United States v. Cooper Health System

940 F. Supp. 2d 208, 2013 U.S. Dist. LEXIS 56809, 2013 WL 1707952
CourtDistrict Court, D. New Jersey
DecidedApril 22, 2013
DocketCivil Action No. 08-5626 (JEI/AMD)
StatusPublished
Cited by6 cases

This text of 940 F. Supp. 2d 208 (United States v. Cooper Health System) is published on Counsel Stack Legal Research, covering District Court, D. New Jersey primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Cooper Health System, 940 F. Supp. 2d 208, 2013 U.S. Dist. LEXIS 56809, 2013 WL 1707952 (D.N.J. 2013).

Opinion

OPINION

IRENAS, Senior District Judge:

Pending before the Court is Relator Nicholas DePace’s “Application for Emergent Relief to Reopen Pursuant to L. Civ. R. 41.1(b) and for the Court’s Determination of Reasonableness of Attorney’s Fee Pursuant to L. Civ. R. 103.1(a)” (the “Application”). For the reasons discussed below, Relator’s Application to Reopen will be granted; however, the relief requested by the Relator will be denied.

I.

On November 12, 2008, Relator Nicholas DePace, M.D., initiated this qui tarn action against the Cooper Health System, Cooper University Hospital (collectively “Cooper”), and Cardiovascular Associates of the Delaware Valley, P.A. (Pietragallo Br. in Opp. Ex. H., at 1.)1 Dr. DePace’s action was pursuant to the qui torn provisions of the Federal False Claims Act, 31 U.S.C. § 3730(b), and the New Jersey False Claims Act, N.J. Stat. Ann. § 2A:32C-1, et seq. (Pietragallo Br. in Opp. Ex. H., at 1.) These qui tarn provisions allow private citizens to file actions on behalf of the Government in cases where people or companies have allegedly made false or fraudulent claims against the Government. See 31 U.S.C. § 3730(b) (“A person may bring a civil action for a violation of section 3729 for the person and for the United States Government. The action shall be brought in the name of the Government.”); N.J. Stat. Ann. § 2A:32C-5(b) (“A person may bring a civil action for a violation of this act for the person and for the State. Civil actions instituted under this act shall be brought in the name of the State of New Jersey.”).

Dr. DePace’s Complaint alleged that the Defendants “paid millions of dollars in illegal kickbacks to physicians to induce them to refer patients to Cooper for expensive in-patient and out-patient cardiac services.” (DePace Aff. Ex. 1, March 11, 2013.) Allegedly, these kickbacks caused false claims to be made against the Federal and New Jersey Governments because Cooper subsequently billed Medicare and Medicaid programs for services resulting from the tainted referrals. (Pietragallo Br. in Opp. Ex. H, at 2.)

Dr. DePace retained the law firm of Pietragallo, Gordon, Alfano, Bosick, & Raspanti, LLP (the “Pietragallo Firm”) to represent him in the qui tam litigation. [210]*210(Pietragallo Br. in Opp., at 4.) This representation was secured through a contingency fee agreement (the “Contingency Fee Agreement”) entered into by the Pietragallo Firm and Dr. DePace. (Id.) Under the Contingency Fee Agreement, Dr. DePace was not obligated to pay the Pietragallo Firm unless there was a recovery in his qui tam action. (Id. Ex. G, at 3.) However, in the case of a recovery prior to the commencement of trial, the Contingency Fee Agreement required Dr. DePace to pay the Pietragallo Firm forty percent of the gross recovery. (Id.) The Contingency Fee Agreement also contemplated what would happen if Dr. DePace were to receive statutory attorneys’ fees from the Defendants in this case, stating:

[i]f there is a judgment, settlement or arbitration award, the Federal and state False Claims Act statutes provide that attorney’s fees and costs may be paid by the defendants (“Statutory Attorneys’ Fees and Costs”). This is in addition to any Attorney’s Contingency Fees we may receive pursuant to Paragraph 6B of this Agreement.

(Id. (emphasis in original)) The Contingency Fee Agreement also includes an Alternate Dispute Resolution clause which states that “any disputes between us will be resolved by alternate dispute resolution,” and that “Pennsylvania law shall apply to any dispute arising under the terms of this agreement.” (Id. Ex. G., at 6.) Dr. DePace’s personal counsel, Joseph Milestone, assisted Dr. DePace during the negotiation of the Contingency Fee Agreement. (DePace Aff. ¶ 13, March 11, 2013; Pietragallo Br. in Opp., at 4-6.) Under the Contingency Fee Agreement, Milestone would receive twenty-five percent of the Pietragallo Firm’s contingent fee for providing services as local counsel. (Pietragallo Br. in Opp. Ex. G, at 2.)

On January 22, 2013, the United States and the State of New Jersey elected to intervene in Dr. DePace’s qui tam litigation for the purposes of settlement. (Notice of Election to Intervene in Part and to Decline to Intervene in Part.) On that same date, a Joint Stipulation of Dismissal of Relator’s Complaint was filed with the Court stating that the United States, the State of New Jersey, Dr. DePace, and Cooper had entered into a settlement agreement (the “Settlement Agreement”). (Joint Stipulation of Dismissal of Relator’s Compl.) Under the Settlement Agreement, Cooper agreed to pay the United States $10,269,000.00 plus interest, and the State of New Jersey $2,331,000.00 plus interest. (Pietragallo Br. in Opp. Ex. H, at 3.) Out of the money received from Cooper, the United States agreed to pay Dr. DePace $1,951,110.00 and New Jersey agreed to pay Dr. DePace $442,890.00. (Id.) Lastly, Cooper agreed to pay Dr. DePace’s counsel $430,000 for expenses, attorneys’ fees, and costs. (Id.) Specifically, the Settlement Agreement stated that “Cooper agrees to pay Relator’s Counsel, and Relator’s Counsel agree to accept as full payment $430,000 for expenses, and attorney’s fees and costs in accordance with subsection 3730(d)(1).” (Id.) In an invoice detailing all the hours spent by the Pietragallo Firm on this case sent by the Pietragallo Firm to counsel for Cooper shortly prior to settlement, the Pietragallo Firm represented its total fees and costs to be $458,420.55. (Pl.’s Supplemental Br. Ex. 2.)

The Pietragallo Firm instructed the United States and the State of New Jersey to deposit Dr. DePace’s share of the settlement into the Pietragallo Firm’s IOLTA account. (Pietragallo Br. in Opp., at 11.) On January 31, 2013, the Pietragallo Firm sent to Dr. DePace and his current counsel Carl Poplar a distribution memo (the “Distribution Memo”) detailing how funds [211]*211would be distributed from the IOLTA account. (Id. Ex K.) The Distribution Memo allocated thirty percent of Dr. DePace’s share to the Pietragallo firm and ten percent to Milestone, accounting for the entire forty percent contingency fee. (Id.) However, Milestone notified the Pietragallo Firm that he would not be seeking any fees for his work in this case. (Pietragallo Letter, April 4, 2013.) Consequently, the Pietragallo Firm wired Milestone’s share to Dr. DePace on April 3, 2013, effectively reducing the contingency fee to thirty percent, and allowing Dr. DePace to receive $1,682,142.45, or seventy percent of his share, under the terms of the Distribution Memo.2 (Id.)

The day after the Pietragallo Firm sent Dr. DePace and Poplar the Distribution Memo, Poplar sent an e-mail to the Pietragallo Firm stating that he had “reservations” about the Contingency Fee Agreement. (Pietragallo Br. in Opp. Ex. T.) At a meeting held on February 6, 2013, Poplar stated his position that the Contingency Fee Agreement may be unenforceable. (Pietragallo Br. in Opp., at 13). Consequently, the Pietragallo Firm sought to initiate the alternate dispute resolution procedures outlined in the Contingency Fee Agreement. (Id., at 14.) However, Dr.

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Cite This Page — Counsel Stack

Bluebook (online)
940 F. Supp. 2d 208, 2013 U.S. Dist. LEXIS 56809, 2013 WL 1707952, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-cooper-health-system-njd-2013.