Jacobs v. CDS, PA et al

Filing 32

MEMORANDUM DECISION AND ORDER denying 28 Defendant's Joint Motion to Stay Discovery. 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 (cjs)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO

UNITED STATES OF AMERICA,
UNITED STATES OF AMERICA EX.
REL., DR. JEFFREY JACOBS

Case No. 4:14-cv-00301-BLW
MEMORANDUM DECISION AND
ORDER

Plaintiff,
v.

CDS, P.A. d/b/a POCATELLO WOMEN’
HEALTH CLINIC; POCATELLO
HOSPITAL, LLC d/b/a/ PORTNEUF
MEDICAL CENTER, LLC, a Delaware
limited liability Company; LHP
POCATELLO, LLC, a Delaware limited
liability company,
Defendants.

INTRODUCTION
Before the Court is Defendants’ CDS, P.A. d/b/a Pocatello Women’s Health
Clinic’s (the “Health Clinic”) and Pocatello Hospital LLC, d/b/a Portneuf Medical
Center, LLC (the “Medical Center”) and LHP Pocatello, LLC’s (“LHP”) Joint Motion to
Stay Discovery (Dkt. 28). Pursuant to the Court’s discovery dispute procedure outlined in
MEMORANDUM DECISION AND ORDER - 1

the Case Management Order, the parties contacted Court staff in attempt to mediate a
pending discovery dispute. Unable to resolve the issues, Defendants move to stay
discovery. For the reasons set forth below, the Court will deny Defendants’ joint motion.
BACKGROUND
Relator Dr. Jeffrey Jacobs initiated this action on behalf of the United States
government pursuant to the qui tam provisions of the False Claims Act, 31 U.S.C.
§ 3724, et seq. Jacobs alleges that Defendants submitted false certifications to the federal
government in connection with payments to Medicare and Medicaid. More specifically,
Jacobs alleges that Defendants falsely and fraudulently submitted, or caused the
submission of, claims for medical services provided to Medicare and Medicaid patients
who were referred to the Medical Center by the Health Clinic in violation of the AntiKickback Statute, 42 U.S.C. § 1320a-7b(b) (“AKS”), and the Stark Law, 42 U.S.C.
§ 1395nn.
All Defendants have moved to dismiss Jacob’s Complaint without leave to amend
on the grounds that Jacobs (1) fails to state a viable claim of relief under Rule 12(b)(6) of
the Federal Rules of Civil Procedure and (2) fails to plead fraud under False Claims Act
with the particularity required by Rule 9(b) of the Federal Rules of Civil Procedure. The
parties' disagree about whether initial disclosures under Rule 26 of the Federal Rules of
Civil Procedure must be exchanged and discovery commenced pending a decision on the
motions to dismiss.

MEMORANDUM DECISION AND ORDER - 2

ANALYSIS
Federal Rule of Civil Procedure 26(c) governs the granting of a protective order. A
party seeking such an order must show “good cause.” Gray v. First Winthrop Corp., 133
F.R.D. 39, 40 (N.D.Ca. 1990). A party seeking to stay discovery carries an even heavier
burden and must make a “strong showing” for why discovery should be denied. Id.
(citing Blankenship v. Hearst Corp., 519 F.2d 418, 429 (9th Cir. 1975)). “The moving
party must show a particular and specific need for the protective order, as opposed to
making stereotyped or conclusory statements.” Id. (citing Wright & Miller, Federal
Practice and Procedure, § 2035).
Here, Defendants argue that a stay of discovery pending a decision on their
motions to dismiss is warranted because the issues raised by Defendants’ motions to
dismiss speak to the threshold question of the sufficiency of Jacobs’ Complaint and do
not require factual discovery to resolve. In essence, Defendants have done no more than
to argue in conclusory fashion that its motion to dismiss will succeed. This idle
speculation does not satisfy Rule 26(c)'s good cause requirement. “The explosion of Rule
12(b)(6) motions in the wake of Bell Atlantic Corp v. Twombly, 550 U.S. 544 (2007), and
Ashcroft v. Iqbal, 129 S.C.1937 (2009), has made speedy determinations of cases
increasingly more difficult….The fact that a non-frivolous motion is pending is simply
not enough to warrant a blanket stay of all discovery.” U.S. ex rel. Howard v. Shoshone
Paiute Tribes, No. 2:10-CV-01890-GMN, 2012 WL 2327676, at *4 (D. Nev. June 19,
MEMORANDUM DECISION AND ORDER - 3

2012). In fact, such a notion is directly at odds with the need for expeditious resolution of
litigation. Gray, 133 F.R.D. at 40.
Defendants argue, however, that Relator must meet the heightened pleading
requirements of Federal Rule of Civil Procedure 9(b). This is true. But it is still not
enough to justify a stay of discovery pending a motion to dismiss. Rather, courts have
held that “a district court may stay discovery only if it is convinced that the plaintiff
cannot state a claim for relief.” Howard, 2012 WL 2327676, at * 1 (emphasis in original)
(citing Twin City Fire Insurance v. Employers of Wasau, 124 F.R.D 652, 653
(D.Nev.1989) and Turner Broadcasting System, Inc. v. Tracinda Corp., 175 F.R.D. 554,
556 (D.Nev.1997)). Other courts within the Ninth Circuit will allow a stay of discovery
if, after taking a “preliminary peek at the merits” of a pending motion to dismiss, “there
appears to be an immediate and clear possibility that [the pending motion to dismiss] will
be granted.” GTE Wireless, Inc. v. Qualcomm, Inc., 192 F.R.D. 284, 286 (S.D. Cal.
2000).
The Court has taken a preliminary look at the pending motions to dismiss, and this
is not case where the complaint is “glaringly deficient” and “completely wanting.” C.f.
Jepson, Inc. v. Makita Corp., 34 F.3d 1321, 1327 (7th Cir. 1994). Nor is it a case in
which the defendant is not a person for purposes of the FCA as in Howard. Instead, this
is a run-of-the-mill case involving a standard motion to dismiss under Twombly and Iqbal
and Rule 9(b). Even if the Court grants the motions to dismiss in part, the likelihood is
that the Court will also grant leave to amend, as granting leave is a commonplace
MEMORANDUM DECISION AND ORDER - 4

response to technical shortcom
e
mings in a complaint. U
United Stat v. Corinthian Colle
tes
eges,
655 F.3d 984, 995 (9th Cir. 20
d
(
011). Accor
rdingly, the Court will deny Defen
ndants’ mot
tion.
ORDER
O
IT IS ORDE
T
ERED that Defendants’ Joint Moti to Stay Discovery (Dkt. 28) is
D
ion
s
DENIED
D.

DAT
TED: Septe
ember 3, 20
015

__________
__________
_____
___
B. L
Lynn Winm
mill
Chief Judge
ited
District Cou
urt
Uni States D

MEMORA
ANDUM DECIS
SION AND ORDER - 5
R