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U.S. v. AMERIGROUP ILLINOIS

September 15, 2005.

UNITED STATES OF AMERICA, STATE OF ILLINOIS, ex rel., and CLEVELAND TYSON Plaintiffs,
v.
AMERIGROUP ILLINOIS, INC., and AMERIGROUP CORPORATION, Defendants.



The opinion of the court was delivered by: JEFFREY COLE, Magistrate Judge

MEMORANDUM OPINION AND ORDER

INTRODUCTION

United States of America ex rel. Cleveland Tyson and the State of Illinois ex rel. Cleveland Tyson (the "plaintiffs") filed this qui tam suit under the False Claims Act ("FCA"), 31 U.S.C. §§ 3729 et seq. and Illinois Whistleblower Reward and Protection Act ("Illinois Whistleblower Act"). 740 ILCS §§ 175/1 et seq. The FCA establishes civil penalties for any person who files "a false or fraudulent claim for payment or approval" by the United States. 31 U.S.C. § 3729(a)(1). The provisions of the Illinois Whistleblower Act are similar. 740 ILCS § 175/3. Under its contract with the Illinois Department of Public Aid ("IDPA"),*fn1 AMG-IL had to submit quarterly statements certifying that, to its knowledge, there had been no fraud, abuse, or misconduct on the part of its employees, providers, or representatives. The contract defined "abuse" as "a manner of operation that results in excessive or unreasonable costs to the Federal and/or State health care programs." (Second Amended Complaint, Ex. A, at 2). The Second Amended Complaint alleges that AMG-IL did not report its limited enrollment practices in its quarterly certifications, which were a precondition to its receiving payment from the federal and state programs involved. This omission allegedly resulted in and constituted false or fraudulent claims for payment in violation of the applicable statutes.

  The Relator is a former employee of AMG-IL, a health maintenance organization operating in the state of Illinois. On March 30, 2000, AMG-IL entered into a contract with IDPA) to provide healthcare services to individuals, who are eligible for Medicaid. Under the contract, AMG-IL was paid per enrollee, with the amount predetermined by actuarial data of the population group to be served. According to the Second Amended Complaint, AMG-IL engaged in systematic discrimination against the potential enrollees based upon their health status: it provided healthcare services to a group of healthier, less expensive patients than the parties intended under the terms of the contract. As a result, AMG-IL spent less of the predetermined amount it was paid and retained a greater profit. IDPA, on the other hand, had to provide more healthcare and spend more money than it had bargained for.

  It is alleged that AMG-IL pursued this scheme through several strategies. For example, it allegedly refused to enroll pregnant women in its plan. In March of 2002, the IDPA discovered that there were far fewer live births to Medicaid beneficiaries enrolled in AMG-IL's plan than those who were not enrolled. It is also alleged that AMG-IL discouraged prospective enrollees who needed specialized medical care and retroactively disqualified prematurely born infants from its plan.

  The plaintiffs have asked me to exercise what they properly characterize as the "wide discretion" and "broad case management powers" a court has in regulating discovery to compel an answer to a contention interrogatory, more than a month in advance of the expert discovery phase of the case. The interrogatory seeks disclosure of the several potential counter-theories of damages that the defendants are admittedly considering:*fn2

 
Describe with specificity AMG-IL's theory or theories and method or methods for calculating damages in the event that (a) AMG-IL is found liable in this case for discriminating against women who were pregnant and (b) AMG-IL is found liable in this case for discriminating against people with serious health conditions (other than pregnancy), such as cancer, HIV, liver cirrhosis, or being a substance abuser.
  As the plaintiffs have hypothesized, there are several methods that AMG-IL might argue the jury should employ to calculate damages. One is the difference between what the IDPA contracted to receive and what AMG-IL actually provided. But, because AMG-IL did not keep a record of those individuals it avoided enrolling in its plan, the parties are left to compare the amount of care AMG-IL actually provided with the amounted of care the parties expect AMG-IL would provide. The plaintiffs contend that such a measurement might be made by comparing the level of services AMG-IL provided with:
 
1) the level of services in the general Medicaid population
2) the level of services other Illinois Medicaid managed care organizations provided
3) the level of services Amerigroup's managed care organizations provided in other states
  The plaintiffs claim that basic "fairness" and "efficiency" — those ineffable and elusive goals that drive so much of the Federal Rules of Civil Procedure — demand that AMG-IL disclose its damage theories and methodologies now, rather than waiting until expert discovery, which begins after the close of discovery on October 31, 2005. Immediate disclosure is essential, the plaintiffs contend, so that they can "begin analyzing the data before expert discovery begins in order to be able to comply with the current schedule for providing an expert report." (Motion To Compel at 3). Without the information, the plaintiffs insist that they will be forced to embark on a broad-based, "very burdensome," "fishing expedition for sensitive and closely-guarded information from third parties," including other managed care organizations in Illinois and Amerigroup's healthcare plans in other states. (Id. at 2-4; Reply Memorandum at 4). So massive and diffuse would the effort be that the plaintiffs might be required "to seek healthcare encounter information for every person on Medicaid in Illinois during the years in question." (Motion to Compel at 2-4) (Emphasis supplied).

  Granting the motion, the plaintiffs argue, would obviate the need for much, if not all, of this intrusive discovery. The defendants have objected on the ground that disclosure in advance of expert discovery is premature, would violate the work product privilege, and would impermissibly disclose the opinions of one or more non-testifying experts in violation of Rule 26(b)(4)(B), which forbids disclosure in pretrial discovery of the facts found or opinions formulated by an opponent's non-testifying experts except upon a showing of exceptional circumstances. Braun v. Lorillard, Inc., 84 F.3d 230, 236 (7th Cir. 1996).

  If, notwithstanding AMG-IL's answer to the interrogatory, the admittedly broad based, expensive, and burdensome discovery directed to third parties that the motion is designed to eliminate, would in all likelihood occur, sound discretion mandates that the motion be denied. For the reasons discussed below, granting the motion would not, under the circumstances of this case, result in the fairness and efficiencies that are the sole justifications for the motion. Moreover, granting the motion would disrupt the orderly flow of discovery contemplated by the Federal Rules of Civil Procedure*fn3 and would effectively accelerate expert discovery, thereby substituting a new schedule in place of that carefully crafted set by Judge Coar. This is not to say that under other circumstances than those presented here, a court would be powerless to require a defendant to answer a contention interrogatory relating to its theory of damages. But this is not the case for what would be a unique exercise of that discretion.

  ANALYSIS

  A.

 
Granting The Relator's Motion Will Not Result In The Fairness And Efficiency That The Motion Claims Justifies Its Granting
  According to the theory of the motion to compel, the plaintiffs can be spared needless effort and energy in pursuing discovery dead-ends if AMG-IL tells them what counter-damage theory it plans to employ. Whatever superficial allure that argument might have had in the abstract vanished when, at the oral argument, AMG-IL's counsel represented that although there were "several viable alternative damage theories" under consideration, none had been selected. Consequently, even if AMG-IL were ordered to disclose the alternative theories, the very thing the plaintiffs fear — namely, unfocused discovery proceeding down multiple paths, none of which would necessarily lead to any end — would come to pass. Rather than being able to husband their time, energy and resources in pursuit of a single theory, they would be compelled to assess all of them. In short, granting the motion would not achieve the ends sought by the motion and would, in all likelihood, ensure a fifth request for an extension of discovery given the breadth of the inquiries that would be undertaken and the inevitable objections from the third parties, whose propriety and privacy interests would admittedly be affected by such discovery.*fn4 And to what end?

  The answer to the interrogatory would not be binding on the defendants and could be abandoned during the course of expert discovery, thereby defeating the goals of the interrogatory.*fn5 As the Advisory Committee notes to Rule 33(b) make clear, AMG-IL's answer to the interrogatory will not "chain" it to whatever "contention or theory" it then held. "The general rule governing the use of answers to interrogatories is that under ordinary circumstances they do not limit proof." Id. And while there may be exceptional circumstances where a party's reliance on an answer may cause such prejudice that the court will hold the answering party to its answer, "the interrogating party will ordinarily not be entitled to rely on the unchanging character of the answers he receives and cannot base prejudice on such reliance." Id.; see also Motson v. Franklin Covey Co., No. Civ.03-1067 RBK, 2005 WL 1541023, *4 (D.N.J. June 30, 2005); Cable & Computer Technology, Inc. v. Lockheed Saunders, Inc., 175 F.R.D. 646, 651 (C.D.Cal. 1997); Sperling v. Hoffman-LaRoche, Inc., 924 F.Supp. 1396, 1412 (D.N.J. 1996); Lewis v. Tully, No. 81 C 3833, 1984 WL 2745, *10 (N.D.Ill. June 15, 1984) (Marshall, J.); 8A Charles A. Wright, ...


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