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The Department of Justice’s refusal to allow Ascension Medical Group to depose a Drug Enforcement Agency agent and a federal prosecutor in state court was reasonable and in line with federal regulations, the 7th Circuit Court of Appeals affirmed Thursday.
The case involves Dr. Timothy Story, who, according to Indianapolis Business Journal, worked for Ascension Medical Group for a decade but was fired in August 2020 after Ascension learned of a federal investigation into his prescribing practices.
Ascension, based in Indianapolis, said it fired Story for failing to notify it of the federal investigation, as required by his employment agreement, according to IBJ.
Story has said he was unaware he was the target of any federal investigation, and even if he was, he was not required to notify Ascension of it. He sued the medical group in 2021 in Indiana Commercial Court, claiming breach of contract and tortious interference with business relationships.
According to court records, Ascension sought to depose a DEA agent and a federal prosecutor in the state court litigation, with the belief that their testimony would help Ascension prove that Story failed to disclose that he was under investigation.
After the DOJ refused to make either employee available for depositions, Ascension sued to compel the testimony of DEA Diversion Investigator Andrew Ratcliff and Assistant United States Attorney Brad Blackington.
In May 2020, while employed by Ascension, Story received a subpoena from the DEA seeking medical records for certain patients.
Over the next few months, Ratcliff and Brad Blackington communicated with Story and his counsel regarding the subpoena.
Both the DOJ and Ascension filed motions for summary judgment in the United States District Court for the Southern District of Indiana.
The DOJ stated that it considered and denied Ascension’s request to depose the employees under the applicable federal regulations, and there was no basis for the court to override the DOJ’s decision.
In October 2022, Indiana Southern District Judge James Hanlon granted the DOJ’s motion for summary judgment and denied Ascension’s.
Ascension filed an appeal with the 7th Circuit in November.
The 7th Circuit affirmed Hanlon’s ruling Thursday, with Judge Thomas Kirsch writing for the court.
According to Kirsch, each federal agency, including the DOJ, has Touhy regulations that govern when to disclose information or make employees available for depositions. Ascension argued that the DOJ did not follow its Touhy regulations.
Kirsch wrote that the Administrative Procedure Act’s arbitrary-and-capricious standard governs challenges to an agency’s withholding of documents or testimony in response to a state court subpoena.
“Put another way: unless the Department unreasonably applies its Touhy regulations, a federal court is powerless to compel its participation in state court discovery,” Kirsch wrote, citing FCC v. Prometheus Radio Project, 141 S. Ct. 1150, 1158 (2021).
Here, the DOJ explained how it arrived at its decision to refuse the depositions, and its refusal wasn’t arbitrary or capricious, Kirsch wrote.
“Ascension might prefer a different outcome, but it should not be surprised by today’s result,” the judge concluded. “It points us to no case when a federal court has compelled a federal prosecutor to sit for a civil state court deposition. This will not be the first.”
Judges Amy St. Eve and Michael Scudder concurred.
The case is St. Vincent Medical Group, Inc., d/b/a Ascension Medical Group-Indiana v. United States Department of Justice, 22-3009.
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