United States et al v. Universal Health Services, Inc., et al.
Filing
291
MEMORANDUM OPINION. Signed by Magistrate Judge Pamela Meade Sargent on 8/5/11. (Bordwine, Robin)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF VIRGINIA
ABINGDON DIVISION
UNITED STATES OF AMERICA, et
al.,
Plaintiffs,
v.
UNIVERSAL HEALTH SERVICES,
INC., et al.,
Defendants.
)
)
)
)
)
)
)
)
)
)
)
MEMORANDUM OPINION
Civil Action No. 1:07cv000054
This matter is before the undersigned on Defendants’ Motion To Compel
The Commonwealth To Produce Documents And For Sanctions, (Docket Item No.
236). Based on the arguments and representations of counsel presented at the July
28, 2011, hearing, and for the reasons stated below, the Motion will be granted in
part.
I.
Background
This action was filed under seal on June 14, 2007, by three therapists,
Megan Johnson, Leslie Webb and Kimberly Stafford-Payne, (“Relators”), who had
been employees of Marion Youth Center between 2004 and 2006. The Relators
claimed that Universal Health Services, Inc., Keystone Marion, LLC, and
Keystone Education And Youth Services, LLC, all doing business as Keystone
Marion Youth Center, had discriminated against them in their employment on the
-1-
basis of race and/or gender. The Relators also alleged that Marion Youth Center,
beginning in December 2004 and continuing until “the present,” had submitted
false claims to the Virginia Medicaid Program in violation of the federal False
Claims Act and the Virginia Fraud Against Taxpayers Act. The seal was partially
lifted on August 1, 2007, to allow the Relators to serve their Complaint on the
Commonwealth of Virginia. The Relators’ Complaint remained under seal while
the federal and state governments, (“Government”), investigated their claims and
decided whether to intervene in the case. The Government gave the court notice of
election to intervene on November 4, 2009.
On February 28, 2011, the defendants filed a motion to compel the
Commonwealth to produce documents relating to complaints of Medicaid fraud
that the Relators alleged they had made against Keystone Marion Youth Center to
the Commonwealth, including its licensing agency, the Department of Behavioral
Health and Developmental Services, (“DBHDS”) 1. (Docket Item No. 135.) The
Commonwealth had objected to producing documents from any state agency other
than the Department of Medical Assistance Services, (“DMAS”), in discovery in
this case. The objections centered around the argument that the Commonwealth,
although a party in the case, did not have “control” of the documents of state
agencies other than those of DMAS. The Commonwealth did not raise any
objection, at that time, based on the production of DBHDS documents being
unduly burdensome.
1
Prior to July 1, 2009, the DBHDS was known as the Department of Mental Health, Mental Retardation and
Substance Abuse Services, (“DMHMRSAS”).
-2-
By Order entered March 22, 2011, the court granted the motion to compel in
part and ordered the Commonwealth to produce the following documents by no
later than April 6, 2011:
Any and all documents in the possession, custody or control of any of
the Commonwealth of Virginia’s departments or agencies, including,
but not limited to, the Department of Behavioral Health and
Developmental Services, (“DBHDS”), and its Office of Licensing,
Office of Human Rights and Office for Protection and Advocacy,
regarding any complaints alleging Medicaid fraud against the
Keystone Marion Youth Center, (“KMYC”), made by any person,
including, but not limited to, Megan Johnson, Leslie Webb, Kimberly
Stafford-Payne and Barbara Jones, from October 1, 2005 through
March 2, 2010….
On April 6, 2011, the date the Commonwealth’s production was due, counsel for
the parties contacted the court by telephone regarding the Commonwealth’s
position that it could not produce the DBHDS documents as ordered because to do
so would be unduly burdensome. The court orally instructed counsel for the
Commonwealth that the Commonwealth should produce all responsive documents
currently available to DBHDS employee witnesses Steve Patrick, Deborah Jones
and Nan Neese. The court further instructed the Commonwealth to file a statement
with the court with regard to its position that production of any electronically
stored documents dated prior to 2009 would be unduly burdensome.
On April 13, 2001, the Commonwealth filed an affidavit by John Willinger,
the Information Security Officer for DBHDS, (Docket Item No. 170) (“Willinger
Affidavit”).
A
second
affidavit
from
Willinger
was
attached
to
the
Commonwealth’s response to the Motion, (Docket Item 257, Att. No. 2)
(“Willinger II Affidavit”). According to Willinger, DBHDS did not receive a
-3-
litigation hold notice directing it to preserve all documents, electronic and
otherwise, in its possession that may be related to allegations of Medicaid fraud at
Keystone Marion Youth Center until April 1, 2010. (Willinger Affidavit at 2.) In
response to the litigation hold, Willinger stated that he requested the Virginia
Information Technologies Agency, (“VITA”), to copy the “network shares” and
“Exchange mailboxes” of all DBHDS employees with potentially relevant
information. These copies were made sometime between July 2010 and September
2010.
According to Willinger:
… Network shares are computer directories located on the
DBHDS computer network, and they serve as electronic storage for
electronic documents and some email files. Each employee has his
own folder, i.e., network share, on the DBHDS computer network.
The employee saves to his network share any electronic documents,
primarily Microsoft Word and Excel documents and PDFs, that he
creates or receives during the normal course of business. …
… An employee’s network share also may contain the
employee’s Microsoft Outlook email files (“PST file”) if the
employee specifically selected to save his PST file to the network
share. …
… Exchange mailboxes are the Microsoft Outlook email
mailboxes of each individual employee and they are maintained by
VITA. The default location for archiving old emails is the hard drive
of each employee’s local computer, but an employee may choose
individually to archive his old emails to the Exchange server. …
(Willinger Affidavit at 2-3.)
Willinger states that DBHDS has used its current Exchange email system
since 2009. (Willinger Affidavit at 3.)
-4-
The Exchange mailboxes copied by VITA during the summer of 2010 contain
only those emails created or received after the conversion to the current system in
2009, configured to be stored on the current Exchange server and actually stored
on the current Exchange server at the time that VITA made the copies. (Willinger
Affidavit at 3.) Prior to the 2009 conversion, each separate DBHDS facility had its
own Exchange server. (Willinger Affidavit at 3.) Full back-up tapes of these
individual facility Exchange servers were made each week. (Willinger Affidavit at
3.)
These back-up tapes cannot, however, be accessed by the current DBSDS
Exchange server. (Willinger Affidavit at 3.) In order to read these back-up tapes,
according to Willinger, VITA would have to recreate the old Exchange server of
each facility. (Willinger Affidavit at 3.) VITA has estimated the cost of rebuilding
the Exchange servers of the two DBHDS facilities at issue – Central Office in
Richmond and the Southwestern Virginia Mental Health Institute in Marion – for
the entire period from October 1, 2005, to the conversion in 2009 at in excess of
$100,000.00. (Willinger Affidavit at 3-4.) According to Willinger, limiting the
scope of the production to a single facility and limiting the number of months
included in the time period would limit the cost. (Willinger Affidavit at 4.)
Willinger acknowledges that other more efficient and less expensive methods for
restoring the information contained on these back-up tapes exists. (Willinger II
Affidavit at 4.) Nonetheless, Willinger states that DBHDS, as a state agency, is
bound by state law to take all its information technology procurement needs to
VITA. (Willinger II Affidavit at 4-5.)
-5-
Willinger also stated that he personally made a “forensic image” of the local
computer hard drive of each DBHDS employee with potentially relevant
information between July 2010 and September 2010. (Willinger Affidavit at 4.)
According to Willinger, “A forensic image is a ‘copy’ of the local computer’s hard
drive, and this image will capture any electronic file, including a PST, saved by the
employee to the hard drive.” (Willinger Affidavit at 4.) Nonetheless, Willinger
states that DBHDS does not have the technology to read these forensic images and
has not searched these forensic images to determine if they contain any
information responsive to the court’s order. (Willinger Affidavit at 4.) Willinger
does admit, however, that these forensic images are searchable by VITA.
(Willinger Affidavit at 4.) Such a search may be included in the package of
services VITA provides and may not entail any cost, but would take one month or
longer to complete. (Willinger Affidavit at 5.)
The Commonwealth also has produced an affidavit from An-Li Hoban,
administrative assistant to the Commissioner for DBHDS. (Docket Item No. 257,
Att. No. 3) (“Hoban Affidavit”). According to Hoban, from April 1-4, 2011, she
reviewed the network shares and Microsoft Outlook email files of the following
DBHDS employees: Margaret Walsh, Nan Neese, Deb Jones, Les Saltzberg,
Chandra Bragg, Leslie Anderson, Steve Patrick, Amanda Currin, Lonzo Lester,
Don Chisler, Debbie Boelte, Joy Lazarus, Joe Cronin and Mickie Jones. (Hoban
Affidavit at 1.) Hoban stated that these files were searched using the keywords
Keystone, Keystone Marion, fraud, claims, investigation, complaints, DMAS,
Department of Medical Assistance Services, billing, billed, overpayment, paid,
findings and MFCU and the names David Duncan, Shelly Jones, Megan Johnson,
Leslie Webb, Kimberly Stafford-Payne and Barbara Jones. (Hoban Affidavit at 1-6-
2.) Hoban does not state whether she searched each of these keywords and names
separately or in combination. According to Hoban, her search yielded only one
responsive document, a draft letter from Shelly Jones of DMAS to David Duncan
of Keystone Marion dated March 27, 2008. (Hoban Affidavit at 2.)
According to defense counsel, each of the Relators has asserted that she
reported alleged Medicaid fraud by Keystone Marion Youth Center to DBHDS.
The defendants have produced at least one email from one of the Relators, Webb,
to Jones and Patrick with DBHDS regarding her allegations of Medicaid fraud
against Keystone Marion Youth Center. (Docket Item No. 281, Att. No. 1.)
Defense counsel also produced a copy of an April 4, 2008, email from Patrick to
Jones stating that Douglas Newsome, Regional Manager, had informed him that
the Commonwealth was going to sue Keystone Marion Youth Center for Medicaid
fraud based on the excessive use of physical restraints in 2005 and 2006. (Docket
Item No. 281, Att. No. 2.)
Defendants have offered the affidavit of James W. Burns, Chief Operations
Officer of eMag Solutions, LLC, (“eMag”), an electronic discovery vendor and
full-service data management provider in support of the Motion. (Docket Item No.
237, Att. No. 3) (“Burns Affidavit”). Burns states that rebuilding the old Exchange
server system of the two DBHDS facilities with potentially relevant information is
only one method of retrieving this information and it is the most laborious and
time-consuming method. (Burns Affidavit at 2-3.) Burns states that, depending on
the type of back-up tapes used and the amount of data contained on these tapes,
eMag should be able to retrieve the information stored on these back-up tapes in a
cost-effective, timely manner using readily available industry technology. (Burns
-7-
Affidavit at 2-4.) Burns states that further information would be necessary for him
to give an estimate of the time or expense that would be required to retrieve the
information, although he stated that eMag charges a flat, per-tape fee for the
restoration of back-up tapes and the extraction of mailboxes contained thereon.
(Burns Affidavit at 3-4.)
I cannot find that the parties ever submitted a Rule 26(f) discovery plan to
the court, and counsel present at the July 28 hearing did not know if or how the
parties’ discovery plan addressed the disclosure of electronically stored
information.
II.
Analysis
The Motion urges the court to order the production of the electronically
stored information at issue from the Commonwealth or, in the alternative, to
impose sanctions against the Commonwealth for its failure to do so. In particular,
the defendants ask the court to impose an inference that the documents not
produced would establish that the Relators did not submit complaints of Medicaid
fraud to DBHDS. This sanction is referred to as the “adverse spoliation inference.”
See Evans v. Medtronic, Inc., 2005 U.S. Dist. LEXIS 38405, at *39-43 (W.D. Va.
Dec. 27, 2005).
The Commonwealth argues that it should not be ordered to review any
further electronically stored information of the DBHDS for responsive documents
because to do so would be unduly burdensome given the effort and expense
required. The Commonwealth also argues that the imposition of any discovery
-8-
sanction, including the adverse spoliation inference, is inappropriate in this case
because it did not destroy, nor has it failed to preserve, any evidence which it had
reason to believe was relevant to the matters before the court. In particular, the
Commonwealth argues that it had no reason to believe that DBHDS records would
be relevant to this case until a March 17, 2010, letter from defense counsel put it
on notice that it should take appropriate steps to preserve relevant information in
the DBHDS records. (Docket Item No. 257, Att. No. 5.)
A party seeking to avoid the production of responsive electronically stored
information based on undue burden must demonstrate that the information is “not
reasonably accessible because of undue burden or cost.” FED. R. CIV. P.
26(b)(2)(B). If the responding party makes this showing, “the court may
nonetheless order discovery from such sources if the requesting party shows good
cause, considering the limitations of Rule 26(b)(2)(C).” FED. R. CIV. P.
26(b)(2)(B). Rule 26(b)(2)(C) requires the court to weigh “the burden or expense
of the proposed discovery” against “its likely benefit, considering the needs of the
case, the amount in controversy, the parties’ resources, the importance of the issues
at stake in the action, and the importance of the discovery in resolving the issues.”
FED. R. CIV. P. 26(b)(2)(C). Rule 37(e) states:
Absent exceptional circumstances, a court may not impose sanctions
under these rules on a party for failing to provide electronically stored
information lost as a result of the routine, good-faith operation of an
electronic information system.
FED. R. CIV. P. 37(e).
-9-
In this case, DBHDS admits that it did not put a litigation hold in place until
April 1, 2010. The documents before the court, however, clearly show that the
Commonwealth knew by April 4, 2008, that it intended to intervene in this action
and that DBHDS records would be relevant to its claims. In particular, the April 4,
2008, email from Patrick at DBHDS states that DBHDS was being asked to review
its own records in an effort to assist in the Commonwealth’s investigation of
Keystone Marion Youth Center for allegations of Medicaid fraud. That being the
case, the Commonwealth has offered no credible explanation of why it did not put
a litigation hold in place with regard to relevant DBHDS records until almost two
years later. Furthermore, the defendants have shown that electronically stored
information relevant to this case did, at some point, exist on the DBHDS pre-2009
email system, in that the Relators have stated that they each sent emails accusing
Keystone Marion Youth Center of Medicaid fraud to DBHDS prior to their
departures in 2006. Thus, a portion of the electronically stored information at issue
in this Motion became less accessible based on the Commonwealth’s own
negligent failure to take steps to adequately preserve relevant information and not
as a result of the routine, good-faith operation of an electronic information system.
The issue the court must consider, with regard to the pre-2009 email files, is
whether the Commonwealth should be excused from production of electronically
stored information due to undue burden or cost caused by its own negligent
actions. Based on the facts before the court in this case, I find that the
Commonwealth should not be excused from production of this information. As
stated above, the party asserting undue burden has the burden of proving such to
the court. I find that the Commonwealth has not made the required showing. While
the Commonwealth has produced evidence that one method of retrieval of the pre-10-
2009 email files would be costly and time consuming, it concedes that other more
efficient and less expensive methods of retrieval exist.
Furthermore, the
defendants have produced evidence that these pre-2009 email files can be retrieved
rather easily at less expense by a commercial vendor.
In reaching my conclusion, I also have considered that the Government is
seeking recovery of all Medicaid funds paid to Keystone Marion Youth Center
from 2005 to 2010, a figure that has been estimated in excess of $10 million. I
further have considered the fact that the defendants have produced evidence that it
is highly likely that these pre-2009 email files contain documents relevant to the
defense of this case. That being the case, I will order that the back-up tapes
containing the pre-2009 email files for the Central Office and Marion DBHDS
facilities be produced to defense counsel for use by a commercial vendor to
retrieve these files in a format usable by the Commonwealth to search for
responsive documents.
The court also must consider whether it should order the searching and
production of any relevant documents found on the September 2010 forensic
images of the hard drives of all DBHDS personnel who the Commonwealth
believed possessed potentially relevant information. Although the Commonwealth
has preserved this information, it admits that it has not searched the images to
determine if they contain any responsive documents because it does not possess the
technology to do so. Based on the facts of this case, I will order that the
Commonwealth produce these forensic images or copies thereof to defense counsel
for use by a commercial vendor to retrieve the information contained therein in a
format usable by the Commonwealth to search for responsive documents.
-11-
At this point, any costs involved in retrieval of this electronically stored
information will be borne by the defendants, subject to the filing of a motion
outlining an estimate of the costs to be incurred and seeking reimbursement of
those costs from the Commonwealth.
An appropriate order will be entered.
ENTERED this 5th day of August, 2011.
/s/
Pamela Meade Sargent
UNITED STATES MAGISTRATE JUDGE
-12-
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?