U.S. v. Ensign Grp., Inc.
U.S. v. Ensign Grp., Inc.
2023 WL 4843076 (C.D. Cal. 2023)
April 19, 2023
McCormick, Douglas F., United States Magistrate Judge
Summary
The Court denied Relator's request for the production of payment information for Medical Director agreements at skilled nursing facilities not included in the previous order limiting discovery to 35 facilities. The Court cited potential burden and delay on the case, but noted that Relator may file a motion for broader discovery if a nationwide scheme is revealed during the discovery process.
UNITED STATES of America ex rel. et al.
v.
The ENSIGN GROUP, INC. et al
v.
The ENSIGN GROUP, INC. et al
Case No. SA CV 15-00389-JWH (DFMx)
United States District Court, C.D. California
Filed April 19, 2023
Counsel
Michael A. Hirst, Hirst Law Group PC, Davis, CA, Ross McDougall Cuff, Abraham C. Meltzer, Charles E. Canter, AUSA - Office of U.S. Attorney, Los Angeles, CA, for United States of America ex rel.Michael A. Hirst, Hirst Law Group PC, Davis, CA, for State of California ex rel., Jane Doe.
James E. Miller, Chiharu G. Sekino, James C. Shah, Casey Therese Yamasaki, Miller Shah LLP, San Diego, CA, Bruce D. Parke, Pro Hac Vice, Miller Shah LLP, Philadelphia, PA, John T. Crutchlow, Pro Hac Vice, Youman and Caputo LLC, Philadelphia, PA, Zachary Arbitman, Pro Hac Vice, Feldman Shepherd Wohlgelernter Tanner Weinstock Dodig LLP, Philadelphia, PA, David J. Caputo, Pro Hac Vice, Youman and Caputo LLC, Newton Square, PA, Heidi A. Wendel, Pro Hac Vice, Miller Shah LLP, New York, NY, Kolin Tang, Miller Shah LLP, Irvine, CA, Laurie Rubinow, Pro Hac Vice, Miller Shah LLP, Chester, CT, Marisela Bernal, Hirst Law Group PC, Davis, CA, Robert M. Thomas, Jr., Pro Hac Vice, Thomas and Associates, Boston, MA, Suzanne E. Durrell, Pro Hac Vice, Durrell Law Office, Milton, MA, Marc E. Masters, Bird Marella Boxer Wolpert Nessim Drooks Lincenberg and Rhow, Los Angeles, CA, for Sharon Ginger.
David J. Schindler, Molly Kate Wyler, Samantha Paxton Koppel, Latham and Watkins LLP, Los Angeles, CA, Jason M. Ohta, Latham and Watkins LLP, San Diego, CA, for The Ensign Group, Inc., Ensign Facility Services, Inc.
David J. Schindler, Latham and Watkins LLP, Los Angeles, CA, for City Heights Health Associates LLC, Atlantic Memorial Healthcare Associates, Inc., Bayshore Healthcare, Inc., Downey Community Care LLC, Richmond Senior Services, Inc., Bernardo Heights Healthcare, Inc., Claremont Foothills Health Associates LLC, Olympus Health, Inc., Grand Villa PHX, Inc., Lemon Grove Health Associates, LLC, Market Bayou Healthcare, Inc., Gate Three Healthcare LLC, West Escondido Healthcare LLC, Ensign Panorama LLC, Riverview Healthcare Inc., Bell Villa Care Associates LLC, HB Healthcare Associates LLC, Rose Park Healthcare Associates, Inc., Successor Healthcare, Inc., Silver Lake Healthcare, Inc., Chaparral Healthcare, Inc., Ensign Whittier West LLC, La Jolla Skilled, Inc., Livingston Care Associates, Inc., Upland Community Care, Inc., Vista Woods Health Associates LLC, Ensign Whittier East LLC.
McCormick, Douglas F., United States Magistrate Judge
Proceedings: (IN CHAMBERS) Order re Relator's Motion to Compel
*1 The parties have submitted supplemental briefing related to Plaintiff-Relator Sharon Ginger's (“Relator”) Motion to Compel Discovery Responses from Defendants The Ensign Group, Inc. (“TEG”) and Ensign Services, Inc. (“ESI” and collectively, “Ensign”). See Dkts. 204 (“Ensign Supp.”), 208 (“Relator Supp”), 213 (“Relator Reply”), 215 (“Ensign Reply”).
The Court held a telephonic hearing with the parties and now DENIES Relator's Motion for the reasons set forth below.
I. BACKGROUND
This is a qui tam action for violation of the federal False Claims Act and the California False Claims Act. Between March 1, 2009 and October 31, 2019, TEG indirectly owned 200 skilled nursing facilities (“SNFs”) in 141 different cities in 13 different states. ESI provides backoffice administrative support to the SNFs pursuant to agreements entered with each SNF.
Relator was a Contracts Manager at Ensign from October 2013 to June 2015. Relator alleges that Ensign engaged in several unlawful schemes, including compensating physicians for referrals to its SNFs. Specifically, Relator alleges that Ensign contracted with physicians to serve as “Medical Directors,” who were paid above fair market value, often for little or no work, in part or in whole as an inducement to refer patients to Ensign's SNFs.
In September 2022, the parties submitted a Joint Stipulation concerning Relator's Motion to Compel. See Dkt. 162. Relator sought discovery for all SNFs that were affiliated with Ensign during a ten-year period, whereas Ensign argued that discovery should be limited to 35 SNFs. Noting that full discovery would cost approximately $20 million dollars, the Court limited discovery to the 35 SNFs:
For now, the Court will limit the scope of discovery to the thirty-five (35) SNFs identified by Defendants. Should such discovery reveal that the alleged fraudulent practices of Defendants were carried out regularly on contracts based in those states, Plaintiff shall have the opportunity to file an appropriate motion requesting broader discovery. “Such an approach will achieve the dual purposes of protecting Defendants from unduly burdensome and potentially unnecessary discovery while allowing Plaintiff to test the waters of his nationwide claim with the opportunity for broadening its scope should its allegations ring true.”
Dkt. 168 (quoting and adopting the reasoning of U.S. ex rel. Spay v. CVS Caremark Corp., 2013 WL 4525226, at *7 (E.D. Penn. Aug. 27, 2013)).
II. THE PRESENT DISPUTE
In several informal discovery conferences, the parties argued over the scope of Interrogatory No. 1, concerning payments to Medical Directors. Relator wanted Ensign to produce Medical Director payments for all SNFs during the relevant period, whereas Ensign argued that the scope of discovery be limited to the 35 SNFs, as outlined in the Court's discovery order, above.
On March 23, 2023, during the third informal conference, the parties agreed that Ensign would produce all Medical Director contracts that were maintained in a central database. However, the parties could not agree as to payment data. As such, the Court asked for supplemental briefing regarding the production of payment information for the 225 Medical Director agreements related to the non-35 SNFs, which the parties refer to as the “non-Arguably Relevant SNFs,” or “non-AR SNFs.”
*2 Ensign argues that Relator's request is burdensome because there is no way to produce complete and accurate payments to Medical Directors without making site visits to each 165 non-AR SNFs and/or interviewing hundreds of former employees or contractors. See Relator Supp. at 10. This is because: (1) ESI does not maintain all Medical Director contracts and thus cannot confirm whether the individual or entity had a contract with the SNF, (2) payment account categorization in ESI's database were not necessarily applied uniformly, and (3) the information housed at ESI alone may not capture nuances that impact the ability to identify payments to Medical Directors. See id. at 10-11.
Ensign estimates that providing complete and accurate payment data would cost at least $1,000,000 and require months or years to complete, a massive burden that outweighs the minimal benefit of producing mostly irrelevant information. Finally, Ensign rejects Relator's proposal of producing the entire database to Relator. Ensign argues that it is entitled to produce only responsive and relevant documents, and that Relator's use of the evidence would still require Ensign to conduct site visits and interviews, resulting in the exact same burden.
Relator disputes Ensign's explanation of how data is kept, arguing that Ensign centrally maintains the payment data and could readily produce it. See Relator Supp. at 6-8. Relator argues that Ensign's position, that it can withhold discovery based on concerns that the production would be inaccurate and incomplete, is unsupported by legal authority and “incongruous with the spirit or letter of the FRCP.” Id. at 10-11. Additionally, Relator argues that Ensign's attempt to link the production of payments to corresponding contracts would allow Ensign to use the discovery process to withhold damaging evidence, even going so far to suggest it constitutes evidence tampering. See id. at 10-12. Indeed, argues Relator, Ensign's stated need to pair Medical Director payments with Medical Director agreements ignores Relator's specific allegations that payments were routinely made in the absence of corresponding agreements.
III. DISCUSSION
After considering the arguments of both sides, the Court denies Relator's request for Medical Director payments from all SNFs during the relevant time period.
In October 2022, the Court adopted Spay and limited the scope of discovery to the 35 SNFs identified by Ensign. The Court did so to avoid prohibitive discovery costs and out of concern that a more permissive approach would threaten to derail the schedule on this seven-year-old case. At that time, the discovery cutoff was less than seven months away. Nevertheless, the Court stated that should discovery reveal a nationwide scheme, Relator would have the opportunity to file an appropriate motion requesting broader discovery.
Tellingly, no motion has been brought. The discovery cutoff is now less than a month away with trial set for the end of the year. And while Relator's motion persuasively argues why Ensign's burden is self-inflicted, it does not identify the benefits of production. In contrast, Ensign has identified that some burden would result from more liberal discovery. With the showing before it, the Court will not embark a new course that sails this matter into 2024 and beyond.
If Judge Holcomb decides to revise the scheduling order and Relator makes a compelling case to go beyond the 35 SNFs, this ruling, like the October ruling, could be revisited. For now, the Motion is DENIED.