Health Law Daily Health system fails in attempt to re-seal physician compensation arrangements
Friday, September 21, 2018

Health system fails in attempt to re-seal physician compensation arrangements

By Susan Smith, J.D., M.A.

A health system’s motion to re-seal certain exhibits that involved physician compensation arrangements included in a qui tam complaint failed because it did not specifically identify which information in each page of each exhibit contained trade secrets and why its confidentiality interest outweighed the public’s interest in access to court records. Because the health system failed to provide a sufficient showing for the court to make the required findings of fact, the court issued an order denying the health system’s motion without prejudice allowing the health system to re-file the motion addressing the issues as described in the order (U.S. ex rel. D'Anna v. Lee Memorial Health System, September 19, 2018, Mirando, C.).

The complaint. The relator’s complaint alleged that the health system violated the Stark Law (42 U.S.C. §1395nn) by paying physicians illegal referral fees and financial incentives under compensation arrangements that exceeded fair market value and were commercially unreasonable in the absence of referrals. The relator alleged that the health system paid excessive compensation to neurosurgeons, cardiologists, and pulmonologists among other groups of physicians and then submitted false claims related to referrals from such specialists to Medicare and Medicaid in violation to the False Claims Act (FCA) (31 U.S.C. §3729).

The motion to re-seal. After the complaint and amended complaint, including all exhibits attached were unsealed and made publicly available, the health system filed its motion to permanently re-seal certain exhibits attached to the complaint and amended complaint claiming that the exhibits contain "trade secrets" as defined by federal and Florida law. The specified exhibits contained details of physician compensation arrangements between the health system and medical providers, specific compensation amounts paid to certain providers, and details regarding provider group compensation amounts allegedly unique to the health system. The health system filed its emergency motion pursuant to Rule 5.2 of the Federal Rules of Civil Procedure and a provision of the Florida Uniform Trade Secrets Act (FUTSA) (Fla. Stat. §688.006). The motion included a list of the exhibits sought to be re-sealed, specific page numbers and a general description of the items as a group, but not individually. The health system requested that the information be sealed permanently and the relator be required to re-file the exhibits in question in redacted form.

Court’s rule for motion to seal. The relator argued that the health system failed to comply with the requirements of Local Rule 1.09 of the Middle District of Florida and failed to meet its burden to show re-sealing the documents was appropriate. Under the requirements of Rule 1.09(a), the title must include the words, "Motion to Seal" and the motion must include: (1) an identification and description of each item proposed for sealing; (2) the reason that filing each item is necessary; (3) the reason that sealing each item is necessary; (4) the reason that a means other than sealing is unavailable or unsatisfactory to preserve the interest advanced by the movant in support of the seal; (5) a statement of the proposed duration of the seal; and (6) a memorandum of the legal authority supporting the seal. The health system argued that it met the requirements of Rule 1.09(b), which is a filing to re-seal under a statute authorizing filing under seal and requires the citation of the statute, identification of the items to be sealed, a proposed duration of the seal, and a statement establishing the items to be sealed are covered under the identified authorizing statute.

The court concluded that the health system failed to comply with the requirements of Rule 1.09(a) and failed to provide sufficient detail for the court to make the findings of fact about the appropriateness of sealing each item requested to be sealed. The court further determined the health system failed to meet the requirements of Rule 1.09(b) because the action does not fall under any section of FUTSA.

Appropriateness of sealing the documents. The health system contended that its compensation information is confidential and exempt from public disclosure laws. In determining whether to seal court filings and other materials, the court noted that it must balance two competing interests: a party’s interest in keeping the information confidential and the public’s legitimate interest in the subject matter and conduct of the proceedings even when the material sought to be sealed is classified as trade secrets. Although the court found that the information contained in the exhibits would appear to qualify for trade secret protection, the health system did not provide detailed identification and description of the items in each cited exhibit and each page that it asserts are trade secrets and why they are trade secrets; therefore, the court could not make the factual findings required by the Eleventh Circuit as to each item to support the re-sealing. In addition, the court concluded that public has a legitimate interest in exhibits as the information is highly probative evidence as it relates to the relator’s allegations that the health system paid physicians under compensation arrangements that exceeded fair market value and were commercially unreasonable in the absence of referrals.

The case is No. 2:14-cv-437-FtM-38CM.

MainStory: TopStory AntikickbackNews FCANews FraudNews MedicaidPaymentNews PartANews PartBNews QuiTamNews StarkNews FloridaNews

Back to Top

Interested in submitting an article?

Submit your information to us today!

Learn More

Health Law Daily: Breaking legal news at your fingertips

Sign up today for your free trial to this daily reporting service created by attorneys, for attorneys. Stay up to date on health legal matters with same-day coverage of breaking news, court decisions, legislation, and regulatory activity with easy access through email or mobile app.