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United States v. Fata

United States District Court, E.D. Michigan, Southern Division

December 9, 2019

UNITED STATES OF AMERICA and THE STATE OF MICHIGAN ex rel. GEORGE KARADSHEH, and GEORGE KARADSHEH, individually, Plaintiffs,
v.
FARID FATA, M.D.; MICHIGAN HEMATOLOGY-ONCOLOGY, P.C., et al., Defendants, and GEORGE KARADSHEH, Cross-Plaintiff,
v.
UNITED STATES OF AMERICA, Cross-Defendant.

          ORDER GRANTING THE UNITED STATES OF AMERICA'S MOTION TO DISMISS CROSS-CLAIM [ECF NO. 49] AND DISMISSING AND CLOSING THIS CAUSE OF ACTION

          DENISE PAGE HOOD UNITED STATES DISTRICT JUDGE

         I. INTRODUCTION

         Plaintiff George Karadsheh (''Karadsheh'') filed a qui tam action on August 5, 2013. Pursuant to a series of stipulations of dismissal in March - June 2017, the case was closed on June 29, 2017. On March 2, 2019, the Court reinstated the qui tam action upon deciding Karadsheh's Motion to Reinstate Qui Tam Case and for Leave to File a Cross-Claim against the United States (''Motion to Reinstate''). ECF No. 47. After Karadsheh timely filed a Cross-Claim, cross-defendant United States of America (the ''Government'') filed a Motion to Dismiss Cross-Claim (''Motion to Dismiss''). ECF No. 49. The Motion to Dismiss has been fully briefed. The Court, having concluded that the decision process would not be significantly aided by oral argument, previously ordered that the Motion to Dismiss would be resolved on the motion and briefs submitted by the parties. E.D. Mich. L.R. 7.1(f)(2). ECF No. 53.

         II. BACKGROUND

         Karadsheh filed this qui tam action on August 5, 2013, four days after he contacted the United States Department of Justice of his concern that Dr. Farid Fata (''Fata'') was intentionally mis-diagnosing his patients and recommending medically unnecessary chemotherapy to patients who did not have cancer. On August 6, 2013, the Government charged Fata with multiple counts of health care fraud, and a first indictment against Fata was filed on August 14, 2013. Fata pled guilty on September 16, 2014. Fata fraudulently billed Medicare approximately $35 million and harmed hundreds of patients by diagnosing them with cancer and subjecting them to medically unnecessary chemotherapy treatment.

         In conjunction with Fata's misdeeds, the Government obtained three separate financial recoveries: (1) approximately $13 million in forfeiture proceedings associated with Fata's criminal conviction, of which Karadsheh was awarded 10% of the recovery ($1.3 million, of which he has received at least $920, 000); (2) $790, 915.42 from False Claims Act allegations related to medically unnecessary laboratory testing performed by Crittenton Hospital on Fata's patients, of which Karadsheh was awarded 20% of the recovery ($158, 209.40); and (3) a $3.27 million settlement stemming from a self-disclosure Crittenton made on July 23, 2015 regarding seven illegal financial arrangements between Crittenton and Fata.

         Karadsheh has not been awarded any amount from the $3.27 million settlement because, the Government maintains, he did not inform the Government about illegal financial arrangements between Crittenton and Fata in any of his three qui tam complaints (filed August 5, 2013, November 5, 2013, and April 10, 2017). Karadsheh filed the Motion to Reinstate for the purpose of recovering a share of the $3.27 million settlement and, when the Motion to Reinstate was granted, Karadsheh filed the Cross-Claim the Government seeks to dismiss.

         III. ANALYSIS

         A. Standard of Review

         In deciding the Motion to Reinstate, the Court evaluated Karadsheh's motion pursuant to Federal Rule of Civil Procedure 60(b)(6). Rule 60(b)(6) provides that a court may vacate a judgment for ''any other reason that justifies relief.'' In deciding the instant Motion to Dismiss, however, the Court employs a different standard in evaluating the Cross-Claim filed by Karadsheh, specifically Rule 12(b)(6).

         A Rule 12(b)(6) motion to dismiss tests the legal sufficiency of the plaintiff's complaint. Accepting all factual allegations as true, the court will review the complaint in the light most favorable to the plaintiff. Eidson v. Tennessee Dep't of Children's Servs., 510 F.3d 631, 634 (6th Cir. 2007). As a general rule, to survive a motion to dismiss, the complaint must state sufficient ''facts to state a claim to relief that is plausible on its face.'' Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). The complaint must demonstrate more than a sheer possibility that the defendant's conduct was unlawful. Id. at 556. Claims comprised of ''labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.'' Id. at 555. Rather, A[a] claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.'' Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

         B. Analysis

         In order to recover on a qui tam claim B which is ultimately what Karadsheh is seeking to accomplish pursuant to his Cross-Claim, Sixth Circuit law requires that a plaintiff allege with particularity B as required by Rule 9(b) B in his complaint(s) the ''alternate remedy''[1] upon which he seeks to recover. See United States ex re. Bledsoe v. Community Health Sys., Inc., 342 F.3d 634, 641 (6th Cir. 2003) (''Bledsoe I'').

         It is the relator's burden to demonstrate that the allegations in his complaint overlap with the conduct described in the Government's alternate remedy, such as in the self-disclosure by Crittendon that resulted in the settlement agreement between Crittendon and the Government. Bledsoe I, 342 F.3d at 650-51; United States ex rel. Bledsoe v. Community Health Sys., Inc., 501 F.3d 493, 521-23 (6th Cir. 2007) (''Bledsoe II''). See also Rille v. Pricewaterhouse Cooper LLP, 803 F.3d 368, 372 (8th Cir. 2015) (a relator's Aright to recovery is limited to a share of the settlement of the claim that they brought, '' and ''does not extend to a different claim that is settled by the government when that claim was not originally 'brought by' the relator."). A relator such as Karadsheh is not entitled ...


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