333 F.R.D. 25 (E.D.N.Y. 2019), 14-CV-6646-RRM-SJB, United States ex rel. CKD Project, LLC v. Fresenius Medical Care AG & Co.

• Docket Nº: 14-CV-6646-RRM-SJB
• Citation: 333 F.R.D. 25, 105 Fed.R.Serv.3d 482
• Opinion Judge: BULSARA, United States Magistrate Judge:
• Party Name: UNITED STATES of America EX REL. CKD PROJECT, LLC, Plaintiffs, v. FRESENIUS MEDICAL CARE AG & CO. KGAA, Fresenius Medical Care Holding, Inc. d/b/a Fresenius Medical Care North America, New York Dialysis Services, Inc., FMS New York Services LLC, Bio-Medical Applications Management Company, Inc., Defendants.
• Attorney: Matthew Silverman, United States Attorney’s Office, Brooklyn, NY, for Plaintiffs. James F. Bennett, Pro Hac Vice, Megan S. Heinsz, Pro Hac Vice, Philip Allen Cantwell, Dowd Bennett LLP, Saint Louis, MO, Hannah Preston, Pro Hac Vice, Dowd Bennett LLP, Clayton, MO, Paul Schoeman, Kramer Levine Naft...
• Case Date: November 08, 2019
• Court: United States District Courts, 2nd Circuit, Eastern District of New York

Page 25

333 F.R.D. 25 (E.D.N.Y. 2019)

105 Fed.R.Serv.3d 482

UNITED STATES of America EX REL. CKD PROJECT, LLC, Plaintiffs,

v.

FRESENIUS MEDICAL CARE AG & CO. KGAA, Fresenius Medical Care Holding, Inc. d/b/a Fresenius Medical Care North America, New York Dialysis Services, Inc., FMS New York Services LLC, Bio-Medical Applications Management Company, Inc., Defendants.

No. 14-CV-6646-RRM-SJB

United States District Court, E.D. New York

November 8, 2019

Matthew Silverman, United States Attorney’s Office, Brooklyn, NY, for Plaintiffs.

James F. Bennett, Pro Hac Vice, Megan S. Heinsz, Pro Hac Vice, Philip Allen Cantwell, Dowd Bennett LLP, Saint Louis, MO, Hannah Preston, Pro Hac Vice, Dowd Bennett LLP, Clayton, MO, Paul Schoeman, Kramer Levine Naftalis & Frankel LLP, New York, NY, for Defendants.

ORDER

BULSARA, United States Magistrate Judge:

Relator CKD Project, LLC ("Relator") has moved to compel responses to its first set of interrogatories and requests for production and to compel production of documents associated with those discovery demands. (Relator’s Mot. to Compel dated Aug. 12, 2019 ("Relator’s Br."), Dkt. 49 at 1). Though the parties have submitted extensive briefs on this motion, the issue raised by them is straightforward: may a relator, who identifies and alleges misconduct in one state or location, and merely alludes to misconduct elsewhere "on information and belief," obtain nationwide discovery to ferret out additional instances of misconduct? In this case, the answer is no.¹

Page 26

Relator alleges that Defendant Fresenius Medical Care Holdings, Inc. ("Fresenius") engaged in a fraudulent kickback scheme whereby physicians were given cash and other consideration to refer their dialysis patients. (Compl. dated Nov. 12, 2014, Dkt. No. 1 ¶ 2). According to Relator, the scheme operated as follows: Fresenius devised a fraudulent business model by which cash and other valuable remuneration were funneled through Fresenius-controlled entities to the physician-owners of dialysis clinics targeted by Fresenius for acquisition in order to induce those physicians to refer their dialysis patients, and transfer their ownership interests in the dialysis clinics, to Fresenius .... "[T]hese transfers were accomplished through a number of interrelated agreements that left Fresenius with a controlling interest in each dialysis clinic’s operations, and that prohibited the physicians from acting in competition with the Fresenius-owned clinic.

(Relator’s Br. at 1 (quotations omitted) (quoting Compl. ¶ 38)). The Complaint alleges that Fresenius used these illegal joint ventures throughout the United States, but it only contains details about a single one: Apollo Healthcare LLC (the "Apollo transaction"). (See Compl. ¶¶ 40-60). The Complaint does allege, nonetheless, that the Apollo transaction is "merely illustrative of acquisitions of dialysis facilities in New York and elsewhere," and names certain other ventures, but only in New York.² (Compl. ¶¶ 61-63).

On the basis of these allegations, and little else, Relator seeks, among other things, all "[d]ocuments related to joint venture transactions that share inculpating characteristics with the joint ventures specifically identified in the Complaint[.]" (Relator’s Br. at 1; see also Relator’s First Set of Reqs. for Produc., attached as Ex. 2 to Relator’s Br., Dkt. No. 49 at 5-6). There are at least 320 dialysis joint ventures at issue. (Relator’s Br. at 3 n.5 (citing Fresenius’s Interrog. Resps. dated July 18, 2019, attached as Ex. 5 to Relator’s Br., Dkt. No 49 at 15)).

In analyzing whether the discovery sought is appropriate, the Court is guided by Federal Rule of Civil Procedure 26(b)(1), which provides that: [T]he scope of discovery is as follows: Parties 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, considering the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.

The question in this case is whether nationwide discovery is within the permissible discovery scope, based on Relator’s allegations— and little else— that alleged kickbacks took place outside of New York. The Court concludes that Relator has not demonstrated the discovery sought is proportional to the needs of the case.

Relators opening brief focuses on defeating Freseniuss relevance and undue burden objections. (See Relators Br. at 3-4). That is understandable, but it is Relator— "as the party seeking discovery— that must make a prima facie showing that the discovery sought is more than merely a fishing expedition."...