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Taul, ex rel. United States v. Nagel Enterprises, Inc.

United States District Court, N.D. Alabama, Southern Division

February 1, 2017

BARRY TAUL, ex rel., UNITED STATES OF AMERICA, Plaintiff,
v.
NAGEL ENTERPRISES, INC., et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          VIRGINIA EMERSON HOPKINS United States District Judge

         I. INTRODUCTION

         The primary issue for the court to decide is which claims arising under the False Claims Act (“FCA”) in Counts I-V of the First Qui Tam Amended Complaint (the “Amended Complaint”)(doc. 47)[1] brought by Plaintiff Relator Barry Taul (“Taul”) are actionable against Defendants Nagel Enterprises, Inc. and Jed Nagel (“Defendants”). As explained below, some of Taul's claims are barred by their respective statutes of limitations, while others are not. Additionally, Taul's reverse FCA claims are due to be dismissed as inadequately alleged. This court retains jurisdiction to decide Taul's timely claims, and Defendants' Motion To Dismiss (doc. 85) is due to be GRANTED IN PART and DENIED IN PART.

         II. PROCEDURAL BACKGROUND

         Taul commenced this action against Defendants on January 13, 2014.[2], [3] On May 19, 2015, Taul filed an Amended Complaint, asserting five grounds for relief: violations of (1) 31 U.S.C. § 3729(a)(1)(A); (2) 31 U.S.C. § 3729(a)(1)(C); (3) 31 U.S.C. § 3729(a)(1)(B); (4) retaliation under 31 U.S.C. § 3730(h); and (5) FCA violations based on violations of 42 U.S.C. § 1320a-7b(b)(2). (Doc. 47). On July 13, 2015, Defendants filed their Answer, which raised the statute of limitations as an affirmative defense. (Doc. 58). On July 30, 2015, Defendants moved for summary judgment (Doc. 61), and on January 25, 2016, this court granted in part and denied in part Defendants' Motion for Summary Judgment. (Doc. 80).

         Currently pending before the court are the following Motions:

1. Defendants' Motion To Dismiss, filed on October 7, 2016 (doc. 85);
2. Defendants' Motion To Quash Plaintiff's Second Deposition Notice and Accompanying Request To Produce Documents at Deposition, filed on October 21, 2016 (doc. 86);
3. Defendants' Motion To Strike/Defendants' Objections to Plaintiff's Second Set of Interrogatories and Requests for Production, filed on October 21, 2016 (doc. 87);
4. Defendants' Motion To Amend/Correct his (doc. 86) Motion To Quash, filed on October 21, 2016 (doc. 88);
5. Defendants' Motion for Leave To File a Response to Plaintiff's Surreply, filed on November 23, 2016 (docs. 96 and 97).[4]

         On November 4, 2016, Taul filed a Response to Defendants' Motion To Dismiss for Lack of Jurisdiction. (Doc. 90). On November 9, 2016, Defendants filed their Reply. (Doc. 92). On November 21, 2016, Taul filed his Surreply. (Doc. 95). All of the above Motions are now ripe for the court's disposition.

         III. MOTION TO DISMISS STANDARD

         A Rule 12(b)(6) motion attacks the legal sufficiency of a complaint. Fed.R.Civ.P. 12(b)(6) (“[A] party may assert the following defenses by motion: (6) failure to state a claim upon which relief can be granted[.]”). The complaint must provide a short and plain statement of the claim that will “give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests.” Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 103, 2 L.Ed.2d 80 (1957) (quoting Fed.R.Civ.P. 8(a)(2)), abrogated by Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556, 127 S.Ct. 1955, 1965, 167 L.Ed.2d 929 (2007); see also Fed. R. Civ. P. 8(a) (requiring that general pleading in a complaint include “a short and plain statement of the claim showing that the pleader is entitled to relief”).

         A plaintiff must set forth grounds for entitlement to relief to survive a motion to dismiss. Twombly, 550 U.S. at 555, 127 S.Ct. at 1964 (citing Conley, 355 U.S. at 47, 78 S.Ct. at 103). Once a claim has been set forth adequately, it may be “supported by showing any set of facts consistent with the allegations in the complaint.” Twombly, 550 U.S. at 563, 127 S.Ct. at 1969. If well-pleaded factual allegations support the complaint, a court “should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S.Ct. 1937, 1950, 173 L.Ed.2d 868 (2009). A claim is considered plausible when the plaintiff “pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. at 678. The complaint must establish “more than a sheer possibility that a defendant has acted unlawfully.” Id. (quoting Twombly, 550 U.S. at 556, 127 S.Ct. at 1965).

         IV. STANDARD OF REVIEW FOR A STATUTE OF LIMITATIONS DEFENSE

         Defendants' Motion To Dismiss (doc. 85) does not specify under which Federal Rule of Civil Procedure they seek to dismiss Taul's claims as untimely. In this Circuit, “[a] Rule 12(b)(6) motion to dismiss for failure to state a claim is an appropriate method for raising a statute of limitations defense. Mann v. Adams Realty Co., 556 F.2d 288, 293 (5th Cir. 1977);[5] see also Edwards v. Apple Computer, Inc., 645 F. App'x 849, 851 (11th Cir. 2016) (internal citations omitted)(“A complaint is subject to dismissal when its allegations, on their face, show that an affirmative defense bars recovery on the claim . . . [t]hus, a motion to dismiss for failure to state a claim is an appropriate method for raising a statute of limitations defense.”).[6] Accordingly, the court construes Defendants' Motion To Dismiss as a challenge under Rule 12(b)(6) of the Federal Rules of Civil Procedure.[7] The court construes the Amended Complaint in the light most favorable to Taul and takes the factual allegations contained therein as true.

         V. FACTUAL ALLEGATIONS

         Taul alleges the following facts in his Amended Complaint (doc. 47):

10. Relator Barry Taul started working for Nagel-Abanks from June 2006 until September 2009.
11. The owner and principal of Nagel-Abanks is Defendant Jed Nagel.
12. The Alabama Organ Center is the only federally designated Organ Procurement Organization for the State of Alabama.
13. The Alabama Organ Center coordinates the equitable use of organs and tissues for life-saving transplants and medical research.
14. In and around June 2003, Nagel-Abanks and the Alabama Organ Center, by and through their respective agents Jed Nagel, Demosthenes “Dem” Lalisan (Director of the Alabama Organ Center), and Richard Alan Hicks (Associate Director of the Alabama Organ Center), entered into an agreement to harvest tissue at Nagel's facility. This agreement involved the harvesting of tissue, bone, muscle, and tendons but not organs.
15. Under the agreement between Nagel and the Alabama Organ Center, when a bone or tissue donor died, the organ center called Abanks with the death information. Abanks, by and/or at the direction of Nagel, would remove the donor from the place of death and bring them to Abanks for harvesting. After the tissue had been harvested the donor would then be transported by Abanks to the funeral home of the deceased's choosing. One particular division of the Alabama Organ Center that was involved in the agreement was the[n] called the gift of body program (hereinafter “GOB”).
16. After the harvesting, the GOB donor's remains were cremated and returned to the donor family. Because Nagel-Abanks also operated a crematory, this Defendant was paid pursuant to the agreement to do the cremation.
17. In or around June 2003, Lalisan and Hicks convinced the Alabama Organ Center to enter into the aforementioned agreement with Nagel-Abanks by arguing that it would be more cost efficient for the Center to perform all tissue recoveries in Birmingham. Lalisan and Hicks reasoned that they could have a tissue recovery team on the ready 24 hours a day in Birmingham. Further, the Alabama Organ Center could pay Nagel-Abanks to remove the donors from anywhere in the state of Alabama and bring them to its Birmingham facility; pay for the use of Nagel-Abanks' embalming room, pay for tissue harvesting performed by Nagel-Abanks, and pay Nagel-Abanks for cremations performed on the GOB donors.
18. In reality Lalisan and Hicks promoted the services of Nagel-Abanks in exchange for kickback payments from Nagel-Abanks. Consequently, from approximately June 2003 until approximately June 2011 Defendants Nagel-Abanks and Jed Nagel made illegal kickback payments to Lalisan and Hicks in exchange for the contractual referral business from the Alabama Organ Center.
19. For each month from June 2003 until approximately June 2011, in Birmingham, Alabama, Lalisan and Hicks would meet at Nagel-Abanks with Nagel to discuss the Alabama Organ Center's bill for the previous month's services. At these monthly meetings Lalisan, Hicks and Nagel would cook the books by fabricating charges to the Alabama Organ Center.
20. For example, for each month from June 2003 until approximately June 2011, in Birmingham, Alabama, Lalisan, Hicks and Nagel would add miles onto transportation services. Further, if a GOB donor was disqualified for tissue harvesting, the books might indicate that the GOB donor did have tissue harvested so the embalming room charge could be used as well as the cremation charge.
21. It is standard in the death care industry to have a removal fee for picking up a body from the place of death. Usually this is a flat rate that includes a certain geographical area. If the removal requires going outside that area there is a per mile charge that takes place.
22. The Nagel-Abanks transportation, embalming, cremation and harvesting charges to the Alabama Organ Center were well over national averages and often were inflated. At the monthly meetings of Nagel, Lalisan, and Hicks, they determined how much the bills would be for the previous month. Consequently, the bills were submitted to UAB (the University of Alabama Birmingham) for payment. Once the bills were paid, twenty percent of the bill would be given back to Hicks and Lalisan by Nagel; Hicks and Lalisan received ten percent each of the kickback.
23. Under the kickback scheme, which violated both the False Claims Act and the Anti-Kickback Statute (AKS), 42 U.S.C. § 1320a-7b(b), Lalisan and Hicks guaranteed that Nagel-Abanks would be able to bill $50, 000.00 to $60, 000.00 each month to the Alabama Organ Center. This bill was paid for with government grants, Medicare, and other federal and taxpayer dollars as these donor services were free to the donor families.
24. In approximately the first week of June 2009, in Birmingham, Alabama, Relator Barry Taul became of aware of the aforementioned fraud and illegal kickbacks.
25. In approximately the first week of June 2009 Taul, an employee of Nagel-Abanks and Nagel at that time, was sent from Nagel-Abanks' Birmingham Alabama location to deliver cremains to a funeral home in Columbiana, AL.
26. While Taul was on this delivery run the only person at Nagel-Abanks was Jed Nagel.
27. When he arrived back at Nagel-Abanks' mortuary he entered the back of the building. When Taul entered the building he was not heard because the crematory, a very loud machine, was in full operation.
28. As Taul walked to the front of the building, he heard voices coming from the front office. Taul did not recognize the voices at first so he paused before going into the office area because he wanted to know if this was a family in the office making cremation arrangements. If this was this case, Taul didn't want to be disrespectful of a grieving family and barge in on their arrangement conference.
29. In approximately the first week of June 2009, as he approached however, Taul recognized the voices in the front office as those of Lalisan, Hicks, and Nagel. Because Taul was on a first name basis with all three individuals, he approached the office to announce his return. At this point, Taul overheard Nagel telling Lalisan and Hicks that if they wanted to continue to get ten percent they were going to have to pad “this bill a little more.” Taul knew these comments were improper but didn't fully understand the full scope of the conversation at that moment.
30. When Taul entered the office Nagel, Lalisan and Hicks were shocked to see him. The three men stopped talking immediately and then changed the subject. All three seemed very nervous. Lalisan and Hicks left very shortly after. Nagel then called Taul into the office and told him that he didn't hear anything. Nagel told Taul that it takes a little grease on some palms sometimes to make money. At this point, Nagel informed Taul of the kickback scheme and fraudulent billing referenced above in ¶¶15-29.
31. In approximately the first week of June 2009, Nagel told Taul that if he (Taul) ever told anybody about the fraud and the kickback scheme Taul had overheard, he (Nagel) would cremate Taul alive and no one would ever find Taul's remains.
32. Nagel is a huge man and Taul took Nagel's threat very seriously. Nagel also said that he knew where Taul lived, where Taul's parents lived and that he (Nagel) would also torture or kill them as well. After these threats, Nagel became very verbally abusive towards Taul during Taul's everyday work environment.
33. Nagel also became physically abusive. For example, between June 2009 and October 2009, in Birmingham, Alabama, Nagel would kick doors into Taul. Also, Nagel often would slap Taul open handed. Once, between June 2009 and October 2009, Nagel even threw an open embalming fluid bottle at Taul resulting in embalming fluid, a very dangerous chemical, spilling all over Taul.
34. During the same time frame, between June 2009 and October 2009, Nagel once threw feces from deceased individuals at Taul. Also, during this same time frame Nagel once took a full catheter bag from a deceased and emptied it on Taul's back. This abusive behavior was designed to scare and intimidate Taul so that he would be too fearful of the consequences of disclosing the fraudulent scheme involving Nagel-Abanks, Nagel, Lalisan and Hicks.
35. The foregoing behavior resulted in Taul fearing retribution to himself and his family from Nagel if Taul were to disclose what he knew about the aforementioned fraud/kickback scheme.
36. After Relator Taul became aware of this fraud and kickback scheme in approximately June 2009 and began suffering abusive behavior from Nagel, Taul began to actively look for employment at another funeral home. Subsequently, in approximately October 2009, Taul found employment at Valhalla funeral home in Midfield, Alabama.
37. In approximately, August 2010, Barry Taul informed the FBI of the fraud and illegal kickback scheme described above involving Lalisan, Hicks, [and] Nagel/Abanks.
38. Relator Taul disclosed the fraud and illegal kickback scheme described above to the government before any public disclosure was made and therefore Relator Taul is the original source regarding said information.
39. Relator Taul has knowledge independent of the public disclosure relating to this matter that “materially adds” to the disclosure and said knowledge and/or information was provided to the government before Relator Taul filed his lawsuit.
40. Shortly after informing the FBI of the fraud and illegal kickbacks described above, in or around August 2010, Taul received a plain card hand addressed to him at Valhalla funeral home in Midfield, Alabama. On one side the card stated, “He knows it was you.” Taul gave this card to the FBI and the FBI retained the card.
41. After this incident, in approximately October 2010, Taul's regional manager at Valhalla funeral home talked to him about an anonymous letter that had been received stating that Taul was a thief. Shortly after this incident, in or around February 2011, Taul was fired from Valhalla funeral home. No good reason was given by Valhalla funeral home for terminating Taul.
42. After he was terminated from Valhalla funeral home, it became virtually impossible for Taul to get a job in the funeral business in Birmingham, Alabama despite having worked ...

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