Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_13-cv-01208/USCOURTS-azd-2_13-cv-01208-6/pdf.json

Nature of Suit Code: 375
Nature of Suit: False Claims Act
Cause of Action: 31:3729 False Claims Act

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Marc A. Wichansky, 

Plaintiff, 

v. 

David T. Zowine, et al., 

Defendants.

No. CV-13-01208-PHX-DGC

ORDER 

 Defendants move for reconsideration on two issues addressed by the Court’s 

December 11, 2015 order (Doc. 310). Doc. 314. Specifically, Defendants ask this Court 

to grant reconsideration on (1) whether the statute of limitations bars Wichansky’s claim 

that Zowine breached his fiduciary duties by failing to prevent billing fraud at MGA, and 

(2) whether the Superior Court’s valuation judgment precludes Wichansky from 

recovering Receiver’s fees. Because Defendants have failed to identify any error in the 

Court’s order, let alone the type of “manifest error” that would justify reconsideration 

(see LRCiv. 7.2(g)), the motion will be denied. 

 1. Statute of Limitations. 

 In its previous order, the Court denied Defendant’s motion for summary judgment 

on Wichansky’s claim that Zowine breached his fiduciary duties by failing to prevent 

billing fraud at MGA. Doc. 310 at 5-9, see id. at 15-17. Defendants ask the Court to 

reconsider this ruling with respect to any breach of fiduciary duty claim based on 

Zowine’s alleged failure to implement proper billing and accounting procedures at MGA, 

Case 2:13-cv-01208-DGC Document 316 Filed 01/13/16 Page 1 of 4
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arguing that Wichansky claims to have known before the onset of the limitations period 

that Zowine was in control of MGA and that MGA was experiencing billing issues. 

Doc. 314 at 2. 

 As the Court explained in its order, the limitations period for a breach of fiduciary 

duty claim “begins to run when the plaintiff discovers the cause of action – that is, when 

the plaintiff knows, or reasonably should know, that he has been harmed, that the harm 

was caused by the defendant, and that the act or omission which caused the harm was 

wrongful.” Doc. 310 at 5 (citing Walk v. Ring, 44 P.3d 990, 996 (Ariz. 2002); Doe v. 

Roe, 955 P.2d 951, 961 (Ariz. 1998)). Defendants’ motion for summary judgment on the 

breach of fiduciary duty claim did not address when Wichansky knew or should have 

known of Zowine’s alleged failure to implement proper procedures. Defendants focused 

instead on when Zowine’s duty to implement such procedures arose: 

If Zowine had a duty to stop billing fraud, that duty would have arisen no 

later than 2010. Similarly, if Zowine was in charge of medical billing 

“long before” 2010 (Doc. 160 ¶ 59), his duty to investigate and institute 

policies to prevent fraud would have been triggered then. A breach of 

fiduciary duty claim premised on the Medical Billing Theories is therefore 

time-barred. 

Doc. 275 at 3 (legal citations omitted). 

 Defendants argue in their motion for reconsideration that “if Wichansky was 

aware of medical billing issues, regardless of whether he knew who was responsible for 

creating those issues, he was on notice that the absence of anti-fraud policies and 

procedures might be a problem at the company – which would have been Zowine’s 

responsibility as the person in ‘complete managerial control of [MGA’s] billing 

processes.’” Doc. 314 at 3. This argument focuses on Wichansky’s knowledge rather 

than Zowine’s duty and therefore differs from the argument made in the summary 

judgment motion. Motions for reconsideration are not the place to make arguments that 

could have been made in the original briefing. Nw. Acceptance Corp. v. Lynnwood 

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Equip., Inc., 841 F.2d 918, 925-26 (9th Cir. 1988). 

 In addition, Defendants’ original motion did not show that knowledge of medical 

billing issues is tantamount to knowledge that proper accounting procedures have not 

been implemented. Surely even businesses with proper procedures sometimes encounter 

billing problems. The fact that procedures are implemented does not mean that they will 

always be followed by every employee, nor does it mean that the manager will always be 

aware when procedures are not followed. Defendants failed to show in their motion that 

Wichansky’s pre-limitations-period knowledge included the fact that Zowine had failed 

to implement proper billing and accounting procedures. 

 2. Receiver’s Fees. 

 The previous order declined to accept Wichansky’s argument that this Court 

should impose a penalty for Defendants’ failure to comply with the state court order, 

noting that enforcement of the state court order is the province of the state court. 

Doc. 310 at 13. The Court also noted, without deciding, that it likely would be improper 

for the Court to address alleged defects in the state court judgment. Doc. 310 at 12 n. 11. 

Defendants ask the Court to extend these observations to preclude Wichansky from 

recovering from Defendants the portion of the Receiver’s fees assigned to Wichansky in 

the state court valuation proceeding, suggesting that doing so would re-litigate a matter 

“already addressed by the Superior Court.” Doc. 314 at 4. 

 The Court does not agree with Defendants’ characterization of the state court 

decision. The state court’s task was to determine the fair value of Wichansky’s share in 

the company as of the date he petitioned for dissolution. See A.R.S. § 10-1434(D). 

Following this statutory directive, Judge Oberbillig deducted a portion of the Receiver’s 

fee from each of the company’s owners in proportion to their ownership. Doc. 276-2 at 

41-43. Judge Oberbillig explicitly disclaimed any intention to rule on either party’s 

fiduciary duty claims, explaining that his valuation ruling would not have preclusive 

effect on these claims. Doc. 292-1 at 187-88 (“I’m not here on a fair value hearing to 

determine the other counts in the complaint. Breach of fiduciary duty, whatever those 

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might be. . . . I don’t think there’s going to be preclusive effect.”). Thus, permitting 

Wichansky to recover his portion of the Receiver’s fee in this case as damages for breach 

of fiduciary duty will not re-litigate any matter decided by the state court. 

IT IS ORDERED that Defendants’ motion for reconsideration (Doc. 314) is 

denied. 

Dated this 13th day of January, 2016. 

Case 2:13-cv-01208-DGC Document 316 Filed 01/13/16 Page 4 of 4