United States District Court, D. Idaho
UNITED STATES OF AMERICA ex rel. DR. JEFFREY JACOBS, Plaintiff,
CDS, P.A. d/b/a POCATELLO WOMEN'S HEALTH CLINIC; POCATELLO HOSPITAL, LLC, d/b/a PORTNEUF MEDICAL CENTER, LLC, a Delaware limited liability company; LHP POCATELLO, LLC, a Delaware limited liability company, Defendants.
MEMORANDUM DECISION & ORDER
Lynn Winmill Chief U.S. District Court Judge.
the Court is Plaintiff-Relator Dr. Jeffrey Jacobs' Motion
for Reasonable Attorneys' Fees and Costs (Dkt. 65). For
the reasons explained below, the Court will deny the motion
without prejudice for lack of standing.
2014, Dr. Jeffrey Jacobs filed this action on behalf of the
United States pursuant to the qui tam provisions of the False
Claims Act, 31 U.S.C. § 3724 et. seq. Jacobs alleged
that the Pocatello Women's Health Clinic and the Portneuf
Medical Center submitted patient claims to the Medicare and
Medicaid programs, falsely certifying that such claims were
in compliance with the Stark Act, 42 U.S.C. § 1395nn and
the Anti-Kickback Act, 42 U.S.C. § 1320a-7b. According
to Dr. Jacobs, the Medical Center and the Women's Health
Clinic engaged in a scheme to illegally shift the
clinic's overhead costs to the medical center as a reward
to the clinic for referrals.
January 2017, Dr. Jacobs filed a Chapter 7 bankruptcy
petition, and shortly after that the United States decided
not to intervene in this action. See In re Jacobs,
No. 17-00018-TLM (Bankr. D. Idaho); Notice of Election to
Decline Intervention, Dkt. 53. The bankruptcy trustee was
prepared to abandon the estate's interest in this action,
which would have allowed Dr. Jacobs to pursue it on his own.
When defendants learned of a potential abandonment, however,
they indicated a willingness to settle. See Ex. B to
Casperson Dec., Motion to Approve Compromise, Dkt. 65-4, at
2017, defense counsel and the bankruptcy trustee reached an
agreement. See Settlement Agreement, In re Jacobs, No.
17-00018-TLM, Dkt. 41-1 (Bankr. D. Idaho). Under the
agreement, defendants agreed to pay $69, 087 to settle the
matter. See Id. ¶ 1. Of this amount, the United
States would keep $51, 816 and the remaining $17, 271 would
be paid to Dr. Jacobs' bankruptcy estate. The settlement
agreement did not obligate defendants to pay attorneys'
fees, but the trustee did not release that claim either.
Id. ¶ 2. Instead, the settlement agreement
provided that this Court would retain jurisdiction to enforce
the terms of the settlement agreement, “including but
not limited to any claim by Relator for attorneys'
fees.” See Id. ¶ 13; see also Joint
Stipulation of Dismissal, Dkt. 63, ¶ 5 (“The Court
will retain jurisdiction over the Parties to the extent
necessary to enforce the terms and conditions of the
Settlement Agreement, including but not limited to any claim
by Relator for attorney's fees.”).
after the settlement agreement was finalized, Dr. Jacobs
filed the pending motion. He asks the Court to award $97, 945
in attorneys' fees and $1, 130.57 in costs.
Qui Tam Actions
False Claims Act, 31 U.S.C. § 3729 et. seq., authorizes
a private suit against a party that has defrauded the United
States. If the suit is successful, the United States and the
private plaintiff (called the “relator”) divide
the proceeds. 31 U.S.C. § 3730(d). “Such suits are
known as qui tam actions, from the Latin qui tam pro domino
rege quam pro se imposo sequitur, meaning ‘he who
brings the action for the king as well as for
himself.'” United States v. Texas Instruments
Corp., 104 F.3d 276, 277 (9th Cir. 1997). The government
may choose to intervene in the action, or it may decline to
do so. Either way, a successful relator is entitled not only
to a share of the proceeds, but also to “an amount for
reasonable expenses which the court finds to have been
necessarily incurred, plus reasonable attorneys' fees and
costs.” 31 U.S.C. § 3730(d)(2). Here, Dr.
Jacobs' bankruptcy estate settled the claim with
defendants, so an award for costs and fees should be issued.
problem, however, is that Dr. Jacobs lacks standing to pursue
fees and costs. As noted, Dr. Jacobs filed a chapter 7
bankruptcy petition in January 2017. Under the Bankruptcy
Code, the filing of a Chapter 7 petition creates an estate
consisting of “all legal or equitable interests of the
debtor in property as of the commencement of the case.”
11 U.S.C. § 541(a)(1). Dr. Jacobs' claim against
defendants includes the potential right to an attorneys'
fee award arising from the claim. Thus, after Dr. Jacobs
filed bankruptcy, the trustee - not Dr. Jacobs individually -
gets to decide whether to pursue attorneys' fees.
Jacobs to pursue a fee motion on his own, the Trustee would
first have to abandon this aspect of the qui tam claim. See
11 U.S.C. § 554(a)-(c). Generally, a bankruptcy trustee
can abandon a claim in one of three ways: (1) the trustee,
after notice and hearing, may abandon property deemed
burdensome or of inconsequential value to the estate; (2) the
bankruptcy court, at the request of a party and after notice
and hearing, may order the trustee to abandon any property;
and (3) property is ...