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United States ex rel. Schutte v. Supervalu, Inc.

United States District Court, C.D. Illinois, Springfield Division

April 17, 2017

SUPERVALU, INC., et al., Defendants.



         This matter comes before the Court on Relators Tracey Schutte and Michael Yarberry's Motion to Compel (d/e 75) (Motion). For the reasons set forth below, the Motion is ALLOWED in part and DENIED in part.


         Relators brought this case against Defendants Surpervalu, Inc., and related entities (collectively Supervalu) for violation of the False Claims Act, 31 U.S.C. § 3729 et seq. Amended Complaint (d/e 33). Relators allege that Supervalu pharmacies intentionally misrepresented the Usual and Customary (U&C) prices that the pharmacies charged for medications in order to receive inflated reimbursements from federally funded programs such as Medicare Part D, Medicaid, and federal employee and retiree health insurance programs (collectively Federal Programs).

         The Relators allege Supervalu established a Price Matching Program in 2006 under which Supervalu pharmacies matched discount prices offered by Walmart, Kmart, and other competitors to customers paying cash for medications, but did not include the discounted prices in Supervalu's determination of its U&C prices. The U&C prices were used to calculate the reimbursement amounts that the Federal Programs paid Supervalu pharmacies for the medications dispensed to covered individuals. The Relators allege that the miscalculation of the U&C prices constituted a fraudulent misrepresentation used to secure funds from the federal government in violation of the False Claims Act. Supervalu denied the allegations.

         Relators filed this case under seal on August 8, 2011. Relators filed the case under seal to allow the United States and Plaintiff States the opportunity to investigate and determine whether to intervene. See 31 U.S.C. § 3730. The United States investigated the Relators' claims for the next several years. During the course of the investigation, the Health and Human Services Office of Inspector General (Inspector General) served a Civil Investigative Demand on Supervalu for documents related to the Price Matching Program. Supervalu produced records dating back to January 1, 2005. On May 22, 2015, the United States elected not to intervene. Government's Notice of Election to Decline Intervention (d/e 20). The Complaint was then unsealed and served on Supervalu. On October 21, 2016, the Court denied Supervalu's Motion to Dismiss. Opinion entered October 21, 2016 (d/e 65). On November 22, 2016, Supervalu provided Relators with a copy of the documents produced to the Inspector General pursuant to the Civil Investigative Demand.

         On December 20, 2016, Relators served Supervalu with their First Sets of Interrogatories and Requests to Produce (collectively Discovery Requests). The Discovery Requests asked for responses within 30 days of service. Memorandum in Support of Motion (d/e 76) (Relators' Memorandum), Exhibit A, Relator's First Set of Request for Production of Documents to Defendants (Requests to Produce), at 1; Exhibit B, Relators' First Set of Interrogatories to Defendants (Interrogatories), at 1. Supervalu responded on January 20, 2017.

         Supervalu argues that the response should have been made by January 19, 2017. Relators are incorrect. The Discovery Requests were served by mail and by email. Request to Produce, attached Certificate of Service; Interrogatories, attached Certificate of Service. The Relators have not shown that email service was effective because Relators have not shown that Supervalu consented in writing to accept service by email. See Fed. R. Civ. P. 5(b)(2)(E).[1] The Discovery Requests, therefore, were effectively served by mail. Supervalu was required to respond by January 23, 2017 because three days are added to response times for documents served by mail. Fed.R.Civ.P. 6(d). Supervalu's January 20, 2017 response was timely. Relators' arguments to the contrary are not persuasive.

         The parties attempted to resolve Supervalu's objections to the Discovery Requests. The following disputes remain:

(1) Supervalu proposes to produce documents on a rolling basis with completion expected by September 2017. Relators want immediate production of responsive documents;
(2) Supervalu proposes to produce a privilege log at the end of production. Relators want immediate production of a privilege log;
(3) Supervalu objects to producing documents from the calendar year 2005. Relators want production of documents back to January 1, 2005;
(4) Supervalu objects to producing documents related to all prescription drug discount programs. Relators want production of documents related to all such discount programs;
(5) Supervalu objects to producing customer identifying information such as names, addresses, and dates of birth. Relators want production of this information;
(6) Relators complain that Supervalu is improperly limiting its search of responsive documents to 23 individual custodians; and
(7) Supervalu has responded to Relators' Interrogatory No. 5 by producing the documents in which the information can be found. Relators want Supervalu to review ...

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