United States ex rel. Lord v. NAPA Management Services Corp.

          MEMORANDUM

          MALACHY E. MANNION UNITED STATES DISTRICT JUDGE

         Presently before the court is a motion for a protective order pursuant to Federal Rule of Civil Procedure 26(c), filed by the two remaining defendants, namely, NAPA Management Services Corporation (“NMSC”), and North American Partners In Anesthesia (Pennsylvania), LLC (“NAPA-PA”), (collectively the “defendants”). (Doc. 117).

         Defendants move for a protective order claiming that good cause exists to preclude the discovery of certain communications and documents requested by plaintiff/relator Michael S. Lord (“plaintiff”) since they are investigative materials prepared in anticipation of litigation protected from disclosure as work product or constitute privileged attorney-client communications.

         In this qui tam action, plaintiff was employed as a certified registered nurse anesthesiologist ("CRNA") by NAPA-PA and was based at Pocono Medical Center (“PMC”) from June of 2011 until July 5, 2013.^[1] Plaintiff alleges that the defendants violated the False Claims Act (“FCA”), 31 U.S.C. §3729, et seq., by submitting false claims to Medicare for reimbursement regarding anesthesiology services. Plaintiff alleges that defendants engaged in a scheme to defraud Medicare in order to receive higher reimbursement by knowingly and falsely billing it for anesthesiology services provided at PMC as “medical direction” services when they should have properly been billed as “medical supervision” services. In particular, plaintiff alleges, in part, that in some of the surgeries he was involved in, the assigned attending anesthesiologist doctor (“Attending”) was not present in the operating room to place the patient under anesthesia and, that at the end of some surgeries, while the patient was being extubated from anesthesia, the Attending was not present in the operating room. Plaintiff also asserts a False Claims Act Whistleblower claim against the defendants as well as a state law breach of contract claim involving his termination from employment.

         Based on the foregoing, the defendants' motion for protective order will be GRANTED, except with respect to one document, Dr. Strobel's PowerPoint presentation entitled “Compliance Talk 2013.”

         I. PROCEDURAL BACKGROUND^[2]

         On April 3, 2019, the defendants filed their motion for a protective order, (Doc. 117), with attached exhibits, namely, the Affidavits of Beth Green, Esquire and Leslie Russo, and a Declaration of Thomas J. Campenni, Esquire, counsel for defendants, dated April 3, 2019. (Docs. 117-1, 117-2 & 117-3, respectively). Attached to Campenni's Declaration as Exhibit B is an abridged version of defendants' privilege log containing the original 31 documents that were the subject of defendants' motion. (Doc. 117-3, Ex. B). Defendants simultaneously filed their brief in support of their motion. (Doc. 118). Plaintiff filed his brief in opposition to defendants' motion on April 17, 2017, (Doc. 122-1), with the attached Declaration of Richard E. Vuernick, Esquire, counsel for plaintiff, (Doc. 122-2). There are also exhibits, A-D, attached to Vuernick's Declaration. Defendants filed their reply brief on April 24, 2019, with the attached April 24, 2019 Declaration of Campenni and a copy of a December 26, 2012 email regarding “Regulations”, which is largely redacted. (Docs. 123 & 123-1).

         On September 9, 2019, defendants submitted revised privilege logs, attached to Campenni's September 9, 2019 Declaration as Exhibits A & B, with 73 documents attached for in camera review. The revised abridged privilege log includes the original 31 documents submitted for in camera review along with 42 additional documents.^[3]

         The court has jurisdiction over this case pursuant to 28 U.S.C. §1331. The court can exercise supplemental jurisdiction over plaintiff's state law claim under 28 U.S.C. §1367. Venue is appropriate in this court since the claims arose in this district and all parties are located here. See 28 U.S.C. §1391.

         II. STANDARD

         Generally, the scope of discovery is broad. “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.” Fed. R. Civ. P. 26(b)(1) (emphasis added). The information need not be admissible to be discoverable. Id. Privileged information, however, is clearly not discoverable. The court must limit discovery if it determines that the information sought is outside the proper scope of discovery. Fed. R. Civ. P. 26(b)(2)(iii).

         A motion for a protective order is a proper method for challenging inappropriate discovery requests. The court's general authority to issue a protective order is governed by Federal Rule of Civil Procedure 26(c), which reads, in pertinent part:

A party or any person from whom discovery is sought may move for a protective order in the court where the action is pending-or as an alternative on matters relating to a deposition, in the court for the district where the deposition will be taken. The motion must include a certification that the movant has in good faith conferred or attempted to confer with other affected parties in an effort to resolve the dispute without court action. The court may, for good cause, issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense.

Fed. R. Civ. P. 26(c)(1). The court may grant various forms of relief under Rule 26(c), including “forbidding disclosure of discovery” and “forbidding inquiry into certain matters, or limiting the scope of disclosure of certain matters.” Fed. R. Civ. P. 26(c)(1)(A), and (D). The decision to grant a protective order, like other rulings regarding the scope of discovery, is within the court's discretion. See Shingara v. Shiles, 420 F.3d 301, 305 (3d Cir. 2005); Mass. Sch. of Law at Andover, Inc. v. Am. Bar. Ass'n, 107 F.3d 1026, 1032 (3d Cir. 1997).

         The party seeking the protective order bears the burden of demonstrating “good cause” for that protection. Glenmede Trust Co. v. Thompson, 56 F.3d 476, 483 (3d Cir. 1995); Pansy v. Borough of Stroudsburg, 23 F.3d 772, 786-87 (3d Cir. 1994). “‘Good cause' is established when it is specifically demonstrated that disclosure will cause a clearly defined and serious injury.” Glenmede, 56 F.3d at 483. There must be a “particular need for protection.” Cipollone v. Liggett Grp., Inc., 785 F.2d 1108, 1121 (3d Cir. 1986). “‘Broad allegations of harm, unsubstantiated by specific examples or articulated reasoning,' do not support a good cause showing.” Pansy, 23 F.3d at 786 (quoting Cipollone, 785 F.2d at 1121).

         Here, the defendants move for protection, in part, because they believe the plaintiff seeks information that is not discoverable-i.e., information that is protected by the attorney-client privilege. Fed. R. Civ. P. 26(b)(1). Similar to the burden on the party seeking a protective order, the party asserting the attorney-client privilege bears the burden of showing that the materials or communications at issue are protected from disclosure. Memory Bowl v. N. Pointe Ins. Co., 280 F.R.D. 181, 186 (D.N.J. 2012); Scott Paper Co. v. United States, 943 F.Supp. 489, 499 (E.D. Pa. 1996). This comports with Rule 26 which explicitly provides that a party withholding information based on a privilege must “expressly make [that] claim” and must “describe the nature of the documents, communications, or tangible things not produced or disclosed-and do so in a manner that, without revealing the information . . .. will enable other parties to assess the claim.” Fed. R. Civ. P. 26(b)(2)(5)(A). “Whether the privilege applies is a question of law for the court to decide.” Andritz Sprout-Bauer, Inc. v. Beazer East, Inc., 174 F.R.D. 609, 632 (M.D.Pa. 1997).

         The purpose of the attorney-client privilege^[4] is “to encourage full and frank communications between attorneys and their clients and thereby promote broader public interests in the observance of law and administration of justice.” Upjohn Co. v. United States, 449 U.S. 383, 389 (1981). The traditional articulation of the attorney-client privilege adopted in this circuit contains the following elements:

(1) the asserted holder of the privilege is or sought to become a client; (2) the person to whom the communication was made (a) is a member of the bar of a court, or his subordinate and (b) in connection with this communication is acting as a lawyer; (3) the communication relates to a fact of which the attorney was informed (a) by his client (b) without the presence of strangers (c) for the purpose of securing primarily either (I) an opinion on law or (ii) legal services or (iii) assistance in some legal proceeding, and not (d) for the purpose of committing a crime or tort; and (4) the privilege has been (a) claimed and (b) not waived by the client.

Maldonado v. New Jersey, 225 F.R.D. 120, 127 (D.N.J. 2004) (quoting In re Grand Jury Investigation, 599 F.2d 1224, 1233 (3d Cir. 1979)). “The privilege covers communications made by the client as well as the attorney and it ‘exists to protect not the giving of professional advice to those who can act on it but also the giving of information to the lawyer to enable him to give sound and informed advice.'” Lawless v. Del. River Port. Auth., No. 11-7306, 2013 WL 180347, at *1 (E.D. Pa. Jan. 16, 2013) (quoting Upjohn, 449 U.S. at 390). The privilege belongs to the client and only the client may waive it. Haines v. Liggett Grp. Inc., 975 F.2d 81, 90 (3d Cir. 1992).

         Generally, information within the scope of the attorney-client privilege will be “zealously protected.” Id. (citation omitted). There are, however, limitations. The privilege extends to the communications between the attorney and his or her client, but not to the disclosure of underlying facts incorporated into the communication. Upjohn, 449 U.S. at 395-96. In addition, “[b]ecause the attorney-client privilege obstructs the truth-finding process, it is construed narrowly.” Westinghouse Elec. Corp. v. Republic of Philippines, 951 F.2d 1414, 1423 (3d Cir. 1991). The application of the privilege must be determined on a “case-by-case” basis, Upjohn, 449 U.S. at 396-97, and it “protects only those disclosures-necessary to obtain informed legal advice-which might not have been made absent the privilege, ” Westinghouse, 951 F.2d at 1423-24 (quoting Fisher v. United States, 425 U.S. 391, 403 (1976)) (emphasis in original).

         Additionally, defendants seek protection from disclosure of certain documents and communications based on the work product doctrine. The law is clear that “documents prepared in the regular course of business rather than for purpose of the litigation are not eligible for work-product protection, even if the prospect of litigation exists.” Sullivan v. Warminster Tp., 274 F.R.D. 147, 152 (E.D.Pa. 2011) (citation omitted); Highland Tank & Mfg. Co. v. PS Intern, Inc., 246 F.R.D. 239, 246 (W.D.Pa. 2007) (“the work-product doctrine ‘only protects documents prepared in anticipation of litigation, not in the regular course of business.'”) (citation omitted).

         The court in Sullivan, 274 F.R.D. at 150, addressed the work-product doctrine as defined by the Third Circuit, and stated:

The work-product privilege is codified by Federal Rule of Civil Procedure 26(b)(3), which states that: a party may not discover documents and tangible things that are prepared in anticipation of litigation or for trial by or for another party or its representative (including the other party's attorney, consultant, surety, indemnitor, insurer, or agent). But, subject to Rule 26(b)(4), those materials may be discovered if: (I) they are otherwise discoverable under Rule 26(b)(1); and (ii) the party shows that it has substantial need for the materials to prepare its case and cannot, without undue hardship, obtain their substantial equivalent by other means. Fed.R.Civ.P. 26(b)(3). As with the attorney-client privilege, the party claiming that evidence is protected attorney work product has the burden of establishing that work-product protection applies. Holmes v. Pension Plan of Bethlehem Steel Corp., 213 F.3d 124, 138 (3d Cir. 2000). Unlike the attorney-client privilege, disclosure to a third party only waives the work-product privilege if it permits an adversary to gain access to the information. See Westinghouse Elec. Corp., 951 F.2d at 1428 (“Most courts hold that to waive the protection of the work-product doctrine, the disclosure must enable an adversary to gain access to the information.”).

See also Mine Safety Appliances Co. v. North River Ins. Co., 73 F.Supp.3d 544, 569-70 (W.D.Pa. 2014).

         The court in Sullivan, 274 F.R.D. at 151, also stated:

[I]t is the communications and not the underlying facts that are privileged. See, e.g., Rhone-Poulenc Rorer, 32 F.3d at 862. Plaintiffs are entitled to discovery regarding the underlying facts of the investigation. It should be further noted, however, that: The protective cloak of [attorney-client] privilege does not extend to information which an attorney secures from a witness while acting for his client in anticipation of litigation. Nor does this privilege concern the memoranda, briefs, communications and other writings prepared by counsel for his own use in prosecuting his client's case; and it is equally unrelated to writings which reflect an attorney's mental impressions, conclusions, opinions or legal theories. Sampson v. School Dist. of Lancaster, 262 F.R.D. 469, 474 (E.D.Pa. 2008). Such communications are generally protected by the work-product privilege instead. See id.

         Further, “[t]he question whether a document was prepared in anticipation of litigation is often a difficult factual matter.” United States v. Rockwell Int'l, 897 F.2d 1255, 1266 (3d Cir. 1990). A document is prepared in anticipation of litigation when, “in light of the nature of the document and the factual situation in the particular case, the document can fairly be said to have been prepared or obtained because of the prospect of litigation.” Id. (citations omitted). As such, courts should determine “the state of mind of the party preparing the document or ... the party ordering preparation of the document.” Martin v. Bally's Park Place Hotel & Casino, 983 F.2d 1252, 1260 (3d Cir. 1993). “This inquiry is limited by the requirement that the party's anticipation of litigation be objectively reasonable.” Sullivan, 274 F.R.D. at 152 (citing Martin v. Bally's Park Place Hotel & Casino, 983 F.2d at 1260).

         III. DISCUSSION

         As a brief backdrop, in January 2019, plaintiff sent a letter to defendants claiming that they improperly withheld certain documents in response to discovery requests as privileged. At issue were the following two categories of documents that defendants withheld as privileged, as reflected on their initial privilege log: (I) e-mail correspondence between non-attorney NAPA employees and officers that were “based upon, and discussing, advice received from counsel”; and (ii) e-mail correspondence with defendants' former outside counsel, David Vaughn.

         Following a teleconference with the court on March 11, 2019, the court agreed to allow defendants to file a motion for a protective order and for the parties to file briefs with respect to the documents in the two stated categories which were withheld by defendants. The court also agreed to conduct an in camera review of the withheld documents.

         After the March 11, 2019 conference, defendants represented that they attempted to identify all of the documents that might fit the two above stated categories. Defendants also stated that they updated their privilege log. Additionally, defendants indicated that they “prepared an abridged version of their privilege log, which includes only the 31 emails and/or other documents [they] determined are within the scope of this motion, numbered as documents 1 through 31.” (citing Campenni's 4-3-19 Decl., Ex. B, Doc. 117-3).

         On September 9, 2019, defendants submitted an updated abridged privilege log, attached to Campenni's September 9, 2019 Declaration as Exhibit B, with 73 documents attached for in camera review, including the original 31 documents.^[5]

         Further, defendants state that they have “specifically identified 10 emails and/or other documents that involve non-attorney NAPA employees or officers (Campenni Decl., Ex. B, Docs. 1-10), and 15 emails and/or other documents that involve David Vaughn (Campenni Decl., Ex. B, Docs.11-25).” Defendants also state that they “withheld six emails and/or other documents [as attorney-client communications] involving former NMSC employee Garrett Dowd-who was an attorney with ...