United States of America et al v. Caris Healthcare, L.P. [TV1]

Filing 95

MEMORANDUM AND ORDER, The parties appeared for a telephone conference on August 10, 2017, to address several discovery disputes. For the reasons stated herein, the Court ORDERS as follows: The relevant time period for purposes of discovery is January 1, 2010 to May 22, 2014; The geographic scope of discovery SHALL include Caris offices in Tennessee, Virginia, and South Carolina; and The Government SHALL provide responses to the Defendants'Interrogatory Nos. 1, 2, 3, and 5 by September 29, 2017.Signed by Magistrate Judge H. Bruce Guyton on 8/16/17. (ADA)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TENNESSEE
AT KNOXVILLE
THE UNITED STATES OF AMERICA, ex rel,
HINKLE,
Plaintiff,
v.
CARIS HEALTHCARE, L.P., and CARIS
HEALTHCARE, LLC,
Defendants.

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No. 3:14-CV-212-TAV-HBG

MEMORANDUM AND ORDER
This case is before the undersigned pursuant to 28 U.S.C. § 636, the Rules of this Court,
and Standing Order 13-02. The parties appeared for a telephone conference on August 10, 2017,
to address several discovery disputes. Attorneys Diana Cieslak, Amy Kossak, Jeremy Dykes,
Robert McConkey, and Jessica Sievert appeared on behalf of the Government, attorneys Birt
Reynolds and Michael Hamilton appeared on behalf of Relator Barbara Hinkle, and attorneys
Matthew Curley, Anna Grizzle, and Taylor Chenery appeared on behalf of Defendants Caris
Healthcare, L.P., and Caris Healthcare, LLC (collectively “the Defendants”).
The parties disagree on the appropriate temporal and geographic scope of discovery. In
addition, the Defendants take issue with the Government’s objections to Defendants’ Interrogatory
Nos. 1, 2, 3, and 5. The Court will address each discovery dispute in turn.

I.

Temporal and Geographic Scope of Discovery
The Government contends that the relevant time period for discovery is January 1, 2010

through May 22, 2014. In support of its position, the Government cites to its Complaint in which

it has alleged that the Defendants submitted false claims or did not report overpayments or repay
Medicare for amounts billed for ineligible beneficiaries on services during the period of April 2010
through December 2013. The Government submits that it is reasonable to include the months
immediately preceding the date in which the Defendants are alleged to have engaged in the
foregoing activity, thereby arguing that the relevant time period should begin on January 1, 2010.
The Defendants agree with the proposed end date of May 22, 2014, but argue that the
relevant time period for discovery should begin on January 1, 2013. The Defendants submit that
the Complaint does not include any factual or substantive allegations that pre-date 2013. Instead,
the Defendants contend that the Complaint alleges certain events occurred in 2013, namely an
internal audit, that created a duty for the Defendants to then review claims for potential over
payments dating back to April 2010. Therefore, the Defendants believe that the relevant time
period for discovery should be from January 1, 2013 through May 22, 2014.
The Government also contends that it is entitled to requested documents and information
concerning Caris office locations in Tennessee, Virginia, and South Carolina.1 In this regard, the
Government submits that the allegations in the Complaint and the manner in which the Defendants
organize and manage their offices, support a finding that the geographic scope of discovery should
include Caris locations in all three states.
The Defendants counter that the Complaint does not include any specific factual allegation
related to its offices in South Carolina or Virginia, and that the Government’s theory of liability
only involves patients serviced by offices in Tennessee.
“The scope of discovery under the Federal Rules of Civil Procedure is traditionally quite
broad.” Lewis v. ACB Bus. Servs., Inc., 135 F.3d 389, 402 (6th Cir. 1998). Generally, “any
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Caris Healthcare, L.P. operates out of Tennessee and Virginia, whereas Caris Healthcare,
LLC operates out of South Carolina since January 2012.
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nonprivliedged matter that is relevant to any party’s claim or defense and proportional to the needs
of the case” is discoverable. Fed. R. Civ. P. 26(b)(1). Moreover, information within the scope of
discovery need not be admissible in evidence to be discoverable. Id. Evidence is relevant when
it has “any tendency to make a fact more or less probable than it would be without the
evidence.” Fed. R. Evid. 401(a).
As to the temporal scope of discovery, the Court agrees with the Government and finds
that the relevant time period is January 1, 2010 to May 22, 2014. In reaching this conclusion, the
Court observes that the allegations set forth in the Complaint specifically reference conduct and
activity that began in 2010. For example, in the Government’s First Cause of Action, the
Government contends that between June 2013 and December 2013, the Defendants “knowingly
presented or caused to be presented to the United States false or fraudulent Medicare claims for
payment or approval.” [Doc. 57 at 45]. In its Second Cause of Action, the Government contends
that between April 2010 and June 2013, “Caris knowingly made or used false records or statement
material to an obligation to pay or transmit money to the United States, or knowingly concealed,
avoided, or decreased an obligation to pay or transmit money to the United States.” [Id. at 46]. In
support of both of its claims, the Government sets forth factual allegations throughout its
Complaint that allege the Defendants (1) made false or fraudulent statements and records between
April 2010 and June 2013, (2) retained Medicare payments for ineligible patients from April 2010
through June 2013, and (3) submitted false claims for Medicare payments from June 2013 through
December 2013. [See e.g., id. at 16-22, 27-45]. Because the alleged acts complained of began in
2010, the Court finds that extending the scope of discovery to 2010 could reasonably be expected
to cover information that is relevant to a party’s claim.
With regard to the geographic scope of discovery, the Court likewise agrees with the

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Government and finds that the Complaint’s allegations are not limited to conduct or practices that
only occurred in Tennessee. The Defendants cite to an internal audit performed in June 2013,
which took place at several Caris Tennessee locations, as evidence that the substantive allegations
in the Compliant are geographically limited to Tennessee. However, the purpose of the audit was
to provide a “one-month snapshot review” and evaluation of patients’ April 2013 medical records.
[Doc. 57 at 16]. Although the Complaint discusses the audit and six sample patients, the Complaint
does not allege that the false claims acts are limited to conduct revealed by the audit. Indeed, the
Complaint discusses companywide business practices endorsed by the Defendants without specific
reference to any one of the geographic locations in which the Defendants operate. [See e.g., id. 57
at 13-16]. Violations committed by Caris in meeting the physician certification requirements, for
instance, are alleged to have occurred “with respect to multiple patients” and are “not isolated to
one facility.”

[Id. at 24].

Similarly, the Complaint discusses questionable conduct and

malfeasance committed by the Defendants’ corporate-level and regional managers, as well as
concerns raised by the Chief Medical Officer about ineligible patients, without reference to a
specific geographic location. [See e.g., id. at 13-16, 18-19]. Therefore, the Court finds that
discovery should not be limited to Caris offices located in Tennessee, but should also include its
offices in Virginia and South Carolina.

II.

Defendants’ Interrogatory Nos. 1, 2, 3, and 5
The Defendants request that the Government be ordered to answer Interrogatory Nos. 1, 2,

3, and 5 which seek identification of the following: (1) specific false claims at issue for hospice
services provided to ineligible patients; (2) alleged overpayments improperly retained for such
patients; (3) specific hospice benefit periods during which patients were ineligible, and (4) any

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false physician certifications of eligibility for the hospice benefit for such patients.

The

Government has objected to answering these interrogatories until after it discloses its expert’s
report and closer to the conclusion of discovery.
The Government argues that answering these interrogatories when discovery is still in its
infancy would effectively require the Government to disclose its expert’s report well in advance
of the deadline set forth in the Scheduling Order for disclosure of expert witnesses. And because
this case is in the early stages of discovery, the Government argues that it is still in the process of
identifying responsive information. The Government further submits that it has already provided
information that is responsive to the interrogatories but objects to providing information beyond
what has already been produced.
The Defendants maintain that the Government’s refusal to fully answer the interrogatories
prejudices the Defendants in that they are unable to mount a defense against the allegations of
fraud leveled by the Government. Because the Government’s “discrete list of patients” now stands
at 129, the Defendants contend that thousands of claims, overpayments, benefit periods, and
physician certifications are at issue. As a result, the Defendants submit that the Government’s
refusal to provide full and responsive answers amounts to a stay of its own discovery obligations
and leaves the Defendants in an unfair position.
To reiterate, Federal Rule of Civil Procedure 26(b)(1) entitles a party to discovery of any
nonprivileged matter that is relevant to a party’s claim or defense. Rule 33(a)(1) provides that
“[u]nless otherwise stipulated or ordered by the court, a party may serve on any other party no
more than 25 written interrogatories, including all discrete subparts.”

Moreover, “[a]n

interrogatory may relate to any matter that may be inquired in under Rule 26(b).” Fed. R. Civ. P.
33(a)(2).

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The Court finds that the Defendants are entitled to the information sought through
Interrogatory Nos. 1, 2, 3, and 5. The interrogatories seek to identify specific false claims,
overpayments improperly retained, specific hospice benefit periods, and false physician
certifications of eligibility. In other words, the Defendants seek to identify specific factual
information largely related to dates and numbers. Based upon the information and augments
provided to the Court from both parties, the Court finds that the information sought does not
require the “scientific, technical or other specialization” information that only an expert can
provide. See Fed. R. Evid. 702(a). The Defendants’ interrogatories go to the very heart of the
Government’s claims, and the Government has not presented anything more than conclusory
assertions that answering the interrogatories would effectively require disclosure of its expert’s
report. Moreover, the Court finds that withholding this information would allow the Government
to continue to build its case while preventing the Defendants from mounting a defense. The Court
recognizes that discovery in this case is on-going. But that is not a reason to effectively stay the
Government’s discovery response obligations. The proper procedure is for the Government to
produce the relevant information it now has, and then to later supplement its answers to the
Defendants’ interrogatories, if necessary.

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III.

Conclusion
Accordingly, and for the reasons stated herein, the Court ORDERS as follows:
1. The relevant time period for purposes of discovery is January 1,
2010 to May 22, 2014;
2. The geographic scope of discovery SHALL include Caris offices
in Tennessee, Virginia, and South Carolina; and
3. The Government SHALL provide responses to the Defendants’
Interrogatory Nos. 1, 2, 3, and 5 by September 29, 2017.
IT IS SO ORDERED.
ENTER:

United States Magistrate Judge

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