January 31, 2023

Volume XIII, Number 31


January 30, 2023

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Lessons to Be Learned from False Claims Act (FCA) Defendant Who Provided Attorney Work Product to Office of Inspector General (OIG)

Health care companies and their counsel handling health care fraud investigations or False Claims Act (“FCA”) cases should consider the potential strategic implications of a decision compelling an FCA defendant to produce attorney work product to a relator.  United States ex rel. Garbe v. Kmart Corp., No. 3:12-cv-00881-MJR-PMF, 2014 U.S. Dist. LEXIS 73261 (S.D. Ill. May 29, 2014).  In Garbe, a federal court ordered a defendant to produce attorney-generated information to an FCA relator that defendant had given to the Office of Inspector General (“OIG”) in response to an OIG subpoena in 2009, finding that the defendant waived the work product protection through disclosure of the data to OIG.

Specifically, the company’s outside counsel prepared a subset of Medicare transaction data in an “easier-to-understand format” and voluntarily provided the attorneys’ work to OIG, under the protection of a confidentiality agreement, to “obtain a more favorable outcome in the OIG investigation.”  Id. at *4.  At the time the company provided the information to OIG, the company was unaware of a pending FCA case, which had been filed under seal one year before OIG issued the subpoena.

Opposing relator’s motion to compel, the company urged the court to apply the “selective waiver” doctrine and decide that the data provided to OIG should remain protected from disclosure to the relator under the attorney work product doctrine.  Id.  The court disagreed, explaining that courts have not generally recognized selective waiver.  Moreover, the company made a “calculated decision” to provide work product to obtain a “strategic advantage” in the OIG investigation, but the company could not “pick and choose” the adversary as to which it waived work product protection.  Id. at *11-12.

The court also distinguished a factually similar case recognizing selective waiver where a bank disclosed attorney work product to the Securities and Exchange Commission in a securities fraud investigation, finding that the confidentiality agreement in that case specifically preserved work product protection.  Id. at *9 (citing Lawrence E. Jaffe Pension Plan v. Household Int’l, Inc., 244 F.R.D. 412, 433 (N.D. Ill. 2006)).  By contrast, the confidentiality agreement with OIG in Garbe was silent about waiver; it protected only against disclosure of sensitive business information.

Fortunately, the court denied relator’s motion to compel production of documents that the company submitted to a United States Attorney’s Office in connection with settlement negotiations.  Applying a “balancing of interests” test to decide whether the settlement documents must be produced, the court concluded that the potential chilling effect on a litigant’s willingness to engage in settlement negotiations outweighed the relator’s need for the documents.

More broadly, the court’s decision suggests several strategic considerations for defense lawyers and corporations navigating the complexities of government investigations or FCA cases.

  • Investigations often involve multiple government enforcement agencies, and they can signal the existence of a sealed FCA claim, which may not be known to the company.  Companies should be aware of the possibility of an FCA suit when disclosing information to health care enforcement authorities.

  • Although companies may wish to cooperate with government enforcement agencies to obtain an expedient and favorable resolution to an investigation, companies and their counsel should weigh the risk that the documents may ultimately end up in the hands of another enforcement agency or an FCA relator in later litigation.

  • If companies subject to a subpoena do provide privileged information or attorney work product, they may wish to carefully draft confidentiality agreements to state that the attorney-work product and attorney-client privileged protections are not waived by providing the information.  Although the agreement may not be a silver bullet given courts’ reluctance to find “selective waiver,” it may provide at least some protection under case law such as Jaffe.

  • Counsel should exercise caution when preparing documents to respond to a subpoena for fear that providing this information might waive attorney work product protection.

©1994-2023 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.National Law Review, Volume IV, Number 157

About this Author

Brian P. Dunphy, Pharmaceutical Attorney, Mintz Levin, Anti-Kickback Lawyer,Health Care Enforcement & Investigations Health Care Compliance, Fraud & Abuse, and Regulatory Counseling Complex Commercial Litigation

Brian has handled a wide range of health care litigation matters, government investigations, and voluntary disclosures for an array of health care providers, life sciences companies, and private equity funds and their portfolio companies. He defends clients against allegations of false claims for payment to the government, in SEC investigations and enforcement proceedings, and represents clients in complex business disputes. Brian also counsels clients on health care regulatory issues, including telemedicine laws, compliance with the federal Physician Payments Sunshine Act and analogous...