United States of America, ex rel., et al v. Sightpath Medical, Inc., et al

Filing 285

ORDER. IT IS HEREBY ORDERED that the April 2, 2019 Order of United States Magistrate Judge David T. Schultz 203 is AFFIRMED. (Written Opinion) Signed by Judge Wilhelmina M. Wright on 7/19/2019. (RJE)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA

United States of America, ex rel. Kipp
Fesenmaier,

Case No. 13-cv-3003 (WMW/DTS)

Plaintiffs,
ORDER
v.
The Cameron-Ehlen Group, Inc., and Paul
Ehlen,
Defendants.

Plaintiff United States of America appeals the April 2, 2019 Order of United States
Magistrate Judge David T. Schultz. For the reasons addressed below, the April 2, 2019
Order is affirmed.
BACKGROUND1
Relator Kipp Fesenmaier filed a qui tam complaint in November 2013 against,
among others, Defendants The Cameron-Ehlen Group, Inc., doing business as Precision
Lens (Precision Lens), and Paul Ehlen, the founder and majority owner of Precision Lens.
After investigating Fesenmaier’s complaint, the United States filed a notice of its election
to intervene in this case in August 2017. The United States subsequently filed an intervenor
complaint (complaint) against Precision Lens and Ehlen on February 8, 2018. The
intervenor complaint alleges that Precision Lens and Ehlen provided kickbacks to

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The magistrate judge’s April 2, 2019 Order and this Court’s October 22, 2018 Order
provide a detailed factual and procedural summary. Accordingly, the Court refers to the
procedural history and facts pertaining to this litigation only as relevant to this appeal.

physicians in violation of the Anti-Kickback Statute (AKS), 42 U.S.C. § 1320a-7b(b).
According to the complaint, as a result of those kickbacks, false and fraudulent claims for
payment were made to federal health care programs, including Medicare, in violation of
the False Claims Act (FCA), 31 U.S.C. § 3729(a)(1), (a)(2). The intervenor complaint also
alleges common-law claims for unjust enrichment and payment by mistake.
The Federal Bureau of Investigation (FBI) initiated its investigation of Defendants’
business activities at least as early as 2012, before Fesenmaier commenced this lawsuit.
The FBI interviewed potential witnesses during the course of the investigation. But the
United States Attorney’s Office did not begin to coordinate closely with the FBI’s
investigation and witness interviews until at least 2014.
On February 7, 2019, Defendants moved to compel discovery. As relevant to this
appeal, Defendants sought an order compelling the United States to respond with greater
specificity to Defendants’ Interrogatory No. 1, which seeks identification and details of
each false claim alleged to have been submitted to the United States. Defendants also
sought an order compelling the United States to respond to Defendants’ Request for
Production No. 5, which seeks the production of all reports and notes of witness interviews
prepared during the investigation.
The magistrate judge granted Defendants’ motion to compel on April 2, 2019. The
April 2, 2019 Order directs the United States to answer Defendants’ Interrogatory No. 1 by
identifying with specificity each alleged false claim no later than 45 days before the close
of discovery. The April 2, 2019 Order also directs the United States to produce all
documents that are responsive to Defendants’ Request for Production No. 5, namely,
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reports and notes of witness interviews made during the investigation. The magistrate
judge reasoned that, because the United States Attorney’s Office “did not become
meaningfully involved in the investigation until 2014,” the United States did not satisfy its
burden to establish that the work-product doctrine applies to any witness interview reports
or notes prepared before 2014. As for witness interviews that occurred after the United
States Attorney’s Office became involved in 2014, the magistrate judge reasoned that, to
the extent the interview reports or notes contain fact work product (as opposed to opinion
work product), “Defendants have demonstrated both substantial need and the inability to
otherwise obtain the information without undue hardship” as required to obtain discovery
of such documents under Federal Rule of Civil Procedure 26(b)(3)(A)(ii). The April 2,
2019 Order permits the United States to submit responsive documents to the Court for in
camera review to identify any protected non-discoverable information that may be redacted
or withheld. Because it objects to these aspects of the April 2, 2019 Order, the United
States appeals.
ANALYSIS
A district court applies an “extremely deferential” standard of review to a magistrate
judge’s ruling on a nondispositive issue. Scott v. United States, 552 F. Supp. 2d 917, 919
(D. Minn. 2008). A district court will modify or set aside a ruling only if it is clearly
erroneous or contrary to law. 28 U.S.C. § 636(b)(1)(A); Fed. R. Civ. P. 72(a); LR 72.2(a);
Ferguson v. United States, 484 F.3d 1068, 1076 (8th Cir. 2007). A ruling is clearly
erroneous when, although there is evidence to support the ruling, “the reviewing court on
the entire evidence is left with the definite and firm conviction that a mistake has been
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committed.” Wells Fargo & Co. v. United States, 750 F. Supp. 2d 1049, 1050 (D. Minn.
2010) (internal quotation marks omitted). A nondispositive ruling is contrary to law when
it “fails to apply or misapplies relevant statutes, case law or rules of procedure.” Id.
(internal quotation marks omitted).
The United States challenges two of the magistrate judge’s rulings—first, the
requirement that the United States identify with specificity each alleged false claim no later
than 45 days before the close of discovery and, second, the requirement that the United
States produce reports and notes of witness interviews made during its investigation. The
Court addresses each challenge in turn.
I.

Identification of False Claims

The United States argues that the magistrate judge clearly erred by ordering it to
identify every alleged false claim no later than 45 days before the close of discovery.
According to the United States, complying with this order would require a “laborious” and
“time-intensive” process, and it is for “practical reasons like this that courts often do not
require contention interrogatories to be answered until close to or at the end of discovery.”
For these reasons, “[t]he United States would strongly prefer to complete the fact discovery
period” before engaging in “the time-intensive process of identifying all false claims during
expert discovery.”
None of the arguments advanced by the United States demonstrates that the
magistrate judge’s decision is clearly erroneous, nor is reversal of a magistrate judge’s
decision warranted merely because a party “strongly prefer[s]” a different outcome.
Although the United States contends that “Defendants should be required to demonstrate
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substantial need for the identification of false claims 45 days before the close of fact
discovery,” it provides no legal authority for imposing such a requirement. If the United
States requires additional time to complete fact discovery in light of the April 2, 2019
Order, it has the option of seeking an extension of the fact discovery deadline. Indeed,
while this appeal was pending, the United States sought and was granted such an extension.
Because the magistrate judge did not clearly err by requiring the United States to
identify all the alleged false claims no later than 45 days before the close of discovery, this
aspect of the April 2, 2019 Order is affirmed.
II.

Witness Interview Reports and Notes

The United States also argues that the April 2, 2019 Order is clearly erroneous and
contrary to law to the extent that it requires the United States to produce reports and notes
of witness interviews made during its investigation. According to the United States, these
documents are protected by the work-product doctrine.
The work-product doctrine “limits the access of an opponent to materials ‘prepared
in anticipation of litigation or for trial.’ ” In re Grand Jury Subpoena Duces Tecum, 112
F.3d 910, 924 (8th Cir. 1997) (quoting Fed. R. Civ. P. 26(b)(3)(A)). The party invoking
the work-product doctrine “bears the burden of establishing the elements of work product
immunity.” Id. at 925. To do so, the party seeking protection must establish that “the
materials were prepared in anticipation of litigation, i.e., because of the prospect of
litigation.” PepsiCo, Inc. v. Baird, Kurtz & Dobson LLP, 305 F.3d 813, 817 (8th Cir.
2002). Such materials nonetheless may be discoverable if the party seeking the materials
shows a “substantial need for the materials to prepare its case” and that it cannot “obtain
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their substantial equivalent by other means” without undue hardship. Fed. R. Civ. P.
26(b)(3)(A); accord PespiCo, Inc., 305 F.3d at 817.
The United States Court of Appeals for the Eighth Circuit has “distinguish[ed]
between two kinds of work product: ordinary work product, which includes raw factual
information, and opinion work product, which encompasses counsel’s mental impressions,
conclusions, opinions or legal theories.” In re Green Grand Jury Proceedings, 492 F.3d
976, 980 (8th Cir. 2007) (internal quotation marks omitted). Whereas ordinary work
product generally is discoverable based on a showing of substantial need and the inability
to obtain substantially equivalent materials without undue hardship, opinion work product
“enjoys a nearly absolute immunity and can be discovered only in very rare and
extraordinary circumstances.” Id. (internal quotation marks omitted). Opinion work
product includes not only the notes and memoranda of an attorney, but also those of an
attorney’s agent. Id. at 981.
A.

Pre-2014 Interview Materials

The magistrate judge first concluded that the United States did not satisfy its burden
of establishing that pre-2014 FBI interview materials were created in anticipation of
litigation. The United States argues that the April 2, 2019 Order erroneously concludes
that interview materials created before 2014 categorically are not entitled to work-product
protection.
The record reflects that the FBI’s lead case agent “do[es] not recall closely
coordinating with the U.S. Attorney’s Office for the District of Minnesota in connection
with the 2013 interviews.” The case agent recalls speaking with an Assistant United States
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Attorney before conducting the interviews about which witnesses would be interviewed
and what topics would be covered. But the United States provides little detail as to the
circumstances of these discussions beyond the case agent’s vague recollections that they
occurred. As the magistrate judge correctly observed, the record is “thin” as to this issue.
Moreover, when a law-enforcement officer conducts a witness interview as part of an
investigation, the officer’s decision to do so is not necessarily the result of a directive from
an attorney for the government in anticipation of litigation. See United States ex rel. Landis
v. Tailwind Sports Corp., 303 F.R.D. 419, 424 (D.D.C. 2014). Without more, the fact that
pre-interview conversations may have occurred between an FBI agent and a government
attorney does not establish that any subsequently prepared interview reports and notes were
created in anticipation of litigation.
It is the burden of the United States to establish that the FBI’s pre-2014 interview
materials are protected by the work-product doctrine and, on this record, the magistrate
judge did not err by concluding that the United States failed to satisfy this burden.2
B.

Post-2013 Interview Materials

The United States also challenges the April 2, 2019 Order’s conclusions with respect
to witness interviews conducted in 2014, after the United States Attorney’s Office became

2

To the extent that any of the pre-2014 interview materials were created in
anticipation of litigation despite the failure of the United States to meet its burden of proof,
the magistrate judge also concluded that these materials nonetheless are discoverable based
on Defendants’ substantial need for the materials. This conclusion, as addressed below, is
not erroneous. Moreover, the April 2, 2019 Order provides the United States the option of
submitting any responsive documents to the magistrate judge for in camera review for
possible redaction.
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involved in the FBI’s investigation. According to the United States, the magistrate judge
erred by failing to recognize that the post-2013 interviews are opinion work product, rather
than fact work product, by virtue of the significant involvement of an Assistant United
States Attorney with those interviews. The United States also contends that the magistrate
judge erred by concluding that any fact work product is discoverable based on Defendants’
substantial need for the materials and inability to obtain equivalent materials without undue
hardship.
1.

Opinion Work Product

According to the United States, all post-2013 interview materials are opinion work
product because an Assistant United States Attorney was involved.
The FBI’s lead case agent attests that an Assistant United States Attorney was
involved with every witness interview in 2014 and thereafter but did not personally attend
each interview. The magistrate judge concluded that “[a]lthough some, or even many, of
the [post-2013] FBI reports may be opinion work product, the Court cannot say with
confidence without reviewing the individual documents.” For that reason, the April 2,
2019 Order permits the United States to submit responsive documents to the Court for in
camera review prior to the production of these materials in discovery so as to identify any
protected non-discoverable information that may be redacted or withheld.
The United States contends that in camera review by the magistrate judge is
unnecessary because the involvement of an Assistant United States Attorney with all
witness interviews in 2014 and thereafter renders those interviews opinion work product.
But the legal authority that the United States cites does not support this broad, categorical
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definition of opinion work product. The notes and memoranda of an attorney’s agent are
opinion work product to the extent that such documents reveal “counsel’s mental
impressions, conclusions, opinions or legal theories.”

In re Green Grand Jury

Proceedings, 492 F.3d at 980 (internal quotation marks omitted). The magistrate judge
acknowledged that many of the post-2013 interview materials may reveal such protected
information. But the record here is insufficient to conclude that all of the post-2013
interview materials are opinion work product based solely on a case agent’s recollection
that an Assistant United States Attorney was “involved with all of the interviews.” The
record is silent as to what the interview reports and notes contain, who drafted them, at
who’s direction they were prepared, or for what purpose. As the April 2, 2019 Order
observes, some of these materials may contain a near-verbatim transcription of the
interview, which likely would be raw factual information as opposed to opinion work
product.
For these reasons, the magistrate judge did not err by requiring the United States to
submit such documents for in camera review before determining whether these interview
materials are opinion work product.
2.

Fact Work Product

The April 2, 2019 Order concludes that any post-2013 interview materials that are
fact work product are discoverable because “Defendants have demonstrated both
substantial need and the inability to otherwise obtain the information without undue
hardship.” The United States argues that this ruling is clearly erroneous and contrary to
law because the magistrate judge made insufficient factual findings and “developed no
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record regarding when Defendants learned of the investigation, their efforts to meet with
individuals interviewed by the government, or the results of these efforts.”
Work-product materials may be discoverable if the party seeking the materials
“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); accord PespiCo, Inc., 305 F.3d at 817. “A party . . . does not demonstrate
substantial need when it merely seeks corroborative evidence.” Baker v. Gen. Motors
Corp., 209 F.3d 1051, 1054 (8th Cir. 2000). And a witness’s prior statement to an attorney
generally is not discoverable “if that witness is available to the other party.” Id.
The magistrate judge found that notes and memoranda from interviews conducted
as early as 2012 are unique because they provide contemporaneous, unadorned testimony
and may demonstrate how witnesses’ recollections have changed over time.3 Implicit in
this finding is the determination that this evidence is not merely corroborative of other
evidence. The United States does not dispute the relevance of these witness interviews to
this case. Indeed, the witnesses that were interviewed between October 2012 and April
2016 include Fesenmaier, current and former Precision Lens employees, and physician
customers of Precision Lens. In addition, the magistrate judge correctly found that
“through eleven requests to extend the deadline to intervene, the Government contributed
to the Defendants’ need for, and inability to otherwise obtain, the same information which

3

Notably, the United States alleges claims against Defendants that date back to 2006,
which further bolsters the likely importance of witness statements made closer in time to
the alleged conduct.
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now exists solely in the Government’s possession.” On this record, the magistrate judge
correctly concluded that Defendants have a substantial need for these witness interview
materials and an inability to otherwise obtain this information without undue hardship.
In summary, the April 2, 2019 Order is neither clearly erroneous nor contrary to law
to the extent that it requires the United States to produce reports and notes of witness
interviews made during its investigation. As such, this aspect of the April 2, 2019 Order
is affirmed.
ORDER
Based on the foregoing analysis and all the files, records and proceedings herein, IT
IS HEREBY ORDERED that the April 2, 2019 Order of United States Magistrate Judge
David T. Schultz, (Dkt. 203), is AFFIRMED.

Dated: July 19, 2019

s/Wilhelmina M. Wright
Wilhelmina M. Wright
United States District Judge

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