United States ex rel. Macias v. Pac. Health Corp.

UNITED STATES OF AMERICA ex rel. JULIE A. MACIAS Plaintiff, v. PACIFIC HEALTH CORPORATION, et al. Defendants.

CV-12-00960 RSWL-JC

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

June 5, 2019

ORDER re Relator's Motion for Default Judgment Against Defendants Pacific Health Corporation and Los Angeles Doctors Hospital Corporation[508]

Currently before the Court is Relator Julie A. Macias' ("Relator") Motion for Default Judgment against Defendants Pacific Health Corporation and Los Angeles Doctors Hospital Corporation [508]. Having reviewed all papers submitted pertaining to this Motion, the Court NOW FINDS AND RULES AS FOLLOWS: the Court GRANTS Relator's Motion for Default Judgment.

///

///

I. BACKGROUND

A. Factual Background

This case arises out of a qui tam action brought by Relator Julie A. Macias ("Relator") on behalf of herself in the name of the United States of America ("the Government") and the State of California for violations of the False Claims Act ("FCA"), 31 U.S.C. § 3729, and California False Claims Act ("CFCA"), Cal. Gov't Code § 12651. Amended Compl. ("AC") ¶ 1, ECF No. 31.¹

Defendant Pacific Health Corporation ("PHC") owns and operates numerous hospitals in Los Angeles and Orange Counties. Id. ¶ 9. Defendant Los Angeles Doctors Hospital Corporation ("Doctors Hospital") is a subsidiary of PHC and owned and operated Los Angeles Metropolitan Medical Center ("LAMMC").² Id. ¶ 10. At all times relevant to this case, PHC controlled LAMMC, and Relator seeks default judgment assigning joint and several liability to Defendants PHC and Doctors Hospital (collectively, "Corporate Defendants" or "LAMMC"). Relator was a registered nurse on thePsychiatric Evaluation Team ("PET") at LAMMC. AC ¶ 6. From April 2003 to July 2012, Relator was employed as a member of LAMMC's PET to conduct psychiatric evaluations for involuntary commitments pursuant to California Welfare and Institutions Code Section 5150 ("5150 holds"). Id. ¶ 162.

Defendant SGG, Inc. ("SGG") was a California corporation with its principal place of business in San Marino, California. Id. ¶ 12. SGG was primarily engaged in the health services industry, including hospital marketing. Id. Defendant Karen Triggiani ("Triggiani") is an individual who founded SGG in 1997 and was its sole shareholder from March 20, 1998 until August 15, 2007. Id. Triggiani was excluded from Medicare on June 19, 2008 after being convicted of conspiracy to commit Medicare fraud. Id. ¶ 217. Defendant Robert Barrett ("Barrett") is Triggiani's husband, who was the sole shareholder of SGG from December 27, 2007 to August 1, 2009. Id. Defendant Dr. Keivan Golchini ("Golchini") is a doctor specializing in internal medicine, who was the sole shareholder of SGG from August 1, 2009 through December 26, 2012 when SGG was dissolved. Id. ¶¶ 12, 16. Defendant Dr. Farhad Khossoussi ("Khossoussi") is a practicing psychiatrist who was granted privileges to practice in the psychiatry department at LAMMC. Decl. of Farhad Khossoussi, M.D. in Supp. of Mot. for Summ.J. ("Khossoussi Decl.") ¶¶ 2-3, ECF No. 353.

Relator alleges that LAMMC engaged in a scheme to improperly refer, transport, and commit patients, often unwillingly, to LAMMC's locked psychiatric units to fraudulently bill Medicare and Medi-Cal. Id. ¶¶ 24, 159-275. Triggiani allegedly provided case management and discharge planning services to LAMMC patients while she was excluded from Medicare in violation of excluded provider regulations. Id. ¶¶ 217-219, 221-264. Pursuant to an allegedly sham contract with LAMMC, SGG (and in particular Triggiani) would recruit patients from outside facilities and refer them to LAMMC in exchange for kickback payments. Id. ¶¶ 24, 204-211. Relator alleges that Dr. Khossoussi admitted and treated these patients knowing the referrals were in exchange for kickbacks. Id. ¶ 327. Dr. Khossoussi, according to Relator, then billed to government healthcare programs the services he provided to these patients. Id. Relator further alleges that Dr. Khossoussi continued to use SGG's and Triggiani's services even after Triggiani was convicted of conspiracy to commit Medicare fraud and excluded from Medicare. Id. ¶¶ 24, 212-264. Relator alleges that Defendants also attempted to conceal Triggiani's continued involvement. Id.

Physicians, hospitals, and ambulance companies who meet the requirements for participation in Medicare mayreceive compensation for health care services furnished to patients eligible for benefits. Id. ¶ 43. Compliance with the federal Anti-Kickback Statute ("AKS") and excluded provider regulations are preconditions to receiving Medicare and Medi-Cal payments. Id. ¶¶ 44-47. LAMMC was required to certify its compliance with these requirements in annual cost reports. Id. ¶¶ 45-46, 60, 64-65, 67, 80, 97, 117, 132-35. As a result, Relator alleges that LAMMC's ongoing scheme rendered it ineligible for Medicare and Medi-Cal reimbursement. Id. ¶¶ 324-30, 339-45, 347-51, 364-69, 376-83, 385-89.

B. Procedural Background

Relator filed the original Complaint [1] in this Action on February 3, 2012. The United States declined to intervene on May 22, 2013. See U.S.'s Notice of Election to Decline Intervention, ECF No. 19. On August 20, 2013, Relator filed an Amended Complaint [31] in this Action. The State of California declined to intervene on February 11, 2014. See Cal.'s Notice of Election to Decline Intervention, ECF No. 36. As a result, the Court ordered that the seal be lifted and that the Complaint and Amended Complaint be served on Corporate Defendants. See Order re Unsealing of Compl., ECF No. 37.

Relator served the Summons and AC on Corporate Defendants on April 2, 2014 [39, 44-45]. On April 12,2014, Corporate Defendants moved to dismiss the AC on the grounds that "public disclosure" barred Relator's claims [58]. On May 30, 2014, the Court denied Corporate Defendants' Motion to Dismiss [100]. On January 26, 2016, counsel for Corporate Defendants brought a Motion to Withdraw as Counsel pursuant to Corporate Defendants' request because they did not have sufficient funds to pay counsel and requested they cease defending them. Mot. to Withdraw 4:9-16, ECF No. 180. On March 21, 2016, the Court granted Corporate Defendants' Motion to Withdraw as Counsel. ECF No. 187. The Court ordered Corporate Defendants to secure new counsel within thirty days of the Order. Order 6:9-17. On April 26, 2016, the Court ordered Corporate Defendants to show cause why they failed to comply with the Court's March 21, 2016 Order. Order to Show Cause 2:17-21; ECF No. 198. The Court advised Corporate Defendants that if they failed to do so, the Court may impose sanctions and strike their Answer, placing them in default. Id. at 2:21-24. Corporate Defendants failed to comply with the Court's April 26, 2016 Order, and their Answer was stricken on May 9, 2016 and the Clerk of Court entered default against Corporate Defendants. ECF Nos. 214, 215.

On July 18, 2016, Relator filed a Motion for Partial Default Judgment against Corporate Defendants as to her fifth, ninth, tenth, and eleventh claims—allrelated to retaliation [246].³ The Court granted Relator's Motion on October 11, 2016 [262]. The Court deferred entry of judgment on Relator's retaliation claim until the case was resolved in its entirety. Once the remaining Defendants were dismissed following settlement, Relator filed the Instant Motion for Default Judgment against Corporate Defendants on March 29, 2019 [508] as to the remaining claims for violations of the FCA and CFCA.

II. DISCUSSION

A. Legal Standard

Federal Rule of Civil Procedure ("Rule") 55(b) authorizes a district court to grant default judgment. Pursuant to Local Rule 55-1, the party moving for default judgment must submit a declaration establishing: (1) when and against which party default was entered; (2) on which pleading default was entered; (3) whether the defaulting party is a minor, incompetent person, or active service member; and (4) proper service. Upon default, all factual allegations in the complaint, except those relating todamages, are assumed to be true. TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987) (quoting Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977)).

In exercising its discretion to grant default judgment, the court must consider the following factors (the "Eitel factors"): (1) possibility of prejudice to the plaintiff, (2) merits of the substantive claim, (3) sufficiency of the complaint, (4) sum of money at stake, (5) possibility of disputes regarding material facts, (6) whether excusable neglect caused the default, and (7) the strong policy favoring decisions on the merits. NewGen, LLC v. Safe Cig, LLC, 840 F.3d 606, 616 (9th Cir. 2016) (quoting Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986)). Additionally, if the defaulting party failed to plead or otherwise defend, the court must determine that it has subject matter and personal jurisdiction. In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999). When default judgment is granted, the relief awarded "must not differ in kind from, or exceed in amount, what is demanded in the pleadings." Fed. R. Civ. P. 54(c).

B. Discussion

1. Jurisdiction and Service of Process

In considering whether to enter default judgment, the Court must first determine whether it has jurisdiction over the subject matter and the parties to the case. In re Tuli, 172 F.3d at 712.

The Court has subject matter jurisdiction over the matter as Relator's claims allege violations of the FCA arising under 31 U.S.C. § 3730. See AC. The Court further has supplemental jurisdiction over Relator's CFCA claim. 28 U.S.C. § 1367.

The Court also has personal jurisdiction over Corporate Defendants. If a defendant's contacts with the forum state are "substantial" or "continuous and systematic," general jurisdiction may be exercised over that defendant for any cause of action. Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 801-02 (9th Cir. 20...