United States of America et al v. Lee Memorial Health System
Filing
80
ORDER granting in part and denying in part 72 Defendant's Second Emergency Motion to Re-Seal Certain Exhibits and Related Portions of Relator's Initial Complaint and First Amended Complaint With Incorporated Memorandum of Law. The Cle rk is directed to re-seal the Complaint (Doc. 1) and attached exhibits (Docs. 1-1 - 1-31). All other documents unsealed by the Court's August 27, 2018 Order (Doc. 50), including the Amended Complaint (Doc. 36) and attached exhibits (Docs. 36-1 - 36-42) shall remain unsealed and un-redacted. Relator is directed to re-file the Complaint and attached exhibits with the redactions requested in Lee Health's affidavit on or before November 15, 2018. See Doc. 73-1 at 72-90. Signed by Magistrate Judge Carol Mirando on 10/16/2018. (APH)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
UNITED STATES OF AMERICA and
ANGELA D’ANNA, ex rel.,
Plaintiffs,
v.
Case No: 2:14-cv-437-FtM-38CM
LEE MEMORIAL HEALTH
SYSTEM,
Defendant.
ORDER
This matter comes before the Court upon review of Defendant Lee Memorial
Health System’s (“Lee Health”) Second Emergency Motion to Re-Seal Certain
Exhibits and Related Portions of Relator’s Initial Complaint and First Amended
Complaint with Incorporated Memorandum of Law filed on September 24, 2018.
Doc. 72. Plaintiff-Relator Angela D’Anna (“Relator”) filed a response in opposition
on October 1, 2018. Doc. 76. Pursuant to the Court’s Order, Lee Health filed a
reply on October 5, 2018. Docs. 77, 78. For the reasons stated below, the motion is
granted in part and denied in part.
I.
Background
On August 8, 2014, Relator filed this case against Lee Health under the qui
tam provisions of the False Claims Act (“FCA”), 31 U.S.C. § 3729 et. seq., alleging
violations of the FCA and 42 U.S.C. § 1395nn (the “Stark Law”).
See Doc. 1.
Relator filed the Complaint under seal pursuant to 31 U.S.C. § 3730(b)(2). See id.
On July 28, 2017, Relator filed an Amended Complaint under seal alleging Lee
Health violated the Stark Law by paying physicians illegal referral fees and financial
incentives under compensation arrangements that exceeded fair market value and
were “commercially unreasonable in the absence of referrals.” Doc. 36 ¶¶ 1-3. Lee
Health allegedly paid the excessive compensation to certain physicians and
“knowingly submit[ted] false claims to government payers [Medicare and Medicaid]
related to referrals from such specialists in violation of the FCA.” Id. ¶ 4. Relator
alleges Lee Health compensated physicians at rates above fair market value by
artificially inflating their Relative Value Units (“RVU”) 1 by, among other things,
crediting work performed by non-physicians—also called physician “extenders”2—to
physicians’ RVU time and submitting false Medicare claims with the inflated RVU
numbers.
See id. ¶¶ 56, 58, 79-81.
Relator claims Lee Health’s “fraudulent
scheme” began on October 1, 2005 and continued until at least June 26, 2014. Id. ¶
57.
The allegations in the Complaint focused on Lee Health physicians in four
specialties: Emergency Department (“ED”) physicians; neurologists; cardiologists;
and pulmonologists.
See Doc. 1 ¶¶ 67, 79, 87, 100, 119.
In the Amended
Complaint, Relator dropped the allegations related to the ED physicians and focused
1
RVUs are used to measure the worth of different physician services performed when
calculating the total Medicare reimbursement a provider is entitled to for a particular service.
See Doc. 36 ¶ 56.
2
Examples of physician “extenders” include physician assistants and nurse
practitioners. See Doc. 1 ¶ 59.
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solely on the neurologists, cardiologists and pulmonologists.3 See Doc. 36 ¶¶ 61-62,
93, 108. Relator seeks treble damages and other civil penalties from Lee Health
related to the United States’ calculated losses from the Medicare and Medicaid
programs. See Doc. 36 at 42. On August 15, 2018, the United States filed a Notice
of Election to Decline Intervention under 31 U.S.C. § 3730(b)(4)(B), requesting that
the Court unseal the Complaint, the Amended Complaint, the Notice, and any order
issued in response to the Notice. Doc. 48 at 1-2. On August 27, 2018, United States
District Judge Sheri Polster Chappell granted the United States’ request and
unsealed the Complaint and Amended Complaint and all exhibits attached thereto.
Doc. 50 at 2.
The Clerk made the filings publicly available on the docket on
September 6, 2018. See Docs. 1, 36, 48, 50.
Lee Health filed an Emergency Motion to Reseal Certain Exhibits on
September 10, 2018, asserting that certain information in the Complaint and
Amended Complaint and attached exhibits contained trade secrets. Doc. 52 at 1-2.
Relator filed a response in opposition on September 13, 2018; and with leave of Court,
Lee Health filed a reply on September 14, 2018. Docs. 59, 63, 64. On September
19, 2018, the Court denied Lee Health’s motion without prejudice for failing to comply
with Local Rule 1.09 and failing to supply sufficient information for the Court to
determine whether the information Lee Health sought to re-seal contained trade
secrets and whether Lee Health’s interest in keeping the information confidential
3
The Amended Complaint also does not include multiple exhibits that Relator
included with the Complaint, including the full roster and salaries of Lee Health physicians
and exhibits relating to the ED physicians. See Docs. 1-1–1-16.
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outweighed the public’s interest in accessing it.
Doc. 71 at 6-8, 14, 17-18.
Lee
Health then filed the present motion on September 24, 2018 and Relator filed a
response on October 1, 2018.
Docs. 72, 76.
Pursuant to the Court’s Order Lee
Health filed a reply on October 5, 2018 (Docs. 77, 78), and the matter is now ripe for
review.
II.
Discussion
A.
Compliance with Local Rule 1.09
Rule 1.09(a) of the Middle District of Florida Local Rules states, in relevant
part:
[u]nless filing under seal is authorized by statute, rule, or order, a party
seeking to file under seal any paper or other matter in any civil case
shall file and serve a motion, the title of which includes the words
“Motion to Seal” and which includes: (i) an identification and description
of each item proposed for sealing; (ii) the reason that filing each item is
necessary; (iii) the reason that sealing each item is necessary; (iv) the
reason that a means other than sealing is unavailable or unsatisfactory
to preserve the interest advanced by the movant in support of the seal;
(v) a statement of the proposed duration of the seal; and (vi) a
memorandum of legal authority supporting the seal . . . No settlement
agreement shall be sealed absent extraordinary circumstances, such as
the preservation of national security, protection of trade secrets or other
valuable proprietary information[.]
M.D. Fla. R. 1.09(a).
District courts have broad discretion in interpreting and
applying their local rules. See Reese v. Herbert, 527 F.3d 1253, 1267 (11th Cir.
2008); Johnson v. England, 350 F. App’x 314, 315-16 (11th Cir. 2009).
Lee Health filed its second emergency motion under Rule 1.09(a) and included
an affidavit with particularized descriptions of each item proposed for re-sealing and
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redacting,4 as well as a second affidavit with descriptions of the harm to Lee Health’s
business that could be caused by the public availability of its compensation data.5
Docs. 72, 73-1, 73-2.
In its second emergency motion, Lee Health applied the
elements of Rule 1.09(a) to the compensation data at issue and divided the motion
into two sections: (1) Rule 1.09(a) elements relating to compensation data relevant to
the allegations in the Amended Complaint; and (2) Rule 1.09(a) elements relating to
data that is irrelevant to the allegations. See Doc. 72 at 2-3. Lee Health applies
the Rule 1.09(a) elements generally to the two categories of compensation data but
not to each item proposed for re-sealing and redacting. See id. at 3-19. The motion
refers to Ms. Fay’s affidavit for the identification and description of each item
proposed for re-sealing and redacting. Id. at 3, 15 (citing Doc. 73-1). In terms of
duration, Lee Health proposes the requested items be sealed for eleven months or
“until such time as Relator is able to re-file copies of the documents with the described
4
As with its first emergency motion, Lee Health filed the affidavit of its Chief
Administrative Officer, Kristine M. Fay. Doc. 73-1; see Doc. 53. This affidavit includes
much of the same information as the first, including Ms. Fay’s descriptions of Lee Health’s
challenges recruiting physicians to the southwest Florida area and the Florida Physician
Workforce Analysis study. See Doc. 73-1 ¶¶ 1-20; Doc. 73-1 at 19-71; Doc. 53 ¶¶ 1-14; Doc.
53-1. This affidavit, however, also includes Ms. Fay’s description of each item proposed to
be re-sealed or redacted and a chart identifying each item. Doc. 73-1 ¶¶ 22-23; Doc. 73-1 at
72-100.
5
Lee Health submitted an additional affidavit from Raymond Thomas Ouellette, the
owner of National Health Resources, Inc., “one of the nation’s largest providers of healthcare
staffing services and physician recruitment.” Doc. 73-2 ¶ 1. In the affidavit, Mr. Ouellette
describes how the availability of Lee Health’s physician compensation data to its competitors
would harm its physician recruiting efforts, including that competitors “would have
knowledge of how much additional compensation would be needed to exceed Lee Health’s
compensation . . . [and] the methodology used by Lee Health to arrive at calculations.” Id. ¶
5.
-5-
sensitive information redacted and Relator retrieves the sealed documents from the
Court.” Id. at 13, 18-19.
Relator argues that Lee Health failed to show “that a means other than sealing
of protecting the interest advanced by Lee Health is not available or is not
satisfactory[.]” Doc. 76 at 18-19. She also argues that Lee Health failed to explain
why each specific item must be re-sealed to protect Lee Health’s competitive position,
instead providing “a conclusory statement that the release of the information would
assist its competitors in recruiting its doctors.”
Id. at 2.
Lee Health does not
directly respond to these arguments in its reply.
The Court finds that Lee Health complied with the procedural requirements in
Local Rule 1.09 in its second emergency motion and satisfactorily followed the Court’s
instructions from the previous Order. See Doc. 71 at 18; M.D. Fla. R. 1.09(a). Lee
Health identifies the main categories of information sought to be re-sealed and
applies the elements of Rule 1.09(a) to each.
See Doc. 72 at 3-19. Lee Health
includes a detailed description of each item proposed for re-sealing in Ms. Fay’s
affidavit and a chart identifying each specific portion of each page of the Complaint,
Amended Complaint and attached exhibits it seeks to re-seal. Doc. 73-1 ¶¶ 22-23;
Doc. 73-1 at 72-100.
The motion and attached affidavit provide sufficient
information for the Court to make the findings of fact required by the Eleventh
Circuit regarding the proprietary nature of the information and Lee Health’s and the
public’s respective interests in keeping the information private and accessing the
information. See Chicago Tribune Co. v. Bridgestone/Firestone, Inc., 263 F.3d 1304,
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1311-15 (11th Cir. 2001). Thus, the Court will proceed to consider the merits of Lee
Health’s motion.
B.
Whether re-sealing the documents is appropriate
The Eleventh Circuit recognizes a “presumptive common law right to inspect
and copy judicial records.” U.S. v. Rosenthal, 763 F.2d 1291, 1292-93 (11th Cir.
1985) (quoting Nixon v. Warner Communications, Inc., 435 U.S. 589, 597 (1978)).
“The common law right of access to judicial proceedings, an essential component of
our system of justice, is instrumental in securing the integrity of the process.”
Chicago Tribune, 263 F.3d at 1311 (citing Richmond Newspapers v. Virginia, 448 U.S.
555, 564-74 (1980)).
The public’s right of access to judicial proceedings and records applies to public
pleadings filed on the docket, such as a complaint and exhibits to a complaint. See
F.T.C. v. AbbVie Products LLC, 713 F.3d 54, 62 (11th Cir. 2013). “A complaint,
which initiates judicial proceedings, is the cornerstone of every case, the very
architecture of the lawsuit, and access to the complaint is almost always necessary if
the public is to understand a court’s decision.” Id.; see also IDT Corp. v. eBay, 709
F.3d 1220, 1223 (8th Cir. 2013) (internal citations omitted) (describing the “modern
trend in federal cases to treat pleadings in civil litigation (other than discovery
motions and accompanying exhibits) as presumptively public, even when the case is
pending before judgment”).6
6
The Eighth Circuit also stated that exhibits attached to a complaint “must also be
treated as judicial records” for purposes of determining whether there is a common law right
of access to documents. IDT Corp., 709 F.3d at 63 (“We even treat specific facts
demonstrated by exhibits as overriding more generalized or conclusory statements in the
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The public’s right of access is not absolute, however, and a judge’s decision
whether to seal court records “should be informed by a ‘sensitive appreciation of the
circumstances that led to . . . [the] production [of the particular document in
question].’” Chicago Tribune, 263 F.3d at 1311 (quoting Richmond Newspapers, 448
U.S. at 598); see also Romero v. Drummond Co., Inc., 480 F.3d 1234, 1246 (11th Cir.
2007) (“The common law right of access may be overcome by a showing of good cause”).
In determining whether to seal court filings and other materials, a district court must
balance competing interests—a party’s interest in keeping information confidential
and the public’s legitimate interest in the subject matter and conduct of the
proceedings. See Chicago Tribune, 263 F.3d at 1315; see also Wilson v. Am. Motors
Corp., 759 F.2d 1568, 1571 (11th Cir. 1985) (quoting Newman v. Graddick, 696 F.2d
796, 803 (11th Cir. 1983)) (“The district court must keep in mind the rights of a third
party—the public, ‘if the public is to appreciate fully the often significant events at
issue in public litigation and the workings of the legal system’”). The court must
balance these competing interests even if the material sought to be sealed from public
view is classified as trade secrets. See Chicago Tribune, 263 F.3d at 1315 (“Should
the district court determine that these documents do in fact contain trade secrets, the
district court must balance [the] interest in keeping the information confidential
against [the] contention that disclosure serves the public’s legitimate interest in
health and safety”).
complaint itself”).
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i.
Whether the information in the documents qualifies for
trade secret protection
a.
Information proposed for re-sealing7
Lee Health’s second emergency motion and the attached affidavits describe in
detail the information it claims deserves trade secret protection. Doc. 72 at 3-19;
Doc. 73-1 ¶¶ 22-23; Doc. 73-1 at 72-100. The chart included with Ms. Fay’s affidavit
also—for the first time—apprises the Court of which specific portions of each page of
the Complaint, Amended Complaint and attached exhibits Lee Health claims
contains trade secret information.8 See Doc. 73-1 at 72-100. Although the general
descriptions in Lee Health’s first emergency motion suggested that a significant
portion of the information sought to be re-sealed represented compensation
methodologies and other secret aspects of the compensation arrangements between
Lee Health and its physicians, the second motion’s specific descriptions and
identifications clarify that the majority of the information is comprised of the actual
dollar amounts of physicians’ and other employees’ compensation from approximately
2008–2014. See id.
7
Lee Health includes descriptions of the items proposed for sealing and redacting in
the second emergency motion and attached affidavits. See Doc. 72 at 3-19; Doc. 73-1 ¶¶ 2223; Doc. 73-1 at 72-100. In her response, Relator attached the declaration of attorney Scott
C. Withrow of the firm Withrow, McQuade & Olsen, LLP. Doc. 76-1. Mr. Withrow’s
declaration includes a chart that describes each item in the Amended Complaint and
attached exhibits proposed for re-sealing and gives Relator’s response to each item. Doc. 762.
8
Lee Health’s previous motion provided general descriptions of the information and
listed the page numbers of the Complaint, Amended Complaint and attached exhibits it
sought to re-seal, but requested only that the documents be sealed and Relator be required
to re-file with appropriate redactions without identifying the proposed redactions. See Doc.
52 at 1-2; Doc. 64 at 6.
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The portions of the Complaint Lee Health seeks to re-seal include (1) a chart
of seventeen ED physicians’ compensation amounts for 2013; (2) two charts of four
neurosurgeons’ compensation amounts for 2008–2013; (3) a chart of four cardiologists’
compensation for 2013; (4) a chart of three pulmonologists’ compensation for 2013;
and (5) two sentences in the Complaint that disclose the medical director’s
compensation for 2010. See Doc. 73-1 at 72; Doc. 1 ¶¶ 67, 79, 87, 100, 119, 126, 129.
The portions of the Amended Complaint proposed for re-sealing include (2)–(5) above
but does not include the ED physicians’ compensation chart, which Relator did not
include in the Amended Complaint. See Doc. 73-1 at 72; Doc. 36 ¶¶ 61-62, 93, 108,
117, 120. Notably, Lee Health does not seek to re-seal certain accompanying charts
in the Complaint and Amended Complaint detailing the physicians’ RVU outputs.
See Doc. 1 ¶¶ 98, 118; Doc. 36 ¶ 90.
Next, Lee Health seeks to re-seal the following exhibits attached to the
Complaint and redact the following information from each exhibit: (1) four sets of
analyses of quarterly compensation for ED physicians and physician “extenders” from
2013 (redact compensation amounts and RVU numbers); (2) a full roster of Lee
Health physicians and their respective compensation (redact compensation amounts);
(3) two external third-party reports on neurosurgeon compensation from 2009 (redact
compensation amounts and RVU numbers); (4) five internal Lee Health analyses of
neurosurgeon compensation and production from 2012 (redact compensation
amounts and RVU numbers); (5) certain neurosurgeon pay statements from 2010 and
2011 (redact compensation amounts); (6) a 2013 Lee Health internal audit report on
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physician compensation methods drafted by Relator (redact six dollar amounts);9 (7)
nine Lee Health cardiologist compensation and production analyses from 2010
(redact compensation amounts and RVU numbers); (8) a 2011 Lee Health internal
audit report on pulmonary critical care physician compensation (redact compensation
amounts and RVU numbers); (9) two compensation and RVU valuation reports for
pulmonologists from 2013 (redact compensation amounts and RVU numbers); and
(10) a 2010 analysis of Lee Health’s medical director’s compensation (redact two
dollar amounts reflecting compensation for marketing services in 2010). Doc. 73-1
at 72-90 (citing Docs. 1-1–1-16, 1-18–1-27, 1-29–1-31).
The exhibits in the Amended Complaint Lee Health seeks to re-seal and redact
include (3), (7) (four of the nine analyses), (8), (9) and (10) above. Id. at 91-100; see
Docs. 36-1–36-2, 36-19–36-22, 36-24, 36-37–36-38, 36-42. Lee Health also seeks to
re-seal the following additional exhibits in the Amended Complaint and redact the
following information from the exhibits: (1) four compensation amendments to
employment agreements for neurosurgeons from 2010 (redact dollar amounts); (2)
two 2013 internal analyses of compensation and production for neurosurgeons (redact
compensation amounts); (3) 2014 analyses of physician compensation (redact six
9
The Court finds this request notable as the audit report is highly detailed as to Lee
Health’s compensation arrangements with neurosurgeons, cardiologists, and
pulmonologists—the physicians who are the focus of Relator’s allegations in the Amended
Complaint. See Doc. 1-16; Doc. 36 ¶¶ 61-62, 93, 108. The report includes a chart of over 25
physicians and lists their compensation amounts as percentages of the market rate median
set by the Medical Group Management Association (“MGMA”). Doc. 1-16 at 4. Despite the
wealth of information in the report, Lee Health seeks to redact only six dollar amounts
representing actual compensation received by physicians. See Doc. 73-1 at 82; Doc. 1-16 at
7, 9-10.
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dollar amounts); (4) four cardiologist employment agreements from 2010 (redact
dollar amounts); (5) a 2013 pooled cardiology group compensation report with RVU
analyses (redact compensation amounts and RVU numbers); (6) three pulmonologist
employment agreements and five addendums to the agreements, from 2012 (redact
certain compensation amounts and RVU numbers); (7) three compensation and RVU
valuation reports for pulmonologists from 2013 (redact compensation amounts and
RVU numbers); and (8) a 2009 Cancer Care Program employment agreement (redact
two dollar amounts). Doc. 73-1 at 91-100; see Docs. 36-3–36-9, 36-12–36-15, 36-17,
36-25–36-32, 36-34–36-36, 36-40.
b.
Applicable standard10
The Eleventh Circuit has stated that the “commonly accepted criteria” for
whether information constitutes “trade secrets” are: (1) whether the party claiming
trade secret protection “consistently treated the information as closely guarded
secrets[;]” (2) whether “the information represents substantial value” to the party; (3)
whether the information would be valuable to the party’s competitors; and (4)
10
In Lee Health’s first emergency motion and Relator’s response, both parties cited
as the definition applicable to Lee Health’s motion the definition of “trade secret” as amended
by the Defend Trade Secrets Act of 2016 (which established a federal civil cause of action for
trade secret misappropriation), 18 U.S.C. § 1839(3). See Doc. 52 at 2; Doc. 59 at 5. Because
the parties agreed on the definition, the Court discussed the nature of the information at
issue in its first Order—without making findings of fact—using that definition as a frame of
reference. See Doc. 71 at 10 n.7. In Lee Health’s second motion and Relator’s response, the
parties seem to disagree on the definition that should apply. Compare Doc. 72 at 4-5 (citing
18 U.S.C. § 1839(3)) with Doc. 76 at 5 (citing Restatement (First) of Torts § 757 (1939)).
Thus, to reconcile the parties’ definitions, in making the findings of fact required by the
Eleventh Circuit, the Court will apply the definition of “trade secret” used by the Eleventh
Circuit in the context of a motion to seal. See Chicago Tribune, 263 F.3d at 1304, 1311-15.
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whether the information “derives its value by virtue of the effort of its creation and
lack of dissemination.” See Chicago Tribune, 263 F.3d at 1304.11
c.
Analysis
Lee Health argues the compensation numbers and methodologies in the
Complaint, Amended Complaint and attached exhibits contain trade secret or
otherwise proprietary information. Doc. 72 at 3, 5. Lee Health argues the data
and methodologies are “subject to considerable measures for maintaining secrecy, and
they derive independent economic value from being not generally known and not
readily ascertainable by Lee Health’s competitors.”
Id. (citation omitted).
Lee
Health claims the public cannot readily obtain the compensation data because of Lee
Health’s internal policies designed to prevent disclosure. Id. at 6. These include
system-wide policies for responding to public records requests to protect employee
financial information—because Lee Health is a public entity, it is subject to federal
and state public records laws, and Lee Health’s policy is to exempt compensation
information from disclosure under the trade secret exemption to the relevant
statutes.
Id. (citation omitted).
The compensation data derives independent
economic value, according to Lee Health, because it is not readily ascertainable
In Chicago Tribune, the defendant argued that the information at issue contained
trade secrets because it met “all of the commonly accepted criteria” defining trade secrets.
263 F.3d at 1313. The Eleventh Circuit recited certain “commonly accepted criteria[,]” citing
various definitions from multiple sources, without specifying whether the court provided the
criteria as guidance to the district court in determining the applicable definition on remand
based on the factual context of the case, or as instruction to the district court to apply those
specific criteria as the definition on remand. See id. At least one other district court in the
Eleventh Circuit, however, has applied the Chicago Tribune definition in a similar context.
See MSP Rec. Claims, Series LLC v. ACE Am. Ins. Co., No. 17-23749-CIV-SEITZ, 2017 WL
6622648, at *2 (S.D. Fla. Dec. 22, 2017).
11
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through proper means; and although “Lee Health’s competitors could theoretically
contact each of its hundreds of employed physicians and ask them to voluntarily
provide their individual salary information[,]” it is unlikely that a competitor would
be able to collect the extensive data compiled by Lee Health. Id. at 7. Lee Health
argues that “even if individual salary information were not protectable, the vast
collection of data at issue here presents a circumstance where the whole is greater
than the sum of its parts.” Id. at 7-8. Lee Health notes again the difficulties it
faces in physician recruitment and the value of the information to its competitors.
Id. at 9. 12
Thus, Lee Health argues the information qualifies for trade secret
protection, or, even if the information does not contain trade secrets, “it is clearly
confidential and proprietary business information worthy of protections by this
Court.” Id.
Relator responds that Lee Health failed to “identify a single competitor” that
could use this data to recruit away physicians and failed to explain how salary
information from up to nine years ago could be of value to any competitor. Doc. 76
at 2. Relator argues the information does not qualify for trade secret protection
because it consists mostly of salaries, which are not trade secrets “because they are
limited in scope and application[,]” and the information is outdated and easily
12
Lee Health notes that in their recruitment efforts, Lee Health and its competitors
rely on survey data from MGMA that is available by region and based on figures from the
previous year. Doc. 72 at 9 (citing Doc. 73-1 ¶ 19; Doc. 73-2 ¶ 4). Lee Health argues that
the MGMA data, while valuable, “lacks the value of actual data from a particular competitor”
and, importantly, “does not describe the methodology and computations” any competitor
would use to arrive at compensation figures. Id. (citing Doc. 73-1 ¶ 19; Doc. 73-2 ¶ 4).
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replicated. Id. at 5 (citations omitted). Relator argues a competitor could “easily”
replicate the information Lee Health seeks to re-seal “by making calls to 3 or 4
physicians in a particular physician group, or meeting individually with the
physicians.”
Id. at 7.
Relator further argues Lee Health has openly published
physician compensation information in the past, never identified the information as
a “trade secret” to the physicians themselves, and does not require employee
confidentiality agreements to safeguard the information.
Id. at 9-10.
Relator
argues Lee Health and its competitors’ reliance on MGMA data shows that Lee
Health’s compensation data lacks independent economic value because competitors
can effectively find out what other hospitals are paying their physicians from the
MGMA data. Id. at 12. Relator also notes that, contrary to Lee Health’s assertion
that no other competitor’s compensation data is public, a lawsuit filed in 2009
disclosed similar compensation data of a competitor’s physicians. Id. (citing U.S. ex
rel. Baklid-Kunz v. Halifax Health, No. 6:09-cv-01002-GAP-TBS, 2011 WL 10885443
(M.D. Fla. Feb. 18, 2011)).
Lee Health replies that the lack of confidentiality agreements related to
physicians’ compensation does not preclude the compensation data’s classification as
trade secrets. Doc. 78 at 6. Lee Health claims it is irrelevant that Halifax Heath’s
compensation data was made available publicly in separate litigation because that
“does nothing to undermine the fact that Lee Health’s data has been subject to
reasonable measures to maintain its secrecy and is unique to Lee Health and
proprietary in nature.” Id. at 6-7.
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The Court has exhaustively reviewed the information Lee Health seeks to reseal and redact in the Complaint, the Amended Complaint and attached exhibits, as
well as the party’s respective filings, including the factually detailed submissions
from Lee Health. Upon a closer review of the relevant information, as well as the
new information submitted by the parties, the Court finds that Lee Health’s
methodologies of calculating physician compensation and the specific compensation
amounts for physicians and mid-level providers are “confidential and proprietary
business information” that Lee Health seeks to protect.
See Doc. 72 at 9. The
Court further finds, however, that Lee Health has not shown that the information it
seeks to re-seal—the compensation amounts themselves or the details of the
compensation arrangements including methodologies—contains information that
rises to the level of trade secrets, for the reasons discussed below.13
As to the compensation amounts, Lee Health consistently has treated the
amounts at issue as closely guarded secrets. See Chicago Tribune, 263 F.3d at 1304.
Lee Health has implemented system-wide policies to govern responses to public
records requests asserting trade secret exemptions under the relevant state and
federal disclosure laws, and the compensation data is available only to limited
internal personnel “on a need-to-know basis.”
13
Doc. 72 at 6-7.
It is not clear,
Based on Lee Health’s generalized description of the information contained in the
exhibits to its first emergency motion, and without identifying the specific information sought
to be redacted in each exhibit, it appeared much of the information would qualify for trade
secret protection. See Doc. 71 at 13. Upon a review of Lee Health’s second emergency
motion and particularized descriptions of the information Lee Health seeks to redact in each
exhibit, although a close question, the Court finds the information does not qualify for trade
secret protection. See Docs. 72, 73-1.
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however, that the information at issue represents substantial value to Lee Health or
would be particularly valuable to Lee Health’s competitors. See Chicago Tribune,
263 F.3d at 1304. The compensation amounts at issue are from most recently four
years ago, and aside from the full roster of Lee Health physicians included as an
exhibit with the Complaint, the compensation data covers only a limited number of
doctors in a few different specialties. See generally Docs. 1, 36.
Further, although historical compensation data may be considered proprietary
in nature, Howard v. Hartford Life and Acc. Ins. Co., 275 F.R.D. 649, 651 (M.D. Fla.
2011), that does not necessarily mean it is properly classified as a trade secret.
Competitors may be able to estimate the current compensation amounts, at least for
Lee Health physicians in general, based on the publicly available MGMA reports.
See Doc. 76 at 7, 13.14 The data derives some value by virtue of its creation and lack
of dissemination, but the data’s value is lessened by its historical nature and the
availability of other means of estimating physicians’ compensation. See Chicago
Tribune, 263 F.3d at 1304. Thus, the Court finds that although the compensation
amounts Lee Health seeks to re-seal and redact contain confidential business
information, they are not trade secrets.
Next, the compensation methodologies at issue generally consist of Lee
Health’s calculation of its physicians’ compensation figures based on the RVUs of
14
As noted above, Lee Health also does not seek to seal and redact a detailed report
listing physicians’ compensation amounts as percentages of the applicable year’s MGMA
medians. See Doc. 73-1 at 82; Doc. 1-16 at 4. A competitor would likely be able to calculate
the actual compensation amounts using that information.
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work performed by the physicians and the RVUs of work performed by non-physician
“extenders.” See, e.g., Doc. 76 at 17. Lee Health’s efforts in the first and second
emergency motions to re-seal focus primarily on compensation amounts, but also
request information relating to compensation methodologies be re-sealed.
See
generally Docs. 52, 72. It appears that the “methodology” at issue consists primarily
of Lee Health’s determinations of how to apply physician and non-physician extender
RVUs to arrive at each physician’s compensation, but Lee Health also argues that if
competitors knew of their methodologies, they would be able to “identify potential
areas . . . [to] . . . offer more attractive incentives.” Doc. 72 at 10. This implies that
Lee Health is also referring to information such as the employment agreements and
addendums that list information regarding benefits and other incentives in physician
employment packages. See Docs. 36-25–36-32.
As explained in its second emergency motion and as with the compensation
data at issue, Lee Health does treat the methodology information as closely guarded
secrets through policies governing responses to public records requests asserting
trade secret exemptions under the relevant state and federal disclosure laws, and the
methodology information is available only to limited internal personnel “on a needto-know basis.” See Doc. 72 at 6-7; Chicago Tribune, 263 F.3d at 1304. It it again
unclear, however, that the specific information identified by Lee Health is, by itself,
of substantial value to Lee Health or would be of particular value to its competitors.
See Chicago Tribune, 263 F.3d at 1304. The employment agreements, for example,
set forth the full details of the employment arrangement between certain physicians
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and Lee Health, including the technical methodology used to calculate pay as well as
all benefits and incentives offered to the physicians.
See, e.g., Doc. 36-25. Lee
Health, however, does not seek to redact most of that information, and mostly seeks
to redact only the specific compensation amounts.
See Doc. 73-1 at 98. In one
agreement, Lee Health seeks only to redact information in a chart including three
compensation amounts and three RVU conversion factors, much of which can be
found two paragraphs down on the same page of the agreement. See Doc. 36-25 at
11; Doc. 73-1 at 98. Competitors may be able to ascertain some of this information
through contacting Lee Health’s physicians, as well.
See Doc. 76 at 7.
Thus,
although the Court finds that this information is proprietary in nature and unique to
Lee Health, the second emergency motion does not show that the information is
properly classified as trade secrets.
ii.
Lee Health’s confidentiality interest versus the public’s
right of access
a.
Applicable standard
The Eleventh Circuit has held that the common law right of access to judicial
records, applicable to non-discovery materials such as dispositive motions and
complaints, “may be overcome by a showing of good cause, which requires ‘balanc[ing]
the asserted right of access against the other party’s interest in keeping the
information confidential.’”15 Romero, 480 F.3d at 1246 (quoting Chicago Tribune,
15
Relator notes in her response that two other courts in the Eleventh Circuit have
applied a “compelling governmental interest” standard to motions to seal certain dispositive
documents. See Doc. 76 at 13 n.6; MSP Rec. Claims, 2017 WL 6622648 at *2 (complaint);
Bright v. Mental Health Resource Ctr., Inc., No. 3:10-cv-427-J-37TEM, 2012 WL 868804, at
*4 (M.D. Fla. Mar. 14, 2012) (FLSA settlement agreement). The Eleventh Circuit, however,
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263 F.3d at 1309)). “[W]hether good cause exists . . . is . . . decided by the nature
and character of the information in question.” Id. (quoting Chicago Tribune, 263
F.3d at 1315)).
In balancing a party’s interest in confidentiality and the public
interest in accessing court records, courts consider several factors: (1) whether
allowing access to the records would “impair court functions or harm legitimate
privacy interests”; (2) “the degree of and likelihood of injury” if the information is
made public; (3) the reliability of the information; (4) whether the other party will
have an opportunity to respond to the information; (5) whether the information
involves public officials or matters of public concern; and (6) whether a less onerous
alternative to sealing court records is available. Id. (citing In re Alexander Grant &
Co. Litig., 820 F.2d 352, 356 (11th Cir. 1987)). The district court must conduct this
balancing test even if the material sought to be sealed from public view is classified
as trade secrets. Chicago Tribune, 263 F.3d at 1315; see also Grupo Unidos por el
Canal, S.A. v. Autoridad del Canal de Panama, No. 17-23996-CV-SCOLA/TORRES,
2018 WL 4111216, at *3 (S.D. Fla. Aug. 29, 2018).
b.
Analysis
Lee Health argues that its interest in protecting its compensation data
outweighs the public’s interest in accessing the court records in the case. Doc. 72 at
10. Lee Health points to the study attached to Ms. Fay’s affidavit finding that by
2025, Lee County “will have a deficit of 107% for general surgeons, 63% for
has never held that this is the standard. Thus, the Court will apply the “good cause”
standard set forth in Romero. 480 F.3d at 1246 (applying good cause standard to sealing a
motion for reconsideration and attached declarations).
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pulmonologists, 34% for cardiologists, and 18% for neurologists.” Id. (citing Doc. 731).
Lee Health argues that “[b]idding wars and poaching situations occur even
without the public disclosure of compensation data,” but such disclosure will further
encourage its competitors to engage in bidding wars. Id. at 11 (citation omitted).
Thus, Lee Health argues “based on the volume of the compensation figures and
methodologies at issue, the likelihood that some portion of the information will be
used to the disadvantage of Lee Health is great” and that “[b]ased on the level of
detail in the compensation and compensation structures, the degree of that injury
will also be great.” Id. This will in turn harm the public, according to Lee Health,
because it will impact its ability to recruit doctors and serve the community. Id.
Lee Health also argues that the information in the Complaint irrelevant to the
allegations in the Amended Complaint should be re-sealed because there is no public
interest in accessing it, including the ED physician compensation data and the full
roster of Lee Health physicians and their salaries. Id. at 14-15.
Relator responds the public’s interest in accessing the court records outweighs
Lee Health’s interest in sealing the documents, and thus Lee Health has failed to
show good cause to re-seal the information. Doc. 76 at 14-15. Relator argues that
Lee Health’s interest in sealing the documents is “speculative at best[,]” noting that
Lee Health “hypothesizes” that the “limited salary data for some physicians contained
in the Amended Complaint from 2011 through 2014 will put [Lee Health] at a
competitive disadvantage if it remains public because in 2025 (seven years from now)
there will allegedly be a shortage of doctors in some specialty areas[.]” Id. at 15
- 21 -
(emphasis in original). She argues that if the Court seals the information requested
by Lee Health the public’s understanding of the Court’s resolution of the issues in the
case will be impaired, as “virtually every motion filed in the case will have to be sealed
because it will inevitably contain a reference to either the data set forth in the
Amended Complaint or the methodology used by Lee Health to inflate the specialists’
compensation.” Id. at 16.
Relator continues that the public will be harmed more significantly if the
information is sealed than if it remains public because the compensation data and
methodologies are central to the allegations in the Amended Complaint, and because
Lee Health is a public entity with an elected board of directors. Id. Finally, she
asserts Lee Health’s effort to seal the compensation methodology information is
“particularly egregious” because “the methodology used to pay these highly
compensated specialists is at the heart of the allegations in this case; namely, that
Lee Health improperly credits specialists based on the RVUs of mid-level providers,
not just the doctor’s own RVUs, to compensate the specialists” in violation of the Stark
Law, causing increased costs to Medicare and Medicaid.
Id. at 17.
Relator
proposes as a compromise, however, “to reseal the original complaint and all the
exhibits thereto[,]” which would remove all information relating to physicians whose
information is no longer relevant to the litigation. Id. at 3.
Lee Health, in its reply, states that it “agrees with Relator’s proposal to seal
the entire original complaint and exhibits” but that the more reasonable alternative
is for the Court to seal the un-redacted versions and allow Relator to re-file redacted
- 22 -
versions. Doc. 78 at 1-2. Lee Health argues, however, that it has met its burden
of establishing good cause as to all the information requested to be redacted, and that
its interest outweighs the public’s interest in accessing the information “because of
the limited scope of its redactions.” Id. at 8. Lee Health asserts that none of the
redactions “will limit the public’s ability to understand the fraud allegations (which
are extremely complicated anyway), or will hide any of the Relator’s claims” and thus
that the impact on the public’s interest is minimal. Id.
The Court finds Lee Health has met its burden to show good cause to seal the
information in the Complaint and attached exhibits, but has failed to meet its burden
as to the Amended Complaint and exhibits attached thereto.
First, there is no
indication that that either allowing access to, or temporarily sealing and redacting,
the Complaint and attached exhibits would impair court functions. See Romero, 480
F.3d at 1246. Lee Health also will not be given an opportunity to respond to the
Complaint and attached exhibits as the Amended Complaint is now the operative
pleading. See id.; Docs. 1, 36. Importantly, there are significant privacy interests
at stake in the context of the Complaint and attached exhibits.
Many of the
individuals named in the exhibits to the Complaint and portions of the Complaint are
no longer involved in the litigation, and their compensation is irrelevant to the
allegations in the Amended Complaint—including the full roster of Lee Health
physicians and the ED physicians. See, e.g., Docs. 1-1–1-6; Romero, 480 F.3d at
1246.
The public’s interest in accessing the information is lessened here also,
because the Complaint is no longer the operative pleading in the case. Thus, the
- 23 -
Court finds Lee Health has shown good cause to re-seal and redact the information
in the Complaint and attached exhibits as the privacy interests outweigh the public’s
interest in accessing the information.
As to the Amended Complaint and attached exhibits, there is no indication that
allowing access to the court records would impair court functions; however, sealing
portions of the Amended Complaint and attached exhibits may in fact impair court
functions.
See Romero, 480 F.3d at 1246; In re: Photochromic Lens Antitrust
Litigation, No. 8:10-MD-2173-T27EAJ, 2011 WL 13141945, at *2 (M.D. Fla. June 9,
2011) (“Partly sealed complaints inevitably invite partly sealed dispositive motions
and responses . . . [a] docket riddled with partly sealed filings poses a further obstacle
to the public’s understanding of the issues and how the Court resolves them. For
this reason too, a more specific demonstration is required that disclosure of the
matters proposed to be sealed may result in significant injury”). Also, Lee Health
has not sufficiently shown the “degree of and likelihood” of injury to its recruiting
efforts to justify sealing the information related to the Amended Complaint;
specifically, Lee Health has failed to connect the compensation data from four to nine
years ago to more than a speculative concern that competitors might use some of the
information to attempt to recruit away its doctors. See Romero, 480 F.3d at 1246;
Doc. 72 at 11; 3376 Lake Shore, LLC v. Lamb’s Yacht Center, Inc., No. 3:14-CV-632J-34PDB, 2014 WL 12621574, at *2 (M.D. Fla. Aug. 25, 2014) (“The potential harm
identified by the plaintiff is speculative and thus insufficient to outweigh the right to
public access”).
- 24 -
Further, neither party argues the information is unreliable, and Lee Health
will be given an opportunity to respond to the Amended Complaint. See Doc. 72 at
12; Romero, 480 F.3d at 1246. There are privacy interests at stake, but the interests
are lessened in the context of the Amended Complaint, as the individuals affected are
the focus of the litigation and Relator’s fraud allegations. See Romero 480 F.3d at
1246. Moreover, although Lee Health requests that Relator re-file the Amended
Complaint and exhibits with redactions, Lee Health is seeking to redact information
that is important to the case and found throughout the Amended Complaint and
exhibits.
Thus, Lee Health is essentially requesting a partial sealing of the
Amended Complaint. See In re: Photochromic Lens Antitrust Litigation, 2011 WL
13141945 at *2. The information also concerns public officials and public concerns,
as the public has a legitimate interest in the operation of its health care facilities and
Lee Health is a public entity.
See Romero, 480 F.3d at 1246; Doc. 76 at 17.
Additionally, the public has a legitimate “health and safety” interest in the details of
alleged public healthcare fraud, as in this case, because patients must be confident
that their physicians are making decisions regarding treatment based on the
patient’s medical needs, and not on improper financial considerations. See Chicago
Tribune, 263 F.3d at 1315; Doc. 36 at ¶ 4.
“[T]he presumption in favor of public access to court filings is especially strong
where . . . the filings involve matters of particular concern to the public, such as
allegations of fraud against the government.” U.S. ex rel. Permison v. Superlative
Technologies, Inc., 492 F. Supp. 2d 561 (E.D. Va. 2007) (citing Smith v. United States
- 25 -
District Court for Southern Dist., 956 F.2d 647, 650 (7th Cir. 1992)); see also U.S. v.
King Pharmaceuticals, Inc., 806 F. Supp. 2d 833, 840 (D. Md. 2011) (“By definition,
an FCA complaint alleges a fraud upon the public”).
Here, the information
regarding the compensation amounts paid to the physicians and the methodologies
used to calculate the physicians’ compensation (including the role of non-physician
“extender” compensation and RVUs) are the primary focus of Relator’s FCA
allegations in the Amended Complaint. See, e.g., Doc. 36 ¶¶ 56, 58-115. The Court
finds that Lee Health has failed to show why its privacy interests in keeping the
information in the Amended Complaint and attached exhibits confidential outweigh
the public’s legitimate interests “in understanding the judicial process, detecting
fraud against the government, protecting health and safety from improper medical
decision-making, and overseeing a public health care system with a publicly elected
Board of Directors.” See Doc. 76-2 at 7 (citation omitted).
Thus, the Court finds Lee Health has not shown good cause to re-seal the
Amended Complaint and attached exhibits.
The Court finds, however, that Lee
Health has shown good cause to temporarily re-seal the identified portions of the
Complaint and attached exhibits, as much of the information is irrelevant to the
allegations in the Amended Complaint and harms the privacy interests of physicians
and other employees not involved in the litigation. The Court is not inclined to reseal the entire documents, though, despite the parties’ mutual assent. See Doc. 76
at 3; Doc. 78 at 1; NXP B.V. v. Blackberry Limited, No. 6:12-cv-498-Orl-YK-TBS, 2014
WL 12622459, at *2 (M.D. Fla. Mar. 17, 2014) (quoting Brown v. Advantage Eng’g,
- 26 -
960 F.2d 1013, 1016 (11th Cir. 1992)) (“The parties’ agreement to seal court
documents is ‘immaterial’ to the public’s right of access”); U.S. ex rel. Permison, 492
F. Supp. 2d at 562-65 (denying relator’s motion to re-seal complaint in FCA case after
government declined intervention and relator voluntarily dismissed the case, due to
public’s interest in accessing court records). Thus, the Court will direct the Clerk to
re-seal the documents and Relator to re-file after redacting the information identified
in Ms. Fay’s affidavit.16 See Doc. 73-1 at 72-90.
ACCORDINGLY, it is
ORDERED:
1.
Defendant’s Second Emergency Motion to Re-Seal Certain Exhibits and
Related Portions of Relator’s Initial Complaint and First Amended Complaint With
Incorporated Memorandum of Law (Doc. 72) is GRANTED in part and DENIED in
part.
2.
The Clerk is directed to re-seal the Complaint (Doc. 1) and attached
exhibits (Docs. 1-1–1-31). All other documents unsealed by the Court’s August 27,
2018 Order (Doc. 50), including the Amended Complaint (Doc. 36) and attached
exhibits (Docs. 36-1–36-42) shall remain unsealed and un-redacted.
16
The Court notes that some portions of the Complaint and attached exhibits are
found in both the Complaint and the Amended Complaint. For the sake of expediency and
to prevent confusion, however, the Court will direct the Clerk to re-seal the Complaint and
all attached exhibits and direct Relator to make all the redactions requested in Ms. Fay’s
affidavit before re-filing the Complaint and attached exhibits. See Doc. 73-1 at 72-90. The
Amended Complaint and all attached exhibits shall remain unsealed and un-redacted in their
entirety.
- 27 -
3.
Relator is directed to re-file the Complaint and attached exhibits with
the redactions requested in Lee Health’s affidavit on or before November 15, 2018.
See Doc. 73-1 at 72-90.
DONE and ORDERED in Fort Myers, Florida on this 16th day of October,
2018.
Copies:
Counsel of record
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