Court Declines to Excuse Production where Party's Negligent Failure to Preserve Rende

[Administrator]

United States v. Universal Health Servs., Inc., No. 1:07cv000054, 2011 WL 3426046 (W.D. Va. Aug. 5, 2011)

Here, the Commonwealth sought to avoid producing allegedly inaccessible information. The court declined to excuse production, reasoning in part that it was the Commonwealth’s own “negligent failure to take steps to adequately preserve information” which rendered the information "less accessible." Instead, the court indicated that it would order the backup tapes and forensic images be produced to defendants “for use by a commercial vendor” to retrieve the information “in a format usable by the Commonwealth” and that defendants would bear the costs, subject to a motion seeking reimbursement.

Defendants sought to compel production of documents related to complaints of Medicaid fraud from the Commonwealth of Virginia. The Commonwealth objected, arguing lack of control of the documents, but was ordered to produce them nonetheless. Thereafter, the Commonwealth indicated it could not produce the documents because it would be unduly burdensome. Specifically, the Commonwealth asserted that it was too costly to access backup tapes from the relevant time period and that it did not have the technological capability to search forensic images of hard drives which were made following placement of the (delinquent) legal hold. Interestingly, while the Commonwealth admitted that there were less expensive alternatives for accessing the at-issue information, it claimed that state agencies were bound by state law to take their “information technology needs” to Virginia Information Technologies Agency, the agency that estimated the allegedly burdensome cost to access the backup tapes in question.

Taking up the question of whether to excuse further review and production of the allegedly inaccessible information, the court noted that it was the Commonwealth’s negligent failure to timely issue a litigation hold that rendered a portion of the ESI "less accessible." The court further noted that defendants had shown that relevant ESI was likely to be recovered. Thus, the court found that the Commonwealth “should not be excused” from production. Turning to the requirement of Rule 26(b)(2)(B) that the resisting party prove the existence of undue burden to the court, the court found that no such showing had been made. Specifically, the court noted that the Commonwealth had conceded that there were more efficient and less expensive methods of retrieval and that evidence of one such alternative (a commercial vendor) had been produced by the defendants. In reaching its conclusion, the court also considered the significant amount of funds which the government sought to recover (in excess of $10 million) and evidence that the files contained relevant information.

Accordingly, the court indicated that it would order that the backup tapes and the forensic images be produced to defense counsel “for use by a commercial vendor” to retrieve the files “in a format usable by the Commonwealth to search for responsive documents.” The court also stated that it would order that defendants bear the costs of the retrieval, subject to a motion outlining the estimates of the costs to be incurred and seeking reimbursement from the Commonwealth.

A copy of the full opinion is available here.



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