Smith et al v. Van Dyck et al

Filing 95

ORDER signed by District Judge Garland E. Burrell, Jr on 2/14/18 ORDERING that partial summary judgment 90 is GRANTED against Defendant and in favor of the United States on the liability issues proscribed by the federal False Claims Act, and is GRANTED against Defendant and in favor of the State of California on the liability issues proscribed in the California False Claims Act; the Motion is otherwise DENIED. (Mena-Sanchez, L)

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1 2 3 4 UNITED STATES DISTRICT COURT 5 EASTERN DISTRICT OF CALIFORNIA 6 7 8 9 UNITED STATES OF AMERICA, and THE STATE OF CALIFORNIA ex rel., NANCY A. SMITH, and WENDY S. JOHNSON, v. 11 13 2:12-cv-1783-GEB-DB ORDER GRANTING IN PART AND DENYING IN PART RELATORS’S MOTION FOR PARTIAL SUMMARY JUDGMENT Relators, 10 12 No. NEIL ALAN VAN DYCK, DPM, NEIL ALAN VAN DYCK, DPM, Inc., Defendants. 14 1 15 Qui tam relators Nancy A. Smith and Wendy S. Johnson 16 (“Relators”) move for partial summary judgment against Neil Alan 17 Van Dyck, DPM, (“Defendant”) “on the causes of action for fraud 18 that 19 plea,” arguing that “[t]he undisputed facts confirm Relators are 20 entitled to summary judgment on Causes of Action I and II of 21 Relators’ Second Amended Complaint . . . .” 22 J. at 1:21-24, ECF No. 90. 23 opposition. 24 United States filed a statement of interest in which it seeks to 25 “clarify several issues in Relators’ Motion,” Statement Interest 26 at 1:21, ECF No. 92, and Relators responded to that statement, 27 1 28 Defendant admitted to in his October 26, 2015 criminal Mot. Partial Summ. Defendant filed a statement of non- Statement Non-Opp’n, ECF No. 91. Thereafter, the Defendant Neil Alan Van Dyck, DPM, Inc. has not yet appeared in this action and the Doe defendants have been dismissed. Therefore, the caption reflects dismissal of the Doe defendants. 1 1 Resp. Statement Interest, ECF No. 93. 2 Relators allege in Cause of Action I violations of the 3 False Claims Act prescribed in 31 U.S.C. § 3729(a)(1)(A)–(B). 4 Second Amended Complaint at ¶¶ 150–151, ECF No. 62. 5 allege in Cause of Action II violations of the California False 6 Claims Act prescribed in Cal. Govt. Code § 12651(a)(1)–(2). 7 at ¶ 158. 8 against 9 $3,775,000.” Relators Id. The “Relators [also] request partial summary judgment Defendants is [on these claims] in Mot. Partial Summ. J. at 10:6–7. Second What these claims 11 follows: “Relators . . . , on behalf of the United States and the 12 State 13 California False Claims Acts for damages and penalties resulting 14 from Defendants’ submission of improper claims for payment to 15 government funded insurance programs for services and durable 16 medical equipment that were inadequately documented or otherwise 17 unsupported and thus deemed not medically necessary.” 18 Amended Complaint at 1:21-27. seek the of concern California, in amount 10 of encapsulated the redress Amended under Complaint the Federal as and Second 19 The United States asserts in its statement of interest 20 that Relators are not entitled to summary judgment for themselves 21 on 22 issues under the Federal False Claims Act should be entered for 23 the United States and summary judgment on the liability issues 24 under the California False Claims Act should be entered for the 25 State of California. 26 27 28 either claim, and that summary judgment on the The United States also states: [A]lthough Relators request judgment against [Defendant] in the amount of $3,775,000, Relators have provided no evidence to support how this amount should be divided between the first and second cause of 2 liability 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 actions. This deficiency is particularly salient because any judgment for damages under 31 U.S.C. § 3729(a)(1)(A)-(B) (Cause of Action I) must be paid to the United States, whereas any judgment for damages under Cal. Gov. Code §§ 12650-12655 (Cause of Action II) must be paid to the State of California. Here, Relators request judgment on both cause of actions, but offer no explanation on how the monies should be divided between the United States and the State of California. This issue must be resolved before judgment on damages can be entered under either cause of action in this case. Moreover, once determined, those amounts will be for judgment to the government parties. Relators can only seek a percentage share – still to be determined – of the damages and civil penalty monies as they are actually recovered in this qui tam action. Id. § 3730(d)(2) (relator is paid out of the proceeds of the qui tam action). Any award to Relators is therefore dependent on the proceeds of this qui tam action. Thus, if Relators want to seek a share of any monies collected in the United States’ criminal action against [Defendant], United States v. Van Dyck, Case No. 2:15-cr-00200 GEB, they must show entitlement to it in this action after the United States receives a judgment. Such issues were not briefed by Relators in the current motion and thus cannot be resolved through this motion. For example, the monies recovered in the criminal case included harm suffered by private insurance companies, which Relators cannot claim a share of. See 31 U.S.C. § 3729(b)(2) (defining the term “claim” to require a nexus with the United States). Additionally, the scope of conduct between the civil and criminal actions are not identical and thus those issues have to be addressed before a determination could be made of what amount, if any, Relators are entitled to. Statement Interest at 3:2–3:22. 25 Each subject cause of action incorporates portions of 26 the Second Amended Complaint and includes paragraphs which have 27 not been shown to be undisputed facts. 28 facts and admissions in the factual basis attached to Defendant’s 3 However, the following 1 plea agreement in the related previously filed criminal action 2 are undisputed facts and admissions: 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 From 2009 through 2014, [Defendant] offered “spa”-type services at his podiatric practice, including routine foot care. These services were typically performed by unlicensed staff in [Defendant]’s practice. In many instances, records reflect that [Defendant] was not even present at his podiatry practice when the billed-services were performed. Despite the fact that [Defendant], or more often his staff, were performing routine foot care that was not covered by Medicare, Medi-Cal, Tricare, or private insurance, [Defendant] submitted claims to these entities for podiatric services that falsely represented either that a “nail avulsion” service was performed (using billing code 11730), when in truth and in fact, routine foot care was performed, or that the routine foot care was necessitated by an injury or symptoms (using billing codes 11720 & 11721) that, in truth and fact, were not present. In addition, [Defendant] also purchased single-use-application Dermagraft skin substitute patches that are used to help in the wound closure for feet. [Defendant] cut the patches into multiple pieces which he then applied to different patients and for which he fraudulently billed Medicare for each application. Based on records obtained from Dermagraft and [Defendant]’s billing records, there were at least 50 instances where [Defendant] billed Medicare $1,500 per application where [Defendant] had altered the single-use Dermagraft patch and applied the pieces to multiple patients. Medicare paid [Defendant] $1,200 on each fraudulent bill submitted for the Dermagraft applications. . . . . The total amount of Fraudulent claims submitted to Medicare, Medi-Cal, Tricare, and private insurers under billing codes 11730, 11720, 11721, and for multiple applications of Dermagraft patches from 2009 to August 2014 was over $2,860,000. Those entities paid approximately $1,230,000 to Van Dyck on the fraudulent claims, including over $1,075,000 paid by Medicare, Medi-Cal, and Tricare, all 4 1 of which are government health care programs. Additionally, Medicare rejected $240,000 in claims submitted under Codes 11730, 11720, and 11721 and Tricare rejected $65,015 in claims submitted under those claims. 2 3 4 Factual Basis for Plea at A-1 through A-2, ECF No. 90-4. Based 5 of on the this concerning evidence, liability portion 7 However, 8 judgment should be entered on damages, since the Relators failed 9 to accompany the motion with a “Statement of Undisputed Facts,” evidentiary by Local Rule record this the 6 the motion undisputed does not is granted. evince that summary 10 required 11 penalties 12 Enterprises, Inc. v. Publishers Serv., Inc., 438 F. App’x 579, 13 582 (9th Cir. 2011) (“The district court appropriately denied 14 [the] Motion for Partial Summary Judgment [because the movant] 15 failed 16 neglecting to submit a statement of undisputed facts . . .”). sought . . . 260(a), evidence “enumerated to offer containing the discretely.” sufficient damages See evidentiary and Falcon support by 17 The Relators make more precise arguments on the damages 18 and penalty issues in their reply brief to the United States’s 19 statement of interest. 20 However, this argument is not considered because the “general 21 rule [is invoked that the movants] cannot raise a new issue for 22 the first time in their reply briefs.” 23 914 F.2d 1545, 1560 (9th Cir. 1990). 24 penalties arguments in the Relators’ reply brief are disregarded. Accordingly, 25 Defendant partial Therefore, the damages and summary favor 28 is 5 in United GRANTED liability issues proscribed by the federal False Claims Act, and and the is 27 Defendant of judgment against against in State of Nev. v. Watkins, 26 GRANTED and Resp. Statement Interest at 2:4–3:11. favor of States the on State the of 1 California on the liability issues proscribed in the California 2 False Claims Act; the motion is otherwise DENIED. 3 Dated: February 14, 2018 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6

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