Check Your Privilege: Documents Prepared as Part of Government’s Claims Investigation Not Protected by Work Product Doctrine; Ingham Regional Medical Center et al. v. United States, COFC No. 13-821

Contractors’ motion asking the court to declare that documents were not protected by the work product doctrine is granted. The government argued the documents were created in anticipation of possible litigation arising out of claims made by healthcare providers for underpaid medical reimbursements. The court, however, found that the documents did not constitute attorney work product but rather were documents produced as part of the claims investigation. In investigating the claims, the court reasoned, the government was akin to an insurance company assessing an insurance claim. The potential for litigation is inherent in insurance claims. Nonetheless, insurers produce claims documents are produced as part of their business, not in anticipation of litigation, so the claims docs are not protected by the work product doctrine. Similarly, while the prospect of litigation hung over the government’s claim investigation, it was too remote to trigger the work product doctrine.

This case arose out of DoD’s TRICARE program, a military health care system that provides medical care for members of the military and their families. In 2001, Congress amended the TRICARE statute to require DoD to use Medicare rules when reimbursing healthcare providers. At the time, however, it was impractical for TRICARE to adopt the Medicare reimbursement rules. Instead, DoD adopted a different rule. DoD reimbursed healthcare providers under this alternative rule until 2009, at which point DoD adopted a system based on the Medicare rules.

A group of hospitals engaged a consulting firm to review the accuracy of payments made before DoD adopted the Medicare reimbursement rules. That firm found that DoD had underpaid the hospitals for outpatient radiology. Based on these findings, DoD created a process by which providers could make claims for an adjustment to reimbursement they had received under the TRICARE program for outpatient radiology.

Thousands of healthcare providers submitted requests for adjustment. The government settled claims brought by a group of 400 hospitals. But there were still over 1600 hospitals that believed they were still owed money under the TIRCARE program.

The plaintiffs were a group of five healthcare providers whose applications for TRICARE adjustments had been denied. The plaintiffs sued in the COFC asserting that the government’s failure to fully reimburse was a breach of contract.

The parties engaged in extensive discovery, during which the government inadvertently disclose two documents and three email, which, the government claimed, were covered by the work product privilege. The documents and the emails were all created while the government was investigating the various claims made by healthcare providers and negotiating settlement with the group of 400 hospitals. One of the documents discussed data problems that Defense Health Agency encountered when calculating adjustment for the 400 hospitals that eventually settled. The second document was an estimate of the government’s liability in the event it was unable to settle with the 400 hospitals. The emails contained analyses of billing patterns, costs data, and procedures the government used to calculate the reimbursement adjustments.

The plaintiffs moved the court for a determination that documents were nor subject to the work product doctrine. The government resisted the motion, arguing that the documents and the emails were created under a persistent threat of litigation from the 400 hospitals.

The court extensively reviewed precedent and treatises discussing the work product doctrine and identified factors to consider when determining whether the doctrine applies. First, the court must look to the factual circumstances surrounding creation of the document and the reasons why it was created. Additionally, the court examines whether the document was created in anticipation of litigation. Finally, even if a document was created in anticipation of litigation, the court looks to whether the document has a dual purpose—that is, does it have some non-litigation, business purpose.

Applying these factors, the court found that the documents discussing the data issues and estimating the government’s liability were not covered by the work product doctrine. The court noted that at the time these documents were created, TRICARE was dedicated to processing reimbursement claims from providers and reconciling underpayment. In inviting hospitals to submit claims, the court reasoned, TRICARE’s business was comparable to that of insurance company. The very nature of the insurance business is the investigation and evaluation of claims. While insurers may anticipate litigation over some claims, the documents generated during an insurance investigation are not necessarily created in anticipation of litigation and thus are not covered by the work product doctrine.

Here, like an insurer, DoD investigated hospitals’ underpayment claims as part of making a payment determination. The very purpose of these documents was to recalculate data and reconcile discrepancies in payments to hospitals. While the parties were discussing litigation and settlement when the documents were created, they were primarily created to help reconcile payments, a business, not a litigation goal.

Relatedly, the court found that these documents were not created in anticipation of litigation. At the time the documents were created, DoD and the hospitals’ counsel exchanged emails that discussed litigation. Nevertheless, the court found that while there may have been a remote prospect of litigation, the substance of the communications did not rise to the level of an articulable claim likely to lead to litigation. What’s more, and importantly, the court noted that despite a privileged legend on the documents, they did not contain any attorney mental impressions.

The court also noted that the documents appeared to have a dual-purpose. While these documents may have assisted attorneys if the case had moved to litigation, they government had an equally valid desire to create these documents to provide correct adjustments to TRICARE participants. Indeed, the court found that this is the type of document that would have to be produced regardless of the threat of litigation.

As to the three contested emails, the court found they were not covered by the work product doctrine. The emails were created when the government’s primary focus was recalculating TRICARE payments. The parties exchanged emails to identify discrepancies in the recalculation process and to arrive at a negotiated business settlement, as opposed to a litigation settlement. Moreover, the emails did not contain an attorney’s mental impressions or legal strategy.

The plaintiffs are represented by Alexander J. Pires of Pires Cooley and Gregory A. Brodek of Duane Morris LLP. The government is represented by A. Bondurant Eley, Joseph H. Hunt, Steven J. Gillingham, and Robert E. Kirschman, Jr., of the Department of Justice.

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