Allgood v. Baptist Memorial Medical Group, Inc.

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF TENNESSEE

WESTERN DIVISION

MARGARET ALLGOOD, )

)

Plaintiff, )

)

v. ) No. 19-2323-JTF-tmp

)

BAPTIST MEMORIAL MEDICAL )

GROUP, INC., and BAPTIST )

MEMORIAL HEALTH CARE )

CORPORATION, )

)

Defendants. )

ORDER GRANTING IN PART AND DENYING IN PART

PLAINTIFF’S MOTION TO COMPEL

Before the court by order of reference is Margaret Allgood’s

motion to compel certain discovery responses from Baptist Memorial

Medical Group, Inc. and Baptist Memorial Health Care Corporation

(collectively “Baptist”). (ECF Nos. 32 & 33.) For the reasons

outlined below, the motion is GRANTED in part and DENIED in part.

I. BACKGROUND

This is a False Claims Act retaliation suit. Allgood alleges

that she was suspended with pay for four months by Baptist because

she reported Medicare billing fraud by Dr. John King, a doctor at

Baptist. Baptist contends Allgood was suspended as part of an

investigation into whether she accessed patient records in

violation of the Health Insurance Portability and Accountability

Act (“HIPAA”). Allgood concedes she accessed HIPAA-protected

records but argues she did so only to report fraud internally,

which is allowed by HIPAA, and that the suspension was pretextual.

The parties disagree about whether certain discovery requests

are relevant and proportional to the needs of the case. Most of

the disputed discovery requests can be grouped into two categories:

(1) requests about whether Baptist committed billing fraud and (2)

requests about Baptist’s investigation into Allgood’s purportedly

unauthorized access to patient records. Allgood contends that this

information is relevant because it goes to pretext while Baptist

argues otherwise. The parties also dispute various other discovery

issues, including: (1) requests about the termination of another

employee, Kathy Long, who allegedly also reported misconduct by

Dr. King; (2) requests about Dr. King’s background and subsequent

resignation from Baptist; (3) requests about HIPAA and False Claims

Act compliance training; and (4) a request for all communications

about Allgood from the date Allgood claims she learned of the

billing fraud to shortly before her suspension.

II. ANALYSIS

A. Scope of Discovery

The scope of discovery is governed by Federal Rule of Civil

Procedure 26(b)(1), which provides that “[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[.]” Fed. R. Civ. P. 26(b)(1). The party seeking discovery is

obliged to demonstrate relevance. Johnson v. CoreCivic, Inc., No.

18-CV-1051-STA-tmp, 2019 WL 5089086, at *2 (W.D. Tenn. Oct. 10,

2019). Upon a showing of relevance, the burden shifts to the party

opposing discovery to show, with specificity, why the requested

discovery is not proportional to the needs of the case. William

Powell Co. v. Nat'l Indem. Co., No. 1:14-CV-00807, 2017 WL 1326504,

at *5 (S.D. Ohio Apr. 11, 2017), aff'd sub nom. 2017 WL 3927525

(S.D. Ohio June 21, 2017), and modified on reconsideration, 2017

WL 4315059 (S.D. Ohio Sept. 26, 2017). Six factors are relevant to

proportionality: (1) “the importance of the issues at stake in the

action;” (2) “the amount in controversy;” (3) “the parties'

relative access to relevant information;” (4) “the parties'

resources;” (5) “the importance of the discovery in resolving the

issues;” and (6) “whether the burden or expense of the proposed

discovery outweighs its likely benefit.” Fed. R. Civ. P. 26(b)(1).

B. False Claims Act Retaliation

The False Claims Act “‘is an anti-fraud statute prohibiting

the knowing submission of false or fraudulent claims to the federal

government.’” Fakorede v. Mid-S. Heart Ctr., P.C., 182 F. Supp. 3d

841, 848 (W.D. Tenn. 2016). It is unlawful to retaliate against an

employee who engages in “lawful acts” to attempt to stop what the

employee believes in good faith to be a violation of the False

Claims Act.1 Miller v. Abbott Labs., 648 F. App'x 555, 560 (6th

Cir. 2016). “[C]ollecting information about potential fraud” is

protected activity under this provision. Id.

Retaliation claims under the False Claims Act “proceed under

the same rules applicable to other employment-related retaliation

claims.” Jones-McNamara v. Holzer Health Sys., 630 F. App'x 394,

397–98 (6th Cir. 2015). “To establish a prima facie case, the

plaintiff must show the following elements: (1) she was engaged in

a protected activity; (2) her employer knew that she engaged in

the protected activity; and (3) her employer discharged or

otherwise discriminated against the employee as a result of the

protected activity.” Id. After the plaintiff establishes a prima

facie case, the burden of production shifts to the defendant to

give a legitimate, non-discriminatory reason for the adverse

employment action. Id. The plaintiff then has the burden to show

that the defendant’s proffered reason is pretextual. Id.

C. State Privilege Law

1At one point in its briefing, Baptist appears to suggest that the

plaintiff’s burden is lower than this, that is, that the plaintiff

need not show she has a good faith basis to believe there was a

violation of the False Claims Act. (ECF No. 39 at 17.) This is a

mistaken understanding of the relevant law. See Miller v. Abbott

Labs., 648 F. App'x 555, 560 (6th Cir. 2016) (“‘[A]lthough the

plaintiff need not establish that [the employer] actually violated

the FCA, she must show that her allegations of fraud grew out of

a reasonable belief in such fraud.’”) (internal alterations

omitted) (quoting Jones-McNamara v. Holzer Health Sys., 630 F.

App'x 394, 400 (6th Cir. 2015)).

Baptist first argues that T.C.A. § 68-11-272(c)(1) protects

much of the requested discovery from disclosure. T.C.A. § 68-11-

272(c)(1) creates a state law privilege for Quality Improvement

Committees (“QICs”) created by healthcare providers to, among

other things, make sure healthcare providers are in compliance

with state and federal law. It protects the “records” of QICs, as

well as statements made to QICs during an investigation. T.C.A. §

68-11-272(c)(1). The purpose of this privilege is to allow

healthcare organizations to freely examine how they can improve

their services without fear that candid statements will be used

against them. Pinkard v. HCA Health Servs. of Tennessee, Inc., 545

S.W.3d 443, 452 (Tenn. Ct. App. 2017).

“[I]n federal question cases, state privilege law does not

apply.” LeMasters v. Christ Hosp., 791 F. Supp. 188, 189 (S.D.

Ohio 1991). Baptist has not identified any caselaw that suggests

federal privilege law recognizes a parallel privilege to the one

established by T.C.A § 68-11-272(c)(1). Indeed, federal courts

have repeatedly held no parallel federal privilege exists. Coone

v. Chattanooga-Hamilton Cty. Hosp. Auth., No. 1:16-CV-481, 2017 WL

9476830, at *4 (E.D. Tenn. May 18, 2017); Levans v. Saint Francis

Hosp.-Bartlett, Inc., No. 15-CV-2142-SHL-tmp, 2015 WL 11017962, at

*3 (W.D. Tenn. Sept. 18, 2015); United States v. Jackson Madison

Cty. Gen. Hosp., No. 12-2226, 2012 WL 12899055, at *3 (W.D. Tenn.

Oct. 16, 2012). Because this is a federal question case, T.C.A. §

68-11-272(c)(1) does not apply.

D. Billing Fraud

Baptist objects to the requested discovery about whether it

engaged in billing fraud. Allgood, Baptist asserts, does not need

to prove that Baptist defrauded the government, only that she was

punished for reporting fraud. As a result, Baptist contends the

sought-after discovery is irrelevant and not proportional to the

needs of the case.

“[E]vidence of motive is extremely relevant in the pretext

analysis.” Dilback v. Gen. Elec. Co., No. CIV.A 4:00-CV-222, 2008

WL 4372901, at *4 (W.D. Ky. Sept. 22, 2008). As a result, evidence

that a company engaged in fraud is relevant to whether it punished

an employee for reporting fraud. Id. “It should be obvious that a

company with real misconduct to hide would have more motive to

terminate a whistle-blowing employee than would a company with

clean hands.” Blakeslee v. Shaw Infrastructure, Inc., No. 3:09-

CV-0214-RRB, 2010 WL 2985812, at *2 (D. Alaska July 27, 2010).

Whether Baptist engaged in billing fraud is thus relevant to

whether Baptist punished Allgood for reporting billing fraud.

Baptist distinguishes Dilback and Blakeslee by pointing out

that those cases were decided before the 2015 amendments to Rule

26, and thus use outdated language when defining the scope of

discovery — whether the evidence “may be relevant” or is

“reasonably calculated to lead to the discovery of relevant

evidence[.]” 2008 WL 4372901 at *4; 2010 WL 2985812 at *2. But the

2015 amendments did not “change the basic principle that Rule 26

is to be liberally construed to permit broad discovery.” Durand v.

Hanover Ins. Grp., Inc., No. 3:07-CV-00130-HBB, 2016 WL 9458551,

at *2 (W.D. Ky. Oct. 27, 2016). Even under the current rule, the

information sought is relevant.

In passing, Baptist argues that the sought-after discovery is

not proportional to the needs of the case. But Baptist does not

articulate any specific way that this discovery would be

disproportionate — its position is that because the information

sought is irrelevant, any discovery on this issue is necessarily

disproportionate. However, the information is relevant, and the

court has not found any deficiencies in the disputed requests. The

motion to compel is GRANTED as to Requests for Production 1, 2, 3,

4, 24, 25, 26, 29, 36, 37, and 38 as well as Interrogatories 1, 2,

and 17.2

E. HIPAA Violations

Baptist objects to the requested discovery regarding its

investigation into Allgood’s access to patient records. Baptist

2In Baptist’s briefing, it quotes certain discovery requests that

Allgood has not sought to compel. The court emphasizes that it is

only granting the motion to compel as to the requests Allgood has

actually sought to compel and only to the extent identified in

this order.

concedes that Allgood did not violate HIPAA. As a result, Baptist

avers that information about the investigation into whether

Allgood violated HIPAA is irrelevant. Allgood disputes whether it

is clear that Baptist is conceding that she did not violate HIPAA,

and further argues that the sought-after discovery is relevant to

whether Baptist’s investigation was pretextual. Baptist further

argues the information sought is disproportional to the needs of

the case because it would involve the disclosure of personal health

information.

Regardless of whether Baptist concedes that Allgood did not

violate HIPAA, Allgood still needs to show the investigation of

her access to patient records was pretextual in order to prevail.

Evidence about the investigation is relevant to whether the

investigation was pretextual. If Baptist did not actually

investigate Allgood’s purported HIPAA violation — or if it did,

but only in a cursory way — it may tend to show Allgood’s suspension

was pretextual. Similarly, if there is little evidence that Allgood

violated HIPAA, it may tend to show that Allgood’s suspension was

pretextual. In contrast, if there is evidence that Baptist

investigated Allgood’s access to patient records thoroughly during

her suspension, it may tend to show the investigation was not

pretextual. The information sought is thus relevant.

As for proportionality, the court has already entered a

protective order regarding personal health information that may be

disclosed in the course of this case. (ECF No. 30.) The privacy

interests of patients at Baptist are thus reasonably protected.

Given that Allgood has shown a strong need for information about

the investigation, the court concludes that Baptist’s concerns

about patient privacy do not make the discovery disproportional to

the needs of the case. Baptist has not made more specific

objections to this discovery on proportionality grounds, and the

court has not found any deficiencies in the disputed requests. The

motion to compel is GRANTED as to Requests for Production 7, 8, 9,

10, 11, 12, 13, 14, 18, 19, 22, 23, 35, and 45.3

F. Requests About Kathy Long

The parties also dispute whether discovery requests about

Kathy Long, a former employee at Baptist working with Dr. King,

are relevant. In Allgood’s complaint, Long is identified as a

comparator who accessed the same files that Allgood did, but did

not report billing fraud, and was not investigated for wrongdoing.

(ECF No. 1 at 10 ¶ 30.) In support of her motion to compel, Allgood

makes a different argument as to why information about Long is

relevant to this case. Allgood claims that Long reported Dr. King

for making abusive statements to her in April 2019, and that Long

was fired by Baptist shortly thereafter. This, Allgood argues,

3The court again emphasizes that it is only granting the motion to

compel as to the requests Allgood has actually sought to compel

and only to the extent identified in this order.

shows a pattern by Baptist of punishing employees who report

misconduct by Dr. King. Allgood also contends that some of the

abusive statements Dr. King made towards Long concerned Allgood.

Baptist does not address Allgood’s second argument about

relevance, but does argue that Long is not an appropriate

comparator because Baptist was unaware she accessed patient files.

Evidence of an employer’s treatment of other employees is

often relevant to an employer’s motive in acting against a

plaintiff. Griffin v. Finkbeiner, 689 F.3d 584, 600 (6th Cir.

2012). Here, both Long and Allgood allegedly reported misconduct

by Dr. King and faced suspension or termination shortly afterwards.

Evidence about the reasons for Long’s termination could shed light

on Baptist’s motive for suspending Allgood.

Evidence about whether Long was investigated for accessing

the same patient files as Allgood is also relevant. The right to

discovery of comparator evidence is not unlimited and must be

balanced against the need to appropriately limit discovery. See

Terrell v. Memphis Zoo, Inc., No. 17-CV-2928-JPM-tmp, 2018 WL

3245003, at *7 (W.D. Tenn. July 3, 2018). However, “[t]he refusal

of a defendant to disclose requested comparator information denies

plaintiff the opportunity to determine whether the evidence

actually reveals comparator status and different treatment,

critical elements of the claim that the trier of fact must

determine.” Bobo v. United Parcel Serv., Inc., 665 F.3d 741, 753

(6th Cir. 2012).

It may be that the evidence will ultimately show that Long is

not an appropriate comparator to Allgood. But “whether the evidence

actually reveals comparator status” is a question for “the trier

of fact” to decide, not one that Baptist may resolve unilaterally

by refusing to provide comparator evidence. Id. Evidence about

whether Long was punished for accessing the same patient files as

Allgood is thus relevant and proportional. The motion to compel is

GRANTED as to Requests for Production 16 and 40 and Interrogatory

20.

G. Requests About Dr. John King

The disputed requests about Dr. King can be grouped into three

categories: (1) requests about the circumstances surrounding Dr.

King’s termination from Baptist; (2) requests about the formation

of Dr. King’s new practice and Baptist’s possible financial stake

in that practice; and (3) requests about past complaints involving

Dr. King. Baptist disputes the relevance and proportionality of

this discovery.

The reasons for Dr. King’s termination from Baptist are

significant to this case. That Dr. King was accused of billing

fraud, Baptist investigated the claims of billing fraud and

concluded Dr. King overbilled the government, and then terminated

Dr. King’s employment with Baptist all suggests a causal link

between the allegations of billing fraud and Dr. King’s

termination. As discussed earlier, whether Baptist engaged in

billing fraud is relevant to whether Allgood was punished for

reporting billing fraud. The motion to compel is GRANTED as to

Requests for Production 50 and Interrogatory 21.

Allgood suggests that information about the formation of Dr.

King’s new practice, and Baptist’s financial stake in it, is

relevant because it goes to “the sincerity of Baptist’s offer to

reinstate Allgood and ongoing hostility between Baptist and

Allgood.” (ECF No. 32 at 15.) It is true that hostility between a

former employee and employer can sometimes affect the scope of

remedies in an employment discrimination suit because hostility

may make reinstatement an impractical remedy. See Hollimon v.

Shelby Cty. Gov't, No. 2:03-CV-02919, 2008 WL 11432204, at *1 (W.D.

Tenn. Aug. 25, 2008). But the concern in such cases is about

personal hostility between the employer and employee, not

attenuated hostility from someone who runs a business the employer

happens to have an investment in. The motion to compel is DENIED

as to Requests for Production 51 and 52.

This leaves the discovery disputes about past complaints

involving Dr. King. If other employees complained about Dr. King

and were retaliated against, that arguably might be probative of

Baptist’s motive in suspending Allgood. However, the court finds

that this discovery falls beyond the scope of Rule 26. Allgood

seeks information about complaints stretching back to the

beginning of Dr. King’s employment at Baptist. There is no reason

to think such remote information has much bearing on this case.

Allgood also seeks information about Baptist’s communications with

a state licensing board regarding Dr. King. But there is no reason

other than speculation to think communications with the state

licensing board would have relevance to the issues at hand here.

The motion to compel is DENIED as to Request for Production 34 and

49 and Interrogatory 19.

H. Training Materials

Allgood seeks to compel production of training materials

about HIPAA and False Claims Act compliance “in effect as of

October 6, 2018.”

It is unclear why training materials about HIPAA and False

Claims Act compliance would be relevant to this case. These

requests are also worded in a way that would make the process of

identifying responsive documents needlessly complicated and that

would capture a large amount of irrelevant information. The request

seeks those materials “in effect as of October 6, 2018,” a term

without an obvious meaning. The request is also not limited

geographically, meaning Baptist — which operates hospitals and

clinics across the mid-South — would have to produce materials

from facilities with no connection to Allgood or anyone else

involved in this case. Given that it is unclear what relevance

this discovery has on the case as a general matter, the requests

are not proportional to the needs of the case. The motion to compel

is DENIED as to Requests for Production 44 and 47.

I. Communications Concerning Allgood

Allgood seeks “[a]ll documents and ESI reflecting

communications concerning Allgood from March 28, 2018, through

October 1, 2018.” Allgood argues this discovery is relevant and

proportional because Allgood learned that Dr. King was committing

billing fraud on March 28 and told another nurse about her

suspicions in April. After this, Allgood claims a supervisor at

Baptist ordered her to apologize to Dr. King for telling another

nurse she suspected Dr. King was committing billing fraud. Allgood

posits communications about Allgood during this period can shed

light into Baptist’s motive in suspending her later. Baptist

objected to this Request for Production on the grounds (lightly

paraphrased) that it was vague, irrelevant, not proportional to

the needs of the case, and sought information protected by the

attorney-client privilege. Baptist did not address this Request

for Production in its briefing.

Though the requested discovery seeks a broad range of

information, it is limited to a specific time range where there is

likely to be relevant evidence and is about a single employee.

Furthermore, the timeline of events is important here. The False

Claims Act protects employees when they are “collecting

information about potential fraud[.]” Miller, 648 F. App'x at 560.

What Baptist knew about Allgood’s investigation of Dr. King and

when it knew it may be relevant to the question of whether her

suspension was pretextual. The motion to compel is GRANTED as to

non-privileged documents and ESI responsive to Request for

Production 32.

III. CONCLUSION

For the reasons above, the motion to compel is GRANTED in

part and DENIED in part. Baptist shall provide discovery responses

under this order within thirty days.

IT IS SO ORDERED.

s/ Tu M. Pham

TU M. PHAM

United States Magistrate Judge

January 7, 2020

Date