Pitts v. Hedges et al

Filing 110

ORDER denying 91 Motion to Stay; denying as moot 94 Motion for Protective Order, 96 Motion for Protective Order, 101 Motion for Protective Order, and 103 Motion Requesting oral argument on various motions. Signed by Chief Judge Terrence W. Boyle on 1/24/2020. Counsel should read the order in its entirety for critical deadlines and information. (Stouch, L.)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
No. 5:16-CV-127-BO

UNITED STATES OF AMERICA, ex rel. , )
DR. VENUS PITTS,
)
)

Plaintiffs,

)
)

V.

DR. JEFFREY G. HEDGES, D.C., et al.,

ORDER

)

)
)
)

)

Defendants.

This matter is before the Court on a motion by defendants Dr. Hedges, ADIO
Management, and Medical Fusion to stay this case. These defendants as well as defendants
Andrew Wells, Action Potential Management, and WH Healthcare Group have also filed
motions for protective order related to the motion to stay.

The United States responded in

opposition to the pending motions, and defendants requested oral argument on the motions. A
hearing on these matters was held before the undersigned on January 7, 2020, at Raleigh, North
Carolina. 1 For the reasons that follow, the motion to stay is denied and the motions for
protective order are denied as moot.
BACKGROUND
The government's False Claims Act complaint alleges that defendants engaged in a
scheme to defraud Medicare through improper billing practices.

[DE 48].

The complaint

alleges, inter alia, that in 2013 defendant Dr. Hedges recruited the relator, Dr. Pitts, a medical
doctor, to open a new integrated chiropractic practice that Dr. Hedges, a chiropractor, could not
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As a hearing has taken place, the pending motion requesting oral argument [DE 103] is
DENIED AS MOOT.

have operated himself. Dr. Pitts would be hired to supervise med-level practitioners who would
perform medical procedures. Dr. Pitts eventually agreed, and, although she would nominally
own the practice, she signed an employment agreement in which she was designated as an
employee of Dr. Hedges. The practice was called Superior Health Physical Medicine (Superior
Durham) and was located in Durham, North Carolina. The complaint alleges that Dr. Hedges
and defendant ADIO Management seized control of the building in which Superior Durham was
located as well as the operation of the practice, including its billing. The complaint alleges that
Dr. Hedges and ADIO Management proceeded to defraud Medicare by submitting false claims
and by making and using false statements and records to support their claims. The complaint
further alleges that Dr. Hedges perpetrated a similar scheme at four other integrated medical
practices.
Between 2014 and 2015, three third-party audit reports noted serious concerns about the
billing practices at Superior Durham. One of those audits was allegedly arranged for by attorney
Steven Bittinger. Dr. Hedges contends that Mr. Bittinger was retained as his counsel when the
Superior Durham audit was arranged; Steven Bittinger also formerly represented the relater Dr.
Pitts. Dr. Hedges has filed a legal malpractice suit against Mr. Bittinger that is currently being
litigated in the United States District Court for the Northern District of Ohio.

Hedges v.

Bittinger, No. 1: 17-cv-720-CAB. He contends that Dr. Pitts is a straw relater and that the real

relater, Mr. Bittinger, violated the attorney client relationship when he brought his claims to the
government.
DISCUSSION
Defendants Dr. Hedges, ADIO Management, and Medical Fusion (the Hedges
defendants) seek to stay this case to allow the malpractice claims pending in the North District of

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Ohio to be decided. The moving defendants contend that a stay would promote judicial economy
because the malpractice action will decide legal and factual issues that are germane to the
defenses that Dr. Hedges anticipates presenting in this case.

The Hedges defendants also

contend that a stay will not prejudice the government, but that the failure to stay this case will
create a hardship and inequities for the moving defendants because Dr. Hedges will have to
utilize resources to litigate similar facts and issues in two courts.
A district court has inherent authority to manage its docket to promote "economy of time
and effort for itself, counsel, and for litigants." Landis v. N Am. Co., 299 U. S. 248, 254-55
(1936). When determining whether to stay proceedings, a district court generally considers " (1)
the interests of judicial economy; (2) hardship and equity to the moving party if the action is not
stayed; and (3) potential prejudice to the non-moving party." Johnson v. DePuy Orthopaedics,
Inc., No. 3:12-CV-2274-JFA, 2012 WL 4538642, at *2 (D.S.C. Oct. 1, 2012) (citation omitted).
"The party seeking a stay must justify it by clear and convincing circumstances outweighing
potential harm to the party against whom it is operative." Williford v. Armstrong World Indus.,
Inc., 715 F.2d 124, 127 (4th Cir. 1983).
The Hedges defendants have failed to demonstrate that a stay of this case is warranted or
appropriate. As to the hardship and equity to the Hedges defendants, even if the North District
of Ohio determines that Mr. Bittinger violated an attorney client relationship with Dr. Hedges,
such a determination would not foreclose any of the claims in this case, which the government is
now prosecuting as the real party in interest. See United States v. Quest Diagnostics Inc., 734
F.3d 154, 167 (2d Cir. 2013). Moreover, that the Hedges defendants may raise an advice-ofcounsel defense in this case is not necessarily dependent on the outcome of the North District of
Ohio litigation. Thus, although being a litigant in two courts at the same time is undesirable, the

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Court is unpersuaded that the Hedges defendants will suffer any real prejudice if this action
proceeds. Nor is there any judicial economy to be gained by a stay because the matters being
litigated in the North District of Ohio are either not germane or will have no dispositive effect on
this litigation.
The potential prejudice to the government in awaiting a decision in the malpractice
action, however, is serious. In a False Claims Act case, the taxpayers are the true plaintiff, as
"they have a strong interest in fraud perpetrated against the United States that results in monetary
loss to the Government." United States ex rel. Grover v. Related Companies, LP, 4 F. Supp. 3d
21, 26 (D.D.C. 2013). The government alleges that it has been defrauded of over $1 million, and
its taxpayers surely have an interest in an expeditious resolution of this case.
CONCLUSION
Accordingly, for the foregoing reasons, the motion to stay [DE 91] is DENIED. The
motions for protective order [DE 94, 96, 101] are DENIED AS MOOT. Any stay of discovery
deadlines that was afforded by the filing of the motions for protective order terminates as of the
date of entry of this order. The parties shall confer and move to amend the scheduling order
within fourteen (14) days of the date of entry of this order if necessary. The motion requesting
oral argument [DE 103] is DENIED AS MOOT.

SO ORDERED, this~

Yday of January, 2020.

1~w.LJ7~
;~NCE W. BOYLE

.,..,.;-,-

CHIEF UNITED STATES DISTRICT JUDGE

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