United States of America v. Dillon et al

Filing 64

MEMORANDUM DECISION AND ORDER. It is hereby ORDERED, that the motions for judgment (docket nos. 59 & 60 ) are GRANTED. It is further ORDERED, that a fine be imposed under the False Claims Act against defendant Cherie R. Dillon in the sum of $ 550,000. It is further ORDERED, that a fine be imposed under the False Claims Act against defendant Dental Healthcare With Heart P.C. in the sum of $550,000. Signed by Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (jp)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
UNITED STATES OF AMERICA,
Plaintiff,
v.
CHERIE R. DILLON and DENTAL
HEALTHCARE WITH HEART, P.C.,
(successor in interest to DENTAL
HEALTHCARE WITH HEART,
PLLC),,

Case No. 1:17-cv-498-BLW
MEMORANDUM DECISION AND
ORDER

Defendants.

INTRODUCTION
The Court has before it motions for judgment filed against defendants Cherie
Dillon and Dental Healthcare With Heart P.C. The motions are fully briefed and at issue.
For the reasons set forth below, the Court will grant both motions.
LITIGATION BACKGROUND
The Government has brought this lawsuit against Cherie Dillon and Dental Health
Care with Heart, P.C. under the False Claims Act (FCA) alleging that the defendants
committed health care fraud and seeking civil penalties. In a separate criminal
proceeding in this Court, Dillon was charged with 24 counts of health care fraud and 24
counts of aggravated identity theft. See U.S. v Dillon, 1:16-cr-037-BLW. The case went
to trial, and after the Government rested its case, Dillon pled guilty to all counts, and she
Memorandum Decision & Order – page 1

was later sentenced to 60 months incarceration. Following a hearing, the Court imposed
forfeiture of $847,016, and ordered restitution in the sum of $139,769.80. On appeal, the
Ninth Circuit held that (1) Dillon’s plea was “knowing and voluntary”; and (2) the Court,
in calculating the restitution amount, should not have deducted billings for hygiene
services Dillon performed. See U.S. v. Dillon, 749 Fed. Appx. 541 (9th Cir. 2018). On
remand, the Court held a hearing and increased the restitution amount to $316,778.25.
See Order (Dkt No. 168 in U.S. v. Dillon, 1:16-cr-037-BLW).
In March of 2019, the Government filed a motion for partial summary judgment
against Dillon. The motion sought summary judgment on only one of the five fraud
theories alleged in the complaint, i.e., that Dillon submitted fraudulent claims for dental
services that had not been performed by a dentist, but instead were performed by her, a
dental hygienist. This fraud theory encompassed 492 of the 820 claims at issue in the
Government’s complaint. The Government asked the Court to impose a civil penalty on
Dillon in the amount of $550,000.
The Court granted this motion in part and denied it in part. See Memorandum
Decision (Dkt. No. 58). The Court granted the motion “to the extent the Government
seeks findings that (1) all of the facts concerning defendant Cherie Dillon’s false and
fraudulent billing of Medicaid for dental services not performed by a dentist and
contained in the United States’ Separate Statement of Undisputed Facts are established in
this case; and (2) defendant Cherie Dillon is liable under the False Claims Act for the 492
false and fraudulent Medicaid claims she filed for dental services.” Id.

Memorandum Decision & Order – page 2

The Court denied without prejudice the Government’s request that the Court
impose a $550,000 civil penalty on Dillon because the Government’s motion sought
summary judgment on only one of the fraud theories alleged in the complaint and,
therefore, “[a]t this point in the litigation, with only part of the liability alleged in the
complaint having been resolved, it is too early to determine a penalty sum.” Id. at p. 5.
In the motion for judgment now before the Court, the Government states that it is
no longer pursuing the remaining fraud theories as to Dillon and asks the Court to impose
a $550,000 civil penalty on Dillon based on the Court’s findings, discussed above, that
Dillon violated the FCA on 492 occasions by submitting false or fraudulent claims for
dentist-only services performed by a non-dentist. The Government also seeks a judgment
of $1,100,000 against Dental Healthcare With Heart as the Clerk has entered default
against them.
ANALYSIS
The standard for assessing the amount of the fine under the FCA requires the
Court to evaluate the severity of Dillon’s offense, assess the costs associated with the
investigation, and assess the societal costs associated with the abuse of the Medicaid
program, among other factors. See U.S. v. Mackby, 339 F.3d 1013 (9th Cir. 2003). The
Court must ensure that the fine does not violate the Excessive Fines Clause of the Eighth
Amendment – that is, the fine must not be “grossly disproportional to the gravity of a
defendant’s offense.” Id.
The facts in this case show that for years Dillon provided and billed for services
that she, as a matter of law, was not qualified to provide and that she knew she was
Memorandum Decision & Order – page 3

prohibited from providing. In doing so, she placed her patients at risk, including when
she illegally provided controlled substances to minors. Dillon’s conduct was not a
temporary lapse in judgment, but involved deliberate, long-term deceit motivated by
greed. The business and banking records of Dental Healthcare With Heart (DHWH)
establish that Dillon and her family received substantial funds from DHWH and that she
used DHWH’s business bank account to pay personal expenses. In addition, to conceal
her fraud, Dillon engaged in identity theft and falsified medical records. It is undisputed
that the costs incurred by the U.S. Department of Health and Human Services’ (HHS) to
investigate Dillon’s fraud were $403,785.05. See Separate Statement of Undisputed
Facts (Dkt. No. 48-2) at ¶ 39.
Considering all of these facts, the Court finds that a fine of $550,000 is reasonable
and just. It is not “grossly disproportional to the gravity of a defendant’s offense. The
Court will therefore grant the Government’s motion for judgment and impose a fine
under the False Claims Act on defendant Cherie Dillon of $550,000.
The Government’s complaint also seeks a fine of $1,100,000 against DHWH. The
complaint was served on DHWH but no answer was ever filed and the Clerk has entered
default against DHWH. See Default (Dkt. No. 56). The facts against DHWH are the
same as those discussed above with regard to Dillon – she used the DHWH business
entity to make the false Medicaid claims. For the same reasons as expressed above, a
fine of $550,000 against DHWH would be reasonable and just and would not violate the
Excessive Fines Clause of the Eighth Amendment. For these reasons, the Court will
grant the motion for judgment against DHWH and impose a fine of $550,000 on DHWH.
Memorandum Decision & Order – page 4

The Court will issue a separate Judgment as required by Rule 58(a).
ORDER
In accordance with the Memorandum Decision set forth above,
NOW THEREFORE IT IS HEREBY ORDERED, that the motions for judgment
(docket nos. 59 & 60) are GRANTED.
IT IS FURTHER ORDERED, that a fine be imposed under the False Claims Act
against defendant Cherie R. Dillon in the sum of $550,000.
IT IS FURTHER ORDERED, that a fine be imposed under the False Claims Act
against defendant Dental Healthcare With Heart P.C. in the sum of $550,000.

DATED: November 4, 2019
_________________________
B. Lynn Winmill
U.S. District Court Judge

Memorandum Decision & Order – page 5