United States ex rel. Lee v. Northern Adult Daily Health Care Center

174 F. Supp. 3d 696, 2016 U.S. Dist. LEXIS 37756, 2016 WL 1171545
CourtDistrict Court, E.D. New York
DecidedMarch 23, 2016
Docket13-CV-4933 (MKB)
StatusPublished
Cited by6 cases

This text of 174 F. Supp. 3d 696 (United States ex rel. Lee v. Northern Adult Daily Health Care Center) is published on Counsel Stack Legal Research, covering District Court, E.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States ex rel. Lee v. Northern Adult Daily Health Care Center, 174 F. Supp. 3d 696, 2016 U.S. Dist. LEXIS 37756, 2016 WL 1171545 (E.D.N.Y. 2016).

Opinion

MEMORANDUM & ORDER

MARGO K. BRODIE, United States District Judge

On September 4, 2013, Orlando Lee, Melville Luckie and Luz Gonzalez (“Rela-tors”) brought this qui tam action on behalf of the United States of America and the State of New York against Northern Adult Daily Health Care Center (“Northern Adult”) and Galena Deverman, alleging violations of the False Claims Act, 31 U.S.C. § 3729 et seq. (“FCA”), and the New York State False Claims Act, N.Y. State Fin. Law § 187 et seq. (“NYFCA”). (Compl. ¶¶ 175-241, Docket Entry No. 1.) On September 8, 2014, the United States and the State of New York declined to intervene in the action. (Docket Entry Nos. 9-10.) On June 25, 2015, Relators filed an Amended Complaint, (Am. Compl., Docket Entry No. 29), and on July 27, 2015, Relators -filed a motion for an “alternate remedy,” (Letter dated July 27, 2015, Docket Entry No. 30; Relators Mot. for Alternate Remedies (“Relators Mot.”), Docket Entry No. 35; Mem. in Supp. of Relators Mot. (“Relators Mem”), Docket Entry No. 36). On August 7, 2015, the State of New York moved to strike Rela-tors’ motion for an alternate remedy as premature. (State of New York Letter Mot. to Strike (“NY Mot. to Strike”), Docket Entry No. 31; State of New York Supp, Letter Mot. to Strike (“NY Supp. Mot. to Strike”), Docket Entry No. 40.) As explained below, the Court denies the State of New York’s motion to strike as procedurally improper and denies Rela-tors’ motion as premature.1

I. Background

a. Factual background

According to the Amended Complaint, Northern Adult is an adult day care center that provides “cognitive stimulation,” arts and crafts, personal hygiene, and occupational and physical therapy to its elderly and low-income registrants. (Am. Compl. ¶ 12.) As payment, Northern Adult accepts Medicaid, managed-Medicaid, private insurance and private payment. (Id.) Northern Adult is obligated to comply with the New York State Health Rules and Regulations, which require Northern Adult to, among other things, give admission priorities to certain registrants, provide nursing and social services, provide assistance and supervision for daily living activities, and provide meals and nutritional supplements. (Id. ¶¶ 16-23.) As an applicant to participate in the New York State Medicaid Program (the “Medicaid Program”), Northern Adult submitted a certification that it would comply with all New York State Department of Health (“DOH”) and federal Medicaid regulations; however, according to Relators, despite filing that certification, it failed to comply with the regulations. (Id. ¶ 34.)

Relators, who were previously employed by Defendants, allege that Defendants billed the Medicaid Program for “sub[698]*698standard services that were inappropriate, unacceptable, harmful, worthless, and/or unnecessary,” in violation of DOH and Medicaid regulations. (Id. ¶ 43.) Specifically, Relators allege that Defendants, among other things, failed to supervise registrants — resulting in registrants “wandering unescorted” in Prospect Park and around the Park Slope neighborhood of Brooklyn, New York — failed to provide food that adhered to certain dietary and health restrictions, and failed to provide food to African-American and Latino registrants. (Id. ¶44.) In addition, among other things, Northern Adult allowed registrants to drink alcohol to the point of intoxication, segregated Latino and African-American registrants, forced developmentally-disabled registrants to wear “embarrassing costumes for the entertainment and amusement of white Russian registrants” and refused to transport registrants to African-American and Latino neighborhoods. (Id.)

Relators also allege that Defendants retaliated against them for reporting Northern Adult’s misconduct. Relators claim that, (1) Lee was constructively terminated after he raised questions and complained about certain violations, including that Northern Adult was treating Latino registrants poorly, (id. ¶¶ 177-91); (2) Luckie was demoted and terminated after he complained about Northern Adult’s health violations and its disparate treatment of African American and Latino registrants, (id. ¶¶ 192-205); and (3) Gonzalez was constructively terminated after complaining about several deficiencies at Northern Adult, including that it stopped providing physical therapy and that it served African American and Latino registrants’ food last, (id. ¶¶ 206-222).

b. Procedural background

After the United States and the State of New York declined to intervene in this action, Northern Adult requested a pre-motion conference regarding its anticipated motion to dismiss pursuant to Rule 9(b) and Rule 12(b)(6) of the Federal Rules of Civil Procedure. (Defs. Letter dated Jan. 14, 2015 (“Defs. PMC Ltr.”), Docket Entry No. 18.) On January 23, 2015, Lee also requested a pre-motion conference regarding an anticipated motion pursuant to 31 U.S.C. § 3730(d)(1) “to seek from New York State the[] [Relators’] share of the civil settlement that the New York State Attorney General entered into with [Northern Adult] resolving a False Claims Act prosecution in which the State recovered over $6.5 million in damages based ... in part, on information obtained from Relators’ [C]omplaint” in this action. (Lee Letter dated Jan. 23, 2015 (“Lee PMC Req.”), Docket Entry No. 19.)

As to Relators’ motion, Lee asserted that, although the State of New York did not intervene in Relators’ qui tam action, the New York State Attorney General settled a civil investigation of Northern Adult, received damages, and forced Northern Adult to cease operations. (Id. at 1-2.) According to Lee, instead of intervening, the State of New York used Relators’ “inside information” to pursue a separate settlement with Northern Adult, but denied Relators their share of the settlement proceeds. (Id. at 2.) Lee asserted that Rela-tors were entitled to a share of the settlement as an “alternate remedy” under the FCA and NYFCA because their qui tam action “obviously overlapped] with the State’s investigation” of Northern Adult. (Id.)

On February 11, 2015, the Court held a hearing on the prospective motions, and set a schedule for Relators to amend the Complaint and for Defendants to move to dismiss that Amended Complaint. (Min. Entry dated Feb. 11, 2015; Hr’g Tr. 25:22-27:3.) At the hearing, the parties agreed [699]*699that the anticipated motion for alternate remedies should be addressed after resolving Defendants’ motion to dismiss. (Hr’g Tr. 14:9-20; 28:11-29:2.) Despite agreeing to that sequence of resolving the proposed motions at the February 11, 2015 conference, Relators nevertheless moved for an alternate remedy while the parties were briefing the motion to dismiss the Amended Complaint. (Relators Mot.; Relators Mem.) Thereafter, the State of New York moved to strike Relators’ motion as contrary to the agreement among the parties at the February 11, 2015 conference. (N.Y. Mot. to Strike 1-2; N.Y. Supp. Mot. to Strike 2.)

II. Discussion

a. The State of New York’s motion to strike

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Bluebook (online)
174 F. Supp. 3d 696, 2016 U.S. Dist. LEXIS 37756, 2016 WL 1171545, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-ex-rel-lee-v-northern-adult-daily-health-care-center-nyed-2016.