Discrepancies in Co-Defendant’s Testimony Precludes Summary Judgment in Kickback Case; United States District Court for the Eastern District of Michigan, Southern Division, No. 2:09-cv-13693, U.S. ex rel. Ruqiayah Madany and John B. Collins v. Paul M. Petre M.D., et al.


The district court granted in part and denied in part the government’s motions for summary judgment in a complaint alleging healthcare fraud. The court granted the motion for summary judgment against two defendants, finding that their convictions in a criminal trial estopped them from denying the allegations in the civil case, as both complaints were based on the same underlying conduct. However, the court denied the government’s motion for summary judgment as to the final defendant. The parties disputed whether the defendant accepted kickbacks in exchange for healthcare referrals and in support cited to different portions of the same deposition testimony of another defendant. The court found that defendant’s testimony contradictory and therefore concluded that a genuine dispute of material fact existed as to whether the defendant here had accepted kickbacks. Because the court could not resolve the discrepancies during these proceedings, the court denied both the government’s and the defendant’s motions for summary judgment.

The government and defendant Victor Savinov cross-moved for summary judgment in a qui tam complaint alleging fraud on Medicare.

The case involved healthcare agencies owned or funded by Muhammad Shahab, who employed marketers who paid individuals to enroll as patients with these agencies. Shahab also paid kickbacks to several physicians to secure referrals. The relators filed this complaint and the government intervened. Previously, several other defendants were dismissed or were subject to consent judgments or default judgments, leaving only defendants Victor Savinov, Nabila Mahbub, and Chiradeep Gupta.

The government moved for summary judgment against Mahbub and Gupta, arguing that the defendants had already been found guilty of offenses stemming from the conspiracy and were therefore estopped from denying the essential elements of the offense in this action because it involved the same criminal conduct.

The court agreed, finding that a jury had convicted Gupta of health care fraud conspiracy and money laundering, and had convicted Mahbub of health care fraud conspiracy, both in connection to the conduct at issue in this case. Because Gupta and Mahbub were convicted of a fraud offense stemming from the same actions in the present case, the court held they were estopped from denying any of the essential elements of the present claim, and therefore granted summary judgment in favor of the government.

Next, the court considered the government’s and Savinov’s cross-motions for summary judgment on the claims against Savinov. The government argued that it was entitled to summary judgment because the evidence showed that Shahab paid for Savinov’s office space and administrative assistant for a few months. Savinov argued that the government did not plead its claims with specificity and that the evidence established that he never received any illegal kickbacks.

First, the court found that the government had adequately pleaded its claims. The complaint alleged that in return for unlawful financial inducements, Savinov caused the submission of more than 1,000 false claims to Medicare. The complaint also alleged that Savinov and Shahab had a quid pro quo arrangement by which Shahab supplied Savinov with an office and assistant, and paid Savinov’s American Express bill in exchange for certifying individuals as needing home healthcare services. The court found these allegations adequately detailed.

In his motion for summary judgment, Savinov argued that the government asserted only that he and his co-defendants violated the Anti-Kickback Statute, and therefore automatically violated the FCA. According to Savinov, an AKS violation is not a per se FCA violation.

Savinov argued that statutory language providing that an AKS violation constitutes a per se FCA violation was not enacted until 2010, after the alleged kickbacks in this case occurred. The court acknowledged this timing, but argued that prior to 2010, courts permitted AKS violations to proceed under the FCA. Based on the volume of case law, the court agreed, finding that an AKS violation constituted an FCA violation before 2010, though not a per se violation as it would be under the post-2010 statutory scheme.

In its motion for summary judgment, the government argued that the evidence clearly established that Savinov accepted kickbacks. In support, the government pointed to Shahab’s deposition testimony, in which he stated that Savinov was able to bill services performed on Medicare beneficiaries referred by Shahab’s recruiters directly to Medicare. Shabab also testified that he paid Savinov’s administrative assistant’s salary for a few months and loaned three or four months of office rent to Savinov as Savinov started up his practice.

The government also noted that Savinov invoked the Fifth Amendment when he was asked about kickbacks or how he got involved in the alleged conspiracy, and argued that it was entitled to an adverse inference on those issues. Finally, in its response to Savinov’s summary judgment motion, the government attached an agreement, signed by Savinov and Shahab’s wife, that stated Savinov would receive $80 per visit for each new patient, $60 for a follow up/revisit, and that he would not have to pay for office rent or a medical assistant, among other things. When asked about this agreement, Savinov again asserted his Fifth Amendment rights.

In his motion, Savinov maintained that he never asked for, or received, a kickback for referring any patient to Shahab’s home healthcare facilities. The court noted that Shahab’s testimony supported this position, as Shahab testified that he did not give Savinov any kickbacks. He also testified that he had paid only one doctor to certify patients for home healthcare for his agencies.

The court found that the discrepancies in Shahab’s testimony created a genuine dispute of material fact that could not be resolved in summary judgment proceedings. The court therefore denied both summary judgment motions as they relate to the FCA claims.

Finally, Savinov argued that he was entitled to summary judgment on the unjust enrichment/constructive trust and payment by mistake claims because he did not participate in the submission of any false claim in any manner. However, due to the above dispute, the court denied the motion.

FCA - Madany v Petre