The United States of America et al v. Safeway, Inc.
Filing
126
OPINION entered by U.S. Magistrate Judge Tom Schanzle-Haskins. Relator Thomas Proctor's Motion to Quash Cynthia Tudor Deposition Subpoena 119 is DENIED, and Defendant's Motion for Leave to Schedule Deposition of Former Government Represen tative Within Two Weeks of Discovery 121 is ALLOWED. Defendant Safeway is given until December 14, 2018 to take the deposition of Dr. Cynthia Tudor, Ph.D. The deadline for filing dispositive motions is extended to January 24, 2019. All other deadlines remain in effect. See written order. (LB, ilcd)
E-FILED
Monday, 03 December, 2018 10:42:55 AM
Clerk, U.S. District Court, ILCD
IN THE UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF ILLINOIS, SPRINGFIELD DIVISION
THE UNITED STATES OF
AMERICA et al., ex rel.
THOMAS PROCTOR,
Relator,
v.
SAFEWAY INC.,
Defendant.
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No. 11-cv-3406
OPINION
TOM SCHANZLE-HASKINS, U.S. MAGISTRATE JUDGE:
This matter comes before the Court on Relator Thomas Proctor’s
Motion to Quash Cynthia Tudor Deposition Subpoena (d/e 119) (Motion
119) and Defendant’s Motion for Leave to Schedule Deposition of Former
Government Representative Within Two Weeks of Discovery (d/e 121)
(Motion 121) (collectively Motions). For the reasons set forth below,
Motion 121 is ALLOWED and Motion 119 is DENIED.
BACKGROUND
Relator Thomas Proctor filed this qui tam action alleging that
Defendant Safeway, Inc., misrepresented its Usual and Customary Prices
(sometimes called U&C Prices) to government programs such as Medicare,
Medicaid, and others that pay some or all of covered individuals’ medical
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expenses, including prescription drugs (collectively Government Health
Programs or sometimes GHP). Proctor alleges that Safeway agreed to
charge its Usual and Customary Prices for prescription drugs to individuals
covered by Government Health Programs. Proctor also alleges that
Safeway offered prescription drugs to the public at discounted prices.
Additionally, Proctor alleges that the discounted prices thereby became
Safeway’s Usual and Customary Price. Proctor claims that Safeway
submitted billings to the Government Health Programs which falsely
represented that its Usual and Customary Prices for prescription drugs
were prices which were higher than the discounted prices offered to the
public. Relator seeks to recover the overpayments to Safeway caused by
these alleged false billings, along with civil penalties, pursuant to the
Federal False Claims Act and State False Claims Acts. See First Amended
Complaint With Jury Demand Pursuant to Federal and State False Claims
Acts (d/e 50) (Amended Complaint).
The Court set the end of fact discovery at November 30, 2018. Text
Order Entered October 4, 2018. On November 9, 2018, Safeway amended
its Rule 26(a)(1) disclosures to list Dr. Cynthia Tudor, Ph.D., as a person
with knowledge that Safeway may call as a witness in this case. Safeway
did not disclose Dr. Tudor as an expert witness. Dr. Tudor was the former
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Deputy Center Director of the Centers for Medicare and Medicaid Services
(CMS) and former Director for the Medicare Drug Benefit and C&D Data
Group, all within the Department of Health and Human Services. Dr. Tudor
authored a memorandum dated October 11, 2006, which provided
guidance regarding situations in which covered individuals can purchase
prescriptions drugs at from pharmacies at cash discount prices (Lower
Cash Price Policy Memorandum). Proctor quoted from the Lower Cash
Price Policy Memorandum in paragraph 102 of the First Amended
Complaint (d/e 50). The Lower Cash Price Policy, set forth in the Lower
Cash Price Policy Memorandum, is incorporated into Chapter 14, § 50.42
of the Centers for Medicare and Medicaid Services’ 2006 Medicare
Prescription Drug Benefit Manual. See Relator’s Response to Defendant’s
Motion for Leave to Schedule Deposition of Former Government
Representative Within Two Weeks of Discovery Cutoff [d/e121] (d/e 124)
(Relator’s Response), at 3.
On November 16, 2018, Safeway issued a subpoena (Subpoena) to
Dr. Tudor to appear and be deposed on November 28, 2018.
Memorandum in Support of Motion 119 (d/e 120) (Proctor Memorandum),
Exhibit 3, Subpoena. Safeway’s counsel also wrote Ms. Seema Verma, the
Acting Administrator of CMS, to request permission to depose Dr. Tudor in
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this case. Proctor Memorandum, Exhibit 4, Letter dated November 16,
2018 (November 16 Letter). Department of Health and Human Services
regulations require agency approval before a former employee can testify
regarding information learned while employed at covered agencies,
including CMS. 45 C.F.R. §2.4(a); see United States ex rel. Touhy v.
Ragen, 340 U.S. 462 (1951) (upholding regulations such as 45 C.F.R. §
2.4(a)). Counsel for Safeway stated in the November 16 Letter that
Safeway intended to depose Dr. Tudor on the following topics:
1)
Memorandum, dated October 11, 2006, from Cynthia
Tudor to All Part D Sponsors, regarding the HPMS Q & ALower Cash Price Policy; and
On this topic, Ms. Tudor is expected to describe the
Memorandum that she authored, and which was published on
October 11, 2006, which addresses the Lower Cash Price
Policy. This testimony is likely to include Ms. Tudor’s
understanding of CMS’s intent and objectives that were driving
the policy and the resulting Memorandum.
2) Medicare Part D Lower Cash Price Policy, including but
not limited to CMS’s objectives for the Policy.
On this topic, Ms. Tudor is expected to describe CMS’s
Medicare Part D Lower Cash Price Policy, the reasons for
developing this policy, changes to the Policy over time, and
explain how this policy functions in practice, particularly with
respect to prescription drug discount programs.
November 16 Letter, at 2-3. Counsel for CMS informed Safeway’s counsel
that a CMS attorney must attend Dr. Tudor’s deposition, and counsel for
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CMS asked for additional time to review the matter before the deposition.
Motion 121, at 1. CMS has not yet given Safeway permission to depose
Dr. Tudor.
Proctor moves to quash the subpoena on the grounds that Safeway
is only using this deposition as a vehicle to extend discovery and delay this
case. Proctor also argues that Safeway is also trying to secure additional
expert testimony without complying with the Rules because Safeway did
not disclose Dr. Tudor as an expert witness. Additionally, Proctor argues
that Dr. Tudor’s testimony about the facts surrounding the Lower Cash
Price Policy Memorandum would be subject to CMS’s claims of privilege,
particularly the deliberative process privilege. Finally, Proctor argues that
Dr. Tudor’s testimony regarding the meaning of the Lower Cash Price
Policy Memorandum is irrelevant since Proctor argues that the Seventh
Circuit has already decided that a pharmacy’s discount prices are its Usual
and Customary prices. See United States ex rel. Garbe v. Kmart Corp.,
824 F.3d 632, 644 (7th Cir. 2016). Proctor argues that, for all these
reasons, that the Subpoena should be quashed.
Safeway responds that it only intends to use Dr. Tudor as a fact
witness for the topics set forth in the November 16 Letter quoted above.
Safeway argues that it was ready, willing, and able to take Dr. Tudor’s
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deposition before the November 30, 2018 deadline, but counsel for CMS
asked for additional time. Safeway asks the Court for leave to take Dr.
Tudor’s deposition on or before December 14, 2018. Safeway also asks
the Court to extend the deadline to file dispositive motions to January 24,
2019. Dispositive motions are currently due on December 24, 2018. Text
Order entered October 4, 2018.
ANALYSIS
Federal Rule of Civil Procedure 26(b)(1) allows parties to obtain
discovery regarding any matter, not privileged, which is relevant to the
claim or defense of any party. Relevant information need not be admissible
at trial if the discovery appears to be reasonably calculated to lead to the
discovery of admissible evidence and the discovery sought is proportional
to the needs of the case. This Court has broad discretion in matters
relating to discovery. See Brown Bey v. United States, 720 F.2d 467, 470
471 (7th Cir.1983); Eggleston v. Chicago Journeymen Plumbers' Local
Union 130, 657 F.2d 890, 902 (7th Cir.1981); see also, Indianapolis Colts v.
Mayor and City Council of Baltimore, 775 F.2d 177, 183 (7th Cir.1985) (on
review, courts of appeal will only reverse a decision of a district court
relating to discovery upon a clear showing of an abuse of discretion).
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The federal discovery rules are to be construed broadly and liberally.
Herbert v. Lando, 441 U.S. 153, 177 (1979); Jefferys v. LRP Publications,
Inc., 184 F.R.D. 262, 263 (E.D .Pa. 1999). The party opposing discovery
has the burden of proving that the requested discovery should be
disallowed. Etienne v. Wolverine Tube, Inc., 185 F.R.D. 653, 656 (D. Kan.
1999); Golden Valley Microwave Foods, Inc. v. Weaver Popcorn Co., 132
F.R.D. 204, 207 (N.D. Ind. 1990); Flag Fables, Inc. v. Jean Ann’s Country
Flags and Crafts, Inc., 730 F. Supp. 1165, 1186 (D. Mass. 1989).
In light of these factors, the Court, in its discretion, will allow Safeway
to depose Dr. Tudor on or before December 14, 2018. Dr. Tudor has
personal knowledge regarding the preparation of the Lower Cash Price
Policy Memorandum. The Lower Cash Price Policy is clearly relevant to
the case. The Lower Cash Price Policy Memorandum discusses the
relationship between discount prices and Usual and Customary Prices.
See Lower Cash Price Policy Memorandum, at 1 n. 1. Proctor quotes the
Lower Cash Price Policy Memorandum in his First Amended Complaint.
Dr. Tudor also has personal knowledge of the operation of the Medicare
Lower Cash Price Policy during her tenure. Safeway is entitled to discover
factual information from Dr. Tudor has regarding these matters. The
situation has similarities to testimony of a treating physician. The physician
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can testify about the treatment as a fact witness even though the testimony
covers technical and specialized matters such as diagnosis and treatment.
See e.g., Moriconi v. Koester, 2015 WL 328590,at *3 (C.D. Ill. January 26,
2015). Dr. Tudor has personal knowledge about the formulation of the
Lower Cash Price Policy Memorandum and the operation of the Medicare
Lower Cash Price Policy. Safeway can depose her on these issues as a
fact witness.
Proctor argues Dr. Tudor’s deposition testimony would be
inadmissible at trial for several reasons. Proctor cites a number of cases to
support these arguments. See Memorandum in Support of Motion to
Quash Cynthia Tudor Deposition Subpoena (d/e 120), at 4-7 and cases
cited therein; Relator Response, at 6-7 and cases cited therein. The cases
cited all involve questions of admissibility at trial. The issue at this juncture,
however, is discovery, not admissibility. Dr. Tudor has some factual
information that is relevant for purposes of discovery and proportional to
the needs of the case. Fed. R. Civ. P. 26(b)(1). Proctor quoted the Lower
Cash Price Policy Memorandum in his First Amended Complaint. Proctor
also asked several deposition witnesses about the Lower Cash Price Policy
Memorandum. See Defendant’s Opposition to Relator’s Motion to Quash
Cynthia Tudor Deposition Subpoena (d/e125), at 2-3. The Lower Cash
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Price Policy is clearly material to this case. Deposing the author of the
Lower Cash Price Policy Memorandum is also clearly proportional to the
needs of this case. The Court will not bar the deposition because some of
her testimony may not be admissible.
Proctor argues that Safeway is trying to secure additional expert
testimony from and undisclosed expert in violation of the Rules. Proctor
may preclude that possibility by challenging the admissibility of any expert
opinions from Dr. Tudor through a pretrial motion in limine. The District
Court is fully capable of barring any such improper expert testimony. The
Court will not bar a discovery deposition because the witness may state
some inadmissible opinions.
The Court similarly will not bar the deposition because some of the
information may be privileged. The CMS attorney at the deposition can
raise claims of privilege and instruct Dr. Tudor not to answer to protect its
privilege. Furthermore, CMS may refuse to allow the deposition if the
potential for disclosure of privileged information is so great. The possibility
of claims of privilege does not justify quashing the Subpoena.
Proctor argues that Safeway is using the Subpoena to delay. There
is some merit to this argument. Safeway could have disclosed Dr. Tudor
sooner. Safeway has also sought extensions of time in this proceeding
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before. See e.g., Defendant’s Motion to Modify Scheduling Order (d/e
109). Still, Safeway issued the Subpoena in a timely manner, two weeks
before the end of discovery. Safeway set the deposition before the
discovery cutoff at a time agreed to by Dr. Tudor and her attorneys, and at
a time when Proctor’s counsel would be available. See Motion 121, at 1, 4.
CMS requested the delay passed the discovery deadline, not Safeway.
Under these circumstances, the Court will not punish Safeway by barring
the deposition due to CMS’s need for delay.
In light of the delay, the Court will extend the dispositive motion
deadline to January 24, 2019. Both parties will need the time to review Dr.
Tudor’s deposition. Safeway will need to review the information to
incorporate her testimony into any dispositive motions. Given these
legitimate needs for additional time, the Court will extend the dispositive
motion deadline.
THEREFORE, IT IS ORDERED that Relator Thomas Proctor’s
Motion to Quash Cynthia Tudor Deposition Subpoena (d/e 119) is DENIED,
and Defendant’s Motion for Leave to Schedule Deposition of Former
Government Representative Within Two Weeks of Discovery (d/e 121) is
ALLOWED. Defendant Safeway is given until December 14, 2018 to take
the deposition of Dr. Cynthia Tudor, Ph.D. The deadline for filing
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dispositive motions is extended to January 24, 2019. All other deadlines
remain in effect.
ENTER: December 3, 2018
s/ Tom Schanzle-Haskins
TOM SCHANZLE-HASKINS
UNITED STATES MAGISTRATE JUDGE
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