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United States v. Supervalu, Inc.

United States District Court, C.D. Illinois

April 23, 2018

UNITED STATES OF AMERICA, et al., ex rel Tracy SCHUTTE and MICHAEL YARBERRY, Relators,
v.
SUPERVALU, INC., et al., Defendants.

          OPINION

          TOM SCHANZLE-HASKINS, UNITED STATES MAGISTRATE JUDGE

         This matter comes before the Court on Relators Tracy Schutte and Michael Yarberry's Motion to Compel (d/e 109) (Motion). For the reasons set forth below, the Motion is ALLOWED in part and DENIED in part.

         BACKGROUND

         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. Plaintiffs' First Amended Complaint with Jury Demand Pursuant to the Federal and State False Claims Act (d/e 33) (Amended Complaint). 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.

         On December 20, 2016, Relators served their First Set of Requests to Produce on Supervalu. Memorandum in Support of Motion to Compel (d/e 110) (Relators Memorandum), Exhibit A, Relators' First Set of Requests for Production of Documents to Defendants (Request). The Request included the following requests relevant to this Motion:

1. All Documents and Communications Defendants submitted to or received from the United States (including the United States Department of Justice and the United States Department of Health & Human Services, Office of the Inspector General) and/or to any of the Plaintiff States since October 1, 2011 Relating to any of the allegations made or damages sought in this action and/or to the Government's investigation of this matter, including, but not limited to Documents calculating damages to the Massachusetts Medicaid program and any and all privilege logs. This request does not seek production of documents that have previously been produced by Defendants to Relators.
2. All Documents identifying Discount Programs offered by You for any Drug, including but not limited to Documents that contain the following information:
d. The Drugs covered in your Discount Program(s), including product name, NDC, GCN, dosage, dates covered, and discount amount offered, advertised or matched for each Drug. This request includes any formularies, Competitors' price or drug lists including those maintained at local stores, or other Documents used or distributed by You to determine drugs eligible for any price matching or other Discount Program.
e. Marketing or advertising information of any kind used to publicize or advertise Your Discount Program(s), including: signage (or facsimile thereof) displayed in your stores or on Your store premises; information published in newspapers, magazines, flyers, leaflets, on internet websites, Facebook pages, radio, or television; and, or any other marketing, advertising or promotional information used by You to promote Your Discount Program(s).
15. Documents and Communications reflecting or concerning Your determination or calculation of U&C price, Reported U&C price, Negotiated Price, and/or Reported Negotiated Price for all Drugs sold by You during the relevant time period including Drugs in Your Discount Program(s) or reimbursed by Government Health Programs. This request includes, but is not limited to Documents related to Your discussions or decisions regarding these prices, and any Documents You reviewed or relied on in determining or calculating these prices for each Third Party Payor, including Government Health Programs. . . . .
19. Documents and Communications (including but not limited to emails, reference manuals, handbooks, training materials, directives, guidance, memoranda, or other rules and/or instructions to pharmacy or IT staff) reflecting or concerning Your policies and procedures regarding: . . . .
f. paying, processing, submitting or adjudicating cash transactions for Drugs; g. paying, processing, submitting or adjudicating claims for reimbursement of Drugs by Third Party Payors;
22. Documents and Communications reflecting or concerning business and financial studies, analyses, reports, summaries, memoranda, opinions, and recommendations relating to or concerning: the calculation of U&C price, Reported U&C Price, Negotiated Price or Reported Negotiated Price; Your Discount Program(s), including price matching and whether discount prices should be included in calculations of Reported U&C Price or Reported Negotiated Price;
31. All Documents that discuss or refer to Your competitors' Discount Programs, including programs under which Walmart or any other competitor offered generic prescription drugs for $4 for a 30-day supply, $8 for a 60-day supply, or $10 or $12 for a 90-day supply or brand drugs during the Relevant Time Period, including any prices lists or formularies of Drugs offered at a discount.
42. For the Relevant Time Period, Documents related to compliance, fraud or abuse training related to ...

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