United States of America, ex rel. v. Sightpath Medical, Inc.

Background

Relator Kipp Fesenmaier filed a qui tam complaint in 2013 against, among others, The Cameron-Ehlen Group, Inc., doing business as Precision Lens, and Paul Ehlen. The United States later intervened and filed its own complaint. It alleged that Precision Lens and Ehlen provided kickbacks to physicians in violation of the Anti-Kickback Statute, causing false or fraudulent claims to be submitted to federal health-care programs, including Medicare, in violation of the False Claims Act. The complaint also asserted common-law claims for unjust enrichment and payment by mistake.

The Federal Bureau of Investigation investigated the defendants’ business activities and interviewed potential witnesses. In February 2019, the defendants moved to compel discovery. They sought a more specific response to an interrogatory asking the United States to identify each alleged false claim, as well as reports and notes from witness interviews conducted during the investigation.

Magistrate Judge’s Discovery Order

On April 2, 2019, United States Magistrate Judge David T. Schultz granted the motion to compel. He ordered the United States to identify each alleged false claim no later than 45 days before the close of discovery. He also ordered production of documents responsive to the request for interview reports and notes.

The magistrate judge concluded that the United States had not shown that interview materials created before 2014 were prepared in anticipation of litigation, as required for protection under the work-product doctrine. For materials created after the United States Attorney’s Office became involved in the investigation, the magistrate judge concluded that any factual material was discoverable because the defendants had shown substantial need and an inability to obtain equivalent information without undue hardship. The order allowed the United States to submit documents for in-camera review, meaning private review by the court, to identify protected information that could be redacted or withheld.

District Court Review

The United States appealed the nondispositive discovery ruling. Under the applicable standard, the district court could modify or set aside the magistrate judge’s order only if it was clearly erroneous or contrary to law. A ruling is clearly erroneous when the reviewing court is firmly convinced that a mistake occurred; a ruling is contrary to law when it fails to apply or misapplies relevant law or procedural rules.

Identification of False Claims

The United States argued that identifying every alleged false claim 45 days before discovery closed would be laborious and time-consuming and that the defendants should have to show substantial need for that timing requirement. The court rejected the argument. The United States provided no legal authority requiring such a showing, and a party’s preference for a different schedule was not enough to establish clear error. The court also noted that the United States could seek an extension of the discovery deadline and had obtained one while the appeal was pending. The court affirmed this part of the magistrate judge’s order.

Pre-2014 Interview Materials

The work-product doctrine generally protects materials prepared in anticipation of litigation or for trial. The party claiming protection bears the burden of establishing that the materials were prepared because of the prospect of litigation. The doctrine distinguishes ordinary, or factual, work product from opinion work product, which reflects an attorney’s mental impressions, conclusions, opinions, or legal theories. Ordinary work product may be discoverable upon a showing of substantial need and inability to obtain the equivalent without undue hardship; opinion work product receives much stronger protection.

The court held that the magistrate judge did not err in finding that the United States had not carried its burden for the pre-2014 FBI interview materials. The record showed only that the FBI case agent vaguely recalled speaking with an Assistant United States Attorney before some interviews. That information did not establish that the materials were prepared in anticipation of litigation. The court also upheld the conclusion that any such materials could be discoverable based on the defendants’ substantial need, subject to the possibility of in-camera review and redaction.

Post-2013 Interview Materials

The United States argued that all interview materials created in 2014 and later were opinion work product because an Assistant United States Attorney was involved in every interview. The court rejected that categorical argument. Attorney involvement alone did not establish that every document revealed legal theories or mental impressions. The record did not show what the documents contained, who drafted them, under whose direction they were prepared, or their purpose. Some documents might instead contain near-verbatim accounts of interviews and therefore raw factual information.

The court upheld the requirement that the United States submit the post-2013 materials for in-camera review to determine which portions, if any, qualified as protected opinion work product. The court also upheld the finding that factual work product was discoverable. The interview materials were considered unique because they contained contemporaneous testimony and could show how witnesses’ memories changed. The defendants had shown substantial need and an inability to obtain the same information without undue hardship, and the United States’ repeated requests to extend the intervention deadline contributed to that situation.

Disposition

Judge Wilhelmina M. Wright affirmed the April 2, 2019 order of Magistrate Judge David T. Schultz in full. The opinion did not decide the underlying False Claims Act or Anti-Kickback Statute allegations; it resolved the United States’ appeal of the discovery order.