Allgood v. Baptist Mem'l Med. Grp.

MARGARET ALLGOOD, Plaintiff, v. BAPTIST MEMORIAL MEDICAL GROUP, INC.,and BAPTIST MEMORIAL HEALTH CARE CORPORATION, Defendants.

No. 19-2323-JTF-tmp

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TENNESSEE WESTERN DIVISION

January 7, 2020

ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION TO COMPEL

Before the court by order of reference is Margaret Allgood's motion to compel certain discovery responses from Baptist Memorial Medical Group, Inc. and Baptist Memorial Health Care Corporation (collectively "Baptist"). (ECF Nos. 32 & 33.) For the reasons outlined below, the motion is GRANTED in part and DENIED in part.

I. BACKGROUND

This is a False Claims Act retaliation suit. Allgood alleges that she was suspended with pay for four months by Baptist because she reported Medicare billing fraud by Dr. John King, a doctor at Baptist. Baptist contends Allgood was suspended as part of an investigation into whether she accessed patient records in violation of the Health Insurance Portability and Accountability Act ("HIPAA"). Allgood concedes she accessed HIPAA-protected records but argues she did so only to report fraud internally, which is allowed by HIPAA, and that the suspension was pretextual.

The parties disagree about whether certain discovery requests are relevant and proportional to the needs of the case. Most of the disputed discovery requests can be grouped into two categories: (1) requests about whether Baptist committed billing fraud and (2) requests about Baptist's investigation into Allgood's purportedly unauthorized access to patient records. Allgood contends that this information is relevant because it goes to pretext while Baptist argues otherwise. The parties also dispute various other discovery issues, including: (1) requests about the termination of another employee, Kathy Long, who allegedly also reported misconduct by Dr. King; (2) requests about Dr. King's background and subsequent resignation from Baptist; (3) requests about HIPAA and False Claims Act compliance training; and (4) a request for all communications about Allgood from the date Allgood claims she learned of the billing fraud to shortly before her suspension.

II. ANALYSIS

A. Scope of Discovery

The scope of discovery is governed by Federal Rule of Civil Procedure 26(b)(1), which provides that "[p]arties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case[.]" Fed. R. Civ. P. 26(b)(1). The party seeking discovery isobliged to demonstrate relevance. Johnson v. CoreCivic, Inc., No. 18-CV-1051-STA-tmp, 2019 WL 5089086, at *2 (W.D. Tenn. Oct. 10, 2019). Upon a showing of relevance, the burden shifts to the party opposing discovery to show, with specificity, why the requested discovery is not proportional to the needs of the case. William Powell Co. v. Nat'l Indem. Co., No. 1:14-CV-00807, 2017 WL 1326504, at *5 (S.D. Ohio Apr. 11, 2017), aff'd sub nom. 2017 WL 3927525 (S.D. Ohio June 21, 2017), and modified on reconsideration, 2017 WL 4315059 (S.D. Ohio Sept. 26, 2017). Six factors are relevant to proportionality: (1) "the importance of the issues at stake in the action;" (2) "the amount in controversy;" (3) "the parties' relative access to relevant information;" (4) "the parties' resources;" (5) "the importance of the discovery in resolving the issues;" and (6) "whether the burden or expense of the proposed discovery outweighs its likely benefit." Fed. R. Civ. P. 26(b)(1).

B. False Claims Act Retaliation

The False Claims Act "'is an anti-fraud statute prohibiting the knowing submission of false or fraudulent claims to the federal government.'" Fakorede v. Mid-S. Heart Ctr., P.C., 182 F. Supp. 3d 841, 848 (W.D. Tenn. 2016). It is unlawful to retaliate against an employee who engages in "lawful acts" to attempt to stop what the employee believes in good faith to be a violation of the FalseClaims Act.¹ Miller v. Abbott Labs., 648 F. App'x 555, 560 (6th Cir. 2016). "[C]ollecting information about potential fraud" is protected activity under this provision. Id.

Retaliation claims under the False Claims Act "proceed under the same rules applicable to other employment-related retaliation claims." Jones-McNamara v. Holzer Health Sys., 630 F. App'x 394, 397-98 (6th Cir. 2015). "To establish a prima facie case, the plaintiff must show the following elements: (1) she was engaged in a protected activity; (2) her employer knew that she engaged in the protected activity; and (3) her employer discharged or otherwise discriminated against the employee as a result of the protected activity." Id. After the plaintiff establishes a prima facie case, the burden of production shifts to the defendant to give a legitimate, non-discriminatory reason for the adverse employment action. Id. The plaintiff then has the burden to show that the defendant's proffered reason is pretextual. Id.

C. State Privilege Law

Baptist first argues that T.C.A. § 68-11-272(c)(1) protects much of the requested discovery from disclosure. T.C.A. § 68-11-272(c)(1) creates a state law privilege for Quality Improvement Committees ("QICs") created by healthcare providers to, among other things, make sure healthcare providers are in compliance with state and federal law. It protects the "records" of QICs, as well as statements made to QICs during an investigation. T.C.A. § 68-11-272(c)(1). The purpose of this privilege is to allow healthcare organizations to freely examine how they can improve their services without fear that candid statements will be used against them. Pinkard v. HCA Health Servs. of Tennessee, Inc., 545 S.W.3d 443, 452 (Tenn. Ct. App. 2017).

"[I]n federal question cases, state privilege law does not apply." LeMasters v. Christ Hosp., 791 F. Supp. 188, 189 (S.D. Ohio 1991). Baptist has not identified any caselaw that suggests federal privilege law recognizes a parallel privilege to the one established by T.C.A § 68-11-272(c)(1). Indeed, federal courts have repeatedly held no parallel federal privilege exists. Coone v. Chattanooga-Hamilton Cty. Hosp. Auth., No. 1:16-CV-481, 2017 WL 9476830, at *4 (E.D. Tenn. May 18, 2017); Levans v. Saint Francis Hosp.-Bartlett, Inc., No. 15-CV-2142-SHL-tmp, 2015 WL 11017962, at *3 (W.D. Tenn. Sept. 18, 2015); United States v. Jackson Madison Cty. Gen. Hosp., No. 12-2226, 2012 WL 12899055, at *3 (W.D. Tenn.Oct. 16, 2012). Because this is a federal question case, T.C.A. § 68-11-272(c)(1) does not apply.

D. Billing Fraud

Baptist objects to the requested discovery about whether it engaged in billing fraud. Allgood, Baptist asserts, does not need to prove that Baptist defrauded the government, only that she was punished for reporting fraud. As a result, Baptist contends the sought-after discovery is irrelevant and not proportional to the needs of the case.

"[E]vidence of motive is extremely relevant in the pretext analysis." Dilback v. Gen. Elec. Co., No. CIV.A 4:00-CV-222, 2008 WL 4372901, at *4 (W.D. Ky. Sept. 22, 2008). As a result, evidence that a company engaged in fraud is relevant to whether it punished an employee for reporting fraud. Id. "It should be obvious that a company with real misconduct to hide would have more motive to terminate a whistle-blowing employee than would a company with clean hands." Blakeslee v. Shaw Infrastructure, Inc., No. 3:09-CV-0214-RRB, 2010 WL 2985812, at *2 (D. Alaska July 27, 2010). Whether Baptist engaged in billing fraud is thus relevant to whether Baptist punished Allgood for reporting billing fraud.

Baptist distinguishes Dilback and Blakeslee by pointing out that those cases were decided before the 2015 amendments to Rule 26, and thus use outdated language when defining the scope of discovery — whether the evidence "may be relevant" or is"reasonably calculated to lead to the discovery of relevant evidence[.]" 2008 WL 4372901 at *4; 2010 WL 2985812 at *2. But the 2015 amendments did not "change the basic principle that Rule 26 is to be liberally construed to permit broad discovery." Durand v. Hanover Ins. Grp., Inc., No. 3:07-CV-00130-HBB, 2016 WL 9458551, at *2 (W.D. Ky. Oct. 27, 2016). Even under the current rule, the information sought is relevant.

In passing, Baptist argues that the sought-after discovery is not proportional to the needs of the case. But Baptist does not articulate any specific way that this discovery would be disproportionate — its position is that because the information sought is irrelevant, any discovery on this issue is necessarily disproportionate. However, the information is relevant, and the court has not found any deficiencies in the disputed requests. The motion to compel is GRANTED as to Requests for Production 1, 2, 3, 4, 24, 25, 26, 29, 36, 37, and 38 as well as Interrogatories 1, 2, and 17.²

E. HIPAA Violations

Baptist objects to the requested discovery regarding its investigation into Allgood's access to patient records. Baptistconcedes that Allgood did not violate HIPAA. As a result, Baptist avers that information about the investigation into whether Allgood violated HIPAA is irrelevant. Allgood disputes whether it is clear that Baptist is conceding that she did not violate HIPAA, and further argues that the sought-after discovery is relevant to whether Baptist's investigation was pretextual. Baptist further argues the information sought is disproportional to the needs of the case because it would involve the disclosure of personal health information.

Regardless of whether Baptist concedes that Allgood did not violate HIPAA, Allgood still needs to show the investigation of her access to patient records was pretextual in order to prevail. Evidence about the investigation is relevant to whether the investigation was pretextual. If Baptist did not actually investigate Allgood's purported HIPAA violation — or if it did, but only in a cursory way — it may tend to show Allgood's suspension was pretextual. Similarly, if there is little evidence that Allgood violated HIP...