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United States v. University Hospital

July 28, 2006

UNITED STATES OF AMERICA, PLAINTIFF,
v.
UNIVERSITY HOSPITAL, INC., DEFENDANT.



The opinion of the court was delivered by: Black, M.J.

Beckwith, C.J.

ORDER

This case is before the Court on a motion by plaintiff United States of America ("United States" or "the government") to compel responses to interrogatories and the production of documents by defendant University Hospital, Inc. ("UHI"). (Doc. 18.) The matter has been referred to the undersigned magistrate judge, who conducted a hearing on the motion on July 26, 2006.

The United States brought this action to recover refunds of employment taxes paid to UHI and relating to quarterly tax periods in 1999 and 2000. UHI filed a counterclaim for a refund of FICA taxes and interest paid in quarterly tax periods for 1997, 2001, 2002, 2003, and the first quarter of 2004.

The case revolves around the issue of whether medical residents at UHI were "students" or "employees" and, thus, whether the payments they received were non-compensatory scholarships for training or were wages for services rendered. UHI contends that the residents' payments were received as non-compensatory scholarships under § 117 of the Internal Revenue Code ("IRC"). In the alternative, UHI argues that even if the payments were not scholarships, the payments are excepted from the definition of employment pursuant to the student exception found in IRC § 3121(b)(10).

On April 7, 2006, the United States filed the present motion to compel responses to outstanding discovery requests. (Doc. 18.) The government seeks: (1) "complete" responses to interrogatories; and (2) the production of documents responsive to its requests. Ruling on the motion to compel was stayed pending review of a motion for summary judgment, also filed by the United States. (See Docs. 17, 28.) On July 13, 2006, the stay was lifted, and the motion was referred to the undersigned. (Doc. 29.)

UHI agrees to produce documents that are responsive to the government's request for production but will do so only pursuant to a protective order. The government agrees that the issuance of a protective order is appropriate. The parties disagree, however, as to certain provisions to be included in such an order.

The parties further agree that issues concerning the protective order need be resolved prior to resolving the discovery disputes underlying the motion to compel, insofar as the production of documents may lead to the resolution of those disputes.

Each party has submitted a proposed protective order. (See Docs. 18-6; 20-18). The proposed orders differ in three significant areas.

First, the order proposed by UHI designates three categories of "Confidential Information": (1) individually identifiable healthcare information; (2) individually identifiable residents' information relating to their participation in the residency program sponsored by UHI (other than Directory Information); and (3) UHI's financial information. (See Doc. 20-18 at ¶ 1). However, the United States objects to including financial records in the designation of Confidential Information. (See Doc. 18-6 at ¶ 1.)

Second, the order proposed by the United States provides that only such documents that a party designates as confidential shall be referred to as "Confidential Information." (See Doc. 18-6 at ¶ 1.) UHI objects to a requirement for the preproduction designation of confidentiality as to individual, discrete documents, or portions thereof, due to the sheer number of documents involved.

Third, and most importantly, the government's proposed order includes the following provision, to which UHI objects:

This order does not prohibit or otherwise restrict a party from disclosing information protected by this order that is relevant to any civil or criminal action to any Federal or State agency with authority to enforce laws regulating any activity relating to the requested information. Any such Federal of State agency shall keep the information confidential to the extent provided by law, and shall not be subject to this order. (Doc. 18-6 at ¶ 8.)

With respect to the government's initial objection to including financial information in the designation of Confidential Information, the undersigned ...


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