JANE DOE v. HEART SOLUTIONS et al

Filing 79

OPINION. Signed by Judge Stanley R. Chesler on 6/23/17. (sr, )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

UNITED STATES OF AMERICA, ex rel
JANE DOE,
Plaintiffs,
v.
HEART SOLUTION PC, BIOSOUND
MEDICAL SERVICES, KIRTISH N.
PATEL, NITA K. PATEL,

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

OPINION

Defendants.
CHESLER, District Judge
This matter comes before the Court upon Defendant Nita K. Patel’s motion to stay the
execution of judgment in this matter and to waive the supersedeas bond requirement [Docket
Entry 75]. Plaintiff United States of America (“the Government”) has opposed the motion
[Docket Entry 78]. 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 in part and deny in part Nita Patel’s motion. The Court will grant a
stay of the execution of judgment, but deny Nita Patel’s motion to waive the supersedeas bond
requirement. The Court sets bond at $5,308,365.
I.

BACKGROUND
On November 17, 2015, Defendants Kirtish and Nita Patel (“the Patels”) pled guilty to

committing health care fraud in violation of 18 U.S.C. § 1347. In their separate pleas, Kirtish
and Nita Patel admitted that they both owned and operated Biosound Medical Services and Heart
Solution P.C. from 2006 to 2014, and they admitted that they defrauded Medicare at their

companies. One day after they pled guilty in their criminal case, the Government filed a civil
complaint against the Patels and the two companies that the Patels they owned, based on the
fraudulent conduct. This Court granted two motions for summary judgment in favor of the
Government, ordering the Patels to pay a sum of $7,756,864.85 in damages and civil penalties to
the Government, and resolving all of the civil claims [Docket Entries 47 & 72]. On May 3,
2017, Nita K. Patel and her company, Heart Solution PC, filed a notice of appeal of the civil case
[Docket Entry 73]. Now, Nita Patel seeks to stay the execution of the $7.75 million judgment
pending appeal and seeks a waiver of the supersedeas bond requirement.
II.

ANALYSIS
Under Federal Rule of Civil Procedure 62(d), an appellant may obtain a stay as a matter

of right by filing a supersedeas bond. 1 “A supersedeas bond is any form of security, whether in
the form of cash, property, or surety bond, which a court may require of one who petitions to set
aside a judgment or execution and from which the other party may be made whole if the action is
unsuccessful.” Hilburn v. Bayonne Parking Auth., No. 07-5211, 2013 WL 1721648, at *2
(D.N.J. Apr. 19, 2013) (quoting Pharmacia Corp. v. Motor Carrier Services Corp., No. 04-3724,
2008 WL 852255, at *4 (D.N.J. March 28, 2008)). “In order to make the other party whole, such
a supersedeas bond must normally be in a sum sufficient to pay the judgment and costs, interest,
and damages for delay.” Id.
“Although the Third Circuit is silent on the issue of whether courts may require a bond
less than the amount of the full judgment, district courts within the Third Circuit have found that
they have discretion under Rule 62(d) to waive the bond requirement in whole or in part.”
Montalvo v. Larchmont Farms, Inc., No. 06-2704, 2011 WL 6303247, at *1 (D.N.J. Dec. 15,

1

There are two exceptions to this rule that are not applicable here.

2011) (citing Church & Dwight Co. v. Abbott Labs., 2009 WL 2230941, at *14 (D.N.J. July 23,
2009)). Courts will only exercise this discretion, however, “where there exists an alternative
means of securing the judgment” and there are “exceptional circumstances.” Montalvo v.
Larchmont Farms, Inc., No. 06-2704, 2011 WL 6303247, at *1 (D.N.J. Dec. 15, 2011) (citing
Transamerica Occidental Life Ins. v. Total Systems, Inc., No. 08-1323, 2011 WL 2447520, at *2;
Church & Dwight, 2009 WL 2230941, at *14). In determining whether “exceptional
circumstances” exist, courts consider five factors: “(1) the complexity of the collection process;
(2) the amount of time required to obtain a judgment on appeal; (3) the degree of confidence that
this Court has in the availability of funds to pay the judgment; (4) whether the [debtor’s] ability
to pay the judgment is so plain that the cost of a bond would be a waste of money; and (5)
whether the [debtor] is in such a precarious financial situation that the requirement to post a bond
would place the other creditors of the debtor in an insecure position.” Hilburn, 2013 WL
1721648, at *2. In order to show that waiver of a bond is appropriate, “it is the appellant’s
burden to demonstrate objectively that posting a full bond is impossible or impracticable;
likewise it is the appellant’s duty to propose a plan that will provide adequate (or as adequate as
possible) security for the appellee.” Id.
Here, Nita Patel is entitled to a stay of the execution of judgment pending her appeal as
long as she posts a supersedeas bond. Nevertheless, Nita Patel has moved to waive the
supersedeas bond. In determining whether to waive the supersedeas bond requirement, this
Court first considers whether there is an alternative means to secure the Court’s judgment in this
case. Nita Patel argues that because the Government has frozen “nearly all” of the Patels’ assets,
the Government has adequate security that it will be paid. As the government explains, however,
Nita Patels’ claim that the government has frozen her assets is a reference to a consent restraint

in the Patels’ criminal case amounting to roughly $3 million. Nita Patel has failed to show that
she consented to extend this agreement to the civil case and the Government alleges that she did
not do so. Therefore, Nita Patel has not demonstrated that any amount of money is secured for
civil judgment, let alone $7.75 million. In sum, Nita Patel fails to show that the freezing of
assets in her criminal case will provide adequate security to the Government that the civil
judgment will be satisfied.
Next, the Court considers whether there are “exceptional circumstances” here. The Court
is directed to look at five factors to determine if there are exceptional circumstances. Although
Nita Patel cites these five factors in her brief, she fails to address how the five factors weigh in
her favor. Nita Patel’s assertion that she and her husband are incarcerated and that their
companies are defunct is irrelevant in determining exceptional circumstances; neither the
incarceration status of the appellant nor the functioning of the appellant’s business are factors to
be considered in determining exceptional circumstances. 2 In fact, when the Court considers the
“exceptional circumstances” factors, the Court finds there are actually significant reasons not to
waive the bond. In its opposition motion, the Government presents evidence that the Patels have
attempted to hide their assets. According to the Government, the Patels have transferred at least
$1.4 million and other assets into accounts held in their children’s names and the children deny
that the money can be used to satisfy the civil judgment. In addition, the Government presents
evidence that the Patels bought a house worth $1.4 million soon after they were arrested. These
actions reduce the Court’s confidence that the funds will be available and increase the Court’s
suspicion that the collection process will prove complex. Thus, in considering two of the five

Moreover, although her incarceration and the unraveling of her business may make it difficult
for Nita Patel to post a bond, Nita Patel has failed to meet her burden of demonstrating
objectively that posting a bond is “impossible or impracticable.”
2

factors to determine if there are exceptional circumstances, the Court finds that there is actually a
great need for the supersedeas bond.
Nita Patel has failed to show that the Court should waive her supersedeas bond because
there are no alternative means to secure judgment and there are no exceptional circumstances
here. In order to grant the stay, the Court orders that Nita Patel post a bond for $5,308,365,
representing the $7,756,864.85 judgment less the value of the three properties that the Patels
own, which are subject to Government liens.
III.

CONCLUSION
For the foregoing reasons, the Court will grant Nita Patel’s motion in part and deny Nita

Patel’s motion in part. The Court will grant the stay of execution and will set bond at
$5,308,365. An appropriate Order will be filed herewith.

s/ Stanley R. Chesler
STANLEY R. CHESLER
United States District Judge
Dated: June 23, 2017