United States District Court, D. Massachusetts
UNITED STATES OF AMERICA, ex rel. CHRISTOPHER DRENNEN, Relator,
v.
FRESENIUS MEDICAL CARE HOLDINGS, INC., d/b/a FRESENIUS MEDICAL CARE NORTH AMERICA, Defendant.
OPINION AND ORDER
George
A. O'Toole, Jr. United States District Judge
The
relator and government allege in this False Claims Act
litigation that Fresenius Medical Care Holdings, Inc.
(“Fresenius”) fraudulently billed Medicare for
excessive and medically unnecessary hepatitis B surface
antigen (“BsAG”) tests. Fresenius has filed two
motions to compel discovery of materials that the government
has withheld under assertions of the deliberative process and
attorney-client privileges.
I.
Motion to Compel Testimony of Center for Medicare and
Medicaid Services' Corporate Representative
The
first motion seeks to compel Dr. Michael Handrigan, the Rule
30(b)(6) designee for the Centers for Medicare and Medicaid
Services (“CMS”), to answer questions concerning
the substance of conversations he had with his attorneys
during a deposition break that preceded a change in his
testimony. Fresenius claims that the government waived or
admitted the inapplicability of the attorney-client privilege
to these communications, but it is apparent from the
deposition transcript that the government's purported
admission was nothing more than a brief, and quickly
corrected, misunderstanding. The circumstances shown on the
record do not come close to an intentional waiver of the
attorney-client privilege. The motion is denied.
II.
Motion to Compel Documents and Testimony of Government
Audit
The
second motion seeks the production of documents and
deposition testimony related to the government audit of
Fresenius laboratory testing and Medicare billing practices
for patients with end-stage renal disease
(“ESRD”). The audit was announced in late 2007 by
the Office of Inspector General (“OIG”) of the
Department of Health and Human Services and was conducted by
auditors in OIG's Office of Audit Services
(“OAS”).
The
audit had two expressed objectives. The first was to
determine whether the composite-rate tests that Fresenius had
billed for ESRD patients complied with Medicare rules and
requirements. The second objective was to gather data on
other separately billable tests-i.e., tests not covered by
the composite rate-that were commonly provided to ESRD
patients, and potentially to report any patterns and trends
in the data to CMS. OIG stated that it would issue a final
report of its findings concerning the first objective, but
that no report would be issued concerning information
gathered as to the second objective unless a qualitative
assessment of the gathered data was made. In other words, as
to the second objective of the audit, OAS from the outset did
not anticipate necessarily issuing any concluding report or
decision. OAS also requested, and subsequently received from
Fresenius, all records of tests relevant to either of the
objectives that occurred within the timeframe randomly
selected by OAS. Because data concerning separately billed
BsAG testing fell within the scope of the second objective,
all requested records of those tests during the audit sample
period were produced.
In
planning and conducting the audit, OAS auditors communicated
and exchanged documents among themselves and with attorneys
in other government offices, two of which are particularly
relevant here. One was the Office of Counsel to the Inspector
General (“OCIG”). OCIG serves as in-house legal
counsel to OIG, providing legal advice, representation, and
support to its component offices with respect to all aspects
of its operations. The other was the Center for Medicare and
Medicaid Services Division of the Office of General Counsel
(“OGC”). OGC serves as legal counsel to CMS and
provides legal advice and counsel to agency personnel on
issues relating to fraud and abuse in Medicare and Medicaid
programs.
In
March 2010, more than two years after the audit was
announced, OIG issued as planned a final report regarding the
first objective of the OAS study concerning composite-rate
tests. It did not issue a report regarding the second audit
objective concerning separately billable tests, a quiescence
the original plan had contemplated as possible. It did share
in an informal way some of the information gathered regarding
separately billed tests with Fresenius and with other
government officials.
In this
litigation the government has produced many of the
communications and data from the audit, but it continues to
withhold 139 documents and responses to 11 objected-to
deposition questions. Briefly put, it claims that all the
withheld matters are protected by the “deliberative
process privilege” because they are
“predecisional” and “deliberative”
with respect to the March 2010 report, and that most of them
are also protected by the attorney-client privilege because
they reflect discussions between auditors and legal staff.
A.
Deliberative Process Privilege
The
so-called “deliberative process” privilege
provides a government agency with protection against
compelled disclosure of “documents reflecting advisory
opinions, recommendations and deliberations comprising part
of a process by which governmental decisions and policies are
formulated.” Dep't of Interior v. Klamath Water
Users Protective Ass'n, 532 U.S. 1, 8 (2001)
(quoting NLRB v. Sears, Roebuck & Co., 421 U.S.
132, 150 (1975)). Information that is simply factual is
generally excluded from protection by the privilege unless it
would reveal details of the decisional process.
Providence Journal Co. v. U.S. Dep't of Army,
981 F.2d 552, 559 (1st Cir. 1992).
In
order for the privilege to apply, the government here must
establish that a document is both “predecisional, that
is, ‘antecedent to the adoption of agency policy,
'” and “deliberative, that is, actually
‘related to the process by which policies are
formulated.'” Texaco P.R., Inc. v. Dep't of
Consumer Affairs, 60 F.3d 867, 884 (1st Cir. 1995)
(quoting Nat'l Wildlife Fed'n v. U.S. Forest
Serv., 861 F.2d 1114, 1117 (9th Cir. 1988)).
The
privilege is a qualified one. Even if a document is properly
characterized as both predecisional and deliberative, its
nondisclosure is not automatically justified. Id. at
885. The public interest in protecting the deliberative
process must be balanced against the movant's particular
need for the information in the litigation. Id.;
Ass'n for Reduction of Violence v. Hall, 734
F.2d 63, 66 (1st Cir. 1984). A litigant's showing that
the information sought is relevant, helpful, and unavailable
from other sources, or essential to ...