BABCHUK et al v. INDIANA UNIVERSITY HEALTH, INC. et al

Filing 96

ORDER denying 82 Plaintiffs' Motion to Compel Production of Documents. Plaintiffs' response to the defendants' motion for summary judgment must be filed within 30 days of the date of the entry of this order. Signed by Magistrate Judge Debra McVicker Lynch on 12/17/2014. (PG)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
WILLIAM I. BABCHUK, M.D. and
WILLIAM I. BABCHUK, M.D., P.C.
doing business as COMPREHENSIVE
MEDICAL IMAGING,

)
)
)
)
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Plaintiffs,
)
)
vs.
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INDIANA UNIVERSITY HEALTH,
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INC., INDIANA UNIVERSITY HEALTH )
TIPTON HOSPITAL, INC.,
)
MICHAEL L. HARLOWE,
)
JOELLEN SCOTT,
)
CARL M. PAFFORD,
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DIANNA ANDREWS,
)
KEVIN W. CONDICT,
)
MICHAEL E. HARPER, and
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RICHARD J. YOUNG,
)
)
Defendants.
)

Case No. 1:13-cv-01376-JMS-DML

Order on Plaintiffs’ Motion to Compel Production of Documents
Before the court is a motion by plaintiffs, Dr. William Babchuk and the
corporate entity through which he practices medicine (together, “Dr. Babchuk”), to
compel the defendants to produce certain documents and “further and fully
respond” to Dr. Babchuk’s second document requests. (Dkt. 82). For the reasons
stated below, the motion is DENIED. Under the court’s order dated September 22,
2014 (Dkt. 80), Dr. Babchuk’s response to the defendants’ motion for summary
judgment is due within 30 days of the entry of this order.

Background
Dr. Babchuk’s complaint alleges that the defendants violated his right to due
process under the Fourteenth Amendment in connection with the termination of his
clinical privileges at defendant IU Health Tipton Hospital (the “Tipton Hospital”) on
June 26, 2012. The termination of his clinical privileges led to the termination of a
contract his medical practice had with the Tipton Hospital to provide radiology
services and led to reports of his suspension being made to the National
Practitioner Data Bank and to the Office of the Indiana Attorney General Licensing
Enforcement Unit. The other defendants are Indiana University Health, Inc. (“IU
Health Corporation”), which is alleged to own the Tipton Hospital, and seven
individuals alleged to have participated in some way in the decision process that
culminated in the termination of Dr. Babchuk’s clinical privileges. (See Complaint,
Dkt. 1).
Dr. Babchuk seeks relief under 42 U.S.C. § 1983, which provides a civil
remedy against a person who, under color of law, violates another’s federal
constitutional rights. The Fourteenth Amendment applies only to state actors, and
not to conduct by private actors, but under some circumstances conduct by private
actors can be characterized as state action for purposes of a constitutional claim via
section 1983. E.g., Brentwood Academy v. Tennessee Secondary School Athletic
Ass’n., 531 U.S. 288, 295 (2001); Hallinan v. Fraternal Order of Police, 570 F.3d 811,
815 (7th Cir. 2009). The defendants consistently have asserted that the section 1983
claims fail because they are not state actors and therefore could not have violated

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the Fourteenth Amendment. They first raised this argument in a Rule 12(b)(1)
motion to dismiss, which the district court denied because the absence of state
action does not deprive the court of subject matter jurisdiction to decide this case;
rather, state action is an element of the plaintiffs’ cause of action. (See Dkt. 50).
The court also ruled that the state action issue would not be decided in the context
of a Rule 12(b)(6) motion to dismiss but must be raised, if before trial, by summary
judgment motion. (Id.).
The magistrate judge held a conference with the parties and ordered that the
defendants could bring an early motion for summary judgment directed at the state
action element, and set a status conference for the parties to address any discovery
necessary to complete briefing of such a motion. At that status conference, held on
June 23, 2014, Dr. Babchuk was directed to serve written discovery relevant to the
state action issues by June 30, and the parties were required to address the
depositions needed by Dr. Babchuk before responding to the defendants’ summary
judgment motion, which they had filed on June 19, 2014. The court heard nothing
from the parties regarding discovery disputes a month after the defendants’ written
responses would have been due and set a date certain (September 26, 2014) for Dr.
Babchuk’s summary judgment response. Only when that deadline was about to
expire was the court advised—by an email—of discovery disputes. (See Dkt. 81).
The court directed Dr. Babchuk to file a motion to compel. He did so on October 6,
2014; the motion is fully briefed and before the court for resolution.

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Analysis
The heart of the discovery dispute between the parties concerns whether the
defendants are required to produce additional documents regarding their
relationships with Indiana University, a state institution. Dr. Babchuk frames that
issue by asking the court to overrule a “nexus” objection interposed by the
defendants. In response to many of Dr. Babchuk’s second discovery requests, the
defendants objected that the “request is not limited in time and has no nexus to the
challenged 2012 decision regarding Babchuk.” The court will first address this
issue. It will then reach Dr. Babchuk’s other complaints about certain general
objections and alleged boilerplate objections, and about the defendants’ compliance
with Rule 26(b)(5) to provide a privilege log.
I.

General Discovery Principles
Rule 26(b)(1) provides that parties may obtain discovery regarding any

matter relevant to a claim or defense, yet the court must also limit the extent of
discovery otherwise allowable where, for example, the burden or expense of
providing it outweighs its likely benefit, “considering the needs of the case, the
amount in controversy, the parties’ resources, the importance of the issues at stake
in the action, and the importance of the discovery in resolving the issues.” Rule
26(b)(2)(C)(iii). See also Patterson v. Avery Dennison Corp., 281 F.3d 676, 681 (7th
Cir. 2002) (internal citations omitted) (although strong public policy favors
disclosure of relevant materials, court should weigh “the value of the material
sought against the burden of providing it and taking into society’s interest in

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furthering the truthseeking function in the particular case before the court”). To
apply these basic discovery principles, the court must necessarily review the legal
claim at issue for which discovery is sought. The court does so not to express a view
on the state action question in this case, but rather to explore the scope of discovery
pertinent to the issue as presented in this case.
II.

State Action and “Nexus”
The discovery issue before the court asks whether the defendants have failed

to produce documents Dr. Babchuk is entitled to discover to support his allegation
that the termination of his clinical privileges was the result of state action. Tipton
Hospital and IU Hospital Corporation (and the individual defendants alleged to
have acted in capacities as employees of these entities) are not Indiana state
agencies, but the ambit of the Fourteenth Amendment extends beyond a state and
formal government organizations. It does so “’when it can be said that the State is
responsible for the specific conduct of which the plaintiff complains.’” Brentwood
Academy v. Tennessee Secondary School Athletic Ass’n., 531 U.S. 288, 295 (2001)
(quoting Blum v. Yaretsky, 457 U.S. 991, 1004 (1982) (emphasis in original)).
“[S]tate action may be found if, though only if, there is such a ‘close nexus between
the State and the challenged action’ that seemingly private behavior ‘may be fairly
treated as that of the State itself.’” Brentwood Academy, 531 U.S. at 295 (quoting
Jackson v. Metropolitan Edison Co., 419 U.S. 345, 351 (1974)).
As explained in Brentwood Academy, “a host of facts . . . can bear on the
fairness of such an attribution,” and no single fact is always required for finding

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state action and no set of circumstances can be said to be “absolutely sufficient, for
there may be some countervailing reason against attributing activity to the
government.” Id. The range of circumstances where state action may be found
have included when a challenged action “results from the State’s exercise of
‘coercive power,’ when the State provides ‘significant encouragement, either overt or
covert,’ or when a private actor operates as a ‘willful participant in joint activity
with the State or its agents.’” Id. at 296 (internal citations omitted). A private
entity may be a state actor also when “it is controlled by an ‘agency of the State,’
has been delegated a public function by the State, is ‘entwined with government
policies,’ or when government is ‘entwined in [its] management or control.’” Id.
(internal citations omitted). In Brentwood Academy, the Court found that a
nominally private entity was “overborne by the pervasive entwinement of public
institutions and public officials in its composition and workings” so that it was not
unfair to apply constitutional standards. Id. at 298.
One of Dr. Babchuk’s state action theories is the “pervasive entwinement”
explored in Brentwood, so it is useful to review the facts of that case. Brentwood
Academy concerned the 1997 enforcement of a regulation concerning athlete
recruitment adopted by the Tennessee Secondary School Athletic Association
(“Association”) against a private parochial high school. The Association regulated
interscholastic sports among the public and private high schools that were members
of the Association, including Brentwood Academy. The Association’s history
revealed its close ties to the State of Tennessee. At its incorporation in 1925, the

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Tennessee State Board of Education had recognized the Association’s role in
enacting and enforcing rules and regulations for athletic competition among the
“public schools of Tennessee.” Id. at 292. Later, in 1972, the State Board had by
rule even “designated” the Association to regulate athletic activities among
Tennessee public schools and specifically approved its regulations while retaining
the authority to review any changes to regulations. Over the next 20 years, the
State Board had on several occasions “reviewed, approved, or reaffirmed” the very
Association regulation that was being challenged in the litigation by Brentwood
Academy. Id. In 1996, the State Board—after a lawsuit in which the Association
was found to be a state actor in a Section 1983 case—amended its rule that had
designated the Association as the regulator of high school sports and characterized
the Association as a purely voluntary association coordinating high school athletics
for schools that chose to participate as members.
Despite the Association’s 1996 “break” with the State Board, the Court found
that because the Association continued to be pervasively entwined with the
Tennessee public school system from the “bottom up” and the “top down,” the
Association “ought to be charged with a public character and judged by
constitutional standards” with respect to its 1997 regulatory enforcement
proceeding against Brentwood Academy. Id. at 302. The entwinement included the
facts that (a) the very regulation at issue had been reviewed and approved by the
State Board; (b) the State Board permitted students to satisfy the State physical
education requirement by participating in sports sponsored by the Association;

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(c) the “customs and practices” of the Association had not changed despite the 1996
“break” with the State Board; (d) members of the State Board were nonvoting
member-designees on the Association’s board of control and legislative council;
(e) employees of the Association were entitled to participate in the State’s
retirement system; and (f) 84% of the Association’s membership were public schools,
“represented by their officials acting in their official capacity to provide an integral
element of secondary public schooling.” See id. at 299-301.
With this backdrop in mind, the court turns to the specific discovery dispute
at hand. First, it is clear from Brentwood Academy that there indeed must be some
tie or “nexus” between the challenged conduct and the government, even if that
nexus is an overwhelming “top to bottom” pervasive entwinement of government in
the workings of the nominally private actor. The defendants’ objection, therefore, to
producing documents and information without a sufficient nexus to the challenged
2012 decision terminating Dr. Babchuk’s clinical privileges will be sustained.
Instead, the issue is whether the documents and information that the defendants
have already provided in discovery to Dr. Babchuk fairly permit him to explore his
nexus theories, including a theory that the 2012 termination of his clinical
privileges can be attributable as conduct of the State because of a pervasive
entwinement of Indiana University and its School of Medicine with IU Health
Corporation and, in turn, the workings of Tipton Hospital.
Dr. Babchuk’s motion to compel provides virtually no explanation of how the
documents he seeks are reasonably necessary to support his nexus theories or why

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the documents that have been produced are insufficient. His opening memorandum
specifically mentions the contents of eight document requests and generally
describes them as seeking (1) strategic or business plans of IU Health Corporation
and Tipton Hospital (Document Request 1), (2) “documents which concern the flow
of benefits to Indiana University School of Medicine and to Indiana University
generally, and the control of Defendants by the Trustees of the Indiana University
and by representatives of the School of Medicine” (Document Requests 8, 9, 10, 11,
12, and 13), and (3) communications between Defendants and any IU Trustee
related to the management or operations of IU Health Corporation or Tipton
Hospital or related to staffing and/or privileging of physicians.” (Document Request
7). See Dkt. 83 at pp. 6 and 13). Dr. Babchuk does not acknowledge, however, the
scope of documents he has been provided documenting the finances and
management of IU Health Corporation and Tipton Hospital.
His reply memorandum does not address at all the defendants’ arguments
regarding the extensive documents they have provided detailing the interrelationships between Tipton Hospital, IU Health Corporation, Indiana University,
and the School of Medicine. The defendants’ response brief discussed in detail the
scope of documents they produced in response to document requests 1, 7, 8, 9, 10,
11, 12, and 13, and explained—persuasively—why, in light of the extent of those
documents, any marginal relevance of any additional documentation is outweighed
by the burden of producing more.

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Dr. Babchuk has received:


IU Health Corporation’s and Tipton’s Hospital’s articles and by-laws.



IU Health Corporation’s and Tipton Hospital’s complete files regarding
IU Health Corporation’s acquisition of Tipton Hospital from Tipton
County, which became effective in 2009.



Tipton Hospital’s operating and capital budgets for 2009-2013.



The agreements, and amendments thereto, creating IU Health
Corporation, and documenting its structure and management, and
relationship to Indiana University and the IU School of Medicine.



Audited financials for IU Health Corporation, and which detail the
extent of financial transactions between IU Health Corporation and the
IU School of Medicine.



Financial information regarding payments connected to Indiana’s state
Medicaid program.



Leases and subleases for property on which various IU Health facilities
are located.



The documents surrounding the termination of Dr. Babchuk’s clinical
privileges and the complete peer review file.

The defendants provided cogent argument why drilling deeper into financial
details or management reporting is burdensome in light of the documents and
information already provided. Dr. Babchuk’s failure to address the defendants’
arguments head-on and with specifics is telling. It is not enough to say that

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financial and management information can be relevant to a pervasive entanglement
nexus theory. Dr. Babchuk needed to explain why, even with the information he
has been provided regarding the management, structure, workings, and finances of
both Tipton Hospital and IU Health Corporation, there are gaps that prevent him
from presenting a fair picture of the relationships between the State and Tipton
Hospital.
For example, Dr. Babchuk does not explain why he needs detailed records of
payments from IU Health Corporation to the IU School of Medicine when he has
been provided the audited financial statements for IU Health Corporation (and the
Definitive Agreement creating IU Health Corporation), which document and
describe the direct and indirect financial support flowing from IU Health
Corporation to the School of Medicine. He provides no hint about what can be
gained through a production of more detail about payments. Similarly, Dr.
Babchuk does not explain why he needs to review every document and
communication between and among IU Health Corporation, Tipton Hospital, any of
the individual defendants and the IU Trustees, years of management reports, or
highly confidential strategic business plans when he has been provided the
documents describing and governing the corporate and management structure of
both IU Health Corporation and Tipton Hospital, the relationships between them,
and their relationships with Indiana University. There is no suggestion of a secret,
underground management system operating outside the corporate by-laws, articles,
and agreements that have been produced.

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The court concludes that given the breadth of documents and information
already provided to Dr. Babchuk, it is not reasonable to require the defendants to do
more. The court is convinced that Dr. Babchuk has the documents reasonably
necessary for him to trace the ways in which, at or around or leading up to the time
of the termination of his privileges in 2012, Tipton Hospital and IU Health
Corporation were intertwined in structure, management, and finance with each
other, Indiana University, and state government.
III.

General Objections, “Boilerplate,” and Privilege Claims
The court also rejects Dr. Babchuk’s requests for relief related to the

defendants’ general objections, alleged boilerplate objections, and privilege
assertions. He does not suggest that any documents or information have been
wrongfully withheld based on the general or “boilerplate” objections, and apparently
accepts (as does the court) the defendants’ representations that discovery has not
been withheld based on those objections. Without a concrete dispute affecting the
fund of information available to Dr. Babchuk for addressing the summary judgment
issues, the court declines to order relief.
The court also rejects Dr. Babchuk’s contention that the defendants have not
provided an appropriate privilege log. According to the defendants, they have
identified and logged any documents specifically withheld on attorney-client
privilege or work product grounds. Other than the “nexus” dispute, Dr. Babchuk
makes no specific challenge to the withholding of these documents, and the court

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will not require the defendants to log documents within categories that it has
agreed the defendants are not required to produce.
Conclusion
The plaintiffs’ motion to compel (Dkt. 82) is DENIED. Their response to the
defendants’ motion for summary judgment must be filed within 30 days of the date
of the entry of this order.
So ORDERED.
Date: December 17, 2014
____________________________________
Debra McVicker Lynch
United States Magistrate Judge
Southern District of Indiana

Distribution:
All ECF-registered counsel of record by email through the court’s ECF system

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