Scollick ex rel. United States v. Narula

ANDREW SCOLLICK,ex. rel. UNITED STATES OF AMERICA, Plaintiff, v. VIJAY NARULA, et al., Defendants.

Case No. 14-cv-1339 (RCL)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

February 25, 2021

MEMORANDUM OPINION

Defendant Dr. Nitin Mehta moves to dismiss the claims against him in plaintiff-relator's Second Amended Complaint for failure to state a claim. ECF No. 316. Upon consideration of the parties' filings, ECF Nos. 316, 316-1, 320, 321, the allegations set forth in the Second Amended Complaint, ECF No. 298, and the relevant legal standards, the Court will GRANT Dr. Nitin Mehta's motion to dismiss, ECF No. 316. All claims brought against Dr. Nitin Mehta in the Second Amended Complaint, ECF No. 298, will be DISMISSED without prejudice.

I. BACKGROUND

The Court assumes familiarity with the procedural history and factual allegations of this six-plus-year-old matter as set forth in its prior Memorandum Opinions. See United States ex. rel. Scollick v. Narula ("Scollick I"), 215 F. Supp. 3d 26 (D.D.C. 2016); United States ex. rel. Scollick v. Narula ("Scollick II"), No. 14-CV-1339, 2017 WL 3268857 (D.D.C. July 31, 2017); United States ex. rel. Scollick v. Narula ("Scollick III"), No. 14-CV-1339, 2020 WL 6544734 (D.D.C. Nov. 6, 2020). The Court will thus provide only the background information necessary to contextualize and resolve the present motion.

A. Procedural History

Plaintiff-relator originally brought this False Claims Act suit in mid-2014 against eighteen defendants. Scollick II, 2017 WL 3268857, at *1. His Complaint alleged that all defendants violated the False Claims Act by (1) knowingly presenting—or causing to be presented—a false or fraudulent claim to the government for payment or approval in violation of 31 U.S.C. § 3729(a)(1)(A) (the "presentment claim"); (2) knowingly making—or causing to be made or used—false statements or records material to false or fraudulent claims in violation of 31 U.S.C. § 3729(a)(1)(B) (the "false-statement claim"); (3) knowingly and improperly avoiding or decreasing an obligation to pay or transmit money to the government in violation of 31 U.S.C. § 3729(a)(1)(G) (the "reverse-false claim"); and (4) conspiring to violate the False Claims Act in violation of 31 U.S.C. § 3729(a)(1)(C) (the "conspiracy claim"). Id.

Thirteen defendants moved to dismiss the Complaint for failure to state a claim. Id. The Court granted in part and denied in part those motions, leaving only a sliver of the original Complaint intact. Id. (citing Scollick I, 215 F. Supp. 3d at 47-48). All that remained of the Complaint was the presentment claim (Count I), false-statement claim (Count II), and conspiracy claim (Count IV), against defendants Citibuilders Solutions Group, LLC ("Citibuilders"), Ajay Madan, and Vijay Narula. Id.

Plaintiff-relator then moved for leave to amend his Complaint. ECF No. 131. The proposed Amended Complaint omitted several defendants listed in the Complaint and brought the presentment claim, false-statement claim, and conspiracy claim against all remaining defendants. See ECF No. 131-1. It also lodged the reverse-false claim at the four "Bonding Defendants": Hudson Insurance Co., Hanover Insurance Co., Centennial Surety Associates, Inc., and Michael Schendel. Id.

Nine defendants—including Dr. Shobha Mehta—opposed plaintiff-relator's motion to amend, arguing that any amendment would be futile. Scollick II, 2017 WL 3268857, at *1. The Court granted in part and denied in part plaintiff-relator's motion. Id. at *17. It allowed plaintiff-relator to amend his Complaint to (1) assert the presentment claim against defendants Optimal Solutions and Technologies, Inc. ("OST, Inc."), Melvin Goodweather, and the Bonding Defendants, (2) assert the false-statement claim against defendants Dr. Shobha Mehta, OST, Inc., Melvin Goodweather, and the Bonding Defendants, (3) assert the reverse-false claim against defendants Hudson Insurance Co. and Hanover Insurance Co., and (4) assert the conspiracy claim against defendants OST, Inc., Dr. Shobha Mehta, Melvin Goodweather, and the Bonding Defendants. Id., Plaintiff filed his Amended Complaint as permitted by the Court. See ECF No. 169, Am. Compl.

During discovery, plaintiff-relator uncovered facts suggesting that Dr. Nitin Mehta—the husband of defendant Dr. Shobha Mehta—also played a role in the alleged fraud scheme. See ECF No. 273 at 2. Accordingly, plaintiff-relator sought the Court's leave to file a Second Amended Complaint with newly added allegations against Dr. Nitin Mehta. See id. The Court granted plaintiff-relator's request. ECF No. 295. In the Second Amended Complaint, all allegations against existing defendants remain the same as pleaded in the Amended Complaint, except those against Dr. Shobha Mehta. See Second Am. Compl., ECF No. 298 Now, some of the allegations against Dr. Shobha Mehta from the Amended Complaint claim that Dr. Shobha Mehta "and/or" Dr. Nitin Mehta took certain actions in furtherance of the fraud. See id. ¶¶ 99, 102, 104, 105.

B. Factual Allegations Against Dr. Nitin Mehta

Plaintiff-relator's Second Amended Complaint brings the presentment claim, false-statement claim, and conspiracy claim against Dr. Nitin Mehta. Second Am. Compl. ¶¶ 215-40,245-60.¹ In support of these three causes of action, plaintiff-relator's Second Amended Complaint claims that Dr. Nitin Mehta participated in both conspiracies alleged in this matter: the CSG conspiracy and the Citibuilders conspiracy. The details of those allegations are as follows.

i. The CSG Conspiracy

Sometime before April 2010, defendants Neil Parekh, Ajay Madan, Vijay Narula, and Amar Gogia formed a new limited liability company called Centurion Solutions Group ("CSG"). Second Am. Compl. ¶¶ 37, 41. They then registered CSG as a service-disabled, veteran-owned small business ("SDVOSB") for purposes of obtaining set-aside government contracts reserved for SDVOSBs. Id. at ¶ 37. Yet CSG was not run by a service-disabled veteran, as it must be to qualify as an SDVOSB. Id. at ¶¶ 27-28, 34-39.

Once CSG was registered as an SDVOSB, employees of a company run by Madan and Narula (OST, Inc.) prepared and submitted bids in CSG's name for government contracts reserved for SDVOSBs. Id. at ¶¶ 13, 17, 41-49. As part of the bidding process for these set-aside contracts, the Department of Veterans Affairs ("VA") requires prospective contractors to provide information about past performance on construction jobs, including the technical specifications of those jobs. Id. at ¶ 97; see id. at ¶¶ 107, 115. And "[i]f a prospective contractor fail[s] to satisfy the technical require[ments] as to past performance[,] that contractor [is] disqualified from the competition." Id. at ¶ 114. To meet the past-performance criteria in set-aside contract solicitations, CSG included in its solicitation responses information about "work it allegedly performed for Dr. Shobha Mehta and/or Dr. Nitin Mehta." Id. at ¶ 96. Drs. Shobha and Nitin Mehta are the aunt and uncle of Neil Parekh, one of the defendants who founded CSG. Id. at ¶¶ 18-19.

Although Dr. Shobha Mehta "is an obstetrician and sole practitioner who practices out of an office" in Alexandria, Virginia, and Dr. Nitin Mehta is a "pediatrician and neonatologist who works at MedStar Georgetown University Hospital and MedStar Montgomery Medical Center," CSG's solicitation responses identified "Dr. Shobha Mehta and/or Dr. Nitin Mehta" as the owner of an entity called "Mehta Medical Group." Id. at ¶¶ 18, 19, 96. Depending on the past performance and technical specification requirements for each SDVOSB contract solicitation, the "CSG conspirators would change the cost and the scope" of the construction projects they claimed to have performed for the Mehta Medical Group. Id. at ¶ 115. CSG's solicitation responses referred to these jobs as the "Mehta Project" and reported completing construction jobs for the Mehta Project ranging from $235,000 to $1,150,000. Id. at ¶¶ 108-12.

In reality, however, CSG did not perform any of these construction jobs. Id. at ¶ 115. Nevertheless, for "each VA contract awarded to CSG," "Dr. Shoba Mehta and/or Dr. Nitin Mehta would separately confirm to the V A contracting officer by submitting a completed questionnaire confirming that the construction had taken place and that CSG's performance on that contracting action [was] excellent." Id. at ¶ 102, 115. Dr. Nitin Mehta "signed and submitted [these] falsified past performance survey reports to a [sic] FAA contracting officer" beginning around November 2010. Id. at ¶ 101. On November 4, 2010, for example, Dr. Nitin Mehta "completed a customer satisfaction survey . . . concerning work done on Dr. Shobha Mehta's medical office and gave CSG a perfect score." Id. at ¶ 107. He did so "knowing that this response was false and that doing so would further the fraudulent conspiracy." Id. Additionally, "Dr. Shobha Mehta and/or Dr. Nitin Mehta knew that CSG claimed in some of its submissions that the renovations of Dr. Shobha Mehta's office [ ] at 5021 Seminary Road, Alexandria, VA . . . exceeded $1 million dollars." Id. at ¶ 105. In reality, however, "[t]hat office location . . . consisted of a single room approximating 200square feet and had not been renovated since it was originally constructed . . . back in the 1980's." Id. Along with submitting these "falsified performance survey reports," Dr. Nitin Mehta also answered phone calls and emails from government contract officers to "verify the false information provided the proposals." Id. at ¶ 104.

Both doctors' involvement in the CSG conspiracy continued for "a period of years." Id. at ¶ 102. In that time, "Dr. Shobha Mehta and/or Dr. Nitin Mehta routinely returned a customer satisfaction [survey] and . . . did so for each VA contract awarded to CSG." Id. Indeed, CSG "needed Dr. Shobha Mehta and/or Dr. Nitin Mehta to provide falsified past performance [reports] so that CSG's responses to the VA solicitation[s] were not rejected...