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Stop Illinois Health Care Fraud, LLC. v. Sayeed

United States District Court, N.D. Illinois, Eastern Division

July 26, 2019



          Sharon Johnson Coleman United States District Judge.

         Plaintiff Stop Illinois Health Care Fraud, LLC brought this qui tam case pursuant to the False Claims Act, 31 U.S.C. §§ 3729, et seq. The plaintiff alleges that defendants violated the Anti-Kickback Statute, 42 U.S.C. § 1320a-7b, the False Claims Act, and the Illinois False Claims Act, 740 ILCS 175/1, et seq. The United States and the State of Illinois did not intervene in the action, and plaintiff filed its Third Amended Complaint on September 22, 2016. (Dkt. 82.) Plaintiff alleges that the defendants paid a community care organization, Healthcare Consortium of Illinois (“HCI”), to give defendants information on clients that HCI had evaluated for eligibility for programs by the Illinois Department of Aging, so that defendants could then market Medicare reimbursed healthcare services to those clients.

         Although the Court was prepared to proceed, on the morning a jury trial was set to begin, due to the unavailability of plaintiff Relator John Mininno the parties opted to proceed with a bench trial. The Court held a bench trial on July 22-24, 2019. After plaintiff presented its case in chief before the Court, defendants filed a motion for a directed finding on all claims, arguing that plaintiff failed to satisfy a prima facie case of an Anti-Kickback Statute violation. (Dkt. 212.) The Court heard oral argument on defendants' motion on July 25, 2019. For the following reasons, defendants' motion is granted.


         The following constitutes the Court's findings of fact pursuant to Rule 52(a) of the Federal Rules of Civil Procedure.

         Defendant Asif Sayeed wholly owns the defendant Management Principals, Inc. (“MPI”). MPI arranges medical referrals to other entities and advertises itself as a “one stop shop, ” managing a variety of healthcare companies, including the defendants Vital Home & Healthcare, Inc. (“Vital Home”) and Physician Care Services, S.C.

         HCI was a non-governmental organization that coordinated services for low-income seniors. The primary function of HCI's senior program included sending case managers (later referred to as care coordinators) to meet with senior clients and survey their needs for access to a range of community offerings, such as “Meals on Wheels” and medical services, that would enable the seniors to remain in their own housing longer. HCI referred clients who needed and desired in-home healthcare to MCI on a rotating basis.

         HCI and MCI entered into a management services agreement effective December 1, 2010. HCI's attorney Robert Spadoni primarily drafted and made revisions to the agreement, which Sayeed negotiated with Spadoni. HCI's Chief Program Officer at that time, Ella Grays, was also aware of the discussions. Pursuant to the agreement, MPI paid HCI $5, 000 monthly for the 18-month length of the agreement in exchange for HCI's administrative advice and counsel. Sayeed testified that he discussed MPI's datamining objectives with Spadoni and Grays, whom confirmed that there were no issues. Grays testified that she knew it was not proper to get anything of value in exchange for referring a patient to a service or an agency and that in all the years that she was at HCI she had no knowledge that anyone had ever taken anything of value in exchange for a referral, including from MPI or Vital Health. Relator John Mininno[1] testified that the payments made under the agreement represented some kind of kickback, without offering specifics as to what represented a kickback and how the practice was improper.

         Alice Piwowarski, whose video deposition plaintiff played in court, worked for Vital Health from approximately 2005 to 2011. She testified that she had been trained and understood that items of value could not be given to a client in exchange for referrals or other improper purpose. Piwowarski also testified that she did not have any knowledge that defendants had ever paid any money or offered another item of value in exchange for patient referrals. While working for Vital Health, Piwowarski became friendly with several of HCI's staff members that she frequently saw. For special occasions, such as a birthday or shower, she would give an HCI employee a $5 or $10 gift card for Dunkin' Donuts. Piwowarski testified that she never did so with the expectation of receiving a referral from HCI and that Sayeed or another defendant never asked her to give anything of value in order to obtain referrals from HCI.

         Rosetta Cutright (also known as Rosetta Cutright Woods) worked at MPI for about a year in 2012 and then at HCI from approximately 2013 to November 2018. Cutright testified that while she worked at HCI, the agency used a rotation list to assign referrals, such that each agency that qualified for the referral would receive a distribution of the referrals. Cutright testified that when she was a caseworker at HCI no one from MPI or any of Sayeed's companies offered her anything of value in exchange for a referral, and she never heard of anyone at HCI being offered something of value from any of Sayeed's companies. Moreover, when MPI employed Cutright, she never heard of anyone at MPI giving something of value to an HCI caseworker for a referral.

         Legal Standard

         Because the Court held a bench trial, the Court construes defendants' motion as a Rule 52(c) motion for judgment on partial findings, rather than as a motion for a directed verdict. See Fed. R. Civ. P. 52(c).[2] Pursuant to Rule 52(c), if a party has been fully heard on an issue during a bench trial and the Court finds against the party on that issue, the Court may enter judgment against the party on a claim that can be maintained “only with a favorable finding on that issue.” Fed.R.Civ.P. 52(c). On a Rule 52(c) motion, the Court is “acting in the capacity of a finder of fact, weighing evidence and assessing the credibility of the witnesses.” Pinkston v. Madry, 440 F.3d 879, 890 (7th Cir. 2006). Judgment on partial findings should be granted only if the Court could only find against the party. See Wilborn v. Ealey, 881 F.3d 998, 1008 (7th Cir. 2018).


         The following constitutes the Court's conclusions of law pursuant to Rule 52(a) of the ...

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