Summary
holding that "plaintiffs here are also suing in the name of another, the United States" and that "thus, plaintiff's choice of forum is entitled to little consideration."
Summary of this case from U.S. EX REL. ROOP v. ARKRAY USA, INC.Opinion
No. C-97-3814 MHP
September 21, 1999
ORDER
In this qui tam action, plaintiffs Ila Swan and Violette King (collectively "plaintiffs") allege that defendants Covenant Care, et al., (collectively "defendants") defrauded the United States government in violation of the Federal False Claims Act by presenting false claims for payment to the United States under the Medicare and Medicaid programs.
Presently before the court is defendants' motion to transfer for convenience or to dismiss plaintiffs' first amended complaint for failure to state a claim on which relief can be granted.
BACKGROUND
Defendants own and operate nursing homes throughout the United States. Plaintiffs allegedly have visited and observed some of defendants' nursing homes in California and Illinois.
Plaintiffs allege that defendants, as providers of nursing facilities, are authorized participants in the Medicare Program of the Federal Social Security Act ("Medicare") and various state Medicaid programs ("Medicaid") which arise out of the Medicaid Act, Title XIX of 42 U.S.C. § 1383 and the Federal Social Security Act, Title XVIII of 42 U.S.C. § 1302. As authorized participants in Medicare and Medicaid, defendants may receive federal funding to help pay for the care of persons over the age of 65 if defendants' facilities comply with certain minimum standards. These standards are found in the Omnibus Budget Reconciliation Act of 1987, § 1861(j) of the Social Security Act for Medicare and Medicaid, 42 U.S.C. § 1396r and in 42 C.F.R. Part 483.
Plaintiffs allege that the facilities of defendants that plaintiffs visited in California and Illinois do not comply with the appropriate federal standards above. Plaintiffs allege that defendants fail to adequately staff their facilities, adequately assess and develop plans of care, replace soiled or wet diapers, provide adequate food and water, take steps to prevent bed sores, provide requested medical assistance or medication and that defendants confine and restrain residents against their will. Plaintiffs further allege that defendants falsify their records of care and services provided to the residents in order that the records appear to be in compliance with the federal standards and that defendants thus submit false or fraudulent claims for reimbursement to the United States.
On October 17, 1997, plaintiffs filed their initial complaint in this court under seal. On March 31, 1999, the United States declined to intervene in the action, and on April 5, 1999, this court ordered that the complaint be unsealed and served on defendants. Plaintiffs filed a first amended complaint on June 1, 1999. On July 21, 1999, defendants filed the instant motion to transfer venue pursuant to 28 U.S.C. § 1404 (a) for convenience and to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted.
LEGAL STANDARD
"For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought." 28 U.S.C. § 1404 (a). There is no established test to determine whether a court should grant a motion to transfer; a court must consider several different "case-specific factors." Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988). Factors that are commonly considered are "the place where the operative facts occurred, the convenience of the parties; the convenience of the witnesses; the relative ease of access to the sources of proof and the availability of process to compel attendance of unwilling witnesses; the plaintiff's choice of forum, a forum's familiarity with the governing law; trial efficiency; and the interests of justice." Don King Prods., Inc. v. Douglas, 735 F. Supp. 522, 533 (S.D.N.Y. 1990). See also William W. Schwarzer et al., California Practice Guide; Federal Civil Procedure Before Trial ¶¶ 4:269-277.2 (The Rutter Group 1999) (additionally listing feasibility of consolidation with action pending elsewhere, relative means of the parties, relative docket congestion, existence of forum selection clause, statute of limitations and whether injunctive relief is sought).
When considering a motion to transfer venue, the burden is on the party moving for the transfer. L.A. Mem'l Coliseum Comm'n v. National Football League, 89 F.R.D. 497, 499 (C.D. Cal. 1981). A motion to transfer will not be granted if such a transfer will only shift, and not eliminate, any inconveniences. Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 843 (9th Cir. 1986). One of the most important factors to consider is the convenience to the witnesses, and a motion to transfer may be granted if another forum is more convenient to the witnesses. Pacific Car an4 Foundry Co. v. Pence, 403 F.2d 949. 955 (9th Cir. 1968). However, one factor that may outweigh all the others is the interest of justice. Pratt v. Rowland, 769 F. Supp. 1128, 1133 (N.D. Cal. 1991).
DISCUSSION
Defendants argue that, pursuant to 28 U.S.C. § 1404 (a), the instant action should be severed and transferred to districts outside the Northern District of California because the facilities that are the subject of the complaint are located in the Eastern District of California and in Illinois. Additionally, defendants argue that the action should be transferred to the Central District of California because defendants' corporate headquarters is located there.
Defendants moved to sever the action into two separate actions and transfer them two separate districts. However, they have not made any showing as to why the action should be severed at this stage. Thus, the motion will be treated solely as a motion to transfer.
Transfer to the Central District would create an even greater burden for those witnesses who must travel from the Eastern District or from Illinois. Only defendants, would be spared some inconvenience by moving the action to the Central District. Additionally, the alleged fraudulent charting of patients' care took place in the Eastern District and in Illinois. Given that it would likely be more inconvenient for one involved in the litigation to travel to the Central District of California and that none of the allegedly fraudulent acts took place there, it makes little sense to transfer the action to the Central District.
Plaintiffs themselves reside in the Eastern District of California ("Eastern District") and in Illinois. They allege that they visited and observed substandard care in defendants' facilities located in those districts. Nowhere in the Amended Complaint do plaintiffs allege that they visited any of defendants' facilities that are located in the Northern District of California. Thus, from the complaint, it appears that the instant action will involve principally the facilities located in the Eastern District and in Illinois.
Plaintiff's only mention defendants' facilities in the Northern District of California in one paragraph in the complaint where plaintiffs allege that the facilities in the Northern District participated in defendants' company-wide conspiracy to defraud the United States. However, as with much of plaintiffs' claims, plaintiffs have failed to allege any factual basis for such an allegation. Additionally; plaintiffs have attached to their Opposition to Defendants' Motion a declaration of plaintiff Swan that she visited three of defendants' facilities that are located in the Northern District. However, because plaintiffs have not included these facilities in their complaint, plaintiffs have not put the care at these facilities at issue, and the court will not consider these facilities m this motion.
One of the most important factors, the convenience of the witnesses, weighs strongly in favor of a transfer to the Eastern District. Patients and staff of the facilities in both the Eastern District and Illinois would have to travel to the Northern District for trial. However, transferring the action to either the Eastern District or Illinois would reduce the inconvenience for the patients and staff of the facilities in at least one of the two districts. Because four of defendants' allegedly substandard facilities are in the Eastern District and three are in Illinois, it seems likely that fewer witnesses would be inconvenienced by a transfer to the Eastern District than by a transfer to Illinois. As plaintiffs correctly note, a transfer is not proper if it will merely shift the inconveniences, but in this action, inconveniences will be reduced by transferring the action to the Eastern District.
Because plaintiffs allege that substandard care took place in facilities in the Eastern District and in Illinois, the operative facts, the care provided and documentation of such care, took place in those districts. Thus, access to the sources of proof, such as the residents and their patient records, could be more easily obtained in either the Eastern District or Illinois; none of these documents are located in the Northern District. Plaintiffs have not indicated any reason why it would be easier to access such sources of information if the action were to remain in the Northern District of California.
Additionally, there will be no shift in the convenience to the plaintiffs if the case is transferred to either the Eastern District or Illinois since those are the locations where at least one plaintiff resides. Plaintiff King is a resident of Illinois, and plaintiff Swan resides in the Eastern District of California. Thus, as long as the case is in either California or Illinois, only one of the plaintiffs may have to travel a substantial distance. Defendants' facilities are located in both districts, but defendants' corporate headquarters is in the Central District of California. Thus, a transfer to Illinois would likely be more inconvenient for defendants than allowing the action to remain in California. However a transfer to the Eastern District would be more convenient than the Northern District of California because the facilities described in the complaint are located in the Eastern District, and there is little difference in convenience, when considering the location of the defendants' headquarters in the Central District, between the Eastern and Northern Districts. Although defendants have greater financial means than do plaintiffs, this factor does not favor allowing the action to remain in the Northern District because a transfer to the Eastern District will strain each parties financial resources less than allowing the action to remain in the Northern District.
In fact, it appears that plaintiffs' only tie to the Northern District of California is the fact that their attorneys are located in the Northern District. Considering the lack of any other reason for this action to have been brought in the Northern District, the court suspects that plaintiffs and their attorneys are engaged in forum shopping.
Further, the interests of justice do not weigh in favor of allowing the action to remain in the Northern District. Plaintiffs will not be inconvenienced by a transfer of the action at this point because the litigation is relatively young, and this court has not yet become greatly involved in this litigation. Aside from possibly having to renotice the instant motion to dismiss if the action is transferred to the Eastern District, such a transfer will result in little or no inefficient use of the judicial system or the party's resources. Further, as defendants point out, the time it takes from the filing of an action to the completion of that action is considerably longer in the Northern District of California than in the districts to which defendants propose transfer. The court does not view this last factor, the relative docket congestion, as dispositive, but it does weigh in favor of transfer.
Finally, plaintiffs argue that the fact that plaintiffs chose the Northern District weighs strongly in favor of retaining the action. Plaintiffs' choice of forum is not a determinative factor. Sometimes, a plaintiff's choice of forum may have very little impact on the court's evaluation of whether to transfer an action. See Lou v. Belzberg, 834 F.2d 730, 739 (9th Cir. 1987) (noting that plaintiff's choice is given less weight when plaintiff brings a derivative suit or represents a class); Garcia v. Allstate Ins. Co., 1996 WL 601689 (M.D. Cal. 1996);Dworkin v. Hustler Magazine. Inc., 647 F. Supp. 1278 (D. Wyo. 1986). Particularly, if the "operative facts have not occurred within the forum and the forum has no interest in the parties or subject matter, (plaintiffs] choice is entitled to only minimal consideration." Lou v. Belzberg, 834 F.2d at 739. In this action, the alleged fraud took place in the Eastern District and in Illinois. Plaintiffs have not alleged that any particular facilities in the Northern District falsified their records. Further, much like a plaintiff in a derivative suit or class action, plaintiffs here are also suing in the name of another, the United States. Thus, although plaintiff's choice of forum weighs in favor of allowing this action to remain in the Northern District) the court finds that plaintiff's choice of forum is entitled to little consideration.
Defendants have met their burden to show that transferring the instant action to the Eastern District of California will significantly reduce, if not eliminate, much inconvenience to the witnesses and the parties and will bring the action closer to the place where the alleged fraud took place. Further, it is not against the interests of justice to transfer the instant action to the Eastern District. For the foregoing reasons,
IT IS HEREBY ORDERED that the instant action be TRANSFERRED to the Eastern District of California. The Clerk of Court is directed to transmit the file in this case to the Clerk of the Eastern District of California.
Because the court transfers the action to the Eastern District of California, the court does not reach the motion to dismiss for failure to state a claim upon which relief can be granted. Instead, in the interest of conserving judicial resources, if the defendants wish to refile their motion, the court in the Eastern District may take up the motion. This court does not wish to shape the pleadings of an action that will be heard in another District.