{8948934: } 1

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF FLORIDA

Case No. 

Thomas W. Waldrep, Jr., 

Chapter 11 Trustee,

Movant, Underlying litigation:

In re CAH Acquisition Company #1 

LLC d/b/a Washington County 

Hospital et al.,

Case No. 19-00730-5-JNC

v. United States Bankruptcy Court

for the Eastern District of North 

Carolina

EmpowerHMS LLC and Empower H.I.S. LLC

Respondents.

______________________________________

TRUSTEE’S MOTION TO COMPEL EMPOWERHMS LLC AND 

EMPOWER H.I.S. LLC’S COMPLIANCE WITH SUBPOENAS

Pursuant to Rule 45 of the Federal Rules of Civil Procedure, Movant Thomas W. 

Waldrep Jr., Chapter 11 Trustee (the “Trustee”) in certain cases under title 11 of chapter 11 of 

the United States Bankruptcy Code, pending in the United States Bankruptcy Court for the 

Eastern District of North Carolina (the “Chapter 11 Cases”),

1

respectfully requests that the Court 

enter an Order compelling Respondents EmpowerHMS LLC and Empower H.I.S. LLC

(together, “Empower”) to comply with the document and deposition subpoenas the Trustee 

served on Empower in the Chapter 11 Cases. 

 

1

The Chapter 11 Cases are In re CAH Acquisition Company #1 LLC d/b/a Washington County Hospital, Case No. 

19-00730-5-JNC, In re CAH Acquisition Company #2, LLC, d/b/a Oswego Community Hospital, Case No. 19-

01230-5-JNC, In re CAH Acquisition Company #3, LLC, d/b/a Horton Community Hospital, Case No. 19-01180-5-

JNC, In re CAG Acquisition Company 6, LLC, d/b/a I-70 Community Hospital, Case No. 19-01300-5-JNC, In re 

CAH Acquisition Company 7, LLC d/b/a Prague Community Hospital, Case No. 19-01298-5-JNC, In re CAH 

Acquisition Company 12, LLC, d/b/a Fairfax Community Hospital, Case No. 19-01697-5-JNC, and In re CAH 

Acquisition Company 16, LLC d/b/a Haskell County Community Hospital, Case No. 19-01227-5-JNC.

Case 1:20-mc-22954-UU Document 1 Entered on FLSD Docket 07/17/2020 Page 1 of 14
{8948934: } 2

The Debtors in the Chapter 11 Cases owned and operated for-profit, critical access 

hospitals in small rural areas in North Carolina, Kansas, Missouri, and Oklahoma. Empower 

served as the management company for the Debtors’ hospitals until late 2018. 

The Debtors’ estates appear to have been victims of an allegedly fraudulent and unlawful 

laboratory specimen billing scheme. The Trustee is conducting an investigation to determine 

whether to bring certain causes of action relating to the billing scheme, including claims for 

fraud, unjust enrichment, fraudulent transfers, and preferences, among others. After receiving 

leave of the bankruptcy court, on June 4, 2020 and June 8, 2020 the Trustee served deposition 

and document subpoenas on Empower in each of the Chapter 11 Cases for, among other things, 

all documents and communications regarding reimbursement rates and amounts billed to patients 

and/or insurance companies for laboratory testing procedures.

To date, Empower has not responded to the subpoena or otherwise contacted the Trustee, 

even though Empower’s deadline produce responsive documents was June 19, 2020, and even 

though an Empower representative was required to appear for deposition on July 10, 2020. 

Accordingly, the Trustee moves for an order compelling Empower to comply with the 

subpoenas. The Trustee also seeks to recover fees and expenses incurred in bringing this Motion, 

or, alternatively, an order of contempt against Empower.

The Trustee’s Motion to Compel is supported by the attached and incorporated 

memorandum of law and exhibits attached thereto.

Dated this 17

th day of July, 2020.

Case 1:20-mc-22954-UU Document 1 Entered on FLSD Docket 07/17/2020 Page 2 of 14
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/s/ Alan Burger__________ 

ALAN BURGER

Florida Bar No. 0833290

McDonald Hopkins PLC 

505 South Flagler Drive, Suite 300

West Palm Beach, FL 33401 

Telephone: (561) 472-2121

Fax: (561) 472-2122 

aburger@mcdonaldhopkins.com

Attorney for Chapter 11 Trustee

Case 1:20-mc-22954-UU Document 1 Entered on FLSD Docket 07/17/2020 Page 3 of 14
{8948934: } 1

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF FLORIDA

Case No. 

Thomas W. Waldrep, Jr., 

Chapter 11 Trustee,

Movant, Underlying litigation:

In re CAH Acquisition Company #1 

LLC d/b/a Washington County 

Hospital et al.,

Case No. 19-00730-5-JNC

v. United States Bankruptcy Court

for the Eastern District of North 

Carolina

EmpowerHMS LLC and Empower H.I.S. LLC

Respondents.

______________________________________

MEMORANDUM OF LAW IN SUPPORT OF TRUSTEE’S MOTION

TO COMPEL EMPOWERHMS LLC AND EMPOWER H.I.S. LLC

TO COMPLY WITH SUBPOENAS

I. INTRODUCTION

This motion arises out of the efforts of a bankruptcy trustee’s efforts to investigate an 

allegedly-fraudulent laboratory specimen billing scheme at a number of rural hospitals. As part 

of the investigation, Thomas W. Waldrep, Jr., Chapter 11 Trustee (the “Trustee”) in certain cases 

under title 11 of chapter 11 of the United States Bankruptcy Code, pending in the United States 

Bankruptcy Court for the Eastern District of North Carolina (the “Chapter 11 Cases”),1has 

subpoenaed documents and testimony from two entities, EmpowerHMS LLC and Empower 

 

1

The Chapter 11 Cases are In re CAH Acquisition Company #1 LLC d/b/a Washington County Hospital, Case No. 

19-00730-5-JNC, In re CAH Acquisition Company #2, LLC, d/b/a Oswego Community Hospital, Case No. 19-

01230-5-JNC, In re CAH Acquisition Company #3, LLC, d/b/a Horton Community Hospital, Case No. 19-01180-5-

JNC, In re CAG Acquisition Company 6, LLC, d/b/a I-70 Community Hospital, Case No. 19-01300-5-JNC, In re 

CAH Acquisition Company 7, LLC d/b/a Prague Community Hospital, Case No. 19-01298-5-JNC, In re CAH 

Acquisition Company 12, LLC, d/b/a Fairfax Community Hospital, Case No. 19-01697-5-JNC, and In re CAH 

Acquisition Company 16, LLC d/b/a Haskell County Community Hospital, Case No. 19-01227-5-JNC.

Case 1:20-mc-22954-UU Document 1 Entered on FLSD Docket 07/17/2020 Page 4 of 14
{8948934: } 2

H.I.S. LLC (collectively, “Empower”), that managed the hospitals until late 2018. The subpoenas 

seek billing records, reimbursement information, laboratory data, and contracts between the 

debtors and third-parties and deposition testimony regarding the same. That information is 

critical to the Trustee’s investigation and to establishing causes of action based on the fraudulent 

billing scheme. 

To date, Empower has not responded to the subpoenas, even though its deadline to 

produce responsive documents was June 19, 2020, and even though an Empower representative 

was required to appear for deposition on July 10, 2020. Nor has Empower contacted the Trustee 

to discuss the subpoenas or to provide information on when it may respond. Accordingly, the 

Trustee respectfully requests an order compelling Empower to produce all responsive documents 

in its possession, custody, and control, and to designate a representative to appear for deposition. 

II. JURISDICTION AND VENUE.

This Court has subject matter jurisdiction over this matter at least under Fed. R. Civ. P. 

45 and the Rules Enabling Act, 28 U.S.C. § 2072. This Court has personal jurisdiction over 

Empower H.I.S. LLC because it is a Florida corporation with, on information and belief, its 

principal place of business at 8724 SW 72 ST #459, Miami FL 33173, and because it has 

minimum contacts out of which this action arises such that the exercise of personal jurisdiction 

satisfies due process. This Court has personal jurisdiction over EmpowerHMS LLC because it is 

a Delaware corporation with, on information and belief, its principal place of business at 8724

SW 72 ST #459, Miami FL 33173, and because it has minimum contacts out of which this action 

arises such that the exercise of personal jurisdiction satisfies due process. Venue is proper under 

28 U.S.C. § 1391 because Empower resides in this District and a substantial portion of the events 

or omissions giving rise to this matter occurred in this District.

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III. FACTS

A. The Chapter 11 Cases.

The Debtors owned and operated for-profit, critical access hospitals (collectively, the 

“Hospitals”) that provided acute care, swing bed, emergency medicine, imaging, rehabilitation, 

laboratory, and related outpatient ancillary services in small rural areas in North Carolina, 

Kansas, Missouri, and Oklahoma. 

On February 19, 2019 (the “Petition Date”), Washington County, North Carolina, 

Medline Industries, Inc., and Dr. Robert Venable (collectively, the “Petitioning Creditors”) filed 

an involuntary petition for relief under Chapter 7 of the Bankruptcy Code against CAH 

Acquisition Company 1, LLC d/b/a Washington County Hospital (“CAH 1”). On February 22, 

2019, the Court entered an order approving the Trustee as interim trustee for CAH 1’s

bankruptcy estate. On March 15, 2019 CAH 1’s bankruptcy case was converted from Chapter 7 

to Chapter 11, and the Trustee was appointed as the Chapter 11 trustee for CAH 1 pursuant to 

section 1104 of the Bankruptcy Code.

In March and April 2019, six of CAH 1’s affiliates, CAH Acquisition Company 2, LLC 

(Case No. 19-01230), CAH Acquisition Company 3, LLC (Case No. 19-01180), CAH 

Acquisition Company 6, LLC (Case No. 01300), CAH Acquisition Company 7, LLC (Case No. 

19-01298), CAH Acquisition Company 12, LLC (Case No. 19-01697), and CAH Acquisition 

Company 16, LLC (Case No. 19-01227) (collectively with CAH 1, the “Debtors”) filed 

voluntary petitions for relief under Chapter 11 of the Bankruptcy Code. The Trustee has also 

been appointed as the Chapter 11 trustee in each of the Chapter 11 Cases. The Chapter 11 Cases 

are being jointly administered by the Court. Some of the Hospitals are still operating and others 

have been closed.

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The Debtors’ estates appear to have been victims of an allegedly fraudulent and unlawful 

laboratory specimen billing scheme. Those directing the Debtors’ activities at the time were 

Jorge Perez (one of the indirect owners of the Hospitals), Empower (a management company 

owned by Mr. Perez and others that managed the Hospitals from 2017 through late 2018), and 

other parties. The facts and circumstances of the billing scheme are collectively referred to 

herein as the “Billing Scheme”).

B. The Subpoenas.

On May 26, 2020, the Trustee filed an Ex Parte Motion for Production of Documents and 

Examination Pursuant to Bankruptcy Rule 2004 in each of the Chapter 11 Cases (the “2004 

Motions”). In the 2004 Motions, the Trustee sought entry of orders requiring Empower to 

produce documents and communications relating to the Billing Scheme, and for its

representatives to appear for depositions on oral examination. Specifically, the proposed 

subpoenas to Empower, copies of which are attached hereto as Exhibits A and B, sought:

1. All documents and communications regarding the Billing Scheme;

2. All documents and communications regarding [each CAH entity’s] provision of 

laboratory testing services from march 1, 2017 to March 15, 2019;

3. All documents and communications regarding reimbursement rates for laboratory 

testing procedures at [each CAH entity] from March 1, 2017 to March 15, 2019;

4. All documents and communications regarding amounts billed to patients and/or 

insurance companies for laboratory testing procedures at [each CAH entity] from 

March 1, 2017 to March 15, 2019;

5. All documents and communications regarding agreements between [each CAH 

entity] and reference laboratories (“Reference Labs”) existing between March 1, 

2017 and March 15, 2019; 

6. All documents and communications regarding Reference Labs’ provision of 

laboratory testing services billed through [each CAH entity] from March 1, 2017 

to March 15, 2019;

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7. All documents and communications regarding amounts [each CAH entity], 

Reference labs, EmpowerHMS, Empower H.I.S., and/or iHealthcare (the entity 

that assumed management responsibility from Empower in late 2018) received for 

laboratory testing services billed through [each CAH entity] from March 1, 2017 

to March 15, 2019;

8. All documents and communications regarding contracts, agreements, or 

arrangement between [each CAH entity], EmpowerHMS, Empower H.I.S., or 

iHealthcare on the one hand, and third-party vendors or marketers on the other in 

existence from March 1, 2017 to March 15, 2019; and

9. All documents and communications regarding payments [each CAH entity], 

EmpowerHMS, Empower H.I.S., and/or iHealthcare made to third-party vendors 

or marketers on account of their participation in the Billing Scheme from March 

1, 2017 to the present. 

The Bankruptcy Court granted each of the 2004 Motions between May 28, 2020 and June 

2, 2020, authorizing the Trustee to issue subpoenas (the “Subpoenas”) to Empower. Copies of 

the Bankruptcy Court’s orders granting the 2004 Motions are attached hereto as Exhibits C

through I. 

On June 4, 2020, the Trustee served the subpoenas on Empower H.I.S. Proof of service 

on Empower H.I.S. is attached hereto as Exhibit J. On June 8, 2020, the Trustee served the 

subpoenas on EmpowerHMS. Proof of service on EmpowerHMS is attached hereto as Exhibit K. 

The subpoenas required Empower to produce responsive materials by June 19, 2020, and also 

required a representative from Empower to appear for deposition on July 10, 2020 at 10:00 a.m.

Empower did not serve objections within 14 days of service, as required by Federal Rule 

of Civil Procedure 45(d)(2)(B). Empower also did not produce any responsive materials on the 

June 19, 2020 return date and has not subsequently produced any documents. No Empower 

representative appeared for deposition on July 10, 2020. No one from Empower has been in 

communication with the Trustee regarding the subpoenas. 

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IV. LAW & ARGUMENT

A. Standard.

Federal Rule of Civil Procedure 26(b)(1) defines the scope of discovery as follows: “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.” Fed. R. Civ. P. 26(b)(1). Consistent with the 

spirit and purpose of the broad discovery rules, federal courts are to employ a liberal discovery 

standard. See Milinazzo v. State Farm Ins. Co., 247 F.R.D. 691, 695 (S.D. Fla. 2007). Moreover, 

the Trustee’s discovery is being conducted pursuant to Federal Rule of Bankruptcy Procedure 

2004, which provides for an even broader right to discovery than pursuant to Fed. R. Civ. P. 26, 

indeed, allowing for what might properly be referred to as a “fishing expedition.” See In re 

Drexel Burnham Lambert Group, Inc., 132 B.R. 702, 711 (Bankr. S.D.N.Y, 1991) (holding 

“Rule 2004 discovery is broader than discovery under the Federal Rules of Civil Procedure, and 

has fewer procedural safeguards. It can be legitimately compared to a fishing expedition.”) 

Rule 45 permits a party to obtain relevant information in the form of documents or 

deposition testimony from a non-party through issuance of a subpoena. See Fed. R. Civ. P. 45. 

See Datta v. Armor Correctional Health Services, Inc., No. 8:15-cv-601-T-27TBM, 2015 WL 

12838185, at *2 (M.D. Fla. July 17, 2015); see also Fisher v. Marubeni Cotton Corp., 526 F.2d 

1338, 1341 (8th Cir.1975) (subpoena duces tecum is the only way to compel a nonparty to 

produce documents or other materials); Southeastern Mechanical Services, Inc. v. Brody, Case 

No. 1:09–CV–0086, 2009 WL 3095642, at *2 (N.D. Ga. June 22, 2009) (same, and noting that 

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Rule 45, as revised in 2006, also provides for the production of electronically stored information 

(“ESI”) by a nonparty). Further, Rule 45 authorizes a party serving a subpoena, like the Trustee, 

to “move the court for the district where compliance is required for an order compelling 

production or inspection.” Fed. R. Civ. P. 45(d)(2)(B)(i); see also Fed. R. Civ. P. 37(a)(1). 

B. Empower Has Failed to Respond to the Subpoenas. 

Empower was served with valid subpoenas requiring it to produce responsive materials 

by June 19, 2020, and requiring its representative to appear for a deposition on July 10, 2020. 

Yet Empower failed to produce any responsive documents or appear for deposition, and has not 

contacted the Trustee in any way to discuss the subpoenas or to indicate that a response to the 

subpoenas will be forthcoming. Empower’s failure to respond to the subpoenas is a flagrant 

violation of its obligations under Rule 45, and this Court should grant the Trustee’s motion to 

compel Empower’s responses. See Rodriguez v. Niagra Cleaning Servs., Inc., No. 09-22645, 

2010 WL 1507043, at *1 (S.D. Fla. Apr. 14, 2010) (granting motion to compel where third party 

failed to respond to subpoena); Credit Suisse Securities (USA) LLC v. Nash, No. 14-80392, 2014 

WL 1258650, at *1 (S.D. Fla. Oct. 3, 2014) (same). 

C. The Trustee is Entitled to Reasonable Attorney’s Fees or an Order of Contempt

Because of Empower’s Failure to Respond to the Subpoenas.

Rule 37(a)(5) of the Federal Rules of Civil Procedure requires courts to impose an award 

of expenses in connection with a discovery motion unless the court finds one of the limited 

exceptions available. See Adelman v. Boy Scouts of America, 276 F.R.D. 681, 699–700 (S.D. 

Fla. 2011) (awarding attorney’s fees for Plaintiff’s motion to compel where Defendant asserted 

baseless relevancy, confidentiality, and privacy objections, and thus “made discovery decisions 

which required Plaintiffs to file a motion to compel.”). These exceptions include: (i) the 

requesting party failed to make a good faith attempt to obtain the discovery without a court 

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{8948934: } 8

order; (ii) the responding party’s position was substantially justified; or (iii) other circumstances 

make an award of expenses unjust. Nationwide Mut. Fire Ins. Co. v. Kelt, Inc., No. , 2015 WL 

1470971, *12 (M.D. Fla. 2015) (awarding attorney’s fees for Defendant’s motion to compel after 

Plaintiff asserted multiple boilerplate objections to discovery requests). Additionally, the court is 

not required to find that a party acted in bad faith before awarding fees. Adelman, 276 F.R.D. at 

700.

Here, the Trustee is entitled to an award of reasonable attorney’s fees in connection with 

the Motion to Compel, as Empower has failed to respond to the subpoenas within the time 

allotted. As a result, the Trustee has been forced to file the instant Motion to Compel. 

Alternatively, this Court should hold Empower in contempt pursuant to Federal Rule of Civil 

Prorcedure 45(g), which provides, “[t]he court for the district where compliance is required . . . 

may hold in contempt a person who, having been served, fails without adequate excuse to obey 

the subpoena or an order related to it.” Fed. R. Civ. P. 45(g). 

V. CONCLUSION

For all of the foregoing reasons, the Trustee respectfully requests that the Court grant the 

Trustee’s Motion to Compel and enter an Order requiring Empower to produce all documents 

responsive to the subpoenas in its possession, custody, or control, and requiring an Empower 

representative to appear for deposition. The Trustee further requests its reasonable expenses, 

including attorney’s fees, caused by Empower’s refusal to comply with the subpoenas, or, 

alternatively, that this Court hold Empower in contempt. The Trustee also requests such further 

relief this Court deems just and proper. 

Dated this 17

th day of July, 2020.

Respectfully submitted,

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/s/ Alan Burger__________ 

ALAN BURGER

Florida Bar No. 0833290

McDonald Hopkins PLC

505 South Flagler Drive, Suite 300

West Palm Beach, FL 33401 

Telephone: (561) 472-2121

Fax: (561) 472-2122 

aburger@mcdonaldhopkins.com

Attorney for the Trustee

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CERTIFICATE OF CONFERENCE

I certify that the Trustee’s counsel has been unable to confer with Empower regarding the 

relief requested in this Motion because Empower has not responded to the subpoenas and has not 

otherwise contacted the Trustee to discuss the subpoenas. 

/s/ Alan Burger__________ 

ALAN BURGER

Florida Bar No. 0833290

McDonald Hopkins PLC 

505 South Flagler Drive, Suite 300

West Palm Beach, FL 33401 

Telephone: (561) 472-2121

Fax: (561) 472-2122 

aburger@mcdonaldhopkins.com

Attorney for the Trustee

Case 1:20-mc-22954-UU Document 1 Entered on FLSD Docket 07/17/2020 Page 13 of 14
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CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy of the foregoing Trustee’s Motion to 

Compel EmpowerHMS LLC and Empower H.I.S. LLC’s Compliance With Subpoenas was 

electronically filed with the Clerk of the Court using CM/ECF on this 17th day of July, 2020. I 

also certify that the foregoing document is being served this day on counsel of record via 

transmission of Notices of Electronic Filing generated by CM/ECF and I also certify that a true 

and correct copy of the Motion is being furnished via overnight delivery to Empower at the 

following addresses:

Empower H.I.S. LLC

8724 SW 72 ST #459

Miami FL 33173

EmpowerHMS LLC

c/o The Company Corporation, Registered Agent

251 Little Falls Drive

Wilmington DE 19808

/s/ Alan Burger__________ 

ALAN BURGER

Florida Bar No. 0833290

McDonald Hopkins PLC 

505 South Flagler Drive, Suite 300

West Palm Beach, FL 33401 

Telephone: (561) 472-2121

Fax: (561) 472-2122 

aburger@mcdonaldhopkins.com

Attorney for the Trustee

Case 1:20-mc-22954-UU Document 1 Entered on FLSD Docket 07/17/2020 Page 14 of 14