Opinion
No. 00-CV-737.
August 31, 2004
MEMORANDUM ORDER
AND NOW, this day of August, 2004, after consideration of a Motion to Compel Production of Documents jointly filed by the United States Government and various state attorney generals (collectively, "Plaintiffs") (No. 166), the Response of Defendants, Merck-Medco Managed Care, LLC, et al. ("Medco Defendants") (No. 176), Plaintiffs' Reply (No. 181), and Medco Defendants' Sur-Reply (No. 184), it is hereby ORDERED that the Motion is GRANTED, IN PART, AND DENIED, IN PART, as follows:
1. In the instant motion, Plaintiffs seek to compel production of all materials responsive to Plaintiffs' First Request for Production of Documents ("First Request"). Specifically, Plaintiffs seek production of documents related to certain audits conducted by and/or at the direction of Medco Defendants, including, but not limited to, "audit reports, interview notes, back-up papers and related materials," which Plaintiffs collectively call "Audits."
2. Medco Defendants have objected to Plaintiffs' First Request on various grounds, and oppose the current motion. As an initial matter, Medco Defendants argue that what Plaintiffs collectively call "Audits" are, in fact, four (4) distinct categories of documents — namely, "Ordinary Course of Business Audits," "Snow Pharmacy and Call Center Audits," "Contractual Guarantee Analyses," and "Pharmacy Investigation." Medco Defendants aver that all documents in the first category have been, and will continue to be, provided to Plaintiffs on a rolling basis, but that a portion of the documents in the second category — and all of the documents in the third and fourth categories — are protected from disclosure by the attorney-client privilege and/or the Work Product Doctrine.
3. "Parties may obtain discovery regarding any matter, not privileged, that is relevant to the claim or defense of any party . . ." Fed.R.Civ.P. 26(b)(1). Generally, the attorney client privilege protects disclosures necessary to obtain informed legal advice which might not have been made absent the privilege. See Fisher v. United States, 425 U.S. 391, 403 (1976); Westinghouse Elec. Corp. v. Republic of the Philippines, 951 F.2d 1414, 1424 (3d Cir. 1991). When corporate documents do not contain mere facts nor mere business decisions, but also examine legal implications of a company's concerns, those documents are generally protected from discovery by the attorney client privilege. In re Ford Motor Co., 110 F.3d 954, 966 (3d Cir. 1997).
4. Generally, the attorney Work Product Doctrine protects from disclosure materials prepared in anticipation of litigation by a party's attorney or agent. See Fed.R.Civ.Proc. 26(b)(3); Hickman v. Taylor, 329 U.S. 495 (1947). "Rule 26(b)(3) establishes two tiers of protection: first, work product prepared in anticipation of litigation by an attorney or his agent is discoverable only upon a showing of need and hardship; second, `core' or `opinion' work product that encompasses `mental impressions, conclusions, opinion, or legal theories of an attorney or other representative of a party concerning the litigation' is `generally afforded near absolute protection from discovery'." In re Cendant Corp. Sec. Litigation, 343 F.3d 658, 663 (3d Cir. 2003) (quoting In re Ford Motor Co., 110 F.3d 954, 962 n. 7 (3d Cir. 1997)). If litigation is not imminent, or if the materials at issue were prepared in the ordinary course of business, they are generally not protected by either the attorney client privilege or the Work Product Doctrine. See Schmidt, Long Assoc., Inc. v. Aetna U.S. Healthcare, Inc., 2001 WL 605199 (E.D. Pa. May 31, 2001).
5. Because it was impossible for the Court to make a determination regarding the privilege issue based exclusively on the parties' briefs, this Court, by Order dated July 26, 2004, required Medco Defendants to provide certain disputed documents to the Court for in camera review. Medco Defendants promptly provided three (3) boxes of documents for the Court's review.
6. Following in camera review of the documents provided by Medco Defendants, consideration of the parties' briefs and exhibits, and consistent with the law set forth above, the Court finds that the documents reviewed in camera consist of both privileged and non-privileged material. As a result, the Court hereby orders Medco Defendants to produce the following in response to Plaintiffs' First Request for Production of Documents:
A. Box 1: All four (4) Summary Reports in the "Category 3 Summary Reports" binder.
This matter is before me pursuant to the governing Case Management Order signed by the Honorable Clarence C. Newcomer, District Court Judge for the Eastern District of Pennsylvania.
The Court notes that each of the Summary Reports is labeled "Confidential — Attorney/Client Communication or Attorney Work Product," and that the stated purpose of each Summary Report is "to permit the Legal Department to advise senior management of [Medco]" with respect to processes used to support the measurement and reporting of various "client guarantee data," as well as the "risks those processes may present to the best interests of Medco." Counsel for Medco Defendants has informed the court that the "Assessment Teams" identified on the cover page of each Summary Report did not consist of attorneys. Importantly, the Summary Reports contain generic "findings" regarding such things as whether various Medco facilities are in compliance with company policies regarding such things as the timing of prescription refills ("turnaround time"), the accuracy rates for filling prescriptions, physical security concerns, security of data, and "dispensing accurate client guarantee reporting." Thus, the Summary Reports contain non-lawyer factual summaries of observations made at various Medco facilities; the Summary Reports do not contain attorney work product; and there is no indication that the Summary Reports were prepared specifically in anticipation of this or any other imminent litigation.
B. Box 2:
2) Spokane Binder:
1) Texas Binder: All documents in the "Data" section (with the exception of a document entitled "Filtering Data" and a letter dated March 31, 2003, drafted by Michael Clarke, Esquire).
a) "Summary Spokane Observations" (3 pages).
b) Charts/spreadsheets of cancellations.
These, and all other, charts/spreadsheets contain raw data from Medco facilities. As such, there is nothing to indicate that the charts/spreadsheets were generated by or for attorneys, nor is there any indication that they were generated in anticipation of this or any other imminent litigation. However, to the extent attorney comments are contained in the margins of any such chart/spreadsheet, such comments may be redacted.
c) "Spokane Bad Cancel Data For Week Ending 5/24/03."
d) "Washington Prescription Cancellation Assessment" (5 pages) and "Ohio West Cancellation Assessment" (3 pages).
e) "Medco Health Solutions of Spokane, Inc." (chart of corporate officers and glossary of terms) (8 pages).
Despite the term "assessment" appearing in the titles of these documents, the documents themselves contain direct application of observations made at Medco facilities to specific Medco operating procedures. As a result, the "assessments" are virtually devoid of subjective comments made by counsel for Medco (or outside counsel retained by Medco for purposes of investigation). To the extent that an attorney's subjective comments are contained in these documents, such comments may be redacted.
f) Charts/spreadsheets of re-enter data.
g) "Medco Health Self Assessment Form Washington Pharmacy May 20, 2003" (8 pages).
Counsel for Medco Defendants has informed the Court that this eight- (8-) page document was prepared by Rich Jones, a Medco pharmacist, and not by an attorney. Although counsel emphasized that the document was prepared "at the direction of" the attorney overseeing the audit/investigation, the Court concludes that the document does not fall under the attorneyclient privilege or the Work Product Doctrine.
3) Virginia Binder:
a) "Virginia Q1 2003 Observations" (2 pages).
b) Charts/spreadsheets of cancellations (2 pages).
c) Medco Health Self Assessment Form (2 pages).
d) "Summary of Receive Date Changes" (1 page).
e) Charts/spreadsheets following the "Summary of Receive Date Changes."
4) Parsippany Binder:
a) "Parsippany Observations" (2 pages).
b) Chart/spreadsheet of "bad cancels."
5) Columbus Binder:
a) "Medco Health Columbus West Pharmacy Management Team" (1 page).
b) "Q1 Summary" (1 page).
c) "Columbus Q1 Summary" (1 page) (with attorney comments redacted).
d) Chart/spreadsheet of cancellations.
e) "Ohio West Prescription Cancellation Assessment" (3 pages).
f) "LL. New Prescription SOP" (6 pages).
g) "Y. Refill Entry SOP" (4 pages).
h) "Columbus Q3 2002 Observations" (4 pages).
6) Nevada Binder:
a) "Nevada Pharmacy Organizational Chart" and personnel at the "Nevada Call Center" (3 pages).
b) "NV Prescription Cancellation Assessment" (3 pages).
c) "Preliminary Nevada Observations" (3 pages).
d) "Preliminary Nevada April/May 2002 Observations" (2 pages) (with paragraph 6 redacted, if necessary).
e) Charts/spreadsheets of cancellations and re-entries.
f) "Customer Service Pharmacist Training Manual Index" (attached to notes for the last interview) (3 pages).
g) "Doc. No. 15-PR-F-741: Accounts Receivable Resolve ARN02 — First Time Drug Order Limit Exceeded Edit" (7 pages).
h) "Doc. No. 15-PR-F-749: Accounts Receivable Resolve the ARX02 — Cancel and Hold Customer Service Edit Message" (7 pages).
i) Interoffice Memo dated 5/2/03 from Mark Hincher, Director of Front End Operations, to all front end employees, on the subject of "mail receive date clarification" (1 page).
j) Memos dated August 21, 2000, and October 31, 2000, from Linda Walsh, et al., to "Order Entry," regarding "Updates Reminders" (2 pages).
k) Memo dated December 7, 2001, from Mary Beconado to "Order Entry Typists," regarding "FEP Update" (1 page).
l) Memo dated November 29, 2001, from Linda Walsh to "Order Entry Typists," regarding "FEP Update" (1 page).
m) Memo dated November 29, 2001, from Barry Boudreaux and George A. Haddow to "Rover and Order Review Pharmacists," regarding "FEP Guidelines Revised Memo" (2 pages).
n) "New Mail Opening Procedure," with attachment (2 pages).
o) Training Grids (4 pages).
p) "Doc. No. 15-PR-F-003: Accounts Receivable Resolve Floor Limit (ARH01) Edit" (8 pages).
q) "Parsippany Observations" (2 pages).
r) Copy of stamped information regarding call-backs (4 pages).
C. Box 3:
1) "JHP Investigation Notebook"
a) Before Tab #1: "Q1 Summary" (1 page).
b) Tab #1:
i) "Pittsburgh Q1 Summary" (2 pages).
ii) "Merck Patient Assistance Program Application" (1 page).
iii) "Prescription Cancellation Assessment" (blank) (4 pages).
c) Tab #2:
i) "Fairfield Q1 Summary" (2 pages).
ii) "New Batch Header" (1 page).
iii) "Cancel and Re-Enter" slip (1 page).
iv) "Summary of Receive Date Changes" (Fairfield) (2 pages).
v) "Fairfield OH Prescription Cancellation Assessment" (2 pages).
vi) "Fairfield Management Team" (1 page).
d) Tab #3: "Columbus Q1 Summary" (4 pages).
e) Tab #4:
i) "New Jersey Prescription Cancellation Assessment" (3 pages).
ii) "Analysis of Two Weeks of Cancel Data" (2 pages).
iii) "Medco Health Solutions of Parsippany LLC" configuration (1 page).
f) Tab #5: "Spokane" (summary) (1 page).
g) Tab #6:
i) "Preliminary Nevada Observations" (3 pages).
ii) "Nevada" (summary) (1 page).
iii) "NV Prescription Cancellation Assessment" (3 pages).
iv) "Nevada Pharmacy Organizational Charts" (2 pages).
This one- (1-) page "summary" should not be confused with the "Nevada Summary Draft Report" dated June 11, 2003.
h) Tab #7:
i) "Tampa 4 Observations" (2 pages).
ii) "Netpark" (summary) (1 page).
iii) "FYI: Refill Receive Date 06/20/03" (1 page).
iv) Interoffice Memo dated June 13, 2003, from CS Management to "All PSRS and CS Pharmacists," regarding "Manual Refills Via RXD Screen" (1 page).
v) "Netpark Organizational Chart" (1 page).
i) Tab #8: "Texas" (summary) (2 pages).
j) Tab #9: Chart of "Protocol Area" by facility (2 pages).
2) "Medco Health Solutions Internal Investigation . . . Nevada Investigation JHP File."
a) Chart/spreadsheet of cancellations and re-entries from the Nevada facility.
b) "Prior Authorization SOP" (2 pages).
c) "Doc. No. 15-PR-F-003: Accounts Receivable Resolve Floor Limit (ARH01) Edit" (8 pages).
d) "Doc. No. 15-PR-F-741: Accounts Receivable Resolve ARN02 — First Time Drug Order Limit Exceeded Edit" (7 pages).
3) "Medco Health Solutions Internal Investigation . . . Pittsburgh Data JHP File." Charts/spreadsheets.
4) "Medco Health Solutions Internal Investigation . . . Parsippany Data JHP File." Charts/spreadsheets.
5) "Medco Health Solutions Internal Investigation . . . Fairfield Data JHP File." Charts/spreadsheets.
6) "Tampa 2 (Dec. '03)."
a) "Tampa 2 Q1 2003 Observations."
b) Charts/spreadsheets.
7) Unlabeled folder with material from Columbus: Charts/spreadsheets (labeled "Data Run").
8. Plaintiffs further argue that, to the extent the remaining documents are privileged, any such privilege has been waived because: (1) Medco Defendants have disclosed some, but not all, of the "Audits;" and (2) Medco executives invoked the "Audits" and their purported findings as evidence that the Government's Complaint was baseless during a teleconference with various third parties (investors and financial analysts) on September 23, 2003. See transcript of conference call attached to the Motion as Exhibit "C."
9. Regarding the attorney-client privilege, "[v]oluntary disclosure to a third party of purportedly privileged communications has long been considered inconsistent with an assertion of the privilege." Westinghouse, 951 F.2d at 1424. "Consequently, it is well-settled that when a client voluntarily discloses privileged communications to a third party, the privilege is waived" unless the disclosure is necessary to further the goal of enabling the client to seek informed legal advice. Id. at 1424, 1428. Similarly, when a party discloses a portion of otherwise privileged material but withholds the remainder, the privilege is waived only as to those communications actually disclosed, unless a partial waiver would be unfair to the party's adversary. Id. at 1426. Where, as here, the alleged waiver occurs in a corporate conference call, such "extrajudicial disclosure [does] not give rise, by implication, to a broad subject matter waiver" unless the confidential information so revealed is later reused in a judicial setting. See In re Keeper of the Records, 348 F.3d 16, 23-25 (1st Cir. 2003).
10. A disclosure to a third party does not necessarily waive the protection of the Work Product Doctrine. See Westinghouse, 951 F.2d at 1428. Therefore, "[m]ost courts hold that to waive the protection of the work product doctrine, the disclosure must enable an adversary to gain access to the information" the party seeks to protect. Id.
11. The Court concludes that Medco Defendants have not waived the protection of either the attorney-client privilege or the Work Product Doctrine. The statements made by Medco personnel to various third parties were not made in the course of judicial proceedings, but rather in a teleconference with investors and other interested third parties. More importantly, the statements referred to various internal audits, investigations or documents in the most general sense; they did not refer to any specific documents; and they did not reveal any data otherwise privileged. Similarly, the fact that Medco Defendants have produced some, but not all, of the documents that Plaintiffs collectively call "Audits," does not constitute a waiver of any privilege claim because the "Audits" in fact consist of vastly different categories of documents, some of which are clearly discoverable and others which are properly privileged. Because there has been no waiver of privilege, the Court finds that all of the documents not specifically listed above are protected from discovery.
12. Finally, Medco Defendants oppose Plaintiffs' discovery requests #25 through #36 on the grounds that the requests are "vague, ambiguous and/or overbroad." In these discovery requests, Plaintiffs seek production of documents that form the basis of public statements made by Merck-Medco executives to the effect that the Government's Complaint has no merit. Each request references a specific statement made by a specific Merck-Medco executive on a specific date and includes a verbatim quotation of the statement. Because the court cannot imagine how Plaintiffs could more narrowly focus these requests, the Court further orders Medco Defendants to provide discovery in response to Plaintiffs' discovery requests #25 through #36.
Nevertheless, Medco Defendants are ordered to continue to produce non-privileged material from all four (4) categories of documents. Moreover, to the extent that Medco Defendants possess additional charts, spreadsheets or "data runs" of uninterpreted raw data not produced for in camera review (that is, those that may fall within Category 2), Medco Defendants are ordered to produce those documents as well.
Additionally, Medco Defendants object to discovery requests #30 through #36 on the privilege grounds previously discussed.
The Court notes that although each discovery request potentially implicates a large number of documents, most (if not all) of the requests appear to implicate the same documents, no doubt many of which have already been provided by Medco Defendants in discovery. Moreover, many (if not most) of the documents not already provided in discovery would likely be duplicates of the documents reviewed by the Court in camera. To the extent that is so, any such documents would be subject to the limitations set forth in this Memorandum Order.
It is so ordered.