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United States v. Berkeley Heartlab, Inc.

United States District Court, D. South Carolina

August 29, 2017

United States of America, Plaintiffs,
v.
Berkeley Heartlab, Inc., et al., Defendants. ex rel Scarlett Lutz, et al., Plaintiffs-Relators,

          ORDER and OPINION

          Richard Mark Cergel United States District Court Judge

         This matter is before the Court on defendant Latonya Mallory's motion for summary judgment of Relators Scarlett Lutz and Kayla Webster's Third Amended Qui Tarn Complaint. (Dkt. No. 500.) Lutz and Webster have filed a response in opposition (Dkt. No. 519), and Mallory has filed a reply (Dkt. No. 529). For the reasons set forth below, Mallory's motion for summary judgment (Dkt. No. 500) is granted in part and denied in part.

         I.Background

         On February 6, 2013, Relators Lutz and Webster filed a qui tarn complaint[1] alleging that several defendants including BlueWave Health Care Consultants, Inc. ("BlueWave"), Health Diagnostics Laboratory ("HDL"), Singulex, Inc., and several individuals including Defendants Mallory, Floyd Calhoun Dent, III, and Robert Bradford Johnson orchestrated a nationwide scheme to offer and pay kickbacks to physicians who ordered HDL and/or Singulex tests in violation of the federal False Claims Act ("FCA"), 42 U.S.C. § 3729, the Anti-Kickback Statute ("AKS"), 42 U.S.C. § 1320a-7b(b), various state false claims acts, and insurance fraud statutes in California and Illinois. Specifically, Relators allege the defendants' financial relationships with physicians provided financial incentives for the use of their laboratory services and resulted in billing private insurers for medically unnecessary testing services, in violation Section 1871.7(a) of the CIFPA, Cal. Ins. Code 1871.7(a), and Section 92/5(a) of the ILCFPA 740 111. Comp. Stat. § 92/5(a). (Dkt. No. 275 at 11). Relators also allege that defendants conspired to commit violations of the federal and state false claims acts. (Dkt. No. 275 at 10.)

         Mallory filed this motion for summary judgment on June 23, 2017. (Dkt. No. 500.) The Court has since granted Relators' motion to dismiss many of their state law claims. (Dkt. No. 608.) Relators' remaining claims against Mallory arise under the false claims acts of Colorado, Florida, Illinois, Indiana, North Carolina, and Virginia and under insurance fraud statutes in California and Illinois. (Dkt. No. 595 at 1-2.) Mallory has moved for summary judgment on all of Relators' remaining state law claims. (Dkt. No. 500.)

         II. Legal Standard A. Summary Judgment

         To prevail on a motion for summary judgment, the movant must demonstrate that there is no genuine issue of any material fact and that the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). The party seeking summary judgment has the burden of identifying the portions of the "pleadings, depositions, answers to interrogatories, any admissions on file, together with the affidavits, if any, which show there is no genuine issue as to any material fact that the moving party is entitled to judgment as a matter of law." Celotex Corp. v. Catrett, 411 U.S. 317, 322 (1986). The Court will construe all inferences and ambiguities against the movant and in favor of the non-moving party. U.S. v. Diebold, Inc., 369 U.S. 654, 655 (1962). The existence of a mere scintilla of evidence in support of the non-moving party's position is insufficient to withstand a motion for summary judgment. Anderson v. Liberty Lobby, Inc.,477 U.S.242, 252 (1986). However, an issue of material fact is genuine if the evidence is such that a reasonable jury could return a verdict in favor of the non-movant. Id. at 257.

         "When the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). "In the language of the Rule, the nonmoving party must come forward with 'specific facts showing that there is a genuine issue for trial."' Id. at 587. "Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no 'genuine issue for trial.'" Id. (quoting First Nat'l Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 289 (1968)).

         B. False Claims Act

         In order to establish a violation of the False Claims Act, a plaintiff must show that: (1) there was a false statement or fraudulent course of conduct; (2) made or carried out with the requisite scienter; (3) that was material to the government's decision to pay a claim; and (4) that caused the government to pay out money or to forfeit moneys due. See United States ex rel. Wilson v. Kellogg Brown & Root, Inc., 525 F.3d 370, 376 (4th Cir. 2008). The state false claims acts at issue here generally mirror the federal FCA. (Dkt. No. 275 at 42, explaining that "[t]he false claims acts of the sovereign States of North Carolina, California, Colorado, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Louisiana, Michigan, Minnesota, New Jersey, New York, Tennessee, Texas, Virginia, and Wisconsin generally mirror the federal FCA").

         III. Discussion

         A. Intervened Federal FCA Claims

         The United States has intervened in all of Lutz and Webster's claims against Mallory that arise under the federal FCA. Because the Government bears responsibility for prosecuting those claims under 31 U.S.C. § 3730(c)(1), the Court will consider Mallory's arguments about those claims in its order on Mallory's motion for summary judgment on claims in the Government's Complaint in Intervention. (Dkt. No. 498.)

         B. Non-Intervened ...


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