Health Law Daily Wrap Up, GENERAL HEALTH CARE NEWS—D. Vt.: Plausible withholding of discovery about criminal referral supports abuse of civil process claim, (Jun 7, 2024)

By Justin Marcus Smith, J.D.

The court cautioned it was a “close call” and the hospital employee would have to prove the hospital improperly withheld information about a parallel criminal investigation, if any, tracking civil discovery demands it placed on the employee.

A workplace discrimination litigant defending a civil counterclaim about misappropriation of patient records could file a second amended complaint adding an abuse of process claim, held a federal district court in Burlington, Vermont. This was despite an earlier ruling that the litigant should assert his Fifth Amendment rights on a question-by-question basis during civil discovery. As a threshold matter, the court held that improper discovery conduct can support an abuse of process claim if other elements of abuse of process are present. Accepting the facts the employee alleged as true, the court next inferred a plausible ulterior motive in the hospital-counterclaimant’s alleged withholding of discovery about a criminal referral or investigation tracking its civil counterclaim against the employee. The court explained it was reasonable to infer, from the hospital’s own alleged actions, that it knew of the potential for a federal felony prosecution and that the employee was at risk of waiving his Fifth Amendment rights during the civil discovery the hospital requested. The court granted the employee’s motion to file a second amended complaint adding the abuse of process claim (Buksh v. Sarchino, No. 2:21-cv-190 (D. Vt. June 4, 2024)).

Background. Three hospital employees sued a hospital and related parties (collectively, the hospital) for workplace discrimination and retaliation. The hospital filed an answer with a counterclaim against only one of the employees. The counterclaim alleged that the one employee in question took patient records, including x-rays, in violation of the Vermont Computer Crimes Statute, 13 V.S.A. §§ 4101-4107.

The employee served a first set of interrogatories and request for production of documents, asking, in part, whether the hospital reported the allegations of the counterclaim to any law enforcement agency. The hospital objected on the basis the requests were irrelevant to their counterclaim, but it did produce documents showing that the hospital had reported a potential security breach to the Vermont Attorney General’s Office and was “cooperating with law enforcement.” Google later informed the employee it had received and responded to a United States Department of Justice (DOJ) grand jury subpoena compelling the release of Google account information.

The employee retained criminal defense counsel who sought information from the United States Attorney’s Office (USA) for the District of Vermont about the Google subpoena. The USA’s response indicated the government had closed the investigation, without making any promises. The employee’s counsel continued to seek information and later moved for a protective order to prevent deposition questioning about the counterclaim, pending more information about the referral to the DOJ, and to bar any claim of Fifth Amendment waiver at the deposition. The court denied that motion instructing that the proper procedure called for the employee to assert Fifth Amendment rights on a question-by-question basis.

The motion now before the court to file a second amended complaint, adding a claim for abuse of process, alleged that the hospital acted in bad faith in an effort to “lure” the employee into discussing incriminating matters without invoking his Fifth Amendment rights, through their alleged failure to disclose the DOJ referral. The employee suggested the hospital would provide his deposition transcript to DOJ to reopen the criminal case and use the opportunity to gain leverage through intimidation, especially given “his ethnicity and membership in protected classes[.]” The employee said his damages consisted of anxiety and the economic harm of having to hire a criminal defense attorney. In sum, the proposed claim centered on the hospital’s responses to interrogatories and the hospital’s alleged failure to disclose that they had communicated with federal prosecutors or law enforcement.

Discovery as process. On the threshold question of what amounts to court process in Vermont, the court found at least two federal circuit courts have listed discovery violations as a basis for alleging abuse of process. The court said it would follow these two federal circuit court authorities albeit courts across the country appear divided on the question. Some prefer to impose sanctions over allowing abuse of process claims. The court held, congruent with the two federal circuit holdings it saw, that improper conduct in discovery can support a claim for abuse of process when other elements of an abuse of process claim are present.

Ulterior motive. At this stage, and in light of the liberal standard for amending pleadings, the court inferred an ulterior motive or purpose from the discovery circumstances the employee alleged. However, the court cautioned it was a “close call.” The main allegation was that the hospital withheld certain discovery to increase the likelihood of a federal prosecution of the employee. Although the employee was aware for some time that he might be prosecuted under Vermont’s Computer Crimes Statute, he said he viewed that possibility as “remote.” He also said that he would have testified, without asserting his Fifth Amendment privilege, without notice of the federal referral or prosecution prior to his deposition. The employee asserted that civil discovery in this matter would have been used in a criminal prosecution and would have also given the hospital new leverage in this civil case.

The hospital countered that the employee’s arguments about this were highly speculative and implausible. The hospital said the employee was only assuming a scheme to “lure” the employee into giving incriminating testimony, and that the U.S. Attorney would then re-open the criminal investigation, ultimately leading to prosecution for federal crimes, including felonies. The employee replied that the hospital’s report to federal law enforcement and the failure to disclose that facts, not speculation.

The court said it must accept the alleged facts as true and make all reasonable inferences in favor of the party seeking to amend, just as it would do on a motion to dismiss. Whether the facts alleged allowed for an inference of a nefarious scheme was a close question. The court acknowledged it had previously determined the hospital’s objection to the employee’s request for discovery about any criminal referral was justified because the reports to government officials had little to do with claims that the employee personally wrongfully exposed patient data. Still, the court concluded it was reasonable to infer from the hospital’s own alleged actions that it knew of the potential for a federal felony prosecution and that the employee was at risk of waiving his Fifth Amendment rights during civil discovery. Whether the defendants hid any federal reporting activity during discovery and in their counterclaim allegations, to gain advantage, remained to be proved.

Damages. The court concluded it was conceivable that exposure to a federal criminal investigation could cause emotional distress. Neither party cited to whether emotional distress damages are available, under Vermont law, to an abuse of process claim. The employee cited a host of cases from other jurisdictions allowing mental suffering damages arising from an abuse of process claim. Absent controlling authority to the contrary, the court held it would allow the abuse of process claim to proceed based on the employee’s alleged damages. The court also held the employee could also proceed based on the alleged financial harm of having to hire criminal defense counsel, even though, as the hospital argued, the court had ruled and ordered earlier that the employee’s proper recourse was to assert his Fifth Amendment privilege on a question-by-question basis.

The case is No. 2:21-cv-190.

Judge: Sessions, W.

Attorneys: Kaveh S. Shahi (Cleary Shahi & Aicher, PC) and Kevin A. Lumpkin (Sheehey Furlong & Behm PC) for Shazad Buksh. Daniel R. Long (Paul Frank & Collins PC) for Dr. William Sarchino DPM Foot and Ankle Surgeon and William Sarchino. Andrea O. Wright (Downs Rachlin Martin PLLC) for Southwestern Vermont Medical Center and Southwestern Vermont Health Care.

Companies: Dr. William Sarchino DPM Foot and Ankle Surgeon; Southwestern Vermont Medical Center; Southwestern Vermont Health Care

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