Comprehensive Pharmacy Services, LLC v. Ascension Health Resource and Supply Management Group, LLC (dba The Resource Group)

Filing 77

MEMORANDUM AND ORDER. (See Full Order.) IT IS HEREBY ORDERED that plaintiff CPS's motion to compel 58 is GRANTED. Defendant is ordered to produce documents and information possessed by the identified 26 TRG Participants in response to Docume nt Request Nos. 4, 10, 11, 15, and 16 from CPS's First Request for Production (as narrowed pursuant to CPSs email and proposed stipulation dated August 15, 2017). IT IS FURTHER ORDERED that the Motion to Quash Dr. Maryland's deposition [6 9] is DENIED. IT IS FURTHER ORDERED that the motion for leave to file 68 is GRANTED. IT IS FURTHER ORDERED that the parties shall meet and confer and file a joint report setting out any proposals for a trial date and any modifications to the Case Management Order no later than April 26, 2018. Signed by District Judge Catherine D. Perry on 4/12/2018. (CBL)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
COMPREHENSIVE PHARMACY
SERVICES, LLC,
Plaintiff,
vs.
ASCENSION HEALTH RESOURCE
AND SUPPLY MANAGEMENT
GROUP, LLC (d/b/a THE
RESOURCE GROUP),
Defendant.

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Case No. 4:17 CV 16 CDP

MEMORANDUM AND ORDER
The background of this dispute is set out in the Memorandum and Order on
plaintiff’s summary judgment motion that was entered earlier today. This order
rules on two pending discovery motions: Plaintiff’s Motion to Compel Production
of Documents [58] and Dr. Patricia Maryland’s Motion to Quash Plaintiff’s
Subpoena Ad Testificandum [69]. For the reasons that follow, I will grant the
Motion to Compel and will deny the Motion to Quash. This Order also provides
instructions to the parties regarding the Case Management deadlines and trial
setting in the case.

CPS’s Motion to Compel
In its First Request for Production, plaintiff Comprehensive Pharmacy
Services, LLC (CPS) sought documents held by defendant Ascension Health
Resource and Supply Management Group, LLC, d/b/a The Resource Group’s
(TRG’s) Participants relating to the underlying material operating and other
changes that occurred between fiscal year 2015 and fiscal year 2016.1 CPS
maintains these changes “gave rise to the need for contractually required
adjustments, i.e., changes that materially altered pharmaceutical costs at TRG
Participants.” ECF No. 59 at 4. CPS argues the information requested is central to
CPS’s claim that TRG breached the contract by failing to negotiate required
adjustments to its savings calculation for changes that took place at TRG
Participants during 2015-2016. In its Response in Opposition to Plaintiff’s Motion

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Specifically, CPS requested the following:
• All documents concerning any cost-saving initiative The Resource Group implemented
at any TRG Participant before CPS was hired, including without limitation any initiative
for which the baseline calculation under SOW was adjusted. Req. No. 4.
• All documents concerning any actual, potential, requested or considered adjustments
under SOW 8 to any shortfall calculation, including, but not limited to, adjustments
based on case mix indices, drug hyper-inflation, The Resource Group’s decision to
switch vendors from Baxter to Hospira, or The Resource Group’s decision not to allow
CPS to switch compounding vendors at TRG Participants. Req. No. 10.
• All documents concerning: (i) the case mix index at each TRG Participant; (ii) hyperinflation at each TRG Participant . . . and (iv) The Resource Group’s decision not to
allow CPS to switch compounding vendors at TRG Participants. Req. No. 11.
• All documents concerning expanded services that may have altered the economic basis
of SOW 8 . . . . Req. No. 15.
• All documents concerning changes in hospital administration that altered the economic
basis of SOW 8 . . . . Req. No. 16.
ECF No. 59-4.
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to Compel, TRG contends that the documents requested are neither relevant nor
proportional to the needs of the case.
The Federal Rules of Civil Procedure relating to discovery permit each party
to serve the opposing party with document requests and interrogatories which
relate to “any matter that may be inquired into under Rule 26(b).” Fed. R. Civ. P.
33(a)(2) and 34(a). Under Rule 26(b)(1), “[p]arties 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). Where a party fails to
cooperate in discovery, the propounding party may move the Court “for an order
compelling an answer, designation, production, or inspection.” Fed. R. Civ. P.
37(a)(3)(B). “Some threshold showing of relevance must be made before parties
are required to open wide the doors of discovery and to produce a variety of
information which does not reasonably bear upon the issues in the case.” Hofer v.
Mack Trucks, Inc., 981 F.2d 377, 380 (8th Cir. 1992). “Upon a showing by the
requesting party that the discovery is relevant, the burden is on the party resisting
discovery to explain why discovery should be limited.” CitiMortgage, Inc. v.
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Allied Mortg. Group, Inc., 4:10CV1863 JAR, 2012 WL 1554908, at *2 (E.D. Mo.
May 1, 2012).
I find that the information requested by CPS is relevant to its claim that TRG
breached SOW 8 by failing to negotiate certain adjustments. SOW 8 requires the
negotiation of miscellaneous adjustments in order to calculate the pharmaceutical
baseline target – which in turn is used to calculate savings and any refund. The
pertinent provision of SOW 8, Section II E, states the following:
[A] Pharmaceutical Baseline Target will be established for each Participant
and in the aggregate for each Regional Health Ministry. . . . The
Pharmaceutical Baseline Target will be calculated from actual Participant
financials and other financial data, provided to CPS by Participant . . . .
Miscellaneous adjustments will be reviewed and mutually agreed upon by
CPS and The Resource Group, (for example: late drug spend invoices posted
to Participants financials in baseline period, but originated in a prior period).
ECF No. 26-4 at 15. TRG argues that the “miscellaneous adjustments” referred to
above should be limited to minor accounting discrepancies and not include the type
of material changes alleged by CPS. However, although Section II E does set forth
an example of an accounting adjustment, the full scope of permissible
miscellaneous adjustments is not limited or defined by the contract. The evidence
before me indicates that CPS and TRG both contemplated and discussed
significant adjustments to pharmaceutical costs. CPS has made the necessary
threshold showing of relevance.

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TRG also argues I should deny the motion as CPS’s requests are overbroad
and not proportional to the needs of this case. However, after the parties met and
conferred, CPS narrowed the scope of its requests and reduced the number of TRG
participants it sought data from to 26. Moreover, any burden in production must
be considered in relation to the amount in controversy – which here is alleged to be
at least $5.4 million. Thus, I find that CPS’s requests for production (4, 10, 11, 15
and 16) are both relevant and proportional, and I will grant CPS’s motion to
compel as set forth below.
Dr. Patricia Maryland’s Motion to Quash
Plaintiff CPS issued a Notice of Deposition and served a Subpoena seeking
to take the deposition of Dr. Patricia Maryland. Dr. Maryland is the Executive
Vice President of Ascension Health Alliance, which is the parent company of
defendant/counter-plaintiff TRG, among others. She is also the President and
Chief Executive Officer of Ascension Health, d/b/a Ascension Healthcare, a “sister
company” of TRG.
TRG argues that Dr. Maryland should not be subjected to a deposition
because she is a high-level corporate executive2 and a deposition would be unduly
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They also argue that she is a “non-party” and insisted that she be served with a Rule 45
subpoena after CPS first noticed her deposition. Now that CPS has served a Rule 45 subpoena in
addition to the Rule 30 notice, TRG argues that CPS has waived any argument that she was
subject to a Rule 30 notice. This dispute makes no difference to the outcome of this motion, but
in any event, the TRG documents show that Dr. Maryland should not be considered a “nonparty” to this case.
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burdensome. 3 TRG also argues that she does not have any role in the day-to-day
operation of TRG, and that CPS is obligated to use less burdensome means to
obtain the information. In particular, TRG argues that CPS must take the
depositions of lower-level personnel before it should be allowed to question Dr.
Maryland.
Plaintiff asserts that Dr. Maryland was involved in the decision to terminate
the contract. They have provided TRG documents (filed under seal because
designated confidential by TRG) showing her involvement in strategy meetings
and other discussions about the CPS contract that is the subject of this lawsuit.
Those documents show that TRG executives dealing with the CPS contract,
including the executive that signed TRG’s demand letters and letter terminating the
CPS contract, had direct and numerous discussions with Dr. Maryland about CPS’s
performance under the contract. This is more than sufficient to meet the plaintiff’s
“threshold showing of relevance.” Hofer, 981 F.3d at 377.
Defendant’s argument that because Dr. Maryland is a high executive she
should not be subject to deposition until all other means of discovery have been
exhausted is simply incorrect. The so-called “Apex” doctrine on which defendant
relies “is normally aimed at high level decision makers who have no particular

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It also argues that the request to take her deposition was premature because the Court had not
ruled on the pending motion for summary judgment. The Court has now ruled, so this argument
no longer applies.
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direct knowledge of the facts pertaining to the particular lawsuit.” Wal-Mart
Stores, Inc. v. Vidalakis, 5:07MC00039-RTD, 2007 WL 4591569 (W.D. Ark. Dec
28, 2007). Plaintiff has made a threshold showing that Dr. Maryland has direct
knowledge of facts pertaining to this case: she was critical of the CPS contract and
directly expressed her criticism to the people working on the project, she was
involved in numerous discussions about CPS’s performance under the contract,
and she was involved in the meetings leading to the termination.
Dr. Maryland’s high position does not insulate her from the obligation to
participate in discovery, and the Court will not require CPS to take depositions in
any particular order. Plaintiff argues that Dr. Maryland’s displeasure with CPS
was a driving factor in defendant’s decision to terminate the contract. The
information sought by plaintiffs about Dr. Maryland’s decision-making cannot be
obtained from others, and CPS is entitled to ask her about it directly. Although
sitting for a deposition is always a burden, nothing presented shows that it poses
any unusual or unfair burden in this case, given the amount of money at stake and
the fact that TRG is a counterclaim plaintiff as well as a defendant. Plaintiff has
agreed to take the deposition at Dr. Maryland’s counsel’s office, at a date
convenient to her, and to limit the questions to issues relevant to this case.

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Scheduling Issues
I recently granted the parties’ joint request to modify the Case Management
Order deadlines in this case, but did not set a new trial date. I recognize that the
delay in my ruling on the pending motions may have affected the parties’
discovery, and so I will direct them to meet and confer again to see if any
additional modifications to the Case Management Order are appropriate.
Following this meeting, the parties should file a joint statement setting out any
additional modifications needed for the Case Management Order, and setting out
any potential trial dates on which they can agree. Their previous motion requested
a trial date not sooner than December of 2018. The following trial settings are
currently available to the Court: December 3, 2018, December 10, 2018, and
January 7, 2019. If the parties cannot agree on any dates for trial, the report
should so state, and I will set a telephone conference and set a date. The report
should also state whether the parties’ previous estimate that the trial would last
three to five days is still accurate.
Accordingly,
IT IS HEREBY ORDERED that plaintiff CPS’s motion to compel [58] is
GRANTED. Defendant is ordered to produce documents and information
possessed by the identified 26 TRG Participants in response to Document Request

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Nos. 4, 10, 11, 15, and 16 from CPS’s First Request for Production (as narrowed
pursuant to CPS’s email and proposed stipulation dated August 15, 2017).
IT IS FURTHER ORDERED that the Motion to Quash Dr. Maryland’s
deposition [69] is DENIED.
IT IS FURTHER ORDERED that the motion for leave to file [68] is
GRANTED.
IT IS FURTHER ORDERED that the parties shall meet and confer and
file a joint report setting out any proposals for a trial date and any modifications to
the Case Management Order no later than April 26, 2018.

CATHERINE D. PERRY
UNITED STATES DISTRICT JUDGE
Dated this 12th day of April, 2018.

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