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UNITED STATES DISTRICT COURT

SOIJTHERNDISTRI/TOFFLORIDA

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FILED B .c

CASE NO.20-60835-CIV-SINGH Aï, ,

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Plaintiff,

M.

FILED IJNDER SEAI,

ELLW OOD M EDICAL CENTER,LLC;

AM EILICORE HEAI,TH,LLC;eta1.,

Defendants.

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M EM OR AO UM OF LAW IN SUPPORT OF

UNITED STATES'UNOPPOSED FX #M TF EIGH TH M PLICATION

FORAN EXTENSION OFTHE INTERVENTIONPERIUDAND SEAI,

The United StatesofAm erica respectfully submitsthism em orandum in supportofits

unopposedexparteapplicationforatlOrderundertheFalseClaimsAct(:GFCA''),asamended,31

U.S.C.j3730(b)(3),forathree-month extension oftimefrom January 12,2024,uptoand

including April 12,2024,within which itm ustnotify the Cotu'tof its decision regarding

interventioninthisquitam action,andduringwhich tim etheCom plaintand otherfilingsshall

remain tmderseal. ThisistheUnited States'eighth requestforan extension oftim e. Relator .

conctlrswiththisrequest.

1. BA CK GR OUND

OnApril23,2020,Relatorfiledthequitam Complaintinthiscase.OnorarotmdM ay 13,

2020,Relatorcom pletedserviceontheU.S.Attorney'sOfficeandtheAttorneyGeneral.OnJuly

12,2023,theCottrtgrantedtheUnitedStates'seventhrequestforanextensionoftheintervention

periodandsealthrough andincludingJanuary 12,'2024.

Case 0:20-cv-60835-AHS Document 39 Entered on FLSD Docket 01/11/2024 Page 1 of 6
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AccordingtoRelator'sComplaint,defendaùitElwoodMedicalCenter,LLC(&(E1lwood''),

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ownedby defendantAmericoreHea1th,LLC (tiA!mericore'),enteredinto anagreementwith

defendantsVerifyHea1th andFirstChoiceLabsUSA (iTirstChoice'),tosubmitclaimsto

M edicareforcancergeneticscreeningteststhatwerenotactuallyperform edbyEllwood.Relator

allegesthatthe agreem entprovided thatthe cancergenetic screening testswere perform ed by

Verify Health and FirstChoice Lab butbilled to M edicare by Ellwood. Relator allegesthat

EllwoodretainedapercentageoftheM edicarepaym entreceivedforthecancergeneticscreening

tests,with theremainderbeingremittedtoVerifyHea1th andFirstChoice. Relatorallegesthat

VelifyHea1thandFirstChoiceenteredintothisarrangem entwithEllwoodbecauseEllwood,asa

ruralcom mtmity hospital,wasexem ptfrom M edicare's70/30rtlleforlaboratory billing,which

requireslaboratodestoperform atleast70% ofthe laboratorytestsbilled. Relatorallegesthat

defendantssubm ittedorcausedtobesubm ittedclaim stoM edicareforimproperly billedm edical

procedtlresthatareinviolationoftheAnti-Kickback Statm e.

Assetforth below,theUnited Stateshasreached an agreem entinprinciplewith certain

defendantsinthisquitam action andneedsadditionaltimetoaddressoutstandingmaterialterms

(includingissuesinarelatedbnnknlptcyaction),toobtaintheapprovalofboththesettlement

nmountandthespecifictermsofthesettlem entagreementfrom appropriateofficialswithinthe

JusticeDepartm entwithauthoritytoact,andtomemorializeandexecutethesettlem entagreement.

II. ARGUM ENT

A. Good CauseExiststoExtendtheSealandIntervention-DecisionPeriod

TheFCA providesthattheUnitedStatesm ay,forgood causeshown,m ovetheCottrtfor

extensionsoftim edutingwhichtointervene,and duringwhichthesealrem ainsintact.31U.S.C.

j3730(b)(3).TheUnitedStatesrespectfullysubmitsthatithasgoodcauseforanextensionof

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tim einthiscase.

B. StatusoftheGovernm ent'sInvestigation

The United States has reached a!lagreem entin principle with Defendants Dan Hul't,

SonoranDesel'tPathologyAssociates,andFirstChoiceLabs(togetherwiththeUnitedStates,the

Gsparties'')and isworldngto addressadditionalmaterialtermsandmemorializeasettlement

agreem ent.However,boththesettlementam otmtandthespecificterm softhewritlen settlem ent

agreem entm uststillbeapprovedby theappropriateoffcialswithintheJusticeDepartm ent.On

September15,2022,DefendantHM pledguiltytoan Infonuation filedintheW estem Districtof

Pennsylvania for,am ongstotherthings,conductalleged in the quitam complaint,including

violationsoftheAnti-M ckbackStatute.M r.Hu14requestedaglobalresolutionthatwouldresolve

anypotentialcivilclaims,on anabilitytopay basis,thattheUnitedStatesmaybringbasedonthe

conductallegedinthequitam Complaintasto him selfandhiscom panies,defendantsSonoran

DesertPathology AssociatesandFirstChoiceLabs.TheUnited Stateshasreviewed M r.Hul's

andhiscompanies'financialdocum entsandthePartieshavereachedanagreem entinprincipleas

tothem onetary am ounttoresolvethisaction. However,thePartiesneedm oretimeto address

materialterm stowardsaresolution,includingthem echnnicsforthesaleofcertainassetsthatwill

fundtheagreed-upon m onetarynm ount,toresolveissuesin arelatedbanknzptcy action,andto

secureJusticeDepartmentapprovalofthesettlementam ount.

The resolution with M r.Hut'tand hiscompnnieswillalso resolve issuesinvolving the

banknlptcyaction filedbytheparentcom panyofdefendantEllwoodM edicalCenter,Americore

HealthLLC.SeeInre:AmericoreHoldings,LLC,etal.,No.6:19+k-61608(tiledDec.31,2019

E.D.Ky.)(tAmericoreBankruptcyAction').TheUnitedStatesfirstinfonnedtheCourtaboutthe

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relatedbanknlptcyonAugust17,2020,whenitftledanapplicationtopartialyliftthesealto

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disclosepertinentm attersaboutthiscasetothebankrnptcy courtandbnnkruptcytrustee.

Atthattime,theUrlited Statesfiled aproofofclaim in thebanknzptcy case for,nmongstother

tllings,civilliability stemm ingf'rom theconductallegedinthequitam complaint.Subsequently,

basedonM r.Hurt'sguiltyplea,thebnnknlptcy trusteesued fifteenparties,including defendants

DanHuzt MichaelLewit andGrantW hite,torecoverapproximately$16millioninM edicare

moneypaidtoElwoodMedicalCenter(forthealegedfraudulentcancergeneticscreeningtests)

and subsequently transferred asçifraudulentconveyances.'' On July 7,2023,theUnited States

attendedam ediation in theAmericoreBanknlptcyActionbetween M r.HM andthebanknlptcy

trustee'scounsel.Asaresultofthem ediation,thetrusteeandtheUnitedStatesarenegotiatingan

intercreditoragreem entthatisexpectedtoresolvethebnnknlptcytnzstee'sclaim sagainstM r.Hurt

andlliscompanieswhiletheUnitedStatesisnegotiating aresolution oftheFCA claim sagainst

M r.HM andhiscom panies.Absentaresolutionwiththetrustee,theUnitedStatesandthetrustee

wouldhavebeenforcedinto litigationregardingthedistribution ofthedefendants'dissipating

assets,andthedefendants(Mr.Hurt,inparticular)wouldhavefartherdepletedtheirassetsdtlring

thelitigation.TheUnitedStatesandthetrusteehaveprelim inarilyagreedtothematerialtermsin

theintercreditoragreement,subjecttotheJusticeDepadment'sapproval,andareintheprocessof

negotiatingthatagreem ent.

The requested three-m onth extension oftime willperm ittime forthe United Statesto

finalizeitsagreem entswith M .1'.Hut'tandhiscompaniesand with thetrusteeinthe Am ericore

Bsmknlptcy Action. Theadditionaltim ew illalsoallow thetmdersignedatlorneysw ithprim ary

responsibility forthism atterto obtaintheappropriateauthority from theDepartmentofJustice.

TheUnitedStatesbelievesthatduringthisadditionalextension oftim e,itwillbeabletomakean

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intelwentiondecisionastotheremainingdefendantkaswell.

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TheUnited StatesalsoasksthisCourttokçepthecomplaintand otherfilingstm derseal

duringtherequested extension.

111. CONCLUSION

Fortheforegoingreasons,theUnited Statesrespectfullyrequestsarlextension oftim eof

thzeem onths,uptoandincludingApril12,2024,withinwllich itisrequiredtonotifytheCourtof

itsdecisionregardingintervention inthequitam action,anddlzringwllichperiodtheComplaint

and otherdocum entsfiled in thism attershallremain underseal.l To theextentthattheCourt

requires additionalinformation,the United States requests the opporturtity to supplem entits

application eitherinm itingoratanincam erahearing.

'TheUnitedStatesalsonotesthatreportingrequirem entsforFCA quitam actionshavechanged.

DulingproceedingsoftheJudicialCorlferenceoftheUnitedStatesinM arch2015,theConference

agreedtoaDepartmentofJusticeproposaltoamendtheCivilJusticeReform Act(tGCJItA'')

reportinginstructionstoprovidethattheçtpendingdate''forquitam casesbroughtlm dertheFCA

bethedateon wlzich thecaseisfirsttmsealedbythecourt.DOJaskedthatthepending datebe

changedinthism amlertoensurethatCJRA reportingrequirementsdonotenterintothedecision

ofwhentotmsealthem atter.FollowingtheConference'sadoptionofthisrecom mendation,FCA

casesinitiallyfiledundersealnolongerappearonpendingcasereportsuntilsuchtim eastheyare

unsealedbythecourt.

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Dated:January 11,2024 qRespectfully subm itted,

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BRIAN M .BOYNTON

PrincipalDeputyA ssistantAttorney General

CivilDivision

M ARKENZY LAPOINTE

UN ITED STATES ATTORN EY

Southem DistrictofFlorida

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By: ' Q.m..

ROSALW E CHAN

AssistantUnitedStatesAttorney

Fla.BarNo.1008816

UnitedStatesAttorney'sOffice

99N .E.4th Street,ThirdFloor

M iam i,Florida33132

Telephone:(305)961-9335

Facsimile:(305)530-7139

Email:Rosaline.chan@usdoj.gov

JAM IE ANN YAVELBERG

PATRICIA L.HAN OW ER

SAM SON 0.A SIYANBI

Comm ercialLitigationBranch

UnitedStatesDepartmentofJustice

175N Street,N .E.,Suite9.224

W ashington,D.C.20008

Te1:(202)353-1053

Email:Samson.Asiyanbiz@usdoj.gov

AtorneysforUnitedStatesofAmerica

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