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The district court denied the defendants’ objection to a magistrate judge’s order compelling discovery in a case alleging unlawful retaliation. The court agreed that information about alleged Medicare billing fraud was clearly relevant to the allegation that the defendants retaliated against the plaintiff for investigating this conduct. The court also found probative value to patient information allegedly accessed by the plaintiff in violation of HIPAA, because it could show whether the adverse employment action was justified or pretextual. The court also reasoned that information regarding the termination of another employee after she reported misconduct was also properly included in the order. Finally, the court declined to consider the defendants’ objection to discovery of other information, as they had not objected first to the magistrate judge.

Defendants Baptist Memorial Group Inc. and Baptist Memorial Health Care Corporation objected to an order by the magistrate judge in a case alleging they retaliated against plaintiff Margaret Allgood for investigating unlawful Medicare billing practices. They also moved to stay discovery pending the outcome of this motion.

Allgood filed a qui tam suit alleging the defendants falsely accused her of violating HIPAA and suspended her, in retaliation for her protected activity. During the process, Allgood filed a motion to compel discovery from Baptist regarding multiple areas, including (1) information about the alleged billing fraud; (2) information about Baptist’s investigation into whether Allgood violated HIPAA by accessing patient records during her investigation of the alleged billing fraud; (3) information about a former Baptist employee who was Allgood’s office manager at Baptist; and (4) communications about Allgood during the time she was aware of and investigating the alleged billing fraud.

A magistrate judge granted the motion in part, including approval of the categories listed above. Baptist objected to all four categories of information. First, the defendants argued that the information about the alleged billing fraud is not relevant to Allgood’s retaliation claim. However, the court disagreed, finding the magistrate judge properly determined that information about the alleged billing fraud and the defendants’ investigation was relevant to the retaliation claim, because it is probative of the reasons for the adverse actions taken against Allgood. The court found it reasonable that to consider that evidence that a company engaged in fraud is relevant to whether it punished an employee for reporting fraud.

Next, Baptist argued that information regarding the alleged HIPAA violations was not relevant. Baptist asserted that it did not object to providing some information, but argued it should not have to produce the actual private patient records and documents accessed by Allgood. Doing so would only further expose the patients’ private information, they argued. The court disagreed, finding that this information is probative of whether Baptist’s investigation of Allgood was pretextual. The magistrate judge reasoned, and the court agreed, that a lack of evidence that Allgood violated HIPAA could show that the suspension was pretextual. The court found that evidence that is probative of whether an employer’s proffered reason for an adverse employment action is pretextual is relevant. Further, the risk of further exposure is minimized because the court entered a protective order to protect the patients’ privacy interests.

Next, Baptist objected to discovery regarding a former employee who was Allgood’s office manager during her employment. However, the court found the magistrate judge properly evaluated this issue, finding that this former employee was Allgood’s office manager, that she had reported another employee connected to the alleged fraud for misconduct, and that she was terminated. The magistrate judge found that information about this termination and whether this employee accessed the same records as Allgood were probative of the potential motivation for the adverse action taken against Allgood, and the court agreed.

Finally, Baptist argued that communications about Allgood during the time she was aware of and investigating the alleged billing fraud are not relevant to Allgood’s retaliation claim. Alternatively, Baptist asked the court to limit Baptist’s required production on this topic to specific custodians. However, the magistrate judge noted that Baptist raised no arguments addressing communications about Allgood in its response to Allgood’s motion to compel discovery. In its objections, Baptist offered no justification for failing to raise its arguments on this issue in its briefing to the magistrate judge. The court therefore declined to consider objections that were not timely raised.

The court denied the defendants’ objection to the magistrate judge’s order and denied the motion to stay discovery as moot.