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United States ex rel. Fesenmaier v. Cameron-Ehlen Group, Inc.

United States District Court, D. Minnesota

July 19, 2019

United States of America, ex rel. Kipp Fesenmaier, Plaintiffs,
v.
The Cameron-Ehlen Group, Inc., and Paul Ehlen, Defendants.

          ORDER

          WILHELMINA M. WRIGHT UNITED STATES DISTRICT JUDGE

         Plaintiff United States of America appeals the April 2, 2019 Order of United States Magistrate Judge David T. Schultz. For the reasons addressed below, the April 2, 2019 Order is affirmed.

         BACKGROUND [1]

         Relator Kipp Fesenmaier filed a qui tam complaint in November 2013 against, among others, Defendants The Cameron-Ehlen Group, Inc., doing business as Precision Lens (Precision Lens), and Paul Ehlen, the founder and majority owner of Precision Lens. After investigating Fesenmaier's complaint, the United States filed a notice of its election to intervene in this case in August 2017. The United States subsequently filed an intervenor complaint (complaint) against Precision Lens and Ehlen on February 8, 2018. The intervenor complaint alleges that Precision Lens and Ehlen provided kickbacks to physicians in violation of the Anti-Kickback Statute (AKS), 42 U.S.C. § 1320a-7b(b). According to the complaint, as a result of those kickbacks, false and fraudulent claims for payment were made to federal health care programs, including Medicare, in violation of the False Claims Act (FCA), 31 U.S.C. § 3729(a)(1), (a)(2). The intervenor complaint also alleges common-law claims for unjust enrichment and payment by mistake.

         The Federal Bureau of Investigation (FBI) initiated its investigation of Defendants' business activities at least as early as 2012, before Fesenmaier commenced this lawsuit. The FBI interviewed potential witnesses during the course of the investigation. But the United States Attorney's Office did not begin to coordinate closely with the FBI's investigation and witness interviews until at least 2014.

         On February 7, 2019, Defendants moved to compel discovery. As relevant to this appeal, Defendants sought an order compelling the United States to respond with greater specificity to Defendants' Interrogatory No. 1, which seeks identification and details of each false claim alleged to have been submitted to the United States. Defendants also sought an order compelling the United States to respond to Defendants' Request for Production No. 5, which seeks the production of all reports and notes of witness interviews prepared during the investigation.

         The magistrate judge granted Defendants' motion to compel on April 2, 2019. The April 2, 2019 Order directs the United States to answer Defendants' Interrogatory No. 1 by identifying with specificity each alleged false claim no later than 45 days before the close of discovery. The April 2, 2019 Order also directs the United States to produce all documents that are responsive to Defendants' Request for Production No. 5, namely, reports and notes of witness interviews made during the investigation. The magistrate judge reasoned that, because the United States Attorney's Office “did not become meaningfully involved in the investigation until 2014, ” the United States did not satisfy its burden to establish that the work-product doctrine applies to any witness interview reports or notes prepared before 2014. As for witness interviews that occurred after the United States Attorney's Office became involved in 2014, the magistrate judge reasoned that, to the extent the interview reports or notes contain fact work product (as opposed to opinion work product), “Defendants have demonstrated both substantial need and the inability to otherwise obtain the information without undue hardship” as required to obtain discovery of such documents under Federal Rule of Civil Procedure 26(b)(3)(A)(ii). The April 2, 2019 Order permits the United States to submit responsive documents to the Court for in camera review to identify any protected non-discoverable information that may be redacted or withheld. Because it objects to these aspects of the April 2, 2019 Order, the United States appeals.

         ANALYSIS

         A district court applies an “extremely deferential” standard of review to a magistrate judge's ruling on a nondispositive issue. Scott v. United States, 552 F.Supp.2d 917, 919 (D. Minn. 2008). A district court will modify or set aside a ruling only if it is clearly erroneous or contrary to law. 28 U.S.C. § 636(b)(1)(A); Fed.R.Civ.P. 72(a); LR 72.2(a); Ferguson v. United States, 484 F.3d 1068, 1076 (8th Cir. 2007). A ruling is clearly erroneous when, although there is evidence to support the ruling, “the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.” Wells Fargo & Co. v. United States, 750 F.Supp.2d 1049, 1050 (D. Minn. 2010) (internal quotation marks omitted). A nondispositive ruling is contrary to law when it “fails to apply or misapplies relevant statutes, case law or rules of procedure.” Id. (internal quotation marks omitted).

         The United States challenges two of the magistrate judge's rulings-first, the requirement that the United States identify with specificity each alleged false claim no later than 45 days before the close of discovery and, second, the requirement that the United States produce reports and notes of witness interviews made during its investigation. The Court addresses each challenge in turn.

         I. Identification of False Claims

         The United States argues that the magistrate judge clearly erred by ordering it to identify every alleged false claim no later than 45 days before the close of discovery. According to the United States, complying with this order would require a “laborious” and “time-intensive” process, and it is for “practical reasons like this that courts often do not require contention interrogatories to be answered until close to or at the end of discovery.” For these reasons, “[t]he United States would strongly prefer to complete the fact discovery period” before engaging in “the time-intensive process of identifying all false claims during expert discovery.”

         None of the arguments advanced by the United States demonstrates that the magistrate judge's decision is clearly erroneous, nor is reversal of a magistrate judge's decision warranted merely because a party “strongly prefer[s]” a different outcome. Although the United States contends that “Defendants should be required to demonstrate substantial need for the identification of false claims 45 days before the close of fact discovery, ” it provides no legal authority for imposing such a requirement. If the United States requires additional time to complete fact discovery in light of the April 2, 2019 Order, it has the option of seeking an extension of the fact discovery deadline. Indeed, while this appeal was pending, the United States sought and was granted such an extension.

         Because the magistrate judge did not clearly err by requiring the United States to identify all the alleged false claims no later than 45 days before the close of discovery, ...


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