Summary
In Medtronic, Inc., 2000 WL 1478476, the court determined that, though relator had asked for discovery covering a twenty-year period, because the "complaint allege[d] that [relator] first observed the alleged misconduct when he relocated to Wichita as a Medtronic sales representative in October 1991" and "was subsequently terminated in August 1994," "[a] reasonable temporal scope of discovery, absent other justification, is January 1990 to January 1995."
Summary of this case from United States ex rel. Ruscher v. Omnicare, Inc.Opinion
Case Nos. 95-1236-MLB, 96-1309-MLB.
July 13, 2000
MEMORANDUM AND ORDER
This qui tam action is before the court on defendants' motions for protective orders (Doc. 87 93). Plaintiff opposes the motions. For the reasons set forth below, the motions shall be granted.
Case No. 95-1236 is Regan's qui tam action and Case No. 96-1309 is his action for wrongful discharge. The cases were consolidated for purposes of discovery and pretrial management. Although Regan sues as both a "relator" and in his individual capacity, the court will refer to plaintiff in the singular for editorial clarity. The discovery disputes relate to his qui tam allegations.
Background
Regan, as a qui tam "relator," filed this action against Medtronic, Inc. (Medtronic) and two of its employees, Matous and McCormack, under the False Claims Act (FCA), 31 U.S.C. § 3729,et seq. Medtronic manufacture and distributes medical devices including cardiac pacemakers, leads, valves, and defibrillators. Matous is a salesman; McCormack is a clinical specialist who provides technical assistance to Medtronic salesmen and customers. Both Matous and McCormack work in Medtronic's Wichita sales district. Regan alleges that all three defendants violated Sections 3729(a)(1), (2), (3), and (7) of the FCA by withholding warranty credits due hospitals.
Regan's FCA theory is simple but convoluted. He claims that Medtronic offers warranty credits for its pacemaker and related cardiac products which have been "explanted" from patients. In order to receive this credit, the device must be returned to Medtronic. Because Medtronic's salesmen are compensated under a formula which deducts warranty credits from total sales revenue, salesmen have an incentive not to collect and return devices for the warranty credits. Regan specifically alleges that Matous and McCormack failed to turn in explanted pacemakers for the credit, and thus increased their compensation. Regan contends that Medtronic's failure to fully account for warranty credits results in the payment of inflated claims for Medicare services by the government.
This theory is further convoluted by the fact that the Medicare payment to the hospital is not directly affected by the invoices submitted by Medtronic to the hospital. The dollar amount paid by the government to a hospital for implanting a pacemaker is determined by the Health Care Financing Agency (HCFA). HCFA predetermines the amount payable for a specific procedure and then adjusts that figure based on the hospital's case mix and historical data. It appears that any failure to issue warranty credits may indirectly result in HCFA allowing higher Medicare reimbursement rates to those hospitals which have not received their warranty credits.
Analysis
Defendants' motions for protective orders arise in the context of written discovery propounded by plaintiff. Whether to enter a protective order rests within the sound discretion of the court.Thomas v. International Business Machines, 48 F.3d 478, 482 (10th Cir. 1995). Fed.R.Civ.P. 26(c) provides that the court, upon a showing of good cause, "may make any order which justice requires to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense." The party seeking a protective order has the burden of persuasion to show good cause for the order. Sentry v. Shivers, 164, 164 F.R.D. 255, 256 (D. Kan. 1996).In addition to deciding whether to enter a protective order under Rule 26(c), this court has a duty to prevent discovery abuse on its own initiative. See, Koch v. Koch Industries, Inc., No. 85-1636-C, 1992 WL 223816 (D. Kan. Aug. 24, 1992). While discovery rules are accorded broad and liberal treatment, "discovery, like all matters of procedure, has ultimate and necessary boundaries." Hickman v. Taylor, 329 U.S. 495, 507 (1947). In setting proper boundaries for the scope of discovery, the court must "balance the inquirer's right to know against the responder's right to be free from unwarranted intrusions." Koch at *10 (quoting Mack v. Great Atlantic Tea Co. Inc., 871 F.2d 179, 187 (1st Cir. 1989). Because each case and its related facts vary considerably, limitations are set on a case by case basis. Id.
I. Medtronic's Motion For A Protective Order (Doc. 87)
Medtronic seeks a protective order (1) striking plaintiff's first set of interrogatories and production requests and (2) limiting the scope of discovery. A brief recitation of the case history provides the context necessary for consideration of this motion.
In October 1995, Regan filed this action under seal so that the United States might evaluate whether to intervene or allow Regan to proceed as a relator. The United States investigated and declined to intervene. Thereafter, Regan filed an amended complaint and Medtronic moved to dismiss for failure to state a claim under Fed.R.Civ.P. 12(b)(6) and 9(b). Judge Belot granted the motion, holding that Regan's complaint lacked specificity and failed to provide the "who, what, when, and where" required by Rule 9(b).
Regan moved for reconsideration and was granted leave to file a third amended complaint. The third amended complaint contained additional allegations concerning Matous and McCormack and listed seven pacemakers which allegedly were not returned for warranty credits at two hospitals located within the Wichita sales district. Once again, Medtronic moved to dismiss for failure to state a claim. This time Judge Belot concluded that the additional allegations satisfied the "who, what, when, and where" criteria and denied the motion.
Flush with the success of resurrecting his case, Regan served Medtronic with 20 interrogatories and 158 production requests which sought information and documents concerning (1) any type of pacemakers, cardiac pacemaker leads, and cardiac defibrillators (2) located in any Medtronic office within the 50 states or U.S. territories (3) from 1980 to the present. Medtronic responds that Regan's requests are overly broad, unduly burdensome, and lack relevance. Furthermore, Medtronic asserts that nationwide discovery of all aspects of its cardiac-related business over a twenty year period is unwarranted; therefore, a protective order should be granted. Regan counters that he is entitled to liberal discovery under the federal rules of civil procedure and that the protective order should be denied.
The production requests are exceptionally expansive, requesting virtually every document in Medtronic's possession concerning cardiac devices.
In support of its motion, Medtronic submits an affidavit by Shelly Zacharias, a Medtronic paralegal, which states that Medtronic currently employs 800 salesmen in 54 districts and another 4,500 people in its "Cardiac Rhythm Management" unit. Records are stored in over 70 locations and during the past 20 years Medtronic was involved in the implant of 2.6 million cardiac devices. Zacharias asserts that the time and expense necessary to answer Regan's discovery requests are "too excessive to reasonably calculate" and would require Medtronic to contact "thousands of employees" and review "millions of documents."
After a careful review of Regan's 20 interrogatories and 158 production requests, the court concludes that a protective order is warranted. Although the complaint only alleges wrongful conduct by Matous and McCormack in the Wichita sales district, Regan nonetheless seeks nationwide discovery concerning all Medtronic salesmen over a twenty year period. When determining the scope of discovery, the natural focus is on the geographical boundaries referenced within the complaint. See Mackey v. IBP, Inc., 167 F.R.D. 186, 195 (D. Kan. 1996). In the absence of some other reasonable justification, the request for "nationwide" information is patently overbroad.
Wrapping himself in the American flag, Regan argues that he is entitled to "nationwide" discovery because he has alleged "nationwide" fraud and brings this case on behalf of the government to "vindicate the public interest to recoup overcharges in all fifty states." This argument is unpersuasive. The court has carefully studied the language of the complaint and disagrees with Regan's characterization that he has alleged a claim of "nationwide" fraud. Regan narrowly avoided dismissal under Rules 12(b)(6) and 9(b) only after adding specific allegations concerning the conduct of Matous and McCormack at two Kansas hospitals. This additional information provided the necessary "who" (Matous, McCormack, and Medtronic), "what" (warranty credits), "when" (1991-94), and "where" (the Wichita sales district) required by Rule 9(b). The focus of the complaint unequivocally addresses only events in the Wichita sales district. Thus the court will limit the scope of discovery to that geographical area.
At oral argument on the motion to dismiss the third amended complaint, Regan declined to extend the geographical boundaries of the lawsuit: "We specified the territory served by Mr. Matous and Ms. McCormack. We specified the district. We specified the dates and said hospitals they served. That is pleading. That is sufficient." (Doc. 67, transcript of October 8, 1998 hearing at page 21). The present suggestion that Regan has asserted "nationwide" fraud is a regression to the generalized pleading which the court previously rejected. With the exception of the Wichita sales district, the complaint lacks any specifics concerning the "who, where, and when."
In the alternative, Regan argues that he should be permitted nationwide discovery because evidence in other districts is relevant to issues of fraud. Sentry Insurance v. Shivers, No. 95-2025-GTV, 1996 WL 61771 (D. Kan. Feb. 6, 1996) (evidence of same or similar fraudulent misrepresentations made to someone other that the injured party is relevant to show knowledge, malice, and intent to defraud). Relevance, however, does not end the inquiry. When dealing with a request for nationwide discovery, the critical evaluation is whether the need for the information, considering its relevance and the nature of the case, outweighs the burden of the request. Id.
The court finds that the burden of answering for other than the Wichita sales district outweighs the possible relevancy of such evidence. Regan's discovery is extraordinarily burdensome, requiring Medtronic to contact 5,300 employees and review millions of documents at 70 storage locations over a 20 year period. Moreover, the information sought is well beyond the issue of whether a salesman failed to turn in a device for a warranty credit. The relevance of Regan's requests is dubious at best. Litigants have an obligation to tailor discovery to suit the particular exigencies of the litigation. "They ought not be permitted to use broadswords where scalpels will suffice, nor to undertake wholly exploratory operations in the vague hope that something helpful will turn up." Koch, at *10 (quotingMack v. Great Atlantic and Pacific Tea Co., Inc., 871 F.2d 179, 187 (1st Cir. 1989). Regan brandishes a broadsword where a scalpel would suffice and the burden of discovery, at least at this time, outweighs the relevancy.
For example, Production Request No. 102 seeks "[a]ll documents pertaining to any changes in the quality control and/or quality assurance procedures that defendant adopted pertaining to its manufacture of pacemakers, pacemaker leads, defibrillators, or other pacemaker activities. . . ." Production Request No. 131 requests "[a]ll documents relating to any and all complaints that defendant received concerning . . . Medtronic, Inc.'s pacemakers."
The court is particularly troubled by Regan's failure, after five years, to identify a single instance of misrepresentation by anyone other than Matous or McCormack.
Regan's request for discovery covering a period of 20 years is also overly broad, unduly burdensome, and unreasonable. The third amended complaint alleges that Regan first observed the alleged misconduct when he relocated to Wichita as a Medtronic sales representative in October 1991. He was subsequently terminated in August 1994. A reasonable temporal scope of discovery, absent other justification, is January 1990 to January 1995.
Regan defined the relevant time period for his 20 interrogatories and 158 production requests as "1980 to the present unless specifically stated otherwise."
Medtronic requests a further limit on the scope of discovery to the seven pacemakers listed in paragraph 43 of the third amended complaint. This request is too restrictive and the court will allow Regan some discovery latitude concerning pacemakers and related cardiac products sold by Matous and McCormack.
Having reviewed Regan's discovery requests in the context of the limitations on the scope of discovery discussed above, the court concludes that the requests are fatally flawed and that Medtronic's request for a protective order should be granted to prevent annoyance, oppression, undue burden, and expense. Regan may redraft and serve new interrogatories and production requests which incorporate this court's ruling on the scope of discovery.
II. Defendants' Joint Motion For a Protective Order (Doc. 93)
Medtronic, Matous, and McCormack (collectively, "defendants") jointly move for a protective order concerning other discovery requests by Regan. Specifically, they request an order quashing (1) Regan's first set of Request For Admissions and (2) his second set of Requests for Production. The motion claims the requests are duplicative, oppressive, unduly burdensome and otherwise improper. Regan counters that they are proper and that he is entitled to responses under the liberal discovery rules of civil procedure. After review of the requests and arguments of counsel, the court concludes that a protective order quashing both Requests For Admissions and Production should be entered.
Regan served defendants with a "combined" request for admissions and production. The "request" was 105 pages in length and contained 506 requests for admission and 253 production requests. The geographical scope (nationwide) and temporal scope (1980 to the present) are the same as those proposed in Regan's first set of interrogatories and production requests and the arguments are also the same. Without repeating its analysis (at pp. 5-9), the court reaffirms its ruling that the geographical scope shall be limited to the Wichita sales district and the temporal scope shall be limited to 1990-95.
In addition to being improper in terms of geographical and temporal scope of discovery, the requests are otherwise improper. The impropriety is best illustrated with reference to a sample of the requests for admission and document production:
46. Medtronic's policy of requiring that explanted medical devices be returned to the manufacturer was stated in Medtronic's written advisories.
Admit ____ Deny ____
46A. Please admit that there are no documents that support or tend to support the veracity of your denial, if applicable, of Requests for Admission No. 46 above.
Admit ____ Deny ____
46B. If you deny Request for Admissions No. 46 and 46A please provide all documents that support or tend to support the veracity of your denial of the same.
Request 46A is a superfluous request. It adds nothing to the discovery other than "grist for the mill." Rather than engage in this convoluted approach, plaintiff should simply request production of the documents. Every admission requested contains a companion request that defendants admit or deny whether documents exist. Those companion requests shall be struck as duplicative and superfluous.
The court also finds that the remainder of Regan's Requests for Admission are excessive and duplicative. For example, Request No. 48 asks defendants to admit or deny that "Regan received and returned to Medtronic devices that were replaced in medical procedures." Request No. 146 asks defendants to admit or deny that "Regan sometimes returned explanted devices to Medtronic." (emphasis added). Request No. 147 asks defendants to admit or deny that "Regan routinely returned explanted devices to Medtronic." (emphasis added). Regan's requests are more than an attempt to nail down the disputed core facts of the case; they are an attempt to "pick every nit that a squad of lawyers could possibly see in it." Wigler v. Electronic Data Systems Corp., 108 F.R.D. 204, 205 (D. Maryland 1985). The requests are most assuredly excessive and the court will enter an order protecting defendants from the annoyance, expense, and burden of responding to the admissions and related production requests.
The court reviewed each and every request and finds duplications too numerous to detail in the body of this opinion. Defendants' exhibit 3 (attached) reflects the redundant and excessive nature of the various admission requests.
IT IS THEREFORE ORDERED that defendants' motions for protective orders (Doc. 87 and 93) are GRANTED. Regan may redraft and serve new interrogatories, production requests, and requests for admissions consistent with the limitations expressed in this opinion.
USA v. MEDTRONIC, ET AL., 95-1236-MLB and REGAN v. MEDTRONIC, 96-1309-MLB Medtronic's Analysis of Plaintiffs' Requests for Admission dated August 19, 1999Plaintiff wrongly alleges that the "relevant time" period for purposes of this action is 19 years — going back to 1980. Plaintiff also wrongly asserts that this action pertains to all Medtronic medical devices sold anywhere in any city, state, and territory of the United States by any Medtronic employee.