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Ohio Bureau of Workers' Compensation v. MDL Active Duration Fund

November 13, 2006

THE OHIO BUREAU OF WORKERS' COMPENSATION, PLAINTIFF,
v.
MDL ACTIVE DURATION FUND, LTD., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Judge Graham

ORDER

Earlier in this litigation, the Ohio Inspector General filed a motion to quash a subpoena duces tecum which was served on March 15, 2006. In an order filed on July 6, 2006, the Court denied the motion without prejudice, noting that Inspector General's assertion of privilege was not accompanied by appropriate declarations or affidavits which are required under these circumstances in order to establish a claim of privilege. That order denied the motion to quash without prejudice, gave the Inspector General the opportunity to support properly any claim of privilege, and established a procedure through which the parties were to confer in order to determine whether the issues raised by the motion could be resolved and, if not, for the filing of an additional motion to quash.

The parties have apparently followed the procedure outlined in the Court's order without success. Consequently, on August 25, 2006, the Inspector General filed a renewed motion to quash. Responsive and reply memoranda have been filed and the matter is now ripe for decision. For the following reasons, the motion to quash will be granted.

I.

The initial discussion of the motion, contained in the Court's July 6, 2006 order, is incorporated herein. Briefly stated, because this case arises under state law, any issue of privilege will be decided with reference to state law. See Fed. R. Evid. 501. Other issues related to discovery, such as whether or not compliance with the subpoena would represent an undue burden on the inspector general, will be decided pursuant to the Federal Rules of Civil Procedure and federal case law interpreting those rules.

II.

The motion to quash raises three issues with respect to the subpoenaed documents, all of which appear to be documents either obtained by the Inspector General from third parties or generated as a result of the Inspector General's investigation of alleged malfeasance within the Ohio Bureau of Workers' compensation. The Inspector General asserts, first, that many documents obtained pursuant to a grand jury subpoena are not to be disclosed because of the secrecy which surrounds grand jury proceedings; second, that any documents generated independently by the Inspector General's office are privileged because there is an ongoing confidential law enforcement investigation taking place; and third, that with respect to both types of documents, it would be unduly burdensome to require the Inspector General to review these documents for the purpose of asserting specific privileges, especially in light of the fact that the documents could be obtained directly from the third parties to whom the Inspector General had issued subpoenas. The Court will discuss each of these arguments in turn.

A.

The Inspector General asserts that a number of the documents covered by the subpoena were obtained either pursuant to subpoenas issued by state prosecutors in Lucas County, Ohio, or from federal prosecutors. Citing Fed. R. Crim P. 6(e)(2), the Inspector General asserts that these records must be kept under seal in order to prevent the unauthorized disclosure of proceedings before the grand jury. The Inspector General notes that, although grand jury secrecy is not absolute, there must be a showing made of compelling necessity. Further, the Inspector General asserts that any request for relief from the secrecy otherwise surrounding grand jury proceedings must be made to the court where the grand jury was convened, which is not this Court. For all of these reasons, the Inspector General contends that any documents obtained by it from state or federal prosecutors which were, in turn, obtained by grand jury subpoena cannot be lawfully produced.

In response, the defendants assert that the Inspector General has not asserted that all of the documents obtained by grand jury subpoena were actually presented to the grand jury. However, in arguing this point, the defendants cite only cases dealing with documents which, although related in some way to a grand jury investigation, were not actually subpoenaed by the grand jury. For example, defendants argue that if an agency is conducting an investigation which parallels a grand jury investigation but obtains materials other than through the grand jury, those materials are not covered by principles of grand jury secrecy. The same is true, assert the defendants, for information obtained for the grand jury but through traditional law enforcement means such as the execution of search warrants rather than through the issuance of grand jury subpoenas. Thus, the defendants appear to concede that any documents actually subpoenaed for the grand jury need not be produced; stating that "materials not obtained by grand jury subpoenas or not presented to the grand jury are not subject to the prohibitions on disclosure for grand jury materials." MDL Defendants' Memorandum in Opposition to Inspector General's renewed Motion to Quash, at 5. Rather, the defendants simply invite the Court not to permit the Inspector General to withhold relevant documents "by improperly stretching federal grand jury secrecy to cover state or agency investigations." Id. at 6.

The Court does not read the Inspector General's objection to the production of grand jury materials to cover anything other than documents obtained by state or federal prosecutors in connection with grand jury proceedings. The Inspector General readily concedes that he is in possession of other documents which were not obtained directly by or for the use of a grand jury, and the grand jury privilege is not being used to shield those documents from production. Because it appears undisputed, however, the Inspector General has obtained some grand jury documents, and that the assertion of the grand jury secrecy privilege relates only to documents so obtained, the Court concludes that any documents within the possession of the Inspector General which were initially obtained by either a federal or state grand jury through the grand jury's subpoena power may not be produced in response to the defendants' subpoena, and the motion to quash will be granted with respect to any such documents.

B.

The next category of documents which the Inspector General seeks to protect are documents obtained by the Inspector General through its own investigatory or subpoena powers in connection with its investigation of the operation of the Bureau of Workers' Compensation. The Inspector General notes that, under O.R.C. §121.42(A), he has been authorized to conduct such an investigation in order to determine whether wrongful acts or omissions were committed in the operation of a state agency by state officers or state employees. That same statute, in later subsections, requires the Inspector General to report such wrong-doing to state or federal prosecuting authorities or other entities having jurisdiction if evidence of criminal wrongdoing is uncovered. O.R.C. §121.43 grants the Inspector General the authority to issue subpoenas for both testimony and documents. The Inspector General acknowledges that a number of documents have been acquired by subpoena in connection with its investigation but asserts that these documents are covered by the law enforcement investigative privilege, which allows investigative agencies to withhold documents from public disclosure while an investigation is ongoing in order to protect the integrity of that investigation.

The defendants, citing to O.R.C. §121.44(A), note that the only documents specifically exempted from disclosure under that statute are documents which constitute reports of an investigation, not documents compiled in the investigatory process, and that the Inspector General is authorized only to designate the portions of reports confidential if the disclosure of the report would endanger a witness or disclose investigative techniques in a way that would enable wrongdoers to avoid detection. The defendants then cite to the Ohio Public Records Act, O.R.C. §149.43, noting that the exemption provided in that statute for law enforcement records pertains only to documents creating a high probability of disclosing the identity of uncharged suspects, the identity of confidential sources, confidential investigatory techniques or procedures, work product, or information ...


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