Opinion
Civil Action No. 01-4078 (DMC)
August 13, 2003
MEMORANDUM ORDER
THIS MATTER comes before the court on the motion of defendant Hackensack University Medical Center ("HUMC") for a protective order that would shield production of certain discovery to Relator Phil Hefner (Relator). HUMC submitted the documents at issue for in camera review. Relator opposes the motion and seeks production of the discovery. Pursuant to Fed.R.Civ.P. 78, no oral argument was heard. After carefully reviewing the submissions of plaintiff and defendant, the court denies defendant HUMC's motion for a protective order.
BACKGROUND
This qui tam suit is brought by Relator Hefner pursuant to the False Claims Act ("FCA"), 31 U.S.C. § 3729, et seq. (2003). Specifically, relator alleges that defendants submitted false claims under Medicare and a Federal grant program, and that it created false statements and certifications when presenting these claims. HUMC retained consultants to conduct a Medicare compliance audit and compliance training. While serving as one of the consultants, relator purportedly uncovered ongoing Medicare fraud by HUMC. HUMC contends that this "fraud" was in actuality erroneous billing for services funded by a federal grant program.In the present motion, defendants seek a protective order precluding the production of unredacted minutes of the Executive Compliance Committee of Hackensack University Medical Center. Relator requested "[a]ll documents that refer or relate to HUMC's Medicare compliance plan(s), program(s) and procedures, including compliance reviews and meetings, audits, and self-audits." HUMC responded by attaching redacted documents Bates Numbered 000643-682, and by objecting to the balance of the request as overly broad, irrelevant, and calling for privileged materials. Relator claims that the minutes were inappropriately redacted. HUMC asserts that these redacted entries are covered by the `self-critical analysis' privilege and that is the focus of the dispute.
Absent privilege, there is little dispute that these documents would be relevant and discoverable. After reviewing the unredacted minutes for in camera review, the court concludes that they are relevant for discovery purposes.
Specifically, HUMC argues that the minutes reflect a self-analysis program that monitors quality standards for hospital operations and health care services. HUMC contends this program is a response initiative prompted by a Memorandum issued by the Department of Health and Human Services, Office of Inspector General (OIG Memorandum) (February 23, 1998). The OIG Memorandum set forth voluntary, but recommended guidelines by which hospitals would place affirmative obligations upon its governing board, officers, and employees to investigate and address fraudulent or substandard activity. According to HUMC, the minutes currently at issue contain "opinions, criticisms, impressions and statements on the quality of care as it relates to the internal hospital operations for all of its clinical service lines." Brief at 11.
ANALYSIS
Neither party disputes that federal common law controls the allegations of privilege applicable here. However, this court will also look to applicable New Jersey State Law in its analysis. As Judge Hughes explained in Brunt v. Hunterdon County et. al., 183 F.R.D. 181, 185 (D.N.J. 1998), "a federal court may `resort to state law analogies for the development of a federal common law of privileges in instances where the federal rule is unsettled.'" (quoting Spencer Savings Bank, SLA v. Excell Mortgage Corp., 960 F. Supp. 835, 836 (D.N.J. 1997) quoting Wm. T. Thompson Co. v. General Nutrition Corp., Inc., 671 F.2d 100, 104 (3d Cir. 1982)).
Both this district and the Supreme Court of New Jersey have declined to formally recognize a self-critical analysis privilege. Spencer Savings Bank, SLA v. Excell Mortgage Corp., 960 F. Supp. at 839;Payton v. New Jersey Turnpike Authority, 148 NJ. 524 (1997). InSpencer Savings Bank, this Court held that the self-critical analysis privilege should not be formally incorporated into federal common law. Spencer at 843-844. In Payton, the New Jersey Supreme Court distinguished the self-critical analysis privilege from sanctioned and established privileges, like the attorney client privilege. 148 NJ. at 547. Payton explained that self-critical analysis should be afforded some confidentiality protection, but not as a "categorical exclusionary" rule. Id. Confidentiality concerns over self-evaluative material should be subject to a case by case balancing test. Id. As is the practice with other information not protected by a formal judicially or legislatively defined privilege, the balance should be drawn between the need for disclosure and the need for confidentiality. Id., at 548. This approach developed in keeping with the United States Supreme Court's directive inUniversity of Pennsylvania v. E.E.O.C., 493 U.S. 182, 189 (1990), that the scope of federal privileges should be expanded only with extreme caution.
In Brunt, the Court summarized the treatment of the self-critical analysis privilege by federal and state courts in New Jersey. 183 F.R.D. at 181. Ultimately, the Court applied thePayton balancing approach in deciding the discoverability of the material at issue. Id. at 186. Based on its review of the law, the Court analyzed the following factors, which are drawn fromPayton and other state and federal decisions:
1. the information must be the result of a critical self-analysis undertaken by the party seeking protection
2. the extent to which the information may be available from other sources
3. the degree of harm the litigant will suffer from the information's unavailability
4. the possible prejudice to the party asserting the privilege
5. the public interest in preserving the free flow of the type of information sought
6. whether the information is of the type whose flow would be curtailed if discovery were allowed
Analysis of these factors in this case indicates that HUMC's motion should be denied.
1. The information must be the result of a critical self-analysis undertaken by the party seeking protection. It is not disputed that the minutes at issue constitute self-analysis conducted by HUMC.
2. The extent to which the information may be available from other sources. In the absence of any evidence to the contrary, this court presumes that the information generated during these closed group sessions cannot be obtained elsewhere. This second factor is also satisfied.
3. The degree of harm the litigant will suffer from the information's unavailability. The redacted information may be crucial to the relator' s claims. Thus, he will likely be harmed by denial of access to the minutes. Relator argues the information sought is specifically relevant to the "knowledge" requirement under the FCA. The court agrees that HUMC's compliance efforts may be relevant to the question of whether HUMC acted with reckless disregard or deliberate indifference. Additionally, without this information relator would be at a disadvantage if HUMC elected to formulate a defense based on the existence of a compliance program. This factor, therefore, leans in favor of production.
4. The possible prejudice to the party asserting the privilege. HUMC argues that production of the minutes would cause its compliance program to suffer. It alleges that disclosure would result in the future nonparticipation of Compliance Committee members and therefore candid and conscientious evaluation would be chilled. HUMC contends that the hospital's fundamental mission — to improve the quality of care for its patients — would be attenuated. HUMC asserts that this impact on the hospital would be significantly prejudicial. The Court appreciates HUMC's argument, which underlies the rationale for the self-critical analysis privilege and it is not without merit. However, on balance, the Court does not believe disclosure would stifle self-analysis in any significant way. In addition, as explained below, other interests predominate in a FCA case.
5. The public interest in preserving the free flow of the type of information sought. Although this factor nominally concerns the public interest in preserving the free flow of the information sought in this case, here it is outweighed by the public's interest in access to the information. A qui tam action involves alleged fraud against the government and directly implicates the public interest on a variety of levels. Relator brings this action on behalf of the United States, and the manner in which government funds are spent is of paramount public concern. It is true, however, that the quality and administration of health care is also of genuine public concern. However, HUMC's speculative contention that disclosure would deter it from aggressively self-criticizing itself is unsubstantiated and insufficient to veto the strong public interest in access to the information.
The overriding public interest in disclosure in a qui tam context has been recognized in United States, ex rel. Falsetti, et. al v. Southern Bell Telephone and Telegraph Company, 915 F. Supp. 308, 313 (N.D.F.L 1996). There, the Court held that the self-critical analysis privilege did not exist in a qui tam action brought under the FCA. The Falsetti Court distinguished qui tam cases from other federal suits where the self critical analysis privilege was recognized, explaining that, in enacting the FCA, Congress considered the competing concerns and chose not to provide a privilege.Id. at 310-313 The Court relied on the fact that the 1986 amendments to the FCA "provided its own version of a self-critical analysis privilege." Id. at 313. In 31 U.S.C. § 3729(a) (1-7 (A-C), Congress provided that the penalty for violation would
be limited to "not less than 2 times the amount of damages" if "the person committing the violation . . . furnished officials of the United States responsible for investigating false claims violations with all information known to such person about the violation within 30 days after the date on which the defendant first obtained the information," "fully cooperated with any Government investigation of such violation," and "at the time such person furnished the United States with the information about the violation, no criminal prosecution, civil action, or administrative action had commenced under this title with respect to such violation, and the person had no actual knowledge of the existence of an investigation into such violation."Id. citing, 31 U.S.C. § 3729(a) (1-7) (A-C).Falsetti further found that in enacting these amendments,
Congress meant that the exception would be a safe-haven for persons who uncover past violations and act promptly to disclose the same to Government investigators. Congress also provided that information voluntarily disclosed is exempt from disclosure pursuant to 5 U.S.C. § 552 (the Freedom of Information Act).Falsetti 915 F. Supp. at 312, citing 31 U.S.C. § 3729(d).
HUMC argues that the Falsetti rationale does not apply here because the OIG Memorandum was issued after theFalsetti opinion. HUMC asserts the OIG Memorandum strongly recommends a program that places affirmative obligations upon it to investigate and address fraudulent and substandard activity. However, this court does not find that the OIG Memorandum in any way trumpsFalsetti. The OIG Memorandum sets forth a non-mandatory protocol to guide hospitals in better protecting their operations from fraud and abuse. The court does not believe that the purpose of this Memorandum would be in any way undermined if the documents were produced in this case. The OIG Memorandum simply provides guidance for hospitals to better comply with statutory and regulatory obligations. As noted in the Memorandum:
[w]e recognize that hospitals are already accountable for complying with an extensive set of statutory and other legal requirements, far more specific and complex than what we have referenced in this document . . .
OIG Memorandum.
The FCA, Falsetti, and the OIG Memorandum acknowledge the somewhat competing public interests raised in this application. However, the court is satisfied that the public's interest in the disclosure of material like the Executive Committee Minutes outweighs any other concerns that were raised.
6. Whether the information is of the type whose flow would be curtailed if discovery were allowed. This factor is addressed in the analysis of the fifth factor.
CONCLUSION
In summary, for the reasons set forth herein, the Court declines to apply a self-critical analysis privilege in this case. Accordingly, HUMC's motion for a protective order is denied and the minutes of the Executive Compliance Committee should be produced to relator Hefner within 10 days.SO ORDERED