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Shahbabian v. Trihealth, Inc.

United States District Court, S.D. Ohio, Western Division

December 2, 2019

SET SHAHBABIAN, M.D., Plaintiff,
v.
TRIHEALTH, INC., et al., Defendants.

          Dlott, Judge.

          MEMORANDUM OPINION AND ORDER

          Stephanie K. Bowman United States Magistrate Judge.

         A year ago, Plaintiff Set Shahbabian, M.D., filed suit against Defendants TriHealth, Inc., Trihealth G, LLC doing business as TriHealth Physician Partners (jointly referenced as “TriHealth”), and Mayfield Clinic, Inc. (“Mayfield”). The case has been referred to the undersigned magistrate judge for ruling on all non-dispositive motions, and for a report and recommendation on any dispositive matters. (Doc. 3). Presently pending and ripe for disposition are three discovery-related motions: (1) Mayfield's motion to quash and for a protective order, (Doc. 74); (2) Plaintiff's Motion to Compel discovery from Navigant and from Sullivan Cotter & Associates; and (3) TriHealth's motion to quash the third-party subpoenas served upon Navigant and Sullivan Cotter & Associates. Plaintiff recently filed two additional motions to compel discovery from one of TriHealth's law firms and its attorney, but those motions are not yet ripe.[1]

         I. Background

         Discovery in this case has been extremely contentious, and the parties have enlisted the Court's assistance in multiple telephonic conferences prior to filing the current set of motions. Fact discovery is scheduled to conclude by December 2, 2019, with a dispositive motion deadline of January 10, 2020. In lieu of setting forth a more complete background, the undersigned incorporates by reference the Background set forth in the Memorandum Opinion and Order filed on October 8, 2019, which addressed a closely related informal discovery dispute.[2] (Doc. 78).

         A primary issue in dispute is the scope of discoverable documents relating to “fair market value” (“FMV”) determinations. Plaintiff's employment contract explicitly states that his compensation must not exceed FMV. (Doc. 21-1 at 19). That contractual term arises from federal laws (the Stark Act and the Anti-kickback law) that impose limitations on physician compensation relative to FMV, with FMV compensation often expressed as a salary range. The FMV determinations were made by accounting and valuation consultants at the request of either corporate general counsel and/or outside counsel for TriHealth.[3]

         Plaintiff's contracted salary is based upon a work relative value unit (“wRVU”). The calculation of the wRVU requirement was based, at least in part, upon regulatory FMV standards. Plaintiff alleges that he was fraudulently induced to agree to the wRVU requirement. It is undisputed that Plaintiff's wRVUs declined over time. Although the reasons for that decline remain at the heart of this lawsuit, TriHealth has filed a counterclaim relating to the decline in Plaintiff's wRVUs. In its counterclaim, TriHealth invokes a claw-back provision that TriHealth asserts entitles it to reimbursement of more than $679, 000 paid in salary to Plaintiff based upon the reduction of his wRVUs. (See Doc. 51).

         Plaintiff argues that because the foundation of the contractual wRVU requirement rests on TriHealth's FMV analysis, and because TriHealth takes the position that a failure of Plaintiff to reimburse TriHealth for the reduced wRVUs would result in Plaintiff's salary exceeding FMV in violation of federal law, Plaintiff is entitled to discovery of the underlying FMV-related documents. In the October Order, the undersigned wrote that “TriHealth does not dispute that the FMV valuation is highly relevant to Plaintiff's breach of contract claim, as well as to TriHealth's affirmative defense and counterclaim.” (Doc. 78 at 11, PageID 526). In addition to the FMV documents relating to his own compensation, Plaintiff seeks similar FMV-related documents concerning the Co-Management Agreement between TriHealth and Mayfield, which (according to Plaintiff) led to the reduction of Plaintiff's wRVUs. Plaintiff initially sought those documents directly from Defendant TriHealth, but subsequently issued subpoenas to two business consultants used by TriHealth to provide FMV analyses.

         II. Analysis of Pending Motions

         A. Motion to Quash/Motion to Compel documents from Navigant Consulting, Inc. and Sullivan, Cotter & Associates, Inc.

         In addition to seeking FMV documents directly from TriHealth, Plaintiff has sought the documents from two business consultants employed directly or indirectly by TriHealth to help determine FMV physician compensation. Plaintiff issued a subpoena to Navigant on August 13, 2019, seeking numerous documents relating to FMV determinations made by a physician compensation group that was headed up by a non-lawyer consultant, Patty Bohney. Ms. Bohney and her team subsequently left Navigant and began working for another business consulting group, Sullivan Cotter & Associates, Inc., taking the TriHealth FMV records with them. Plaintiff later issued a subpoena to Sullivan Cotter, seeking the same FMV-related documents.

         Previously, TriHealth refused to produce any FMV records, arguing that all such records were subject to an attorney-client privilege. Upon receipt of the respective subpoenas, the attorneys for Navigant and Sullivan Cotter similarly objected to production based upon their client's assertion of the same attorney-client privilege. Plaintiff has now moved to compel Navigant and Sullivan Cotter to produce the documents, while TriHealth has filed a separate motion to quash the third-party subpoenas. For the reasons discussed below, the undersigned will compel Navigant and Sullivan Cotter to produce documents responsive to the subpoenas and will deny TriHealth's motion to quash.

         In the October 8, 2019 Order, the undersigned pointed out that the party asserting the privilege bears the burden to prove its application, and that claims of attorney-client privilege will be narrowly construed because they “reduce[] the amount of information discoverable during the course of a lawsuit.” Humphreys, Hutcheson and Moseley v. Donovan, 755 F.2d 1211, 1219 (6th Cir.1985) (quoting United States v. Goldfarb, 328 F.2d 280, 281 (6th Cir.), cert. denied, 377 U.S. 976, 84 S.Ct. 1883 (1964)). Thus, courts apply the privilege “only when ‘necessary to achieve its purpose' and only to protect legal disclosures that ‘might not have been made absent the privilege.'” Cooey v. Strickland, 269 F.R.D. 643, 648 (S.D. Ohio 2010) (quoting Fisher v. United States, 425 U.S. 391, 403, 96 S.Ct. 1569 (1976)).

         TriHealth insists that all FMV-related documents are subject to attorney-client privilege because both Navigant and Sullivan were agents of TriHealth, engaged by TriHealth's counsel in order to provide legal advice. “The privilege applies to factual investigations conducted by counsel at a corporate client's request (to provide legal advice to that client), and also to agents of an attorney who are assisting in rendering legal advice to the client.” In re Behr Dayton Thermal Products, LLC, 298 F.R.D. 369, 373 (S.D. Ohio 2013) (internal citation omitted). However, as the October Order explained:

         To assess whether the privilege applies in any given situation, the Sixth Circuit has instructed courts ...


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