JANE DOE v. HEART SOLUTIONS et al

Filing 71

OPINION. Signed by Judge Stanley R. Chesler on 4/3/17. (DD, )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
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UNITED STATES OF AMERICA, ex rel
JANE DOE,
Plaintiffs,
v.
HEART SOLUTION PC, BIOSOUND
MEDICAL SERVICES, KIRTISH N.
PATEL, NITA K. PATEL,

Civil Action No. 14-3644 (SRC)(CLW)

OPINION

Defendants.
CHESLER, District Judge
This matter comes before the Court upon Plaintiff United States of America’s (“the
Government”) motion for partial summary judgment on common law claims in Count III, IV, V,
and VI of its intervenor Complaint [Docket Entry 62]. Defendants Heart Solution P.C., Nita K.
Patel, Biosound Medical Services, and Kirtish N. Patel (collectively, “Defendants”) have
opposed the motion [Docket Entries 68 & 69]. The Court has considered the parties’
submissions and proceeds to rule without oral argument, pursuant to Federal Rule of Civil
Procedure 78. For the reasons set forth below, the Court will grant the Government’s motion.
I.

BACKGROUND
On November 17, 2015, Defendants Kirtish and Nita Patel separately pled guilty to

committing health care fraud in violation of 18 U.S.C. § 1347. As part of their guilty pleas,
Kirtish and Nita Patel admitted that they both owned and operated Biosound Medical Services
and Heart Solution P.C. from 2006 to 2014. (K. Patel Tr. at 32:1-5; N. Patel Tr. at 22:12-17).

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They admitted that at their companies, they committed two general schemes defrauding
Medicare.
First, they billed Medicare for fraudulent diagnostic test reports. (K. Patel Tr. at 32:1023; N. Patel Tr. at 22:20-23:1). Both Patels admitted that they claimed that licensed specialist
physicians had reviewed and interpreted the diagnostic tests, when they had not. (K. Patel Tr. at
32:18-23; N. Patel Tr. at 23:2-7). The Patels admitted that instead, Kirtish Patel wrote many of
the diagnostic reports that were supposed to have been written by a specialist physician, despite
the fact that Kirtish Patel did not have a medical license. (K. Patel Tr. at 33:5-9, 33:14-22; N.
Patel Tr. at 23:14-19). The Patels further admitted that both Kirtish Patel and Nita Patel attached
forged specialist physician signatures to reports. (K. Patel Tr. at 33:23-34:4; N. Patel Tr. at
23:20-25). Medicare paid $487,244.95 for these diagnostic tests. (United States Rule 56.1
Statement ¶ 11 [hereinafter PSF]).
Second, the Patels admitted that from 2006 to 2014, they represented to Medicare that the
neurological testing performed at Biosound Medical Services was supervised by a licensed
neurologist, when in fact it was not. (K. Patel Tr. at 34:4; N. Patel Tr. at 23:8-13). Medicare
paid $1,181,710 for this neurological diagnostic testing. (PSF ¶ 11).
The Patels acknowledged that they knew that submission of these false claims to
Medicare was illegal. (K. Patel Tr. at 36:21-37:2; N. Patel Tr. at 25:17-20). They also admitted
that in total, Medicare paid Biosound Medical Services and Heart Solution P.C. at least
$1,668,954.95 for claims submitted. (K. Patel Tr. at 35:11-36:17; N. Patel Tr. at 25:2-16).
Relator filed the original Complaint in this civil action against Defendants on June 6,
2014 [Docket Entry 1]. The Government filed a notice of election to intervene on November 18,
2015 [Docket Entry 9], along with an intervenor Complaint [Docket Entry 10]. This Court has

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granted two previous motions for summary judgment, one filed by Relator and one by the
Government [Docket Entries 30 & 34]. The Government now files another partial motion for
summary judgment on its common law claims.
II.

LEGAL STANDARD
a. SUMMARY JUDGMENT
Summary judgment is appropriate under Fed. R. Civ. P. 56(c) when the moving party

demonstrates that there is no genuine issue of material fact and the evidence establishes the
moving party’s entitlement to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S.
317, 322-23 (1986). A factual dispute is genuine if a reasonable jury could return a verdict for
the non-movant, and it is material if, under the substantive law, it would affect the outcome of
the suit. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). “In considering a motion
for summary judgment, a district court may not make credibility determinations or engage in any
weighing of the evidence; instead, the non-moving party's evidence ‘is to be believed and all
justifiable inferences are to be drawn in his favor.’” Marino v. Indus. Crating Co., 358 F.3d 241,
247 (3d Cir. 2004) (quoting Anderson, 477 U.S. at 255).
“When the moving party has the burden of proof at trial, that party must show
affirmatively the absence of a genuine issue of material fact: it must show that, on all the
essential elements of its case on which it bears the burden of proof at trial, no reasonable jury
could find for the non-moving party.” In re Bressman, 327 F.3d 229, 238 (3d Cir. 2003)
(quoting United States v. Four Parcels of Real Prop., 941 F.2d 1428, 1438 (11th Cir. 1991)).
“[W]ith respect to an issue on which the nonmoving party bears the burden of proof . . . the
burden on the moving party may be discharged by ‘showing’—that is, pointing out to the district

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court—that there is an absence of evidence to support the nonmoving party’s case.” Celotex,
477 U.S. at 325.
Once the moving party has satisfied its initial burden, the party opposing the motion must
establish that a genuine issue as to a material fact exists. Jersey Cent. Power & Light Co. v.
Lacey Twp., 772 F.2d 1103, 1109 (3d Cir. 1985). The party opposing the motion for summary
judgment cannot rest on mere allegations and instead must present actual evidence that creates a
genuine issue as to a material fact for trial. Anderson, 477 U.S. at 248; Siegel Transfer, Inc. v.
Carrier Express, Inc., 54 F.3d 1125, 1130-31 (3d Cir. 1995). “[U]nsupported allegations . . . and
pleadings are insufficient to repel summary judgment.” Schoch v. First Fid. Bancorporation,
912 F.2d 654, 657 (3d Cir. 1990); see also Fed. R. Civ. P. 56(e) (requiring the nonmoving party
to “set out specific facts showing a genuine issue for trial”). “A nonmoving party has created a
genuine issue of material fact if it has provided sufficient evidence to allow a jury to find in its
favor at trial.” Gleason v. Norwest Mortg., Inc., 243 F.3d 130, 138 (3d Cir. 2001).
If the nonmoving party has failed “to make a showing sufficient to establish the existence
of an element essential to that party’s case, and on which that party will bear the burden of proof
at trial . . . there can be ‘no genuine issue of material fact,’ since a complete failure of proof
concerning an essential element of the nonmoving party’s case necessarily renders all other facts
immaterial.” Katz v. Aetna Cas. & Sur. Co., 972 F.2d 53, 55 (3d Cir. 1992) (quoting Celotex,
477 U.S. at 322-23).
b. COLLATERAL ESTOPPEL
Under the common law doctrine of collateral estoppel, a defendant may not contest an
issue in a civil suit that has been resolved in the Government’s favor in a criminal prosecution,
whether the defendant pled guilty or was convicted after a trail. United States v. Killough, 848

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F.2d 1523, 1528 (11th Cir. 1988) (citation omitted). Here, this civil qui tam action arises from
the same set of transactions that underlie the Patels’ guilty pleas in their criminal cases.
Therefore, the Patels are estopped from denying the essential elements of offenses in this civil
action that involve the same transactions in the informations to which the Patels pled guilty.
III.

DISCUSSION
The Government moves for partial summary judgment on Counts III, IV, V, and VI, and

seeks the damages requested in the intervenor Complaint. The Court will address each claim in
turn.
a. COMMON LAW FRAUD
First, the Government moves for partial summary judgment on Count III, common law
fraud. A plaintiff must allege five elements to recover from common law fraud: “(1) a material
misrepresentation of a presently existing or past fact; (2) knowledge or belief by the defendant of
its falsity; (3) an intention that the other person rely on it; (4) reasonable reliance thereon by the
other person; and (5) resulting damages.” Williams v. BASF Catalysts LLC, 765 F.3d 306, 317
(3d Cir. 2014) (citing Banco Popular N. Am. v. Gandi, 184 N.J. 161, 172-73 (2005) (quotation
marks omitted). A fact is material if a reasonable person would attach importance to it in
determining his or her choice of action in the transaction, or if the maker of the representation
knew or had reason to know that the recipient of the representation regards the matter as
important in determining his or her choice of action, even if a reasonable person would not.
Universal Health Servs., Inc. v. United States, 136 S. Ct. 1989, 2002–03 (2016) (internal citation
omitted); Voilas v. Gen. Motors Corp., 170 F.3d 367, 376 (3d Cir. 1999). A plaintiff’s reliance
is reasonable if it was “acting justifiably or reasonably in giving credence to the alleged
misrepresentation” – that is, if it relied on a representation that was “worthy of belief.” Voilas,

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170 F.3d at 377.
The Patels admitted at their guilty pleas to conduct that makes them liable for common
law fraud. First, they admitted to making misrepresentations. In their guilty pleas, they admitted
that they forged doctors’ signatures on fraudulent diagnostic test reports and billed Medicare for
the reports and the underlying tests. The Patels admitted that they lied that a licensed physician
reviewed and interpreted the diagnostic data recorded by technicians who administered the
testing. Additionally, the Patels admitted that they billed Medicare for neurological tests
performed at Biosound Medical Services from 2006 to 2014 and they falsely reported that these
tests were supervised by a licensed physician. These misrepresentations were material because
Medicare attached importance to the Patels’ claims that a physician was reviewing, interpreting,
and supervising the tests, and Medicare would not have paid the Patels for their testing had it
known the truth. See 42 C.F.R. § 410.32(b) (stating that diagnostic testing services “furnished
without the required level of supervision not reasonable and necessary” and thus are not covered
by Medicare). 1
Additionally, as to the other elements of common law fraud, the Patels admitted at their
guilty plea that they knew their representations were false and that billing Medicare for the
reports was illegal. They intended for Medicare to rely on their representations so that Medicare
would pay them for their fraudulent testing. The Government established the fourth element –
that it reasonably relied on the Patels’ material misrepresentations – because the Patels identified
supervising physicians and certified that they were abiding by Medicare program rules. See 42
C.F.R. § 424.510(d)(3) (requiring a signature on an enrollment application attesting “that the
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The Patels operated an Independent Diagnostic Testing Facility for Medicare Part B purposes.
Under 42 C.F.R. § 410.33(b), they were thus required to have a supervising physician.
Moreover, the Defendants billed Medicare for diagnostic testing that required at least a general
level of supervision under 42 C.F.R. § 410.32(b)(3)(i).
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provider or supplier is aware of, and abides by, all applicable statutes, regulations, and program
instructions.”). Thus, the Patels’ representations were worthy of belief. Finally, the Patels
admitted in their guilty pleas that Medicare paid the Patels at least $1,668,954.95 for fraudulent
diagnostic testing, reports, and unsupervised neurological diagnostic testing. Since the Patels
have already pled guilty to conduct that shows that they committed common law fraud, there are
no genuine issues of material fact remaining. Thus, the Court grants the Government’s motion
for summary judgment on the common law fraud claim.
b. UNJUST ENRICHMENT
Next, the Government moves for summary judgment on its unjust enrichment claim. “To
establish unjust enrichment, a plaintiff must show both that defendant received a benefit and that
retention of that benefit without payment would be unjust.” VRG Corp. v. GKN Realty Corp.,
641 A.2d 519, 526 (1994). Here, the Patels admitted in their guilty pleas that they were paid at
least $1,668,954.95 by Medicare for their fraudulent diagnostic and neurological testing. The
retention of this $1,668,954.95 would be inequitable because it was obtained through their
crimes. Based on their guilty pleas, there are no disputed genuine issues of material fact that
they received a benefit after fraudulently billing Medicare. This Court therefore grants the
Government’s motion for summary judgment on the unjust enrichment claim.
c. DISGORGEMENT OF PROFITS
Similarly, the Government moves for summary judgment on Count V, its disgorgement
of profits claim. A court can order a defendant to divest itself of the benefits of illegal activity
through disgorgement of profits. Commodity Futures Trading Comm’n v. American Metals
Exchange Corp., 991 F.2d 71, 76 (3d Cir. 1993). Here, the Patels admitted that they retained
$1,668,954.95 in gains from Medicare due to their illegal activity. Because they admitted this in

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their guilty pleas, there are no contested genuine issues of material fact. Thus, the Court grants
the Government’s motion for summary judgment on disgorgement of profits.
d. PAYMENT BY MISTAKE OF FACT
The Government finally moves for summary judgment on Count VI, payment by mistake
of fact. Payment by mistake of fact permits the Government to recover funds that “its agents
have wrongfully, erroneously, or illegally paid.” United States v. Albinson, No. CIV. 09-1791,
2010 WL 3258266, at *18 (D.N.J. Aug. 16, 2010) (citing United States v. Wurts, 303 U.S. 414,
415 (1938)). “[I]f the Government made payments based on an erroneous belief that was
material to the decision to pay, it is entitled to recover the payments.” Id. at *19 (internal
citation omitted). Here, the Government paid the Patels under the erroneous belief that a
physician had been reviewing and interpreting diagnostic data, and supervising neurological
tests. The Government was under this erroneous belief because of the Patels’ submissions to
Medicare and their certification that they were abiding by Medicare regulations. The Patels
admitted to illegally billing Medicare in their guilty pleas. Because these misrepresentations
were material to Medicare’s decision to pay the Patels, the Government can recover. Thus, the
Court grants the Government’s motion for summary judgment on payment by mistake of fact.
e. KIRTISH PATEL’S ARGUMENT ON LIABILITY
Kirtish Patel seeks to create a genuine issue of material fact by stating in his certification
that he employed Dr. Brad Tinkelman and Dr. Fawaz Mian as supervising neurologists from
2006 to 2007 and 2012 to 2014, respectively. As this Court has previously explained, both
Kirtish and Nita Patel’s plea allocutions conflict with this assertion, as both admitted that
between 2006 and 2014, they “falsely represent[ed] to Medicare that the neurological testing
being performed at Biosound Medical Services was being supervised by a licensed neurologist,

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when, in fact, it was not”. (K. Patel Tr. at 34:18-22; N. Patel Tr. at 24:14-22). Defendants repeat
their assertions that the plea colloquy was not sufficiently specific. But, Defendants have not
explained why they did not assert at the plea allocutions that some testing at Biosound had been
conducted under the supervision of a licensed neurologist, at the proper level of supervision, if in
fact this was the case. The Court has already struck the portions of Kirtish Patel’s certification
addressing these issues as self-serving. Given the Patels’ admissions at their guilty pleas, the
Court does not find genuine issues of material fact here.
f. NITA PATEL’S ARGUMENT ON LIABILITY
Nita Patel claims that she should not be held liable for unsupervised testing that occurred
at Biosound Medical Services, because she did not own or operate the company. This Court has
already rejected this argument, which Nita Patel also made in response to the previous motions
for summary judgment. This argument contradicts her sworn testimony during her plea
allocution that she was an owner and operator of Biosound Medical Services from 2006 to 2014,
and that she and her husband knowingly falsely represented to Medicare that the neurological
testing being performed at Biosound Medical Services was being supervised by a licensed
neurologist. (N. Patel Tr. at 22:12-17; 24:18-26). As this Court previously noted, Judge Walls’
questioning on the issue of ownership of Biosound and the false representations made to
Medicare was clear. Nita Patel had the opportunity to explain that she did not own Biosound
during her plea allocution. The Court cannot justify ignoring the admissions made in the plea
allocution based on this self-serving briefing. This Court already struck the portions of Nita
Patel’s affidavit that address her ownership and operation of Biosound. Because Nita Patel is
estopped from denying that she owned and operated Biosound from 2006 to 2014 and that she
made false representations to Medicare about neurological testing being supervised at Biosound,

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this Court grants the Government’s motion for summary judgment as to the liability of Nita
Patel.
g. DAMAGES
The Government finally asks the Court to grant summary judgment on damages for
common law fraud, unjust enrichment, disgorgement of profits, and payment by mistake. The
Government requests that the Patels be ordered to pay $1,668,954.95, the amount that the Patels
admitted Medicare had paid to them for their fraudulent testing. 2
Defendants repeat the arguments they made in response to the last round of motions for
summary judgment and request that the Court reduce the damages for several reasons. First,
Defendants assert that damages from false claims based on fraudulent diagnostic reports should
be reduced by 60 percent. The Patels argue that their tests had some value despite the forged
reports accompanying the test results, because the Patels completed the technical component of
the test, and thus a physician who had ordered the test could have, theoretically, examined the
test results themselves. They suggest that the Government must produce a billing code expert to
determine the damages. As this Court concluded in its last summary judgment Opinion,
Defendants offer no evidence to show that any physician, in fact, interpreted the diagnostic test
themselves. And furthermore, as this Court has previously stated, Medicare requires that the
services for which it reimburses must be medically “reasonable and necessary,” which requires
adequate supervision. 42 U.S.C. § 1395y(a)(1)(A). Medicare is not required to reimburse for
tests simply because they may have some “value.” Medicare requires that the “interpretation of a
diagnostic procedure includes a written report.” Medicare Claims Processing Manual Ch. 13 at
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The Court previously granted judgment in the sum of $7,756,864.85 in favor of the United
States against the Defendants [Docket No. 47]. The government requests that the liability runs
concurrent, meaning that the Defendants’ liability in this matter should not exceed
$7,756,864.85.
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20.1 (Professional Component). The Patels have admitted that they performed the diagnostic
tests, and that they are liable for creating forged test reports. Specifically, Defendants
represented to Medicare that they had provided a service that they, in fact, did not provide.
Therefore, the forged test reports render the claims worthless under Medicare’s requirements.
For these reasons, the Court will not reduce the damages based on this theory of apportionment
of the claim’s value.
In addition, Defendants attack the number of false claims at issue in this action. The
Court has also already addressed this argument in its last Opinion. To the extent that the Patels
seek to reduce damages based on the statements in Kirtish Patel’s certification that Biosound
employed a supervising neurologist for part of the time period in question and that some of the
tests were in fact supervised, the Court will not grant this request. The Court has struck the
portions of Kirtish Patel’s certification addressing these issues, for the reasons stated above, and
Defendants have offered no other support for the requested reduction of fees on this issue. The
Patels admitted in their pleas that neurological testing at Biosound was not supervised for the
time period at issue, and are estopped from denying these admissions. Defendants next argue
that Kirtish Patel wrote “many” of the diagnostic reports, but not all of them, and that damages
should be reduced accordingly. This argument is not persuasive because the Patels admitted in
their pleas that Medicare paid them $1,668,954.95 due to their fraudulent acts, so any dispute as
to the number of false claims is moot.
Finally, based on the affidavits submitted with their oppositions, the Patels also assert
that Defendants should not be required to reimburse the funds they received from Medicare that
they subsequently paid in taxes to the Government. The Patels offer no case cites for the
proposition that the taxes they paid on the money paid by Medicare for their false claims should

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be subtracted from the amount they owe to the Government, or indeed that any court has offset
damages to a government program like Medicare based on tax payments to the general treasury.
The Patels have admitted the exact amount that Medicare paid them for their fraudulent
testing. Since Defendants are estopped from denying the facts in their plea allocutions related to
damages, the Court will grant summary judgment in favor of the Government for $1,668,954.95
in damages.
IV.

CONCLUSION
For the foregoing reasons, the Court will grant the Government’s motion. An appropriate

Order will be filed herewith.

s/ Stanley R. Chesler
STANLEY R. CHESLER
United States District Judge
Dated: April 3, 2017

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