Jacobs v. Advanced Dermatology & Skin Cancer Specialists PC

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Randy Jacobs, et al., Plaintiffs, v. Advanced Dermatology & Skin Cancer Specialists PC, et al., Defendants.

No. MC-23-00032-PHX-DWL

United States District Court, D. Arizona

November 24, 2023

ORDER

Dominic W. Lanza United States District Judge

INTRODUCTION

This subpoena enforcement action arises out of a lawsuit that Dr Randy Jacobs (“Dr. Jacobs”) filed in July 2020 in the Central District of California (“the California Action”) against Advanced Dermatology & Skin Cancer Specialists, P.C. (“Advanced Dermatology”) and some of its directors, officers, and employees. In April 2022, Dr. Jacobs filed a First Amended Complaint (“FAC”) in the California Action naming Desert Dermatology & Skin Care Specialists, Inc. (“Desert Dermatology”) as an additional defendant. (Doc. 1-2 at 2-44.) However, in September 2022, the judge overseeing the California Action dismissed all claims against Desert Dermatology with leave to amend. (United States ex rel Jacobs v. Advanced Dermatology & Skin Cancer Specialists P.C., et al., No. 20-cv-01373-JGB-SHK (C.D. Cal.), Dkt. 70.)

In April 2023, in connection with the California Action, Dr. Jacobs served a Rule 45 subpoena on Desert Dermatology seeking documents concerning Desert Dermatology's relationship with Advanced Dermatology and its directors, officers, and employees and concerning Desert Dermatology's medical and billing practices. (Doc. 1-3 at 2-12.) In August 2023, Dr. Jacobs filed, in the District of Arizona, a motion to compel Desert Dermatology to produce the subpoenaed documents. (Doc. 1.)

While the motion to compel was pending, Dr. Jacobs filed a Second Amended Complaint (“SAC”) in the California Action that re-added Desert Dermatology as a defendant. (No. 20-cv-01373-JGB-SHK, Dkt. 154.) In October 2023, Dr. Jacobs served requests for production on Desert Dermatology in the California Action that are substantially identical to the requests for production in the subpoena. (Doc. 11 at 4-12.)

In light of these developments, the Court concludes that the most prudent course of action is to transfer Dr. Jacobs's pending motion to the issuing court in the Central District of California pursuant to Rule 45(f) and close this miscellaneous action.^[1]

BACKGROUND

I. The Parties And Other Relevant Entities

Advanced Dermatology has its principal place of business in Temecula, California and office locations in Temecula, Hemet, San Bernardino, Riverside, Corona, Menifee, Sun City, Moreno Valley, Victorville, La Quinta, and Palm Springs, California. (Doc. 1-2 at 5 ¶ 7.) “The corporation also has affiliated offices in Yuba City and Stockton, doing business as Advanced Dermatology & Skin Cancer Specialists of Northern California.” (Id.)

Desert Dermatology is an Arizona corporation with its principal place of business in Tucson, Arizona and office locations in Gilbert and Glendale, Arizona. (Id. at 5 ¶ 8.) “Desert Dermatology is a related entity to Advanced Dermatology with common ownership, leadership, and practices.” (Id.)

Advanced Dermatology and Desert Dermatology are Medicare/Medicaid providers. (Id. at 10 ¶ 23.) Advanced Dermatology and Desert Dermatology offer patients Mohs micrographic surgery (“Mohs surgery”), “a specialized technique for the removal of skin cancer.” (Id. at 15 ¶ 48.) “The vast majority of [Advanced Dermatology's and Desert Dermatology's] patients indicated for Mohs surgery are over the age of 65 and are Medicare beneficiaries.” (Id. at 19 ¶ 70.) Under Medicare, “Mohs is a bundled code and can only be bundled if the same doctor performs all elements of the procedure-otherwise, the lower reimbursable, separate codes are to be used (for essentially the same overall process). Medicare also separately reimburses for each stage of Mohs surgery performed in removing cancer. Hence, the more stages of Mohs surgery that are performed, the higher the reimbursement from Medicare.” (Id. at 17 ¶ 60.)

Dr. Jacobs “is a board-certified clinical dermatologist.” (Id. at 4 ¶ 6.)

Dr. Jesse Mitchell (“Dr. Mitchell”) is a “Dermatologist at Advanced Dermatology and Desert Dermatology, is listed as the owner of Advanced Dermatology, and is a director of Desert Dermatology.” (Id. at 5 ¶ 9.)

Christopher Clem “is a non-physician” who “directs both the day-to-day operations and the broader management of both Advanced Dermatology and Desert Dermatology” and “is listed with the Arizona Secretary of State as an officer of Desert Dermatology.” (Id. at 5 ¶ 10.)

II. The California Action

On July 9, 2020, Dr. Jacobs filed the California Action, naming Advanced Dermatology, Dr. Mitchell, and Dr. Roupen Yaghsezian as defendants. (No. 20-cv-01373-JGB-SHK, Dkt. 1.) The complaint alleged violations of the False Claims Act (“FCA”) arising out of Advanced Dermatology's billing practices for Mohs procedures. (Id. at 2230.)

On April 29, 2022, Dr. Jacobs filed the FAC in the California Action, naming Desert Dermatology and Clem as additional defendants. (Doc. 1-2 at 2-44.) In relevant part, the FAC alleges as follows:

Dr. Mitchell and Chris Clem are also the purported owners and officers of a nearly identically named Desert Dermatology . . . . Dr. Mitchell performs the Mohs medical procedures connected to the false claims in the [California] Action. Dr. Mitchell performs the same medical procedures in Arizona through [Desert Dermatology]. Overall, the individual Defendants appear to be engaged in the same fraudulent billing practices through [Desert Dermatology] including using pathologists and omitting their NPI numbers from [Desert Dermatology's] billing (using the same billing company-run by Mr. Clem's family), entering kickback arrangements with pathologists, using unsupervised PAs, and violating CLIA.

(Doc. 1 at 2-3.)

On June 17, 2022, Desert Dermatology filed a motion to dismiss the claims against it in the FAC for lack of personal jurisdiction. (No. 20-cv-01373-JGB-SHK, Dkt. 48.)

On September 28, 2022, the Central District of California granted Desert

Dermatology's motion to dismiss with leave to amend and set an October 11, 2022 deadline for further amending the complaint. (No. 20-cv-01373-JGB-SHK, Dkt. 70.)

On February 2, 2023, the Central District of California set an April 24, 2023 deadline to amend the pleadings or add new parties to the California Action (No. 20-cv-01373-JGB-SHK, Dkt. 90 at 1), and later extended this deadline to August 24, 2023 (No. 20-cv-01373-JGB-SHK, Dkt. 100 at 2).

III. Rule 45 Subpoena

On April 24, 2023, as part of the California Action, Dr. Jacobs obtained a Rule 45 subpoena directed to Desert Dermatology. (Doc. 1-3 at 2-12.) The subpoena includes requests for documents related to Desert Dermatology's relationships with Dr. Mitchell, Clem, and Advanced Dermatology; “in any way related to Mohs surgeries, billing, PA supervision, AKS, or CLIA issues”; “in any way related to any contact with the State of California or any person or entity in that state”; “in any way related to billing for Mohs surgeries wherein a surgeon and pathologist work together to complete the procedure”; and “in any way related to billing Mohs surgeries to any FHBP.” (Id. at 10-12.) The subpoena requires Desert Dermatology to produce the documents in Phoenix, Arizona. (Id. at 2.)

On June 13, 2023, Desert Dermatology's counsel responded to the subpoena in writing with several objections. (Doc. 5-1 at 2-12.)

On June 27, 2023, Desert Dermatology's counsel sent a supplemental response to the subpoena. (Doc. 5 at 2 n.1.)^[2]

On June 29, 2023, Desert Dermatology's counsel and Dr. Jacobs's counsel “participated in a lengthy meet and confer telephone conference.” (Doc. 5-3 at 4-5 ¶¶ 1316.)

On July 27, 2023, after the meet-and-confer conference, Dr. Jacobs's counsel sent a follow-up letter regarding some of the issues discussed during the meet-and-confer conference. (Doc. 5-2 at 18-22.) Desert Dermatology's counsel interpreted the letter as “rais[ing] new substantive legal arguments and purporting] to completely re-do Subpoena Request No. 5.” (Doc. 5-3 at 16, internal citations omitted.) Desert Dermatology's counsel requested additional time to prepare a response to the subpoena and letter. (Id.)

On August 2, 2023, Desert Dermatology's counsel offered to meet and confer with Dr. Jacobs's counsel. (Id. at 7 ¶ 25.) That same day, Dr. Jacobs filed the pending motion to compel. (Doc. 1.)

On August 3, 2023, Desert Dermatology's counsel sent a second supplemental response to the subpoena, “including producing approximately 58 pages of documents.” (Doc. 5-2 at 2-16; Doc. 5-3 at 8 ¶ 27.)

On August 22, 2023, the motion to compel became fully briefed. (Docs. 5, 6.)

IV. Recent Developments

On September 25, 2023, Dr. Jacobs filed the SAC in the California Action, readding Desert Dermatology as a defendant and alleging FCA violations arising from Desert Dermatology's billing practices for Mohs surgeries. (No. 20-cv-01373-JGB-SHK, Dkt. 154.) The SAC also asserts, in relevant part, that “Desert Dermatology does not maintain a separate identity from Advanced Dermatology, SoCal, Dr. Mitchell, or Clem.” (Id. at 51 ¶ 235.)

On October 12, 2023, Dr. Jacobs served Rule 34 requests for production on Desert Dermatology in the California Action. (Doc. 11 at 4-12.) The requests for production in the California Action are essentially identical to the requests for production in the subpoena. (Compare Doc. 11 at 10-12 with Doc. 1-3 at 10-12.)^[3]

On October 20, 2023, Desert Dermatology filed a motion to dismiss the claims against it in the SAC for lack of personal jurisdiction, lack of prosecution, and failure to state a claim. (No. 20-cv-01373-JGB-SHK, Dkt. 184.) That motion is pending.

Discovery in the California Action closes on April 18, 2024. (No....