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Pain Center of Se Indiana, LLC v. Origin Healthcare Solutions LLC

United States District Court, S.D. Indiana, Indianapolis Division

May 8, 2015

ORIGIN HEALTHCARE SOLUTIONS LLC; SSIMED (d/b/a SSIMED Holding, LLC); ORIGIN HOLDINGS, INC., a Delaware Corporation; JOHN DOES (1-50) inclusive; and JOHN DOES (1-100 inclusive, Defendants.


RICHARD L. YOUNG, Chief District Judge.

Plaintiffs, the Pain Center of SE Indiana, LLC, the Indiana Pain Medicine and Rehabilitation Center, P.C., and Anthony Alexander, M.D., object to the Magistrate Judge's January 23, 2015 Entry (Filing No. 196) denying Plaintiffs' first motion to quash certain subpoenas of financial records (Filing No. 163). Defendants, SSIMED, d/b/a SSIMED Holding, LLC, Origin Healthcare Solutions, LLC, and Origin Holdings, Inc., served the subject subpoenas upon certain nonparties. For the reasons stated below, the court OVERRULES Plaintiffs' Objection and AFFIRMS the Magistrate Judge's Entry.

I. Background

Plaintiff healthcare providers have alleged various counts of fraud and breach of contract against Defendants stemming from the performance of certain contracts. Plaintiffs contracted to purchase billing and clinical data software packages from SSIMED. (Filing No. 16 ("Complaint") ¶¶ 36, 52). Origin Healthcare Solutions later assumed the contracts as successor-in-interest to SSIMED. ( See id. ¶ 4). According to Plaintiffs, Defendants' defective software and deficient support services led to lost income, forcing Plaintiffs into a "vicious cycle of borrowing from banks and friends to cover financial shortfalls." (Id. ¶¶ 42, 70). Moreover, such shortfalls allegedly fettered Plaintiffs' ability to pursue lucrative business opportunities. (Id. ¶¶ 81, 91).

In December 2014, Defendants provided Plaintiffs the required notice of their intent to serve subpoenas on various financial institutions and Plaintiffs' CPA. ( See Filing Nos. 164-1 through 164-4). The subpoenas sought "[a]ll annual or monthly statements, loan documentation, and documents regarding garnishments or levies on any account held by [Plaintiffs] between January 1, 2003, and December 31, 2012." (Id. ). Defendants also sought all communications between Plaintiffs and their CPA, and all documents received from or produced for Plaintiffs. (Filing No. 164-3). Plaintiffs moved to quash all of the subpoenas, asserting that (1) the subpoenas amount to a "fishing expedition"; (2) the documents sought lack relevance to the litigation and require impermissible disclosures; (4) the subpoenas seek privileged information; and (5) the Magistrate Judge had previously ruled on discovery requests related to damages. ( See Filing Nos. 164 and 182). The Magistrate Judge denied Plaintiffs' motion, finding Plaintiffs' assertions conclusory and without merit. (See Filing No. 196 at 3-5). Plaintiffs now object to the Magistrate Judge's ruling.

II. Discussion

Plaintiffs object to the Magistrate Judge's ruling on grounds that (1) she improperly dismissed Plaintiffs' assertion of privilege, and (2) she erroneously rejected Plaintiffs' position on relevancy.[1], [2] The court now addresses the merit of each.

A. Applicable Law

The district court reviews the non-dispositive discovery decisions of a magistrate judge for clear error. Domanus v. Lewicki, 742 F.3d 290, 295 (7th Cir. 2014) (citation omitted); Fed.R.Civ.P. 72(a). In other words, the court will not upset a magistrate judge's decision unless it runs contrary to law or leaves the court with a definite and firm conviction that the magistrate judge made a mistake. Weeks v. Samsung Heavy Indus. Co., 126 F.3d 926, 943 (7th Cir. 1997).

Federal Rule of Civil Procedure 45 governs the issuance of subpoenas. The breadth of discoverable material via subpoena parallels the liberal scope permitted under Rule 26(b) so long as the material sought is relevant, not privileged, and at least leads to admissible evidence. Graham v. Casey's Gen. Stores, 206 F.R.D. 251, 253-54 (S.D. Ind. 2002) (citations omitted). A court must grant a motion to quash or modify a subpoena that "requires disclosure of privileged or other protected matter... or subjects a person to undue burden." Fed.R.Civ.P. 45(d)(3)(A)(iii)-(iv). The party seeking to quash subpoenas bears the burden of establishing its objections. Jackson v. Brinker, 147 F.R.D. 189, 194 (S.D. Ind. 1993) (citing Holifield v. United States, 909 F.2d 201, 2014 (7th Cir. 1990)).

A party generally lacks standing to quash a nonparty subpoena unless production of the materials sought would disclose privileged or protected information. See United States v. Raineri, 670 F.2d 702, 712 (7th Cir. 1982) (recognizing that a party may move to quash if subpoena infringes upon party's "legitimate interests"); see also Malibu Media, LLC v. John Does 1-14, No. 1:12-cv-263, 2013 WL 2285950, at *2 (N.D. Ind. May 22, 2013). Personal rights asserted with respect to bank accounts may give a party standing to challenge nonparty subpoenas served upon financial institutions. Schmulovich v. 1161 Route 9, LLC, No. 07-597(FLW), 2007 WL 2362598, at *2 (D.N.J. Aug. 15, 2007); see also Iantosca v. Benistar Admin. Servs., Inc., No. 1:11-mc-0066-RLY-DML, 2011 WL 3155649, at *2 (S.D. Ind. July 26, 2011) (finding that movants- both individuals and entities-had legitimate interest in the privacy of bank records sufficient to confer standing to challenge nonparty subpoena). The court finds that Plaintiffs have sufficient interest in their financial records and thus had standing to move to quash the subpoenas.

B. Accountant-Client Privilege

Plaintiffs argue that the Magistrate Judge improperly rejected their invocation of the accountant-client privilege as conclusory.[3] Federal Rule of Evidence 501 provides that "state law governs privilege regarding a claim or defense for which state law supplies the rule of decision." Only claims arising under ...

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