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United States ex rel Pogue v. Marriott International

February 7, 2007


The opinion of the court was delivered by: Royce C. Lamberth, United States District Judge

Part of Misc. No. 01-50 (RCL)


This case is one of several consolidated for pretrial purposes by the Multidistrict Litigation Panel. In short, the relator, A. Scott Pogue, has brought a False Claims Act ("FCA") case against Diabetes Treatment Centers of America, Inc. ("DTCA"), for an alleged kickbacksfor-referrals scheme. Before the Court are several motions related to basic housekeeping and scheduling matters, as well as motions to strike related to a potential expert witness, and DTCA's motion for judgment on the pleadings, which seeks to dismiss certain claims as time-barred.

I. Miscellaneous Motions

Several motions are unopposed or submitted with the joint consent of the parties. First is the Motion [110 & 1180] to Dismiss All Claims Against the Defendant Atlanta Physicians, which seeks dismissal of the "Atlanta Physicians" defendants, namely Paul C. Davidson, M.D.; Bruce W. Bode, M.D.; Judson G. Black, M.D.; Robert Dennis Steed, M.D.; and Anthony E. Karpas, M.D. Dismissal is with prejudice as to the relator, A. Scott Pogue, and without prejudice as to the United States. The Motion [110] is GRANTED.

Next on the docket are several housekeeping motions. The United States' Unopposed Motion [111] to File Surreply to DTCA's Motion to Reconsider; DTCA's Motion [113] to File Response Brief in Excess of Ten Pages; the United States' Unopposed Motion [116] for Extension of Time to File Reply to Motion to Strike the Expert Report of Eric Yospe; the United States' and Relator's Unopposed Motions [1189 & 1190] for Extension of Time to File Reply to Motion to Strike Report and Designation of DTCA Expert Witness Eric Yospe; DTCA's Motion [1204] to File a Surreply to United States' and Relator's Motions to Strike; DTCA's Unopposed Motion [1197] for Leave to File Supplemental Briefs Regarding DTCA's Motion to Compel; the United States' Motion [1185] for Leave to File Surreply; and Relator's Unopposed Motion for Leave to File Surreply to DTCA's Motion for Judgment on the Pleadings [125] are all GRANTED.*fn1 Relator's Motion [126] for Leave to File Opposition to Summary Judgment Instanter is DENIED as moot.

Also DENIED is the Joint Motion [1140] to Amend Scheduling Order, which has been mooted by the passage of time. The parties are ORDERED to meet and confer within thirty (30) days of this date and submit to the Court a proposed Scheduling Order that addresses all outstanding matters. Assuming the parties agree on the Scheduling Order, the Court will move with dispatch to enter it upon receipt.

II. Motion to Reconsider

DTCA's Motion [106] to Reconsider and Amend asks the Court to revisit its June 2, 2006 Memorandum Opinion and Order, which denied DTCA's motion [84] to compel the federal Department of Health and Human Services ("HHS") to produce documents and testimony in response to a subpoena issued to HHS by DTCA.

DTCA first urges the Court to reconsider its holding that HHS is not a "person" subject to subpoena under Rule 45 of the Federal Rules of Civil Procedure, in light of the Court of Appeals' subsequent decision in Yousuf v. Samantar, 451 F.3d 248 (D.C. Cir. June 16, 2006). Yousuf held that a federal agency is a "person" for the purposes of Rule 45 and thus subject to a motion to compel under that Rule, including in cases where the United States is not a party. The Court therefore GRANTS the Motion to Amend its Opinion to reflect that an agency of the United States is a "person" for the purposes of Rule 45.*fn2

At the same time, Yousuf explicitly recognized, and did nothing to displace, the applicability of each agency's Touhy regime for handling requests for information, including subpoenas.*fn3 See In re Subpoenas in SEC v. Selden, 445 F.Supp. 2d 11 & nn. 6, 7 (D.D.C. Aug. 16, 2006) (Urbina, J.); Santini v. Herman, 456 F.Supp. 2d 69, 71-72 (D.D.C. Oct. 17, 2006) (Collyer, J.). The need to go through the Touhy process is especially important in this case, since HHS has engaged in discussions with DTCA during the pendency of these motions and has begun producing some documents. It is also apparent that the scope of DTCA's requests for documents may have changed as a result of these discussions, and that its request for testimony may have dropped out of the picture all together.

As such, the sound approach is for DTCA to determine what requests remain unmet and submit them to HHS in the form of a subpoena in compliance with the agency's Touhy regulations. The Motion to Compel is GRANTED, insofar as the Court expects HHS to process the subpoena with dispatch. When HHS has completed this process, DTCA may seek review of this final agency action through a motion to compel further compliance. At that point the other objections that HHS has previously raised to DTCA's requests -- to their scope and nature, etc. -- can be addressed to the extent they are raised again, and the Court can compel further compliance with the subpoena if necessary.

III. Expert Motions

Next, the Court addresses the United States' Motion [103] to Strike the Expert Report of Eric Yospe, Relator's Motion [104] to Strike the Report and Designation of DTCA Expert Witness Eric Yospe, and Relator's Motion [1174] to Seal Rule 26 Expert Report of Eric Yospe. As explained below, the Motions are DENIED.

Eric Yospe was employed at the Health Care Financing Administration, a part of HHS, from 1972 to 1996, including tenures as Chief of the Audit and Reimbursement Branch and as the Director of Audit and Civil Monetary Penalties. In his Expert Disclosure, filed pursuant to Rule 26(a)(2) of the Federal Rules of Civil Procedure, Yospe states that he has been retained by DTCA to provide expert opinions, and that if called to testify he would opine on the Medicare cost reporting process in place during the years 1986 to 1996 and on "the impact that a Medicare cost report claim for certain of the fees DTCA charges to its hospital clients has on Medicare payments through the cost reporting process." See Docket # 103. The rest of the report outlines Yospe's opinions. The United States and relator move to strike his expert disclosure report for failure to comply with HHS' Touhy regulations, 45 C.F.R. §§ 2.1-2.6. Relator also seeks to strike his designation as an expert.

Under Federal Rule of Civil Procedure 12(f) a court may strike all or part of a pleading for insufficiency, redundancy, immateriality, impertinence, or scandalousness. See Fed. R. Civ. P. 12(f).*fn4 Judicial Watch, Inc. v. Dep't of Commerce, 224 F.R.D. 261, 263 (D.D.C. 2004). These motions are strongly disfavored, and the decision of whether to strike all or part of a pleading or attachment thereto rests within the sound discretion of the court. See Judicial Watch, 224 F.R.D. at 263 (collecting authorities); 2-12 Moore's Federal Practice -- Civil § 12.37 (2006).

A "motion to strike is considered an exceptional remedy and is generally disfavored," Larouche v. Dep't of the Treasury, 2000 U.S. Dist. LEXIS 5078 at *40 (D.D.C. Mar. 31, 2000)(citing Moore's at § 12.37[1]), and the proponent of such a motion must carry a "formidable burden." Judicial Watch, 224 F.R.D. at 264.

Under the federal "Housekeeping Statute," 5 U.S.C. § 301, a federal agency may adopt procedures -- dubbed Touhy regulations after the Supreme Court decision United States ex rel. Touhy v. Ragen, 340 U.S. 462 (1951) -- for responding to subpoenas and other requests for testimony or documents. According to the Touhy regulations adopted by HHS, "[n]o employee or former employee" of HHS "may provide testimony or produce documents in any proceedings to which this part applies concerning information acquired in the course of performing official duties or because of the person's official relationship with the Department unless authorized by the Agency head" pursuant to the process set forth in the Touhy regulations, and upon the Agency head's determination "that compliance with the request would promote the objectives of the Department." 45 C.F.R. § 2.3. These regulations do not apply to civil proceedings where the United States, HHS, or any other federal agency is a party. 45 C.F.R. § 2.1(d)(1).

The valid Touhy regulations adopted by HHS require that a party first seek agency approval before attempting to secure the testimony of a current or former agency employee. See, e.g., In the Matter of a Subpoena Issued to Thomas A. Scully, 2006 U.S. Dist. LEXIS 38780, 06-cv-77 (D.D.C. Apr. 11, 2006) (Kessler, J.). After exhausting agency remedies, the party may then seek judicial review of the agency decision via an Administrative Procedure Act action. See id.; In re: Subpoena Duces Tecum to Tommy G. Thompson, 2005 U.S. Dist. LEXIS 41202, 04- cv-498 (D.D.C. 2005) (Kollar-Kotelly, J.). These rules apply here.*fn5

DTCA initially designated Yospe as an expert and filed his Rule 26 disclosure without seeking HHS approval through the Touhy process. While these motions were pending, DTCA sought and received HHS approval to call Yospe as an expert, subject to certain conditions, and HHS approved an expert report for Yospe, also subject to conditions. If DTCA is unhappy with the scope of testimony that HHS has approved going forward, it can exhaust administrative remedies and seek review of the agency decision in accord with the APA. Any complaints by relator and the United States regarding Touhy compliance should thus be alleviated.

As to the motions to strike, no proper basis for granting them has been shown. It appears that the purpose of the motions, particularly the motion to strike Yospe's expert designation, was to prevent Yospe from testifying at all. If Yospe had attempted to testify, in person, by affidavit, or otherwise, a motion to strike or in limine may have been a proper vehicle for HHS to ensure that he did not purport to pronounce official policy on behalf of the agency, discuss matters over which the agency asserts a privilege, and to otherwise safeguard the governmental interests that Touhy regulations serve to protect. However, there is no authority indicating that HHS can block all testimony by a former employee as to that individual's personal opinions and observations, absent the assertion of a specific privilege. See, e.g., Carter v. Mississippi Department of Corrections, 1996 WL 407241, 88-cv-213 (N.D. Miss. May 24, 1996) (adoption of Touhy regulations does not create absolute privilege for agency to withhold information from court). At any rate, DTCA's Touhy compliance moots these concerns. The motions to strike the report and expert designation are denied insofar as they sought to block Yospe from testifying.

To the extent they seek to strike the original expert report, the motions to strike are infirm for other reasons, in addition to being moot. First and foremost, the Rule 26(a)(2) expert disclosure is neither testimony nor a pleading, and therefore could not properly be stricken under Rule 12(f). For that matter, the report was in no position to be stricken at all, since it was only placed on the docket by the United States when it moved to strike. While relator also raised objections to the admissibility of certain sections of the report, his remedy is to raise those objections to specific questions or testimony if and when Yospe testifies, not in a motion to strike the entire expert report. An expert report is not meant to be admissible as evidence and need not be to pass muster. Of course, as it would in any case, the Court will disregard any improper materials when ruling on the merits -- such as statements in the report that purport to pronounce policy positions on behalf of HHS, without obtaining HHS' approval.

To avoid confusion between this expert report and the one that has passed through the HHS Touhy process, or between this report and any future affidavit or other exhibit furnished by Mr. Yospe, the Court admonishes relator, the United States, and DTCA not to incorporate by reference any portions of the original Yospe expert report or to otherwise refer to the original Yospe report in deposition or other testimony or in court filings. Rather, the parties and the United States should move forward on the basis of the current report as approved by HHS.

The motion to seal the report is denied, as relator has identified no basis for such action.

To the extent that any privileges apply to the report, they belong to the United States, which has not claimed any need to seal the report and, indeed, ...

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