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In re Subpoenas Served on The American Kidney Fund, Inc.

United States District Court, D. Maryland, Southern Division

April 29, 2019

IN RE SUBPOENAS SERVED ON THE AMERICAN KIDNEY FUND, INC.
v.
AMERICAN RENAL ASSOCIATES HOLDINGS, INC., et al., Defendants. UNITEDHEALTHCARE OF FLORIDA, INC., et al., Plaintiffs,

          REPORT AND RECOMMENDATION

          CHARLES B. DAY UNITED STATES MAGISTRATE JUDGE

         Pending before the Court is Non-party American Kidney Fund, Inc.'s (“AKF”) Renewed Motion for Attorneys' Fees (“AKF's Renewed Mot.”). ECF No. 55. Pursuant to 28 U.S.C. § 636, and Local Rule 301, the Honorable Theodore D. Chuang referred this matter to the undersigned for the making of a Report and Recommendation. Also pending before the Court is AKF's informal motion to strike that was submitted to the Court by letter. See Letter from Chong Park to the Court dated Jan. 17, 2019 (“AKF's Letter-Mot. to Strike”), ECF No. 61. The Court has reviewed AKF's Renewed Motion and memoranda related thereto. No. hearing is deemed necessary. Local Rule 105.6 (D. Md. July 1, 2016). For the reasons stated herein, I recommend that AKF's Renewed Motion for Fees as well as its Letter-Motion to Strike be denied.

         I. Pertinent Factual and Procedural Background

         AKF's Renewed Motion is the latest filing in what has been a highly contentious proceeding concerning whether a party's discovery demands constitute an undue burden on a non-party entity that is heavily implicated in the events at issue in the underlying proceeding. This motion is the result of subpoenas issued in a case commenced by UnitedHealthcare of Florida, Inc. (“UHC of Florida”) and All Savers Insurance Company (“ASI”) (collectively “United”) in the Southern District of Florida. UnitedHealthcare of Florida, Inc. v. American Renal Associates Holdings, Inc., Civ. A. No. 16-cv-81180-KAM (S.D. Fl. filed July 1, 2016) (hereinafter the “Florida Litigation”). While the Florida Litigation has since been settled, the allegations at issue in that matter remain key to determining the merits of AKF's Renewed Motion.

         Factual History

         United commenced a civil suit against the America Renal Associates Holdings, Inc., (“ARAH”) and the American Renal Associates, LLC (“ARA”). First Am. Compl., (“United Am. Compl.”), AKF's Renewed Mot., ECF No. 55-1, Ex. 1-1(c). UHC of Florida is an insurance company that provides coverage to individuals in the State of Florida. Id. at ¶ 31. ASI is an insurance company that provides coverage for individuals in the State of Ohio. Id. at ¶ 32. ARAH is a “national provider of kidney dialysis services for patients suffering from chronic kidney failure, also known as end stage renal disease, or ESRD.” Id. at ¶ 33. ARA is a dialysis provider that operates clinics in various states, including Florida and Ohio. Id. at ¶ 34. ARA is “100% owned by ARAH.” Id.

         At issue in the Florida Litigation was ARAH's and ARA's alleged practice of “patient-steering.” Id. at ¶ 1. According to United, ARA allegedly “convince[d] dozens of patients in Florida and Ohio to abandon their primary Medicaid coverage (or forgo available Medicare coverage) and enroll into commercial plans offered by United through the health insurance exchanges established under the Patient Protection and Affordable Care Act (‘ACA').” Id. at ¶ 4. By doing so, ARA was allegedly able to seek reimbursement for higher amounts per treatment session than it would otherwise have been able to if these patients were under Medicare or Medicaid coverage. Id. at ¶¶ 6, 120-24, 136, 292-98.

         Although AFK was never named as a party to the Florida Litigation, United accused AKF of being a willing co-conspirator in this alleged patient-steering scheme. Id. at ¶¶ 6, 101-19, 120-55. AKF is a 501(c)(3) tax-exempt non-profit that provides services, educational programing, and financial resources to individuals and families living with kidney disease. Id. at ¶¶ 101-02. Among the programs it offers is the Health Insurance Premium Payment (“HIPP”) program that pays the insurance premiums for eligible patients. Id. at ¶ 103. The HIPP is primarily funded through donations, including donations from dialysis providers. Id. at ¶¶ 103-04.

         According to United, as a third-party provider of insurance premiums AKF played a key role in the alleged patient-steering scheme. Id. at ¶¶ 190-96. For the alleged scheme to work properly, patients would need to be able to pay their insurance premiums. Id. at ¶¶ 125-28. However, the patients ARA allegedly steered towards private insurance plans were of limited financial means and likely unable to pay high premiums. Id. at ¶ 125. According to United, ARA “guided” patients to AKF's HIPP program and assisted them in filling out applications. Id. at ¶¶ 128, 137. While the rules governing eligibility for the HIPP program at the time prohibited individuals who were eligible for Medicare or Medicaid from receiving funds, patients ARA allegedly sent to AKF were not barred from the HIPP program. Id. at ¶ 128. According to United, AKF tracked which providers gave contributions to its HIPP fund and determined whether to approve patients' applications based on their provider's contributions. Id. at ¶ 128. For its part, ARA allegedly “ensured that [its] patients would receive HIPP assistance by making ‘charitable contributions' to AKF ‘earmarked for the patients' premiums in accordance with AKF policy at the time.” Id. at ¶ 128.

         Procedural History

         On September 26, 2016, United served AKF with a set of subpoenas, which included requests for 33 categories of documents and sought testimony from an AKF representative on 11 topics. See Subpoena to Testify at a Dep. in a Civil Action & Subpoena to Produc. Docs. (the “First Subpoenas”) ECF No. 55-1, Ex. 1-1(d). AKF filed objections to the First Subpoenas on October 4, 2016 (“AKF's Objections to the First Subpoenas”) ECF No. 55-1, Ex. 1-1(1).

         On October 19, 2016, counsel for United and AKF conferred regarding the First Subpoenas. No. resolution was reached at that time. AKF's counsel avers that United made “no further substantive communications” until December 29, 2016. On that date, United's counsel sent an e-mail offering to limit its requests in response to AKF's objections and in an effort to “reduce[] the burden on [AKF], while still allowing United access to the materials relevant to its case against ARA.” E-mail from Jeffery S. Gleason to Jeffrey B. Bushofsky (“Dec. 29, 2016 E-mail Between Counsel”) ECF No. 55-1, Ex. 1-1(m). While counsel for both sides agreed to have a phone call to discuss the First Subpoenas in mid-January 2017, United's counsel cancelled the meeting at the last minute and requested the call be rescheduled. See E-mail from Jeffery S. Gleason to Jeffrey B. Bushofsky (“Jan. 13, 2017 E-mail Between Counsel”) ECF No. 41-4, Ex. 1-1(n). There is no indication that this call was rescheduled or that any communication occurred between the two parties until June 2017.

         On June 2, 2017, United withdrew the First Subpoenas and served AKF by hand with a second set of subpoenas, which included requests for 27 categories of documents and sought to depose an AKF representative on 19 topics. See Subpoena to Testify at a Dep. in a Civil Action & Subpoena to Produc. Docs. (the “Second Subpoenas”) ECF No. 55-1, Ex. 1-1(a). On June 15, 2017, AKF served responses and objections to the Second Subpoenas. AKF's Objections to the Second Subpoenas, ECF No. 55-1, Ex. 1-1(p). On June 27, 2017, the parties held a “meet and confer” to discuss the Second Subpoenas.

         On June 28, 2017, AKF commenced the proceeding before this Court by filing a Motion to Quash the Second Subpoenas. See AKF's Mot. to Quash Doc. and Dep. Subpoenas (“AKF's Mot. to Quash”), ECF No. 1. Although the motion was denied without prejudice for failing to comply with the Court's Case Management Order, the parties agreed to court mediation and were subsequently referred to the undersigned.

         In October 2017, [1] the parties reached an agreement in terms of what material would be turned over in response to United's Second Subpoenas. J. Status Report 2 (June 26, 2018), ECF No. 38. On January 8, 2018, the undersigned approved the parties' motion for a protective order. On January 30, 2018, AKF completed its agreed upon document production. Id. On March 20, 2018, United completed its Rule 30(b)(6) depositions of AKF. Id. at 3.

         In their Joint Status Report, the parties advised that-aside from the issue of expense reimbursement-the matters pending before this Court were resolved. Id. at 2-3.

         On August 9, 2018, AKF filed its Motion for Attorneys' Fees requesting the Court “award it attorneys' fees in connection with its response to two sets of subpoenas for documents and testimony . . . .” AKF's Mot. for Fees 1.

         On November 8, 2018, this Court denied AKF's Motion for Fees without prejudice for failing to include “supplemental information regarding fees in compliance with Appendix B of the Local Rules of the Court.” The Court gave AKF until December 8, 2018, to submit the necessary information. ECF No. 54. United had “until January 11, 2019, to submit any additional response.”

         On December 7, 2018, AKF's Renewed Motion was filed and AKF included as exhibits its original Motion for Fees and Reply. It also included a new breakdown of fees and costs in an effort to comply with the Local Rules, which it filed under seal. On January 11, 2019, United filed its opposition under seal. On January 17, 2019, AKF filed a letter requesting that the Court “strike the 20-page, unauthorized sur-reply brief” filed by United. United responded that same day with its own letter opposing AKF's informal motion to strike.

         II. Analysis

         A. AKF's Motion to Strike

         As a threshold matter, AKF argues that this Court should strike United's “unauthorized sur-reply” as it “does not actually address [AKF's] recent submission of costs consistent with the Court's order and Local Rule 105(2)(a).” AKF's Letter-Mot. to Strike 1. United counters that it was permitted by this Court's November 8, 2018 Order to submit “any additional response” to AKF's supplemental filing and that it ...


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