923 F.3d 308
3rd Cir.2019Background
- Nita K. Patel and husband Kirtish Patel pled guilty (2015) to Medicare fraud under 18 U.S.C. § 1347 involving two schemes: forged specialist diagnostic reports and falsely representing that neurological diagnostic tests were supervised by a licensed neurologist.
- The United States intervened in a qui tam FCA suit brought by relator Jane Doe against the Patels, Biosound Medical Services (Kirtish’s company), and Heart Solution P.C. (Nita’s company), alleging violations of 31 U.S.C. § 3729(a)(1)(A) and (B) and related common-law claims; the government sought summary judgment.
- At Nita Patel’s plea colloquy she admitted (among other things) that Biosound performed unsupervised neurological testing and that Biosound and Heart Solution were paid roughly $1.18 million for such testing; the colloquy did not clarify ownership or allocation of payments between the companies.
- The district court granted summary judgment for the government, relying on collateral estoppel from the guilty pleas to preclude defenses by Nita and Heart Solution; it also struck an unsworn statement by Kirtish as incompetent evidence.
- On appeal, the Third Circuit affirmed as to Nita Patel’s FCA and common-law fraud liability for the unsupervised neurological-testing claims but vacated the district court’s rulings insofar as they estopped Heart Solution and insofar as they foreclosed Nita from contesting unjust enrichment/disgorgement/payment-by-mistake damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ownership is required for individual FCA liability | Government: any person who knowingly submits or causes false claims is liable; ownership not required | Patel: no ownership in Biosound, so no duty/liability for Biosound’s unsupervised testing | Ownership irrelevant; individual employees can be liable under the FCA (ownership not an element) |
| Whether an unsworn, non‑penalty‑of‑perjury statement can create a triable fact on supervision periods | Defendants: K. Patel’s statement raises dispute about years Biosound lacked a supervising neurologist | Government: unsworn statement is incompetent summary‑judgment evidence | Unsworn statement not made under 28 U.S.C. § 1746 cannot defeat summary judgment; no genuine dispute on supervision years |
| Whether Heart Solution is collaterally estopped by Nita’s guilty plea/colloquy | Government: plea admissions establish issues as to both companies | Heart Solution: was not charged/convicted and had no full and fair chance to litigate | Vacated as to Heart Solution — collateral estoppel does not apply to an uncharged entity when issues weren’t actually litigated or decided against it |
| Whether Nita’s plea collaterally estops her on unjust enrichment/disgorgement/payment‑by‑mistake (i.e., whether she retained Medicare funds) | Government: plea admissions (incl. payments to Biosound/Heart Solution) estop her on retention/damages | Nita: plea did not establish she personally retained Medicare funds; possible that Biosound retained all funds | Reversed as to these claims and related damages — plea did not resolve who actually received/retained the payments, so collateral estoppel does not apply |
Key Cases Cited
- Cook County v. United States ex rel. Chandler, 538 U.S. 119 (Sup. Ct.) (defining statutory term “person” includes natural persons)
- Nissho‑Iwai Am. Corp. v. Kline, 845 F.2d 1300 (5th Cir.) (unsworn statements not sufficient to create dispute on summary judgment absent § 1746 compliance)
- Woloszyn v. County of Lawrence, 396 F.3d 314 (3d Cir.) (unsworn statements may be disregarded on summary judgment)
- United States ex rel. Petratos v. Genentech Inc., 855 F.3d 481 (3d Cir.) (articulating FCA elements: falsity, causation, knowledge, materiality)
- Universal Health Servs., Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989 (Sup. Ct.) (materiality is an element of FCA claims; payment despite knowledge is strong evidence of non‑materiality)
- In re Graham, 973 F.2d 1089 (3d Cir.) (framework for collateral estoppel)
- Chisholm v. Defense Logistics Agency, 656 F.2d 42 (3d Cir.) (need to examine criminal record/colloquy to determine what issues were decided)