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CASTLE v. CROUSE

May 24, 2004.

JOSEPH L. CASTLE, II, et. al.
v.
LINDA J. CROUSE, M.D



The opinion of the court was delivered by: HARVEY BARTLE, III, District Judge

MEMORANDUM

The Trustees of the AHP Settlement Trust ("Trust") involving Wyeth's diet drugs Pondimin and Redux have sued defendant Linda Crouse, M.D. under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1964, et sea., and for other wrongful conduct in connection with attestations that certain class members suffered from valvular heart disease ("VHD") entitling them to benefits from the Trust.

Before the court is the motion of the Trustees for entry of a protective order. At issue is certain "confidential information" which defendant Linda Crouse, M.D. seeks to obtain from the Trust through discovery. The Trustees contend the information is subject to the protective order entered by this court in Pretrial Order ("PTO") No. 2683 in connection with the Nationwide Class Action Settlement Agreement and the Multi-District Litigation No. 1203 involving Wyeth's diet drugs, Pondimin and Redux.*fn1 The Trustees maintain they cannot produce this information without a court order.

  In their supporting memorandum, the Trustees first point out that they do not intend to prevent the defendant, her legal team, prospective experts, or other agreed-upon and court-approved persons from having access to the "confidential information" designated in PTO No. 2683. The Trustees have also offered to narrow the definition of "confidential information" to reflect the less comprehensive delineation in PTO No. 2875. However, they argue that there is good cause to enter a protective order because one is necessary to effectuate the purposes of PTO No. 2683 and to prevent both parties and non-parties to the Diet Drugs litigation from obtaining information from the defendant that could not otherwise be obtained. The Trustees contend that the privacy interests of claimants under the Settlement Agreement, the Trust's development and implementation of internal policies and procedures, and the other concerns outlined in PTO No. 2683 are at stake.

  Dr. Crouse agrees that limited claimant-identifying information such as names, addresses, and social security numbers should be protected from public dissemination. Indeed, she too is withholding the same sort of information pending the entry of a protective order by the court. However, she argues that good cause does not exist to enter a more expansive order. Dr. Crouse's defense and counterclaims apparently rest at least to some extent on alleged deficiencies with internal policies and procedures of the Trust and the Trustees. She contends she should be entitled to share information with others who have or will themselves become targets of the Trust's investigations. In addition, she suggests that because the May 3, 2004 deadline to file claims has now passed, the rationale for keeping "confidential information" confidential no longer exists because claimants will not be able to use that information to "game the system." Finally, Dr. Crouse emphasizes that the Trustees' action against her is not actually part of the Diet Drugs litigation.

  Our evaluation of the Trustees' request is guided by the standard set forth by our Court of Appeals in Glenmede Trust Company v. Thompson, 56 F.3d 476 (3d Cir. 1995) ("Glenmede"), and Pansy v. Borough of Stroudsburq, 23 F.3d 772 (3d Cir. 1994). As articulated in Glenmede, "[a] party seeking a protective order over discovery materials must demonstrate that `good cause' exists for the protection of that material. . . . `Good cause' is established when it is specifically demonstrated that disclosure will cause a clearly defined and serious injury. Broad allegations of harm, unsubstantiated by specific examples, however, will not suffice." Glenmede, 56 F.3d at 483 (internal citations omitted). See also Fed.R. Civ. P. 26(c). Several factors are useful in making a determination of whether a protective order should be entered:
1) whether disclosure will violate any privacy interests;
2) whether the information being sought is for a legitimate purpose or for an improper purpose;
3) whether disclosure of the information will cause a party embarrassment;
4) whether confidentiality is being sought over information important to public health and safety;
5) whether the sharing of information among litigants will promote fairness and efficiency;
6) whether a party benefitting from the order of confidentiality is a public entity or official; and
  7) whether the case involves issues important to the public. Id. This list is not exhaustive, but "the analysis should always reflect a balancing of private versus public interests." Glenmede, 56 F.3d at 483.
  As stated in PTO No. 2683, the protective order in the related Diet Drugs litigation was necessary:
(i) to implement Section VIII.F.I of the Settlement Agreement, which requires that any information provided by or regarding a Class Member or otherwise obtained pursuant to the Settlement Agreement shall be kept confidential and disclosed to appropriate persons only to the extent necessary to process Claims or provide benefits under the Settlement Agreement; and (ii) to permit the successful and orderly implementation of the Settlement Agreement by preserving the confidentiality of proprietary information regarding the internal procedures and policies of the Trust and of the Trustees, the former Interim Claims Administrators, any Claims Administrator(s), and their employees, contractors, and advisors that has been or will be generated in the course of the implementation of the Settlement Agreement. The Court finds that the need to implement Section VIII.F.I of the Settlement Agreement, the need to protect the privacy of the medical information of Class Members included in their claims, and the need for the Trust to develop its procedures and policies internally, constitutes good cause for the entry of this Order.
PTO No. 2683. The Trustees seek protection of "confidential information" similar to that defined in PTO No. 2683.

  As to claimants' personal information, such as name, address, telephone number, e-mail address, social security number, and other personal identifying information, no one disputes the strong privacy interest at stake. We agree with both parties that good cause exists at this time to enter a protective order as to this information. The same reasoning also applies to the records of the Trust's employees.

  As to the internal procedures and policies of the Trust, we recognize that the Trust has an important interest in confidentiality, particularly in light of the large number of allegedly fraudulent claims filed and the steps it is taking in its investigations of those claims. Over eighty-four thousand Green Forms have been filed with the Trust under the Settlement Agreement. This is a number far in excess of what anyone ever expected when the Settlement Agreement was before the court for approval at the time of the Fairness Hearing in 2000. See PTO No. 2662. Although the Settlement Agreement originally called for a fifteen percent audit, based on a finding in November, 2002 that the number of claims submitted was "totally at odds with impressive and undisputed epidemiological evidence presented at the Fairness Hearing," the court found good cause to implement a one hundred percent audit requirement for all Fund B claims. Id.

  The Trust is a fiduciary for tens of thousands of claimants. In its attempts to protect the large but limited fund it holds for deserving claimants, the Trust has developed and is developing procedures and policies to discover and protect against fraud. This court has a compelling obligation to prevent the payment of finite Trust funds to claimants whose claims are not supported by a reasonable medical basis. Unlimited distribution of information relating to internal policies and procedures could greatly impede the Trust's efforts to combat fraud. Thus, there is good cause to protect such information from open-ended disclosure.

  At the same time, this information appears to be an inherent part of Dr. Crouse's defense and counterclaims. We reiterate that there is no objection to Dr. Crouse's obtaining the information to which she is entitled. We recognize that Dr. Crouse is entitled to the discovery she needs for adequate preparation of her defense and pursuit of her counterclaims against the Trust.

  Accordingly, we will allow the parties to share information relating to the internal policies and procedures of the Trust only as necessary to prosecute and defend this litigation. In the event that a party has a need to disclose confidential information to any person not designated as an "authorized person," that party shall first seek a stipulation by the other party in advance of intended production. We note that this requirement applies to disclosures to any attorneys not retained by the parties in this action and the agents and representatives of such other attorneys, all of whom are excluded from the definition of "authorized persons." If relief from the court is sought, the information may not be disclosed pending a court ruling. If the court approves the disclosure, the person will be deemed an authorized person under this order.

  Disclosure to any expert, contractor, accountant, auditor, or other authorized person retained by a party must, of course, be subject to a confidentiality agreement. Further, as set forth in the accompanying order, before disclosing any confidential information to an authorized person, the person making such disclosure shall provide a copy of the court's order to the authorized person and obtain ...


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