Suppressed v. Suppressed

Filing 275

MEMORANDUM Opinion and Order Signed by the Honorable Arlander Keys on 1/21/2014. Mailed notice(tlp, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

UNITED STATES OF AMERICA
ex rel.
BERNARD LISITZA, et al.

) No. 06 C 6131
)
)
)
Plaintiffs,
) Judge John Tharp, Jr.
)
v.
) Magistrate Judge Arlander Keys
)
PAR PHARMACEUTICAL COMPANIES, )
INC., et al.
)
)
Defendants.
)
MEMORANDUM OPINION AND ORDER
In this case, the United States of America through the
Relator Bernard Lisitza (“Relator”) sued Par Pharmaceutical
Companies Inc. (“Par”) for violation of the federal False Claims
Act, 31 U.S.C. §§3729-32, and parallel state statutes.
Currently, there are several motions pending before this Court:
Par’s motion to compel the USA’s response to interrogatories
[#240], Par’s motion to compel the Relator’s response to
interrogatories [#245], as well as the State of Texas’ motion
for a protective order to prevent Par from obtaining
investigative work product of the Texas Attorney General (“Texas
AG”) [#259].

For the reasons set forth below, the motions to

compel [#240 and 245] are granted in part and denied in part,
and the motion for a protective order [#259] is denied.

1

Background & Procedural History
On November 9, 2006, the Relator filed a complaint alleging
that Par engaged in an unlawful scheme to induce Medicaid
provider pharmacies to switch the dosage form of certain
medications in order to increase state Medicaid reimbursement.
Specifically, the Relator alleges that Par manufactured and
marketed three drugs -ranitidine, fluoxetine, and buspirone- in
non-traditional dosage forms in order to opportunistically
exploit certain provisions of the federal regulations, thereby
violating the federal False Claims Act and analogous state
statues.
In response to Plaintiffs suit, Par served its first set of
interrogatories and its first document requests on May 23, 2012
and its second set of interrogatories on June 28, 2013.

The

parties held a final meet and confer on August 27, 2013 in order
to address issues raised by the Plaintiffs’ objections to the
second set of interrogatories, as well as issues outstanding
from the first.

Although many of the issues have been resolved,

the parties are unable to reach agreement on several of Par’s
requests.
Lastly, before the Court is non-party state of Texas’
motion for a protective order to prevent Par from obtaining the
“investigative work product” of the Texas AG.
2

Texas argues that

the Texas AG began a confidential investigation pursuant to the
Texas Medicaid Fraud Prevention Act, and was appointed a member
of the National Association of Medicaid Fraud Control Units
(“NAMFCU”) to help investigate and resolve matters in the
instant case.

A Texas Medicaid Fraud Control Unit Data Analyst,

Dana McCoy (“Ms. McCoy”), was appointed lead analyst, and
produced a 50-state damages analysis, referred to herein as the
“Damages Investigative Work Product.”

The State of Texas argues

that the Damages Investigative Work Product is statutorily
protected from discovery and disclosure, and requests that the
Court enter a protective order barring it from Defendants’ use.
Standard of Review
The district court exercises significant discretion in
ruling on a motion to compel.

The district court may grant or

deny the motion in whole or in part, and similar to ruling on a
request for a protective order under Rule 26(c), the district
court may fashion a ruling appropriate for the circumstances of
the case.

Fed. R. Civ. P. 37(a)(4)(B), (c).

Thus, a district

court is not limited to either compelling or not compelling a
discovery request; in making its ruling, a district court should
independently determine the proper course of discovery based
upon the arguments of the parties.

See, Gile v. United

Airlines, Inc., 95 F.3d 492, 496 (7th Cir. 1996).

3

Courts have

discretion to limit the extent of discovery after considering
“[if] the burden or expense of the proposed discovery outweighs
its likely benefit...the importance of the issues at stake in
the action, and the importance of the discovery in resolving the
issues.”

Fed. R. Civ. P. 26(b)(2)(c)(iii).

Where the party from whom the documents are requested
objects to the request, the party seeking the request may move
for an order to compel production.
Inc., 95 F.3d 496.

Gile v. United Airlines,

“A party objecting to the production of

relevant information on the ground that it is unduly burdensome
has the burden to prove the extent of that burden.”

John Wiley

& Sons, Ltd. v. McDonnell Boehnen Hulbert & Berghoff LLP, No. 12
C 1446, 2013 WL 505252, at *3 (N.D. Ill. Feb. 12, 2013).

The

Seventh Circuit, however, has often warned that “discovery is
not to be used as a fishing expedition.” E.E.O.C. v. Harvey L.
Walner & Associates, 91 F.3d 963, 971–972 (7th Cir. 1996).
Accord Brenneman v. Knight, 297 Fed.Appx. 534, 538, 2008 WL
4748516, 2 (7th Cir. 2008) (“But requiring the staff to conduct
a fishing expedition, particularly of the magnitude Brenneman
requested, would have imposed too great a burden.”)
Rule 26 provides that the Court may, for good cause, issue
an order to protect a party or person from annoyance,
embarrassment, oppression, or undue burden or expense, including
4

“forbidding the disclosure of discovery” and “forbidding inquiry
into certain matters, or limiting the scope of disclosure or
discovery to certain matters.”

Fed. R. Civ. P. 26(c)(1).

Additionally, the Court may give weight to “the fact of [Texas’]
nonparty status... in weighing the burdens imposed in the
circumstances.” Katz v. Batavia Marine & Sporting Supplies,
Inc., 984 F.2d 422 (Fed. Cir. 1993).
Discussion
Par requests that the Court order Plaintiffs, Unites States
and Relator, to provide full and complete responses to all of
its interrogatories and requests for production of documents.
Par argues that its discovery requests seek “the most basic of
information regarding the United States’ allegations in this
case.” Par’s Mot. at 3 [Dkt. #240].

With regard to the Relator,

Par argues that its interrogatories only seek “basic information
regarding the Relator’s core allegation.”
[Dkt. #245].

Par’s Mot. at 3,

The Court will address each outstanding request in

turn.
I. Par’s First Request for Production of Documents to Plaintiff
United States of America
a. Document Request No. 2
Here Par requests "[a] copy of each false claim at issue
in

this

lawsuit

that

[the

United
5

States']

contend[s]

was

presented
rather

to [it]."

Par’s Ex. 2, at 5.

than produce

alleges

to

be

electronic

a

false,

claims

copy
the

of

each

United

data

that

Par argues that,

Medicaid

States,

claim

instead,

covers

that it
p roduced

entire

“ the

time

period as alleged in the complaint for all states and NDCs at
issue."

P a r ’ s Ex. 6, at 2.

Plaintiff
possession

contends

are

not

that

actual

the

pieces

false
of

claims

paper,

in

its

instead

the

vast majority of claims submitted by providers on behalf
of beneficiaries are electronic.

Plaintiff maintains that

all of the electronic claim data has been produced by the
United States for both Walgreens and Omnicare – the only
providers

for

which

Plaintiff

is

seeking

damages.

With

regard to Par’s request of Plaintiff to identify which of
these claims
“every

claim

were

false,

submitted

it

is

as

a

Plaintiff’s
result

of

opinion
the

that

switching

scheme, is false.”
Rule

34

requires

only

that

a

party

produce

electronically stored information in the form “in which it
is

ordinarily

maintained.”

Fed.

R.

Civ.

P.

34(b)(2)(E)(ii). Accordingly, the court denies Par’s motion
to compel Document Request No. 2.

6

b. Document Request No. 10
Document Request No. 10 seeks “[a]ll charts, lists or any
other document itemizing false claims allegedly induced by Par,
including but not limited to documents similar to Exhibit 10 to
Relator’s Complaint.”

Par’s Ex. 2, at 6.

In support of its

complaint, the United States provided a one-page chart that
itemized certain false claims at issue in this case, and Par now
asks Plaintiff to turn over anything similar.

Plaintiff posits

several arguments against the production of any charts/lists
such as that of Exhibit 10, including that they were prepared
under the auspices of the NAMFCU and are privileged, that they
are protected by the work product doctrine, that they are in the
control of the respective lead state (Texas) who compiled them
in preparation for settlement, and are protected by Rule 408.
Par contends that the requested chart(s) are factual, nonopinion work product, which is obtainable by an adversary if
“the party shows that it has substantial need for the materials
to prepare its case and cannot, without undue hardship, obtain
their substantial equivalent by other means.” Fed. R. Civ. P.
26(b)(3)(A); See Fields v. City of Chicago, No. 10 C 1168, 2012
WL 6705419, at *3 (N.D. Ill. Dec. 26, 2012).

Moreover, Par

argues that Plaintiffs’ inclusion of one such chart as an
attachment to the Relator’s complaint constitutes waiver, as it
was shared with adversaries.
7

Although the Court does not agree with the waiver argument,
it does find that such computative, non-opinion, data is not
protected by any privilege.

Moreover, the Court finds

Plaintiffs argument that Par can rely on the electronic claim
submission data (CMS MAX RX), which has already been produced to
Par, unavailing.

Plaintiffs are not solely relying on that

data, and Par has a substantial need for such input data in
order to effectively investigate the claims and defend itself.
The Court finds that Par cannot personally obtain such
information without undue hardship.

To the extent that opinion

or damages analysis is intermingled with the data, the Court
does not see why Plaintiffs cannot redact those portions,
leaving the factual input for review.

Accordingly, the Court

orders Plaintiff to comply with Document Request No. 10.
II. Par’s First Set of Interrogatories to Plaintiff United
States of America
a. Interrogatory No. 1
Here, Par asks the United States “when and how did [it]
first learn of [its] claim against Par[.]” Par’s Ex. 1, at 6.
The United States response was that it was during the timeframe
of

the

investigations

of

the

allegations

against CVS, Omnicare, and Walgreens.

in

the

suits

filed

Par’s argument that a

timeframe is necessary, especially so that Par may know what
role the Relator played, is unavailing. As Plaintiff suggests,
8

the deposition of the Relator would be a much better source for
such

inquiry.

addressed

this

The

Court

point.

finds

that

Accordingly,

Plaintiff

the

adequately

denies

court

Par’s

motion to compel Interrogatory No. 1.
b. Interrogatory No. 3
Par

requests

Plaintiff

to

“[i]dentify

all

communications

between [it] and employees of any state government regarding the
setting of MACs for any of the Subject Drugs during the period
2000-2007.”

Par’s Ex. 1, at 6.

insofar

as

the

Centers

for

(“CMS”)

had

any

correspondence

The United States avers that

Medicare
relating

and
to

Medicaid
MAC,

it

Services
has

been

produced. Otherwise, Plaintiff argues, correspondence relating
to the setting of any MAC is not relevant to this case, and that
this is not the appropriate forum to contest any states’ MAC
setting

methodology.

The

Court

agrees,

and

finds

Plaintiff’s

response sufficient. Accordingly, the court denies Par’s motion
to compel Interrogatory No. 3.
c. Interrogatory No. 4
Par asks the United States to “identify each FUL [Federal
Upper Limits] and the period of time over which the FUL existed”
and to “explain in detail how each such FUL was set and the
reason for the timing of when each such FUL was set.”
1, at 6.

Par’s Ex.

Much like Interrogatory No. 3, the United States has

produced and provided Par with documents, as well as directed
9

them to the web-based information.

Anything regarding how each

FUL is set is not applicable here.

Accordingly, the court

denies Par’s motion to compel Interrogatory No. 4.
d. Interrogatory No. 11
Par seeks to know the specific misrepresentations that the
United States alleged Par made in Paragraph 150 of its corrected
complaint.

Plaintiff clarifies that it “never contended that

Par itself made misrepresentations, but rather that it caused
certain pharmacies to make false representations in order to
have claims paid by Medicaid.”

U.S.’ Resp. at 8.

The Court

finds that the government’s response to this interrogatory
sufficiently sets out the alleged conduct of Par, as well as the
misrepresentations allegedly induced by Par.

Accordingly, the

Court denies Par’s motion to compel Interrogatory No. 11.
e. Interrogatories Nos. 13, 14, and 15
Through these Interrogatories, Par seeks identification,
via Bates number, of the false claims at issue in this case, and
Interrogatory No. 15 seeks identification “by ‘Dispensed Date,’
‘Script Number,’ ‘Pharmacy Location’, etc.

As the Court found

with regard to Interrogatory No. 2, so it finds with regard to
these three interrogatories.

Accordingly, the Court denies

Par’s motion to compel Interrogatories Nos. 13, 14, and 15.

10

III. Par’s Second Set of Interrogatories to Plaintiff United
States of America
a. Interrogatory No. 1
Par asks the United States to identify “each state for
which [it is] seeking federal share damages.” Par’s Ex. 9, at5.
Although Plaintiff may not have been as clear as Par would have
liked originally, with regard to the information shared on the
Omnicare-related states, the Court finds that the United States
has now made all such information clear to Par.

Accordingly,

the court denies Par’s motion to compel Interrogatory No. 1.
b. Interrogatories Nos. 2 and 3
Through these two Interrogatories, Par seeks identification
of, and citation for, each express or implied certification that
the United States contends provides the basis for its
allegations that Par violated the False Claims Act.
9, at 5.

Par’s Ex.

Par argues that it must know the certifications that

form the basis of the United States’ complaint in order to focus
its fact discovery efforts.

Plaintiff argues that the False

Claims Act has no language relating to either “express” or
“implied” certifications, and that the statute does not
reference “certifications,” instead it speaks of false claims
made or caused to be made for payment.

Plaintiff maintains that

it has already described to Par what the government contends is
false, and that it is disingenuous for Par to claim it is
11

unaware.

The Court finds that Plaintiff has, to the best of its

ability, described to Par the false claims made and/or caused to
be made for payment.

Accordingly, the Court denies Par’s motion

to compel Interrogatories Nos. 2 and 3.
c. Interrogatory No. 4
Here Par requests the MAC rates for each drug, and for
every state for which the United States seeks federal share
damages.

The Court agrees with Par that such information is

clearly relevant and should be produced.

However, the

government clarifies that it does not have such information in
its possession, custody, or control, as there is no reporting
requirement, and states do not voluntarily provide such
information which CMS does not seek.

The government has

produced everything that CMS has provided on this issue,
accordingly, Par’s motion to compel Interrogatory No. 4 is
denied.
IV. Par’s First Set of Interrogatories to Relator
a. Interrogatory No. 1
Par asks the Relator “[w]hen and how did you first learn of
your claim against Par?” The Relator responded with initial
objections, and then a response addressing the when, but not
much detail was provided as to the how.

Moreover, Par felt that

the response incorporated prejudicial information, which was
irrelevant to the question and could lead to the statement being
12

unusable in front of a jury.

The Court agrees.

However, the

Relator’s amended response included in its opposition to Par’s
motion to compel seems to make up for its original deficiencies.
Relator’s Opp. Mot. at 3-4.

Accordingly, the Court finds that

the Relator has now responded to the best of his knowledge,
therefore, no further response to Par’s motion to compel
Interrogatory No. 1 is required.
b. Interrogatory No. 4
Here Par asks the Relator to identify the other pharmacies
–aside from Walgreens and Omnicare- for which he is claiming
damages; describe Par’s wrongful conduct with respect to each
such pharmacy; and identify documents in support of the
allegation.

The Relator initially responded that damages are

claimed for all pharmacies that dispensed the Par drugs at
issue, specifically listed eighteen pharmacies that “may” be
involved, and explained that, as the investigation is ongoing,
the response will be supplemented as information becomes
available.

However, the Relator, through his opposition motion,

has now amended and supplemented his answer to a degree found
sufficient by the Court.

Accordingly, no further response to

Par’s motion to compel Interrogatory No. 4 is required.
c. Interrogatory Nos. 7 and 9
Through these two interrogatories, Par asks the Relator to
identify documentation for each false claim and to identify all
13

claims for reimbursements at issue in this lawsuit.

Relator

claims to have produced all such documentation in his control
responsive to these two requests, which amounts to “several
hundreds of thousands of Medicaid claims and reimbursement
records.”

Relator’s Opp. Mot. at 7.

However, the Relator

admits that it has withheld documents containing damages
calculations and data summaries that it was provided with under
the auspices of the NAMFCU, and that it defers to the arguments
of the State of Texas as set forth in its Motion for Protective
Order.

For the reasons explained by the Court supra, regarding

Par’s Document Request No. 10, and for reasons explained infra,
regarding Texas’ motion for a protective order, the Court grants
Par’s motion to compel the full and complete response and
production of Interrogatory Nos. 7 and 9.
d. Interrogatory No. 11
Here Par asks the Relator to identify all persons with
personal knowledge regarding the materiality and reliance
alleged in several paragraphs of Relator’s complaint.

Relator

responded with the names of 31 fact witnesses with respect to
materiality and reliance, none of which, however, were employed
by the plaintiff state Medicaid agencies or CMS, as Par presumed
they would be.

The Court finds that the Relator fulfilled Par’s

request, as the Seventh Circuit has rejected the need for a
showing of government employees under the False Claims Act. See
14

United States v. Rogan, 517 F.3d 449, 452-53 (7th Cir. 2008).
Accordingly, no further response to Par’s motion to compel
Interrogatory No. 11 is required.
V. Par’s Second Set of Interrogatories to Relator
a. Interrogatory No. 1
Here Par asks Relator to identify each state in which he is
seeking damages.

The Court agrees with Par, the Relator’s

initial response was less than straightforward; however
Relator’s amended response makes clear that it is seeking
federal damages for “every state and the District of Columbia,”
and also expressly names each state that it is seeking state
damages.

The Court finds that the Relator has now sufficiently

responded to Par’s interrogatory.

Accordingly, no further

response to Par’s motion to compel Interrogatory No. 1 is
required.
b. Interrogatory Nos. 2 and 3
Through these interrogatories, Par seeks identification of,
and citation for, each express or implied false certification
that the Relator contends provided the basis of his allegations
that Par violated the Federal False Claims Act and analogous
state statutes.

Identical to the Court’s finding with regard to

Par’s parallel motion to compel the United Sates on
Interrogatories Nos. 2 and 3, supra, the Court finds that the
Relator, to the best of his ability, described to Par the false
15

claims made and/or caused to be made for payment and provided
Par with all certifications in his possession.

Accordingly, the

Court denies Par’s motion to compel Interrogatories Nos. 2 and
3.
c. Interrogatory No. 4
Through this interrogatory, Par asks Relator to identify
the Medicaid reimbursement ceilings for all strengths and dosage
forms of buspirone, fluoxetine, and ranitidine from January 1,
1998 to the present.

Relator maintains that he has provided Par

with all responsive documentation in his control, including
documents “regarding the setting and implementation of…FULs and
documentation regarding…MACs.”

Relator’s Opp. Mot, at 10.

In

the same vein as the Court’s finding with regard to Par’s motion
to compel the United States on Interrogatory No. 3, the Court
finds here that the Relator has responded adequately and that no
further response is necessary.

Accordingly, the court denies

Par’s motion to compel Interrogatory No. 4.
VI. Non-Party State of Texas’ Motion for Protective order
Lastly, before the Court is non-party state of Texas’
motion for a protective order to prevent Par from obtaining the
“investigative work product” of the Texas AG.

Texas argues

that, after being served with the Relator’s qui tam action, the
Texas AG began a confidential investigation pursuant to the
Texas Medicaid Fraud Prevention Act.
16

On August 21, 2009, the

State of Texas was appointed a member of the National
Association of Medicaid Fraud Control Units (“NAMFCU”) to help
investigate and resolve matters in the instant case, and the
parties entered into a Common Interest Agreement with Relator’s
counsel on December 13, 2009 in an effort to coordinate the
investigation and prosecution of the Relator’s allegations. See
Texas’ Mot., at 2.
In late 2009, Texas was tasked by the NAMFCU team with
developing a 50-state damages analysis for use in then-upcoming
settlement negotiations.

Texas Medicaid Fraud Control Unit Data

Analyst, Ms. McCoy, was appointed lead analyst for the NAMFCU
Par Team, and was primarily responsible for developing the 50state damages analysis, including without limitation compiling
and synthesizing the underlying state utilization data. See
McCoy Aff. at ¶ 6.

Ms. McCoy submitted national data requests

to all state MFCUs for utilization summaries concerning the
National Drug Codes (NDCs) of three drugs manufactured and
marketed by Par: ranitidine, fluoxetine, and buspirone.
¶ 9.

Id. at

Ms. McCoy was able to compile utilization summaries from

all 50 states and the District of Columbia in spreadsheets which
were then used to formulate damages estimates.

Id. at ¶ 9-11.

The resultant 50-state analysis is referred to herein as the
“Damages Investigative Work Product.”

17

The State of Texas argues that the Damages Investigative
Work Product is statutorily privileged and protected from
discovery and disclosure under applicable Texas state law, a
privilege Texas feels the Court should also apply here by virtue
of Federal Rule of Evidence 501 and associated principles of
comity.

Moreover, Texas argues that the Damages Investigative

Work Product was compiled and generated specifically in
anticipation of litigation and it incorporates certain legal
assumptions and conclusions of the NAMFCU team and the Texas AG
regarding the extent of Par’s liability and the amount of
monetary harm attributable to Par. Texas argues that the Damages
Investigative Work Product should, therefore, also be protected
from discovery as work product materials pursuant to Rule
26(b)(3).

Lastly, Texas claims that the Damages Investigative

Work Product was compiled and developed in furtherance of
settlement talks with Par, and thus falls within the scope of
Federal Rule of Evidence 408.
The Court finds that the Texas State Privilege should not
apply in this federal case.

As both parties highlight, the

Supreme Court has established a two-factor balancing test to
determine whether to apply a state law privilege. “[F]ederal law
will recognize a privilege that promotes sufficiently important
interests to outweigh the need for probative evidence.

18

To

that end, the asserted privilege: (1) must be ‘rooted in
imperative need for confidence and trust,’ and (2) ‘must also
serve public ends.’” Sevilla v. U.S., 852 F. Supp. 2d 1057, 1059
(N.D. Ill. 2012) (quoting Jaffe v. Redmond, 518 U.S. 1 (1996)).
Although the Court agrees that this information undoubtedly
serves “public ends,” such data is not imperatively in need of
“confidence and trust.”
Under Rule 26(b)(3)(A), fact work product may be
discoverable if “(i) [it is] otherwise discoverable under Rule
26(b)(1); and (ii) the party shows that it has substantial need
for the materials to prepare its case and cannot, without undue
hardship, obtain their substantial equivalent by other means.”
The Court finds that Par has substantial need of these
documents; they contain data reflecting utilization and other
information about the three drugs that are at the heart of this
litigation, and Par cannot obtain sufficiently similar data
without undue hardship.

Although Texas suggests that Par can

serve its own subpoenas and readily utilize the information that
is publicly available, the Court finds that argument
unpersuasive.
likewise.

Indeed, if that were true, Texas would have done

Instead, Texas utilized the authority of NAMFCU to

request data forma all 50 states, and then compiled a 50-state
analysis regarding the specific drugs in controversy.

The Court

finds that the data Ms. McCoy received from her data request,
19

and the compilations and summaries of the data created by Ms.
McCoy, are not opinion work product.

Both parties agree that

the documents at issue consist primarily of collecting the
results of a 50-state data request.

To the extent that damage

calculations, opinions, settlement figures, or anything other
than pure input data is included, it may be redacted.
Conclusion
For the reasons set forth above, Par’s motions to compel
[#240 and #245] are granted in part and denied in part, as
detailed above, and the motion for a protective order [#259] is
denied.

DATE: January 21, 2014

ENTERED:

________________________
ARLANDER KEYS
United States Magistrate Judge

20