United States v. Sutter Health

Background

Relator Laurie M. Hanvey brought this action alleging that Sutter Health and other defendants violated the False Claims Act and California False Claims Act. She alleged that Sutter entered compensation arrangements with physician groups that violated the Anti-Kickback Statute and Physician Self-Referral Law, and that Sutter then submitted or caused others to submit false claims related to services provided to patients referred by those groups.

Sutter’s summary-judgment motion described a process in which its administrators worked with its legal team, used third-party fair-market-value appraisals, and reviewed physician agreements and timesheets. Sutter had also stated that it did not intend to rely on an advice-of-counsel defense or a good-faith defense based on its interpretation of the law or belief in the legality of its conduct.

The privilege dispute

Hanvey argued that Sutter’s description of consultation with its lawyers waived attorney-client privilege over about 400 documents concerning Sutter’s internal review of the fair market value and commercial reasonableness of the financial arrangements. She asked the court to determine that the privilege was waived and to order production of the documents.

Sutter argued that its references to working with its legal department were only general background information, that it was not relying on legal advice for its defenses, and that Hanvey’s request was procedurally delayed. The court declined to find Hanvey’s motion dilatory because of the volume of motion practice in the case.

Ruling

The court held that Sutter’s general references to its legal department did not waive attorney-client privilege. The court characterized those references as an undetailed description of Sutter’s general process and noted Sutter’s repeated position that it was not asserting an advice-of-counsel defense. The court therefore denied Hanvey’s request to compel production of the designated documents.

The court nevertheless found that narrower relief was appropriate. It concluded that Sutter had cited its collaboration with its legal team to support its description of a rigorous process, and that allowing Sutter to present that evidence could create an unfair impression that it relied on legal advice. Relying on the approach of another federal court, the court ordered that Sutter may not introduce at trial any evidence, testimony, or arguments that it worked with its legal team as part of its process for reviewing the fair market value and commercial reasonableness of the relevant financial arrangements.

Disposition

The court denied the relator’s motion for determination as to waiver of privilege. It granted alternative relief by prohibiting Sutter from introducing the specified evidence, testimony, or arguments at trial.