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United States ex rel. Cairns v. D.S. Medical L.L.C.

United States District Court, E.D. Missouri

December 22, 2016

UNITED STATES OF AMERICA, ex rel. PAUL CAIRNS, et al., Plaintiff,
D.S. MEDICAL, L.L.C., et al., Defendants.



         This qui tam action is before the Court on Defendant Dr. Sonjay Fonn's motion (Doc. No. 157) to compel production of reports of interviews (“Reports”) conducted by the Government before it intervened in this action or filed criminal charges against Defendants based on the allegations in the qui tam complaint. The Government asserts work product protection. For the reasons set forth below, the motion to compel will be denied with respect to interviews conducted after July 1, 2014; and granted in part and held in abeyance in part with respect to interviews conducted before July 1, 2014, pending the Court's in camera review of certain of those Reports.


         The qui tam complaint in the present action was filed on January 5, 2012, claiming that Dr. Fonn and three other Defendants violated the False Claims Act, 31 U.S.C. §§ 3729-33, by submitting or causing to be submitted to the Medicare and Medicaid programs false claims for reimbursement for Dr. Fonn's services in performing spinal surgeries between December 2008 and March 2012, and for the purchase of implant devices used in those surgeries. The claims for reimbursement were allegedly false because they were the result of alleged kickbacks that violated the federal criminal Anti-Kickback Statute.

         Upon being served with the complaint, the Government began parallel civil and criminal investigations, with Assistant United States Attorney (“AUSA”) Dorothy McMurtry assigned to the criminal aspects of the investigation, and AUSA Andrew Lay assigned to the civil fraud component. On March 13, 2012, the Government filed its first motion to extend the time the qui tam complaint would remain under seal beyond the 60 days provided for by statute, to allow the Government time to investigate the allegations and decide whether to intervene. The Court granted the motion. A second such motion was filed on August 9, 2012, and granted shortly thereafter.

         On January 15, 2013, the Government made a presentation to counsel for Defendants to discuss the Government's theory of Defendants' criminal liability and the evidence supporting it. The Government asserts that during the presentation, “numerous potential witnesses” were identified, including Jon Wait.

         On March 10, 2014, after two additional motions for an extension were granted, the Government moved to partially lift the seal to allow the Government to advise Defendants of the qui tam suit for the purpose of discussing the allegations therein with Defendants and to engage in any settlement negotiations that might arise. The Government stated that it had conducted a thorough investigation but had not yet advised Defendants of the existence of the qui tam case or the specific nature of the allegations against them. The Court granted the motion.

         On June 30, 2014, after the Court granted the Government one additional extension of time to intervene in the present case, the Government filed its notice of intention to intervene. The Government requested that, aside from the Relator's complaint, the Government's intervention complaint, and the notice of intention to intervene, “all other papers on file in this action remain under seal because in discussing the content and extent of the United States' investigation, such papers are provided by law to the Court alone for the purpose of evaluating whether the seal and time for making an election to intervene should be extended.” (Doc. No. 23 at 2.)

         In its August 7, 2014 memorandum opposing Defendants' motion (Doc. No. 33) to unseal the entire case, including the motions for extensions, the Government asked the Court to deny the motion on the ground that the extension motions contained “sensitive information which is protected by the deliberative process and investigative privileges. Disclosing such information could impede the ongoing criminal investigation and limit the Government's ability in future FCA qui tam investigations to candidly discuss the progress of intervention investigations with the Court.” (Doc. No. 39.)

         On September 18, 2014, the Government filed criminal charges against Defendants, arising out of the same conduct involved in this civil case. On October 6, 2014, the Court granted Defendants' motion to stay the civil case in light of the pendency of the criminal charges. The Court also, by agreement of the parties, denied without prejudice several pending motions, including the above-noted motion of Defendants to unseal the entire record.

         On December 31, 2014, AUSA McMurtry disclosed to counsel for Defendants in the context of the criminal case a summary of its interviews with seven individuals, including Todd Stanaford, Daniel Henson, Brandon Scott, and Reyn Gallacher. (Doc. No. 157-5.) On December 15, 2015, the Government dismissed the criminal charges, and the stay in the present case was lifted on December 17, 2015.

         On June 9, 2016, this Court granted Dr. Fonn's motion to compel production of the Government's privilege log with the names of the witnesses interviewed by the Government during its parallel criminal and civil investigations. (Doc. No. 149.) In opposition to that motion, the Government submitted the affidavit of AUSA McMurtry, who attested that on several occasions she and AUSA Lay attended witness interviews that were conducted by law enforcement agents, and that the meeting with agents “were held in anticipation of possible litigation” based on the qui tam allegations. (Doc. No. 157-2.) Pursuant to the Court's June 9, 2016 Order, the Government produced its log (Doc. No. 157-1) which listed 68 interviews, 42 of which were conducted before the Government intervened in this case or filed criminal charges, and 26 of which were conducted after intervention. The log associates an attorney with 15 of the pre-intervention interviews, and 6 of the post-intervention interviews. The Government asserted the work product protection for all 68 Reports of these interviews. By motion dated July 27, 2016, Dr. Fonn seeks production of the 68 Reports.


         Dr. Fonn argues that the record, as summarized above, shows that the 42 interviews conducted before September 18, 2014 (the day the Government filed criminal charges against Defendants), were conducted during the investigative stage of the case, rather than “in anticipation of litigation, ” and thus the Reports of these interviews are not protected under Federal Rule of Civil Procedure 26(b)(3)(A), which generally protects “documents . . . prepared in anticipation of litigation or for trial.” Dr. Fonn posits that each time the Government filed another motion for extension of the intervention period, and told the Court that it needed more time to conduct further investigation before determining whether it should intervene, the Government remained in the investigative stage and was not conducting interviews in anticipation of litigation. Dr. Fonn also notes AUSA McMurtry's statement that the meetings with the investigating agents were held in anticipation of possible litigation, which does not meet the standard for work product protection.

         Dr. Fonn argues alternatively, that due to the length of time that has passed since the interviews in question, he is entitled to disclosure of these Reports under Rule 26(b)(3)(A)(ii), which provides that trial preparation material that is relevant may be discovered by a party who “shows that it has a substantial need for the materials to prepare its case, and cannot, without undue hardship, obtain their substantial equivalent by other means.” Dr. Fonn posits that taking depositions of the interviewees now would not suffice, in light of lapsed memories. As an example, Dr. Fonn points to the June 24, 2016 deposition testimony of Jon Wait, who was interviewed by the Government several times beginning in the Fall of 2012, and who is listed by the Government as a person who is likely to be called as a witness at trial in the present case. Wait essentially testified that he could not remember events that transpired in the time frame of 2012, nor his interviews with the Government, including his interview in April 2015.

         Dr. Fonn explains that the Reports likely have important impeachment value, as the record suggests that several of the individuals interviewed who are listed as Government witnesses in the present case made statements ...

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