United States of America v. Dillon et al

Filing 8

MEMORANDUM DECISION AND ORDER. It is hereby ORDERED, that the motion to stay (docket no. 4 ) is DENIED. 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,
Case No. 1:17-cv-498-BLW
Plaintiff,
MEMORANDUM DECISION AND
ORDER

v.
CHERIE R. DILLON, and DENTAL
HEALTHCARE WITH HEART, P.C.,
(successor in interest to DENTAL
HEALTHCARE WITH HEART, PLLC),
Defendants.

INTRODUCTION
The Court has before it defendant Dillon’s motion to stay this action for
recovery under the False Claims Act. The motion is fully briefed and at issue. For
the reasons expressed below, the Court will deny the motion.
LITIGATION BACKGROUND
In a related criminal action, Dillon was charged with 24 counts of health
care fraud and 24 counts of aggravated identity theft. See U.S. v. Dillon, 1:16-CR037-BLW. The case went to trial, and after the Government rested its case, Dillon
pled guilty to all counts, and she was later sentenced to 60 months incarceration.
Following a hearing, the Court imposed forfeiture of $847,016, and ordered

Memorandum Decision & Order – pg. 1

restitution in the sum of $139,769.80. Dillon filed a notice of appeal and started
serving her sentence on August 14, 2017. Her appeal is pending.
In that criminal action, Dillon filed a motion to stay enforcement of the
monetary judgment against her. The Court denied her motion, holding that her
arguments challenging the forfeiture sums were not “fairly debatable” and did not
raise a “substantial question,” as required under the applicable legal standard set
out in U.S. v. Handy, 761 F.2d 1279, 1283 (9th Cir. 1985). See Memorandum
Decision (Dkt. No. 133) in U.S. v. Dillon, 1:16-CR-037-BLW. Regarding the
restitution, the Court directed the Clerk to hold any restitution payment until the
appeal terminates. Id.
When the trial in the criminal action was completed, the Government filed
this action, a civil False Claims Act against Dillon, alleging that her dental billings
to Medicaid were fraudulent and that she improperly used the credentials of a
licensed dentist to conduct her fraud. In the motion now pending before the Court
for resolution, Dillon seeks to stay this civil action pending her criminal appeal.
LEGAL STANDARDS
The Constitution does not ordinarily require a stay of civil proceedings
pending the outcome of criminal proceedings. Federal Sav. & Loan Ins. Corp. v.
Molinaro, 889 F.2d 899, 902 (9th Cir.1989). “In the absence of substantial
prejudice to the rights of the parties involved, such parallel proceedings are
Memorandum Decision & Order – pg. 2

unobjectionable under our jurisprudence.” S.E.C. v. Dresser Industries, Inc., 628
F.2d 1368, 1374 (D.C.Cir.1980). Nonetheless, a court may exercise its discretion
to stay civil proceedings when the interests of justice seem to require such action.
Keating v. Office of Thrift Supervision, 45 F.3d 322, 324 (9th Cir.1995).
“A court must decide whether to stay civil proceedings in the face of parallel
criminal proceedings in light of the particular circumstances and competing
interests involved in the case.” Molinaro, 889 F.2d at 902. In determining
whether to stay civil proceedings, a court must first consider “the extent to which
the defendant’s fifth amendment rights are implicated.” Keating, 45 F.3d at 324.
In addition, the court should generally consider the following five factors: “(1) the
interest of the plaintiffs in proceeding expeditiously with this litigation or any
particular aspect of it, and the potential prejudice to plaintiffs of a delay; (2) the
burden which any particular aspect of the proceedings may impose on defendants;
(3) the convenience of the court in the management of its cases, and the efficient
use of judicial resources; (4) the interests of persons not parties to the civil
litigation; and (5) the interest of the public in the pending civil and criminal
litigation.” Id. at 325.
Here, Dillon has appealed her guilty plea in the related criminal case. As a
result, there is a possibility that her Fifth Amendment rights could be implicated
because statements she makes in this civil case could be used against her if she
Memorandum Decision & Order – pg. 3

prevails on appeal and the United States elects to retry the criminal case. But this
is, at best, a very remote possibility, as the Court has found her grounds for appeal
quite weak, as discussed above. Moreover, Dillon’s Fifth Amendment rights could
be protected through less drastic means, such as by asserting the privilege on a
question-by-question basis, and by issuing a protective order. See Doe v. City of
San Diego, 2012 WL 6115663 at *3 (S.D.Ca. Dec. 10, 2012) (observing that once
a criminal trial is completed and an appeal pending, courts are generally more
reluctant to stay parallel civil proceedings, and listing less drastic measures to
protect Fifth Amendment rights).
Evaluating other factors beyond the Fifth Amendment concerns, a stay
would put a substantial burden on the Government as this fraud occurred years ago
and witnesses may be difficult to find. Moreover, the Government will be
pursuing this civil False Claims Act case regardless of what happens to the
criminal case on appeal. Finally, the public interest would not be served by a
multiple-year delay to await the outcome of the criminal appeal.
For all these reasons, the Court will deny the motion for stay.
ORDER
In accordance with the Memorandum Decision set forth above,
NOW THEREFORE IT IS HEREBY ORDERED, that the motion to stay
(docket no. 4) is DENIED.
Memorandum Decision & Order – pg. 4

DATED: May 23, 2018

_________________________
B. Lynn Winmill
Chief U.S. District Court Judge

Memorandum Decision & Order – pg. 5