Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_12-cv-02218/USCOURTS-caed-2_12-cv-02218-6/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 31:3729 False Claims Act

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UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

DOUGLAS DALITZ, et al.,

Plaintiffs,

v.

AMSURG CORP., et al.,

Defendants.

No. 2:12-cv-2218-TLN-CKD

ORDER

Plaintiffs Douglas Dalitz’s and Randy Gray’s (“relator plaintiffs”) motion to compel 

discovery, ECF No. 72, came on regularly for hearing on December 9, 2015. Gary Callahan and 

Tatiana Filippova appeared for relator plaintiffs. Brian Roark and Robert Swanson appeared for 

defendants. Upon review of the documents in support of the motion, no opposition having been 

filed with regard to either, upon hearing the arguments of counsel, upon review of the joint 

statement regarding the parties’ discovery disagreement, and good cause appearing therefor, THE 

COURT ORDERS AS FOLLOWS:

I. Background

Generally stated, this is a qui tam action in which relator plaintiffs allege in their first 

amended complaint that defendants submitted false claims for medical billing under Medicare 

and Medi-Cal in violation of the federal and California False Claims Acts. More specifically, 

relator plaintiffs allege that defendants failed to perform medical assessments and obtain 

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comprehensive histories and physicals (“H&Ps”), which were required under Medicare’s and 

Medi-Cal’s reimbursement standards, before performing surgical procedures at Redding 

Endoscopy Center (“REC”), an ambulatory surgical center (“ASC”) jointly owned and operated 

by defendants. The relator plaintiffs allege further that defendants knowingly made false 

certifications that they performed these prerequisites in order to obtain payment for their services 

from the federal and state government agencies administering Medicare and Medi-Cal, and 

engaged in a conspiracy to defraud by knowingly submitting the false claims. Finally, the relator 

plaintiffs allege that defendants terminated them from their employment at REC in retaliation for 

their attempts to rectify defendants’ alleged fraudulent conduct. 

II. Relevant Discovery Standards

As of December 1, 2015, Federal Rule of Civil Procedure 26(b)(1) was amended to 

provide the following standards regarding the scope of discovery:

Unless otherwise limited by court order, the 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. Information within 

this scope of discovery need not be admissible in evidence to be discoverable.

Where—as here—a party resists discovery, the requesting party may file a motion to 

compel. Rule 37 governs motions to compel, and provides that a “party seeking discovery may 

move for an order compelling an answer, designation, production, or inspection” if a party fails to 

answer an interrogatory submitted under Rule 33” or “fails to respond” to a request under Rule 

34. Before moving to compel, Rule 37 requires the movant to include a certification that the 

movant has “in good faith conferred or attempted to confer” with the party resisting discovery 

before seeking judicial intervention. Fed. R. Civ. P. 37(a)(1). Generally, the party resisting 

discovery carries the burden of showing why discovery should be denied. Blankenship v. Hearst 

Corp., 519 F.2d 418, 429 (9th Cir. 1975).

The court has broad discretion in controlling discovery and in determining whether 

discovery is burdensome or oppressive. See Little v. City of Seattle, 863 F.2d 681, 685 (9th Cir.

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1988). The court may fashion any order which justice requires to protect a party or person from 

undue burden, oppression, or expense. United States v. Columbia Board. Sys., Inc., 666 F .2d 

364, 369 (9th Cir. 1982) cert. denied, 457 U.S. 1118 (1982).

III. Discussion

Relator plaintiffs’ motion to compel presents two separate but related discovery issues for 

the court’s consideration. First, relator plaintiffs seek to compel defendants to produce discovery 

relating to all of the ASCs owned and operated by defendant AmSurg Corp. nationwide, while 

defendants contend that the geographic scope of discovery should be limited to defendants’ 

actions at REC only. Second, relator plaintiffs seek to compel discovery covering the period from 

January 1, 2008 through the present, while defendants argue that only discovery concerning the 

timeframe in which the relator plaintiffs were employed at REC is warranted. The court will 

address each of these disputes in turn.

A. Geographic Scope of Discovery

With respect to the geographic scope of discovery, relator plaintiffs argue that the 

allegations of their amended complaint demonstrate that their claims are national in scope, 

therefore necessitating discovery relating to all of the ASCs owned and operated by AmSurg 

Corp. nationwide. Relator plaintiffs argue in the alternative that staged discovery initially 

limiting the geographic scope to AmSurg Corp.’s ASCs in California only would be appropriate 

and could diminish the burden that would be imposed by nationwide discovery.

The court finds that the factual allegations of the first amended complaint do not show that 

the scope of discovery to be produced by defendants should be expanded to cover all ASCs 

owned by AmSurg Corp. located nationwide, or even within the smaller geographic region of 

California. Relator plaintiffs contend that allegations concerning AmSurg Corp.’s national 

directive to its ASCs to increase patient volume in order to drive revenues gives rise to a 

reasonable inference that similar fraudulent conduct was also being carried out at ASCs other 

than REC. However, while it is conceivable that such a policy could have incentivized fraudulent 

behavior at AmSurg Corp.’s other ASCs similar to that alleged against defendants with regard to 

REC, the existence of such a policy, without more, does not create a plausible inference that 

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similar misconduct has occurred at those other centers. A directive to increase the number of 

patients does not necessarily mean that AmSurg Corp. directed its ASCs to engage in the 

fraudulent practices alleged with regard to REC. Indeed, such a directive may just as well have 

driven the other ASCs to increase patient volume through non-fraudulent means. There are 

simply no other factual allegations in the first amended complaint that plausibly suggest that 

AmSurg Corp.’s national directive commanded the sort of fraud alleged against REC or otherwise 

led its other ASCs to commit similar violations.

The allegations of the first amended complaint fail to provide a factual basis for 

nationwide discovery as they do not plausibly indicate that the alleged fraudulent conduct has 

occurred outside of REC. Relator plaintiffs’ factual allegations focus entirely on defendants’ 

activities at REC. ECF No. 23 at 24-25. While they also allege “that the conduct that the 

Relators observed during their employment with AmSurg represents the standard practice of the 

entire AmSurg corporate enterprise” and that “[o]ther ASCs controlled by AmSurg are 

committing the same type of conduct,” id. at ¶¶ 82-83, there are no factual allegations in the first 

amended complaint that would plausibly support these conclusory allegations or otherwise 

indicate that AmSurg Corp.’s other ASCs engaged in the misconduct alleged with respect to

REC. Indeed, the fact that the first amended complaint alleges facts showing the submission of 

false claims from only a single ASC more strongly inplies that such practices were not 

widespread. Cf. U.S. ex rel. Spay v. CVS Caremark Corp., 913 F. Supp. 2d 125, 177 (E.D. Pa. 

2012) (finding that relator plaintiffs’ allegations created “a strong inference that Defendants 

submitted false claims nationwide” because they identified a large number of false claims coming 

out of defendants’ facilities “in at least three states and Puerto Rico”). 

In addition, the declaration of Deborah Miller filed in support of defendants’ opposition to 

relator plaintiffs’ motion to compel states that AmSurg Corp. does not engage in the clinical 

management or billing operations for its ASCs, which are handled either by the physicians or 

board of directors at each ASC. Declaration of Deborah Miller, ECF No. 73-1, Exh. 10, (“Miller 

Decl.”) at ¶ 8. This indicates that the actual decisions regarding whether to obtain H&Ps or other 

required assessments prior to operating on patients and then to submit Medicare or Medi-Cal

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billing claims for those operations is not dictated by AmSurg Corp.’s national directives, but by 

the individuals working locally at the individual ASC. This evidence, when taken into 

consideration with the allegations of the first amended complaint, strongly suggests that the fraud 

alleged against REC was only local to that center. Accordingly, relator plaintiffs fail to 

demonstrate that discovery relating to ASCs other than REC is relevant to their claims at this 

juncture.

Moreover, relator plaintiffs’ request for discovery relating to AmSurg Corp.’s 246 ASCs

nationwide, which are located in 34 different states, would be disproportionate to their discovery 

needs. Defendants show that there is no central nationwide database from which they can obtain 

the requested documents for each ASC. See Miller Decl. at ¶ 7. Therefore, permitting 

nationwide discovery would likely cause an extreme burden on defendants, who would have to 

conduct an individualized collection of relevant documents from each ASC. Defendants would 

be burdened even further given that they would need to carry out what would likely be a massive 

production effort before the fast-approaching February 4, 2016 fact discovery deadline currently 

in place in this action. See ECF No. 50. 

Similarly, relator plaintiffs’ alternative request for discovery regarding only California 

ASCs also is disproportionate to their needs for discovery concerning their claims. Defendants’ 

Miller Declaration notes that AmSurg Corp.’s “Western Region” consists of 14 ASCs located in 

either California or Arizona. Miller Decl. at ¶ 3. While this presents a smaller geographic scope 

compared to relator plaintiffs’ primary request for national discovery, it is still disproportionate to 

plaintiff’s need for discovery relating to ASCs other than REC because relator plaintiffs’ 

allegations are almost exclusively centered on defendants’ actions involving REC. Furthermore, 

given the time constraints posed by the impending fact discovery deadline and the fact that each 

ASC maintains its own information separate from the others, it may not be reasonably feasible for 

defendants to produce this information in a timely manner.

The burden caused by the wide-ranging scope of discovery sought by relator plaintiffs and 

the fact that their allegations only indirectly relate to AmSurg Corp.’s national activities 

concerning the operation of its ASCs tips the balance in favor of the more limited geographic 

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scope advocated by defendants. Accordingly, the court will deny relator plaintiffs’ motion to 

compel insofar as it seeks discovery related to AmSurg Corp.’s ASCs other than REC.

B. Temporal Scope of Discovery

Defendants argue that the temporal scope of discovery should be limited to only the 

period between September 1, 2010 and January 17, 2011, which was time when relator plaintiffs’ 

employment contracts with defendants were in effect. However, the limitation of a relator’s 

discovery rights to only the duration of his or her employment contract would undermine the 

purpose behind qui tam actions under the federal and California FCAs, which is to vindicate the 

government’s rights with regard to a defendant contractor’s fraudulent activity. Such a restraint 

regarding the discoverable timeframe would place a limit on qui tam actions that do not exist for 

government-initiated actions. “Additionally, it would dissuade whistleblowing by limiting a 

relator’s claim, not to the plausible allegations regarding the submission of false claims—which is 

the [FCA’s] focus—but to the duration of the relator’s employment, on which the [FCA] is 

silent.” U.S. ex rel. Fiederer v. Healing Hearts Home Care, Inc., 2014 WL 4666531, at *5 (D. 

Nev. Sept. 18, 2014).1 The mere fact that relator plaintiffs here allege that they worked for 

defendants at REC for a limited period of time does not mean that their FCA claims are 

necessarily limited in scope to only that time. See U.S. ex rel. Walker, 433 F.3d at 1359 

(reversing district court’s discovery order limiting the scope discovery on FCA claim to the 

relator plaintiff’s term of employment with defendant because the relator plaintiff ‘s complaint 

alleged that defendant engaged in fraudulent conduct prior to, during, and after that timeframe); 

U.S. ex rel. Fiederer, 2014 WL 4666531, at *5 (finding defendants’ argument that the scope of 

discovery relating to FCA claim should be limited to the duration of the relator plaintiff’s 

employment to lack merit because such a limit “would weaken the [FCA] by placing limits on qui 

tam actions that do not exist for government-initiated actions”).

 

1 Because the California False Claims Act]“is patterned on [the federal False Claims Act,] . . . it is 

appropriate to look to precedent construing the equivalent federal act.” State v. Altus Fin., S.A., 

36 Cal. 4th 1284, 1299 (2005).

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Furthermore, the allegations of the first amended complaint demonstrate that the scope of 

relator plaintiffs’ claims concern fraudulent practices by defendants that occurred prior to, during, 

and after relator plaintiffs’ employment at REC. For example, paragraph 49 of the first amended 

complaint alleges that after relator plaintiffs raised the issue of defendants’ failure to perform the 

required comprehensive H&Ps and pre-surgical assessments during a meeting in October of 2010, 

relator plaintiff Dalitz was pulled aside by Penny Workman, REC’s office manager and 

Registered Nurse, who informed him that defendants had previously been cited by the State of 

California for failing to perform such assessments on a cardiac patient at REC. ECF No. 23 at ¶ 

49. This allegation plausibly indicates that the alleged wrongful behavior occurred prior to the 

time relator plaintiffs were employed at REC. The allegations of the amended complaint further 

indicate that the alleged fraudulent practice at REC began on or about December 5, 2008, when 

REC began to operate under AmSurg Corp.’s partial ownership. ECF No. 23 at ¶¶ 9-18.

Also in paragraph 49, relator plaintiffs allege that the “REC Physicians and staff made no 

attempts to correct their procedures regarding the comprehensive H&P and pre-surgical 

assessment requirement” after relator plaintiffs had raised their concerns regarding noncompliance. Id. Relator plaintiffs then go on to allege that on December 13, 2010, just days 

before their employment with REC was terminated by defendants, they attended a meeting with 

some of the defendants and again informed them of the need to comply with the relevant 

regulations, but that “no resolution was reached.” Id. at ¶¶ 57-58. These allegations plausibly

demonstrate that the regulatory violations and fraudulent billing claims on which relator 

plaintiffs’ claims are based continued to occur after the termination of their employment.

Relator plaintiffs request that an order compelling defendants to produce discovery 

encompassing the period from January 1, 2008 through the present. However, relator plaintiffs

fail to demonstrate why discovery dating back to January 1, 2008 is relevant to the claims at issue 

in this action. As noted above, the court finds that the allegations of the first amended complaint 

plausibly indicate that defendants began to engage in the alleged fraudulent scheme beginning on 

December 5, 2008, the date on which REC began it operations under the majority ownership of

AmSurg Corp.

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Similarly, while relator plaintiffs’ allegations plausibly demonstrate that defendants’ 

fraudulent activity continued after the expiration of relator plaintiffs’ employment contracts, those 

allegations do not warrant discovery concerning the time after August 27, 2012, the date on which 

the original complaint was filed in this action. Relator plaintiffs’ allegations with regard to 

defendants’ actions at REC repeatedly refer to those actions in the past tense, strongly suggesting 

that relator plaintiffs’ claims are limited to the time frame prior to the date on which this action 

was initiated. See generally, ECF No. 23 at ¶¶ 42-61. Accordingly, the period between the filing 

date of the original complaint and the present does not appear to fall within the scope of relator 

plaintiffs’ allegations. Therefore, the court finds that relator plaintiffs fail to demonstrate how the 

discovery they request relating to the time after their complaint was filed is relevant to their 

claims at issue in this matter.

For the foregoing reasons, the court determines that the proper temporal scope of 

discovery relevant to the allegations of the first amended complaint is from December 5, 2008

through August 27, 2012. Discovery covering such a period appears proportional to the needs of 

this case. As noted above, the complaint sets forth allegations pertaining to defendants’ 

fraudulent actions at REC that make the requested discovery concerning this timeframe 

reasonably necessary to further relator plaintiffs’ claims. Furthermore, the parties note in their 

joint statement concerning the present motion that defendants have already produced discovery

relating to REC for the timeframe encompassing relator plaintiffs’ employment at that facility. 

Accordingly, it appears that defendants would be able to produce similar discovery covering the 

rest of the relevant timeframe without great difficulty or undue burden. Therefore, the court finds 

that relator plaintiffs are entitled to the requested discovery insofar as it concerns the period of 

December 5, 2008 through August 27, 2012.

/////

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/////

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/////

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IV. Conclusion

For the reasons discussed above, IT IS HEREBY ORDERED that relator plaintiffs’ 

motion to compel, ECF No. 72, is granted in part:

1. With regard to the geographic scope of discovery, defendants shall supplement their 

responses to relator plaintiffs’ discovery requests by producing any relevant and 

nonprivileged material concerning defendants’ activities at REC. Relator Plaintiffs’ 

motion to compel is denied insofar as it seeks discovery concerning AmSurg Corp.’s 

other ASCs and national or regional activities not directly relevant to plaintiff’s 

allegations regarding defendants’ activities at REC.

2. With regard to the temporal scope of discovery, defendants shall produce any relevant 

and nonprivileged discovery responsive to relator plaintiffs’ discovery requests 

covering the period of December 5, 2008 through August 27, 2012.

Dated: December 14, 2015

11 dalitz2218.mtc

_____________________________________

CAROLYN K. DELANEY

UNITED STATES MAGISTRATE JUDGE

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