United States District Court, W.D. Missouri.
ORDER REGARDING DISCOVERY DISPUTE
action arises out of an alleged pass-through billing scheme
for laboratory tests at a rural Missouri hospital. Now before
the Court is a second discovery dispute between
Plaintiffs and Defendants Hospital Partners, Inc., Empower
H.I.S., LLC, and Jorge Perez (collectively, the
“Discovery Defendants”). Plaintiffs maintain that
the Discovery Defendants have failed to comply in several
respects with the Court's February 1, 2019, discovery
order (Doc. 171). Plaintiffs additionally raise concerns
about deposing the Discovery Defendants, as well as about
their counsel's anticipated attempt to withdraw from the
case. Plaintiffs ask the Court to order the Discovery
Defendants to rectify these issues. As set forth below, the
Court GRANTS Plaintiffs' requests.
first state that they have attempted for several months
without success to depose the Discovery Defendants. They
request that the Court require the Discovery Defendants to
provide three possible dates for a deposition, with
Perez's to occur within twenty days of this order and the
others' to occur within forty-five days of this order.
Mr. Frank Smith, counsel for the Discovery Defendants,
counters that the current ownership status of Hospital
Partners is unclear, and that the company has no documents
besides those possessed by other defendants. He states that
his understanding is that David Byrns and Perez, neither of whom
claim to own Hospital Partners, “have provided whatever
documents could be attributed” to the company. Mr.
Smith offers Perez for a deposition in the final two weeks of
response is unacceptable. Mr. Smith entered an appearance on
the Discovery Defendants' behalf. He is therefore
responsible for counseling his clients on their obligations
under the Federal Rules, and his ignorance concerning
Hospital Partners' ownership and compliance with
discovery requirements is no excuse. The Court grants
next complain that the Discovery Defendants have flouted the
Court's previous order, which, among other things,
required the production of the Discovery Defendants'
relevant business records by February 15. According to
Plaintiffs, the Discovery Defendants have provided only a
handful of e-mails from a single custodian. The Discovery
Defendants do not dispute this. Yet they ask for thirty
additional days to locate and produce any additional
documents, at least “to the extent they exist.”
The Court rejects this request and orders the Discovery
Defendants to produce all relevant requested documents within
seven days. The Court's previous order was clear, and
there is no reason for further delay.
third issue is the Discovery Defendants' blanket
designation of all produced documents as “highly
confidential.” Plaintiffs claim this fails to comply
with the protective order and is needlessly burdensome. The
Court agrees. The Discovery Defendants protest that financial
discovery is inappropriate because dissipated funds are not
recoverable under section 502(a)(3) of ERISA, 29 U.S.C.
§ 1132(a)(3). This argument is without merit, and the
Court has already rejected it. See Doc. 171, at 9;
Doc. 165, at 10-11 (ruling that even though dissipated funds
are not recoverable under section 502(a)(3) of ERISA,
Plaintiffs are entitled the chance to prove whether the funds
the crux of Plaintiffs' complaint is that the Discovery
Defendants committed fraud by wrongfully availing themselves
of the hospital's high insurance reimbursement rate. It
should therefore come as no surprise that discovery would
involve the financial records of the entities at the heart of
the allegations. Cf. Nat'l Ben.
Programs, Inc. v. Express Scripts, Inc., No.
4:10-cv-00907-AGF, 2011 WL 6009655, at *5 (E.D. Mo. Dec. 1,
2011) (taking issue with subpoenas that sought confidential
financial information “unrelated to the litigation
at hand” (emphasis added)). Hence, the Court
orders the Discovery Defendants to conduct individualized
confidentiality designations within ten days. Otherwise, the
Court will deem them waived.
parties' last disagreement centers on Mr. Smith, who
Plaintiffs fear will soon withdraw from the case, thereby
depriving them of a needed conduit to both the Discovery
Defendants and needed evidence. Mr. Smith is admitted pro
hac vice. His local counsel was terminated on April 10,
and Mr. Smith asked for thirty days to replace her. To date,
he has not done so. He anticipates that the Court will strike
his appearance, lest he “somehow become an indentured
servant, ” given his clients' purported inability
to pay. Considering the state of discovery at this juncture
and the Discovery Defendants' lack of responsiveness, the
Court will not permit Mr. Smith to withdraw at this time.
See L.R. 83.2 (requiring the filing of a motion to
withdraw that the Court will grant only upon a showing of
good cause, such as the entry of appearance of substitute
given the need for progress, the Court orders Plaintiffs and
the Discovery Defendants to appear in person for a status
conference on July 1, 2019, at 11:00 a.m. This and all cases
deserve the parties' adherence to the letter and spirit
of the discovery rules. Weiss v. Amoco Oil Co., 142
F.R.D. 311, 313 (S.D. Iowa 1992) (describing the purpose of
discovery as providing “parties with information
essential to the proper litigation of all relevant facts, to
eliminate surprise, and to promote settlement.” (citing
Oppenheimer Fund, Inc. v. Sanders,437 U.S. 340, 341
(1978)) (internal quotations and other citations omitted)).
The Discovery Defendants have ...