Marietta Area Healthcare, Inc. et al v. King et al

Filing 24

MEMORANDUM OPINION AND ORDER The 13 Joint Motion to Dismiss or Transfer is GRANTED to the extent it requests transfer; it is directed that this matter be TRANSFERRED to the United States District Court for the Northern District of West Virginia, Wh eeling Division; the 21 Motion for Leave to File Sur-Reply in Opposition to Defendants' Joint Motion to Dismiss or Transfer is TERMINATED AS MOOT. Signed by Judge Irene C. Berger on 2/16/2021. (cc: Clerk for the District Court for the Northern District of West Virginia; counsel of record; any unrepresented party) (kew)

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IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA
CHARLESTON DIVISION
MARIETTA AREA HEALTHCARE, INC., et al.,
Plaintiffs,
v.

CIVIL ACTION NO. 2:20-cv-00639

MICHAEL A. KING, et al.,
Defendants.

MEMORANDUM OPINION AND ORDER
The Court has reviewed the Plaintiffs’ Complaint (Document 4), the Defendants’ Joint
Motion to Dismiss or Transfer (Document 13), the Memorandum in Support of Defendants’ Joint
Motion to Dismiss or Transfer (Document 14), the Plaintiffs’ Response to Defendant’s Joint
Motion to Dismiss or Transfer (Document 19), and the Defendants’ Joint Reply to Plaintiffs’
Response to Defendants’ Joint Motion to Dismiss or Transfer (Document 20). In addition, the
Court has reviewed the Plaintiffs’ Motion for Leave to File Sur-Reply in Opposition to Defendants’
Joint Motion to Dismiss or Transfer (Document 21). For the reasons stated herein, the Court finds
that this matter should be transferred to the Northern District of West Virginia.
FACTUAL ALLEGATIONS
The Plaintiffs, Marietta Area Healthcare, Inc., Marietta Memorial Hospital, and Marietta
Healthcare Physicians, Inc. (collectively, “Memorial Health”), initiated this suit against
Defendants Michael A. King and Michael D. Roberts, M.D., with their complaint filed on
September 25, 2020. Their allegations derive from a previous lawsuit, namely, a False Claims

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Act (FCA) complaint that Mr. King and Dr. Roberts brought against Memorial Health as Relators.
The Plaintiffs are Ohio corporations with their principal places of business in Ohio. Mr. King is
a former officer of Camden Clark Medical Center, a hospital in Parkersburg, West Virginia. He
was no longer an officer at the time he initiated the FCA complaint, and the Complaint alleges that
he now resides in North Carolina. Dr. Roberts is a surgeon with a private practice in Parkersburg.
He is a West Virginia resident.
Memorial Health alleges that the Defendants deliberately made false and unsupported
allegations in the FCA complaint, triggering an expensive federal investigation into Memorial
Health. After a three-year investigation conducted by the U.S. Attorney’s Office for the Northern
District of West Virginia, the United States cleared Memorial Health of wrongdoing and declined
to intervene in the FCA case. The Defendants dismissed the case.
Prior to the filing of the FCA, Memorial Health was expanding, in part by purchasing local
physician practices and forming connections with area medical professionals. Dr. Roberts and
his two physician partners at Parkersburg Surgical Associates (PSA) had based their practice
largely at Camden Clark. In the summer of 2012, PSA was negotiating for Camden Clark to
purchase the practice and employ PSA as the exclusive provider of surgical services for the
hospital. PSA also approached Memorial Health about employing the physicians and potentially
purchasing the practice, but Memorial Health did not extend an offer. PSA applied for clinical
privileges at Memorial Health in September 2012. Dr. Roberts’ application was approved on
November 1, 2013. Memorial Health was awaiting additional information regarding the other
physicians. One of the PSA physicians sent Memorial Health a letter dated November 15, 2013,
requesting that the applications for clinical privileges be held in abeyance or withdrawn. The
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PSA physicians had received an offer to serve as the exclusive provider of general surgical services
at Camden Clark. Mr. King was then the President and CEO of Camden Clark.
In November 2016, the Defendants filed the FCA in the Northern District of West Virginia,
asserting that Memorial Health “violated federal law in recruiting and paying physicians and that
it inappropriately submitted claims to federal health care programs – Medicare, Medicaid, and TriCare – based on those violations.” (Compl. at ¶34.) The FCA complaint alleged that “Memorial
Health had paid certain physicians in excess of their fair market values in order to induce referrals”
in violation of the Stark Law and the Anti-Kickback Statute. (Id. at ¶ 47.) The FCA complaint
purports to detail meetings that never took place, misstates the content of emails and other
communications, falsely claims that Memorial Health offered each of the PSA physicians
$500,000 and made illegal employment offers to other physicians, and materially misstates factual
allegations that Memorial Health illegally overpaid to acquire, employ, or otherwise contract with
physicians and physician practices. (Id. at ¶ 50.)

Although the allegations that were the subject

of the FCA involved medical practices and activity located primarily in the Parkersburg area, the
Defendants offered untrue and insufficient statements to support venue in the Northern District of
West Virginia.
As a result of the filing of the FCA, the United States began an investigation into Memorial
Health that continued for three years. During that time, Memorial Health produced documents
and participated in interviews. The federal investigators ultimately found that the claims in the
FCA complaint were unsubstantiated and opted not to intervene in the FCA case. The Defendants
continued to pursue their qui tam action until requesting dismissal on March 20, 2020. The
district court granted the dismissal request on March 23, 2020, and entered an amended order on
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April 24, 2020. After the April 24, 2020 order, documents, including the FCA complaint, were
unsealed and Memorial Health had its first opportunity to review the allegations. (Id. at ¶ 52, 5658, 61.)
Rumors of the investigation interfered with Memorial Health’s business. One doctor
resigned employment at Memorial Health, and others chose other employment opportunities or to
affiliate with other hospitals. Memorial Health began experiencing increasing difficulties with
recruitment. It alleges that the FCA complaint caused “decreased revenues, higher expenses, and
lost business opportunities.” (Id. at 68.)
Memorial Health alleges the following causes of action: Count I – Malicious Prosecution;
Count II – Tortious Interference with Business Relationships and Expectancies; Count III – Abuse
of Process; Count IV – Fraudulent Legal Process in Violation of W. Va. Code § 61-5-27a; and
Count V – Punitive Damages. It seeks compensatory and consequential damages plus court costs
and expenses, pre-judgment and post-judgment interest, punitive damages, attorneys’ fees, and
any other relief to which it may be entitled.
VENUE
The Defendants contend that the proper venue for this action is the Northern District of
West Virginia. The Defendants are not all residents of West Virginia, and so they assert that
proper venue is the district “in which a substantial part of the events or omissions giving rise to
the claim occurred.” (Def.’s Mem. at 7, quoting 28 U.S.C. § 1391(b).) They argue that the
claims in this suit all arise from the filing of the qui tam, which took place in the Northern District
of West Virginia. The Defendants cite cases holding that the proper venue for suits alleging

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malicious prosecution or other torts arising from the filing of a previous lawsuit is the venue in
which the underlying lawsuit was filed.
The Plaintiffs argue that venue in this District is proper. They contend that the Defendants
coordinated their conduct in the Southern District of West Virginia, and the underlying
relationships and circumstances developed in the Southern District of West Virginia. They argue
that many of the allegations contained in the FCA complaint involve conduct that occurred, or was
alleged to have occurred, in the Southern District of West Virginia, and venue for the FCA was
not properly in the Northern District of West Virginia.
28 U.S.C. § 1391(b) provides that:
A civil action may be brought in (1) a judicial district in which any
defendant resides, if all defendants are residents of the State in
which the district is located; (2) a judicial district in which a
substantial part of the events or omissions giving rise to the claim
occurred, or a substantial part of property that is the subject of the
action is situated; or (3) if there is no district in which an action may
otherwise be brought as provided in this section, any judicial district
in which any defendant is subject to the court’s personal jurisdiction
with respect to such action.
Section 1391(c)(2) goes on to state that a defendant is a “resident” of “any judicial district in which
such defendant is subject to the court’s personal jurisdiction with respect to the civil action in
question.”
“[I]t is possible for venue to be proper in more than one judicial district.” Mitrano v.
Hawes, 377 F.3d 402, 405 (4th Cir. 2004). Courts considering whether “a substantial part of the
events or omissions giving rise to the claim” occurred in the district are to consider “the entire
sequence of events underlying the claim” rather than “only on those matters that are in dispute or
that directly led to the filing of the action.” Id. (quoting First of Mich. Corp. v. Bramlet, 141 F.3d
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260, 264 (6th Cir.1998)).
When a case is initiated in an improper district or division, Section 1406(a) permits courts
to either dismiss the case or transfer it to “any district or division in which it could have been
brought.” The plaintiff bears the burden of establishing that venue is proper, and must make either
a prima facie showing, absent an evidentiary hearing, or demonstrate proper venue by a
preponderance of the evidence, if the court hears evidence.

Adhikari v. KBR, Inc., No.

115CV1248JCCTCB, 2016 WL 4162012, at *3 (E.D. Va. Aug. 4, 2016).
Courts may also transfer venue “for the convenience of parties and witnesses, in the interest
of justice” when venue is proper in both the transferring district and in another district. 28 U.S.C.
§ 1404(a). The Fourth Circuit has established four factors for consideration in deciding motions
to transfer under § 1404(a): “(1) the weight accorded to plaintiff's choice of venue; (2) witness
convenience and access; (3) convenience of the parties; and (4) the interest of justice.” Trustees
of the Plumbers & Pipefitters Nat. Pension Fund v. Plumbing Servs., Inc., 791 F.3d 436, 444 (4th
Cir. 2015).
The Plaintiffs seek to recover for malicious prosecution, tortious interference with business
relationships and expectancies, abuse of process, and fraudulent legal process. Each of their
claims arise from the filing of the FCA complaint. The nature of the claims establishes that the
underlying suit is the core action or event giving rise to these claims. Although some of the facts
supporting the allegations in the FCA complaint arose from actions or relationships in the Southern
District of West Virginia, the FCA complaint and ensuing investigation were centered in the
Northern District of West Virginia.1 The Northern District was the site of the allegedly false and
1 Given the Plaintiffs’ Ohio residence and principal place of business, presumably much of its efforts to cooperate
in the investigation occurred there.

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abusive claims against the Plaintiffs.

The background information included in the instant

complaint regarding the relationship and communications between Dr. Roberts and Memorial
Health, much of which occurred in Parkersburg, is tangential to the causes of action the Plaintiffs
pled. The court that handled the FCA complaint, ruled on motions, and ultimately entered the
dismissal, is in the Northern District of West Virginia, as is the U.S. Attorney’s Office that
investigated the allegations. In short, accepting the allegations in the Complaint as true and
viewing the evidence in the light most favorable to the Plaintiffs, only minor, tangential events
occurred in the Southern District of West Virginia. The Plaintiffs did not set forth a prima facie
showing that a substantial part of the events giving rise to the claim occurred in this district.
Therefore, the Court finds that venue is not proper.
Even if venue were permissible under § 1391, the Court would find transfer appropriate
under § 1404. The Plaintiffs’ choice of venue, of course, would weigh in favor of retaining the
case. However, the convenience of witnesses and the parties weighs slightly in favor of transfer.
The Plaintiffs are Ohio corporations, and either district is accessible to all parties.

Many

witnesses, including the investigators who made the decision not to intervene in the FCA case, are
based in the Northern District or in Ohio. Dr. Roberts is the only specific party or witness
identified in the pleadings as a resident of this District, although the Plaintiffs emphasize that others
mentioned in or impacted by the underlying suit reside in the Southern District. Finally, the
interest of justice weighs heavily in favor of transfer to the court that handled and is familiar with
the underlying FCA complaint, particularly given that portions of the underlying case remain
sealed.

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CONCLUSION
Wherefore, after thorough review and careful consideration, the Court ORDERS that the
Defendants’ Joint Motion to Dismiss or Transfer (Document 13) be GRANTED to the extent it
requests transfer. The Court further ORDERS that this matter be TRANSFERRED to the
United States District Court for the Northern District of West Virginia, Wheeling Division.
The Court ORDERS that the Plaintiffs’ Motion for Leave to File Sur-Reply in Opposition
to Defendants’ Joint Motion to Dismiss or Transfer (Document 21) be TERMINATED AS
MOOT to permit that motion to be addressed by the court where venue is proper.
The Court DIRECTS the Clerk to send a certified copy of this Order to the Clerk for the
District Court for the Northern District of West Virginia, counsel of record and to any
unrepresented party.
ENTER:

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February 16, 2021