United States v. Anesthesia Services Associates, PLLC

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF TENNESSEE

NASHVILLE DIVISION

UNITED STATES OF AMERICA and )

THE STATE OF TENNESSEE ex rel. )

SUZANNE ALT et al., )

)

Plaintiffs, )

)

v. ) Case No. 3:16-cv-0549

) Judge Aleta A. Trauger

ANESTHESIA SERVICES )

ASSOCIATES, PLLC, d/b/a )

COMPREHENSIVE PAIN )

SPECIALISTS, et al., )

)

Defendants. )

MEMORANDUM

Before the court is the Joint Motion to Allocate Relator Share and Attorney Fee and

Expenses (“Motion to Allocate”) (Doc. No. 184), filed along with a Memorandum in Support

thereof (Doc. No. 185) by relators Suzanne Alt, Mary Butner, Dana Brown, and Jennifer Pressotto

(the “Moving Relators”). Relator Allison Chancellor has filed a series of responses to the motion,

the last of which is styled as her Second Amended Memorandum in Opposition to the Moving

Parties’ Joint Motion to Allocate Relator Share and Attorney Fees and Expenses (Doc. No. 193),

which the court understands to supersede Chancellor’s previous filings in response to the Motion

to Allocate. The Moving Relators filed a Reply. (Doc. No. 194.)

In addition, Chancellor has filed a pro se Motion to Be Deemed First-to-File Regarding

Specimen Validity (“SVT”), Psychological (“iPAD”), and Pharmacogenetic (“Genetic”) Testing

(and Urine Drug Testing if the Court Determines Chancellor is First-to-File) as to the United

States’ and Tennessee’s Settlement with CPS (Doc. No. 195), along with a supporting

memorandum (Doc. No. 196), which, if granted, would affect the allocation of proceeds of the

settlement reserved for the relators.1

For the reasons set forth herein, the Moving Relators’ Motion to Allocate will be granted

in part and denied in part, and Chancellor’s Motion to Be Deemed First to File will be denied.

I. PROCEDURAL BACKGROUND

Relator Suzanne Alt filed her whistleblower complaint against defendant Anesthesia

Associates, PLLC d/b/a Comprehensive Pain Specialists (“CPS”) on March 9, 2016; relators

Butner and Brown jointly filed their whistleblower complaint on March 11, 2016; relator Pressotto

filed the third complaint on July 18, 2016; and relator Chancellor filed her whistleblower complaint

in the Southern District of Illinois on October 27, 2016.2 Chancellor’s case was eventually

transferred to the Middle District of Tennessee and consolidated with the other pending qui tam

cases. The United States and the State of Tennessee (collectively, “the Government”) filed a Notice

of Election to Intervene, and Decline to Intervene, in Parts of this Consolidated Action (Doc. No.

43), and a Complaint in Intervention was filed on July 19, 2019 (Doc. No. 65). By then, it was

apparently already clear that the funds available to pay any settlement or judgment would be far

less than the Government’s damages, as CPS had ceased operations.

In April 2020, the court granted the parties’ joint motion to extend all deadlines while the

parties engaged in mediation and settlement discussions. As of July 2020, the parties had agreed

to the basic terms of a settlement agreement with CPS for $2,196,663.94 (the “Suspended

1 Chancellor was represented by counsel until January 19, 2021, when the court granted

her attorneys’ Amended Motion to Withdraw. (Doc. No. 174.) Having been unable to procure

successor counsel, she has proceeded pro se since that time.

2 A fifth whistleblower complaint was filed on May 2, 2017, making allegations that had

already been made by the previous relators. That case was voluntarily dismissed on August 24,

2020 (Doc. No. 162), and the relators who filed that case were not included in the ultimate

settlement of the consolidated case.

Amount”), the value of the funds then held by the Government in a payment suspension account,

with an additional $138,000 to be contributed to the settlement pool by CPS for the relators’ non-

intervened claims and attorney’s fees. (See Doc. No. 166-1, at 6, 5). According to the Settlement

Agreement executed by all of the parties,3 CPS ultimately agreed to pay the total settlement amount

of $2,964,663.93.4 (Settlement Agreement ¶ 1.) Defendant Peter Kroll separately agreed to pay

$150,000 (the “Kroll Settlement Amount”). (Id. ¶ 2.)

A proposed version of the Settlement Agreement that was not actually adopted by the

parties (“Proposed Settlement”) indicates that the total Relators’ Share ($610,684.62) is made up

of $589,332.79 from the CPS Settlement Amount,5 to be divided among all of the relators, plus an

additional $21,351.83 from the Kroll Settlement Amount, to be paid to relators Butner and Brown.6

(See Doc. No. 175-1 ¶ 3 n.2.) The Proposed Settlement anticipated that the Relators’ Share would

be allocated as follows: Alt to receive $212,832.59; Butner and Brown together to receive

$30,585.57, plus $21,351.83 from the Kroll Settlement Amount; Pressotto to receive $31,951.74;

and Chancellor to receive $313,952.89. (Doc. No. 175-1, at 18 ¶ 3 n.2.) These allocations were

based on the Government’s estimates of potential damages attributable to each of the different

claims in which it had intervened and a pro rata allocation of the Relators’ Share to each of the

relators with respect to the settled claims for which they were deemed the “first to file.” (See Doc.

3 A copy of the final, fully executed Settlement Agreement was emailed to the court on

April 16, 2021, but it has never actually been filed in the court’s docket.

4 This figure likely contains a typographical error. It appears that the parties intended to

settle for $2,946,663.94, or the sum of $2,196,663.94 and $750,000 (see Settlement Agreement ¶ 1(a)

and (b)), rather than $2,964,663.94.

5 This figure represents twenty percent of $2,946,663.94.

6 According to the Moving Relators, the Government determined that “[a]ny Relator share

payment out of the Kroll Settlement amount was properly payable to Butner and Brown” (Doc.

No. 185, at 6 n.2), as they were the only relators to name Kroll as a defendant.

No. 185, at 5–6.) The charts that the Government apparently provided to the relators, and which

the relators have supplied to the court in their respective motions, reflect the Government’s

assessment of the total value of each of the intervened and settled claims, whom the Government

deemed the “first to file” each claim, and the portion of the settlement traceable to each claim, as

follows:

Claim7 US Damages TN Damages US + TN

Combined

UDS $3,000,000 $300,000 $3,300,000

iPad $2,400,000 $1,000,000 $3,400,000

Genetic $2,000,000 $500,000 $2,500,000

SVT $1,000,000 $275,000 $1,275,000

P-Stim $150,000 $450,000 $600,000

$8,550,000 $2,525,000 $11,075,000

Claim US Damages % TN Damages %

UDS 35.09% 11.88%

iPad 28.07% 39.60%

Genetic 23.39% 19.80%

SVT 11.70% 10.89%

P-Stim 1.75% 17.82%

100% 100%

Settlement from CPS $2,946,663.94

CPS US Portion 77.20%

CPS TN Portion 22.80%

CPS US &TN Relators’ % 20.00%

CPS US Relators’ Share $454,964.91

CPS TN Relators’ Share $134,367.88

Total Relators’ Share $589,332.79

7 “UDS” refers to Urine Drug Screening; “iPad” refers to a depression screening test

conducted on iPads; “Genetic” refers to various pharmacogenetic blood tests; “SVT” stands for

Specimen Validity Testing; and “P-Stim” refers to a non-covered acupuncture device.

Relator First-To-File on US TN Estimated US Estimated Estimated

Settled Claims Damages Damages Relator’s TN Total

% % Share Relator's Relator’s

Share Share

Alt US: UDS/SVT 46.78% 0.00% $212,832.59 $212,832.59

Butner/Brow TN: UDS/SVT 0.00% 22.77% $30,595.57 $30,595.57

n

Pressotto US: P-Stim 1.76% 17.82% $8,007.38 $23,944.36 $31,951.74

TN: P-Stim

Chancellor US: iPad, 51.46% 59.41% $234,124.94 $79,827.95 $313,952.89

Genetic TN:

iPad, Genetic

100.00% 100.00% $454,964.91 $134,367.88 $589,332.79

(See Doc. No. 196, at 27; see also Doc. No. 185, at 5–6.)

Despite the fact that the Proposed Settlement allocated more than fifty percent of the

Relators’ Share to Chancellor, Chancellor refused to sign that version of the Settlement

Agreement, objected to the settlement overall, and insisted that a fairness hearing be held, at which

her objections could be heard. The court conducted a full fairness hearing on April 13, 2021 at

which all of Chancellor’s objections to the settlement were overruled. At the conclusion of the

hearing, the court gave Chancellor three options: (1) she could sign the Proposed Settlement with

the Government’s proposed allocation of the Relators’ Share; (2) she could sign an amended

version of the agreement that expressly left the allocation of the Relators’ Share to the court’s

discretion; or (3) she could decline to execute any agreement altogether, in which event the other

parties would be free to effectuate the settlement and allocate the proceeds among themselves.

Chancellor indicated at the hearing that she needed time to decide.

Three days later, the parties notified the court that all parties had signed the final version

of the Settlement Agreement in which the Government agreed to set aside, from the total settlement

amount, a Relators’ Share of $610,684.62, to be divided among the relators in all four of the

consolidated cases. (Id. ¶ 3.) The final Settlement Agreement, rather than making a specific

allocation, states only that, if the parties cannot “agree as to the distribution of the Relators’ share

of the CPS Settlement Amount, the Court will make such a determination” but that Butner and

Brown shall receive $21,351.83 from the Kroll Settlement Amount “upon written instructions from

their counsel.” (Settlement Agreement ¶ 3 n.2.) In addition, the court is to decide upon the

distribution of the $138,000 earmarked for “attorney’s fees and costs . . . as well as non-intervened

claims and retaliation claims,” unless the relators reach an agreement. (Settlement Agreement ¶ 4.)

In the two months following execution of the Settlement Agreement, the parties have

apparently been unable to reach an agreement as to the allocation of either the Relators’ Share or

the $138,000. On June 16, 2021, the Moving Relators filed their present Motion to Allocate, and,

on July 17, 2021, Chancellor filed her Motion to Be Deemed First-to-File.

II. LEGAL STANDARDS

The False Claims Act (“FCA”), 31 U.S.C. § 3729 et seq., authorizes private individuals,

known as relators, to “bring a civil action . . . in the name of the Government” against those who

make fraudulent claims against the United States, id. § 3730(b)(1). When a relator brings such a

qui tam suit, the government may intervene and proceed with the action, or it may decline to

intervene and allow the relator to proceed. See id. § 3730(b)(1)–(4), (c). The FCA encourages

relators to bring qui tam suits by allowing them to share in any recovery obtained for the

government. To avoid diluting this potential payout, the FCA’s so-called “first-to-file rule”

prohibits relators other than the first to file from “bring[ing] a related action based on the facts

underlying the pending action.” Id. § 3730(b)(5).

Subsection 3730(d), entitled “Award to qui tam plaintiff,” provides in relevant part:

If the Government proceeds with an action brought by a person under subsection

(b), such person shall, subject to the second sentence of this paragraph, receive at

least 15 percent but not more than 25 percent of the proceeds of the action or

settlement of the claim, depending upon the extent to which the person substantially

contributed to the prosecution of the action.

Id. § 3730(d)(1). “[A] relator seeking recovery must establish that ‘there exists [an] overlap

between Relator’s allegations and the conduct discussed in the settlement agreement.’” Rille v.

PricewaterhouseCoopers LLP, 803 F.3d 368, 373 (8th Cir. 2015) (en banc) (quoting U.S. ex rel.

Bledsoe v. Cmty. Health Sys., Inc., 342 F.3d 634, 651 (6th Cir. 2003)).

Thus, to be entitled to the relator’s share under paragraph 3730(d)(1), a relator must be a

person who “br[ings]” “an action under . . . subsection [3730(b)].” 31 U.S.C. § 3730(d)(1); Rille,

803 F.3d at 372 (“The relators’ right to recovery is limited to a share of the settlement of the claim

that they brought.”). The first-to-file rule bars any “person other than the Government” from

“bring[ing] a related action based on the facts underlying the pending action.” 31 U.S.C. §

3730(b)(5). “So only the first-to-file relator can claim the relator’s share of the settlement

proceedings for each claim.” United States v. Millenium Labs., Inc., 923 F.3d 240, 252 (1st Cir.

2019), cert. denied sub nom. Est. of Cunningham v. McGuire, 140 S. Ct. 851 (2020); accord U.S.

ex rel. Shea v. Cellco P’ship, 863 F.3d 923, 927 (D.C. Cir. 2017) (“The first-to-file bar thereby

ensures only one relator will share in the government’s recovery . . . .”); U.S. ex rel. LaCorte v.

SmithKline Beecham Clinical Labs., Inc., 149 F.3d 227, 231 (3d Cir. 1998) (“[N]o qui tam plaintiff

may . . . share in a government settlement if his or her allegations repeat claims in a previously

filed action.”).

Alternatively, however, it also appears that, where more than one relator has pursued

claims in which the government intervenes and that are ultimately settled, the relators may agree

among themselves as to the allocation of the relator’s share, as a matter of contract. See, e.g.,

United States v. Cmty. Health Sys., Inc., 666 F. App’x 410, 412 (6th Cir. 2016) (recognizing that

the relators’ share was “split among all the individual relators in the various cases according to the

sharing agreement that relators had reached before the settlement [with the defendant] was

finalized”). As relevant here, the parties have left the allocation of the Relators’ Share, as a matter

of contract, to the court’s basically unfettered discretion. (See Settlement Agreement ¶ 3 n.2.)

Otherwise, the conclusion that a relator may only share in the settlement of the claims he

or she brought first “aligns with the policies underlying the first-to-file rule” embodied in the qui

tam provision, which “attempts to reconcile two conflicting goals, specifically, preventing

opportunistic suits, on the one hand, while encouraging citizens to act as whistleblowers, on the

other.” Millenium Labs., 923 F.3d at 252 (internal quotation marks and citations omitted).

III. DISCUSSION

A. The Parties’ Positions

In their motion and supporting memorandum, the Moving Relators represent that there is

a legitimate basis in the record for declining to apportion any part of the Relators’ Share to

Chancellor. In particular, they claim that, because Alt was the first to file, and the total damages

attributable to the claims she brought to the Government’s attention exceed the value of the entire

settlement amount, Alt would arguably be entitled to the entirety of the Relators’ Share. In the

spirit of compromise and in recognition of the fact that the Government did intervene in

Chancellor’s case and that Chancellor ultimately settled and released the claims that she brought,

the Moving Relators have agreed among themselves—and propose that the court issue an order

consistent with their agreement—that the Relators’ Share be allocated as follows:

RELATOR PROPOSED SHARE

ALLOCATION FROM CPS

SETTLEMENT RELATOR SHARE

Alt $385,336.30

Pressotto $64,977.20

Butner & Brown $60,531.05 (plus $21,351.83 from Kroll

Settlement Amount)

Chancellor $78,488.22

(Doc. No. 185, at 12.) The Moving Relators further propose to divide the $138,000 equally among

their three cases ($46,000 each).

The Moving Relators acknowledge that the Government originally proposed that

Chancellor receive an allocation of $313,952.89, based on its pro rata estimate of the damages

reasonably traceable to Chancellor’s allegations relating to fraudulent charges for genetic testing

and iPad psychiatric screening. While they were willing to accept that recommendation in 2021,

the Moving Relators argue now that, because Chancellor rejected the Government’s proposed

allocation, her allocation should, instead, be determined “based on her actual participation and

contribution to this case,” gauged in light of the same factors that typically guide courts’

determination of the percentage of the total settlement that should be allocated to the relator under

31 U.S.C. § 3730(d)(1). (See Doc. No. 185, at 9.) More specifically, they argue that:

(1) Chancellor filed the last of the four consolidated cases, more than seven months after

Alt filed the first qui tam complaint. Because the total settlement was based on the defendant’s

ability to pay rather than the total value of the Government’s estimated damages, and the vast

majority of the settlement funds came from a CMS suspension account, Chancellor’s additional

claims and allegations did not meaningfully alter the end result—meaning, in other words, that the

Government likely would have received the same amount in settlement, even if Chancellor had

never filed her qui tam complaint. (Doc. No. 185, at 14.) The Moving Relators argue that these

factors weigh strongly in favor of a significant reduction of Chancellor’s allocation, as does the

fact that the Government had already been made aware of the fraud from three other qui tam cases.

(2) Although Alt’s qui tam complaint did not bring claims based on the fraud relating to

genetic testing and iPad screening, Alt had informed the Government about those schemes in her

disclosure interview in April 2016, six months before Chancellor filed her complaint, thus

substantially limiting Chancellor’s value to the Government as a whistleblower—a factor also

warranting a reduction of her share. (Doc. No. 185, at 15.)

(3) Chancellor’s involvement in the case has significantly hampered the other parties’

efforts to resolve the case and has cost the Government, the court, and the other parties substantial

time and effort without returning any additional funds to the Government. (Doc. No. 185, at 15

(citing DOJ Guidelines downward departure factor 8 (“The relator . . . did not provide any help

after filing the complaint, hampered the Government’s efforts in developing the case, or

unreasonably opposed the Government’s position in litigation.” (emphasis added)).)

Based on the application of those factors, the Moving Relators propose a seventy-five

percent reduction from the amount the Government originally proposed to allocate to Chancellor.

Chancellor objects to the Moving Relators’ proposed allocation without actually proposing an

alternative. However, in her separately filed Motion to Be Deemed First-to-File, she argues that

any relator’s right to recovery is limited to a share of the settlement of the claims that the relator

actually filed first and that she should be deemed the first to file claims related to both SVT and

UDS, in addition to being deemed the first to file the iPad screening and genetic testing claims.

Regarding her claim to be the first to file UDS-related claims, Chancellor argues that the Alt and

Butner/Brown qui tam Complaints were not sufficiently specific to satisfy Rule 9(b) of the Federal

Rules of Civil Procedure. Regarding SVT, she asserts that a comparison of their respective

pleadings reveals that she, not they, actually was the first to alert the government to CPS’s fraud

in conducting such tests.

Chancellor also provides a lengthy narrative history of the development in the case,

generally contesting the Moving Relators’ position that she only minimally contributed to the

development and settlement of the claims against CPS. She contends, instead, that she relayed to

the Government more information and evidence than the other relators and provided substantial

assistance to the Government. She denies delaying the settlement process and insists that she had

been requesting a fairness hearing since September 2020 and that, instead of respecting her

decision in that regard, the other parties attempted to force a settlement on her. She also maintains

that the written proposed settlement agreement was not circulated until November 2020, that this

version had many errors that all of the other parties had overlooked, and that she insisted be

corrected, but they were not ultimately corrected until February 2021. Additionally, she argues

that the Moving Relators are unfairly using her decision to allow the court to allocate the Relators’

Share among the relators as an opportunity to “punish” her for making that decision. (Doc. No.

193, at 13.) She asserts that the Moving Relators offer no legal support for the proposition that a

relator’s right to a share of the settlement can be “abrogated by an agreement to which the relator

was not a party.” (Id. at 15.)

In their Reply, the Moving Relators contend that it is far too late, post-intervention and

post-settlement, to claim that the other relators’ complaints are legally infirm under the pleading

standard established by Rule 9(b). Otherwise, the Moving Relators do not engage with

Chancellor’s arguments, asserting instead that she has not “meaningfully refute[d] any of the

arguments” made in their Motion to Allocate. (Doc. No. 194, at 1.)

B. The Moving Relators’ Motion to Allocate

As a general proposition, the court is not persuaded that Chancellor should effectively be

punished for challenging the Government’s proposed allocation of the Relators’ Share or that her

share should be calculated based on the factors intended to guide a determination of what

percentage of the total settlement should be allocated to the relator (or relators) in the first place.

The court reaches that conclusion based, first, on the fact that the Government did not express an

intention that Chancellor’s portion of the Relators’ Share be reduced based on lack of substantial

assistance or interference in the settlement process. And second, as indicated by the legal standards

articulated above, a relator’s “right to recovery is limited to a share of the settlement of the claim

that [she] brought.” Rille, 803 F.3d at 372. As a result, an allocation of a disproportionate amount

of the settlement to the Moving Relators is not supported either by the law or the facts. Thus, for

the same reason, the court rejects the Moving Relators’ argument that relator Alt would be entitled

to claim the entirety of the Relators’ share. The Government and CPS could have structured the

settlement to make it clear that all of the settlement proceeds were traceable to the UDS claim, but,

instead, the Settlement Agreement specifically provides for the settlement and dismissal with

prejudice of all claims asserted against CPS.

The court, in sum, rejects the Moving Relators’ proposal that the Government’s proposed

allocation of the Relators’ Share to Chancellor be reduced by seventy-five percent and declines to

adopt the Moving Relators’ agreement in that regard.

C. Chancellor’s Motion to Be Deemed First to File

1. Rule 9(b) and the UDS Claim

The Moving Relators contend that it is far too late for Chancellor to contest the validity of

their qui tam complaints under Rule 9(b). The court agrees. In Roberts v. Accenture, LLP, 707 F.3d

1101 (8th Cir. 2013), the government argued, in the context of a dispute as to the appropriate

percentage of an FCA settlement that should be awarded to the relators, that “a qui tam claim

which is deficient as measured by Rule 9(b) standards necessarily lacks the type of specific

information about fraud that would provide the government any meaningful assistance.” Id. at

1017 (internal quotation marks omitted). It urged the court to “incorporate the requirements for

surviving a motion to dismiss under Rule 9(b) into the test for determining whether ‘the

Government proceeds with an action brought by [a relator]’ for purposes of an award to a qui tam

plaintiff under 31 U.S.C. § 3730(d).” Id.

The Eighth Circuit declined that invitation, holding that Rule 9(b) plays no part in the

determination of whether a relator is entitled to share in the settlement proceeds from a claim in

which the government elected to intervene. Id. As the court observed,

Rule 9(b)’s standards are meant to test the sufficiency of a complaint at its outset.

If a defendant challenges the sufficiency of a complaint’s allegations at the outset

of a case, a plaintiff still has the opportunity to cure the deficiency. In contrast,

section 3730(d) only comes into play at the conclusion of a case, after the action

has already proceeded to a judgment or a settlement. If the government is allowed

to contend at the conclusion of a case that a relator’s initial allegations were

insufficient, even though the government implicitly acknowledged the legal

sufficiency of the pleadings by choosing to intervene, the relator no longer has the

opportunity to cure the deficiency.

Id. at 1017–18; accord United States v. Shire Regenerative Med., Inc., No. 8:11-CV-176-T-

30MAP, 2017 WL 6816615, at *5 (M.D. Fla. Nov. 20, 2017) (finding that “a challenge to a qui

tam complaint based on a failure to plead the claim with particularity under Rule 9(b) is conducted

by a party at the motion to dismiss stage” and, therefore, that “any argument on the part of the

other Relators that [one set of relators is] entitled to none of the settlement proceeds because [their]

Complaint was not sufficiently pled with particularity fails”).

This court agrees, finding that it is far too late in these proceedings to challenge the validity

of any relator’s complaint on Rule 9(b) grounds. It is also unclear, as the Middle District of Florida

noted, whether one relator would even have standing to raise a Rule 9(b) challenge to another

relator’s pleading. Shire Regenerative, 2017 WL 6816615, at *5. But see U.S. ex rel. Dhillon v.

Endo Pharms., 617 F. App’x 208, 213–14 (3d Cir. 2015) (affirming the district court’s rejection

on the merits of a Rule 9(b) claim raised in the context of a dispute between relators over the

allocation of the relator’s share based on the first-to-file rule).

The court, therefore, will deny Chancellor’s motion, insofar as she seeks to be deemed the

first to file UDS claims based on the purported deficiency of the other relators’ UDS claims.

2. SVT Claim

Chancellor also argues that the Government simply erred in lumping together the UDS and

SVT claims and that she should be deemed the first to file a claim related to medically unnecessary

SVT.

Resolution of a first-to-file dispute requires a comparison of the complaints at issue. See

U.S. ex rel. Heath v. AT & T, Inc., 791 F.3d 112, 121 (D.C. Cir. 2015) (“Similarity is assessed by

comparing the complaints side-by-side, and asking whether the later complaint alleges a fraudulent

scheme the government already would be equipped to investigate based on [the first] [c]omplaint.”

(internal quotation marks and citation omitted)); In re Nat. Gas Royalties Qui Tam Litig. (CO2

Appeals), 566 F.3d 956, 964 (10th Cir. 2009) (“The first-to-file bar is designed to be quickly and

easily determinable, simply requiring a side-by-side comparison of the complaints.”).

The court has reviewed and compared the relator complaints filed in this case. Chancellor’s

Complaint (Case No. 3:19-cv-102, Doc. No. 1) is undoubtedly more detailed than the earlier-filed

complaints filed by Alt (Case No. 3:16-cv-549, Doc. No. 1) and Butner and Brown (Case No. 3:16-

cv-561, Doc. No. 1) regarding the defendants’ UDS scheme. However, while Alt, Butner and

Brown do not expressly reference or describe Specimen Validity Testing, neither does Chancellor.

The Government has described SVT as a part of the UDS fraud scheme. (See Gov’t Complaint in

Intervention, Case No. 3:16-cv-549, Doc. No. 65 ¶ 129 (“CPS had weekly conference calls with

providers to ensure that they were ordering and billing for the full panel of UDS, which included

specimen validity testing.”).) The Government apparently concluded that Alt’s (nationwide) and

Butner and Brown’s (Tennessee-related) allegations of fraudulent and unnecessary UDS tests were

sufficient to encompass—and to put it on the track of investigating and uncovering—the medically

unnecessary SVT as well. Accord Heath, 791 F.3d at 122 (observing that a second claim will be

barred by the first-to-file rule where the first has “already put the government on notice of both

the nature and reach of the alleged fraud” and that “the greater fraud often includes the lesser”).

The court finds, in short, no legitimate basis in the record for deeming Chancellor the first to file

SVT-related claim.

Chancellor’s Motion to Be Deemed First to File will, accordingly, be denied.

D. Allocation of the Relators’ Share

The court finds that neither Chancellor nor the Moving Relators have provided a basis for

deviating from the Government’s proposed allocation as set forth in the Proposed Settlement that

Chancellor declined to accept. That proposed distribution was based on the first-to-file attributions

and the Government’s estimation of the pro rata value of each of the settled claims in proportion

to the total CPS Settlement Amount, as illustrated in the charts on pages 4–5, supra. The United

States will be directed, in accordance with Paragraph 3 of the Settlement Agreement, to submit

payment to the Relators as follows:

1. $212,832.59 to Alt;

2. $30,595.57 to Butner and Brown;

3. $31,951.74 to Pressotto; and

4. $313,952.89 to Chancellor

This distribution does not include the share from the Kroll Settlement Amount which, the court

presumes, has already been distributed to Butner and Brown.

E. Distribution of the Remaining $138,000

The FCA provides that any relator entitled to an award under the terms of 31 U.S.C.

§ 3730(d) “shall also receive an amount for reasonable expenses . . . plus reasonable attorneys’

fees and costs.” Each of the relators has been deemed the first to file at least one intervened and

settled claim and, as such, is entitled to some portion of the Relators’ Share. Under the statute,

they are each also entitled to a reasonable attorney’s fee. There is no question that the amount

allocated by the Settlement Agreement to cover the relators’ attorneys’ fees is far less than the

actual value of the services provided by the various attorneys, but additional funds were simply

not available from CPS.

The Moving Relators, as indicated above, request that the $138,000 be allocated to

attorneys’ fees and divided equally among their three cases. Chancellor argues that this amount

was not earmarked solely for attorneys’ fees but “also reserved for non-intervened and retaliation

claims.” She contends that, because she and Pressotto were the only relators who filed amended

pleadings against CPS after the Government intervened, thereby preserving their retaliation claims,

she and Pressotto should receive more of this amount than Alt and Butner and Brown. She also

claims it would be unfair to “allow attorney fees to supersede Relator’s retaliation claims,

especially in a case where the defendant ‘doesn’t have any money.’” (Doc. No. 193, at 25.)

Chancellor is correct that, pursuant to the Settlement Agreement, CPS agreed to pay

$138,000 directly to the relators “for attorneys’ fees and costs incurred by Relators, as well as non-

intervened claims and retaliation claims.” (Settlement Agreement ¶ 4.) However, the relators have

also left to the court’s discretion the distribution of this sum. There is no evidence in the record

regarding the value of the non-intervened claims, and, irrespective of any potential value they

might have had, all of the parties, including Chancellor, agreed to release their non-intervened

claims. In addition, it is irrefutable that none of the attorneys in any of these qui tam cases will be

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fully compensated for their time and expenses, due to the limited pool of funds available.

Consequently, in terms of overall fairness, the court finds that the entirety of this remaining sum

should go toward the relators’ attorneys’ fees. Because Chancellor is no longer represented by

counsel, the court accepts the Moving Relators’ proposal that this sum be divided equally among

their three cases, with counsel for Alt, Butner and Brown (together), and Pressotto each receiving

$46,000. Counsel for CPS, who are currently holding this sum in escrow, will be directed to

distribute the funds in accordance with this Memorandum.

IV. CONCLUSION

As set forth herein, the Moving Relators’ Motion to Allocate will be granted in part and

denied in part, and Chancellor’s Motion to Be Deemed First to File will be denied. The

Government and CPS will be directed to distribute the Relators’ Share and additional $138,000 as

set forth herein.

An appropriate Order is filed herewith.

United States District Judge