We spent much of the last six years opposing the government in civil litigation.  Sure, a few of the government lawyers had a certain swagger to them, but in most ways litigating against them was similar to litigating against private parties.  The government hired and collaborated with many of the same plaintiffs’ attorneys that we see in mass tort litigation.  They served discovery on us; we served discovery on them.  They requested every document under the sun, and they pushed hard to get them.  Good times. 

There was, however, one big difference:  The governmental entities on the other side of the aisle had discoverable documents.  Millions of them.  The plaintiffs that we typically see don’t usually have much of anything to produce, making the burdens of discovery astoundingly unbalanced. 

That dynamic changed with states, cities, and counties on the other side.  They had a major skin the discovery game just like we did, yet many of them were unprepared to handle it.  We can only speculate as to why.  Perhaps it was a function of government hubris and a feeling that the normal rules did not apply to them.  Maybe they and their outside counsel were just not accustomed to marshaling and producing documents in great numbers.  Or maybe they just underestimated the task and mishandled it.  We saw countless pretrial schedules slip because we could not get the documents.  One plaintiff was dropped from a bellwether trial group because it mishandled document discovery, and another lost a trial date that the court had said was firm and would not move. 

The lesson was that the rules apply to both sides.  That too is the lesson of United States ex rel. Plaintiff v. Novo Nordisk, Inc., No. 23-5459, 2025 U.S. Dist. LEXIS 115618 (W.D. Wash. June 17, 2025), where a federal district court ruled that a prescription drug manufacturer was entitled to an adverse inference jury instruction against the State of Washington because of the State’s culpable failure to preserve and produce documents. 

The State sued the manufacturer alleging violations of the False Claims Act and Anti-Kickback Statute through off-label promotion of a hemophilia treatment.  At the center of the State’s claims was its allegation that the State Medicaid program paid millions of dollars for a particular patient’s treatment.  Id. at *2-*3.  The State began to investigate in 2007, and multiple State employees reviewed records and participated in a “Hemophilia Working Group” in 2009.  Critically, the State Medicaid agency submitted a complaint to the Medicaid Fraud Unit in 2014 alleging that “extraordinary amounts” of the product were being shipped to the patient, raising concerns about waste or drug diversion.  Id. at *3.

This is the point of no return, as the State anticipated litigation no later than 2014.  The State did not, however, issue a litigation hold notice until two years later, and it took no further action to preserve the Medicaid agency’s records under March 2020.  The State did not place a legal hold on the mailboxes of some relevant document custodians until 2023—nine years after the Medicaid agency first made formal claims of fraud.  Id. at *4-*5.

To make things worse, the state did not disclose these facts to the defendant manufacturer until January 2025—after the close of discovery. 

The order does not say why the State finally came clean, but the defendant clearly challenged why the State failed to produce a single document from any of the record reviewers, the “Hemophilia Working Group,” or the author of the complaint to the Medicaid Fraud Unit.  Based on these failures, the defendant requested an adverse inference against the state that, if the documents were available, they would show that the State paid for treatments that were medically necessary.  Id.

The district court allowed the adverse interest instruction against the State.  The State’s duty to preserve documents arose no later than 2014, when it knew or should have known that documents relating to this patient, this product, and the State investigation were relevant to future litigation.  Moreover, it was reasonable to infer that, because the State paid for the patient’s treatment, at least some of the physician reviewers supported the prescriptions and that lost or destroyed records would have shown this.  This inference was bolstered by a State investigator’s testimony that she did not remember seeing evidence that the patient’s treatments were unnecessary. 

Finally, the State was culpable, and the defendant suffered prejudice.  The State did not take the necessary steps to preserve important records, and it created privilege logs anticipating litigation as early as 2014, yet waited years before following up to preserve records.  For its part, the defendant lost the opportunity to use the lost or destroyed records to prove that the treatment for which the State paid was medically necessary. 

The court could have done more, such as award attorneys’ fees, which it denied.  But still, this is a useful reminder that the government has to play by the rules, too.  With governmental entities increasingly active on the civil front, we’ll take that.