Ingham Regional Medical Center v. United States ( 2020 )

In the United States Court of Federal Claims
No. 13–821
(Filed Under Seal: 6 January 2020)
(Reissued for Publication: 14 January 2020) *
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INGHAM REGIONAL MEDICAL *
CENTER et al., *
*
Plaintiffs, *
v. * Work Product Doctrine; Motion to Compel;
* RCFC 26(b)(3).
THE UNITED STATES, *
*
Defendant. *
*
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Alexander J. Pires, Pires Cooley, Washington, DC, with whom was Gregory A. Brodek, of
counsel, Duane Morris LLP, Bangor, ME, for plaintiffs.
A. Bondurant Eley, Senior Trial Counsel, with whom were Joseph H. Hunt, Assistant Attorney
General, Steven J. Gillingham, Assistant Director, and Robert E. Kirshman, Jr., Director,
Commercial Litigation Branch, Civil Division, Department of Justice, Washington, DC, for
defendant.
*
This Opinion and Order was originally filed under seal, to allow the parties the opportunity to propose redactions.
No redactions were proposed. The order is reissued for publication with a few minor, non-substantive corrections.
OPINION AND ORDER
HOLTE, Judge.
Plaintiffs Ingham Regional Medical Center (“Ingham”), Bay Regional Medical Center,
McLaren Northern Michigan, Gifford Medical Center, Inc., and Lakewood Health System
(collectively, “plaintiffs”), allege the United States, acting through the Secretary of the
Department of Defense (“DoD”) in his official capacity as operator of TRICARE, underpaid
them for medical services they administered through the TRICARE program. Pending before the
Court are five motions: (1) Plaintiffs’ Motion for Determination that Certain Documents
Produced in Discovery are not Privileged or Subject to the Work Product Doctrine, ECF No. 106
(“Pls.’ Mot.”); (2) Plaintiffs’ Motion to Compel Deposition Testimony, ECF No. 109 (“Pls.’
Mot. to Comp.”); (3) Defendant’s Motion to Seal Plaintiffs’ Motion to Compel, ECF No. 111;
(4) Defendant’s Response to Plaintiffs’ Motion to Compel and Defendant’s Motion to Strike
Portions of Plaintiffs’ Expert Report that Rely Solely upon Privileged Material, ECF No. 113
(“Def.’s Resp. to Pls.’ Mot. to Comp.”); and (5) Defendant’s Motion to Seal Plaintiffs’ Reply to
Defendant’s Response to Plaintiffs’ Motion to Compel and Plaintiffs’ Opposition to Defendant’s
Motion to Strike, ECF No. 117. The Court held oral argument on these motions on 7 October
2019. For the following reasons, the Court GRANTS plaintiffs’ motions and DENIES the
government’s motions.
I. Background
TRICARE is a “military health care system” that “provides medical and dental care for
current and former members of the military and their dependents.” Ingham Reg’l Med. Ctr. v.
United States, 874 F.3d 1341, 1342 (Fed. Cir. 2017). TRICARE Management Activity
(“TMA”), a “field office in the Defense Department,” managed and oversaw TRICARE. 1 N.
Mich. Hosps., Inc. v. Health Net Fed. Servs., LLC, 344 F. App’x 731, 734 (3d Cir. 2009).
Hospitals providing TRICARE services are reimbursed according to DoD guidelines. Ingham
Reg’l Med. Ctr., 874 F.3d at 1343 (citing 32 C.F.R. § 199.14). In 2001, the TRICARE statute
was amended to require DoD to use Medicare reimbursement rules when reimbursing outside
healthcare providers, which DoD was not previously required to do. Id. At the time, adopting
Medicare reimbursement rules was impractical for TRICARE due to “the lack of TRICARE cost
report data comparable to Medicare’s.” Id. (quoting TRICARE; Sub-Acute Care Program;
Uniform Skilled Nursing Facility Benefit; Home Health Care Benefit; Adopting Medicare
Payment Methods for Skilled Nursing Facilities and Home Health Care Providers, 67 Fed. Reg.
40,597–02, 40,601 (June 13, 2002)). In 2005, DoD issued a Final Rule, “which provided a more
detailed explanation of the payment rules for hospital-based outpatient services.” Id. That rule
specified, “[f]or most outpatient services, hospitals would receive payments ‘based on the
TRICARE-allowable cost method in effect for professional providers or the [Civilian Health and
Medical Program of the Uniformed Services (“CHAMPUS”)] Maximum Allowable Charge
(CMAC).’” Id. (quoting TRICARE; Sub-Acute Care Program; Uniform Skilled Nursing Facility
Benefit; Home Health Care Benefit; Adopting Medicare Payment Methods for Skilled Nursing
Facilities and Home Health Care Providers, 70 Fed. Reg. 61,368–01, 61,371 (Oct. 24, 2005)
1
TMA is now known as the Defense Health Agency (“DHA”).
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(codified at 33 C.F.R. pt. 199)). These rules “applied until 2009, when TRICARE introduced a
new payment system for hospital outpatient services that was similar to the Medicare [Outpatient
Prospective Payment System] rules.” Id.A group of hospitals (hereinafter referred to as “the 400 Hospitals”) “complained that
CMAC was only intended to be used for individual health care providers, not institutions with
large overhead costs.” 2 Ingham Reg’l Med. Ctr., 874 F.3d at 1343. The 400 Hospitals are a
separate, but similarly situated group of hospitals as plaintiffs in this case, who seek to represent
a group of approximately 1,610 hospitals. 3 See Pls.’ Mot. to Certify Class Action & Appoint
Class Counsel, ECF No. 77 (“Pls.’ Mot. to Certify”). In response to hospital complaints,
TRICARE hired a consulting firm, Kennell and Associates, to “undertake a study of the accuracy
of its payments to the hospitals.” Ingham Reg’l Med. Ctr., 874 F.3d at 1343–44. Kennell and
Associates performed a study (the “Kennell study”) which “compared CMAC payments to the
payments that would have been made using Medicare payment principles, and determined that
DoD ‘(1) underpaid hospitals for outpatient radiology but, (2) correctly paid hospitals for all
other outpatient services.’” Id. at 1344 (emphasis omitted).
Due to the Kennell study findings, “DoD created a discretionary payment process,” and
on 25 April 2011, DoD notified TRICARE hospitals by letter of the process which allowed
hospitals to “request a review of their TRICARE reimbursements.” Id. 4 In addition to the letter,
2
On 23 January 2007, the 400 Hospitals “filed their first amended complaint in the [United States District Court for
the District of Delaware] asserting claims for breach of contract implied in fact and breach of quasi-contract/unjust
enrichment” against one of TRICARE’s managed care support contractors. N. Mich. Hosps., Inc., 344 F. App’x at
735. On 30 May 2008, the District Court dismissed the complaint because the hospitals failed to exhaust their
administrative remedies. Id. at 736. The Third Circuit affirmed the dismissal. Id. at 740. Thereafter, the parties to
that suit exchanged email communications regarding further steps and potential readjustment with TRICARE.
3
Plaintiffs in this case are represented by the same law firm as the 400 Hospitals but are a separate, albeit similarly
situated group as the 400 Hospitals. See Def.’s Resp. to Pls.’ Mot. for Determination that Certain Docs. Produced in
Disc. are not Priv. or Subject to the Work Product Doctrine (“Def.’s Resp. to Pls.’ Mot.”) at 6, ECF No. 108. The
400 Hospitals initially included 2,500 hospitals, but over time, this number decreased to approximately 400
hospitals. Compare id. at App12 (mentioning representation of “approximately 2,500 hospitals”), with id. at App59
(email mentioning representation of “approximately 400 hospitals”).
4
The letter states, in pertinent part:
For purposes of this process, DoD will treat your submission as an untimely but discretionary appeal
under 32 Code of Federal Regulations 199.10(a)(5) and (c), provided it is received no later than 60
days from the date of this letter. Based on the request, your hospital may be paid an adjustment,
subject to the availability of appropriations, in return for your acceptance of DoD’s offer of
additional payment based on criteria established by the agency. . . . In order to bring closure to any
concerns regarding payment of hospital outpatient services under the TRICARE regulation prior to
implementation of OPPS, payment of the discretionary adjustments will also be contingent on the
execution of a release by the hospital of any hospital outpatient service claims against the agency,
TRICARE beneficiaries, and TRICARE MCSCs. We value your hospital as a partner in this effort
and remain committed to working with you to complete the analysis of claims data and determine
if any additional payments may be allowed.
Ingham Reg’l Med. Ctr. v United States, 126 Fed. Cl. 1, 12 (2016), aff’d in part, rev’d in part by Ingham Reg’l Med.
Ctr. v. United States, 874 F.3d 1341 (Fed. Cir. 2017). Approximately 5,200 hospitals, including the named plaintiffs
in this case and the 400 Hospitals, submitted a request. Id. at 16. Once TRICARE sent the 400 Hospitals
recalculated amounts proposed for reimbursement, the hospitals identified errors in the recalculation. Id. at 17.
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“DoD published a document titled ‘NOTICE TO HOSPITALS OF POTENTIAL
ADJUSTMENT TO PAST PAYMENTS FOR OUTPATIENT RADIOLOGY SERVICES’ (the
“Notice”)” on the TRICARE website. Ingham Reg’l Med. Ctr., 874 F.3d at 1344. 5 The Notice
also described a “nine-step process by which hospitals could ‘request an analysis of their claims
data for possible discretionary adjustment’ and to ‘govern the review of payments for hospital
outpatient radiology services and payment of any discretionary net adjustments.’” 6 Ingham
Reg’l Med. Ctr. v United States, 126 Fed. Cl. 1, 14 (2016), aff’d in part, rev’d in part by Ingham
Reg’l Med. Ctr. v. United States, 874 F.3d 1341 (Fed. Cir. 2017). If DoD determined a hospital
was entitled to an adjustment, payment was conditioned upon availability of appropriations and
TRICARE allegedly acknowledged errors in the calculations but claimed it was not aware of the errors prior to
sending the proposed payment adjustments. Id.5
The Notice explained, in pertinent part:
The TRICARE regulation provisions on hospital outpatient services, in the absence of adoption of
the Medicare OPPS methodology, adopted comparable Medicare payments for similar services
provided in other sites (i.e., physician offices). That is, TRICARE looked to the similarity of services
being provided, not the site of services, in adopting a reimbursement methodology for hospital
outpatient services. . . .
[I]n reviewing payments for hospital services, DoD has determined that, for radiology services . . .
the technical component of the allowable charge did not approximate the Medicare fair payment for
such hospital services as well as it could have. That is, looking at the Medicare reimbursement
methodologies in existence prior to adoption of Medicare OPPS in 2000, . . . some radiology services
were underpaid in comparison. . . . Thus, although payments to hospitals for radiology services were
consistent with the duly promulgated regulation, there is a basis for TRICARE to provide an
opportunity to make some discretionary net payment adjustments to approximate more closely
Medicare payment methods. . . .
General TRICARE policy is that payment methodologies follow to the extent practicable Medicare
payments. Prior to adopting [OPPS], Medicare used a blended rate that factored in a percentage of
hospital costs and a percentage of the global physician fee schedule to reimburse hospital outpatient
radiology services. In contrast, TRICARE regulation limited reimbursement to hospitals for
individual outpatient radiology services to the technical component portion of the CHAMPUS
Maximum Allowable Charge (CMAC), which was one component of Medicare’s physician fee
schedule. Consistent with TRICARE policy under statute to pay similar to Medicare, we have
determined that discretionary adjusted payments may better reflect the Medicare payment amounts
for outpatient radiology claims.
Ingham Reg’l Med. Ctr., 874 F.3d at 1344.
6
“Step 1 instructed hospitals to submit a request for analysis of their claims data.” Ingham Reg’l Med. Ctr., 126
Fed. Cl. at 14 (internal quotation marks omitted). “Step 2 described the procedure for submitting a request,”
including “[a] separate Excel spreadsheet must be completed for each hospital” accompanying a request. Id. “Steps
3 through 7 described the review process.” Id. Step 8 stated, “[a] written response to the hospital’s request . . . will
provide the calculated discretionary adjusted payment and the calculations from which the adjustment was derived.”
Id. at 15. Step 8 further explained:
While the methodology for calculating the adjustment is not subject to questions, any questions
regarding the data used in the calculations should be received by TMA within 30 days of the date
of TMA’s response as specified in the response. Any questions should be accompanied by detailed
explanation of the alleged errors and the proposed corrections with supporting documentation.
Id. Lastly, Step 9 noted, “TRICARE’s response would include a release and agreement to accept the discretionary
payment.” Ingham Reg’l Med. Ctr., 874 F.3d at 1345 (internal quotation marks omitted).
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the hospital signing a release of claims against DoD. Ingham Reg’l Med. Ctr., 874 F.3d at 1344–
45.
Plaintiffs submitted requests for discretionary payment, and TRICARE provided written
responses. Ingham Reg’l Med. Ctr., 126 Fed. Cl. at 16. “Plaintiff Ingham signed the Release
and received the proposed payment,” but alleged “the payment it received . . . was less than the
amount it was owed.” Id. DoD informed plaintiff Bay Regional Medical Center “it had been
overpaid for radiology services and was owed nothing.” Ingham Reg’l Med. Ctr., 874 F.3d at
1345. “Plaintiffs McLaren Northern Michigan, Gifford Medical Center, Inc., and Lakewood
Health System refused to sign the Release after receiving proposed payment amounts that they
believed, due to multiple errors in the [Kennell study] and TMA’s calculations, understated the
amount they were owed for outpatient radiology services.” Ingham Reg’l Med. Ctr., 126 Fed.
Cl. at 17.
A. Procedural History
Plaintiffs are a group of hospitals, separate from the 400 Hospitals, that provide medical
services as part of the TRICARE program. On 21 October 2013, plaintiffs brought this action
claiming the government underpaid them for medical services they provided between 1 August
2003 and 1 May 2009. Ingham Reg’l Med. Ctr., 126 Fed. Cl. at 9. Plaintiffs allege this
underpayment breached two contracts and violated various statutory and regulatory provisions. 7
Id. Plaintiffs seek to represent a class of approximately 1,610 similarly situated hospitals,
separate from the 400 Hospitals. See Pls.’ Mot. to Certify. 8
On 13 January 2015, the government filed a motion to dismiss plaintiffs’ complaint for
failure to state a claim pursuant to Rule 12(b)(6) of the Rules of the United States Court of
Federal Claims (“RCFC”). See Def.’s Mot. to Dismiss Pls.’ First Am. Compl., ECF No. 41. The
government argued plaintiffs “fail[ed] to allege facts” sufficient to establish a binding contract
with the government or that any contract was breached, and absent a valid contract, “there
[could] be no mutual mistake or breach of the covenant of good faith and fair dealing.” Id. at 1–
2. On 22 March 2016, this Court dismissed plaintiffs’ complaint for failure to state a claim.
Ingham Reg’l Med. Ctr., 126 Fed. Cl. at 55. Plaintiffs appealed, and on 3 November 2017, the
Federal Circuit “reverse[d] the dismissal of [plaintiff] Ingham’s breach of contract claim,
affirm[ed] the dismissal of [plaintiffs’] money-mandating claim, and [did] not reach the claim for
mutual mistake.” Ingham Reg’l Med. Ctr., 874 F.3d at 1348. 9 The Federal Circuit remanded the
case “for further proceedings on the breach of contract claim.” Id. On remand, plaintiffs filed an
amended complaint, the government filed its answer, and the parties engaged in ongoing
7
Plaintiffs raise five counts in their first amended complaint: (1) breach of express contract; (2) breach of implied-
in-fact contract; (3) mutual mistake; (4) breach of covenant of good faith and fair dealing; and (5) violations of 10.
U.S.C. §§ 1079, 1086, and 32 C.F.R. § 1997.7(h)(2). Am. Compl., ECF No. 40.
8
This Court stayed consideration of plaintiffs’ motion for class certification on 30 April 2018. See Order, ECF No.
78.
9
On appeal, plaintiffs appealed three claims: “(1) breach of express contract between Ingham and DoD based on
the discretionary payment process; (2) revision of Ingham’s contract based on mutual mistake, in light of the errors
in the calculations of radiology outpatient services and the Kennel study; and (3) violations of money-mandating
statutes and regulations, 10 U.S.C. §§ 1079 and 1086 and 32 C.F.R. § 199.7(h)(2).” Ingham Reg’l Med. Ctr., 874
F.3d at 1346.
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discovery. 10 This case was transferred to the undersigned Judge on 29 July 2019. See Order,
ECF No. 114.
B. Factual History Relevant to this Dispute 11
On 26 July 2010, counsel for the 400 Hospitals, C. Mitchell Goldman, sent a letter to
TMA’s general counsel, Robert Seaman, inviting him to engage in recalculation negotiations to
address the alleged underpayments. Def.’s Resp. to Pls.’ Mot. for Determination that Certain
Docs. Produced in Disc. are not Priv. or Subject to the Work Product Doctrine at App2–3, ECF
No. 108 (“Def.’s Resp. to Pls.’ Mot.”). If TMA was unwilling to negotiate, Mr. Goldman
requested Mr. Seaman provide more direction on how the 400 Hospitals “may resubmit [their]
claims in question to comply with [TRICARE’s] requirements,” their contracts, and applicable
law. Id. 12
On 19 November 2010, Gregory Brodek, also counsel for the 400 Hospitals, emailed Mr.
Seaman explaining once the 400 Hospitals exhausted their administrative remedies, they would
“be forced to resume the legal course of action, which will remove any ability to structure a
resolution that addresses both your clients [sic] and ours [sic] needs and concerns.” Id. at App4.
On 19 January 2011, Mr. Brodek wrote Rear Admiral Christine Hunter, Deputy Director
of TMA, about several items the parties must address to resolve the alleged underpayments,
including “the proposed repayment process, the methodology used to determine the existence of
underpayments, and our representation.” Id. at App13. 13
10
On 11 June 2019, the previous Judge assigned to this case scheduled expert discovery to close on 22 August 2019.
Order, ECF No. 104. On 21 August 2019, the parties filed a joint motion to stay expert discovery pending
resolution of unresolved discovery motions at issue in this order and opinion. ECF No. 120. On 29 August 2019,
the undersigned Judge issued an order stating, “[t]he Court shall extend all deadlines contained within the 11 June
2019 scheduling order (ECF 104) at the time the pending discovery motions are ruled upon.” Order, ECF No. 122.
All pending discovery disclosures and motions occurred after the 3 November 2017 Federal Circuit opinion.
11
The facts relevant to this discovery dispute occurred during the 400 Hospitals’ recalculation discussions with
TRICARE, prior to the commencement of this suit.
12
The letter stated in pertinent part:
At the conclusion of our meeting, we made two specific requests [to] which you agreed . . . . First,
we would like for your client to consider . . . entering into negotiations to settle this dispute. A
settlement would avoid both sides incurring significant cost of claims processing and ultimately
litigation. . . . Second, if your client is unwilling to enter into settlement discussions, please provide
us with clear and concise directions on how our hospitals may resubmit the claims in question to
comply with Tricare’s requirements and not violate their existing payer contracts and existing law.
. . . It is our belief that all parties are benefitted by avoiding protracted litigation which has been
ongoing for more than 6 years.
Def.’s Resp. to Pls.’ Mot. at App3.
Mr. Brodek further stated:
13
During the meeting, there appeared to be a misunderstanding of Duane Morris’ representation of
the Hospitals in this dispute and where this dispute is procedurally. Duane Morris was retained to
file class action lawsuits on behalf of hospitals that had submitted claims for reimbursement of
facility charges which were denied by two of TRICARE’s three regional contractors. Those lawsuits
were filed by representative hospitals on behalf of all similarly situated Hospitals in these two
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On 2 February 2011, Mr. Brodek again emailed Mr. Seaman to express his understanding
that “TRICARE is currently analyzing how to . . . address the payment error,” but said, “if the
currently pending appeals cannot be resolved in a manner that addresses our clients’ concerns,
they will be forced to proceed back to court.” Id. at App17. Mr. Brodek stated litigation was not
“in either our clients’, nor TRICARE’s, best interest,” and he offered a proposal he said “avoids
these undesirable outcomes, and allows for a prompt, and final, resolution of this matter.” Id.
After TRICARE sent its 25 April 2011 letter and issued the Notice establishing its
discretionary payment review, the 400 Hospitals claimed there were deficiencies in the data
TMA used to calculate proposed adjustments. Def.’s Resp. to Pls.’ Mot. at 7. On 14 July 2011,
Mr. Brodek emailed Paul Hutter, the new General Counsel of Defense Health Agency (“DHA”),
confirming the 400 Hospitals and DHA would each run a calculation for a sample of data for ten
TRICARE hospitals and compare their results. Def.’s Resp. to Pls.’ Mot. at App27. Once they
exchanged their findings, in a 27 July 2011 letter to Mr. Hutter, Mr. Brodek confirmed “it
appears our data may not be as disparate as we originally believed,” and he accepted Mr.
Hutter’s offer to “run . . . calculations on several additional hospitals.” Id. at App41–42.
After exchanging additional calculations, on 16 September 2011, Mr. Brodek sent Mr.
Hutter an email titled “Global Settlement,” proposing a $92 million recalculated payment for all
400 Hospitals. Id. at App57. Mr. Hutter responded to the proposal on 21 September 2011 by
indicating TRICARE would agree to a $22 million payment. Id. at App59. Mr. Brodek
responded on 22 September 2011 requesting Mr. Hutter’s “rationale for a 20% increase based
upon data on which we have repeatedly disapproved the accuracy of,” and requested to speak the
following day “to either resolve, or agree this matter needs to be pushed into litigation.” Id. at
App61.
On 26 September 2011, in response to an email from Mr. Hutter titled “Settlement,” Mr.
Brodek wrote “it does not appear that there should be anything controversial left to discuss,” and
“there is enormous benefit to all parties to resolve the matter in its totality.” Id. at App61.
Thereafter, the parties agreed to a final recalculated adjustment, and on 6 December
2011, Mr. Brodek sent Mr. Hutter an “invoice” for the agreed upon recalculated adjustment for
“TRICARE hospital outpatient laboratory, radiology, and diagnostic services.” Id. at App356.
C. Documents Under Review
regions. Those lawsuits were ultimately dismissed without prejudice to enable the parties to exhaust
their administrative remedies. That dismissal without prejudice was affirmed by the United States
Court of Appeals for the Third Circuit, in which the Third Circuit noted that the reason for the
dismissal was to enable a factual record to be compiled in the administrative process concerning (1)
whether expenses that qualify as facility charges were incurred; (2) whether such charges were
properly billed; and (3) how much is owed. TRICARE has now shown through its own analysis that
the expenses qualified as facility charges and were both incurred and billed by the Hospitals. The
only remaining unanswered question is the amount owed to the Hospitals.
Def.’s Resp. to Pls.’ Mot. at App14 (emphasis omitted).
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On 21 October 2013, plaintiffs initiated this litigation. See Compl., ECF No. 1. Between
June and October 2018, plaintiffs served the government with various requests for production of
documents. Pls.’ Mot. to Comp. at Appx111–116, 146. In response, the government produced
around 380,000 pages of documents and compiled a privilege log with 2,500 entries. Def.’s
Resp. to Pls.’ Mot. at 9. Plaintiffs now request the Court determine whether two documents and
three emails the government produced during discovery are privileged. See Pls.’ Mot. at 1; Pls.’
Mot. to Comp. at 1–2. The Court refers to each document individually as follows: “Document
One”; “Document Two”; “Email One”; “Email Two”; and “Email Three.”
The government produced the documents in question through various discovery
productions between 20 September 2018 and 9 April 2019. See Pls.’ Mot. to Comp. at 9–10.
Government counsel is unsure how Document One and Document Two were produced but
explains the documents were likely “mis-coded . . . in [the government’s] document management
database as non-privileged.” Def.’s Resp. to Pls.’ Mot. at 11. The government marked
Document One in its privilege log at least sixteen times and Document Two at least twelve
times, but both documents were inadvertently produced to plaintiffs. Id. at 8–9. Document One
and Document Two were contained in a group of documents attached to an email which was
marked privileged, but the attachments were not secondarily marked. Id. The government
marked Email One twice in its privilege log, but Email One “did not receive consistent privilege
treatment over the course of the [g]overnment’s many productions,” and it was produced twice to
plaintiffs. Def.’s Resp. to Pls.’ Mot. to Comp. at 6–7. Email Two and Email Three were never
marked privileged and were produced by the government. Id. at 5–6.
a. Document One
On 30 September 2011, Dave Kennell, principal of Kennell and Associates, prepared
Document One, Bates number ING0262545-53, and sent it to Mr. Hutter. Pls.’ Mot. at A29–
A37. Document One, titled “Data Problems Related to Payment Adjustments for [the 400
Hospitals],” contained the stamp “Attorney-Client Protected Work Product Not To Be
Disclosed” on the bottom of every page. Id. In the document, Mr. Kennell identifies data
problems encountered while calculating adjustments for the 400 Hospitals. Id. Mr. Kennell
estimates a total payment adjustment based on the issues identified in the document. Id. The
government produced Document One on 5 February 2019, but listed it at least sixteen times on
its privilege log. Def.’s Resp. to Pls.’ Mot. at 9, 11.
On 8 December 2011, “Melissa Walters, an individual providing staff support to DHA’s
Fall Church [sic] Office of General Counsel . . . forwarded a packet of six [of the 400 Hospitals’]
settlement-related documents . . . at Mr. Hutter’s request to Walt Ruggles, the then-Head of
TMA’s Financial Operations Division, to facilitate payment of the [400 Hospitals] Settlement.”
Id. at 9–10. That packet included Document One. See id.
On 13 May 2019, plaintiffs’ counsel notified government counsel the government
produced two potentially privileged documents. Pls.’ Mot. at A232. On 2 June 2019,
government counsel informed plaintiffs’ counsel the documents were subject to work product
privilege and clawback. Id. at A233.
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b. Document Two
Document Two, Bates number ING0262544, titled “Estimated TMA Liability in 3
Categories of Hospital Outpatient Services if Settlement does not Happen (2003-2009),” does
not specify its author or date of creation. Pls.’ Mot at A38. Document Two contains
summarized calculations in boxed rows on an x and y axis. Id. On the y axis, Document Two
lists four boxes: (1) “Additional TMA Liability for Radiology using ‘costs’”; (2) “Additional
TMA Liability for Radiology using ‘billed charges’”; (3) “Additional TMA Liability for
Radiology, Labs, and Diagnostic Tests using ‘costs’”; and (4) “Additional TMA Liability for
Radiology, Labs, and Diagnostic Tests using ‘billed charges.’” Id. On the x axis, Document
Two lists three boxes corresponding to the y axis: (1) “6 Months in 2008 for all Hospitals ~
3,500”; (2) “6 Years for all Hospitals ~ 3,500”; and (3) “6 Years for Duane Morris Hospital ~
400.” Id. In the corresponding boxes for the x and y axes, Document Two provides estimated
calculations for the listed hospital services and listed variables. Id. The government produced
Document Two on 5 February 2019, but listed the document at least 12 times on its privilege log.
Def.’s Resp. to Pls.’ Mot. at 9, 11.
Document Two’s creation is unclear. The government cannot ascertain its creator, but
states after Document One’s creation, “Mr. Hutter, or another individual employed in the Fall
Church [sic] Office of DHA’s Office of General Counsel, summarized [Document Two].” Id. at
8. In a footnote in its response to plaintiffs’ privilege motion, the government explains:
Based on the circumstantial evidence . . . we reasonably believe that Mr. Hutter is,
in fact, the author of the substance of [Document Two]. We have been unable to
confirm this with absolute certainty, however, because Mr. Hutter no longer works
for the Government, and has not responded to our attempts to contact him with
respect to this issue.
Id. at 8 n.2. The government states, however, “[t]he metadata identifies the original author of
this liability projection as Melissa Walters.” Id. at 9.
On 13 May 2019, plaintiffs’ counsel notified government counsel the government
produced two potentially privileged documents. Pls.’ Mot. at A232. On 2 June 2019,
government counsel informed plaintiffs’ counsel the documents were subject to work product
privilege and clawback. Id. at A233.
c. Email One
On 26 August 2011, Christina Witsberger, a Senior Research Analyst at Kennell and
Associates, sent Email One, Bates number ING0366488–89, to Mr. Kennell. Pls.’ Mot. to
Comp. at 9. Email One contained the subject line “HOPD Rad Adj - D. Morris - Childrens Hosp
of the Kings Daughters, Norfolk VA TIN [redacted] zip 23507.” Id. In Email One, Ms.
Witsberger analyzes billing patterns by comparing TRICARE Encountered DATA (“TED”) for
the subject line hospitals to the data the 400 Hospitals sent. 14 Id. The government produced
Email One on 4 March 2019 and 9 April 2019. Id. at 9–10.
14
Ms. Witsberger wrote, in relevant part:
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On 7 June 2019, plaintiffs deposed Ms. Witsberger, during which Email One was marked
Exhibit 29. Id. at Appx88. Government counsel instructed Ms. Witsberger not to answer
questions relating to Email One on the basis of work product doctrine and indicated the
government would seek to clawback the document. Id.
d. Email Two
On 2 September 2011, Ms. Witsberger sent Email Two, Bates numbers USA000129,
USA000396, and ING0000961, to Mr. Kennell. Pls.’ Mot. to Comp. at 8–9. Email Two
contained the subject line “Duane Morris Latest Email.” Id. In Email Two, Ms. Witsberger
explained certain CPT codes were excluded from their analysis because “they did not have
CMAC rates,” not because they were “purely technical.” Id. She further explained because the
excluded codes were lab codes, not radiology codes, they did not have anything in the CMAC
field. Id. The government produced Email Two on 20 September 2018 and on 15 November
2018. Pls.’ Mot. to Comp. at 8–9.
On 11 October 2018, plaintiffs deposed Mr. Kennell. Id. at 10. Email Two was part of a
group of documents marked as Exhibit 21 during the deposition. Id. at Appx40. Mr. Kennell
testified, without objection of government counsel, he compiled Exhibit 21. Id. Email Two was
also marked Exhibit 32 during the 5 June 2019 deposition of Ms. Witsberger. Id. at Appx90.
Government counsel instructed Ms. Witsberger not to answer questions relating to Email Two on
the basis of the work product doctrine and indicated the government would seek to clawback the
document. Id. at Appx90–Appx91.
e. Email Three
On 13 September 2011, Ms. Witsberger sent Email Three, Bates numbers USA000141
and ING0000969, to Mr. Kennell. Pls.’ Mot. to Comp. at 8–9. Email Three contained the
subject line “TC and 76499 analysis -- S and W.” Id. Email Three analyzed cost data for certain
coded procedures performed in hospitals in the southern and western United States. 15 Id. The
government produced Email Three on 20 September 2018 and 15 November 2018. Id. at 8–9.
I have examined some billing patterns of the above hospital to compare line item info sent by Duane
Morris versus our TED records, to try to figure out the discrepancy in number of line items for
Period 2, which was off about 13% (Duane Morris had 13 pct more line items).
Although there are some claims they have which I cannot match (and a few we have they do not),
examining some high volume CPT codes for these hospitals uncovered many cases where the CPT
code on the TED record is just a general radiology “unlisted” (i.e. dump) code of 76499 whereas
Duane Morris has a specific CPT code. The allowed amounts match what the CMAC for the TC
was during the time period, so it does appear they were paid by CMAC for a specific CPT code
rather than for dump code 76499.
Pls.’ Mot. to Comp. at Appx137. Ms. Witsberger lists “examples of claims where the TED has CPT 76499 but
Duane Morris has a specific CPT code on the hospital’s claim record.” Id. at Appx138.
15
Ms. Witsberger wrote “[f]or the West, there is not a huge problem. All look normal except for the TINs beginning
with 9305…. as we discussed (the ones in Oregon). Dump code 76499 is not an issue in the West.” Pls.’ Mot. To
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On 11 October 2018, plaintiffs deposed Mr. Kennell, and he testified about Email Three’s
contents without objection from government counsel. Id. at Appx45–Appx47. On 30 April
2019, plaintiffs deposed Martha Maxey, a former TMA employee, and Email Three was marked
Exhibit 41. Id. at 11. Ms. Maxey testified about Email Three’s contents without objection from
government counsel. Pls.’ Mot. to Comp. at 11. Email Three was similarly marked Exhibit 34
during Ms. Witsberger’s 7 June 2019 deposition. Id. at Appx92. Counsel for the government
instructed Ms. Witsberger not to answer questions relating to Email Three on the basis of the
work product doctrine and indicated the government would seek to clawback the document. Id.
at Appx92–Appx93.
II. Discussion
A. Work Product Privilege
The work product doctrine is codified in Rule 26(b)(3) of the RCFC. 16 The doctrine “is
intended to preserve a zone of privacy in which a lawyer can prepare and develop legal strategy
Comp. at Appx125. Further, “[f]or the South, two of the example [sic] I chose turned out to have huge numbers
under another zip which does appear to be the same hospital in Peters file. We did not search these zips or report
results.” Id. Additionally, “[d]ump codes are a problem in period 2 for all of them to some degree, being around
10-15 pct of period 2 (20 pct for Jackson County and Kings Dtrs).” Id.
16
RCFC 26(b)(3) provides:
(A) Documents and Tangible Things. Ordinarily, a party may not discover documents and tangible
things that are prepared in anticipation of litigation or for trial by or for another party or its
representative (including the other party’s attorney, consultant, surety, indemnitor, insurer, or
agent). But, subject to RCFC 26(b)(4), those materials may be discovered if:
(i) they are otherwise discoverable under RCFC 26(b)(1); and
(ii) the party shows that it has substantial need for the materials to prepare its case and
cannot, without undue hardship, obtain their substantial equivalent by other means.
(B) Protection Against Disclosure. If the court orders discovery of those materials, it must protect
against disclosure of the mental impressions, conclusions, opinions, or legal theories of a party’s
attorney or other representative concerning the litigation.
(C) Previous Statement. Any party or other person may, on request and without the required
showing, obtain the person’s own previous statement about the action or its subject matter. If the
request is refused, the person may move for a court order, and RCFC 37(a)(5) applies to the award
of expenses. A previous statement is either:
(i) a written statement that the person has signed or otherwise adopted or approved; or
(ii) a contemporaneous stenographic, mechanical, electrical, or other recording—or a
transcription of it—that recites substantially verbatim the person’s oral statement.
RCFC 26(b)(3) and Rule 26(b)(3) of the Federal Rules of Civil Procedure (“FRCP”) are identical. Compare RCFC
26(b)(3), with Fed. R. Civ. P. 26(b)(3). The Court therefore uses other federal courts’ interpretations of the FRCP as
persuasive authority. See Adams v. United States, 391 F.3d 1212, 1218 n.3 (Fed. Cir. 2004) (“Rule 12 of the Court
of Federal Claims mirrors Rule 12 of the Federal Rules of Civil Procedure”); see also 2002 Rules Committee Note,
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‘with an eye toward litigation,’ free from unnecessary intrusion by adversaries.” Pac. Gas &
Elec. Co. v. United States, 69 Fed. Cl. 784, 789 (2006) (quoting Hickman v. Taylor, 329 U.S.
495, 510–11 (1947) (observing that Rule 26(b)(3) codified the principles underlying the
Hickman work product doctrine); see also In re EchoStar Commc’ns Corp., 448 F.3d 1294, 1301
(Fed. Cir. 2006) (citing Hickman, 329 U.S. at 511) (“[T]he work-product doctrine encourages
attorneys to write down their thoughts and opinions with the knowledge that their opponents will
not rob them of the fruits of their labor.”). “At its core, the work-product doctrine shelters the
mental processes of . . . attorney[s], providing a privileged area within which [they] can analyze
and prepare [their] client’s case.” United States v. Nobles, 422 U.S. 225, 238 (1975). RCFC
26(b)(3) prevents a party from discovering “documents and tangible things that are prepared in
anticipation of litigation or for trial by or for another party or its representative (including the
other party’s attorney, consultant, surety, indemnitor, insurer, or agent).” Although the rule
protects documents prepared in anticipation of litigation, it does not address the scope of this
immunity. See, e.g., Fed. Trade Comm’n v. Grolier Inc., 462 U.S. 19, 25 (1983) (“[Federal Rule
of Civil Procedure] 26(b)(3) does not in so many words address the temporal scope of the work-
product immunity.”).
A primary treatise on the work product doctrine published by the American Bar
Association titled, “The Attorney-Client Privilege and the Work-Product Doctrine” (“ABA Work
Product Treatise”) explains the work product privilege applies “not to all materials in an
attorney’s files, but only to those materials that were prepared in anticipation of litigation or for
trial.” 2 Edna Selan Epstein, The Attorney-Client Privilege and the Work-Product Doctrine 1082
(6th ed. 2017). The privilege applies when: (1) there is “a threat of litigation”; and (2) the
“document [was] prepared because of that threat.” Id. at 1082–83. To constitute “in anticipation
of litigation,” the document “must also have been prepared for litigation and not for some other
purpose.” Id. at 1094 (emphasis omitted). A document may have been prepared “before or
when litigation is imminent or pending without necessarily having been in the least prepared ‘in
anticipation’ of litigation.” Id. If a document would have been prepared regardless of the
litigation, the document is generally not subject to work product protection. Id. at 1114.
The ABA Work Product Treatise outlines two approaches to determine the primary
motivation for a document’s preparation: the “because of” approach and the “primary purpose”
approach. Id. Two questions guide this determination: (1) “[w]ere the documents prepared in
the ordinary course of business”; and “(2) [w]as there an independent business purpose for which
the document would have been prepared even if there had been no litigation anticipated?”
Epstein, supra, at 1115. “If the answer to either question is yes, then there is no need to accord
the document work-product protection.” Id. 17 “The fact that litigation eventually does occur is
Rules of the United States Court of Federal Claims (as amended July 1, 2019) (“[I]nterpretation of the court’s rules
will be guided by case law and the Advisory Committee Notes that accompany the Federal Rules of Civil
Procedure.”).
17
Wright & Miller’s treatise, Federal Practice and Procedure, underscores this point: “even though litigation is
already in prospect, there is no work-product immunity for documents prepared in the regular course of business
rather than for purposes of the litigation.” 8 Charles Alan Wright, Arthur R. Miller & Richard L. Marcus, Federal
Practice & Procedure § 2024 (3d ed.), Westlaw (database updated Aug. 2019). Additionally, the Advisory
Committee Note to Rule 26(b)(3) states in part: “[m]aterials assembled in the ordinary course of business, or
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not sufficient justification for making every document prepared before litigation work-product
protected.” Id. at 1122. The ABA Work Product Treatise provides, for example, “internal audits
and accident investigations [are] not to be work-product protected unless litigation is clearly the
primary motive.” Id. at 1125 (emphasis in original). Additionally, “documents or other
materials prepared looking toward, or in implementation of, a settlement often have been held
not to be in anticipation of litigation.” Id. at 1132. This is also true with investigative
documents because “even though litigation may be foreseeable, courts have not hesitated to
make investigative documents discoverable on the ground that there was a business purpose
separate and distinct from the prospect of possible litigation that led to the investigation.” Id. at
1156.
Three recent Court of Federal Claims cases address the work product doctrine. See Pac.
Gas & Elec. Co. v. United States, 69 Fed. Cl. 784 (2006); Weston/Bean Joint Venture v. United
States, 128 Fed. Cl. 1 (2014); Northrop Grumman Corp. v. United States, 80 Fed. Cl. 651(2008).
In the first comparable Court of Federal Claims case, Pacific Gas & Electric, the Court
discussed the work product doctrine in depth and explained, “‘documents that are prepared in the
ordinary course of business or that would have been created in essentially similar form
irrespective of the litigation’ are not protected.” Pac. Gas & Elec. Co., 69 Fed. Cl. at 798
(quoting United States v. Adlman, 134 F.3d 1194, 1202 (2d Cir. 1998)). In that case, an electric
utility sued the United States for breach of contract. The government moved “to compel the
production of documents and deposition testimony” withheld on the basis “of the attorney-client
privilege and the work product doctrine.” Id. at 786. The government argued plaintiff
improperly asserted work product privilege over documents prepared for regulatory agencies
overseeing plaintiff’s company. Id. at 786–87. In response, plaintiff argued the work product
privilege applies to “material prepared for administrative proceedings . . . as well as proceedings
before the court of record” because administrative proceedings constitute litigation. Id. at 788.
This Court discussed whether the proceedings, or some aspect thereof, constituted litigation for
the documents to gain work product protection. Id. at 799. It explained, “‘[t]he threshold
determination in a case involving a claim of work product privilege is whether the material
sought to be protected from discovery was prepared in anticipation of litigation’ or was prepared
in the ordinary course of business or for other purposes.” Id. at 790 (quoting Allendale Mut. Ins.
Co. v. Bull Data Sys., Inc., 145 F.R.D. 84, 86 (N.D. Ill. 1992)).
This Court outlined two approaches to determine if a document was prepared “in
anticipation of litigation,” because “there are ‘a variety of approaches and conflicting decisions
in the case law.’” Id. at 790 (quoting Harper v. Auto-Owners Ins. Co., 138 F.R.D. 655, 659
(S.D. Ind. 1991)). Under the first approach, a court considers “‘the primary motivational
purpose behind the creation of the document.’” In re Raytheon Secs. Litig., 218 F.R.D. 354, 357
(D. Mass. 2003) (quoting United States v. Gulf Oil Corp., 760 F.2d 292, 296 (Temp. Emer. Ct.
App. 1985)). “Under this approach, ‘if the primary motivating purpose behind the creation of the
document is not to assist in pending or impending litigation, then a finding that the document
pursuant to public requirements unrelated to litigation, or for other nonlitigation purposes are not under the qualified
immunity provided by this subdivision.” 48 F.R.D. 487, 501.
-13-
enjoys work product immunity is not mandated.’” Pac. Gas & Elec. Co., 69 Fed. Cl. at 791
(quoting Gulf Oil Corp., 760 F.2d at 296). Under the second approach, known as the “because
of” approach, “[w]here a document was created because of anticipated litigation, and would not
have been prepared in substantially similar form but for the prospect of that litigation, it falls
within [the work product doctrine.] Id. at 791 (quoting Adlman, 134 F.3d at 1195) (emphasis
omitted). As the Second Circuit observed in Adlman, “[t]he formulation of the work-product
rule used by the Wright & Miller treatise, and cited by the Third, Fourth, Seventh, Eighth and
D.C. Circuits, is that documents should be deemed prepared ‘in anticipation of litigation,’ and
thus within the scope of [Federal Rule of Civil Procedure 26(b)(3)], if ‘in light of the nature of
the document and the factual situation in the particular case the document can fairly be said to
have been prepared or obtained because of the prospect of litigation.’” Adlman, 134 F.3d at
1202 (quoting 8 Charles Alan Wright, Arthur R. Miller & Richard L. Marcus, Federal Practice
& Procedure § 2024, at 343 (1994)) (emphasis omitted).
In Pacific Gas & Electric, this Court did not decide whether the “‘primary motivating
purpose’ or the ‘because of’ approach is the correct application of RCFC 26(b)(3),” because its
determination did not turn on which approach was used. Pac. Gas. & Elec. Co., 69 Fed. Cl. at
798. This Court noted, however, “under either formulation, ‘documents that are prepared in the
ordinary course of business or that would have been created in essentially similar form
irrespective of the litigation’ are not protected.” Id. (quoting Adlman, 134 F.3d at 1202)).
Additionally, in Pacific Gas & Electric, this Court discussed a line of cases describing
the proper standard for identifying “dual-purpose” documents, which are prepared for concurrent
purposes, not simply for litigation. Id. at 797–98. In the first case, the District Court for the
Northern District of Nevada held documents prepared as part of an aircraft manufacturer’s
investigation into a crash of one of its planes did not gain work product protection. Soeder v.
Gen. Dynamics Corp., 90 F.R.D. 253, 255 (D. Nev. 1980). In addition to preparing for litigation,
the manufacturer had an “equally reasonable desire . . . to protect future pilots and passengers of
its aircraft, to guard against adverse publicity in connection with such aircraft crashes, and to
promote its own economic interests by improving its prospect for future contracts for the
production of said aircraft.” Id. Therefore, that court found because those documents were
investigative, they were not subject to the work product doctrine. See id. In the second case,
Stout v. Illinois Farmers Ins. Co., 150 F.R.D. 594, 602 (S.D. Ind. 1993), aff’d, 852 F. Supp. 704(S.D. Ind. 1994), the District Court for the Southern District of Indiana analyzed whether an
insurer’s documents “for concurrent litigation and non-litigation uses” related to a fire loss claim
were protected under the work product doctrine. That court reasoned:
If a document or thing would have been created for non-litigation uses regardless
of its intended use in litigation preparation, it should not be accorded work product
protection. Because the document would have been created for non-litigation
reasons anyway . . . the document’s release in discovery would not contravene the
policies supporting the work product rule.
Id. at 604. Thus, the court “presume[d] that documents which were produced by an insurer for
concurrent purposes before making a claims decision would have been produced regardless of
litigation purposes and therefore do not constitute work product.” Id. at 605.
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This Court held in Pacific Gas & Electric, “[d]ocuments created by plaintiff ‘in the
ordinary course of business or that would have been created in essentially similar form
irrespective of’ the potential adversarial aspects” of the proceedings were not protected. 69 Fed.
Cl. at 805 (citing Adlman, 134 F.3d at 1202). The court analyzed various documents listed in
plaintiff’s privilege log “for the purpose of permitting the parties to analogize these examples to
disputed documents not mentioned . . . to resolve any further discovery disputes involving the
work product doctrine.” Id.In the second comparable Court of Federal Claims case addressing the work product
doctrine, Weston/Bean Joint Venture v. United States, the government filed a motion in limine,
arguing various exhibits were prepared in anticipation of litigation and accordingly protected
under the work product doctrine. 128 Fed. Cl. at 5. This Court applied the Adlman standards
and held, “[t]he challenged documents addressed to the validity of the plaintiff’s administrative
claims would have been created whether or not the claims ultimately ended up in litigation and
so were not prepared ‘because of’ anticipated litigation.” Id.
In the third comparable Court of Federal Claims case, Northrop Grumman, plaintiff
moved to “compel production of documents based on an alleged waiver of [work product]
privilege.” 80 Fed. Cl. at 651. In response, the government argued the relevant documents were
not subject to work product protection because they were prepared for the contracting officer
making a final decision on plaintiff’s claim. Id. at 652. This Court discussed the two approaches
to the work product determination and, agreeing with the Pacific Gas & Electric holding, found,
“under either formulation, documents that are prepared in the ordinary course of business or that
would have been created in essentially similar form irrespective of the litigation are not
protected.” Id. at 654–55 (quoting Pac. Gas & Elec. Co., 69 Fed. Cl. at 798) (internal quotation
marks omitted). Although the documents were marked “produced in direct or indirect
anticipation of litigation pursuant to the direction of the government attorney,” this Court stated,
“the court’s responsibility is to look at the essence of the document itself, and not be driven to
conclusions merely by a stamp affixed to the document.” Id. at 653, 655. This Court held the
documents were prepared in the ordinary course of business because the primary motivational
purpose for their creation was the contracting officer’s final decision. Id. at 656. This Court
accordingly found the documents not subject to work product protection. Id.
Finally, the ABA Work Product Treatise cites several district and circuit court cases
presenting similar fact patterns to the documents and emails at issue in this case. Epstein, supra,
at 1133 (citing Binks Mfg. Co. v. Nat’l Presto Indus., Inc., 709 F.2d 1109 (7th Cir. 1983); Willis
v. Westin Hotel Co., No. 85 Civ. 2056, 1987 WL 6155, at *1 (S.D.N.Y. Jan. 30, 1987); Scott
Paper Co. v. Ceilcote Co., 103 F.R.D. 591, 595 (D. Me. 1984); Grumman Aerospace Corp. v.
Titanium Metals Corp. of Am., 91 F.R.D. 84, 86 (E.D.N.Y 1981); Coastal Corp. v. Duncan, 86
F.R.D. 514, 515 (D. De. 1980). In Scott Paper Co., the District Court for the District of Maine
distinguished “reports prepared in response to an unfortunate event, that might well lead to
litigation” from “materials prepared as an aid to litigation.” 103 F.R.D. at 595 (emphasis in
original). In the documents at issue in that case, “the possibility of litigation is expressly
mentioned,” but “[i]n each instance, the document’s author expressed the hope that litigation
could be avoided.” Id. The court analyzed the term “settlement,” as used in the documents, and
-15-
reasoned, “‘settlement’ in this context refers to a negotiated business settlement and not to the
settlement of a legal action.” Id.; see also Rupert v. United States, 225 F.R.D. 154, 157 (M.D.
Pa. 2004) (finding an appeals officer’s memorandum prepared “to evaluate a settlement with the
Plaintiffs . . . [was] not protected by the work-product privilege.”).
In Coastal Corp. v. Duncan, plaintiffs challenged the validity of certain Department of
Energy (“DOE”) regulations. 86 F.R.D. at 515. The DOE asserted work product privilege to
protect “pre-decisional, internal documents of a recommendatory or deliberative nature” from
production. Id. at 516. The DOE argued the documents were prepared when litigation was
“considered likely” and in “the context of DOE enforcement activities . . . the ‘likelihood of
litigation’ is very strong.” Id. at 522. The District Court for the District of Delaware held:
because DOE did “not point[] with specificity to the litigation anticipated by DOE attorneys in
preparing the documents,” it “failed to properly assert the attorney work-product privilege.” Id.
In Grumman Aerospace Corp., plaintiffs sought discovery of an economic analysis report
a “neutral fact-finder” prepared for the DoD to evaluate potential settlement of antitrust claims.
91 F.R.D. at 86. DoD asserted work product privilege, and the District Court for the Eastern
District of New York found “the very fact of settlement ordinarily presupposes the existence, and
assertion of identifiable claims that adversary parties prefer to settle rather than litigate.” Id. at
89. Moreover, settlement negotiations do not “require[] . . . the ‘adversary preparation’ the
doctrine protects.” Id. The court further reasoned since the DoD was contractually bound to
never use the report in litigation against the defendant, the report was not subject to protection.
Id. at 89–90.
In Willis, the defendant sought “the production of an accident report prepared by an
employee of its codefendant.” 1987 WL 6155, at *1. The District Court for the Southern
District of New York stated, “material prepared by non-attorneys in anticipation of litigation,
such as accident reports and other investigative reports, is immune from discovery only where
the material is prepared exclusively and in specific response to imminent litigation. The mere
contingency that litigation may result does not give rise to the privilege.” Id.; see also Harper v.
Auto-Owners Ins. Co., 138 F.R.D. 655, 663 (S.D. Ind. 1991) (“It is presumed that a document or
thing prepared before a final decision was reached on an insured’s claim, and which constitutes
part of the factual inquiry into or evaluation of that claim, was prepared in the ordinary and
routine course of the insurer’s business of claim determination and is not work product.”).
Finally, in Binks Manufacturing Co., the Seventh Circuit affirmed a district court order
compelling production and admission of two internal memoranda defendant’s in-house counsel
prepared. 709 F.2d at 1121. The first memorandum, prepared for defendant’s general counsel,
detailed mechanical problems defendant’s machinery experienced, which gave rise to the claim.
Id. at 1113. The second memorandum, prepared for defendant’s production manager, further
detailed the mechanical problems and provided the counsel’s opinion of the proper allocation of
responsibility between the parties. Id. The court considered letters the parties exchanged when
the memoranda were prepared, and while one letter’s tone was threatening, the court determined
it fell short of explicitly threatening litigation. Id. at 1120. The court reasoned, “while there may
have been the remote prospect of litigation . . . the appellant has failed to meet its burden of
proving that the memoranda were prepared . . . because of the prospect of litigation, or, that some
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articulable claim, likely to lead to litigation, had arisen,” even though litigation resulted. Id.(emphasis and internal quotation marks omitted).
a. The Parties’ Arguments – Document One and Document Two
Plaintiffs argue Document One and Document Two are not subject to work product
protection 18 because “[t]he documents at issue here reflect Kennell’s historic involvement in the
Government’s discretionary payment program.” Pls.’ Mot. at 11. Additionally, Document One
and Document Two “were not created in anticipation of litigation with the [400 Hospitals] over
the discrepancies that they had identified because, by the time the documents were created, the
essential terms of a settlement had already been agreed to.” Id at 12. 19
In response, the government argues Document One and Document Two are subject to
work product privilege because “the fact that the documents are privileged is apparent on their
face.” Def.’s Resp. to Pls.’ Mot. at 13. Further, the “major strategy” the 400 Hospitals used to
“bring about both the discretionary payment process and the later [400 Hospitals] settlement was
the repeated and explicit threat of litigation.” Id. at 14. The government cites two letters and
two emails written prior to the discretionary payment process and three emails written after the
discretionary payment process, which it argues contain the “explicit threat of litigation” that lead
to Document One’s creation. 20 See id. at 3–4, 7–8, 13–14; see also supra pgs. 6–7 (quoting all
seven correspondences the government cites). Additionally, the government argues the “threat
of litigation had [not] been removed by September 22, 2011, before [Document One] and
[Document Two] were created.” Id. at 14. 21
18
Plaintiffs also argue Document One and Document Two are not subject to attorney-client privilege. Pls.’ Mot. at
10–22. During the 7 October 2019 oral argument, counsel for the government confirmed the government does not
assert the attorney-client privilege for Document One or Document Two. See Order, ECF No. 122. The Court
therefore does not address whether Document One or Document Two are subject to the attorney-client privilege.
19
Plaintiffs raise four other arguments why Document One and Document Two are not privileged if the Court finds
they are protected work product: (1) “[t]he Government’s voluntary production of documents, and its lack of
objection to testimony by Kennell and Witsberger, relating to the Kennell Study and the discretionary payment
program operates as a waiver of any possible work product protection”; (2) the government’s production of the
documents waived any protection because “the Government’s process to screen for work product and privilege was
insufficient” and “the Government did not take prompt steps to rectify the disclosure, instead waiting over two
weeks to assert a claim of work product protection”; (3) “providing [a government employee] with a copy of
[Document One] months after it was created, and providing him with both documents after the settlement agreement
was signed, when litigation was not threatened, the Government waived any work-product protection that the
documents may have had”; and (4) even if the documents are protected work product, “they are necessary to
impeach the false testimony of Kennell and Witsberger” and “are necessary to aid Plaintiffs, and ultimately this
Court, to quantify the underpayment resulting from the Government’s exclusion of categories of outpatient services
besides radiology.” Id. at 16–17, 21–22.
20
The government cites five emails and two letters: 26 July 2010 letter from C. Mitchell Goldman to Mr. Seaman;
19 November 2010 email from Mr. Brodek to Mr. Seaman; 19 January 2011 letter from Mr. Brodek to Rear Admiral
Christine Hunter; 2 February 2011 email from Mr. Brodek to Mr. Seaman; 16 September 2011 email from Mr.
Brodek to Mr. Hutter; 21 September 2011 email from Mr. Brodek to Mr. Hutter; 26 September 2011 email from Mr.
Brodek to Mr. Hutter. See Def.’s Resp. to Pls.’ Mot at 3–4, 7–8.
21
In response to plaintiffs’ four other arguments, the government argues: (1) “[t]he fact that the Government has
permitted plaintiffs broad discovery into the non-privileged aspects of this case does not operate as a privilege
waiver”; (2) the government did not waive privilege because Document One was identified and withheld 16 times
and Document Two 12 times, their disclosure was inadvertent, and two weeks is not “an inappropriately long period
of time” to seek clawback; (3) the government did not waive privilege by disclosing the documents to one of its
-17-
b. Analysis – Document One and Document Two
i. Document One
Although the government argues Document One’s privilege is apparent on its face, “[t]he
court’s responsibility is to look at the essence of the document itself, and not . . . a stamp affixed
to the document.” Northrop Grumman, 80 Fed. Cl. at 655. Therefore, the Court must determine
“whether the material sought to be protected from discovery was prepared in anticipation of
litigation or was prepared in the ordinary course of business or for other purposes.” Pac. Gas &
Elec. Co., 69 Fed. Cl. at 790 (quoting Allendale Mut. Ins. Co., 145 F.R.D. at 86) (internal
quotation marks omitted). “‘[D]ocuments that are prepared in the ordinary course of business or
that would have been created in essentially similar form irrespective of the litigation’ are not
protected.” Id. at 798 (citing Adlman, 134 F.3d at 1202).
The Court initially reviews the factual circumstances surrounding Document One’s
creation. First, the Court considers the nature of the government’s hospital payment business
during TRICARE’s recalculation and discretionary payment process. Prior to the 25 April 2011
Notice, TRICARE’s overarching goal was to avoid litigation by reconciling previous
underpayments the 400 Hospitals identified. Consistent with this goal, the recalculation Notice
stated TRICARE “review[ed] payments for hospital services . . . [and] has determined that, for
radiology services . . . looking at the Medicare reimbursement methodologies in existence prior
to adoption of Medicare OPPS in 2000, . . . some radiology services were underpaid in
comparison,” and “[c]onsistent with TRICARE policy under statute to pay similar to Medicare,
we have determined that discretionary adjusted payments may better reflect the Medicare
payment amounts.” Ingham Reg’l Med. Ctr., 874 F.3d at 1344. Additionally, Step 8 of the
Notice’s nine-step review process detailed TRICARE would provide a written response to all
hospitals who submitted a request for analysis of the claims, which “would provide the
calculated discretionary adjusted payment and the calculations from which the adjustment was
derived.” Id. at 1345 (internal quotation marks omitted). Further, Step 8 provided, “[a]ny
questions [about the response] should be accompanied by detailed explanation of the alleged
errors and the proposed corrections with supporting documentation.” Ingham Reg’l Med. Ctr.,
126 Fed. Cl. at 42. Through this internal review process, TRICARE sought to identify payment
discrepancies and made the business decision to allow hospitals to submit their TRICARE
payments for recalculation review.
TRICARE’s invitation for participant hospitals to submit claims for review is comparable
to business decisions insurance companies make during internal claims evaluation processes.
When an insurer receives a claim, part of its internal business process is to undertake
investigatory steps to evaluate the claim. This internal review process is conducted as a key
component of its business to assure the correct payment is made to the claimant. Other federal
employees because “[i]t was necessary for [him] to have access to information regarding the proposed settlement”;
and (4) “[n]o [e]xceptional [c]ircumstances [w]arrant [d]iscovery [o]f [Documents One and Two]” because
“plaintiffs failed to collect and preserve all of their own data in order to prove their claims” and this “does not now
mean that plaintiffs now have a substantial need justifying access to privileged information.” Def.’s Resp. to Pls.’
Mot. at 14, 16–20 (emphasis omitted).
-18-
courts have dealt with documents similarly created from internal review and have likewise held
those internal documents were prepared as part of a business process.
As this Court discussed in Pacific Gas & Electric, in Stout, the District Court for the
Southern District of Indiana stated, “[i]f an insurer anticipates litigation over a pending claims
decision and undertakes extra-ordinary investigations for the purpose of ensuring a correct
decision, the resulting documentation is not work product because the insurer generated the
reports to use in evaluating the claim.” Stout, 150 F.R.D. at 598. In the evaluation process,
“[m]any documents are produced ‘because of’ anticipated litigation, in the sense that they would
have not been created but for the prospect of litigation, but they were not created to prepare for
that litigation.” Id.; see also Harper, 138 F.R.D. at 663 (“It is presumed that a document or thing
prepared before a final decision was reached on an insured’s claim, and which constitutes part of
the factual inquiry into or evaluation of that claim, was prepared in the ordinary and routine
course of the insurer’s business of claim determination and is not work product.”). The ABA
Work Product Treatise similarly notes, “the very nature of an insurer’s business [is] to
investigate and evaluate merits of claims . . . in the ordinary course of an insurer’s business.”
Epstein, supra, at 1101. Here, just like an insurer’s claim investigation, DoD investigated
hospitals’ underpayment claims further before making a payment determination. During the
evaluation, both internal communications and communications with the parties are expected, and
these communications are generated as part of the repayment evaluation process. While there
may have been communication exchange between the parties regarding “settlement” after the
Notice, the comments were related to calculation review regarding repayment. The ABA Work
Product Treatise notes any time insurance coverage is considered, “factual inquiry into or
evaluation of a claim . . . are produced in the ordinary course of an insurer’s business.” Id.
Similarly in this case, when the Notice was posted, the government’s business focus was to
recalculate data to reconcile any past discrepancies in its payments to hospitals. Recalculating
TRICARE payments therefore became the government’s business during the discretionary
payment period, and any additional steps were in furtherance of this business goal.
The Court next considers whether Document One was prepared in anticipation of
litigation. The government argues three 2011 emails (16 September, 21 September, and 26
September) threatened litigation after the 400 Hospitals disputed the amount of proposed
payment adjustment. Def.’s Resp. to Pls.’s Mot. at 7–8. The government argues it was this
explicit threat of litigation which led to Document One’s creation, and the threat of litigation was
not removed prior to its creation. Id. at 14. 22
The 2011 emails discuss the benefits of agreeing on calculation figures to avoid disputes.
The ABA Work Product Treatise cites cases with comparable facts in the insurance context,
including Scott Paper Co., discussing whether documents prepared after an accident are subject
to work product protection. Epstein, supra, at 1133. The Scott Paper Co. court distinguished
22
“Paul Hutter, and [the 400 Hospitals] attempted to reconcile their competing calculations . . . and [the 400
Hospitals] repeatedly tied this separate settlement process to an explicit threat of litigation, including the following
correspondence: [a] September 16 2011 email . . . [a] September 21, 2011 email . . . [a] September 26, 2011 email.”
Def.’s Resp. to Pls.’s Mot. at 8–9. “[I]n the face of threatened litigation by [the 400 Hospitals], on September 30,
2011, Mr. Kennell provided DHA General Counsel Paul Hutter with [Document One].” Id. at 8.
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between “reports prepared in response to an unfortunate event that might well lead to litigation”
and “materials prepared as an aid to litigation.” Scott Paper Co., 103 F.R.D. at 595 (citing Binks
Mfg. Co., 709 F.2d at 1120); see also Soeder, 90 F.R.D. at 255 (finding an “in-house” accident
report prepared for a purpose other than for litigation was not protected). Although the
“possibility of litigation [was] expressly mentioned . . . the document’s author expressed the
hope that litigation could be avoided,” and held the documents were not protected. Id. at 596. In
this case, prior to the 2011 emails, between 14 July 2011 and 2 August 2011, the parties worked
to clarify discrepancies identified in their respective recalculation analyses. At the time the 2011
emails were exchanged, there was no prospect of litigation because the letter and Notice
initiating the discretionary payment process were sent to expressly avoid litigation. Although the
2011 emails mention “litigation” and “settlement,” as discussed in Scott Paper Co., the term
“settlement” in this context refers to a negotiated business settlement, not the settlement of a
legal action, because the government sought to correct payment errors and avoid litigation.
When parties engage in a negotiated business settlement, “the very fact of settlement ordinarily
presupposes the existence, and assertion of identifiable claims that adversary parties prefer to
settle rather than litigate.” Grumman Aerospace Corp., 91 F.R.D. at 90. The 2011 emails
demonstrate the authors hoped litigation could be avoided and refer to the term “settlement” as a
negotiated business settlement to bring finality to payment adjustments.
Moreover, steps businesses take “to ensure that their current or future conduct conforms
to the law or contractual obligations cannot be held to constitute steps in preparation for
litigation merely because there is a substantial prospect of litigation if another party believes they
have failed.” Stout, 150 F.R.D. at 598. Here, the 2011 Notice stated, “[c]onsistent with
TRICARE policy under statute to pay similar to Medicare, we have determined that discretionary
adjusted payments may better reflect the Medicare payment amounts.” See Ingham Reg’l Med.
Ctr., 874 F.3d at 1344. Consequently, the government’s efforts to better comply with the statute,
including analysis it procured in Document One, cannot constitute preparation for litigation.
As the ABA Work Product Treatise summarizes, multiple cases conclude where there
may be a prospect of litigation, a party must meet its burden to demonstrate documents were
prepared because of the prospect of litigation. Epstein, supra, at 1133; see also Binks Mfg. Co.,
709 F.2d at 1120. In Binks, the litigation concerned defective contract performance. Binks Mfg.
Co., 709 F.2d at 1111. An attorney for the purchaser, Presto, prepared two letters. The attorney
sent the first letter to Presto’s General Counsel, describing a conversation between three Presto
corporate officers detailing the mechanical problems Presto experienced operating machinery.
Id. at 1113. The attorney sent the second letter to Presto’s Production Manager, containing a
detailed list of the system’s malfunctions, as well as the attorney’s opinion concerning the
allocation of responsibility between Presto and Binks regarding the machinery breakdowns. Id.Afterwards, “Binks and Presto made several unsuccessful attempts to reach a negotiated
settlement” before “Binks filed a complaint seeking recovery under the contract for the balance
of the purchase price.” Id. The court analyzed the events leading to the preparation of the
memoranda, including letters the companies sent to each other. The first letter, which Binks sent
to Presto, “request[ed] full payment of the [s]ystem’s purchase price” and if not paid, Binks
would send a team to “dismantle and remove the equipment.” Id at 1119. Presto responded by
sending Binks a letter, which said in relevant part:
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It should be specifically noted that your proposed avenues of resolving this matter
are not available. We have already indicated that we shall withhold further payment
to set off against our damages. . . . If you persist in your choice not to make the
necessary corrections, we shall have to proceed on our own and continue to hold
you fully responsible for any damages and expenses incurred.
Id. at 1120. The court observed although the letter’s tone was threatening, it fell short of
threatening litigation. Binks Mfg. Co., 709 F.2d at 1120. The court held the letters were not
privileged, reasoning “while there may have been the remote prospect of litigation . . . the
appellant has failed to meet its burden of proving that the memoranda were prepared . . . because
of the prospect of litigation, or, that some articulable claim, likely to lead to litigation, had
arisen.” Id. (emphasis and internal quotation marks omitted).
In this case, the 2011 emails mention “litigation,” but they also discuss the benefits of a
negotiated business settlement to avoid litigation. Def.’s Resp. to Pls.’ Mot. at App17. The
government argues it was the “explicit threat of litigation” in the 2011 emails which led to
Document One’s creation. Id. at 7–8. While there may have been a remote prospect of litigation
at the time of Document One’s creation, similar to Binks, the communications leading up to the
creation of the document contained demands as to what each party wished to receive from the
other, but the substance of the communications did not rise to the level of an articulable claim
likely to lead to litigation. Binks Mfg. Co., 709 F.2d at 1120. Here, in the communications prior
to Document One’s creation and the 2011 Notice, Mr. Brodek stated in his 2 February 2011
email to Mr. Seaman that litigation was not “in either our clients’, nor TRICARE’s, best
interest,” and he offered a proposal he thought “avoids these undesirable outcomes, and allows
for a prompt, and final, resolution of this matter.” Def.’s Resp. to Pls.’ Mot. at App17. Mr.
Brodek offered his proposal on how to avoid litigation, and while there may have been a future
remote prospect of litigation, the government fails to identify an articulable claim likely to lead
to litigation as Document One was created during the government’s factual investigation into
payment adjustments for the 400 Hospitals.
Additionally, the Court in Binks found the letter at issue in that case was not protected by
the work product doctrine even though it contained attorney mental impressions. Binks Mfg. Co.,
709 F.2d at 1113. Conversely, in this case, Document One did not contain attorney mental
impressions, but was nonetheless marked “Attorney-Client Protected Work Product Not To Be
Disclosed.” Pls.’ Mot at A29–A37. Although marked privileged, the Court reviews the
substance of the document; here, the communications exchanged prior to Document One’s
creation were merely a back-and-forth dialogue to identify payment discrepancies to reach a
business settlement recalculation across all payees.
Finally, this Court’s opinion in Pacific Gas and Electric discussed a line of cases
describing the proper standard for “dual-purpose” documents, such as Document One, which are
prepared for concurrent purposes, not simply for litigation. 69 Fed. Cl. at 797–98. First, in
Soeder, an “in-house” report prepared in response to an airplane crash was not deemed protected
work product despite the defendant anticipating litigation. 90 F.R.D. at 255. The Court held
litigation does not automatically grant work product protection because defendant had an
“equally reasonable desire . . . to improve its aircraft products, to protect future pilots and
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passengers of its aircraft, to guard against adverse publicity in connection with such aircraft
crashes, and to promote its own economic interests by improving its prospect for future
contracts.” Id. Second, in Stout, the insurance company had an equally reasonable desire to
avoid litigation and provide a correct claims decision, but any extra investigation was to arrive at
a calculation and not to form a litigation strategy. 150 F.R.D. at 598. Similar to these cases,
here, Document One may have assisted if the case proceeded to litigation to provide evidence of
miscalculations in the discretionary payment process, but the government had an equally
reasonable desire to provide a correct adjustment to its TRICARE participants. When Document
One was created, the government’s primary focus was the calculation, and recalculation, of
TRICARE payments which became the government’s business during the discretionary payment
process. The parties communicated to identify discrepancies in the recalculation process.
Although emails mention the term “litigation,” the emails’ tone, language, and history
demonstrate the authors’ hope to avoid litigation. The emails refer to the term “settlement” as a
negotiated business settlement to agree on a recalculation figure. Although Document One may
have served a dual-purpose to provide evidence of miscalculations, Document One would have
been produced regardless of any litigation to ensure the correct payment was made; any
additional research the government conducted to make a correct payment determination is not
protected work product.
ii. Document Two
Document Two does not indicate its author or date of creation. See Pls.’ Mot. at A38.
The government argues circumstantial evidence establishes Mr. Hutter, the General Counsel of
DHA, as Document Two’s author, but also states metadata shows Ms. Walters is the original
author. Def.’s Resp. to Pls.’ Mot. at 8–9. The government did not submit an affidavit from Mr.
Hutter establishing he is the author of Document Two. Regardless of authorship, documents
prepared by non-attorneys do not immediately lose work product protection. See RCFC
26(b)(3)(A) (preventing a party from discovering “documents and tangible things that are
prepared in anticipation of litigation or for trial by or for another party or its representative
(including the other party’s attorney, consultant, surety, indemnitor, insurer, or agent”)).
The government argues Document Two was created because the 400 Hospitals threatened
litigation. No date of creation is listed for Document Two, but its figures concern TRICARE
recalculation, and Document Two comprises accounting numbers for the 3,500 hospitals who
participated in the TRICARE program, so the date range is likely between 1 January 2011 and 30
September 2011 when Document One was produced. See Pls.’ Mot. at A38. In this time period,
the government’s primary focus on payments was recalculating data to reconcile past
discrepancies. For payment recalculation analysis, like the analysis during the discretionary
payment process, the government required an extrapolated compilation of numbers previously
calculated. Similar to an insurance company’s internal claims evaluation process, documents
prepared by an insurer in evaluating claim fulfillment “would have been produced regardless of
litigation purposes and therefore do not constitute work product.” Pac. Gas & Elec. Co., 69 Fed.
Cl. at 797 (quoting Stout, 150 F.R.D. at 598); see also Harper, 138 F.R.D. at 663 (“It is
presumed that a document or thing prepared . . . which constitutes part of the factual inquiry into
or evaluation of that claim, was prepared in the ordinary and routine course of the insurer’s
business . . . and is not work product.”). Here, the government took extra investigatory steps to
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compile calculations as part of a business decision, which arose from the discretionary payment
process in mid-2011. This documentation, at a time when the government compiled calculations
based on evaluation of recalculations, relates directly to the government’s business of
recalculating data to reconcile past discrepancies. Document Two is a user-friendly way of
capturing estimated summary statistics based on estimated final values for listed factors on the x
and y axes of the table. Although Document Two’s title contains the word “settlement,” the
calculations in the document refer to a negotiated business recalculation settlement, not the
settlement of a legal action, as the comments were related to repayment review. Further,
Document Two only contains calculations compiled during the discretionary payment process
and does not contain any attorney mental impressions or legal strategy.
iii. Document One and Document Two
Document One and Document Two’s calculations relate to the government’s business
during the discretionary payment process and were part of a business decision prepared to
provide extrapolated calculations regardless of litigation threat. Like the insurance context, if an
insurer anticipates litigation and takes extra investigatory steps to ensure a correct decision, the
documents are produced for use in evaluating claim fulfillment and not subject to work product
protection. Therefore, both documents are not subject to work product protection. This is
consistent with Supreme Court and Federal Circuit precedent as the documents were prepared as
part of a business recalculation and no part concerned a lawyer’s preparation with an “eye
towards litigation.” Hickman, 329 U.S. at 510–11 (Work product doctrine is intended to allow a
lawyer to develop a legal strategy “with an eye towards litigation”); Nobles, 422 U.S. at 238 (“At
its core, the work-product doctrine shelters the mental processes of . . . attorney[s], providing a
privileged area within which [they] can analyze and prepare [their] client’s case.”); In re
EchoStar Commc’ns Corp., 448 F.3d at 1301 (“[T]he work-product doctrine encourages
attorneys to write down their thoughts and opinions with the knowledge that their opponents will
not rob them of the fruits of their labor.”). RCFC 26(b)(3) prevents a party from discovering
“documents and tangible things that are prepared in anticipation of litigation or for trial by or for
another party or its representative (including the other party’s attorney, consultant, surety,
indemnitor, insurer, or agent).” The ABA Work Product Treatise explains the privilege applies
“not to all materials in an attorney’s files, but only to those materials that were prepared in
anticipation of litigation or for trial.” Epstein, supra, at 1082. Further, “documents or other
materials prepared looking toward, or in implementation of, a settlement often have been held
not to be in anticipation of litigation.” Id. at 1132. In this context, “‘documents that are prepared
in the ordinary course of business or that would have been created in essentially similar form
irrespective of the litigation’ are not protected.” Pac. Gas & Elec. Co., 69 Fed. Cl. at 798
(quoting Adlman, 134 F.3d at 1202).
c. The Parties’ Arguments – Email One; Email Two; and Email Three
Plaintiffs argue the three emails are not subject to work product protection because they
were “from an employee of a government contractor to another employee of that contractor,” and
“[a]gency counsel is not listed as a recipient on any of the three emails, nor is there any
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indication that agency counsel requested the information contained in them.” Pls.’ Mot. to
Comp. at 14. 23
The government argues the three emails are subject to work product protection because it
was the explicit threat of litigation which led to Ms. Witsberger conducting the initial data
analysis for Mr. Kennell, and this analysis led to the creation of the emails. Def.’s Resp. to Pls.’
Mot. to Comp. at 11–12.24 Additionally, the government argues pursuant to RCFC 26(b)(5)(B),
the Court should strike all reference to the challenged material plaintiffs’ expert used as a basis
for the opinions in his report. Id. at 18.
In reply, plaintiffs argue: (1) the government failed to provide any affidavits to
substantiate its argument that agency counsel directed Ms. Witsberger to perform tasks related to
the three emails; (2) the motion to strike plaintiffs’ expert report which relies upon disputed
documents should be denied because “the documents in question are not privileged and, if they
were, that privilege was unequivocally waived by [the government’s] actions and inactions”; and
(3) if the motion to strike is granted, it will prejudice plaintiffs as “[p]laintiffs have relied upon
the contents of all of the Witsberger emails as well as the deposition testimony of Mr. Kennell
and Ms. Maxey regarding some of those emails in framing their case against defendant.” Pls.’
Reply to Def.’s Resp. to Pls.’ Mot. to Comp. and Pls.’ Opp’n to Def.’s Mot. to Strike, ECF No.
116 at 3, 10, 19–21.
d. Analysis – Email One; Email Two; and Email Three
i. Email One
On 26 August 2011, Ms. Witsberger sent Email One to Mr. Kennell with the subject line
“HOPD Rad Adj - D. Morris - Childrens Hosp of the Kings Daughters, Norfolk VA TIN
[redacted] zip 23507.” Pls.’ Mot. to Comp. at Appx137. The government argues the analysis in
this email was conducted due to the explicit threat of litigation and was then sent to Mr. Kennell,
who created Document One. See Def.’s Resp. to Pls.’ Mot. to Comp. at 12.
Prior to Email One’s creation, as detailed for Document One, the parties exchanged
emails discussing recalculation to address alleged underpayments and the discretionary payment
process. At this time, after DoD sent the letter and Notice, the government’s primary focus was
23
Plaintiffs raise two other arguments why the three emails are not privileged if the Court finds they are protected
work product: (1) the government waived work product protection because it intentionally disclosed the emails, and
even if their disclosure was inadvertent, “marking . . . two of the documents at depositions, without objection from
government counsel, was a clear waiver as to those documents”; and (2) plaintiffs’ substantial need for the three
emails is sufficient to overcome work product protection because the emails are highly relevant to plaintiffs’
allegations that “in calculating the amounts owed to hospitals during the discretionary payment process Kennell and
Associates failed to capture all of the relevant outpatient radiology data,” and plaintiffs do not have access to a
substitute for the three emails. Pls.’ Mot. to Comp. at 21, 23.
24
In response to plaintiffs’ other arguments, the government argues: (1) it did not waive privilege by inadvertently
disclosing the three emails because they “contain absolutely no indications that they are work product, and because
they overtly appear to be something they are not,” it was not readily apparent that the documents were privileged
prior to their disclosure; and (2) no exceptional circumstances justify their discovery because “[t]he fact that
plaintiffs neglected to pursue discovery that they deem to be relevant to their claims is not a valid reason for them to
now invade the work product privilege.” Def.’s Resp. to Pls.’ Mot. to Comp. at 14, 16 (emphasis omitted).
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recalculating TRICARE payments, which became the government’s business during the
discretionary payment process. The parties subsequently exchanged calculations to identify any
differences in recalculating their data. At this point, the parties communicated as part of the
repayment process, when there was no prospect of litigation because the process was intended to
avoid litigation. To achieve a correct recalculation, the non-attorney research Ms. Witsberger
provided to Mr. Kennell analyzed different calculations in the discretionary payment process—a
process the government pursued for all payees. Here, Email One contains research into specific
problems identified in the discretionary payment process. Email One contains no attorney
mental impressions or legal strategy, and only contains analysis into the discretionary payment
process. This documentation, produced in the ordinary course of business, does not
automatically gain work product protection because “‘documents that are prepared in the
ordinary course of business or that would have been created in essentially similar form
irrespective of the litigation’ are not protected.” Pac. Gas & Elec. Co., 69 Fed. Cl. at 791
(quoting Adlman, 134 F.3d at 1202). While communications prior to Email One’s creation
contain back and forth argument regarding a negotiated business settlement, the comments only
related to repayment. This non-attorney research contained in Email One generated solely for
the purpose of claim investigation is not subject to work product protection. See Harper, 138
F.R.D. at 663 (finding an insurer’s investigative records were not subject to work product
protection because the records pertained to investigation before a claim decision was made).
ii. Email Two
On 2 September 2011, Ms. Witsberger sent Email Two to Mr. Kennell with the subject
line “Duane Morris Latest Email.” Pls.’ Mot. to Comp. at Appx123. Ms. Witsberger “examined
the issue in the email regarding deleting CPT codes billed on a global basis that are purely
technical,” and analyzes why codes were excluded from Kennell’s analysis and why Duane
Morris may not have realized why certain fields were not populated. Id. The government argues
this analysis was conducted due to the explicit threat of litigation and sent to Mr. Kennell who
produced Document One. Def.’s Resp. to Pls.’ Mot. to Comp. at 12.
As discussed supra for Email One, the government’s primary focus was recalculating
TRICARE payments during the discretionary payment process. The parties exchanged
calculations to identify any data discrepancies to achieve a correct recalculation. The non-
attorney research Ms. Witsberger provided analyzed a specific issue relating to the government’s
business at the time of the discretionary payment process. Ms. Witsberger provided calculations
and explained why information was excluded from the initial Kennell study. Pls.’ Mot. to Comp.
at Appx123. At the time of its creation, the parties exchanged emails regarding repayment
calculations, and the non-attorney research relates directly to the recalculation analysis. Email
Two contains no attorney mental impressions or legal strategy, and its information directly
relates to the government’s business of providing a correct recalculation to TRICARE program
payees. This document therefore is not protected because “‘documents that are prepared in the
ordinary course of business or that would have been created in essentially similar form
irrespective of the litigation’ are not protected.” Pac. Gas & Elec. Co., 69 Fed. Cl. at 791
(quoting Adlman, 134 F.3d at 1202).
iii. Email Three
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On 13 September 2011, Ms. Witsberger sent Email Three to Mr. Kennell with the subject
line “TC and 76499 analysis – S and W.” Pls.’ Mot. to Comp. at Appx125. In Email Three, Ms.
Witsberger analyzes data for hospitals located in the southern and western United States. Id.As discussed for Email One and Email Two supra, the government’s primary focus and
business was recalculating TRICARE payments during the discretionary payment process. The
parties discussed differences in their data prior to Email Three’s creation, and the non-attorney
research Ms. Witsberger provided to Mr. Kennell analyzed different calculations used in the
discretionary payment process. At the time of its creation, the parties exchanged emails
regarding repayment calculations, and the non-attorney research relates directly to the
recalculation analysis. Email Three contains no attorney mental impressions or legal strategy,
and its information directly relates to the government’s business of providing a correct
recalculated adjustment to TRICARE program payees. This document therefore is not protected
by the work product doctrine because it was created in the government’s ordinary course of
business. 25
iv. Email One; Email Two; and Email Three
When Email One, Email Two, and Email Three were created, the government’s primary
focus was recalculating TRICARE payments, which became the government’s business during
the discretionary payment process. The parties exchanged emails to identify discrepancies in the
recalculation process, and any additional research conducted in order to arrive at a correct
decision was a “negotiated business settlement.” Scott Paper Co., 103 F.R.D. at 596 (finding use
of the term “settlement . . . refers to a negotiated business settlement”); Epstein, supra, at 1125
(“[I]nternal audits and accident investigations [are] not to be work-product protected unless
litigation is clearly the primary motive.”) (emphasis in original). The three emails only contain
discretionary payment analysis and no attorney mental impressions for “preparation [of] [the
government’s] case.” Nobles, 422 U.S. at 238 (“At its core, the work-product doctrine shelters
the mental processes of . . . attorney[s], providing a privileged area within which [they] can
analyze and prepare [their] client’s case.”); Hickman, 329 U.S. at 510–11 (explaining work
product doctrine is intended to allow a lawyer to develop a legal strategy “with an eye toward
litigation”); In re EchoStar Commc’ns Corp., 448 F.3d at 1301 (“[T]he work-product doctrine
encourages attorneys to write down their thoughts and opinions with the knowledge that their
opponents will not rob them of the fruits of their labor.”). Therefore, the three emails are not
subject to work product protection.
III. Conclusion
25
The government’s response brief to plaintiffs’ motion for privilege determination notes original counsel for the
government concluded Email Two and Email Three were business “responses to routine challenges brought
pursuant to Step 8 of the [Discretionary Payment Process].” Def.’s Resp. to Pls.’ Mot. to Comp. at 5. The
government acknowledges the emails merely “reflect an analysis by Christina Witsberger . . . of the discrepancies
between the data submitted by several hospitals and the data that TMA had used to calculate each hospital’s
proposed adjustment.” Id. at 6.
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The Court hereby GRANTS: (1) Plaintiffs’ Motion for Determination that Certain
Documents Produced in Discovery are not Privileged or Subject to the Work Product Doctrine,
ECF No. 106; and (2) Plaintiffs’ Motion to Compel Deposition Testimony, ECF No. 109. The
Court hereby DENIES: (1) Defendant’s Motion to Seal Plaintiffs’ Motion to Compel, ECF No.
111; (2) Defendant’s Response to Plaintiffs’ Motion to Compel and Defendant’s Motion to
Strike Portions of Plaintiffs’ Expert Report that Rely Solely upon Privileged Material, ECF No.
113; and (3) Defendant’s Motion to Seal Plaintiff’s Reply to Defendant’s Response to Plaintiffs’
Motion to Compel and Plaintiffs’ Opposition to Defendant’s Motion to Strike, ECF No. 117.
The Court does not address plaintiffs’ remaining arguments regarding waiver of the work
product doctrine and exceptional circumstances regarding justification of their disclosure. As
this order is filed under seal pursuant to the protective order in this case and motions containing
arguments of privilege and attorney work product, the parties shall meet and confer to discuss
unsealing all motions and exhibits, or other reasons for related pleadings on these motions to
remain sealed. Additionally, the parties shall discuss the need for further discovery, including
deposition of Christina Witsberger, and a proposed schedule for all discovery and motions
extended by the Court’s 29 August 2019 order, ECF No. 122. On or before 27 January 2020,
the parties shall file a joint status report addressing: (1) the unsealing of pleadings and exhibits
related to the motions in this order; and (2) a proposed schedule for remaining discovery and
motions extended by the Court’s 29 August 2019 order, ECF No. 122.
IT IS SO ORDERED.
s/ Ryan T. Holte
RYAN T. HOLTE
Judge
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