In U.S. ex rel. Omni Healthcare, Inc. v. MD Spine Sols. LLC, No. 18-cv-12558-PBS (D. Mass. June 7, 2024), Massachusetts Magistrate Judge Donald L. Cabell, in evaluating five factors for inadvertent disclosure, found that the “defendants have waived their privilege” over 613 privileged documents that were inadvertently disclosed and ordered the defendants to return them to the plaintiff.
Case Discussion and Judge’s Ruling
In this case, the plaintiff sued the defendants and others (on behalf of the United States, 29 individual states, and the District of Columbia) claiming they engaged in fraudulent practices by misleading the plaintiff into ordering unnecessary PCR urine tests for patients, which violated the False Claims Act.
During the US investigation of the defendants, the US proposed a plan to address the issue of attorney-client privilege in connection with the defendants’ production of documents. The plaintiff asserted that that US proposed entering an order under Federal Rule of Evidence 502(d), which would have protected the defendants from any potential waiver. The defendants asserted that the United States did not propose a Rule 502(d) order, but rather offered to use a “filter team” to screen out the defendants’ privileged documents if the defendants agreed that this review process would not “taint” the filter team. As Judge Cabell stated: “Regardless, it is undisputed that the defendants rejected the proposal. Instead, the defendants conducted their own internal privilege review before producing documents to the United States.”
On April 6, 2021, the US informed the defendants that it had identified 12 potentially privileged documents while reviewing the defendants’ December 30, 2020, production and subsequently identified eight more documents within an hour of the original notification. The defendants conducted a review and clawed back the twelve documents that the US had identified as potentially privileged, but did not review the rest of the production or any other production to see if they had inadvertently produced any other privileged documents.
During this time period, the US and the defendants had been engaged in settlement discussions for months, and ultimately reached a settlement. After the settlement, however, the plaintiff continued pursuing its remaining claims against the defendants. The US and the plaintiff entered into a Common Interest Agreement to facilitate the sharing of information and materials between them, and the US provided the plaintiff with the documents that the defendants had previously produced to the US.
The defendants did not learn that the US had provided their past productions to the plaintiff until the plaintiff used documents from one of those productions as exhibits during a deposition. One week after this discovery, after reviewing their productions to the US, the defendants attempted to claw back 639 allegedly privileged documents that they had apparently inadvertently disclosed. The plaintiff objected to the claw back request, and after a conferral between the parties, the defendants withdrew their privilege claims for 26 of the documents, leaving a total of 613 allegedly privileged documents subject to the claw back request.
Judge Cabell first rejected the plaintiff’s argument that defendants waived the privilege by putting privileged materials “at issue” in litigation because the claims relating to the Anti-Kickback Statute and Eliminating Kickbacks in Recovery Act were already dismissed.
Judge Cabell then proceeded to consider implied waiver and identified five factors for inadvertent disclosure constitutes a waiver:
- Reasonableness of Precautions: Judge Cabell found that the defendants’ precautions were not reasonable, noting: “MD Labs itself, and not its counsel, conducted the privilege review in the first instance. Relying on a party to conduct its own review without counsel’s involvement, at least in part, is hardly a reasonable precaution.”
- Timeliness of Post-Disclosure Actions: Judge Cabell noted: “the defendants clawed back the small set of documents that the United States identified, but they did not take any steps to determine if they had inadvertently produced any other privileged documents until November 28, 2023, when Omni used some of those documents in a deposition. This delay of well over two years and seven months is significant and strongly suggests that the defendants have impliedly waived the privilege.”
- Scope of the Production: The defendants disclosed 613 privileged documents, a small portion of the total production but still significant. Judge Cabell found that this factor was neutral since the volume of disclosed documents suggested both a systemic error and that the disclosure was a fraction of the overall production.
- Extent of the Inadvertent Disclosure: Stating: “The extent of the inadvertent disclosure in this case is significant”, Judge Cabell noted the privileged documents were accessible to the US for nearly three years and to plaintiffs for over a year, during which time both parties had the opportunity to review and utilize them, and found this extensive exposure weighed in favor of waiver.
- Overriding Interests of Fairness and Justice: In finding this factor weighed in favor of waiver, Judge Cabell stated: “the court appreciates that the defendants made a conscious decision to forego a privilege review after April 6, 2021, and instead focus on settling the case. Nonetheless, the defendants had reason to believe that they might have inadvertently disclosed privileged materials and chose to do nothing about it for over two years.”
With four of the five factors for inadvertent disclosure weighing in favor of waiver, Judge Cabell found defendants had waived privilege on those documents.
So, what do you think? Do you think the five factors inadvertent disclosure properly took into account the settlement discussions? Please share any comments you might have or if you’d like to know more about a particular topic.
Case opinion link courtesy of eDiscovery Assistant, an Affinity partner of eDiscovery Today.
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