proportional to Plaintiff's needs in the case. With the exceptions noted below in which the requests lack a necessary temporal limitation or a request is not sufficiently narrowed to apply to Plaintiff's claims, the Court disagrees. The document requests are ...

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