United States v. Sutter Health

Nature of the ruling

This document contains tentative rulings for a pretrial conference. It resolves motions in limine, objections to witnesses, proposed voir dire questions, proposed jury instructions, and administrative matters for the upcoming trial. It does not enter judgment on the underlying claims.

Motions in limine

The court ruled as follows:

- R1 and D1A — Prior settlements: Granted in part and denied in part. The court will not allow evidence of settlements in the case because of the risk that the jury would infer liability from them. It also was not inclined to allow argument that the Department of Justice investigated the relator’s allegations. The court will allow evidence of conduct during the settlement period because it is relevant to claims made in October and November 2014 and to issues such as an alleged ongoing pattern or scheme, compliance processes, and knowledge. - R2 — Damages testimony from Michael Salve, Ph.D.: Denied. The court found his opinion relevant to damages if the relator cannot provide evidence supporting Ms. DeMario’s method of including claims involving a Physician Group doctor. - R3 — Sutter Health’s Office of Inspector General self-disclosure: Granted. The court found the self-disclosure relevant to Sutter Health’s knowledge that compensating physicians based on inadequate time sheets was improper. - R4 — Evidence related to 30(b)(6) testimony: Denied. The court identified an untimely discovery dispute. - R5 — Argument that the government was not harmed because billed services were medically necessary: Granted. The court ruled that medical necessity is not relevant to whether the government was harmed or to the amount of damages. The ruling does not prevent defendants from arguing that medical director contracts or other challenged compensation arrangements were fair market value or commercially reasonable because the services were necessary. - R6 — Claims that the relator improperly obtained Sutter Health’s documents: Granted. The court ruled that describing the acquisition as improper, theft, or stealing conflicted with whistleblower protections and the requirement that whistleblowers provide evidence to the government when bringing a qui tam action, meaning an action brought by a private person on the government’s behalf. - R7 — Sutter Health’s nonprofit status and charitable activities: Granted in part and denied in part. Defendants may identify Sutter Health as a nonprofit entity. They may not argue from its nonprofit status or charitable works because they disclaimed during discovery any intention to rely at trial on a lack-of-profit motive. - D1B — Limiting the relator’s testimony to personal knowledge: Granted. The relator stated that she would not testify about facts outside her personal knowledge. - D2 — Testimony from Stanley Sokolove: Denied. The court found that his opinion that the Centers for Medicare & Medicaid Services would not have reimbursed claims was not an improper legal opinion because he was not opining that the claims violated the Anti-Kickback Statute or Stark Law. His opinion was based on improper billing practices and did not depend on “Incident To” guidance. - D3 — Executive compensation evidence: Deferred. Such evidence may be relevant if the compensation methodology was affected by referral volume. The court stated that, without that showing, the evidence would be excluded. - D4 — References to criminal statutes: Granted. The prejudicial effect of referring to potential criminal violations or criminal liability outweighed the limited value of using criminal penalties to show a party’s state of mind. The ruling does not bar the relator from using the word “incriminating.” - D5 — The relator’s burden of proof on False Claims Act claims: Granted. The relator agreed not to misstate the burden of proof. - D6 — Unrelated litigation and settlement agreements: Granted in part and denied in part. The court stated that the Office of Inspector General self-disclosure was admissible, while settlement agreements were addressed by the court’s prior settlement-evidence ruling. - D7 — Claims submitted to managed-care organizations: Denied. The court found that claims submitted to government-managed-care organizations were material to the government’s decision to pay the claims.

Witness objections

Relator’s objections

The court sustained the relator’s objection to testimony from Dr. George Allman, Dr. Peter Anastassiou, Dr. Leigh Iverson, Dr. Keith Korver, Dr. Raveendra Nadaraja, Dr. Alex Yap, and Dr. Ed Yee. The court found that defendants had not timely identified these doctors as witnesses and rejected defendants’ argument that the relator could have sought additional discovery after a later declaration.

The court also sustained the relator’s objection to Michael Salve, Ph.D.’s opinions about “designated health services.” The court found that this opinion went beyond the scope of his response to Ms. DeMario’s supplemental report.

The court overruled the relator’s conditional objection to the FMV appraisers. The objection concerned the use of finalized fair-market-value reports without an opportunity to introduce draft reports and communications, rather than whether the appraisers could testify. The court also found no demonstrated prejudice because the relator acknowledged having an opportunity to subpoena them.

Defendants’ objections

The court overruled defendants’ objection concerning “Sutter Health Document Custodian(s).” Although the relator had not identified specific custodians, the court found good cause because Sutter Health’s production of at least 400 internal records made it difficult to determine which documents required a custodian.

The court sustained in part and overruled in part the objection concerning Brenna Arceo, Sarah Ham, and Bettina Brill. The relator agreed to withdraw Ms. Brill. The court allowed Ms. Arceo and Ms. Ham to testify about their involvement in obtaining fair-market-value appraisals concerning financial arrangements with Sac Cardio, including requested changes to a final version, and about communications with people outside Sutter Health. The court found that the proposed testimony did not seek privileged information or violate an earlier order concerning Sutter Health’s legal team.

The court overruled the objection concerning Laurie Hanvey and stated that the relator may testify about settled conduct. It also overruled the objection concerning Kathleen McNamara, Jerry Pratt, and Stanley Sokolove because the relator said she did not intend to elicit testimony that the court had excluded.

Voir dire and jury instructions

The court directed the parties to meet and confer and jointly propose no more than fifteen oral voir dire questions by October 29, 2024. The questions should not duplicate questions on the electronic questionnaire or questions already proposed by the parties.

The court will give standard preliminary instructions, including an instruction on the jury’s duty, but will give the remaining instructions at the end of trial. In the instruction summarizing the claims and defenses, the court ruled that language about the government’s decision not to intervene must be removed because that decision was irrelevant and prejudicial. The court directed the parties to jointly draft an appropriate instruction on the claims and defenses by October 28, 2024. The court stated that legal instructions concerning the False Claims Act, the Anti-Kickback Statute, the Stark Law, the California False Claims Act, and materiality would be given separately at the end of trial.

The court will not give the proposed instruction allowing jurors to question witnesses because jurors may not question witnesses in this trial. It also will not give the proposed instruction about expert testimony concerning intent, motives, or state of mind because the instruction was unnecessary; the parties may object if an expert gives improper testimony. The court declined to give a proposed instruction about statistical evidence because defendants had not shown it was necessary and the general expert-testimony instruction appeared sufficient. The parties were directed to modify the proposed instruction concerning electronic evidence to account for their responsibility to provide equipment and technical support.

Administrative matters

The court intends to impose time limits at trial. The parties will have three weeks for jury selection and presentation of their cases, and the case will go to the jury no later than November 25, 2024. The court estimated approximately 65 total hours for presenting the case, or 32.5 hours per side, after accounting for jury selection, jury instructions, and breaks. The parties also must prepare for and test their courtroom technology. The court included health precautions directing people with symptoms of COVID-19 or other respiratory viruses to notify the courtroom deputy.