Me. Med. Ctr. v. U.S.

• Decision Date: 10 February 2011
• Docket Number: No. 2:09–cv–652–GZS.,2:09–cv–652–GZS.
• Citation: 766 F.Supp.2d 253
• Parties: MAINE MEDICAL CENTER, Plaintiffv.UNITED STATES of America, Defendant.
• Court: U.S. District Court — District of Maine

766 F.Supp.2d 253

107 A.F.T.R.2d 2011-859

MAINE MEDICAL CENTER, Plaintiff

v.UNITED STATES of America, Defendant.

No. 2:09–cv–652–GZS.

United States District Court, D. Maine.

Feb. 10, 2011.

Robert H. Stier, Pierce Atwood LLP, Portland, ME, Michael A. Schlanger, Shelli L. Calland, Covington & Burling, Washington, DC, for Plaintiff.Stephen T. Lyons, U.S. Department of Justice, Washington, DC, for Defendant.

ORDER ON DISCOVERY DISPUTE

JOHN H. RICH III, United States Magistrate Judge.

The instant discovery dispute arose when the government refused to answer interrogatories or respond to Maine Medical Center's (“MMC's”) request for production of documents bearing on MMC's request for a refund of Federal Insurance Contributions Act (“FICA”) taxes paid in 2001.¹ At MMC's request, I held a teleconference with the parties on January 21, 2011, during which the government argued, in relevant part, that the discovery sought was unduly burdensome and irrelevant because:

1. The Internal Revenue Service (“IRS”) has no record of ever having received the refund request;

2. MMC cannot show timely filing pursuant to the applicable statute, 26 U.S.C. § 7502;

3. There is a split in the circuits regarding whether the common-law “mailbox rule” survived the enactment of section 7502. However, even assuming arguendo that the First Circuit would hold that it did, that does not help MMC because MMC claims to have mailed its refund request on April 15, 2005, the day that it was due, too late to have been timely filed pursuant to the mailbox rule; and

4. In the absence of MMC's ability to prove timely filing, the court lacks jurisdiction to adjudicate the 2001 refund claim and, hence, the discovery sought is impermissible.

MMC contended that (i) it could indeed prove timely filing pursuant to an amalgam of the provisions of section 7502 and the mailbox rule, (ii) in any event, final resolution of that question at this (discovery) stage is premature, and (iii) it is entitled to discovery with respect to the handling of the missing claim by the IRS. Hence, it argued, the government should be compelled to respond to its discovery requests.

At the conclusion of the teleconference, without objection, I directed the parties to file simultaneous briefs, by noon on January 28, 2011, addressing the following potentially dispositive legal issues with respect to the discovery at issue: (i) whether, as a matter of law, the plaintiff is precluded from relying on the mailbox rule unless it mailed its request for a refund sufficiently in advance of the due date to have ensured, in the ordinary course, its receipt by the due date, and (ii) whether there is authority for the proposition that section 7502 may be supplemented by the mailbox rule. See Report of Hearing and Order re: Discovery Dispute (Docket No. 22) at 2. For purposes of resolution of the instant discovery dispute, I directed the parties to assume that, in the face of a split among the United States Circuits Courts of Appeals as to whether section 7502 provides the exclusive means by which a taxpayer can prove timely filing with the IRS, the First Circuit would side with those courts holding section 7502 non-exclusive. See id. at 2 n. 1.

The parties timely filed the required briefs. See MMC Brief; United States' Brief in Support of Its Position That This Court Lacks Jurisdiction Over the Plaintiff's Claim for 2001 (“Gov't Brief”) (Docket No. 24) & exhibits thereto. With the benefit of those briefs, and treating the instant discovery dispute as a motion by MMC to compel discovery, I now deny that motion.

I. Factual and Procedural Background

Kevin Montminy, then MMC's Acting Director, Audit and Compliance Services, discussed a potential FICA refund claim with Al Swallow, MMC's Associate Vice President of Finance, as early as August 23, 2004. See Plaintiff's Answers to United States' First Set of Interrogatories (“Plaintiff's Interrog. Ans.”) (Docket No. 24–1), Exh. 1 to Gov't Brief, ¶ 1 at 3.² Montminy continued to monitor, and discuss with others inside and outside of MMC, the potential of a refund. See id. The subject was raised again during a conference call on March 16, 2005, with accountants Maggie O'Brien and Jeanne Schuster from Ernst & Young. See id.

In early April 2005, Montminy began preparing a refund claim. See id. He faxed a copy of the draft refund claim to Schuster, who had been advising MMC about the FICA refund issue. See id. On April 4, Schuster emailed comments and suggestions for a revised draft claim. See id. It was unclear to Montminy whether the protective filing needed to include a specific amount for the refund claim or whether it could be more general. See id. He emailed another accountant, Jocelyn Bishop at PriceWaterhouseCoopers, on April 6 with that question, expressly noting that the filing was “due 4/15/05.” Id.

In an April 6 email to Schuster, Montminy indicated that MMC “had been told that the totals were not required for protective claims and thus we haven't done any leg work to compile the data yet.” Id. On April 7, Schuster recommended, after checking with her firm's FICA refund expert, that the form include specific refund amounts. See id. Ernst & Young's subsequent invoice “for professional tax services rendered through April 15, 2005” contains an entry in the amount of $1,650.00 for “tax research, discussions and email correspondence on review of 2001 Medical Resident FICA protective refund claim including coordination with EY National refund claim expert on implications of claims filed without amounts of refund anticipated.” Id.

At approximately 11 a.m. on April 12, Montminy met with Swallow and two other MMC employees, John Heye, Vice–President of Finance and Treasurer, and Gene Joyner, Assistant Director of Financial Planning, to review the status of the FICA refund issue. See id. ¶ 1 at 3–4. They decided to file the refund claim on April 15 and to include the specific amount of the refund being claimed. See id. ¶ 1 at 4. Later that afternoon, Montminy sent an email to Jeff Winchenbach, the Director of Financial Services, stating:

I am trying to complete a filing for John Heye to approve by Friday, April 15. Question, can you determine the amount of FICA paid to residents of MMC for the calendar year 2001 through [the Lawson database system].... John would like to corroborate the filing with a listing, by resident, of the FICA withheld.

Id.

Montminy and Winchenbach completed their exchange of emails regarding the amount of FICA paid for medical residents at 6:34 p.m. on Thursday, April 14. See id. At approximately 2:30 p.m. on Friday, April 15, Montminy met with Heye at his office at Maine Medical Center. See id. Heye signed the refund claim. See id. Montminy then returned to his office on Washington Avenue in Portland, had his assistant, Debbie Raspiller, prepare the mailing to be sent by certified mail, and, at 3:22 p.m., faxed the signature page back to Heye for his files. See id. At the time, Montminy's standard practice in dealing with tax and other filings that had to be postmarked on the same day was to drive to the main U.S. Post Office on Forest Avenue in Portland and mail the filing by certified mail, return receipt requested. See id. He believes that he followed that standard practice in mailing the FICA refund claim for 2001 on April 15. See id.

No one at MMC has a specific recollection of this particular mailing. See id. ¶ 2 at 5. In accordance with standard practice, however, MMC would have used the United States Postal Service (“USPS”) to mail the 2001 refund claim. See id. The claim was mailed from the post office located at 125 Forest Avenue in Portland, Maine. See id. MMC does not know the identity of the USPS employee who handled the mailing of the claim. See id.

MMC admits the following:

1. The claim could not have been delivered to the IRS until after April 15, 2005. See Plaintiff's Response to United States' First Set of Requests for Admission (Docket No. 24–2), Exh. 2 to Gov't Brief, ¶ 3.

2. MMC does not have a copy of either a certified mail receipt or a registered mail receipt for the mailing of the claim. See id. ¶ 6.

3. MMC does not have either the original of the postmarked envelope/wrapper that it claims contained the claim or a copy of that envelope/wrapper. See id. ¶ 7.

4. The claim was not mailed for same-day delivery. See id. ¶ 8.

The interrogatories to which MMC seeks to compel an answer include:

1. The time, date, and location of searches made for federal tax returns and/or tax refund claims filed since 2000 by MMC and/or MaineHealth, together with (i) the identity of all persons who participated in such searches, (ii) a detailed description of how the search was conducted and how long it lasted, and (iii) identification or production of all documents located during the search, see United States' Answers to Plaintiff's First Set of Interrogatories, supplied by MMC incident to its request for a discovery conference, ¶ 1 at 3;

2. A description of where and how federal tax returns and/or tax refund claims filed since 1996 by MMC and/or MaineHealth have been recorded, stored, or retained, including whether such returns and/or claims have been lost or destroyed, see id. ¶¶ 2–3 at 3;

3. The steps the IRS routinely took to process claims from institutions seeking refunds for FICA taxes paid by and for medical residents for each tax year since 2000, and the three persons most knowledgeable about those steps, see id. ¶¶ 5–6 at 4; and

4. The identity of all committees, consultants, government agencies, news organizations, or other groups, and all individual persons, whether employed by the IRS or by third parties, who are known or believed to have studied, analyzed, examined, reported about, or otherwise considered since 2000 the issue of how the IRS receives, stores, maintains, keeps, loses, misplaces, or destroys documents submitted to it by taxpayers, see id. ¶ 8 at 5.

MMC seeks, inter alia,...