St. Vincent Med. Grp. v. United States Dep't of Justice

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ST. VINCENT MEDICAL GROUP, INC. d/b/a ASCENSION MEDICAL GROUP -INDIANA Plaintiff, v. UNITED STATES DEPARTMENT OF JUSTICE, Defendant.

No. 1:22-mc-00011-JPH-MG

United States District Court, S.D. Indiana, Indianapolis Division

October 27, 2022

SEALED ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT

James Patrick Hanlon United States District Judge.

Ascension Medical Group wants to take the depositions of a Drug Enforcement Administration Investigator and an Assistant United States Attorney in connection with a civil lawsuit pending in an Indiana state court. The Department of Justice responds that it considered and denied Ascension's request under the applicable federal regulations and there is no basis for the Court to override the DOJ's decision. The parties have filed cross-motions for summary judgment. For the reasons that follow, Ascension's motion is DENIED, dkt. [15], and the Department of Justice's motion is GRANTED, dkt [17].^[1]

I. Facts and Background

In May 2020, while employed by Ascension, Dr. Timothy Story received a subpoena from the DEA seeking medical records for certain patients. Dkt. 16 at 4.^[2]

Over the next few months, DEA Diversion Investigator Andrew Ratcliff and Assistant United States Attorney Brad Blackington communicated with Dr. Story and his counsel regarding the subpoena. Dkt. 18 at 5. Most of the communications were with Mr. Blackington. Id.; dkt 19-1 at 10, 40 (Deposition transcript of Dr. Story's former counsel).^[3]Dr. Story and his clinics later received and responded to grand jury subpoenas. Id. Around the same time, Ascension received subpoenas for certain records and learned that Dr. Story had responded to the DEA subpoena. Dkt. 16 at 4; dkt. 17-2 at 1. Ascension fired Dr. Story in August 2020, and he later sued Ascension in Hamilton County Circuit Court for tortious interference and breach of his employment contract. Id. at 4-5.

A focal point of the Hamilton County lawsuit is whether Mr. Ratcliff or Mr. Blackington told Dr. Story that he was either the subject or target of a federal investigation. See dkt. 17-5 at 2. Ascension argues that this fact is material to the litigation. Dkt. 16 at 17.^[4]Ascension also interprets a letter that Dr. Story produced in the state court discovery as proving this fact. Dkt. 16 at 19; dkt. 24 at 16.

In connection with that suit, Ascension sought to depose both Mr. Ratcliff and Mr. Blackington about several topics, including:

• Their communications directly with Dr. Story;

• Their communications directly with Dr. Story's counsel, including concerning Dr. Story's response to the DEA document subpoena, Mr. Blackington's discussions with Barnes & Thornburg concerning a potential conflict of interest in their representation of Dr. Story, and the discussions about conducting an interview of Dr. Story; and

• Their communications directly with AMG personnel, including with respect to the various subpoenas served on Dr. Story and AMG and the interviews of AMG personnel.

Dkt. 17-2 at 2. Ascension informed the DOJ that it would not inquire into "any proceedings before any grand jury" or internal DOJ communications. Id. The DOJ denied Ascension's request after considering it under the DOJ's Touhy regulations. Dkt. 17-3; 28 C.F.R. § 16.21-16.28; see United States ex rel. Touhy v. Ragen, 340 U.S. 462, 470 (1951).

The DOJ informed Ascension that it "processed the request in accordance with 28 C.F.R. § 16.21-16.28" and concluded that Mr. Ratcliff only "had several short conversations with Dr. Story's office assistant and Dr. Story related to service of the DEA administrative subpoena," after which Mr. Blackington and Dr. Story's counsel took over the communications; he therefore possessed no information relevant to the topics that Ascension sought to ask him about. Dkt. 17-3 at 1. With respect to Mr. Blackington, the DOJ said that Ascension's request:

(1) violated the "grand jury secrecy rule," codified at Fed. R. Crim. P. 6(e);

(2) implicated the privacy rights of individuals who may have been part of a criminal investigation but were not charged with any crime; and

(3) would probe "AUSA Blackington's mental impressions or opinions about prosecution or investigatory decisions [which is] barred by the work product doctrine and law enforcement investigatory privilege."

Dkt. 17-3 at 1-2. The DOJ further noted that the relevant communications could be obtained from non-privileged sources such as Dr. Story, his present and former counsel, and Ascension's own records and employees. Id. at 2. Ascension renewed its request and the DOJ denied it for the same reasons. See dkt. 17-4.^[5]

Ascension then brought this suit under the Administrative Procedure Act, 5 U.S.C. §§ 701-706, asking this Court to review the "denial of [Ascension]'s discovery request" because it is a "final agency action for which there is no other adequate remedy in a court." Dkt. 1 at 3 (quoting 5 U.S.C. § 704).

Both Ascension and the DOJ have moved for summary judgment. Dkts. 15, 17.

II. Applicable Law

The parties dispute the applicable standard of review. Ascension argues that this Court should review the DOJ's denial of Ascension's request under Federal Rules of Civil Procedure 26 and 45 because "the issue at hand is simply a non-party's refusal to appear for depositions." Dkt. 16 at 9-11. The DOJ argues that the Court must review the denial of Ascension's request under the deferential APA standard. Dkt. 18 at 8-9.

The Court concludes that the APA framework applies here. Ascension argues that there is uncertainty regarding the applicable standard of review for evaluating a federal agency's decision to not comply with a non-party subpoena or request for information. Dkt. 16 at 8-10. But in the cases cited by Ascension, the plaintiffs sought information from federal agencies in the context of federal litigation. See Donald v. Outlaw, No. 2:17-cv-32-TLS-JPK, 2020 WL 2899689 at *7 (N.D. Ind. June 2, 2020) (where the plaintiff brought a § 1983 suit in federal court); Taylor v. Gilbert, No. 2:15-cv-00348-JMS-MJD, 2018 WL 1334935 at *2 (S.D. Ind. Mar. 15, 2018) (where a federal prisoner asserted Bivens Eighth Amendment violations in federal court). That's not the case here where the underlying litigation is in state court and no federal agency is a party to the litigation. This is an important procedural distinction because "a state court litigant's only recourse from a federal agency's refusal to comply with a state court subpoena is to bring an APA claim-necessarily governed by the APA arbitrary and capricious standard-against the agency in federal court." Watts v. SEC, 482 F.3d 501, 508 n.1 (D.C. Cir. 2007). That's essentially what happened here.

After the DOJ refused to comply with Ascension's request to take the depositions of Mr. Ratcliff and Mr. Blackington, Ascension exercised "the sole remedy" available and "file[d] a collateral action in federal court under the APA." Houston Business Journal, Inc. v. Off. of the Comptroller, 86 F.3d 1208, 1211-12 (D.C. Cir. 1996); dkt. 1 at 2 ¶ 4 ("[T]he appropriate means to challenge a federal entity's denial of discovery in related state court litigation is to challenge the denial by filing a separate action under the APA in the federal district court encompassing the location of the dispute.").

Moreover, reviewing the DOJ's decision under the APA is consistent with the approach taken by the Seventh Circuit in Edwards v. DOJ, 43 F.3d 312, 315-16 (7th Cir. 1995). There, the plaintiff obtained a state court subpoena and order compelling the DOJ to produce information related to civil proceedings. Edwards, 43 F.3d at 314. The DOJ removed the case to federal court arguing that the state court lacked jurisdiction to enforce the order against it and that the plaintiff could only seek to obtain the information through an APA suit in federal court. Id. While the parties in Edwards agreed that the APA applied, the Seventh Circuit observed that when a state court litigant seeks judicial review of a federal agency's decision to not comply with a state-court subpoena, (1) "the action to be reviewed has to be an APA claim directed at the agency, the United States, or the employee thereof"; (2) "the review action must be in federal court pursuant to 5 U.S.C. § 702, rather than in a state court that lacks jurisdiction"; and (3) "the government must not have waived its sovereign immunity." Id. at 316; see Walsh v. Kempfer, 2022 WL 2176314, at *3 n.2 (S.D. Ill. Jun. 16, 2022) ("Edwards is distinguishable" from cases like Donald "because it originated in state court . . . .").

The Court reviews the DOJ's denial of Ascension's request under the APA, which limits a court's authority to reverse only agency actions that are "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A). Under this standard, the Court may find the DOJ's decision invalid "[o]nly if the agency relied on factors that Congress did not intend it to consider, failed to consider an important aspect of the problem, or failed to articulate a satisfactory connection between the facts found and the choice made . . . ." Dubnow v. McDonough, 30 F.4th 603, 610 (7th Cir. 2022) (citing Sierra Club v. EPA, 774 F.3d 383, 393 (7th Cir. 2014)). "Under this highly deferential standard, an administrative decision should be upheld 'as long as the agency's path may be reasonably discerned.'" Sierra Club, 774 F.3d at 393 (quoting Mt. Sinai Hosp. Med. Ctr. v. Shalala, 196 F.3d 703, 708 (7th Cir. 1999)).

III. Analysis

A. The DOJ's Touhy regulations

Touhy regulations are developed by federal agencies to provide a method for determining whether and how to respond to subpoenas or other requests for information. Edwards, 43 F.3d at 316 (discussing...