LIFEBRITE HOSPITAL GROUP OF STOKES, LLC v. BLUE CROSS AND BLUE SHIELD OF NORTH CAROLINA

Filing 100

MEMORANDUM OPINION AND ORDER signed by MAG/JUDGE L. PATRICK AULD on 08/09/2023, that the Motion to Quash (Docket Entry 86 ) is DENIED without prejudice to Adam Walters maintaining any objections he timely lodged to the subpoenas at issue. (Garland, Leah)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

LIFEBRITE HOSPITAL GROUP
OF STOKES, LLC,

)
)
)
)
)
)
)
)
)
)
)

Plaintiff,
v.
BLUE CROSS AND BLUE SHIELD
OF NORTH CAROLINA,
Defendant.

1:18cv293

MEMORANDUM OPINION AND ORDER
This case comes before the Court on LifeBrite Hospital Group
of Stokes, LLC (“LifeBrite Hospital”), LifeBrite Hospital Group,
LLC, LifeBrite Laboratories, LLC (“LifeBrite Labs”), Christian
Fletcher

(“Fletcher”),

and

Amber

Fletcher’s

(collectively,

“LifeBrite’s”) Motion to Quash (Docket Entry 86), to which Blue
Cross and Blue Shield of North Carolina (“BCBSNC”) responded
(Docket Entry 88) and LifeBrite replied (Docket Entry 89).

The

Motion to Quash targets subpoenas directed to Adam Walters, an
attorney (and nonparty) who previously represented Fletcher and
LifeBrite Labs.

(See Docket Entry 86 at 2.)

For the reasons that

follow, the Court denies the Motion to Quash, but without prejudice
to Walters’s right to maintain objections he timely made to the
subpoenas.
I. Background
This case concerns reimbursement of health insurance claims
associated with a rural, critical access hospital (“CAH”).

(See

Docket Entry 5 at 1.)
BCBSNC,

a

private

According to the Complaint in this case,

health

insurance

provider,

“refus[ed]

to

compensate LifeBrite for [] services rendered to BCBSNC and/or its
affiliate’s insureds.”

(Id.)

Such refusal allegedly contravenes

a contract between LifeBrite Hospital and BCBSNC.

(Id. at 2.)

BCBSNC, in turn, has contended (via Counterclaims) that the
persons and entities comprising LifeBrite “engaged in a deceptive
scheme to enrich themselves . . . by using LifeBrite Hospital’s
[billing identifiers] to bill for laboratory tests that LifeBrite
Hospital did not perform.”

(Docket Entry 75 at 12.)

BCBSNC’s

Counterclaims further assert that LifeBrite Labs conducted the
laboratory tests at issue, and the reimbursement requests to BCBSNC
should have identified LifeBrite Labs as the entity responsible for
conducting the tests.

(See id.)

According to the Counterclaims,

that scheme resulted in BCBSNC making outsized claim reimbursements
to LifeBrite, to the tune of “more than $11 million in less than
one year.”

(Id. at 14.)

Separate

from

this

litigation,

Christian

Fletcher

faced

criminal charges for participating in a scheme involving LifeBrite
Labs.

(See id. at 23 (citing United States of America v. Perez,

No. 3:20-cr-86 (M.D. Fla. June 27, 2022)).

That alleged scheme

involved LifeBrite Labs contracting with several CAHs across the
southeastern United States and conducting laboratory testing on
behalf of those hospitals, but then billing health insurance

2

providers using the CAH’s hospital identification number, rather
than that of LifeBrite Labs.

(See generally id.; see also Docket

Entry 86 at 4 (Motion to Quash reporting that, “[i]n 2020, the
United States brought criminal charges against [] Fletcher for
conspiracy to commit health care fraud”).) The CAHs under scrutiny
in that criminal case did not include LifeBrite Hospital.

(See

id.)
Fletcher testified during his criminal trial.

(See Docket

Entry 86 at 4-5; see also Docket Entry 89-1; Docket Entry 89-2;
Docket

Entry

89-3

(trial

transcripts).)

In

that

testimony,

Fletcher explained that he relied upon the advice of his counsel,
Walters, in

contracting

with

the

CAHs,

and

that

Walters

had

concluded that the arrangements between LifeBrite Labs and the CAHs
complied with applicable law. (See generally Docket Entry 86 at 45; see also Docket Entry 89-2 at 11, 93-94 (testimony describing
Walters’s conclusions that said arrangements violated no law or
contract).)
A jury acquitted Fletcher.

(See id. at 5 (citing United

States of America v. Perez, No. 3:20-cr-86 (M.D. Fla. June 27,
2022).)

Thereafter, on May 23, 2023, BCBSNC served subpoenas on

Walters and his former law firm.
(certificate

of

service).)

(See Docket Entry 86-2 at 5

The

subpoenas

seek

Walters’s

communications with Fletcher and LifeBrite regarding “use of a
[h]ospital’s

[b]illing

[i]dentifiers

3

to

bill

for

[l]aboratory

[s]ervices,”

as

well

as

other

documents

and

communications

regarding LifeBrite entities and the CAHs at issue in Fletcher’s
criminal trial.

(Id. at 13-14.)

As a result, LifeBrite filed the Motion to Quash, contending
that this Court should quash the subpoenas “because on their face
they seek communications and documents protected from disclosure by
the attorney-client privilege and the work product doctrine.”
(Docket Entry 86 at 2.)

The Motion to Quash also asserts that

“LifeBrite has not waived its privilege as to these documents[,
because Fletcher’s testimony in his criminal trial concerned]
hospitals other than the one at issue in this case (specifically,
. . . hospitals in Florida, Georgia, and Missouri—none of which are
the subject of this litigation) and claims submitted under the
network agreements between those hospitals and payors other than
BCBSNC.”

(Id.)

Finally, the Motion to Quash argues that the

subpoenas partly target “irrelevant contracts not at issue in this
case.”

(Id. at 6.)

BCBSNC’s Response first asserts that LifeBrite failed to
sufficiently identify the documents and/or communications to which
the attorney-client privilege would attach.
at 17-18.)
privilege

(See Docket Entry 88

Next, the Response contends that any attorney-client
“was

waived—and

documents

on

the

subject

became

discoverable—when Fletcher testified broadly about the legal advice
provided

by

Walters

in

connection

4

with

his

advice-of-counsel

defense in the criminal case.”
(averring

that

“LifeBrite

(Id. at 18-19; see also id. at 23

Labs’

relationship

with

LifeBrite

Hospital is nearly identical to its relationships with [the CAHs in
the criminal trial]”).)

Third, the Response argues that the

sought-after discovery bears relevance to LifeBrite’s intent when
it submitted claims to BCBSNC.
LifeBrite’s

Reply

(See id. at 28.)

initially

insists

that

LifeBrite

sufficiently identified the categories of documents over which it
asserts attorney-client privilege.

(See Docket Entry 90 at 5-7.)

Then, the Reply rejoins that Fletcher’s testimony in the criminal
trial involved “a far more limited subject matter [than that
advanced by BCBSNC].” (Id. at 8.) Finally, the Reply disputes the
relevance of the discovery.
legality of

LifeBrite

Labs’

(See id. at 12 (arguing that “[t]he
contracts

with

the

[CAHs

in

the

criminal trial], and Fletcher’s testimony that he followed his
lawyers’ advice, does not tend to prove or disprove the intent or
negligence

of

Fletcher

in

acquiring

and

operating

LifeBrite

Hospital”).)
II. Discussion
A. Discovery Standards
“Parties 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 . . . .”

Fed. R. Civ. P.

26(b)(1). This standard applies to “[a]ll civil discovery, whether

5

sought from parties or nonparties.”

Virginia Dep’t of Corr. v.

Jordan, 921 F.3d 180, 188 (4th Cir. 2019).

“Discovery rules are to

be accorded broad and liberal construction,” Boshea v. Compass
Mktg., Inc., No. 21-CV-309, 2021 WL 4425765, at *2 (D. Md. Sept.
27, 2021), and “[r]elevance is not, on its own, a high bar,”
Jordan, 921 F.3d at 188.

That said, Federal Rule of Civil

Procedure 45 imposes “[a] more demanding variant of [Federal Rule
of Civil Procedure 26’s] proportionality analysis,” id. at 189, in
order to ensure that parties do not draw nonparties “into the[ir ]
dispute without some good reason,” id. Notwithstanding the greater
scrutiny

of

discovery

requests

to

nonparties,

“the

ultimate

question [under either Federal Rules of Civil Procedure 26 or 45]
is whether the benefits of discovery to the requesting party
outweigh the burdens on the recipient.”

Id.

When faced with a motion to quash a subpoena directed to a
nonparty, “the court for the district where compliance is required
must quash or modify [the] subpoena [if it] . . . requires
disclosure of privileged or other protected matter, if no exception
or waiver applies[,] or [] subjects a person to undue burden.”
Fed. R. Civ. P. 45(d)(3)(A).
undue burden.

An overbroad subpoena imposes an

See In re Subpoena Duces Tecum to AOL, LLC, 550 F.

Supp. 2d 606, 612 (E.D. Va. 2008).

In addition, although “[n]o

requirement of relevance is included in the text of [Federal] Rule
[of Civil Procedure] 45[], it is settled that a subpoena is limited

6

in scope by Rule 26(b)(1) of the Federal Rules of Civil Procedure.”
Coleman v. District of Columbia, 275 F.R.D. 33, 36 (D.D.C. 2011).
Accordingly, courts may quash subpoenas directed to third parties
when those subpoenas target materials that “bear little apparent
connection [to matters at issue].”

In re Non-Party Subpoena to

Ctr. for Study of Soc. Pol’y, No. 21-MC-65, 2023 WL 2467738, at *3
(D.D.C. Mar. 7, 2023).
B. The Attorney-Client Privilege
“The attorney–client privilege is the oldest of the privileges
for confidential communications known to the common law.”
Co. v. United States, 449 U.S. 383, 389 (1981).

Upjohn

The privilege “is

founded upon the necessity . . . of the aid of persons having
knowledge of the law . . ., which assistance can only be safely and
readily

availed

of

when

free

apprehension of disclosure.”

from

the

consequences

or

the

Hunt v. Blackburn, 128 U.S. 464, 470

(1888); see also United States v. (Under Seal), 748 F.2d 871, 873
(4th Cir. 1984) (recounting that, “[a]s modern society became
increasingly complex, courts recognized that individuals would need
to rely on experts to transact business involving legal problems”).
“[W]hen

the

privilege

applies,

it

affords

confidential

communications between lawyer and client complete protection from
disclosure.”

Hawkins v. Stables, 148 F.3d 379, 383 (4th Cir.

1998).

7

Importantly, the “party asserting privilege has the burden of
demonstrating its applicability.”

National Lab. Rels. Bd. v.

Interbake Foods, LLC, 637 F.3d 492, 501 (4th Cir. 2011).

In that

regard, the proponent must “specifically and factually support his
claim

of

privilege,

.

.

.

[because]

an

improperly

privilege is the equivalent of no privilege at all.”
Jetnet Corp., 111 F.R.D. 68, 71 (M.D.N.C. 1986).

asserted
Byrnes v.

A party may meet

this burden by “establishing an evidentiary basis . . . for each
element of [the attorney-client privilege] for each . . . category
of document.”

Victor Stanley, Inc. v. Creative Pipe, Inc., 250

F.R.D. 251, 267 (D. Md. 2008); see also Fed. R. Civ. P. 26(b)(5);
Fed. R.
asserting

Civ.

P.

45(e)(2)(A)

privilege

“describe

(both
the

requiring
nature

of

that

the

person

the

[privileged

material] in a manner that . . . will enable other parties to
assess the claim”).
On the substance:1

1 The Parties stand in agreement that “federal common law
applies to the privilege issues.” (Docket Entry 86 at 8 n.2; see
also Docket Entry 88 at 17 n.5 (“agree[ing] . . . that federal
common law applies to the privilege issues”).) But neither Party
cites any support for their proffered proposition that removing a
case “on the basis that BCBSNC ‘has been sued for actions taken as
a person acting as a federal officer of an agency of the United
States or under color of such office’” (Docket Entry 86 at 8 n.2
(citing Docket Entry 75 at 23)) sufficiently implicates a federal
question such that federal common law governs questions of
privilege. See Ohio v. Doe, No. 3:04-CV-155, 2005 WL 5610228, at
*3 (S.D. Ohio Apr. 22, 2005) (applying Ohio statute regarding
waiver of attorney-client privilege after federal public defender
removed dispute to federal court pursuant to 28 U.S.C. § 1442,
while observing that, “by exercising removal jurisdiction over this
8

The privilege applies only if (1) the asserted holder of
the privilege is or sought to become a client; (2) the
person to whom the communication was made (a) is a member
of the bar of a court, or his subordinate and (b) in
connection with this communication is acting as a lawyer;
(3) the communication relates to a fact of which the
attorney was informed (a) by his client (b) without the
presence of strangers (c) for the purpose of securing
primarily either (i) an opinion on law or (ii) legal
services or (iii) assistance in some legal proceeding,
and not (d) for the purpose of committing a crime or
tort; and (4) the privilege has been (a) claimed and (b)
not waived by the client.
United States v. Jones, 696 F.2d 1069, 1072 (4th Cir. 1982) (citing
United States v. United Shoe Mach. Corp., 89 F. Supp. 357, 359 (D.
Mass. 1950)).

dispute, this [c]ourt has stepped into the shoes of [the state
court judge], and will apply the law of Ohio in the same manner as
that judicial officer would have applied it, had [the federal
public defender] not removed this matter”).
Even so, the Court concludes that federal common law applies,
for two alternative reasons. First, BCBSNC’s Counterclaims raise
questions related to ERISA (see Docket Entry 75 at 27-28), and when
a case “involv[es] both federal and state law claims, the federal
law of privilege applies.” Virmani v. Novant Health Inc., 259 F.3d
284, 287 n.3 (4th Cir. 2001).
Second, this dispute involves
alleged waiver of the attorney-client privilege (by virtue of
testimony in a federal proceeding) and, under those circumstances,
federal standards govern waiver “even if state law [would]
provide[] the rule of decision.” Fed. R. Evid. 502(f). In any
event, “the elements of the North Carolina attorney-client
privilege are similar to the attorney-client privilege recognized
under federal common law,” Mason C. Day Excavating, Inc. v.
Lumbermens Mut. Cas. Co., 143 F.R.D. 601, 607 (M.D.N.C. 1992), so
the Court’s analysis would not meaningfully differ whether it
consulted federal or state law, see, e.g., State v. Murvin, 304
N.C. 523, 531 (listing same elements of attorney-client privilege
as federal common law); State v. Tate, 294 N.C. 189, 193
(discussing “well-settled” principle of North Carolina privilege
law that a party may waive the privilege by “offer[ing] testimony
concerning the substance of the communication”).
9

“Although the privilege has a venerable pedigree and helps to
ensure competent and complete legal services, it is nonetheless
inconsistent with the general duty to disclose and impedes the
investigation of the truth.”

(Under Seal), 748 F.2d at 875; see

also United States v. Aramony, 88 F.3d 1369, 1389 (4th Cir. 1996)
(observing

that

claims

of

privilege

“interfere[]

with

the

truthseeking mission of the legal process” (internal quotation mark
omitted); see also Trammel v. United States, 445 U.S. 40, 50 (1980)
(“Testimonial exclusionary rules and privileges contravene the
fundamental principle that the public has a right to every man’s
evidence.” (cleaned up).) As a consequence, “courts are careful to
construe recognized privileges narrowly.”

In re Sealed Case, 676

F.2d 793, 806–07 (D.C. Cir. 1982); see also In re Grand Jury Proc.,
727 F.2d 1352, 1355 (4th Cir. 1984) (reporting view that attorneyclient privilege “is not favored by federal courts” (internal
quotation marks omitted)).
Strict construction of the attorney-client privilege has led
courts

to

conclude

maintaining

the

that

“[a]ny

confidential

disclosure

nature

of

inconsistent

the

attorney-client

relationship waives the attorney-client privilege.”
F.2d at 1072.

with

Jones, 696

Moreover, “[a]ny voluntary disclosure by the client

to a third party waives the privilege not only as to the specific
communication disclosed, but often as to all other communications
relating to the same subject matter.”

10

Id. (emphasis added); see

also Fed. R. Evid. 502(a) (providing that intentional disclosure of
privileged information in federal proceeding results in waiver of
privilege for other information that “concern[s] the same subject
matter” and “ought in fairness to be considered together”).

A

voluntary disclosure of privileged material effects a broader
waiver of the privilege than an inadvertent disclosure because
parties should not enjoy the freedom to selectively disclose “part
of a privileged communication to gain an advantage in litigation.”
Id.; see also Sealed Case, 676 F.2d 809 n.54 (noting that courts
may

“retain

discretion

not

to

impose

full

waiver

as

to

all

communications on the same subject matter where the client has
merely disclosed a communication to a third party, as opposed to
making some use of it”).)

Concluding otherwise would permit the

privilege to further interfere with the truth-seeking function of
the legal process because “a party [could] reveal[] one beneficial
communication

but

fail[]

to

reveal

communication on the same matter.”

another,

less

helpful,

U.S. ex rel. Mayman v. Martin

Marietta Corp., 886 F. Supp. 1243, 1252 (D. Md. 1995).
Although the United States Court of Appeals for the Fourth
Circuit has not directly answered “[w]hether assertion of the
advice-of-counsel

defense

constitutes

a

waiver

of

the

attorney-client privilege,” United States v. Dallmann, 433 F. Supp.
3d 804, 813 (E.D. Va. 2020), other circuits to consider the issue
have concluded that “the waiver certainly extends to the advice

11

given by the attorney and any communication made or evidence
submitted to the attorney upon which the attorney’s advice is
based,” id. at n.8 (collecting cases).

Thus, courts across the

country apply a fairly uniform standard: effectively that, “[w]hen
a party raises an advice of counsel defense, [] all advice on the
pertinent topic becomes fair game.”

U.S. ex rel. Drakeford v.

Tuomey, 792 F.3d 364, 391 (4th Cir. 2015) (Wynn, J., concurring).
“Of course, defining the ‘subject matter,’ and thus the scope
of the waiver, is a critically important aspect of the waiver
analysis.”

E.I. Dupont de Nemours & Co. v. Kolon Indus., Inc., 269

F.R.D. 600, 605 (E.D. Va. 2010).

Even in the case of a voluntary

disclosure for tactical purposes, courts must take heed not to
“open

up

the

possibility

of

confidential communications.”

a

fishing

expedition

of

all

Hawkins, 148 F.3d at 384 n.4.

Courts must therefore closely scrutinize the disclosed material so
as to balance the risk of a “fishing expedition,” id., with the
risk that a party could “use the attorney’s opinions as [both]
sword [and] shield to affect the factfinding process,” Vaughan
Furniture Co. Inc. v. Featureline Mfg., Inc., 156 F.R.D. 123, 128
(M.D.N.C. 1994).
Due to the critical importance of accurately defining the
“subject

matter”

when

faced

with

an

argument

for

waiver

of

privilege, the Court highlights certain specific applications of
the doctrine with the goal of clarifying some common principles.

12

For example, Martin Marietta involved a government contractor that
faced

a

government

investigation

over

Martin Marietta, 886 F. Supp. at 1244.

its

billing

practices.

The contractor, in the

process of performing a contract to develop a prototype of a
missile defense system, billed the government for research and
development costs it incurred, ultimately exceeding the contract
value, which the government argued the contractor could not do.
See id. at 1244-45. During settlement negotiations, the contractor
informed the government that a legal memorandum drafted by in-house
counsel had concluded that the contractor’s billing practices (as
it related to research and development costs) complied with the
relevant Defense Acquisition Regulation (as recently interpreted in
a court opinion).

See id. at 1247-48.

As a result, the court

concluded that the scope of the subject matter waiver included all
in-house legal advice on the propriety of seeking reimbursement for
research and development over and above the value of existing
contracts, during the period the contractor employed that practice
to support development of the missile defense system prototype.
See id. at 1252.

Thus, the scope of the waiver could theoretically

include other government contracts, because the advice of in-house
counsel consisted of interpreting one regulation in light of one
court decision.

See id. at 1247-48.

In so holding, the court

implicitly recognized that the contractor could apply the same
legal advice to different contracts.

13

In E.I. DuPont, a company CEO issued a press release alleging
that a competitor visited its facilities “expressly for the purpose
of obtaining confidential [company] technology.”
F.R.D. at 603.

E.I. Dupont, 269

As it turned out, the FBI orchestrated that visit

as a sting operation, and the company later learned as much during
discussions between its in-house counsel and the government, the
details

of

which

relayed to

the

the

CEO.

company’s
Id.

at

in-house

605.

counsel

Given

the

subsequently
company

CEO’s

disclosure of that information (via press release), the court held
that the scope of the subject-matter waiver consisted of the
company’s

communications

with

the

government

regarding

the

competitor’s “one [visit] and [] the purpose for that [one visit].”
Id. at 607.

The court, however, declined to “artificially expand

the scope of the subject matter to . . . all communications in [the
company]’s possession relating to the [g]overnment’s investigation
of [the competitor].”

Id.

E.I. DuPont thus distinguishes between

communications regarding (A) one general topic, and (B) individual
transactions that fall under that topic. See id. (emphasizing that
“the scope of the waiver is measured by the substance of the
protected information that has been publicly disclosed,” as well as
importance
published”).

of

not

“ignor[ing]

what

[the

company]

actually

In other words, E.I. DuPont recognizes that, when a

party voluntarily discloses privileged communications regarding a

14

particular transaction, subject matter waiver should not extend to
the entire (more general) topic.
Finally, in Blue Lake Forest Products, a timber company sought
damages

when

the

United

States

Forest

Service

suspended

the

company’s timber operations. See Blue Lake Forest Prod., Inc. v.
United States, 75 Fed. Cl. 779, 781 (2007).

The Forest Service did

so because, in prior litigation involving a different plaintiff, a
court

had

concluded

that

the

Forest

Service

had

failed

to

adequately conduct certain environmental impact studies prior to
awarding timber contracts.

See id.

In that prior litigation, the

Forest Service had disclosed an internal legal memorandum that
evaluated

the

Forest

Service’s

compliance

with

its

statutory

obligations to conduct those environmental impact studies. See id.
at 787-90.
Products
documents

As a consequence, the court in Blue Lake Forest

defined
and

the

scope

communications

of

subject

concerning

matter
the

waiver

Forest

as

all

Service’s

interpretation and implementation of its obligations in conducting
environmental impact studies under the applicable federal law. See
id. at 794.

Blue Lake Forest Products highlights not just the

possibility of cross-litigation subject matter waiver, but, like
Martin Marietta, also stands for the proposition that the waiver
can extend to a party’s transactions with separate entities, so
long as the underlying legal assessment governing the dealings with
those entities remains the same.

15

C. The Motion to Quash
Request One
In light of the foregoing principles, the Court turns first to
Request

One

in

the

subpoenas,

which

calls

for

“[a]ll

[c]ommunications [Walters] had with any LifeBrite Entity, Christian
Fletcher,

or

Amber

Fletcher,

[r]elated

[h]ospital’s

[b]illing

[i]dentifiers

[s]ervices.”

(Docket Entry 86-2 at 13.)

to

[t]o
bill

the
for

use

of

a

[l]aboratory

As an initial matter, and

contrary to BCBSNC’s contention, LifeBrite has met its burden of
demonstrating that these communications implicate the attorneyclient privilege.
the parties

do

(See Docket Entry 88 at 17-18.)
not

dispute

that

Fletcher

and

In that regard,
LifeBrite

Labs

employed Walters as outside counsel, that Walters acted in that
capacity while rendering advice, or that LifeBrite has sought to
claim the
argument

privilege.
appears

to

(See
center

generally
on

id.)

whether

Rather,

LifeBrite

BCBSNC’s

adequately

described the documents to which the privilege would apply.

(See

id. at 18.)
Request One calls for communications concerning use of a CAH
billing identifier to bill for laboratory services.
Entry 86-2 at 13.)

(See Docket

And, as the criminal trial transcript amply

demonstrates, Walters frequently provided Fletcher and LifeBrite
Labs with counsel related to said topic.

(See, e.g., Docket Entry

89-1 at 29-30 (testimony reflecting that Fletcher hired Walters “to

16

ensure that [they] were compliant” when contracting with CAHs), 32
(noting that Fletcher retained Walters “with the specific purpose
of giving advice about the reference laboratory agreement and the
legalities surrounding it”), 50 (testimony describing memorandum
Walters drafted addressing legality of proposed laboratory services
agreement with one CAH); Docket Entry 89-2 at 12 (documenting
Walters’s conclusion from memorandum), 75-76 (testimony regarding
Walters’s assistance in drafting laboratory services agreement with
second CAH), 126 (detailing Walters’s time entries for work related
to third CAH).) Accordingly, a sufficient evidentiary basis exists
to

support

LifeBrite’s

invocation

of

communications covered by Request One.

privilege

as

to

the

See Victor Stanley, 250

F.R.D. at 267.
Even
waived—and

so,

BCBSNC

documents

urges
on

the

that

any

subject

claim

of

became

“privilege

was

discoverable—when

Fletcher testified broadly about the legal advice provided by
Walters in connection with his advice-of-counsel defense in the
criminal case.”

(Docket Entry 88 at 18-19.)

Here, the Court must

first distinguish between the CAHs at issue in the criminal trial,
and LifeBrite Hospital; LifeBrite does not appear to dispute that
Fletcher waived the privilege as to the former category.

(See

Docket Entry 90 at 7 (conceding that Fletcher testified regarding
“contracts with [CAHs at issue in criminal trial]”), 9 (detailing

17

testimony related to said hospitals), 10 (seeking to distinguish
LifeBrite Hospital from other CAHs).)
The Court agrees, and concludes that Fletcher did waive
attorney-client privilege as it relates to communications with
Walters concerning laboratory services agreements with the CAHs at
issue in the criminal trial.

Fletcher’s testimony, which he could

have withheld, plainly constitutes a “voluntary disclosure by [him,
which]

waives

the

privilege

not

only

as

to

the

specific

communication disclosed, but [also] as to all other communications
relating to the same subject matter.”
also Fed. R. Evid. 502(a).

Jones, 696 F.2d at 1072; see

In that regard, Fletcher testified at

length in describing the advice he received from Walters when
researching,

negotiating,

agreements with those CAHs.

drafting,

and

ultimately

executing

(E.g., Docket Entry 89-1 at 32, 46,

48, 50; Docket Entry 89-2 at 12, 75-76.)
Further, Fletcher appears to have injected this testimony into
the criminal trial in order “to gain an advantage in litigation,”
Jones, 696 F.2d at 1072, i.e., by raising an advice of counsel
defense (which likely contributed to his acquittal).

Thus, absent

a finding of waiver, Fletcher “[could] reveal[] one beneficial
communication

but

fail[]

to

reveal

another,

less

helpful,

communication on the same matter,” Martin Marietta, 886 F. Supp. at
1252, and thereby “use [Walter]’s opinions as [both] sword [and]
shield to affect the factfinding process,” Vaughan Furniture, 156

18

F.R.D. at 128.

Accordingly, Fletcher waived any privilege with

regard to communications with at least three CAHs named in Request
One.2
The question remains whether Fletcher’s testimony at trial
involved the same “subject matter” as his communications with
Walters regarding a laboratory services agreement with LifeBrite
Hospital.

As noted, “defining the ‘subject matter,’ . . . is a

critically important aspect of the waiver analysis.”
269 F.R.D. at 605.

E.I. Dupont,

Additionally, the Court must endeavor to avoid

“open[ing] up the possibility of a fishing expedition of all
confidential communications,” Hawkins, 148 F.3d at 384 n.4.
In deference to those concerns, the Court finds that the bulk
of Fletcher’s trial testimony, which addressed laboratory service
agreements with other CAHs, does not result in a subject matter
waiver as to Walters’s communications with LifeBrite regarding the
laboratory services agreement with LifeBrite Hospital, for two

2 The subpoenas define “Hospital” to include five CAHs,
including LifeBrite Hospital, the three CAHs Fletcher discussed in
detail during the criminal trial, and “Chestatee Regional Hospital
in Chestatee, Georgia.”
(Docket Entry 86-2 at 11.)
However,
Chestatee rarely appears in the trial transcript, and only does so
in the context of Fletcher stating that he has “never been involved
with Chestatee at all.” (Docket Entry 89-3 at 22; see also id. at
23 (testimony that he “never had anything to do with Chestatee”).
The record does not reflect that LifeBrite Labs ever entered into
a laboratory services agreement with a CAH in Chestatee.
(See
generally Docket Entry 89-1; Docket Entry 89-2; Docket Entry 89-3.)
Therefore, the Court would not consider Fletcher to have waived any
privilege over communications with Walters regarding a CAH in
Chestatee, to the extent those communications even exist.
19

reasons.
legal

First, as the trial transcript establishes, Walters’s

analysis

in

evaluating

potential

agreements

entailed

consideration of federal law, but also relevant state law.

(See

Docket Entry 89-2 at (memorandum discussing “[federal] [A]nti[K]ickback [S]tatute” as well as Medicare’s “Shell Laboratory
Rule”).)

For

example,

the

memorandum

Walters

drafted

when

LifeBrite Labs sought to enter an agreement with a CAH in Florida
specifically included review of “the Florida Brokering Act.”
at 11.)

(Id.

Additionally, Walters’s time entries reflect further

conferral with Fletcher regarding “Florida fraud and abuse concerns
with hospital/lab arrangement and physician marketing.”

(Id. at

121; see also id. at 122 (entries noting “[r]eview [of] Florida
statutes and regulations,” “Florida law,” “Florida fraud and abuse
issues,” and “Florida compliance issues”), 220 (cross-examination
addressing section in memorandum on “Florida Anti-brokering Patient
Act”), 233 (same), 235 (same), 237 (same); Docket Entry 89-3 at 46
(inclusion in contract with Florida CAH of language indicating that
“[t]he parties believe that th[eir] agreement complies with . . .
all relevant fraud and abuse laws and regulations for the state of
Florida”), 51 (inclusion in contract with Missouri CAH of similar
language that refers to Missouri law).)
Separately, but as importantly, Walters also reviewed each
CAH’s contracts with health insurance providers “before he rendered
his opinion on whether there was any prohibitive language in

20

th[os]e contract[s] that would deem it inappropriate for the
reference lab agreement that he was drafting.”
at 48.)

(Docket Entry 89-1

That included, for the first CAH in Florida, at least

thirteen separate contracts with providers.

(See id.; see also

Docket Entry 89-2 at 12-13 (reflecting that Walters “reviewed the
insurance contracts” for first CAH).)

The record shows that

Walters repeated this exercise for each subsequent laboratory
services agreement.

(See id. at 212 (discussing Walters’s review

of payer contract for CAH in Missouri).)
Florida law would have no bearing on Walters’s analysis of a
laboratory services agreement between LifeBrite Hospital (a CAH in
North Carolina) and LifeBrite Labs (a Georgia entity).

Moreover,

Walters

suggests)

likely

would

have

(as

his

past

practice

undertaken a separate review of LifeBrite Hospital’s contracts with
insurance providers prior to rendering a final opinion on the
permissibility of an agreement with LifeBrite Hospital. Therefore,
unlike the scope of the counsel’s review in Martin Marietta, see
886 F. Supp. at 1247-48, Walters’s legal advice here required
examining the laws of different jurisdictions, as well as distinct
sets of contracts with payers.

Thus, unlike in Blue Lake Forest

Products, LifeBrite Labs could not readily transpose Walters’s work
regarding an agreement with one CAH to another.

Put another way,

and as the E.I. Dupont Court similarly recognized, the general
topic

of

Walters’s

representation

21

consisted

of

advising

on

laboratory services agreements with CAHs; but that general topic
included discrete transactions with distinct legal issues, and the
Court must not “ignore what [Fletcher] actually published [at the
criminal trial].”

E.I. Dupont, 269 F.R.D. at 607.

Fletcher’s

testimony

disclosing

Walters’s

agreements

with

in

and

CAHs

Florida

advice

Missouri

Therefore,
related

does

not

to

waive

privilege as to LifeBrite’s communications with Walters for a
similar agreement with LifeBrite Hospital.
However,

BCBSNC’s

Response

highlights

three

additional

passages that it contends effect a broad subject-matter waiver, and
the Court ultimately concludes that one of those passages does
waive any privilege for LifeBrite’s communications with Walters
regarding

the

Hospital.

laboratory

services

agreement

with

LifeBrite

First, the Response cites a portion of Fletcher’s

testimony for the proposition that Fletcher and Walters discussed
“[w]hether there were any legal concerns about LifeBrite Labs
contracting

with

a

rural

hospital

to

perform

hospital would bill commercial insurers for.”
12.)

tests

that

the

(Docket Entry 88 at

But in that portion of testimony, Fletcher only confirms

that, “anytime [he was] going to deal with a critical access
hospital, [he] made sure [] Walters was aware of what [he was]
doing to get legal advice from [Walters].”
33 (emphasis added).)
dealings,

and

(Docket Entry 89-2 at

This general testimony as to unspecified

Walters’s

awareness

22

(but

not

approval

of

any

particular transaction), falls short of establishing a subject
matter waiver for communications related to a specific agreement
with LifeBrite Hospital. See United States v. White, 887 F.2d 267,
271 (D.C. Cir. 1989) (holding that “general assertion lacking
substantive content that one’s attorney has examined a certain
matter is not sufficient to waive the attorney-client privilege”).
Next, the Response contends that Fletcher used one legal
memorandum from Walters for “every [] arrangement LifeBrite Labs
considered” (Docket Entry 88 at 12), because “it applied with equal
force to [all CAHs]” (id.).

However, the passage BCBSNC cites as

support, placed in context, pertains only to LifeBrite Labs’
agreement with the first CAH in Florida.
42-43.)

(See Docket Entry 89-3 at

In that passage, Fletcher testified about the memorandum

Walters prepared prior to LifeBrite Labs entering an agreement with
that CAH.

(See id.)

Then, Fletcher’s attorney asked:

Q. And . . . this is the only memorandum we have before
[] Walters drafts all of the contract, right?
A. Yes, sir.
(Id. at 43 (emphasis added).) The question specifically probed the
contract with the first CAH in Florida, and sought to ascertain
whether Fletcher consulted any other source before Walters drafted
all of that (one, particular) contract, not all contracts with all
CAHs, as the Response suggests.3

The Court thus concludes that any

3 Elsewhere, Fletcher maintains that Walters’s memorandum
“[was] relevant for all three contracts [with the CAHs at issue in
23

subject matter waiver as a result of Fletcher’s answer would not
extend to LifeBrite Hospital.
Nonetheless,

the

Court

does

find

that

one

passage

from

Fletcher’s testimony waives privilege regarding the laboratory
services agreement with LifeBrite Hospital.

As the Response

explains, Fletcher did “disclose[] that he relied on advice Walters
provided about how LifeBrite Labs could contract with any rural
hospital that would bill insurers for tests performed by the lab.”
(Docket Entry 88 at 20-21 (emphasis in original).) In the relevant
passage, Fletcher’s criminal trial counsel asked him, with regard
to a draft agreement with the CAH in Missuori, whether “[LifeBrite
Labs’ in-house counsel] or [] Walters [had] told [Fletcher that] it
would have been improper to enter into this type of agreement”
(Docket Entry 89-2 at 93), to which Fletcher replied, “ [n]o[, and
that t]hey told [him] that it was proper as addressed in the
contract

that

was

written”

(id.).

The

line

of

questioning

continued:

the criminal trial].” (Id. at 237.) True enough, because (as the
Court has recounted) the memorandum discussed federal law, which
would not vary from CAH to CAH, while also highlighting the
importance of reviewing pertinent state law, as well as each CAH’s
contracts with payers.
In that regard, the memorandum holds
relevance across the board, at least in the sense that it
established a framework for evaluating the propriety of laboratory
services agreements with CAHs.
But, as the entire transcript
indicates, Walters had to review separate state laws, and separate
contracts, for each CAH. Accordingly, Fletcher’s suggestion that
the one memorandum had relevance for all contracts does not lead to
the conclusion that all contracts entailed the same “subject
matter,” for purposes of privilege waiver.
24

Q. If they had told you it was illegal, would you have
done it?
A. No. We -- there was several proposals that they gave
that said we should not do them, and we did not do them.
Q. So every time you were -- you brought something to Mr.
Bonner or Mr. Walters, if they told you, you couldn't do
it, you didn't do it?
A. Correct. Every time.
(Id. at 94 (emphasis added).) Fletcher’s testimony here represents
the classic embodiment of an advice of counsel defense: Fletcher
stated, in effect, that whenever Walters voiced disapproval towards
a proposal, Fletcher would discontinue the transaction, thereby
prompting the jury to draw the inescapable inference that Walters
approved of each agreement Fletcher and LifeBrite Labs completed.
(See id.; see also Dallmann, 433 F. Supp. 3d at 813 (discussing
scope of waiver when party raises advice of counsel defense and
concluding that “[m]erely disclosing the advice received from the
attorney would be a selective disclosure” and that “the waiver
certainly extends to the advice given by the attorney and any
communication made or evidence submitted to the attorney upon which
the attorney’s advice is based”).

This particular testimony,

unlike the prior two passages, does not address Walters’s mere
“aware[ness].”

(See id. at 33.)

Nor did Fletcher confine the

scope of this testimony to an individual contract, or a particular
CAH.

(See Docket Entry 89-3 at 42-43.)

25

Rather, Fletcher spoke to

“every time [ he] brought something to [] Walters.”

(Docket Entry

89-2 at 94.)
To

reiterate,

this

testimony

disclosure by [Fletcher].”

constitutes

a

Jones, 696 F.2d at 1072.

“voluntary
Voluntary

disclosures of privileged information “waive[] the privilege not
only as to the specific communication disclosed, but [also] as to
all other communications relating to the same subject matter.”
Id.; see also Fed. R. Evid. 502(a).

Fletcher used this testimony

in order “to gain an advantage in litigation,” id., insofar as he
“reveal[ed] one beneficial communication but [potentially] fail[ed]
to reveal another, less helpful, communication on the same matter,”
Martin

Marietta,

886

F.

Supp.

at

1252.

The

Court

cannot

countenance the “use [of Walters]’s opinions as [both] sword [and]
shield to affect the factfinding process.”

Vaughan Furniture, 156

F.R.D. at 128.
As a result, the Court finds Fletcher waived the attorneyclient privilege, and the subject matter of that waiver consists of
all

communications

between

LifeBrite

and

Walters

related

to

Walters’s approval of a laboratory services agreement between
LifeBrite Labs and LifeBrite Hospital.

For the sake of clarity,

this waiver extends not just to communications, but also to any

26

“evidence submitted to [Walters] upon which [his] advice [wa]s
based.”

Dallmann, 433 F. Supp. 3d at 813.4

The foregoing analysis of Request One leaves LifeBrite’s
argument that the topic partly calls for irrelevant material
because any communications regarding the CAHs at issue in the
criminal trial

“have

absolutely

no

defenses in the instant litigation.”

bearing

on

the

claims

(Docket Entry 86 at 11.)

or
For

one, such “conclusory assertions,” Johns Hopkins Univ. v. Datascope
Corp., No. 05-CV-759, 2007 WL 1450367, at *2 (D. Md. May 16, 2007),
fail to meet LifeBrite’s burden as the moving party.

Putting that

aside, considering that “[d]iscovery rules are to be accorded broad
and liberal construction,” Boshea, 2021 WL 4425765, at *2, and that
“[r]elevance is not, on its own, a high bar,” Jordan, 921 F.3d at
188, the Court finds that those communications (at a minimum) bear
relevance to LifeBrite’s state of mind in dealing with BCBSNC.
To recap, BCBSNC has alleged that LifeBrite made fraudulent
misrepresentations by falsely certifying that LifeBrite Hospital

4 The Court could read Fletcher’s statement more broadly, and
plausibly find a waiver as to the entire attorney-client
relationship. (See Docket Entry 89-2 at 94 (not limiting testimony
to any particular type of proposal).) However, the Court elects to
read Fletcher’s facially unqualified statement in context, and
interpret it as a reference to proposals related to laboratory
services agreements with CAHs.
(See id. at 93 (discussing
agreement with CAH in Missouri prior to relevant line of
questioning).) In so doing, the Court aims to scrutinize “what
[Fletcher] actually published,” E.I. Dupont, 269 F.R.D. at 607,
and avoid “artificially expand[ing] the scope of the subject
matter,” id.
27

conducted certain tests that Lifebrite Labs actually conducted, a
practice that LifeBrite Hospital’s contract with BCBSNC allegedly
prohibited.

(See Docket Entry 75 at 12-13, 17, 51.)

fraudulent

misrepresentation

Taylor

Gore,

v.

161

N.C.

requires

App.

300,

an

“intent

303

A claim for
to

(2003).

deceive.”
Fletcher’s

testimony at the criminal trial indicates that he understood the
importance of evaluating a CAH’s contracts with insurance providers
prior to entering a laboratory services agreement.

(See Docket

Entry 89-1 at 48 (reflecting that Walters insisted on reviewing
payer contracts before opining on permissibility of laboratory
services agreement).)

Therefore, the communications with Walters

concerning agreements with those CAHs shed light on LifeBrite’s
knowledge (and intent) when executing the laboratory services
agreement at issue in this case and submitting reimbursement claims
to BCBSNC.

Accordingly, LifeBrite’s argument of irrelevance lacks

merit.
In sum, the Court denies the Motion to Quash as to Request
One, but does so without prejudice to Walters maintaining any
objections he timely lodged.
Requests Two and Three
Request Two seeks production of Walters’s communications “with
anyone

other

[h]ospital’s
[s]ervices.”

than

[LifeBrite

[b]illing

r]elated

[i]dentifiers

to

(Docket Entry 86-2 at 13.)

28

[t]o
bill

the
for

use

of

a

[l]aboratory

Request Three further

seeks, as a catch-all request, “all communications [Walters] ha[s]
had [r]egarding [the CAHs]” (id. at 13-14), {t]o the extent [the
communications were not] responsive to Request [One]” (id. at 13).
LifeBrite does not meaningfully address either of these requests in
the Motion to Quash or Reply, describing them in the introduction
of

the

Motion

to

Quash

as

“seek[ing]

entirely

irrelevant

information” (Docket Entry 86 at 6), but otherwise failing to
develop any argument to support quashing the particular requests
(see generally id. at 6-12 (failing to discuss Requests Two or
Three); Docket Entry 90 at 1-15 (same)).
On its face, Request Two does not raise any issues with
privilege,

as

it

parties.

(See

targets

Docket

Walters’s

Entry

86-2

communications
at

13.)

In

with

third

addition,

in

connection with the discussion as to Request One, the Court has
already concluded that communications on the topic of laboratory
services agreements with CAHs hold relevance to LifeBrite’s intent
in dealing with BCBSNC.

Finally, although the language of Request

Three could potentially include privileged communications (in view
of the constraints the Court adopted in defining the waiver), and
could raise concerns of overbreadth, the Court declines to quash or
modify either Request Two or Request Three, given that LifeBrite
failed to develop any argument on those fronts.

See Hughes v. B/E

Aerospace, Inc., No. 1:12CV717, 2014 WL 906220, at *1 n.1 (M.D.N.C.
Mar. 7, 2014) (emphasizing that “[a] party should not expect a

29

court to do the work that it elected not to do”).

Accordingly, the

Court denies the Motion to Quash as to Requests Two and Three, but
does so without prejudice to Walters maintaining any objections he
timely lodged.
Requests Four, Five, and Six
Requests
documents.

Four,
(See

Five,

Docket

and

Entry

Six

all

86-2

at

demand
14

production

(seeking

of

documents

“reflecting the relationship between [the] LifeBrite [entities]”),
id. (requesting production of documents “[r]elated [t]o [l]abratory
[s]ervices performed by Lifebrite Labs and billed using a [CAH
identifier]”),

id.

(soliciting

documents

on

topics

of

“any

[i]vestigation by BCBSNC, other [p]ayors, or any governmental
organization [r]elated [t]o the billing of [l]abratory [s]ervices
by a [CAH]”).)
not develop

an

Like with Requests Two and Three, LifeBrite does
argument

in

support

of

modifying

or

quashing

Requests Four, Five, and Six; the Motion to Quash only contends in
a conclusory fashion that “these categories of documents [are]
overbroad and entirely irrelevant [and also] clearly encompass
documents protected by the work product privilege.”
86 at 10-11.)

(Docket Entry

Given the lack of argument on point, see Hughes,

2014 WL 906220, at *1 n.1, the different purposes underlying workproduct protection and the attorney-client privilege, see United
States v. Nobles, 422 U.S. 225, 238 (1975), and the distinct
standards for ascertaining a waiver as to each, see E.I. Dupont,

30

269 F.R.D. at 606, the Court declines to grant relief to LifeBrite
on this aspect of its Motion to Quash.

See generally United States

v. Zannino, 895 F.2d 1, 17 (1st Cir. 1990) (cautioning that “a
litigant has an obligation to spell out its arguments squarely and
distinctly, or else forever hold its peace” (internal quotation
marks omitted)).

Accordingly, the Court will also deny the Motion

to Quash as it relates to Requests, Four, Five, and Six, without
prejudice to Walters’s right to maintain any objections he timely
lodged.
III. Conclusion
Fletcher’s

testimony

at

his

criminal

attorney-client

privilege

as

to

all

trial

waived

communications

the

between

LifeBrite and Walters regarding evaluation and establishment of a
laboratory services agreement between LifeBrite Labs and LifeBrite
Hospital, as well as the three CAHs at issue in the criminal trial.
Further, LifeBrite has failed to substantiate any other basis for
the Court to quash or to modify any of the subpoena requests.
IT IS THEREFORE ORDERED that the Motion to Quash (Docket Entry
86) is DENIED without prejudice to Adam Walters maintaining any
objections he timely lodged to the subpoenas at issue.
This 9th day of August, 2023.
/s/ L. Patrick Auld
L. Patrick Auld
United States Magistrate Judge

31