United States v. Jolly, CIVIL ACTION No. 14-2247

451 F.Supp.3d 657

UNITED STATES of America, EX REL, Treci MCNEIL, et al.

v.Tarun JOLLY, et al.

CIVIL ACTION No. 14-2247

c/w 15-877, 15-297, 15-1445, 16-15440

United States District Court, E.D. Louisiana.

Signed April 3, 2020

Frances Margaret Phares, Frances Margaret Phares, Attorney at Law, Covington, LA, Mark H. Schlein, Baum Hedlund Aristei & Goldman, PC, Los Angeles, CA, for Plaintiffs

Shayna Beevers Morvant, Beevers & Beevers, LLP, Gretna, LA, Steven Michael Mauterer, Blue Williams, LLP, Metairie, LA, Pauline Hardin, Avery Bryce Pardee, New Orleans, LA, Michael Sam Finkelstein, M. Suzanne Montero, Sternberg, Naccari & White, LLC, New Orleans, LA, for Defendants

LANCE M. AFRICK, UNITED STATES DISTRICT JUDGE

REF: ALL CASES SECTION I

ORDER & REASONS

Before the Court are motions¹ for attorneys' fees, costs, and expenses filed by Treci McNeil ("McNeil"), Lindsey Lawson ("Lawson") and Sheldon Green ("Green"), Bradley Church ("Church"),² and Philip Bergeron ("Bergeron"). For the following reasons, McNeil's motion is granted in part and denied in part, Lawson and Green's motion is denied, Church's motion is denied, and Bergeron's motion is granted in part and denied in part.

I.

Between 2014 and 2015, McNeil, Lawson and Green, Church, Bergeron, and Kevin Outerbridge ("Outerbridge") (collectively, "relators") brought separate qui tam actions against, inter alia , defendants Tarun Jolly, M.D. ("Jolly"), Barry Griffith ("Griffith"), Patrick Ridgeway ("Ridgeway"), and UTC Laboratories, Inc., a/k/a RenRX ("UTC") for alleged violations of the Anti-Kickback Statute ("AKS"), 42 U.S.C. § 1320a-7b(b), and the Physician Self-Referral Law ("Stark Act"), 42 U.S.C. § 1395nn.³

The relators claimed that the defendants offered and paid remuneration to physicians and other individuals to induce the ordering of medically unnecessary pharmacogenetic clinical laboratory tests, and submitted false claims to the Medicare program for reimbursement of such tests.⁴ Bergeron filed his qui tam action in the United States District Court for the Southern District of New York against, inter alia , Jolly, Griffith, Ridgeway, and UTC, and his case was transferred to this district in 2016.⁵ McNeil filed her qui tam action in this district against, inter alia , UTC and Jolly.⁶ Lawson and Green filed their qui tam action in this district against UTC and another defendant who is not a party to this matter.⁷ Church filed his qui tam action in this district against UTC.⁸ Outerbridge filed his qui tam action in this district against UTC and Jolly.⁹

Pursuant to 28 U.S.C. § 3730(b)(2), a copy of each relator's complaint and written disclosure of substantially all material evidence and information the relator possessed was served on the government. The government elected to intervene and proceed in each of the relator's actions, and it began investigations into the allegations raised in the relators' complaints.

After years of investigation, in September 2019, a global settlement agreement was reached between the government, the relators, and defendants Jolly, Griffith, Ridgeway, and UTC.¹⁰ Under the terms of the global settlement agreement, Jolly, Griffith, Ridgeway, and UTC were required to pay to the United States their respective portions of the total settlement amount—$500,000 by Jolly, $250,000 by Griffith, $250,000 by Ridgeway, and $42,109,358.68 by UTC.¹¹

Pursuant to the global settlement agreement, the relators agreed to release Jolly, Griffith, Ridgeway, and UTC from, inter alia , liability to all relators arising from the relators' qui tam actions, "excluding claims under 31 U.S.C. § 3730(d) for expenses or attorneys' fees and costs."¹² The agreement also provided that the government and the relators agree that "they each retain all of their rights pursuant to the False Claims Act on the issue of the share percentage, if any, that Relators should receive of any proceeds of the settlement of their claim(s), and that no agreements concerning Relator share have been reached to date."¹³

In January 2020, the government and the relators entered into a settlement agreement ("Relators Settlement Agreement") awarding shares of the proceeds from the global settlement agreement to Bergeron and McNeil.¹⁴ Specifically, Bergeron was awarded $8,211,324.94 of the settlement amount agreed upon by UTC, Ridgeway, Griffith, and the government, and McNeil was awarded $110,000 of the $500,000 settlement amount agreed upon by Jolly.¹⁵ The Relators Settlement Agreement did not provide for awards to Lawson, Green, Church, or Outerbridge.¹⁶

II.

The False Claims Act ("FCA"), 31 U.S.C. § 3729 et seq. , imposes liability on those who defraud the government with false or fraudulent claims for payment or approval.¹⁷ U.S. ex rel. Thompson v. Columbia/HCA Healthcare Corp. , 125 F.3d 899, 903 (5th Cir. 1997). Under the qui tam provisions of the FCA, a private citizen—i.e., a relator—with special knowledge of fraud against the government may bring an action in the name of the government.¹⁸ United States v. U.S. ex rel. Thornton , 207 F.3d 769, 771 (5th Cir. 2000) (citing 31 U.S.C. § 3730(b)(1) ). The government may, though it need not, elect to intervene and proceed with the action. 31 U.S.C. § 3730(b)(2) ; Thornton , 207 F.3d at 771. If the government intervenes, it may settle the action over the relator's objections if the court determines that the proposed settlement is fair, adequate, and reasonable under all circumstances.¹⁹ 31 U.S.C. § 3730(c)(2)(b).

Under § 3730(d)(1) of the FCA, a successful relator "shall...receive at least 15 percent but not more than 25 percent of the proceeds of the action or settlement of the claim, depending upon the extent to which the person substantially contributed to the prosecution of the action." 31 U.S.C. § 3730(d)(1) ; see U.S. ex rel. Longhi v. United States , 575 F.3d 458, 475 (5th Cir. 2009). Any such payment to a relator "shall be made from the proceeds." 31 U.S.C. § 3730(d)(1). Section 3730(d)(1) further provides that "[a]ny such person shall also receive an amount for reasonable expenses which the court finds to have been necessarily incurred, plus reasonable attorneys' fees, costs, and expenses. All such expenses, fees, and costs shall be awarded against the defendant." 31 U.S.C. § 3730(d)(1).

A. Relators' Entitlement to Attorneys' Fees, Costs, and Expenses

The defendants dispute whether Church, Lawson, and Green are entitled to attorneys' fees, costs, and expenses under § 3730(d)(1). The defendants acknowledge that McNeil and Bergeron have a right to recover attorneys' fees, costs, and expenses, but they argue that Church, Lawson, and Green are not entitled to such awards because Church, Lawson, and Green did not directly receive any proceeds from the settlement of the qui tam actions.²⁰ The Court agrees.

Section 3730(d)(1) of the FCA provides for an award to a qui tam relator, as well as attorneys' fees, costs, and expenses. This statutory provision states, in pertinent part:

If the Government proceeds with an action brought by a person under [ § 3730(b) ], such person shall, subject to the second sentence of this paragraph, receive at least 15 percent but not more than 25 percent of the proceeds of the action or settlement of the claim, depending upon the extent to which the person substantially contributed to the prosecution of the action...Any payment to a person under the first or second sentence of this paragraph shall be made from the proceeds. Any such person shall also receive an amount for reasonable expenses which the court finds to have been necessarily incurred, plus reasonable attorneys' fees and costs. All such expenses, fees, and costs shall be awarded against the defendant.

31 U.S.C. § 3730(d)(1).

As evident from the text of the statute, the award of attorneys' fees, costs, and expenses is separate from the award of a percentage of the settlement proceeds—a relator "shall receive" a share of the proceeds, and the relator "shall also receive" an amount for reasonable expenses, including attorneys' fees and costs. Id. The statute also makes clear that the relator's award from the settlement shall be taken out of the proceeds, while attorneys' fees, costs, and expenses shall be assessed against the defendant. See id. ; U.S. ex rel Sharma v. Univ. of S. California , 217 F.3d 1141, 1143 (9th Cir. 2000) ("[T]he statute explicitly separates proceeds from attorneys' fees and costs" and "requires attorneys' fees and costs to be ‘awarded against the defendant, rather than taken out of the proceeds of the FCA recovery.’ ") (quoting United States ex rel. Kelly v. Boeing Co. , 9 F.3d 743, 747 (9th Cir. 1993) ).

Based on the plain language of § 3730(d)(1), a person who is entitled to attorneys' fees, costs, and expenses is one who receives a payment from the proceeds of the action or settlement of the claim.

The statute clearly states that any payment "to a person" shall be made from the proceeds, and that "any such person ," shall also receive attorneys' fees, costs, and expenses. 31 U.S.C. § 3730(d)(1) (emphasis added). The mandatory award of attorneys' fees, costs, and expenses does not apply to all persons who bring a qui tam action under § 3730(b), but rather only to those who receive a payment from its proceeds. See United States v. NextCare, Inc. , No. 11-141, 2013 WL 431828, at *2 (W.D.N.C. Feb. 4, 2013) ("The plain language of the FCA demonstrates that a relator is only entitled to attorneys' fees if that relator also obtained a relator's share following a court award or settlement."); United States ex rel. Greenwald v. Kool Smiles Dentistry, PC , No. 10-1100, 2018 WL 4356744, at *3 (D. Conn. Sept. 12, 2018) (holding that a relator who was a party to a settlement agreement but did not receive any payment of a relator's share was not entitled to attorneys' fees and costs).

The global settlement agreement between all parties in this case did not provide for a relator's share to every relator. Rather, the global settlement...