Saidiani v. NextCare, Inc et al

Filing 52

ORDER denying 30 Motion for Attorney Fees. Signed by Senior Judge Graham Mullen on 2/4/2013. (eef)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
3:11CV141
THE UNITED STATES OF AMERICA,
THE STATE OF COLORADO,
THE STATE OF GEORGIA,
THE STATE OF NORTH CAROLINA,
THE STATE OF TEXAS, and
THE COMMONWEALTH OF VIRGINIA
Ex rel. ANTONIO SAIDIANI,
Plaintiffs,

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Vs.
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NEXTCARE, INC., NEXTCARE ARIZONA LLC, )
COLORADO URGENT CARE, LLC,
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NEXTCARE GEORGIA LLC, NEXTCARE
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NORTH CAROLINA LLC, MATRIX
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OCCUPATIONAL HEALTH, INC.,
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NEXTCARE TEXAS LLC, VIRGINIA URGENT )
CARE LLC, JOHN SHUFELDT, and DOES 1
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THROUGH 25, INCLUSIVE,
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Defendants.
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__________________________________________)

ORDER

This matter is before the Court upon Relator Saidiani’s Motion for Attorney’s Fees, Costs
and Expenses. On December 21, 2009, Lorin Granger (“Granger”) filed a qui tam False Claims
Act (“FCA”) lawsuit against NextCare, Inc. (“Next Care”) in this district, alleging that NextCare
had violated the FCA by billing and obtaining reimbursement from government health care
programs for allegedly unnecessary medical tests performed at NextCare urgent care clinics.
The Complaint named the United States as a Plaintiff, but did not originally name any states as
plaintiffs. Upon reviewing Granger’s original Complaint, the government began its investigation
of NextCare’s medical testing policies and procedures, its billings to state and federal
government health care programs, and its coding practices. NextCare began cooperating with

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the government’s investigation and began discussions with the governmental entities regarding a
potential settlement.
On March 24, 2011 Relator Granger amended her Complaint to add causes of action
under the Georgia, North Carolina, Texas and Virginia FCAs. Unaware of the Granger suit,
Antonio Saidiani (“Saidiani”) filed an FCA lawsuit against NextCare on the same day Granger
amended her Complaint.1 In addition to the United States, the Saidiani Complaint named several
individual states as Plaintiffs, including Colorado, Georgia, North Carolina, Texas and Virginia.
On June 4, 2012, the United States, various State Attorneys General, and NextCare
entered into Settlement Agreements resolving the state and federal governments’ allegations
against NextCare. Relators Granger and Saidiani joined in those agreements. Pursuant to those
Settlement Agreements, NextCare agreed to pay $10 million to the federal and state
governments. The United States intervened in and dismissed the Granger Complaint. The
relator in Granger also recovered a Relator’s Share because her Complaint was the first-filed and
NextCare paid her expenses, attorneys’ fees, and costs pursuant to 31 U.S.C. § 3730(d)(1). 2
The United States intervened in the Saidiani case, as the second-filed case, for the purpose of its
dismissal, since the underlying conduct had been fully resolved in the first-filed Granger
Complaint.
Section 3730(b)(1) of the FCA allows private-citizen plaintiffs – “relators” – to bring a
civil action in the name of the United States Government to expose fraud committed by third
parties against the Government. In return for their service, successful relators are entitled to a
percentage of the damages received as a bounty, 31 U.S.C. § 3130(d), thereby “creat[ing] a
financial incentive for relators to protect the federal treasury from fraud.” Am. Civil Liberties
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Saidiani’s claims are nearly identical to those raised in the Granger Complaint.
Pursuant to state and federal False Claims Acts, a successful relator shall receive a share of a settlement in
an intervened case. 31 U.S.C. § 3730(d)(1).
2

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Union v. Holder, 673 F.3d 245, 248 (4th Cir. 2011) (citing United States ex rel. Marcus v. Hess,
317 U.S. 537, 540 (1943)). The relevant statutory section reads:
If the Government proceeds with an action brought by a person under
subsection (b), such person shall, subject to the second sentence of this
paragraph, receive at least 15 percent but not more than 25 percent of the
proceeds of the action or settlement of the claim, depending upon the
extent to which the person substantially contributed to the prosecution of
the action … Any payment to a person under the first or second sentence
of this paragraph shall be made from the proceeds. Any such person shall
also receive an amount for reasonable expenses which the court finds to
have been necessarily incurred, plus reasonable attorneys’ fees and costs.
All such expenses, fees, and costs shall be awarded against the defendant.
31 U.S.C. § 3130(d)(1). In short, a relator is a person who shall receive between 15 and 25% of
the Government’s proceeds of the action or settlement of a claim, and that person receiving a
Relator’s share “shall also” receive an amount for reasonable expenses in bringing the action, in
addition to attorneys’ fees and costs. Id. Satisfaction of the former portion of the statutory
section is an express precondition of receipt of monies under the latter. Id.
This bounty creates a double-edged sword in that it encourages insider plaintiffs to come
forward and expose fraud, but also encourages parasitic suits by persons in search of their share
of the bounty. To this end, “Congress has therefore included a number of provisions that further
the golden mean between adequate incentives for whistle-blowing insiders with genuinely
valuable information and discouragement of opportunistic plaintiffs . . . .” In re Natural Gas
Royalties Qui Tam Litig., 566 F.3d 956, 960 (10th Cir. 2009) (internal quotations and omissions
omitted) (quoting United States ex. rel. Maxwell v. Kerr-McGee Oil & Gas Corp., 540 F.3d
1180, 1184 (10th Cir. 2008)). One of these provisions, the so-called “first-to-file” bar, applies to
the Saidiani Complaint: “When a person brings an action under this subsection, no person other
than the Government may intervene or bring a related action based on the facts underlying the
pending action.” 31 U.S.C. § 3730(b)(5). That provision “encourages prompt disclosure of
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fraud by creating a race to the courthouse among those with knowledge of fraud.” Campbell v.
Redding Med. Ctr., 421 F.3d 817, 821 (9th Cir. 2005); see Wang v. FMC Corp., 975 F.2d 1412,
1419 (9th Cir. 1992) (noting that “[q]ui tam suits are meant to encourage insiders privy to a fraud
on the government to blow the whistle on the crime. In such a scheme, there is little point in
rewarding a second toot”).
The plain language of the FCA demonstrates that a relator is only entitled to attorneys’
fees if that relator also obtained a relator’s share following a court award or settlement. Like the
federal FCA, the state FCA statutes at issue also tie the entitlement to fees and costs to the
“person” receiving the Relator’s Share. See COLO. REV. STAT. ANN. § 25.5-4- 306(4)(III) (West)
(“Any payment to a relator under subparagraph (I) or (II) of this paragraph (a) [granting an
award of 15-25% when the government proceeds with an action brought by a relator] shall be
made from the proceeds. The relator shall also receive an amount for reasonable expenses that
the court finds to have been necessarily incurred plus reasonable attorney fees and costs.”); N.C.
GEN. STAT. ANN. § 1-610(d) (West) (“The qui tam plaintiff also shall receive an amount for
reasonable expenses that the court finds to have been necessarily incurred, plus reasonable
attorneys’ fees and costs.”); TEX. HUM. RES. CODE ANN. § 36.110(c) (Vernon 2012) (“A
payment to a person under this section [a private plaintiff, if the state proceeds with an action
brought by him] shall be made from the proceeds of the action. A person receiving a payment
under this section is also entitled to receive from the defendant an amount for reasonable
expenses, reasonable attorney’s fees, and costs that the court finds to have been necessarily
incurred.”); VA. CODE ANN. § 8.01-216.7(A) (West 2012) (“Any payment to a person under this
section shall be made from the proceeds of the award. Any such person shall also receive an

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amount for reasonable expenses that the court finds to have been necessarily incurred, plus
reasonable attorneys’ fees and costs.”).
There is no dispute that the Federal and State Settlement Agreements reference only
Relator Granger as receiving a Relator’s share of the settlement proceeds. Accordingly, Saidiani
recovered nothing pursuant to those agreements. However, in the latter part of 2011, Saidiani
and Granger had entered into a separate private agreement between themselves to share any
proceeds that resulted from the litigation. Apparently, Saidiani is receiving a share of proceeds
from Granger pursuant to this private agreement with Granger.
Saidiani argues that because he and Relator Granger entered into this private agreement
to share proceeds, that he should be considered a successful Relator who has “received” a
Relator’s share and is thus entitled to fees under the various state FCA statutes. 3 Sadiani cites no
caselaw in support of his position and the plain language of the statutory texts and the settlement
agreements do not support such a claim.
It appears to the Court that Saidiani is not a successful Relator who has secured a
Relator’s share through the Settlement Agreements entered into with the federal and state
governments. The fact that he may have received a share of the proceeds through a separate
private agreement with Granger does not change this conclusion. Moreover, Saidiani cites no
caselaw supporting his argument that he is entitled to fees based upon his “receipt” of litigation
proceeds through a private agreement with the first-filed Relator. The Court will not direct that
Saidiani receive something that he was unable to secure through negotiation and settlement with
NextCare.

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Saidiani is not arguing that he should recover any fees under the federal FCA.

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IT IS THEREFORE ORDERED that Saidiani’s Motion for Attorneys’ Fees, Costs and
Expenses is hereby DENIED.
Signed: February 4, 2013

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