Waldrep, Jr. v. Labmed Services LLC
Filing
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ORDER denying 1 Motion to Quash and for Protective Order. Signed by Magistrate Judge Amanda Arnold Sansone on 4/25/2024. (BEE)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
THOMAS W. WALDREP, JR.,
As Litigation Trustee,
Plaintiff,
v.
Case No.: 8:24-mc-0007-MSS-AAS
LABMED SERVICES, LLC,
Defendant.
___________________________________/
ORDER
Non-party Mark Blake requests that this court quash a subpoena, or
issue a protective order, in relation to subpoena issued by Thomas W. Waldrep,
Jr., as litigation trustee, in the United States Bankruptcy Court for the
Eastern District of North Carolina. (Doc. 1). Mr. Waldrep opposes Mr. Blake’s
motion. (Doc. 4).
I.
BACKGROUND
On February 16, 2022, Mr. Waldrep filed a complaint against Labmed
Services, LLC (Labmed), a Nevada corporation, in the Eastern District of
North Carolina Bankruptcy Court. (Doc. 1-1). Mr. Blake was one of the two
managers of Labmed. (Doc. 1-2). According to the complaint, Labmed
participated in a billing scheme to generate fraudulent reimbursements for
laboratory tests at several rural hospitals in multiple states. (Doc. 1-1). The
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complaint alleged the hospitals entered arrangements with marketers,
physicians, and laboratory testing companies to defraud insurance companies
and hospitals, like the debtor in the underlying Chapter 11 bankruptcy cases,
through improper billing practices. (Id.). Under those arrangements,
marketers solicited physicians around the country to send blood and urine
samples to select laboratories. (Id.). These laboratories would bill the tests to
private insurers as if they had been conducted at the hospitals for patients of
those hospitals. (Id.). But none of those patients had received treatment from
the hospitals. (Id.). This allowed the laboratories to charge private insurers
higher, in-network reimbursements rates for procedures that were out-ofnetwork and should have been reimbursed at lower rates. (Id.).
When the scheme was uncovered, the private insurers targeted began
scrutinizing the hospitals’ claims or stopped doing business with the hospitals.
(Id.). The hospitals were forced to file for bankruptcy. (Id.). Mr. Waldrep
brought the adversary proceeding to rectify the harm Labmed caused the
hospitals’ business and to recover the fraudulent transfers made to hospitals
in connection with the scheme.1 (Id.).
The Bankruptcy Court entered a default judgment against Labmed for
See United States Bankruptcy Court for the Eastern District of North Carolina,
Case Nos. 19-00730-5-JNC, 19-01230-5-JNC, 19-01180-5-JNC, 19-01300- 5-JNC, 1910298-5-JNC, 19-01697-5-JNC, and 19-01227-5-JNC.
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$279,907.13, plus interest on February 8, 2023. (Doc. 1-2). Through third-party
discovery, Mr. Waldrep learned that Labmed’s account with BB&T Bank (n/k/a
Truist Bank) was closed with a zero balance on February 28, 2019, and that
Labmed was dissolved on September 3, 2019. (See Docs. 1-4, 1-5).
Mr. Waldrep served a Rule 45 subpoena on Mr. Blake requesting postjudgment discovery under Federal Rule of Civil Procedure 69. (Doc. 1-3). Mr.
Blake moves to quash the subpoena, or for a protective order. (Doc. 1). Mr.
Waldrep opposes the motion. (Doc. 4).
II.
ANALYSIS
“Pursuant to Rule 45, a Court may quash a subpoena if it (1) fails to allow
a reasonable time to comply; (2) requires a person to comply beyond the
geographical limits specified in Rule 45(c); (3) requires disclosure of privileged
or other protected matter, if no exception or waiver applies; or (4) subjects a
person to undue burden.” Malibu Media, LLC v. Doe, No. 8:14-cv-2351-T36AEP, 2015 WL 12850584, at *2 (M.D. Fla. Jan. 22, 2015) (citing Fed. R. Civ.
P. 45(d)(3)(A)(i)–(iv)), report and recommendation adopted, 2015 WL 574274,
(Feb. 11, 2015). “The party seeking to quash a subpoena bears the burden of
establishing at least one of the requirements articulated under Rule 45(d)(3).”
Id.
“Rule 69(a)(2) allows a judgment creditor to obtain discovery from any
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person, including the judgment debtor, as provided in the federal rules of civil
procedure or in the state’s procedure scheme.” Regions Bank v. Hyman, No.
8:09-cv-1841-T-17MAP, 2013 WL 12166236, at *1 n.2 (M.D. Fla. Aug. 15,
2013). “It is not uncommon to seek asset discovery from third parties, including
banks, that possess information pertaining to the judgment debtor’s assets.”
In re Taylor, Bean & Whitaker Mortg. Corp., 620 B.R. 165, 168 (Bankr. M.D.
Fla. 2019) (internal citation omitted). “But when a judgment creditor seeks to
discover the personal financial information of a nonparty ( . . . ), he or she bears
the burden of proving that the information sought is relevant or is reasonably
calculated to lead to the discovery of admissible evidence. AmTrust Bank v.
Alvarez, No. 17-20988-CIV, 2021 WL 3709528, at *2 (S.D. Fla. Aug. 20, 2021)
(citing Winderting Invs., LLC v. Furnell, 144 So. 3d 598, 602 (Fla. 2d DCA
2014)).
Mr. Blake argues the subpoena “imposes an undue burden on [him]
because the subpoena requires him to disclose personal financial information
[Mr. Waldrep] will use to further disrupt his financial life without any basis
for issuing the subpoena on a closed case.” (Doc. 1, p. 5). Mr. Blake also argues
that Mr. Waldrep has obtained discovery of Labmed’s financial records, and
that discovery of his financial records is irrelevant. (Id., pp. 4–6.)
Labmed’s financial records have a zero balance, and the entity was
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dissolved in 2019. (See Doc. 1, p. 1). Having obtained a judgment against
Labmed, Mr. Waldrep may pursue post-judgment financial discovery of one of
Labmed’s only two members, Mr. Blake, to locate Labmed’s assets and enforce
the judgment.2 Federal courts allow discovery of a debtor’s financial records on
an outstanding judgment, notwithstanding an individual’s right to financial
privacy. Frenkel v. Acunto, No. 11-62422-CIV-COHN/SELTZER, 2014 WL
4680738, at *2 (S.D. Fla. Sept. 19, 2014). Mr. Waldrep has a right to discovery
in its effort to collect on the judgment.; see also In re Taylor, Bean & Whitaker
Mortg. Corp., 620 B.R. 168 (“The presumption is in favor of full discovery of
any matters arguably related to the creditor’s efforts to trace the debtor’s
assets and otherwise to enforce its judgment.”) (quoting E.I. DuPont de
Nemours & Co. v. Kolon Indus., Inc., 286 F.R.D. 288, 291 (E.D. Va. 2012)). The
underlying claims are for actual and constructive fraudulent transfer, with
allegations that money illegally flowed into and out of the accounts of Labmed.
(See Doc. 1-1). Thus, Mr. Blake’s financial information is relevant and
discoverable.
Mr. Blake argues that, in the alternative, a protective order should be
entered. However protective orders have been entered in the underlying
A subpoena has also been served on Labmed’s other member, Beau Gertz, who has
filed this motion to quash in the District of Colorado. See Gertz v. Waldrep, Litigation
Trustee, Case No. 1:24-mc-00035-NYW-KAS.
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bankruptcy cases in the Eastern District of North Carolina, which will apply
to and protect Mr. Blake’s financial information. (See Doc. 4-1). Additional
protection is not required.
III.
CONCLUSION
Non-party Mr. Blake’s motion to quash or for protective order (Doc. 1) is
DENIED.
ORDERED in Tampa, Florida on April 25, 2024.
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