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

Filing 784

ORDER denying 720 Motion for Reconsideration ; granting 736 Motion for Extension of Time, by Magistrate Judge Boyd N. Boland on 4/30/2014.(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
______________________________________________________________________________
This matter arises on MDx’s Motion for Reconsideration of Order Imposing
Sanctions [Doc. # 720, filed 1/17/2014] (the “Motion to Reconsider”), which is DENIED. Also
at issue is Health Grades Motion for Enlargement of Time to File Fee Application [Doc. #
736, filed 1/29/2014] (the “Motion for Enlargement”).
The parties have argued that a crucial issue in this patent infringement case is whether
MDx’s accused products infringe the requirements of Health Grades’ patent that “[t]he
healthcare provider must provide ‘at least three’ of a set of data elements . . . and the healthcare
provider must ‘verify’ the elements he provides.” Order [Doc. # 711] at p. 1. In a motion to
compel discovery directed at MDx’s Interrogatory No. 2, Health Grades acknowledged 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,” Motion to Compel [Doc. # 126] at pp. 6-7,

and complained that MDx’s response about this provider-verified information was “conclusory
and vague.” Id. I agreed and ordered MDx to supplement its response to Interrogatory No. 2 “to
state 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.
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
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 significance of MDx’s supplemental answer to Interrogatory No. 2 became clear
when MDx sought summary judgment arguing that “Health Grades has no evidence that any
healthcare provider has ever provided even two of the required data elements, let alone three.”
Motion for Summary Judgment of Non-Infringement [Doc. # 367/368] at p. 2. In particular,
MDx argued 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/or
modified any of the following information: age, years in profession, year 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.

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The supplemental response to Interrogatory No. 2 was false. MDx now admits that it
subsequently produced emails and faxes contradicting the answer. Motion for Reconsideration
[Doc. # 720] at p. 4. At the time of my Order imposing sanctions, the evidence indicated 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.” Order [Doc. # 711] at p. 4.
MDx’s counsel seeks to avoid sanctions arguing, first, that despite a reasonable inquiry,
“counsel for MDx was not aware of the [contrary evidence] until much later.” Motion to
Reconsider [Doc. # 720] at p. 4 (original emphasis). In addition, MDx’s counsel asserts, its
inquiry was reasonable and the supplemental response is accurate because the supplemental
response expressly is “‘based on the Health Grades Infringement Contentions’” and, pursuant
to the Local Patent Rules of the Northern District of California,1 “the scope of the defendant’s
discovery obligation is limited by the scope of the plaintiff’s Infringement Contentions.” Id. at
pp. 5-6 (original emphasis).2
Perhaps MDx counsels’ argument based on the California local rules would have some
strength if the supplemental response was provided simply to an interrogatory. Here, however,
the supplemental response came after Health Grades’ motion to compel, where Health Grades
specifically argued that “claims 1 and 15 of the patent-in-suit require healthcare provider-

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Those rules are applicable here at the request of the parties and pursuant to the
Scheduling Order [Doc. # 34] at pp. 6-7.
2

According to MDx’s counsel, Health Grades’ infringement contentions “state that the
infringing method by which physicians provide data is by directly editing their own data through
the vitals.com web portal.” Motion to Reconsider [Doc. # 720] at p. 7. Health Grades responds
that its contentions, “following the Markman Order’s definition of ‘verify,’ provided MDx’s
counsel reasonable notice that it contended that the claim element could be satisfied in multiple
ways.” Response [Doc. # 754] at p. 5.
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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,” Motion to
Compel [Doc. # 126] at pp. 6-7, and complained that MDx’s response about this providerverified information was “conclusory and vague,” id.; and pursuant to my order that MDx “state
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. On these facts, MDx counsels’ strained
reliance on the California local rules is unpersuasive. The Motion to Compel made clear exactly
what Health Grades was seeking and why, and my order compelled a full and complete answer
to the question. At that point, reliance on the California local rules was unreasonable.
Moreover, MDx counsels’ argument is rendered incredible by the fact that MDx relied on
the false interrogatory response in support of its withdrawn motion for summary judgment. See
Doc. ## 367/368 and 627. That motion relied principally on MDx’s assertions that “Health
Grades has no evidence that any healthcare provider has ever provided even two of the required
data elements, let alone three,” Motion for Summary Judgment of Non-Infringement [Doc. #
367/368] 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/or modified any of the following information: age, years in profession, year 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 argument

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was misleading, if not an outright falsehood, when made, and the care with which the statements
are presented makes the lack of candor clear. In particular, MDx relied not on evidence, by
affidavit or otherwise, that no physician had entered three or more categories of provider-verified
information; instead, it carefully argued only that “Health Grades has no evidence that any
healthcare provider has ever provided even two of the required data elements, let alone three.”
Motion for Summary Judgment of Non-Infringement [Doc. # 367/368] at p. 2. And now we
know why. The truth is not that no physician has entered three or more categories of providerverified information. Rather, the tortured fact relied on by MDx is that no physician made such
edits “directly through the web portal.” Motion to Reconsider [Doc. # 720] at p. 7. Thousands
of such edits have been made, however, by “physicians submitting data by fax or email with the
request that MDx edit the profile. . . .” Id. The importance of this fact for infringement purposes
is clear--MDx practices the particular claim element.
MDx’s attempted sleight-of-hand renders its supplemental response to Interrogatory No.
2 misleading and false, and reasonable inquiry by MDx’s lawyers certainly would have disclosed
the falsehood (if, in fact, the lawyers were not fully aware).
MDx’s counsel also argues that I was mistaken about whether the supplemental
discovery responses were verified by its client. In my sanctions order, I relied on the evidence
presented to me and found that they were not. Order [Doc. # 711] at p. 3 n.1. I was presented
with incomplete evidence, and my conclusion apparently was not correct. Motion to Reconsider
[Doc. # 720] at p. 2. The error does not alter my decision that sanctions properly are imposed on
counsel and not the client. In particular, it is apparent to me that counsel, and not its client, drew
the fine distinction and decided not to reveal the edits made by “physicians submitting data by

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fax or email” based on Health Grades infringement contentions and the California local rules.
As I have said, that was an impermissible sleight-of-hand and is sanctionable.
IT IS ORDERED:
(1)

The Motion to Reconsider [Doc. # 720] is DENIED; and

(2)

The Motion for Enlargement [Doc. # 736] is GRANTED. Health Grades shall

submit its fee application on or before May 14, 2014.
Dated April 30, 2014.
BY THE COURT:
s/ Boyd N. Boland
United States Magistrate Judge

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