Health Grades, Inc. v. MDX Medical, Inc.

Filing 711

ORDER granting 631 Motion for Sanctions as outlined in the attached order. by Magistrate Judge Boyd N. Boland on 1/3/2014.(trlee, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Magistrate Judge Boyd N. Boland
Civil Action No. 11-cv-00520-RM-BNB
HEALTH GRADES, INC.,
Plaintiff,
v.
MDX MEDICAL, INC., d/b/a Vitals.com,
Defendant.
______________________________________________________________________________
ORDER
______________________________________________________________________________
Now before me is Health Grades, Inc.’s Motion for Sanctions for MDx Medical,
Inc.’s Failure to Comply With Court-Ordered Discovery [Doc. # 631, filed 10/21/2013]
(“Health Grade’s Motion for Sanctions”). Health Grades’ Motion for Sanctions is GRANTED
as specified.
Crucial to the determination of the pending motion is the defendant’s (“MDx”) argument
that in order for the plaintiff (“Health Grades”) to prove that MDx is infringing the patent-insuit, Health Grades must show that the MDx’s accused products satisfy the following
requirements of the patent: “(1) The healthcare provider must provide ‘at least three’ of a set of
data elements (Exhibit A, claim 1, col. 20, lines 29-38; claim 15, col. 22, lines 19-27); and the
healthcare provider must ‘verify’ the elements he provides (Id.).” Motion for Summary
Judgment of Non-Infringement [Doc. # 368] at p. 6.
In January 2012, Health Grades filed a Motion to Compel [Doc. # 126]. As is relevant
here, Health Grades sought to compel a full response to Interrogatory No. 2, id. at pp. 6-7, which

requested:
With respect to any version of MDX’s Accused Products, using a
claim chart, state in detail MDX’s bases for any assertions of noninfringement of the patent in suit on a claim-by-claim , elementby-element basis. Your answer should include a statement of
MDX’s interpretation of each claim element, a statement whether
MDX’s Accused Products provide(s) such an element or an
equivalent and, if not, an explanation how MDX’s Accused
Products operate or function differently than the claim element and
a particularized statement why a component, feature or function of
Accused Products is not a substantial equivalent of the pertinent
claim element.
Id. at p. 6.
Health Grades acknowledged in the Motion to Compel that “claims 1 and 15 of the
patent-in-suit require healthcare provider-verified information that includes at least three of the
following: specialty information, medical philosophy, gender, age, years in profession, years in
practice, awards, honors, professional appointments, professional memberships, publications,
languages, and hobbies,” id., and complained that MDx’s response about this provider-verified
information was “conclusory and vague.” Id. On April 26, 2012, I granted Health Grades’
motion to compel with respect to Interrogatory No. 2, requiring MDx to “state for each claim
element whether MDx’s Accused Products provide such an element or an equivalent and, if not,
[to] explain how MDx’s Accused Products operate or function differently than the claim
element. . . .” Order [Doc. # 192] at p. 2.
MDx’s Second Supplemental Responses to Interrogatories [Doc. # 632-1], made pursuant
to my order compelling discovery, included the following answer in connection with
Interrogatory No. 2: “No physician has ever entered and/or modified any of the following
information: age, years in profession, years in practice, or publications. . . . MDx currently has

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no knowledge of any physician who has entered and/or modified three or more of [the providerverified] information.” MDx’s Second Supplemental Responses to Interrogatories [Doc. # 6321] at p. 3. The Second Supplemental Responses to Interrogatories [Doc. # 632-1] were serve on
Health Grades, unsigned, on May 10, 2012.1 Id. at p. 11.
Subsequently, on November 2, 2012, MDx filed a Motion for Summary Judgment of
Non-Infringement [Doc. # 367/368]. In that motion, MDx argued that “Health Grades has no
evidence that any healthcare provider has ever provided even two of the required data elements,
let alone three,” id. at p. 2, and that “[t]he only evidence collected by Health Grades relating to
whether and to what extent physicians use the portal to modify this data is summarized in MDx’s
response to interrogatory 2,” quoting MDx’s discovery response that “[n]o physician has ever
entered and/or modified any of the following information: age, years in profession, years in
practice, or publications” and that “MDx currently has no knowledge of any physician who has
entered and/or modified three or more of [the provider-verified] information.” Id. at p. 7.
The supplemental response to Interrogatory No. 2 and the arguments made in support of
the Motion for Summary Judgment of Non-Infringement [Doc. # 367/368] based on that
supplemental response are patently false.2 Initially, Health Grades challenged the accuracy of

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My Order required that “[t]he compelled discovery shall be made, in full compliance
with the formalities of the Federal Rules of Civil Procedure, on or before May 10, 2012.” Order
[Doc. # 192] at p. 2. Rule 33(b)(5), Fed. R. Civ. P., requires that “[t]he person who makes the
answers must sign them, and the attorney who objects must sign any objections.” As noted, the
Second Supplemental Responses to Interrogatories [Doc. # 632-1] at issue here, dated and served
on May 10, 2012, are not signed, contrary to both my Order and the rule. I am not informed
whether this defect ever was cured.
2

MDx eventually withdrew the Motion for Summary Judgment of Non-Infringement
[Doc. # 367/368] “in view of recent discovery supplements. . . .” Notice of Withdrawal [Doc. #
627].
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the interrogatory response through a declaration of its expert, Dr. Philip Greenspun:
MDx’s [sic] contends that it is possible that no doctor edited three
or more fields. Given the data that MDx supplied, this is so
improbable that the probability cannot be expressed in terms or
numbers that are within ordinary human experience. The closest
level of improbability that regularly is considered by a Court is for
DNA matching in criminal trials, in which probabilities are
typically expressed as roughly 1 in 100 billion (10 -11), i.e., a
number with 11 digits. The probability of MDx being correct is so
close to zero that the fraction would require between 7000 and
8000 digits to express, even under assumptions that are favorable
to MDx.
Declaration of Dr. Philip Greenspun [Doc. # 632-6] (the “Greenspun Decl.”) at ¶50.
Subsequently, MDx produced documents directly contradicting its response to Interrogatory No.
2. In fact, Health Grades argues, without dispute by MDx, that “11,209 of the Verification
Forms produced thus far show that MDx has received three or more of the types of Physician
Information from physicians.” Health Grades Motion for Sanctions [Doc. # 664] at p. 3 and
Exh. C [Doc. # 663-3].
MDx attempts to defend its false interrogatory answer and unfounded summary judgment
argument by claiming that in order to retrieve information responsive to Interrogatory No. 2
MDx would have been required to “design[] specific queries in order to have an analysis run on
the MDx database, so as to create documents and information that could answer the question of
whether any provider has ever edited three or more of the data elements,” and “MDx had no
obligation to do anything of the sort.” Response [Doc. # 652] at pp. 3-4. MDx’s argument and
attempted defense is meritless.
The cases relied on by MDx for its meritless argument--Cartel Asset Mgmt. v. Ocwen
Fin. Corp., 2010 WL 502721 *14 (D. Colo. Feb. 8, 2010), and Seed Research Equipment

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Solutions, LLC v. Gary W. Clem, Inc., 2011 WL 3880895 *1 (D. Kan. Sept. 1, 2011)--concerned
motions to compel with respect to requests for production of documents. It is true, when dealing
with requests for production of documents under Fed. R. Civ. P. 34, that a party cannot be
compelled to create, or cause to be prepared, new documents solely for their production. Cartel
Asset Mgmt., 2010 WL 502721 *14. Rule 34 only requires a party to produce documents that
are already in existence.
I am not concerned here with a request for production of documents. To the contrary, in
this case Health Grades served an interrogatory on MDx, and I entered an order compelling MDx
to fully answer the interrogatory by stating “for each claim element whether MDx’s Accused
Products provide such an element or an equivalent and, if not, explain how MDx’s Accused
Products operate or function differently than the claim element.” Order [Doc. # 192] at p. 2.
Rule 33 specifically requires that a private corporation, like MDx, must answer interrogatories
“by any officer or agent, who must furnish the information available to the party.” Fed. R.
Civ. P. 33(b)(1)(B) (emphasis added). In addition, interrogatories must “be answered separately
and fully in writing and under oath.” Fed. R. Civ. P. 33(b)(3) (emphasis added).
When answering interrogatories, “[a] party is charged with knowledge of what its agents
know, or what is in records available to it, or even, for purposes on Rule 33, information
others have given it on which it intends to rely in its suit.” Oklahoma v. Tyson Foods, Inc., 262
F.R.D. 617, 629 (N.D. Okla. 2009) (emphasis added). A party responding to interrogatories
“cannot meet its discovery obligations by sticking its head in the sand and refusing to look for
the answers and then saying it does not know the answer.” In re Independent Service
Organizations Antitrust Litigation, 168 F.R.D. 651, 653 (D. Kan. 1996). Nor is it sufficient for a

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party to refuse to provide a full answer to an interrogatory simply because it does not maintain
the data in the format requested. L.H. v. Schwarzenegger, 2007 WL 2781132 *5 (E.D. Calif.
Sept. 21, 2007). To the contrary, interrogatories must be answered “directly and without evasion
in accordance with information that the answering party possesses after due inquiry.” 8B
Wright, Miller & Marcus, Federal Practice and Procedure (Civil) §2177 at p. 80 (emphasis
added). In this case, and in view of my order compelling the discovery, due inquiry certainly
required MDx to gather the information available from its database, either by designing
necessary queries or otherwise.
I find, by overwhelming evidence, that MDx failed to fulfill its obligation under Fed. R.
Civ. P. 33 and my Order [Doc. # 192] compelling discovery to answer Interrogatory No. 2 fully
and truthfully after a reasonable inquiry of the information available to it. Contrary to that
obligation, although MDx had the information necessary to fully answer Interrogatory No. 2, as
demonstrated by its recent production of documents, see Response [Doc. # 652] at p. 8
(discussing “THE DOCUMENTS BEING PRODUCED NOW” and estimating the volume of the
late production at “about 25,000 e-mails and/or faxes”), MDx refused either to fully answer the
interrogatory or comply with my Order compelling discovery based on the improper ground that
MDx would have to run specific queries of its database. L.H. v. Schwarzenegger, 2007 WL
2781132 *5 (holding that a party may not refuse to provide a full answer to an interrogatory
simply because it does not maintain the data in the format requested, and imposing sanctions).
Rule 26(g), Fed. R. Civ. P., provides in relevant part:
(1) Signature Required; Effect of Signature. . . . [E]very
discovery . . . response . . .must be signed by at least one attorney
of record in the attorney’s own name. . . . By signing, an attorney
. . . certifies that to the best of the person’s knowledge,
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information, and belief formed after a reasonable inquiry:
* * *
(B) with respect to a discovery . . . response . . ., it is:
(i) consistent with these rules and warranted by existing law or by
a nonfrivolous argument for extending, modifying, or reversing
existing law, or for establishing new law;
(ii) not interposed for any improper purpose, such as to harass,
cause unnecessary delay, or needlessly increase the cost of
litigation; and
(iii) neither unreasonable nor unduly burdensome or expensive,
considering the needs of the case, prior discovery in the case, the
amount in controversy, and the importance of the issues at stake in
the action.
* * *
(3) Sanction for Improper Certification. If a certification violates
this rule without substantial justification, the court, on motion or
on its own, must impose an appropriate sanction on the signer, the
party on whose behalf the signer was acting, or both. The sanction
may include an order to pay the reasonable expenses, including
attorney’s fees, caused by the violation.
In addition, Rule 37(b), Fed. R. Civ. P., provides for the imposition of sanctions, as
follows:
(b) Failure to Comply With a Court Order.
* * *
(2) Sanctions in the District Where the Action is Pending.
(A) For Not Obeying a Discovery Order. If a party or a party’s
officer, director, or managing agent--or a witness designated under
Rule 39(b)(6) or 31(a)(4)--fails to obey an order to provide or
permit discovery, . . . the court where the action is pending may
issue further just orders. They may include:
(i) directing that the matters embraced in the order or other
designated facts be taken as established for purposes of the action,
as the prevailing party claims;
(ii) prohibiting the disobedient party from supporting or opposing
designated claims or defenses, or from introducing designated
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matters in evidence;
(iii) striking pleadings in whole or in part;
(iv) staying further proceedings until the order is obeyed;
(v) dismissing the action or proceeding in whole or in part;
(vi) rendering a default judgment against the disobedient party; or
(vii) treating as contempt of court the failure to obey any order
except an order to submit to a physical or mental examination.
* * *
(C) Payment of Expenses. Instead of or in addition to the orders
above, the court must order the disobedient party, the attorney
advising that party, or both to pay the reasonable expenses,
including attorney’s fees, caused by the failure, unless the failure
was substantially justified or other circumstances make an award
of expenses unjust.
In addition to an award of its attorneys fees and costs associated with MDx’s false
discovery response, Health Grades requests the imposition of the following evidentiary sanction:
The claim elements of claims one and fifteen set forth below shall
be deemed established:
“accessing [or access] healthcare provider-verified information
about the first healthcare provider, wherein the healthcare
provider-verified information is received from the first healthcare
provider and comprises three or more from the group consisting of:
Specialty information, medical philosophy, gender, age, years in
profession, years in practice, awards, honors, professional
appointments, professional memberships, publications, languages,
and hobbies. . . .
Health Grades’ Motion for Sanctions [Doc. # 632] at p. 15.
Before imposing a merits-determinative sanction such as that sought by Health Grades, a
court must evaluate certain factors:
(1) the degree of actual prejudice to the [other party]; (2) the
amount of interference with the judicial process; (3) the culpability
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of the litigant; (4) whether the court warned the party in advance
that dismissal of the action would be a likely sanction for
noncompliance; and (5) the efficacy of lesser sanctions. Only
when the aggravating factors outweigh the judicial system’s strong
predisposition to resolve cases on the merits is dismissal an
appropriate sanction.
Ehrenhaus v. Reynolds, 965 F.2d 916, 921 (10th Cir. 1992)(internal citations and quotations
omitted).
In this case, the degree of actual prejudice to Health Grades does not warrant a severe
merits-determinative sanction. Although I strongly condemn the conduct of MDx and its
counsel in intentionally failing to meet its discovery obligations, even in the face of an order
compelling discovery, the necessary information now has been made available to Health Grades.
Any prejudice to Health Grades may be cured prior to trial.
The conduct of MDx and its counsel has seriously interfered with the judicial process. At
a minimum, that conduct required Health Grades to file a motion to compel, which was the topic
of a hearing and my Order; MDx then filed a motion for summary judgment relying substantially
on its inaccurate response to Interrogatory No. 2, to which Health Grades was required to
respond, and which was set for hearing before the district judge until MDx withdrew that motion
at the eleventh hour; and Health Grades was required to file the instant motion for sanctions,
which has consumed substantial judicial resources.
Because MDx’s Second Supplemental Responses to Interrogatories [Doc. # 632-1] are
not signed by the person who made the answers, as required by Fed. R. Civ. P. 33(b)(5), I cannot
adequately assess the culpability of the client. The supplemental discovery responses are signed
by MDx’s counsel, however, and I find that it failed completely in its duty to assure that
Interrogatory No. 2 was answered directly and without evasion in accordance with information
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that MDx possessed after due inquiry. And this failure of counsel was not substantially justified.
No order warned MDx of the possibility of sanctions for failure to satisfy its discovery
duties, but the Federal Rules of Civil Procedure are replete with such warnings, satisfying the
notice requirement under Ehrenhaus.
Finally, I find that lesser sanctions are sufficient to cure any prejudice to Health Grades
and to assure MDx’s subsequent compliance with its pretrial obligations.
Although MDx has produced substantial documents from which Health Grades may be
able to ascertain an answer to Interrogatory No. 2, MDx still has not provided a full answer to
that interrogatory after due inquiry and has failed to comply with the formalities of having the
answer signed by the person who made it. Consequently, I will require MDx to make the
necessary inquiry, including the duty to design any specific query necessary to run the analysis
on MDx’s database, and to fully comply with my order compelling discovery to “state for each
claim element whether MDx’s Accused Products provide such an element or an equivalent and,
if not, [to] explain how MDx’s Accused Products operate or function differently than the claim
element. . . .” Order [Doc. # 192] at p. 2. In order to fully comply with the order compelling
discovery, MDx must state whether “(1) The healthcare provider must provide ‘at least three’ of
[the specified data elements]; and the healthcare provider must ‘verify’ the elements he
provides” and, if not, explain how MDx’s accused devices operate or function differently than
those claim elements.
In addition, I award Health Grades its reasonable expenses, including attorney’s fees,
caused by MDx’s failure to fulfill its discovery obligations. The award includes the expenses
and attorneys fees incurred by Health Grades in conferring about and filing its Motion to Compel

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Discovery [Doc. # 126] and related Reply [Doc. # 140];3 preparation of its Opposition to the
Motion for Summary Judgment of Non-Infringement [Doc. # 405], including the reasonable
expenses incurred in connection with the preparation of the Greenspun Decl. [Doc. # 632-6];4
and preparation of Health Grades’ Motion for Sanctions [Doc. # 631] and related Reply [Doc. #
664]. The award of expenses and attorneys fees is assessed against MDx’s counsel solely, and
not against MDx, because (1) MDx’s counsel had an independent duty under Fed. R. Civ. P.
26(g) to assure the propriety of the interrogatory answer “after a reasonable inquiry,” which duty
it failed to satisfy; (2) the record before me fails to disclose that a representative of MDx, other
than its counsel, ever reviewed, approved, or signed the Second Supplemental Responses to
Interrogatories [Doc. # 632-1]; and (3) counsel, not a party, is responsible for the contents of
motions, including MDx’s Motion for Summary Judgment of Non-Infringement [Doc. #
367/368].
In addition, at Health Grades’ request I will reopen discovery as may be necessary to cure
any additional prejudice it has suffered as a result of MDx’s improper answer to Interrogatory

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I recognize that I previously denied Health Grades’ request for expenses and attorneys
fees associated with the Motion to Compel, Order [Doc. # 192] at p. 4, finding that MDx’s
position was substantially justified. In view of the new information which has come to light in
connection with the instant Motion for Sanctions, however, including the fact that MDx
possessed documents from which it readily could determine issues concerning whether its
products satisfy the provider-verified requirement, I find that my previous ruling on that issue
was wrong.
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An award of these costs is appropriate because the Motion for Summary Judgment of
Non-Infringement [Doc. # 367/368] was premised largely on the accuracy of MDx’s response to
Interrogatory No. 2, which was inadequate when made. MDx subsequently withdrew that
motion in view of its later discovery supplements. Notice of Withdrawal [Doc. # 627]. Had
MDx adequately answered Interrogatory No. 2 in response to my order compelling discovery, it
would not have filed the Motion for Summary Judgment of Non-Infringement [Doc. # 367/368],
and Health Grades would not have been put to the expense of responding.
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No. 2.
IT IS ORDERED that Health Grades’ Motion for Sanctions [Doc. # 631] is GRANTED
as follows:
(1)

On or before January 24, 2014, MDx shall make the necessary inquiry, including

designing any specific query necessary to run the analysis on MDx’s database, and shall fully
comply with my order compelling discovery to “state for each claim element whether MDx’s
Accused Products provide such an element or an equivalent and, if not, [to] explain how MDx’s
Accused Products operate or function differently than the claim element. . . .” Order [Doc. #
192] at p. 2. In order to fully comply, MDx must state whether “(1) The healthcare provider
must provide ‘at least three’ of [the specified data elements]; and the healthcare provider must
‘verify’ the elements he provides” and, if not, explain how MDx’s accused devices operate or
function differently than those claim elements;
(2)

Health Grades is awarded its reasonable expenses, including attorney’s fees,

incurred in conferring about and filing its Motion to Compel Discovery [Doc. # 126] and related
Reply [Doc. # 140]; preparing Health Grades’ Opposition to Motion for Summary Judgment of
Non-Infringement [Doc. # 405], including the reasonable expenses incurred in connection with
the preparation of the Greenspun Decl. [Doc. # 632-6]; and preparing Health Grades’ Motion for
Sanctions [Doc. # 631] and related Reply [Doc. # 664]. The award of expenses and attorneys
fees is assessed against MDx’s counsel solely, and not against MDx. To facilitate this award,
Health Grades shall prepare and serve on MDx on or before January 17, 2014, a fee application
that complies with the requirements of D.C.COLO.LCivR 54.3. Thereafter, Health Grades and
MDx’s counsel must confer pursuant to D.C.COLO.LCivR 7.1(a) in an attempt to reach

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agreement on the amount of the award. In the event agreement on the amount of the award has
not been reached and the award not fully satisfied, Health Grades shall file on or before January
31, 2014, a motion seeking an award of the expenses and attorneys fees claimed; and
(3)

On the motion of Health Grades and with an adequate showing of need, I will

reopen discovery as may be necessary to cure any additional prejudice Health Grades has
suffered as a result of MDx’s improper answer to Interrogatory No. 2.
Dated January 3, 2014.
BY THE COURT:
s/ Boyd N. Boland
United States Magistrate Judge

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