Case dossier · Fresno division · No. 1:19-cv-01699-JLT-HBK
Terpening v. Fresno Community Hospital
The October 29 order, the preservation dispute, and the bounded 2025 settlement
A Fresno qui tam case that settled with the hospital system and its technology affiliate in 2025 and continues against five other defendants. The October 29, 2026 order directs targeted discovery into lost text messages and leaves Rule 37(e) sanctions undecided; this dossier reads it in full and places it beside the executed settlement, the government's three positions and the integrity agreement.
What changed on 29 October 2026
The written ruling that the October 25 edition of The Fresno Files described as still to come now exists. In ECF 102, the magistrate judge recorded that text messages a vendor had collected from certain Santé and faculty-group custodians are no longer available in the parties' or the vendor's files — except one custodian's Bates-numbered set — and that the source phones were not preserved. Whether reasonable preservation steps were taken once litigation was foreseeable is disputed. The court did not decide sanctions. It ordered targeted discovery on the loss: a sworn declaration within 21 days, organizational testimony under Rule 30(b)(6) within 35 days, an optional joint subpoena to the vendor, and a window for the relator to move for Rule 37(e) sanctions within 30 days after that discovery ends. It refused to halt the deposition schedule. Nothing in the order finds intentional destruction, grants an adverse inference, or decides any False Claims Act question.T01
Stated by the operative instrument itself: a signed order, an executed agreement, a statute, an official opinion.
An identifiable public source that is not the operative instrument: a DOJ announcement, a docket summary, a reproduced text.
Reported by a party or index and confined to what the reporter says; the underlying document was not obtained.
KPSGILL analysis from timing, structure or omission — labeled, never promoted to fact.
A question the retrieved record does not answer; the document that would answer it is named.
| Case | United States ex rel. Terpening v. Fresno Community Hospital and Medical Center, et al., No. 1:19-cv-01699-JLT-HBK (E.D. Cal., Fresno division) |
|---|---|
| Filed | December 4, 2019, under seal; complaint unsealed by ECF 49 on May 13, 2025 |
| Settled and dismissed | Fresno Community Hospital and Medical Center d/b/a Community Health System (CHS) and Physician Network Advantage, Inc. (PNA): settlement executed May 2025; dismissal order ECF 60 (June 25, 2025). Six individual defendants dismissed with prejudice as to the relator and without prejudice as to the United States |
| Remaining defendants | Santé Health System, Inc.; Santé Health Foundation; Central California Faculty Medical Group (in the settlement, “d/b/a Inspire Health Medical Group”); Grant Nakamura, M.D.; Michael Synn, M.D. — parties against whom litigation continues, not adjudicated participants in anything |
| Government position | May 2025: not intervening at that time as to the remaining defendants; stated then that its investigation would continue. That statement is dated and is not evidence of any present investigation |
| Pending motion | Motion to dismiss the First Amended Complaint (ECF 74–75), submitted on the papers November 18, 2025; no ruling through the October 25 docket report. ECF 102 does not address it |
| Discovery | Active. About 1.2 million pages of Department of Justice documents produced to the relator (ECF 102); about 1.8 million pages produced July 1, 2026 (ECF 95). The two figures are separately attributed and are not a running total |
| Sanctions | Undecided. Targeted Rule 37(e) discovery ordered October 29, 2026 |
| Status label | DISCOVERY · SANCTIONS NOT DECIDED · PLEADING CHALLENGE PENDING |
| Verification scope | Latest order read: ECF 102 (Oct. 29, 2026). Latest complete docket report: Oct. 25, 2026 (through Dkt. 101). Later entries, if any, not reviewed |
ECF 102, read in full
Proved On October 19, 2026 the court held an informal discovery dispute hearing with the relator and the five remaining defendants on "the alleged spoliation of text messages by the Remaining Defendants or their vendor" and on the relator's request for sanctions and a halt to the deposition schedule. The October 29 order states what the present record indicates, in three parts: the vendor collected text messages from certain Santé and faculty-group custodians, but apart from one custodian's set identified by a Bates range, those messages are no longer available in the parties' or the vendor's files; the source phones were not preserved; and the parties dispute whether reasonable preservation measures were taken once litigation was reasonably foreseeable. A footnote records that defense counsel reported information that the messages may be stored on a hard drive.T01
The court then said that "further factual development is necessary" before it can decide whether Rule 37(e) sanctions are warranted, naming four subjects: the duty to preserve, preservation efforts, prejudice, and any intent to deprive the relator of the information's use. It also recorded that a subpoena to Fresno Community Hospital and Medical Center had issued on October 1, 2026, that none had yet been served on PNA, and that productions from both were expected after an amended confidentiality order, which the court entered the day it was submitted. Given the production already available, it declined to stay the depositions.T01
| ¶ | Ruling | What it does not do |
|---|---|---|
| 1 | Within 21 days, "if not already done," the remaining defendants serve a sworn declaration from a knowledgeable custodian or qualified representative on (a) text-message and mobile-device preservation policies and practices for the relevant custodians and (b) the vendor's collection, handling and loss of the data | Find that the policies were inadequate |
| 2 | Within 35 days, "unless a date has already been set," produce a Rule 30(b)(6) witness on preservation and collection, communications and engagements with the vendor, and the current status of any text-message data or backups | Presume that backups exist or do not |
| 3 | The parties may jointly seek a subpoena to the vendor or its records custodian for non-privileged collection and retention information | Require a subpoena |
| 4 | The relator may move for Rule 37(e) sanctions within 30 days after the targeted discovery is complete; the motion must address the duty to preserve, prejudice and evidence of intent to deprive | Grant, preview or limit any sanction |
| 5 | These deadlines may be modified by stipulation or on motion | Fix the dates unconditionally |
| 6 | Request to halt all depositions as a spoliation sanction: denied without prejudice to targeted remedial measures after further development | Foreclose later remedies |
| 7 | Request to postpone two named depositions pending the hospital and PNA records: denied | Decide what those records show |
| 8 | After those records arrive, limited follow-up depositions of the two witnesses by stipulation, or on good cause; four hours per witness absent further order | Guarantee that follow-up will occur |
| 9 | The rulings rest on the conference record and are without prejudice to a properly supported motion | Bind the court on a fuller record |
The dates, stated as what they are
- Informal discovery dispute hearing
Spoliation and deposition scheduling heard (ECF 101).
- ECF 102 entered
Targeted preservation discovery ordered; sanctions not decided.
- Day 21 — calculated, conditional
The declaration deadline counted from the order, "if not already done," subject to stipulation or modification. Not a verified current obligation.
- Day 35 — calculated, conditional; and the joint status report already due
The Rule 30(b)(6) deadline counted from the order, "unless a date has already been set." The same date is the joint-report deadline set by ECF 91 for the December 10 mid-discovery conference.
- Mid-discovery status conference (ECF 91)
Set by the June 2026 order, subject to later orders.
The sanctions-motion window has no fixed date: it opens when the targeted discovery is complete, which the record does not yet establish. Calculations use Rule 6's ordinary counting; neither date has been confirmed by a later docket entry.T01T06T10
What Rule 37(e) requires, in order
Rule 37(e) governs electronically stored information that should have been preserved in anticipation or conduct of litigation and is lost because a party failed to take reasonable steps to preserve it, where it cannot be restored or replaced through additional discovery. If — and only if — those threshold conditions are met, subsection (e)(1) allows measures no greater than necessary to cure prejudice to another party; subsection (e)(2) allows the severe measures — a presumption that the lost information was unfavorable, an adverse-inference instruction, dismissal or default — only on a finding that the party acted with intent to deprive another party of the information's use in the litigation.T10
- Duty. When was litigation reasonably foreseeable, and to whom? A 2019 sealed filing, a later unsealing and a 2025 settlement are different trigger dates for different people.
- Reasonable steps. What preservation instructions, vendor terms, export procedures and supervision existed for these custodians?
- Loss and irreplaceability. Is the information — not merely the device — gone? Recipients' phones, backups, exports and the reported hard drive all bear on this.
- Prejudice. Which subjects, dates and participants are missing, and what can surviving records prove instead?
- Intent to deprive. Only for (e)(2) remedies: timing, selectivity, instructions and the consistency of explanations with the technical record.
- Remedy. Is the request for replacement evidence, a prejudice-curing measure, or a merits-determinative sanction? The justification must match the consequence.
The October 29 order follows this sequence exactly: it orders the discovery that bears on items 1–5 before any remedy is considered. That is why the possible hard drive matters. If it holds the collected messages, prejudice may shrink or vanish; if it holds an incomplete export, it may sharpen the account of what is missing. Its existence would not establish completeness, and its absence would not establish intent.
The two Ninth Circuit decisions that frame the motion either side will file
Jones v. Riot Hospitality Group LLC, 95 F.4th 730 (9th Cir. 2024), affirmed a terminating sanction where the district court found intentional destruction of electronic evidence. Intent may be proved circumstantially — by the timing of deletion, affirmative deletion steps and selective preservation — and dismissal under (e)(2) requires the rule's threshold findings, the intent finding and consideration of lesser measures. A relator seeking severe sanctions will build its chronology around those factors.T11
Gregory v. State of Montana, decided September 27, 2024, reversed severe sanctions imposed under inherent authority where Rule 37(e) governed, rejecting the use of inherent power to sidestep the rule, and held that recklessness does not supply the specific intent (e)(2) requires. A defendant opposing sanctions will rely on it to confine any remedy to proven prejudice.T12
Inference Read together, the two decisions mean that the outcome in Fresno will turn less on the fact of loss — already recorded — than on two things the order told the parties to develop: what the custodians and the vendor did, and when; and whether the content survives somewhere else. Neither decision describes what happened here.
| Question | Proposition requiring proof | Strongest competing explanation | Record that would resolve it |
|---|---|---|---|
| When did the duty arise? | Litigation was reasonably foreseeable to these custodians before the loss | The relevant people lacked notice at the asserted date | Hold notices, collection instructions, investigation chronology |
| Were the steps reasonable? | The collection and retention process lacked adequate safeguards or supervision | Reasonable procedures existed; the failure was isolated or external | Vendor engagement terms, export logs, storage procedures, escalation records |
| Is the information gone? | The content cannot be restored or replaced | Recipients, backups or the reported drive retain usable copies | Forensic examination; custodian-by-custodian reconciliation of collected, delivered, retained and produced data |
| What is the prejudice? | Specific subjects or periods cannot now be proved | Surviving documents cover the same ground | Identified gaps by date, participant and subject; substitute evidence |
| Was there intent to deprive? | Timing or selectivity supports purposeful loss | Routine settings, error or an unrelated event explains it | Technical traces, contemporaneous instructions, comparative preservation across custodians |
The map stays custodian-specific. An explanation about one custodian, one vendor engagement or one collection period cannot by itself settle responsibility for every organization or person among the remaining defendants. Large production totals — 1.2 million pages here, 1.8 million there — say nothing about whether a particular communication survives.
The settlement, as the executed agreement states it
Proved The agreement is among the United States (acting also for HHS-OIG), CHS, PNA and the relator. PNA, it recites, was a health-care technology business founded in April 2010 principally to support CHS's expansion of electronic health records into physician offices; CHS assisted in its formation and funded most of its operations; the relator worked for PNA from 2011 to 2017; and PNA intended to cease active operations on or about August 31, 2025. The United States intervened for purposes of settlement with CHS and PNA in May 2025.T02
| Component | Amount | How it relates to the others |
|---|---|---|
| Settlement Amount (¶ 1) | $31,200,000.00 | Payable jointly and severally by CHS and PNA within 30 days of the effective date |
| Restitution (¶ 1) | $15,000,623.50 | Included within the Settlement Amount — not an addition to it |
| Post-handshake interest (¶ 1) | 4.25% p.a. | On the Settlement Amount from February 13, 2025 through the effective date |
| Relator's share (¶ 2) | $4,992,000.00 | Paid by the United States out of what it receives — not an additional recovery |
| Relator's fees and costs (¶ 3) | $275,000.00 | A separate payment by CHS and PNA under 31 U.S.C. § 3730(d) |
| DOJ headline (May 14, 2025) | $31.5 million | Announcement figure; DOJ did not itemize it. The investigation's earlier interest calculation remains on The Fresno Files |
The United States' contentions — denied by CHS and PNA, with the agreement expressly "neither an admission of liability" nor a concession that the claims lack foundation — concern four categories: remuneration including hospitality at a PNA-operated venue between July 2014 and March 2022; EHR subsidies and cost reductions to the faculty group, including delayed collection of upfront cost-sharing, between April 2013 and August 2024; hardware and subsidies to Santé Health Foundation between February 2013 and May 31, 2021; and clinical-integration grants distributed through the foundation to 35 listed providers. The government contended these violated the Anti-Kickback Statute and created financial relationships outside any Stark exception. DOJ's announcement states that the claims resolved "are allegations only, and there has been no determination of liability."T02T03
The relator's release does not extend to Santé Health System, Santé Health Foundation, the faculty group, Dr. Nakamura or Dr. Synn (¶ 5). The settlement is therefore a bounded historical event: it is not a damages model for the continuing case, not an adjudicated valuation of any arrangement, and not evidence of what any remaining defendant knew.T02
Three government positions, and a dismissal with four parts
ECF 49 recorded three different positions, each with its own consequence: intervention for settlement as to CHS and PNA; declination as to six individuals; and "not intervening at this time" as to the five remaining defendants, with the government's statement that its investigation would continue. The order preserved the government's right to intervene later for good cause, required service of all pleadings on it, and required notice to it before any dismissal or settlement of the declined or non-intervened parts.T04
| Defendants | As to the relator | As to the United States |
|---|---|---|
| CHS and PNA | Dismissed with prejudice | Covered Conduct: with prejudice · all other claims: without prejudice |
| Six declined individuals | Dismissed with prejudice | Without prejudice |
| Five remaining defendants | "No other defendants or claims are dismissed" | |
A party-by-party, claim-by-claim structure is the only accurate way to describe a partial resolution. "The case settled" is too broad; "the remaining defendants were proven liable" is unsupported.T05
Why the EHR allegations need a period-by-period rule analysis
The government's EHR contention spans April 2013 to August 2024 — across the December 2020 rewrite of both the Stark EHR exception and the AKS EHR safe harbor, effective January 19, 2021. Current 42 C.F.R. § 411.357(w) distinguishes initial or replacement donations, for which the recipient's contribution must be paid before receipt, from later items and services, for which contributions may be made at reasonable intervals; it retains a 15% recipient contribution and addresses donor financing, documentation, interoperability and selection criteria. The AKS safe harbor, § 1001.952(y), separately addresses the same subjects, and OIG's 2020 rulemaking explains its treatment of updates.T13T14T15T16
Inference A phrase such as "delayed collection of upfront cost-sharing" therefore cannot be evaluated in one step. Each transaction needs its own fields — donation type (initial, replacement, update, training, service), date, recipient, cost, required contribution, actual payment date, any financing, and the rule version then in force — before anyone can say whether an exception or safe harbor was satisfied. Failure to fit a safe harbor would not by itself establish an AKS violation, and an AKS violation would not by itself establish every element of an FCA claim; coordinated-care language, conversely, does not show that a protection's conditions were met. That is the structure the remaining litigation will have to fill with evidence.
The corporate integrity agreement: a separate oversight record
Proved CHS's agreement with HHS-OIG runs five years from the final signature. It required a Chief Compliance Officer within 90 days, employed and in senior management, reporting directly to the chief executive and not subordinate to the general counsel or chief financial officer. Appendix B requires an Arrangements Systems Review in the first and fourth reporting periods (and in any period with material changes), and an annual Arrangements Transactions Review of 50 randomly selected focus arrangements entered into or renewed in the period. If the independent reviewer cannot verify compliance for at least 90% of the sample, OIG may require an additional sample of up to the same size.T08
| Column | What belongs in it |
|---|---|
| Obligation | The CIA provision and its reporting period |
| Evidence of performance | An annual report, IRO report or OIG correspondence — if public |
| Documented deficiency | Only where a public record states one |
| Corrective action | The organization's documented response |
| Enforcement consequence | A stipulated-penalties demand or breach notice — if any is public |
CIA reports are submitted to OIG and are not ordinarily published. Their absence from a public website is not evidence that they were not prepared or were withheld.
What the record does not yet show
This dossier has not reviewed the First Amended Complaint (ECF 70), the dismissal briefs (ECF 74–75, 81–82) or any docket entry after October 25, 2026 other than ECF 102. It therefore does not describe the amended pleading's theories against each remaining defendant, does not predict the ruling on the pending motion, and does not state that any deadline in ECF 102 has been met, extended or missed.T09T17
Entity precision
The faculty group in this case is Central California Faculty Medical Group, identified in the settlement as doing business as Inspire Health Medical Group. It is not California Forensic Medical Group, the professional corporation in KPSGILL.com's separate CFMG–Wellpath investigation. Similar initials establish nothing, and nothing in the records reviewed here connects Wellpath to this case.
The broader Fresno record — the settlement history, the 2011–2019 background and the Form 990 analysis — is in The Fresno Files. The legal framework is in The False Claims Act in healthcare.
Sources
Official issuers and original instruments are preferred; reproductions of primary legal text are identified. A source that opens is not proof of every neighbouring claim. Checked 1 November 2026 unless stated.
- T01United States ex rel. Terpening v. Fresno Community Hospital and Medical Center, No. 1:19-cv-01699-JLT-HBK (E.D. Cal.), ECF 102 — Order memorializing rulings at discovery dispute hearing (Oct. 29, 2026), official GovInfo copy
- T02Settlement Agreement among the United States, Fresno Community Hospital and Medical Center d/b/a Community Health System, Physician Network Advantage, Inc. and the relator (executed May 2025; dismissal order refers to the May 7, 2025 agreement)
- T03U.S. Attorney's Office, E.D. Cal. — Fresno-based Community Health System agrees to pay $31.5 million to resolve allegations of false claims (May 14, 2025)
- T04ECF 49 — Order on the United States' notice of election (May 13, 2025), official GovInfo copy
- T05ECF 60 — Order dismissing certain parties and claims (signed June 24, filed June 25, 2025), official GovInfo copy
- T06ECF 91 — Order modifying case-management deadlines (signed June 3, filed June 4, 2026), official GovInfo copy
- T07ECF 95 — Interim discovery and deposition protocols (Aug. 5, 2026), official GovInfo copy
- T08HHS-OIG corporate integrity agreement with Fresno Community Hospital and Medical Center d/b/a Community Health System (May 7, 2025), Appendix B
- T09PACER civil docket report, No. 1:19-cv-01699-JLT-HBK, generated Oct. 25, 2026, 3:30 p.m. Pacific (entries through Dkt. 101)
- T10Federal Rules of Civil Procedure (Dec. 1, 2025 edition), Rule 37(e)
- T11Jones v. Riot Hospitality Group LLC, 95 F.4th 730 (9th Cir. 2024), No. 22-16465
- T12Gregory v. State of Montana, No. 22-35674 (9th Cir. Sept. 27, 2024)
- T1342 C.F.R. § 411.357(w) — electronic health records items and services (eCFR)
- T14CMS final rule, Modernizing and Clarifying the Physician Self-Referral Regulations, 85 Fed. Reg. 77492 (Dec. 2, 2020)
- T1542 C.F.R. § 1001.952(y) — AKS safe harbor for electronic health records items and services (eCFR)
- T16HHS-OIG final rule, Revisions to Safe Harbors Under the Anti-Kickback Statute, 85 Fed. Reg. 77684 (Dec. 2, 2020)
- T17GovInfo case package, No. 1:19-cv-01699 (E.D. Cal.)
Fresno and Eastern District False Claims Act library
- Fresno division · 1:19-cv-01699TerpeningDiscovery · sanctions undecided
- Sacramento division · 2:24-cv-00287PetersDiscovery · Rule 37(b) preclusion adopted
- Fresno practice · 2024 agreementMukkerSettled with specified facts accepted
- Fresno practice · 2024 agreementGoswami / California Pain ConsultantsSettled; contentions denied
- Eastern District of CaliforniaRegional and criminal comparatorsDated historical records
- Governing lawThe False Claims Act in healthcareStatute, pleading, materiality, scienter, Stark, AKS
Case library index · The Fresno Files · Healthcare enforcement investigation · Source ledger