U.S. ex rel. Fischer v. Cmty. Health Network, Inc.
U.S. ex rel. Fischer v. Cmty. Health Network, Inc.
2023 WL 4577673 (S.D. Ind. 2023)
June 27, 2023

Klump, M. Kendra,  United States Magistrate Judge

Protective Order
Attorney-Client Privilege
Proportionality
Spoliation
Failure to Preserve
Sanctions
Attorney Work-Product
Legal Hold
30(b)(6) corporate designee
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Summary
The court denied CHN's request to prevent Relator and the United States from deposing Ms. Lloyd as part of their exploration of CHN's discovery compliance. The court also granted CHN's request to prohibit Relator from inquiring of Ms. Lloyd information that is protected by attorney-client privilege and/or attorney work product doctrine. The court denied CHN's other requests, including prohibiting any future deposition of Ms. Lloyd and counting any of Ms. Lloyd's deposition time against any subsequent deposition of Ms. Lloyd.
Additional Decisions
UNITED STATES OF AMERICA ex rel. Thomas P. Fischer, et al., Plaintiffs,
v.
COMMUNITY HEALTH NETWORK, INC., et al., Defendants
No. 1:14-cv-01215-RLY-MKK
United States District Court, S.D. Indiana, Indianapolis Division
Signed June 27, 2023

Counsel

Arthur Di Dio, U.S. Department of Justice - Civil Division, Los Angeles, CA, Claire Horrell, Joanna G. Persio, U.S. Department of Justice, Civil Division, Washington, DC, Justin R. Olson, Shelese M. Woods, United States Attorney's Office, Indianapolis, IN, Kelly Quinn McAuliffe, Commercial Litigation Branch, Fraud Section, Norfolk, VA, for Plaintiff United States of America.
Fallon Lilly, Office of Indiana Attorney General, Indianapolis, IN, Matthew Garner Whitmire, Indianapolis, IN, for Plaintiff State of Indiana.
Blake P. Holler, Marc T. Quigley, Krieg DeVault LLP, Carmel, IN, Daniel C. Fundakowski, Pro Hac Vice, Elizabeth A. Harris, Erica Sibley Bahnsen, George B. Breen, Richard W. Westling, Pro Hac Vice, Epstein Becker & Green P.C., Washington, DC, Jeremy A. Morris, Taft Stettinius & Hollister LLP, Indianapolis, IN, Libby Yin Goodknight, Thomas J. Costakis, Krieg DeVault, LLP, Indianapolis, IN, Robert K. McBride, Pro Hac Vice, Taft Stettinius & Hollister LLP, Covington, KY, for Defendant Community Health Network, Inc.
Blake P. Holler, Marc T. Quigley, Krieg DeVault LLP, Carmel, IN, Daniel C. Fundakowski, Pro Hac Vice, Elizabeth A. Harris, Erica Sibley Bahnsen, George B. Breen, Richard W. Westling, Pro Hac Vice, Epstein Becker & Green P.C., Washington, DC, Libby Yin Goodknight, Thomas J. Costakis, Krieg DeVault, LLP, Indianapolis, IN, for Defendants Community Physicians of Indiana, Inc., Visionary Enterprises, Inc., Hancock Surgery Center, Community Endoscopy Center, LLC, North Campus Surgery Center LLC, South Campus Surgery Center, LLC, East Campus Surgery Center, Hamilton Surgery Center, LLC, Howard Community Surgery Center, Northwest Surgery Center, LLC, Indianapolis Endoscopy Center, LLP, North Campus Office Associates, L.P.
Klump, M. Kendra, United States Magistrate Judge

ORDER

*1 This matter comes before the Court on the Defendants’ Motion for a Protective Order, Dkt. [578]. The United States and Relator responded, and CHN filed its reply in support of its motion. (Dkts. 593; 594; 599). The motion is now ripe for decision.
I. Background
On December 20, 2022, the parties appeared in front of Magistrate Judge Dinsmore to discuss the “status of and future plans for discovery.” (Dkt. 475 at 1). During that hearing, Magistrate Judge Dinsmore authorized the parties to conduct depositions to explore the parties’ discovery compliance, (id.), or in other words, to conduct “discovery on discovery.” The Minute Order from that conference directs that “any depositions conducted to explore a party's compliance with their discovery obligations do not count toward the number of depositions a party may conduct as established by Rule or Court order.” (Id.).
Thereafter, Relator noticed, and the parties participated in, two discovery compliance depositions of Community Health Network, Inc. (“CHN”) employees. In one of those depositions—the March 21, 2023, deposition of Richard Copple—the name of Karen Ann Lloyd came up frequently; Mr. Copple identified Ms. Lloyd as being the only person who could answer some of the questions which Relator posed. (See Dkt. 594-1). Ms. Lloyd is general counsel for CHN and has been in that role since at least 2014. (Dkt. 579 at 6).
After Mr. Copple's deposition, Relator noticed Ms. Lloyd's deposition for June 28, 2023. (Dkt. 579-1). CHN filed its Motion for a Protective Order, Dkt. [578], seeking to prevent Ms. Lloyd's deposition or, in the alternative, seeking an order prohibiting the Relator (and presumably the United States) from inquiring into privileged areas; requiring any future depositions of Ms. Lloyd to be noticed only with either (a) Community's consent or (b) leave of Court; and counting any of Ms. Lloyd's deposition time against any subsequent deposition of Ms. Lloyd the parties may take. (Dkt. 578).
II. Applicable Standard
The Federal Rules of Civil Procedure allow for wide-ranging discovery, subject to two limitations: relevance and proportionality. Fed. R. Civ. P. 26(b)(1). Under those same rules, the court may “for good cause, issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense,” including an order forbidding a deposition. Fed. R. Civ. P. 26(c)(1); Gookins v. County Materials Corp., No. 1:19-cv-00867-JPH-MJD, 2020 WL 3397730 at *1 (S.D. Ind. Jan. 7, 2020). A finding of good cause must be based on a particular factual demonstration of potential harm, not on conclusory statements. 8 Charles Alan Wright, Arthur R. Miller, & Richard L. Marcus, Federal Practice and Procedure § 2035, at 483-86 (2d ed. 1994). The burden to show good cause is on the moving party, and the burden is a “heavy” one. Gookins, 2020 WL 3397730 at *2 (citing Apple Inc. v. Samsung Elecs. Co., Ltd., 282 F.R.D. 259, 263 (N.D. Cal. 2012)). The court has “broad discretion” to enter protective orders and decide “what degree of protection is required.” Seattle Times Co. v. Rhinehart, 467 U.S. 20, 36 (1984).
III. Discussion
a. Ms. Lloyd's deposition.
*2 The parties, at length, debate whether this Court should apply the factors outlined in Shelton in determining whether Karen Ann Lloyd can be deposed. Shelton v. American Motors Corp., 805 F.2d 1323, 1327 (8th Cir. 1986). (Dkts. 579, 594). The Court declines to decide whether Shelton applies to the facts of this dispute. But, even if it were to apply Shelton, the Court finds that Relator has justified the need for Ms. Lloyd's deposition.
Before turning to the Shelton analysis, the Court notes that CHN's own witness provides compelling justification for Relator to depose Ms. Lloyd on CHN's discovery compliance. In response to Relator's 30(b)(6) notice, (Dkt. 542-7), CHN designated Richard Copple to testify, (Dkt. 542-8). In his deposition, Mr. Copple pointed to Ms. Lloyd as having knowledge and/or information that was responsive Relator's questions. And Mr. Copple made clear that Ms. Lloyd had knowledge or information that he did not. (Dkt. 594-1 at 3-28). Based on Mr. Copple's own testimony, the Court finds that Ms. Lloyd is a necessary witness to United States’ and Relator's exploration of CHN's discovery compliance.
Nevertheless, and noting that it is not persuaded that Shelton necessarily applies to this dispute, the Court now engages in the analysis urged by CHN and finds that even if it did apply the Shelton factors, the request for Ms. Lloyd's deposition would be justified.
(i) No other means exists to obtain the information than to depose opposing counsel.
As discussed supra, CHN's designated witness made clear that the discovery compliance answers which Relator sought lie with Ms. Lloyd. (Dkt. 594-1). Mr. Copple unequivocally identified Ms. Lloyd as the best (and only) person who could answer many of Relator's questions. (Id.). CHN has not identified another way for Relator to obtain the information that was sought through these questions, i.e.facts relating to CHN's discovery compliance, and the Court cannot identify any alternative methods.
(ii) The information sought is relevant and nonprivileged.
To the extent that Relator seeks Ms. Lloyd's testimony relating to the facts of CHN's discovery compliance, the Court finds that this information is relevant to the issue of CHN's compliance and preservation efforts, and it is also nonprivileged. However, the Court is concerned by Relator's seemingly relaxed attitude towards CHN's worry that Relator's questions will invade the protected sphere of attorney-client communication and attorney work product: “[i]f CHN believes a question being put to Ms. Lloyd seeks information that is protected by the attorney-client privilege, it is of course free to object to that question.” (Dkt. 594 at 14). Of course CHN is free to object—but Relator, represented by competent, experienced counsel, should not use its questioning to undermine (or ignore) two of the most important tenets of the judicial system: attorney-client privilege and attorney work product doctrine. Indeed, the Court agrees with CHN on this point: some of Relator's proposed questions appear to seek privileged information. However, the Court will not try to predict the questions asked at Ms. Lloyd's deposition but will trust that the parties will not seek testimony on matters which are privileged.
(iii) The information is crucial to the preparation of the case.
The information sought by Relator is crucial to the preparation of his case. In this instance, United States and Relator are conducting discovery to determine whether CHN has complied with its discovery obligations. In effect, the parties are exploring potential spoliation of relevant evidence and what sanction, if any, should be imposed if this Court determines that relevant evidence was destroyed, and the destroying party should be sanctioned. At this moment, the spoliation question is still under investigation. And CHN continues to supplement its discovery productions. If the spoliation question were to be answered affirmatively, there could be sanctions imposed, including allowing the trier of fact to draw adverse inferences against the sanctioned party, and these adverse inferences would undoubtedly be crucial to any preparation for a hearing or trial on the merits. Ms. Lloyd's deposition is crucial to the discovery compliance investigation which, in turn, could be crucial to the merits of this case. Shelton, 805 F.2d at 1327.
b. Magistrate Judge Dinsmore's December 2022 Order
*3 As noted above, on December 20, 2022, Magistrate Judge Dinsmore held a telephonic status conference to discuss the parties’ progress and concerns with discovery. (Dkt. 475). Prior to the conference, both the United States and Relator informed the Court of their concerns with CHN's efforts to preserve information relevant to this litigation, specifically, CHN's efforts to preserve electronically stored information (“ESI”). (Dkt. 474 at 15-19). Both the United States and Relator learned that CHN had not sent formal litigation hold notices to “some individuals who were thought to possess relevant information” and that evidence had been “deleted,” “lost or destroyed,” or was otherwise “inaccessible.” (Id. at 15-17) CHN and Relator disputed whether Community met its preservation obligations. (Id. at 17). CHN acknowledged that the United States and Relator had “raised questions about the sufficiency of CHN's litigation hold process and have made numerous requests for information related to the same.” (Id. at 30).
At the December 20, 2022, status conference, Magistrate Judge Dinsmore authorized the parties to conduct depositions to explore the parties’ discovery compliance. (Dkt. 475 at 1). Pursuant to that Order, Relator noticed and deposed two CHN employees. (Dkt. 579 at 2; Dkt. 593 at 2). The United States informed CHN that it intends to depose one of the witnesses as a merits witness; CHN told the United States it will neither oppose a second deposition of that witness nor “seek to otherwise limit the time on the record.” (Dkt. 593-1 at 2). Now, CHN seeks to prevent the United States and Relator from subsequently deposing Ms. Lloyd as a merits witness if she is deposed relating to CHN's discovery compliance or to otherwise limit the time allowed for any subsequent deposition of Ms. Lloyd.
At the outset, the Court disagrees with CHN's position that Magistrate Judge Dinsmore's Order “did not address ... whether there was any reason to be concerned about the possibility of spoliation ....” (Dkt. 579 at 2). While it is true that Magistrate Judge Dinsmore's Order did not explicitly say “spoliation,” Magistrate Judge Dinsmore allowed the parties to conduct depositions to explore discovery compliance after the status conference in which the United States and Relator sounded their alarm relating to CHN's preservation practices. (Dkt. 474 at 15-19, 30). It is not a stretch to posit that Magistrate Judge Dinsmore allowed the discovery compliance depositions to “address whether there had been spoliation or even whether there was any reason to be concerned about the possibility of spoliation,” (Dkt. 579 at 2).
CHN then attempts to use the Order's silence in its favor to foreclose the United States and Relator from conducting a second deposition of Ms. Lloyd on the merits of this matter. (Id. at 3). The United States and Relator counter that Magistrate Judge Dinsmore's Order should not be interpreted to hamper the parties’ ability to conduct merits discovery separately from their discovery compliance exploration.
The Court agrees with the United States and Relator. There is nothing in the Court's Order (and nothing presented by the parties) to convince this Court that Magistrate Judge Dinsmore's decision to allow the parties to conduct depositions to “explore a party's compliance with their discovery obligations” was intended to curtail the parties’ exploration of the merits by preventing a second deposition of a witness deposed on the discovery compliance issue(s). (Dkt. 475). Indeed, the Order suggests the opposite: by explicitly excluding the discovery compliance depositions from counting toward the number of depositions a party may conduct under the Federal Rules of Civil Procedure (or other court order), it is clear that any discovery on compliance was separate from merits discovery. (Id.).
In its reply, CHN clarifies that by asking this Court to prohibit a subsequent deposition of Ms. Lloyd, it is not “aimed at preventing a merits deposition ... in the future.” (Dkt. 599 at 2). CHN merely seeks to avoid requiring Ms. Lloyd to sit for two separate depositions and suggests that the United States and Relator could depose Ms. Lloyd both on the merits and discovery compliance at one time. (Id. at 3). Normally, the Court would agree with this position. In this matter, however, it is due to CHN's delays that Ms. Lloyd cannot be deposed on both matters at once.
*4 CHN first asserted an advice of counsel defense on February 10, 2023. (Dkt. 497). After the defense was raised and CHN notified the Court (after the Court's prompting, (Dkt. 504)) that it had identified 8,000 previously withheld documents to be produced, the Court ordered CHN to produce the documents by March 10, 2023. (Dkt. 508). By March 16, 2023, CHN produced 12,627 documents related to its advice of counsel defense, but the United States identified several alleged deficiencies. (Dkt. 513 at 10). The parties agreed to meet and confer and provide a timeline for supplementation. (Dkt. 515). On April 24, 2023, CHN was ordered to update and supplement its discovery responses in light of its advice of counsel defense by May 31, 2023. (Dkt. 527). On May 19, 2023, CHN asked this Court for more time to supplement its discovery responses based on its advice of counsel defense. (Dkt. 553). The Court gave CHN until June 9, 2023. (Dkt. 571). On June 8, 2023, CHN asked for more time (until June 12) to supplement its discovery responses relating to its advice of counsel defense and (until June 30) to complete its privilege logs. (Dkt. 584). The Court granted in part and denied in part CHN's request on June 9, 2023. (Dkt. 592).
The United States and Relator are prevented from deposing Ms. Lloyd on June 28, 2023, relating to the merits of Community's advice of counsel defense for one reason: CHN's own delay in identifying and supplementing its defense. CHN may not seek to limit the United States or Relator to an all-or-nothing deposition of Ms. Lloyd when its slow progress in satisfying its production obligations is the reason that the United States and Relator are not yet prepared to depose Ms. Lloyd on CHN's defense(s). Nor is a delay of Ms. Lloyd's deposition until such time as she could be deposed on both topics appealing to this Court. In a case that has already been marred by delays and discovery disputes, the Court will not prevent discovery from moving forward.
IV. Conclusion
For the foregoing reasons, CHN's Motion for a Protective Order, Dkt. [578], is GRANTED IN PART and DENIED IN PART.
• CHN's request that Relator and the United States be prevented from deposing Ms. Lloyd as part of their exploration of CHN's discovery compliance is DENIED;
• CHN's request that Relator shall not inquire of Ms. Lloyd information that is protected by attorney-client privilege and/or attorney work product doctrine is GRANTED;
• CHN's request that the Court prohibit any future deposition of Ms. Lloyd is DENIED. Nothing in this Order, however, should be interpreted to prevent any party from seeking an order pursuant to Federal Rules of Civil Procedure 26(c) and/or 30(a)(2)(A)(ii), if appropriate; and
• CHN's request that the amount of time expended in any discovery compliance deposition of Ms. Lloyd counts against a subsequent deposition of Ms. Lloyd is DENIED.
So ORDERED.
Distribution: All ECF-registered counsel of record via email.