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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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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UNITED STATES OF AMERICA, and
THE STATE OF CALIFORNIA ex
rel., NANCY A. SMITH, and
WENDY S. JOHNSON,

v.

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2:12-cv-1783-GEB-DB

ORDER GRANTING IN PART AND
DENYING IN PART RELATORS’S
MOTION FOR PARTIAL SUMMARY
JUDGMENT

Relators,

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No.

NEIL ALAN VAN DYCK, DPM,
NEIL ALAN VAN DYCK, DPM,
Inc.,
Defendants.

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Qui tam relators Nancy A. Smith and Wendy S. Johnson

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(“Relators”) move for partial summary judgment against Neil Alan

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Van Dyck, DPM, (“Defendant”) “on the causes of action for fraud

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that

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plea,” arguing that “[t]he undisputed facts confirm Relators are

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entitled to summary judgment on Causes of Action I and II of

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Relators’ Second Amended Complaint . . . .”

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J. at 1:21-24, ECF No. 90.

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opposition.

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United States filed a statement of interest in which it seeks to

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“clarify several issues in Relators’ Motion,” Statement Interest

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at 1:21, ECF No. 92, and Relators responded to that statement,

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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.

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Resp. Statement Interest, ECF No. 93.

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Relators allege in Cause of Action I violations of the

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False Claims Act prescribed in 31 U.S.C. § 3729(a)(1)(A)–(B).

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Second Amended Complaint at ¶¶ 150–151, ECF No. 62.

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allege in Cause of Action II violations of the California False

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Claims Act prescribed in Cal. Govt. Code § 12651(a)(1)–(2).

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at ¶ 158.

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against

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$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

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follows: “Relators . . . , on behalf of the United States and the

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State

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California False Claims Acts for damages and penalties resulting

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from Defendants’ submission of improper claims for payment to

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government funded insurance programs for services and durable

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medical equipment that were inadequately documented or otherwise

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unsupported and thus deemed not medically necessary.”

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Amended Complaint at 1:21-27.

seek

the

of

concern

California,

in

amount

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of

encapsulated

the

redress

Amended

under

Complaint

the

Federal

as

and

Second

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The United States asserts in its statement of interest

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that Relators are not entitled to summary judgment for themselves

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on

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issues under the Federal False Claims Act should be entered for

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the United States and summary judgment on the liability issues

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under the California False Claims Act should be entered for the

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State of California.

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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
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liability

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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.

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Each subject cause of action incorporates portions of

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the Second Amended Complaint and includes paragraphs which have

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not been shown to be undisputed facts.

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facts and admissions in the factual basis attached to Defendant’s
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However, the following

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plea agreement in the related previously filed criminal action

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are undisputed facts and admissions:

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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
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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.

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Factual Basis for Plea at A-1 through A-2, ECF No. 90-4.
Based

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of

on

the

this

concerning

evidence,

liability

portion

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However,

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judgment should be entered on damages, since the Relators failed

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to accompany the motion with a “Statement of Undisputed Facts,”

evidentiary

by

Local

Rule

record

this

the

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the

motion

undisputed

does

not

is

granted.

evince

that

summary

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required

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penalties

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Enterprises, Inc. v. Publishers Serv., Inc., 438 F. App’x 579,

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582 (9th Cir. 2011) (“The district court appropriately denied

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[the] Motion for Partial Summary Judgment [because the movant]

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failed

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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

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The Relators make more precise arguments on the damages

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and penalty issues in their reply brief to the United States’s

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statement of interest.

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However, this argument is not considered because the “general

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rule [is invoked that the movants] cannot raise a new issue for

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the first time in their reply briefs.”

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914 F.2d 1545, 1560 (9th Cir. 1990).

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penalties arguments in the Relators’ reply brief are disregarded.
Accordingly,

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Defendant

partial

Therefore, the damages and

summary

favor

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is

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in

United

GRANTED

liability issues proscribed by the federal False Claims Act, and
and

the

is

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Defendant

of

judgment

against

against

in

State of Nev. v. Watkins,

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GRANTED

and

Resp. Statement Interest at 2:4–3:11.

favor

of

States

the

on

State

the

of

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California on the liability issues proscribed in the California

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False Claims Act; the motion is otherwise DENIED.

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Dated:

February 14, 2018

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