United States v. Dental Dreams, LLC

307 F.Supp.3d 1224

UNITED STATES of America, and State of New Mexico, ex rel. Jose Hernandez–Gil, DMD, Relator Plaintiff,

v.DENTAL DREAMS, LLC a/k/a Dental Experts, LLC, an Illinois limited liability company, Sameera Tasnim Hussain, DMD, individually and as an organization agent, Dental Dreams, LLC, a New Mexico limited liability company, Family Smiles, LLC, a New Mexico limited liability company, Frank Von Westernhagen, DDS, individually and as an organization agent, KOS Services, LLC, an Illinois limited liability company, and Khurram Hussain, Esq., individually and as an organization agent, Defendants.

No. Civ. 13–1141 JH/KBM

United States District Court, D. New Mexico.

Filed March 28, 2018

David M. Houliston, The Law Offices of David M. Houliston, Albuquerque, NM, Jared B. Stubbs, Pro Hac Vice, Mark D. Stubbs, Matthew R. Howell, Fillmore Spencer, LLC, Provo, UT, for Plaintiff.

Andrew G. Schultz, Melanie B Stambaugh, Rodey Dickason Sloan Akin & Robb PA, Albuquerque, NM, Laura McLane, Mark W. Pearlstein, McDermott Will & Emery, Boston, MA, Michael S. Stanek, McDermott Will & Emery, Washington, DC, for Defendants.

MEMORANDUM OPINION AND ORDER

Judith C. Herrera, United States District Judge

This matter is before the court on (i) the Motion for Summary Judgment and Memorandum in Support (ECF No. 112), filed by Defendants on November 10, 2017; (ii) Defendants' Motion to Exclude Certain Opinions and Testimony of Plaintiff's Expert Witness (ECF No. 111), filed November 10, 2017; and (iii) the Motion to Partially Dismiss Amended Complaint and to Strike (ECF No. 57), filed by Defendants on November 11, 2016. This Court, having considered the pleadings, motions, briefs, evidence, and relevant law, concludes that (i) Defendants' motion for summary judgment should be granted in part and denied in part as described herein, but the Court will reserve ruling for a hearing on the issue of the liability of Defendants Dental Dreams, LLC a.k.a. Dental Experts, LLC, an Illinois limited liability company, and KOS Services, LLC; (ii) Defendants' motion to exclude certain opinions of Plaintiff's expert Dr. Ryan Craig Moffat will be granted; and (iii) Defendants' motion to partially dismiss the amended complaint and to strike will be granted in part and denied in part as described herein.

A. Defendants' Motion for Summary Judgment

Defendants filed a motion for summary judgment seeking dismissal of all claims in the amended complaint except for Count 25 against Family Smiles. In Plaintiff's response, he agreed to the dismissal of the following claims: Count 22 (Bad faith breach of contract), Count 23 (Fraud in the inducement), Count 24 (Tortious interference with contract), Count 26 (Intentional infliction of emotional distress), and Count 27 (Prima facie tort). Pl.'s Resp. 18 n.2, ECF No. 123. The Court will therefore dismiss Counts 22–24 and 26–27 and turn to the merits of the remaining counts.

1. Factual Background¹

a. Plaintiff's Hiring and Employer

Plaintiff/Relator Jose Hernandez–Gil (hereinafter "Plaintiff") is a dentist who worked for Defendant Family Smiles, LLC ("Family Smiles") for an approximately two-week period in May 2013, pursuant to an Employment Agreement dated April 30, 2013. Def.'s Mot. for Summ. J. ("MSJ"), Undisputed Fact ("UF") ¶ 1, ECF No. 112. The employment agreement was between Plaintiff and "Family Smiles, LLC, a New Mexico limited liability company, its successors and assigns, as well as its parent, or any subsidiary, affiliate, joint venture or partner of Family Smiles, LLC (collectively ‘FSL’)." Employment Agreement, ECF No. 52–1.

KOS Services, LLC, ("KOS") is a limited liability company ("LLC") in Illinois, and its Articles of Organization form lists Khurram Hussain as its registered agent and states that it "has management vested in ... member ... Khurram Hussain." Defs.' Reply, Ex. E, ECF No. 127–5 at 6–7 of 14. KOS provides administrative services for Family Smiles and Khurram Hussain is the President of KOS. Decl. of Khurram Hussain ¶ 1, ECF No. 112–5.

Dental Experts is an LLC, and its Illinois Articles of Amendment list Dr. Sameera Hussain as a member. Defs.' Reply, Ex. E, ECF No. 127–5 at 8–10 of 14. Dental Dreams was a New Mexico LLC and Dr. Sameera Hussain was its sole member. See id. at 12–14 of 14; Answer ¶ 24, ECF No. 56 at 14 of 112.

b. Plaintiff's Discovery of Billing Practices at Family Smiles

Dr. Noah Shafer was a dentist employed by Family Smiles from June 2011 to September 2012, prior to Plaintiff's employment with Family Smiles. Def.'s MSJ, UF ¶ 2, ECF No. 112. Dr. Shafer was one of more than 220 dentists working for or affiliated with the entity Defendants during Plaintiff's employment. Id.

While employed by Family Smiles, Dr. Hernandez–Gil treated some patients, who Dr. Shafer previously had treated. See Dep. of Hernandez–Gil 173:22–174:5, ECF No. 123–2. In reviewing some of the patients' charts, Dr. Hernandez–Gil found records of treatments that he believed, based on his examination of the patients, had not been provided. Decl. of Hernandez–Gil ¶ 9, ECF No. 123–3. Two dentists for Family Smiles reported to Plaintiff that they were worried they were going to be fired because they were unwilling to do medically unnecessary procedures which Edith Pinto, Regional Manager for Family Smiles' New Mexico dental clinics, and the owners of the company were pressuring them to perform. See Dep. of Dr. Hernandez–Gil 140:15–141:24, 185:21–186:7, ECF No. 123–1; Decl. of Hernandez–Gil ¶ 15, ECF No. 123–3.

On May 15, 2013, Plaintiff reported what he had found with the patients and charts of Dr. Shafer to Edith Pinto. Decl. of Hernandez–Gil ¶¶ 15–16, ECF No. 123–3.² Plaintiff also told Ms. Pinto what the other dentists had told him. Dep. of Dr. Hernandez–Gil 140:15–141:24, 185:21–186:7, ECF No. 123–1.³ At the time, Ms. Pinto acted shocked, like this was the first she was hearing of this, and she said she was going to look into it. Decl. of Hernandez–Gil ¶ 16, ECF No. 123–3; Dep. of Dr. Hernandez–Gil 185:21–186:10, ECF No. 123–1.

Minutes later on May 15, 2013, Dr. Hernandez–Gil reported the situation to Clint Sandoval, the Atrisco Office Manager. See Dep. of Dr. Hernandez–Gil 185:21–186:24, ECF No. 123–1; Decl. of Hernandez–Gil ¶ 10, ECF No. 123–3. Mr. Sandoval immediately admitted, "You're going to find a lot of that." Decl. of Hernandez–Gil ¶ 11, ECF No. 123–3. Mr. Sandoval acted as though he was not upset; instead, he was making fun of it and implying that it was the culture of the company. Dep. of Dr. Hernandez–Gil 253:9–22, ECF No. 123–1. Mr. Sandoval said that Edith knows all about and has known all about the allegations Plaintiff had brought to her attention. See id. at 185:21–188:7. Dr. Hernandez–Gil replied that it was fraud. Decl. of Hernandez–Gil ¶ 12, ECF No. 123–3.

On May 16, 2017, Plaintiff spoke with Mr. Sandoval again about Dr. Shafer's fraudulent billing practices. Decl. of Dr. Hernandez–Gil ¶ 18, ECF No. 123–3. Mr. Sandoval replied that Ms. Pinto, Sameera Hussain and "Khurram" were all aware of the practices. Id.⁴ When Plaintiff asked who was Khurram, Mr. Sandoval replied that he was Sameera Hussain's husband and attorney for the network of dental clinics and other businesses that included Family Smiles, Dental Dreams, Dental Experts, and KOS. Id. Mr. Sandoval referred to all these entities, together with other companies in their network, as "the company." Id. Mr. Sandoval explained that Sameera ran the dental side of the business, while Khurram ran the legal side, and KOS handled the money side. Id. He stated that Sameera and Khurram Hussain effectively own or control the entire network, regardless of whose name is on the title. Id. Mr. Sandoval said that Sameera and Khurram would not allow an investigation or audit into the fraudulent billing because it would cost too much money. Id. Mr. Sandoval then explained that the company used employment contracts in which dentists could not leave the company without giving notice a very significant period of time in advance, provisions the company would use to force the dentists that wanted to leave sooner to meet certain performance goals to gain an early release. Id. ¶ 19. Mr. Sandoval explained that performance goals were so high that they virtually required fraud be committed by those dentists. Id.

On May 20, 2013, Plaintiff told Ms. Pinto about all the files of Dr. Shafer he found with procedures charted and billed to Medicaid, but never actually performed. Id. ¶ 20. Ms. Pinto acknowledged she was aware of the billing fraud and said there were forms to fill out if he found more of these situations. Id. ¶ 21. On May 22, 2013, Plaintiff found more instances in patient charts indicating services had been performed and billed, when in fact the services were not performed. Id. ¶ 22. Consistent with Ms. Pinto's direction, Plaintiff reported to Mr. Sandoval that same day the fraudulent charges he discovered. Id. ¶ 23. In response, Mr. Sandoval replied "the company" wanted Plaintiff to do the missing work, fill out a form, and allow his production to be credited with the work, although it would not at that time be billed. Id. ¶ 24. Plaintiff stated that the company's response was inadequate by law and that it needed to report it and do an audit. Id. ¶ 25. Mr. Sandoval said that he knew that was what the company was required to do, but it was not what the company would do because they would lose too much money. Id. The forms Mr. Sandoval provided Plaintiff to complete on the falsely certified work were pre-addressed to Sameera Hussain. Id. ¶ 26. Plaintiff submitted two such forms. See id.

Prior to his raising allegations of false Medicaid billing practices, in his first few days of work, Plaintiff had been getting positive feedback. Dep. of Dr. Hernandez–Gil 214:19–215:8, ECF No. 123–1. After raising his allegations, his feedback changed. Id.

c. Unwanted physical contact

Beginning on May 15, 2013, when Mr. Sandoval discovered that Plaintiff was gay, and again...