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Date: 03-15-2019

Case Style:

United States of America v. Heath Solutions, P.C., et al.

Case Number: 17-2019

Judge: Roth

Court: United States Court of Appeals for the Third Circuit on appeal from the District of New Jersey (Essex County)

Plaintiff's Attorney: Charles Graybow, Paul B. Brickfield, Timothy McInnis

Defendant's Attorney: Mark E. Cedrone

Description:




Nita K. Patel and her husband, Kirtish N. Patel, were
convicted of defrauding Medicare in a prior criminal
proceeding. The United States then brought this civil action
for the same fraudulent schemes against Ms. Patel, Ms.
Patel’s healthcare company (Heart Solution P.C.), Mr. Patel,
and Mr. Patel’s healthcare company (Biosound Medical
Services). The United States prevailed in the District Court
and only Ms. Patel and Heart Solution appealed.
In granting summary judgment to the United States,
the District Court relied on the Patels’ convictions and plea
colloquies in the criminal case, essentially concluding that
Ms. Patel had already admitted to all elements and issues
relevant to her civil liability. However, the District Court
failed to dissect the issues that were determined in the
criminal case from those that were not. It lumped together
Ms. Patel and Heart Solution, even though Heart Solution was
4
not involved in the criminal case. It also failed to
disaggregate claims Medicare paid to Ms. Patel and Heart
Solution from those paid to Mr. Patel and Biosound. As such,
it erred in finding that Ms. Patel and Heart Solution conceded
all of the essential elements to every claim in this appeal.
Thus, we will affirm the judgment of the District Court in part
and vacate in part and remand for further proceedings
consistent with this opinion.
I.
In November 2015, the Patels pled guilty to separate,
but nearly identical, criminal information charges under 18
U.S.C. § 1347 for defrauding Medicare.1 They conducted this
fraud through two separate schemes. First, the Patels
submitted diagnostic reports to Medicare that should have
been written by a specialist physician—but were not—and
contained forged physician signatures. Ms. Patel and Heart
Solution do not dispute liability with respect to the claims
involving this scheme. The second scheme involved
diagnostic neurological testing. Medicare regulations require
all diagnostic testing to be “reasonable and necessary,” as
defined under Medicare Part B.2 In order for diagnostic
neurological testing to be “reasonable and necessary,” it must
be performed under the proper level of physician
supervision.3 The Patels did not comply with these
regulations. Instead of employing a supervising neurologist
for these tests, the Patels falsely represented to Medicare that
1 Ms. Patel was sentenced to 78 months in prison and is
currently serving her sentence.
2 42 U.S.C. § 1395y(a)(1)(A).
3 42 C.F.R. § 410.32(b)(1); 42 C.F.R. § 411.15(k).
5
the neurological testing was being supervised by a licensed
neurologist.
Much of this appeal centers on Ms. Patel’s plea
colloquy for her criminal conviction. The relevant parts of
the colloquy follow. First, the sentencing judge asked Ms.
Patel whether she and her husband “own and operate mobile
diagnostic companies known as Biosound Medical Services
and Heart Solution PC,” and she responded, “yes.”4 Neither
the court, the government, nor Ms. Patel clarified whether she
had ownership interests in both companies or just Heart
Solution.5 Next, the judge asked whether between 2006 and
2014, Ms. Patel and her husband “falsely represent[ed] to
Medicare that the neurological testing being performed at
Biosound Medical Services was being supervised by a
licensed neurologist, when, in fact, it was not.”6 Again, she
responded “yes.”7 Neither the court nor the parties addressed
whether Heart Solution—as opposed to the Patels or
Biosound—made any such misrepresentations. Finally, the
judge asked whether, “Biosound Medical Services and Heart
Solution, PC, [were] paid at least [$1.18 million] by Medicare
. . . for diagnostic neurological testing that was never
supervised by a licensed neurologist.” Ms. Patel answered,
4 A41.
5 Ms. Patel does not contest that she owns Heart Solution.
The parties disagree on whether Ms. Patel had any ownership
interest in Biosound. But as discussed in III.A, whether Ms.
Patel had an ownership interest in Biosound is irrelevant;
thus, we do not make any determinations as to this issue.
6 A43.
7 A43.
6
“yes.”8 Neither the parties nor the court sought to clarify
whether one company was paid the entire amount or whether
the payments were divided between the companies.
In June 2014, relator Jane Doe brought a qui tam suit
under the False Claims Act (FCA) against Ms. Patel, Mr.
Patel, Biosound, and Heart Solution. The United States filed
a complaint in intervention on November 18, 2015. The
plaintiffs sought to hold the Patels and the two companies
civilly liable for defrauding Medicare through the two
schemes described above. Specifically, they claimed the
defendants violated two provisions of the FCA by (1)
“knowingly present[ing] or caus[ing] to be presented a false
or fraudulent claim,”9 and (2) “knowingly mak[ing], us[ing],
or caus[ing] to be made or used a false record or statement
material to a false or fraudulent claim.”10 They also brought
common law claims including fraud, unjust enrichment,
disgorgement of profits, and payment by mistake of fact.
In March 2016, the plaintiffs moved for partial
summary judgment on the two FCA counts, arguing that Ms.
Patel’s admissions during her plea colloquy established all the
elements of the FCA claims and that therefore Heart Solution
and Ms. Patel were collaterally estopped from contesting
FCA liability. In their opposition brief, the defendants relied
on a statement submitted by Mr. Patel in a pleading entitled
“Certification of Kirtish N. Patel.” In it, Mr. Patel claimed
8 A44. Medicare paid a total of $1,668,954.95. $1.18 million
was for the neurological testing, and the remainder was for
the scheme not at issue here.
9 31 U.S.C. § 3729(a)(1)(A).
10 31 U.S.C. § 3729(a)(1)(B).
7
that Biosound employed a supervising neurologist from 2006
to 2007 and from 2012 to 2014. The defendants argued that
the statement raised an issue of fact as to the time frame
during which Biosound lacked a supervising neurologist. The
statement was not sworn and was not made under the penalty
of perjury.
The District Court granted summary judgment to
plaintiffs on July 8, 2016, finding that the guilty pleas and
accompanying colloquies established all elements of the FCA
claims and collaterally estopped the defendants from
contesting liability. It also struck the section of Mr. Patel’s
statement regarding the time frame during which Biosound
had a supervising neurologist because it was “self-serving”
and conflicted with testimony from the plea colloquy
regarding the time frame without any “reasonable
explanation.” On December 23, 2016, the government moved
for summary judgment on the remaining common law claims
under the same theory—that the defendants had admitted to
all the elements of the claims. The District Court agreed and
granted the motion on April 3, 2017.
On May 3, 2017, Ms. Patel and Heart Solution
appealed both summary judgment orders.11 They submit two
primary arguments. First, they contend that Ms. Patel cannot
be liable for any unsupervised neurological testing at
Biosound because she did not own or operate Biosound, and
thus had no legal duty to ensure Biosound employed a
neurological testing supervisor. Second, they argue that even
if we find them liable for the neurological testing issues at
Biosound, Mr. Patel’s statement created an issue of material
11 Kirtish Patel and Biosound did not appeal.
8
fact as to the time frame during which the unsupervised
testing occurred. We reject both of these arguments.
Moreover, we will affirm the District Court with
regard to Ms. Patel’s liability on the FCA and common law
fraud claims. However, we will vacate the District Court’s
findings that (1) Heart Solution is estopped from contesting
liability and damages for all claims, and (2) Ms. Patel is
estopped from contesting liability and damages for the
remaining common law claims.
II.
The District Court had jurisdiction under 31 U.S.C. §
3732(a) and 28 U.S.C. §§ 1331, 1367. We have jurisdiction
of this appeal under 28 U.S.C. § 1291. We exercise plenary
review over a district court’s grant of summary judgment,
applying the same standard as the district court.12 Under this
standard, a court will “grant summary judgment if the movant
shows that there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of law.”13
III.
We first address Ms. Patel’s and Heart Solution’s two
main arguments on why the District Court erred in granting
summary judgment. First, they contend that Ms. Patel cannot
be liable for Biosound’s unsupervised testing because she did
not possess an ownership interest in Biosound and merely
12 Blunt v. Lower Merion Sch. Dist., 767 F.3d 247, 265 (3d
Cir. 2014).
13 Fed. R. Civ. P. 56(a).
9
worked as an employee. We reject this argument and hold
that ownership interest is irrelevant to FCA liability. Second,
they argue that even if Ms. Patel is liable for Biosound’s
fraud, Mr. Patel’s statement created a triable issue of fact as
to the years during which Biosound lacked a supervising
neurologist. We conclude that Mr. Patel’s statement cannot
create a disputed issue of fact on summary judgment because
it was not sworn or made under penalty of perjury.
A.
We address the issue of ownership first. Ms. Patel
argues that because she did not have any ownership interest in
Biosound, she had no duty to ensure that Biosound employed
a supervising neurologist and was not in charge of ensuring
Biosound’s compliance with Medicare regulations. However,
whether Ms. Patel had an ownership interest in Biosound is
irrelevant to her liability under the FCA.14 There are four
elements to the two FCA claims brought here: “falsity,
causation, knowledge, and materiality.”15 Ownership is not
one of them. Although corporations and individuals with
ownership interests—such as board members and
14 Ms. Patel also makes this argument in her brief with respect
to common law fraud, stating that “there is no evidence that
Nita Patel made material misrepresentations to Medicare
regarding supervision of the neurological testing that was
performed at Biosound,” supposedly because she did not own
Biosound. This argument fails on its face because she plainly
admitted in her plea colloquy that she made such
misrepresentations.
15 United States ex rel. Petratos v. Genentech Inc., 855 F.3d
481, 487 (3d Cir. 2017) (citations omitted).
10
executives—are typically the parties investigated and sued for
FCA violations, individuals at all levels of a company have
been found liable under the FCA.16 We conclude that
individual employees with no ownership interest in a
company can be liable under Sections 3729(a)(1)(A) and
3729(a)(1)(B) of the FCA.
This conclusion, that an ownership interest is not
required for FCA liability, is consistent with the language of
the FCA. Section 3729 establishes civil penalties for “[a]ny
person” in violation of its provisions.17 The FCA does not
define the term “person,” but the Supreme Court has found
that the meaning of the word has not changed since 1863,
when Congress passed the original FCA.18 There is no doubt
that Congress intended the term “person” to include natural
16 See, e.g., United States v. Krizek, 111 F.3d 934, 942 (D.C.
Cir. 1997) (wife of psychiatrist who worked as an employee
in his practice was liable under FCA); United States v.
Menominee Tribal Enterprises, 601 F. Supp. 2d 1061, 1071
(E.D. Wis. 2009) (employees of a tribe are “persons” under
the FCA); U.S. ex rel. Burlbaw v. Regents of N.M. State
Univ., 324 F. Supp. 2d 1209, 1215 (D.N.M. 2004) (“[U]nder
the FCA, state employees are ‘persons’ who may be sued if
they are sufficiently involved in the submission of a false
claim to the United States.”).
17 31 U.S.C. § 3729(a)(1).
18 See Cook County, Ill. v. U.S. ex rel. Chandler, 538 U.S.
119, 125 (2003).
11
persons. There is no suggestion in the FCA that an ownership
interest is necessary to the definition of “person.”19
Recent Department of Justice (DOJ) guidance
regarding the FCA is consistent with our holding that
ownership is not required for FCA liability. In 2015, then–
Deputy Attorney General Sally Yates issued a memo
regarding corporate fraud and wrongdoing, including FCA
enforcement.20 The memo explicitly states that the DOJ
should focus on “seeking accountability from the individuals
who perpetrated the wrongdoing.”21 The memo states that the
DOJ should “fully leverage its resources to identify culpable
individuals at all levels in corporate cases”22 and that DOJ
“lawyers should not agree to a corporate resolution that
19 Id. at 125 (“[T]he Court . . . recognized the presumption
that the statutory term ‘person’ ‘extends as well to persons
politic and incorporate, as to natural persons whatsoever.’”)
(quoting United States v. Amedy, 412, 6 L.Ed. 502 (1826)).
Even if the term’s meaning was not clear, the Dictionary Act
resolves the question. See Burwell v. Hobby Lobby Stores,
Inc., 134 S. Ct. 2751, 2793 (2014) (“The Dictionary Act’s
definition [of the term person], however, controls only where
context does not indicate otherwise.”) (citations omitted).
The Dictionary Act’s definition of the term “person” includes
“individuals” and does not indicate any necessity for
ownership interests. See 1 U.S.C. § 1.
20 See Memorandum from Sally Q. Yates on Individual
Accountability for Corporate Wrongdoing to the DOJ, at 4
(Sept. 9, 2015) (mentioning liability under 31 U.S.C. § 3729
explicitly).
21 Id. at 1.
22 Id. at 2 (emphasis added).
12
includes an agreement to dismiss charges against, or provide
immunity for, individual officers or employees.”23 It is clear
from the language of the memo that, in the eyes of the DOJ,
liability does not depend on ownership and employees are
subject to suit.
Because ownership is irrelevant to FCA liability, the
first argument fails.
B.
Ms. Patel and Heart Solution also argue that there
remains a triable issue of fact regarding the years during
which Biosound employed a supervising neurologist. In
support of this argument, they rely on Mr. Patel’s statement,
which claims that Biosound employed a supervising
neurologist during 2006-2007 and 2012-2014. We conclude
that because Mr. Patel’s statement was both unsworn and not
given under the penalty of perjury, it was insufficient to
create an issue of fact on summary judgment.
This holding is consistent with the Federal Rules of
Civil Procedure, authority from our sister circuits, and our
own precedent. A 2010 amendment to the Advisory
Committee Notes on Federal Rule 56(c)(4), which governs
evidence submitted on summary judgment, states “that while
‘a formal affidavit is no longer required’ on summary
judgment, a certification submitted as a substitute for an
affidavit must be subscribed in proper form as true under
penalty of perjury.” This amendment incorporates a statutory
exception to the general rule that affidavits must be sworn to
23 Id. at 5 (emphasis added).
13
be considered on summary judgment. The statute, 28 U.S.C.
§ 1746, provides that when a matter is required to be
supported by a sworn affidavit, the matter can instead be
supported by an unsworn “declaration, certificate,
verification, or statement,” as long as the statement is made
under penalty of perjury and dated. Thus, while an unsworn
statement may be considered on summary judgment, an
unsworn statement that has not been made under penalty of
perjury cannot.
The Fifth Circuit Court of Appeals reached the same
conclusion when presented with this issue. In Nissho-Iwai
American Corp. v. Kline,24 the only evidence the nonmoving
party submitted on summary judgment was an statement that
was “neither sworn nor its contents stated to be true and
correct nor stated under penalty of perjury.”25 The court held
that unsworn statements, on their own, generally cannot raise
an issue of fact as to preclude summary judgment unless the
statement falls within the statutory exception to this rule
24 845 F.2d 1300 (1988).
25 Id. at 1305-06.
14
under Section 1746.26 The Second and Seventh Circuit
Courts of Appeals have come to similar conclusions.27
Although we have not directly addressed this issue in a
precedential opinion, today’s holding is in line with our prior
rulings. In Woloszyn v. County of Lawrence,28 we held that a
district court did not err in refusing to consider an unsworn
statement on summary judgment because it did not comply
with Rule 56.29
Accordingly, Mr. Patel’s statement is incompetent
summary judgment evidence. His statement is the only
evidence Ms. Patel and Heart Solution submitted on the issue
of the whether Biosound had a supervising neurologist at any
26 Id. at 1306-07; see also Ion v. Chevron USA, Inc., 731 F.3d
379, 382 n.2 (5th Cir. 2013) (“Although unsworn documents
usually cannot raise fact issues precluding summary
judgment, [the] declaration can be considered pursuant to the
statutory exception found in 28 U.S.C. § 1746.”).
27 See In re World Trade Center Disaster Site Litig., 722 F.3d
483, 488 (2d Cir. 2013) (unsworn statements can be
considered on summary judgment as long as they comply
with 28 U.S.C. § 1746); Pfeil v. Rogers, 757 F.2d 850, 859
(7th Cir. 1985) (“Affidavits are admissible in summary
judgment proceedings if they are made under penalties of
perjury; only unsworn documents purporting to be affidavits
may be rejected”).
28 396 F.3d 314 (3d Cir. 2005).
29 Id. at 322-23. Woloszyn was decided before the 2010
amendments to the Advisory Notes, and thus, did not consider
whether the statement complied with the 28 U.S.C. § 1746
exception.
15
point between 2006 and 2014.30 Therefore, there is no
genuine dispute of material fact as to whether Biosound had a
supervising neurologist.
IV.
We now turn to collateral estoppel as applied to Heart
Solution and conclude that Heart Solution is not collaterally
estopped from contesting liability or damages for the claims
against it. Under federal common law, collateral estoppel
applies when “(1) the issue sought to be precluded is the same
as that involved in the prior action; (2) that issue was actually
litigated; (3) it was determined by a final and valid judgment;
and (4) the determination was essential to the prior
judgment.”31 Moreover, “collateral estoppel cannot apply
when the party against whom the earlier decision is asserted
did not have a full and fair opportunity to litigate that issue in
the earlier case.”32 In situations involving the collateral
30 Ms. Patel and Heart Solution also argue that the words
“supervision” and “the” in the sentencing judge’s questioning
are ambiguous and create an issue of material fact as to the
time frame during which Biosound employed a supervising
neurologist. This argument fails. Even if these words were
ambiguous in the context of the plea colloquy, the Appellants
have put forth no evidence supporting Ms. Patel’s
understanding of such terms. Thus, these arguments are
insufficient to create an issue of fact at the summary
judgment stage.
31 In re Graham, 973 F.2d 1089, 1097 (3d Cir. 1992)
(citations omitted).
32 Allen v. McCurry, 449 U.S. 90, 95 (1980) (citations
omitted).
16
estoppel effects of a prior criminal judgment, “the court must
examine the record of the criminal proceeding,” including the
plea colloquy, “to determine specifically what issues were
decided.”33 “[R]easonable doubt as to which issues were
decided by a prior judgment should be resolved against using
such judgment as an estoppel.”34
Heart Solution cannot be estopped based on Ms.
Patel’s criminal conviction and plea colloquy. The United
States charged and convicted only Mr. and Ms. Patel of
healthcare fraud under 18 U.S.C. § 1347—not Heart
Solution.35 As such, Heart Solution did not have any
opportunity, much less a “full and fair opportunity,”36 to
litigate any issue involved in this appeal. Moreover, whether
Heart Solution defrauded Medicare by submitting false
reports about neurological testing was not actually litigated or
determined by a final judgment in the criminal proceeding.
Ms. Patel’s plea testimony and conviction certainly speak to
her role in Biosound’s schemes to defraud Medicare, but they
do not establish that Heart Solution had any role in this
scheme.
Thus, we will vacate the District Court’s holding that
Heart Solution is estopped.
33 Chisholm v. Def. Logistics Agency, 656 F.2d 42, 48 (3d Cir.
1981).
34 Id. at 50 (citing Kauffman v. Moss, 420 F.2d 1270, 1274
(3d Cir. 1970)).
35 See Criminal Complaint, United States v. Patel, No. 15-cr-
592 (D.N.J. June 9, 2014), ECF No. 1.
36 Allen, 449 U.S. at 95.
17
V.
Next, we address Ms. Patel’s liability for FCA
violations and common law fraud and conclude that (1) the
District Court properly found that she was estopped from
contesting the falsity and knowledge elements of these
claims; and (2) the Government met its burden to show
materiality and causation.
An FCA violation has four elements: “falsity,
causation, knowledge, and materiality.”37 Ms. Patel admitted
that: (1) she “falsely represented to Medicare that the
neurological testing being performed at Biosound Medical
Services was being supervised by a licensed neurologist
when, in fact, it was not;” and (2) she “knowingly made these
false representations to Medicare.” As a result, she is
collaterally estopped from denying the falsity and knowledge
elements of the FCA claims.
We also conclude that the materiality element has been
satisfied38 even though the District Court did not apply
Supreme Court precedent. In June 2016, the Supreme Court
decided Universal Health Services, Inc. v. United States ex
37 United States ex rel. Petratos v. Genentech Inc., 855 F.3d
481, 487 (3d Cir. 2017) (citations omitted).
38 Because we find that the materiality element of the FCA
claims has been satisfied, we need not reach the question of
whether Ms. Patel is collaterally estopped from contesting
materiality. Therefore, we make no determinations as to
whether materiality under 18 U.S.C. § 1347—the criminal
statute under which Ms. Patel was convicted—and materiality
under the FCA are the same “essential element.”
18
rel. Escobar,39 where it held that materiality is an element of
all FCA claims, regardless of whether the specific statutory
provision lists materiality as an element.40 The Court then
provided guidance on how the materiality requirement should
be applied. It explained that a misrepresentation is not
material merely because the government designates
compliance with a particular regulatory requirement as a
condition of payment or because “the Government would
have the option to decline to pay if it knew of the defendant’s
noncompliance [with the regulation].”41 In fact, it is “very
strong evidence” that a requirement is not material “if the
Government pays a particular claim in full despite its actual
knowledge that certain requirements were violated.”42 Thus,
materiality “cannot be found where noncompliance is minor
or insubstantial.”43 On the other hand, materiality may be
found where “the Government consistently refuses to pay
claims in the mine run of cases based on noncompliance with
the particular statutory, regulatory, or contractual
requirement.”44
The District Court did not apply Escobar in its
analysis. It relied exclusively on the provision labeling
39 136 S. Ct. 1989 (2016).
40 Id. at 2002-03; see also United States ex rel. Spay v. CVS
Caremark Corp., 875 F.3d 746, 763 (3d Cir. 2017) (“Despite
the lack of a materiality requirement, the Supreme Court had
no trouble finding that the FCA’s materiality requirement also
applied to this section.”).
41 Escobar, 136 S. Ct. at 2003.
42 Id.
43 Id.
44 Id.
19
supervision of diagnostic testing a condition of payment
rather than looking to the record for other factors, as provided
in Escobar, bearing on the materiality analysis.45 However,
when we examine the record, we conclude that there is no
issue of fact as to materiality under Escobar.
The initial burden was on the government to show
materiality, and it met its burden when it submitted that,
pursuant to the regulation, Medicare would not pay the claims
in the absence of a certification from a supervising
neurologist. Neither Ms. Patel nor any other defendant put
forth any evidence indicating otherwise. She made no
showing that noncompliance with the supervision
requirement was “minor or insubstantial”46 or that Medicare
generally pays this type of claim “in full despite its actual
knowledge that certain requirements were violated.”47
Because the Government met its burden to show materiality
and Ms. Patel put forth no evidence in rebuttal, the element of
materiality was properly established, and there is no need to
remand this case to the District Court to determine materiality
under Escobar.
This conclusion as to materiality also means that there
was causation—the final FCA element. Because these
misrepresentations were material, they caused damage to
45 Escobar specifically states that whether a “provision is
labeled a condition of payment is relevant to but not
dispositive of the materiality inquiry.” Id. at 2001 (emphasis
added).
46 Id. at 2003.
47 Id.
20
Medicare. In other words, but for the misrepresentations,
Medicare would never have paid the claims.
Next, we address the District Court’s holding that Ms.
Patel’s conviction also estops her from contesting liability as
to common law fraud. The elements of fraud under New
Jersey law are (1) knowingly making a material
misrepresentation; (2) an intention that the other person rely
on the misrepresentation; (3) reasonable reliance by the other
person; and (4) resulting damages.48 We agree with the
District Court that Ms. Patel is estopped from denying that
she knowingly made misrepresentations to Medicare
regarding the neurological testing being performed at
Biosound. Moreover, for the same reasons as in the FCA
claim, we find that the materiality and causation/reliance
elements of common law fraud have been met. Therefore, we
will affirm the District Court’s determination as to common
law fraud.
VI.
Turning to the remaining common law claims—unjust
enrichment, disgorgement of profits, and payment by mistake
of fact—we hold that Ms. Patel is not collaterally estopped
from denying liability or damages as to these claims.
An essential element of all three of these claims is that
the defendant retained funds—payments from Medicare in
this case. Unjust enrichment requires a showing “that
defendant received a benefit and that retention of that benefit
48 Banco Popular N. Am. v. Gandi, 184 N.J. 161, 172-73
(2005).
21
without payment would be unjust.”49 A disgorgement of
profits claim requires that the defendant have profit or
revenue to disgorge.50 And payment by mistake of fact
allows the United States to recover money from a defendant
that “its agents have wrongfully, erroneously, or illegally
paid.”51
Whether Ms. Patel or Heart Solution specifically—as
opposed to Mr. Patel and Biosound—retained any from funds
from Medicare was not determined in the criminal case so as
to estop Ms. Patel from contesting liability for these claims.
In order to find that Ms. Patel is collaterally estopped, we
must find that the issue of whether she retained funds was (1)
involved and litigated in the prior action, (2) actually
determined by a final judgment, and (3) essential to the
conviction.52 Ms. Patel’s conviction and plea colloquy do not
permit such findings. First, 18 U.S.C. § 1347 criminalizes
knowingly “defraud[ing] any health care benefit program” or
“obtain[ing] . . . money . . . owned by . . . any health care
benefit program.” Thus, Ms. Patel need not have obtained
money from Medicare to be liable under Section 1347; she
could have just defrauded Medicare.
Her plea colloquy does not establish that she obtained
funds from Medicare. Ms. Patel admitted that she submitted
false claims to Medicare about the neurological testing at her
49 VRG Corp. v. GKN Realty Corp., 135 N.J. 539, 554 (1994)
(emphasis added).
50 See Commodity Futures Trading Comm’n v. Am. Metals
Exch. Corp., 991 F.2d 71, 76 (3d Cir. 1993).
51 United States v. Wurts, 303 U.S. 414, 415 (1938).
52 See In re Graham, 973 F.2d 1089, 1097 (3d Cir. 1992).
22
husband’s company, Biosound. She also admitted that
Biosound and Heart Solution were paid approximately $1.18
million from Medicare for unsupervised neurological testing.
These admissions may suggest that Ms. Patel and/or Heart
Solution retained at least part of the $1.18 million, but they
are not sufficient to estop Ms. Patel from arguing and
submitting evidence to show otherwise. It is possible that Mr.
Patel and Biosound retained the entire benefit and Ms. Patel
and Heart Solution retained nothing. The criminal
proceedings do not speak to this question, much less resolve
it. Where there is “reasonable doubt as to which issues were
decided by a prior judgment” we cannot conclude that
collateral estoppel applies.53
This same reasoning applies to the question of
damages. Ms. Patel is not estopped from contesting damages
because neither her conviction nor colloquy conclusively
establish she was ever paid by Medicare for unsupervised
neurological testing.
As such, we will reverse the District Court’s grant of
summary judgment on the unjust enrichment, disgorgement
of profits, and payment by mistake of fact claims. We will
also reverse the District Court’s finding as to damages
assessed against Ms. Patel.

* * *

53 Chisholm v. Def. Logistics Agency, 656 F.2d 42, 50 (3d Cir.
1981).
23
the FCA for false claims submitted to Medicare for
unsupervised neurological tests and on the issue of Ms.
Patel’s common law fraud. We will reverse the remaining
portions of the District Court’s summary judgment orders and
remand this case to the District Court for further proceedings
consistent with this opinion.

Outcome: For the foregoing reasons, we will affirm the District
Court’s judgment on the issue of Ms. Patel’s liability under

Plaintiff's Experts:

Defendant's Experts:

Comments:



 
 
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