Failing to Plan and Oversee Discovery Is Planning to Fail

New Orleans Reg’l Physician Hosp. Org., Inc. v. United States, No. 11-541C, 2015 WL 5000512 (Fed. Cl. Aug. 21, 2015).

A party that relied on a piecemeal, patchwork strategy driven by individual custodians was ordered to cooperate with opposing counsel to devise a reliable system that it would then use to redo its search for and production of responsive documents.

Contentious discovery disputes arose in this breach of contract action arising out of disagreements over the payout of Medicare claims in the wake of Hurricanes Katrina and Rita. The plaintiff, Peoples Health Network (PHN), was dissatisfied with the government’s discovery responses and asked several times for supplemental information. Ultimately, PHN asked the government to agree to a list of custodians and search terms; the government objected.

Things came to a head when the plaintiff deposed a former CMS health insurance specialist, who said she prepared numerous reports and e-mails during the relevant period. After the deposition, PHN noted that the government produced only a few e-mails and reports from the specialist, and PHN itself had records from her that the government did not produce. When PHN asked to confer with the government about the thoroughness of its searches, the government delayed, asserting it needed a copy of the deposition transcript to discuss the issue. Tensions rose as PHN’s counsel repeatedly asked to confer and the government refused to cooperate. Ultimately, PHN filed a motion to compel that asked the court to order the parties to establish a joint custodian list, search terms, and production protocol and have CMS redo its searches and reproduce all documents based on this protocol.

The government opposed the motion and argued that its production was adequate. However, the government admitted that it did not put a legal hold in place until six months after litigation began. In fact, the government did not send the legal hold memo to the CMS regional office with oversight over PHN until April 2012. The government also provided 23 custodian declarations that detailed the government’s search efforts. These declarations showed that each custodian employed an idiosyncratic search method. Only two acknowledged that a legal hold had been established. Some said they began searching for documents in 2012 using several document categories and search terms suggested in e-mails from CMS administrators, but none admitted using all 28 search terms the government informed PHN were used to locate responsive documents.

Further, the government claimed some of the requested documents were destroyed before litigation was anticipated under its document retention program. However, others were destroyed in spite of a duty to preserve them. For example, the government destroyed the specialist’s hard drives when she retired, four months after PHN filed this lawsuit. The government speculated that it might have produced all of the specialist’s responsive documents nonetheless, as she saved them to a shared drive that was preserved and searched for responsive materials.

The court ruled that the government’s search fell was neither thorough nor reliable. Noting that a “proper search for discoverable documents requires careful planning, oversight, and monitoring by the party’s counsel,” the court held that the government did not “put into place a systematic, reliable plan to find and produce all relevant documents in this case.” In particular, counsel did not oversee employees’ search efforts. Although they received an e-mail with recommended search terms and categories, the search parameters were left up to each custodian. Nor did counsel require the custodians to keep records of their searches.

The court admitted it was “possible that defendant’s searches did uncover all of the existing, relevant documents in CMS’s possession.” However, given the haphazard nature of the searches, it granted the plaintiff’s “reasonable and warranted” request to confer with the government to identify custodians and appropriate search terms. It also required the government to maintain detailed records about the custodians’ searches. The court denied PHN’s request for attorneys’ fees but allowed PHN to renew the request if new documents were unearthed that required retaking depositions.

New Orleans Reg’l Physician Hosp. Org., Inc. v. United States, No. 11-541C, 2015 WL 5000512 (Fed. Cl. Aug. 21, 2015).


Counsel cannot simply issue a legal hold and expect custodians to understand and comply. They must take affirmative steps to monitor compliance with the hold as well as efforts to identify, preserve, and search discoverable information. As the court noted, they must be able to “explain the rationale for the method chosen to the court, demonstrate that it is appropriate for the task, and show that it was properly implemented.”