United States of America ex rel. et al v. D.S. Medical LLC et al

Filing 150

MEMORANDUM AND ORDER re: 137 MOTION to Compel Production and Memorandum in Support filed by Defendant Sonjay Fonn..IT IS HEREBY ORDERED that Defendant Dr. Sonjay Fonns motion (Doc. No. 137) to compel production of three PowerPoints is GRANTED with respect to the PowerPoint presented to SMFC and DENIED with respect to the PowerPoints presented to counsel for Defendants. Signed by District Judge Audrey G. Fleissig on 6/9/16. (MRS)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
UNITED STATES OF AMERICA,
ex rel. PAUL CAIRNS, et al.,
Plaintiff,
vs.
D.S. MEDICAL, L.L.C., et al.,
Defendants.

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Case No. 1:12CV00004 AGF

MEMORANDUM AND ORDER
This qui tam case is before the Court on Defendant Dr. Sonjay Fonn’s motion
(Doc. No. 137) to compel production of three PowerPoint presentations made by the
government during the course of the joint criminal and civil investigation of the claims
against Defendants. For the reasons set forth below, Defendant’s motion is granted in
part and denied in part.
BACKGROUND
The claims against Defendants in the present civil case are brought under the
False Claims Act, 31 U.S.C. §§ 3729-33, asserting violations of the federal AntiKickback Statute, 42 U.S.C. § 1320a-7b(b), in the context of spinal implant surgeries
performed by Dr. Fonn at medical facilities, including Saint Francis Medical Center
(“SFMC”), in St. Genevieve, Missouri. The claims are based in part on the alleged
overutilization by Dr. Fonn of spinal implant devices.
Two of the PowerPoints at issue were shown to defense counsel before the

government filed criminal charges against Defendants or intervened in the present civil
action, in an effort to resolve the allegations against Defendants. The third PowerPoint
was presented to SFMC’s attorneys, some members of its Board of Directors, and some
members of its executive team. Each presentation compiled various documents from
the joint investigation, and explored various legal theories and contentions against
Defendants and SFMC, respectively. Each presentation was marked as protected by
Federal Rule of Evidence 408 (protecting settlement negotiation communications)
and/or Federal Rule of Criminal Procedure 11(f) (protecting plea negotiations).
Shortly after the SFMC presentation, the hospital reached a civil settlement with the
government, and no criminal charges were ever filed against the hospital. Through
discovery in this case, Defendants have copies of all of the business records shown in
each of the three PowerPoint presentations, as well as a copy of the hospital’s
settlement agreement.
Dr. Fonn notes that the Eighth Circuit does not recognize a negotiation privilege,
and argues that all three PowerPoints discuss Defendants’ conduct at issue in this case
and are thus relevant and discoverable under the liberal rules of discovery. With
respect to the SFMC PowerPoint presentation, Dr. Fonn asserts that evidence that the
hospital and some of its employees were under the threat of criminal investigation
could go to show bias or prejudice of any of these employees who are called as
witnesses by the government in the present case. Thus, the SFMC PowerPoint is
discoverable under Federal Rule of Evidence 408 which provides that settlement
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negotiation material is admissible to prove a witness’s bias or prejudice. Dr. Fonn
notes that 22 SFMC employees are listed by the government as prospective witnesses
on topics that go to the heart of this case.
With respect to the two PowerPoints shown to Defendants’ counsel, in the
motion to compel, Dr. Fonn makes a generalized argument that as they discuss
Defendants’ conduct at issue in this case, they are relevant and discoverable under the
liberal rules of discovery embodied in Federal Rule of Civil Procedure 26, and that “a
party is not allowed to use Rule 408 as a screen for curtailing [its] adversary’s right of
discovery.”
In response, the government concedes that the Eighth Circuit does not recognize
a negotiation privilege, but opposes the motion to compel on the grounds that (1) public
policy of encouraging settlement negotiations dictates against requiring disclosure of
the PowerPoints, (2) the record does not establish a waiver by the government of work
product and negotiation privilege rights, and (3) Dr. Fonn failed to establish the
“particularized relevance” of the PowerPoints, especially given that they are cumulative
of discovery material he already has.
In his reply, Dr. Fonn adds an argument that at the two PowerPoint presentations
to Defendants’ counsel, “several federal case agents” who “likely participated in [the
PowerPoints] development” were also present. (Doc. No 141 at 5.) Dr. Fonn asserts
that one of the documents used in the PowerPoint to convince Defendants’ counsel that
Dr. Fonn overutilized implant devices was not displayed in its entirety, leaving off
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exculpatory information. Dr. Fonn argues that this renders the PowerPoints relevant to
the “agent witnesses’ bias and credibility.” He adds that he does not know which other
documents may also have only be partially displayed. Thus, “simply having the
documents of the PowerPoints presented to defense counsel does not demonstrate the
documents which were only shown in part and the created misimpression by such
partial display. In other words, the critical issue for challenging the bias and credibility
of the government agents and witnesses is only shown through the PowerPoint.” Id. at
6.
DISCUSSION
Under Federal Rule of Civil Procedure 26(b)(1), litigants may obtain
discovery regarding any nonprivileged matter that is relevant to any party’s
claim or defense and proportional to the needs of the case, considering the
importance of the issues at stake in the action, the amount in controversy,
the parties’ relative access to relevant information, the parties’ resources,
the importance of the discovery in resolving the issues, and whether the
burden or expense of the proposed discovery outweighs its likely benefit.
Fed. R. Civ. P. 26(b)(1). “Information within this scope of discovery need not be
admissible in evidence to be discoverable.” Id. Relevancy in this context “has been
construed broadly to encompass any matter that bears on, or that reasonably could lead
to other matter that could bear on, any issue that is or may be in the case.” Jo Ann
Howard & Associates, P.C. v. Cassity, 303 F.R.D. 539, 542 (E.D. Mo. 2014).
Here, Dr. Fonn, as the moving party, bears the initial burden of showing that the
requested discovery is discoverable within the meaning of Rule 26. See Cent. States,
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Se. & Sw. Areas Pension Fund v. King Dodge, Inc., No. 4:11MC00233 AGF, 2011 WL
2784118, at *2 (E.D. Mo. July 15, 2011). “[A]fter the proponent of discovery makes a
threshold showing of relevance, the party opposing a motion to compel has the burden
of showing its objections are valid by providing specific explanations or factual support
as to how each discovery request is improper.” Cincinnati Ins. Co. v. Fine Home
Managers, Inc., No. 4:09CV234-DJS, 2010 WL 2990118, at *1 (E.D. Mo. July 27,
2010).
Federal Rule of Evidence 408 provides that evidence related to settlement
negotiations is not admissible “to prove or disprove the validity or amount of a disputed
claim or to impeach by a prior inconsistent statement or a contradiction,” but may be
admitted for “another purpose, such as proving a witness’s bias or prejudice . . . .” Fed.
R. Evid. 408 (a) & (b). To the extent Rule 408 impacts the discoverability of
negotiation material by imposing a “heightened standard” for showing relevance, see,
e.g., Auto-Owners Ins. Co. v. Mid-Am. Piping, Inc., No. 4:07 CV 00394, 2008 WL
2570820, at *2 (E.D. Mo. June 26, 2008), the Court concludes that here Dr. Fonn has
met this burden with respect to the SFMC PowerPoint. As he argues, disclosure of this
PowerPoint might lead to the discovery of admissible evidence of bias or prejudice of
certain witnesses. The government has not countered this argument; nor has the
government asserted undue burden or what prejudice that would result from producing
the SFMC PowerPoint. Furthermore, by voluntarily presenting the PowerPoint to
counsel and employees of SFMC, the government has waived any work product
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privilege that would now protect the PowerPoint from discovery. See, e.g., Pittman v.
Frazer, 129 F.3d 983, 988 (8th Cir. 1997).
The Court concludes, however, that Dr. Fonn has not met his burden of showing
relevance with respect to the two PowerPoints presented to counsel for Defendants.
The Court does not discern any evidence admissible under Rule 408 that disclosure of
this negotiation information could lead to, and any relevance is outweighed by its
prejudicial impact, given that the PowerPoints were created for and used in connection
with settlement negotiations with Defendants.
CONCLUSION
Accordingly,
IT IS HEREBY ORDERED that Defendant Dr. Sonjay Fonn’s motion (Doc.
No. 137) to compel production of three PowerPoints is GRANTED with respect to the
PowerPoint presented to SMFC and DENIED with respect to the PowerPoints
presented to counsel for Defendants.

AUDREY G. FLEISSIG
UNITED STATES DISTRICT JUDGE
Dated this 9th day of June, 2016.

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