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Sorensen v. Polukoff

United States District Court, D. Utah

April 30, 2018

GERALD I. POLUKOFF, M.D.; ZABRISKIE LAW FIRM, LLC, a Utah limited liability company; RHOME ZABRISKIE, J.D.; FLEMING, NOLEN & JEZ, LLP, a Texas limited liability partnership; and RAND P. NOLEN, J.D., Defendants.


          Ted Stewart Judge.

         This matter is before the Court on Defendants' Motion to Dismiss. For the following reasons, the Court will grant in part Defendants' Motion. Specifically, the Court will dismiss Plaintiff's claims under RICO and HIPAA. Before determining whether to exercise jurisdiction over Plaintiff's remaining state-law claims, which are not addressed here, the Court will give Plaintiff an opportunity to amend his RICO claim.

         I. BACKGROUND

         Dr. Sherman Sorensen (“Plaintiff”) formed the Sorensen Cardiovascular Group (“SCG”) in 2006 and provided cardiology services in Salt Lake City, Utah, until December 2011. Plaintiff is known for his expertise in a medical procedure known as patent foramen ovale (“PFO”) closures, which are used to fix a defect in the septum between the upper atrial chambers of the heart.

         In 2009, Dr. Gerald Polukoff met with Plaintiff about working for SCG as a Cardiologist and learning more about PFO closure techniques. However, Dr. Polukoff did not start working at SCG until June 2011. Then, in July 2011, Plaintiff suffered a heart attack and decided to retire at the end of the year. Plaintiff discussed his retirement with Dr. Polukoff, and the decision was made to either pay out the rest of Dr. Polukoff's contract or turn SCG over to him. “Dr. Polukoff indicated that he would consider the offer, but that he would need to ensure the financial viability of SCG before deciding to either accept or reject.”[1]

         SCG stored its patient billing records on a series of hard drives that were maintained by TecCon, Inc.[2] Plaintiff claims that Dr. Polukoff was not authorized to access these hard drives, but Dr. Polukoff allegedly met with TecCon on October 7, 2011, and was provided with a hard drive to take offsite and remote access to SCG's billing records.

         A month later, Dr. Polukoff informed Plaintiff that he would not assume ownership of SCG. Plaintiff paid out the rest of Dr. Polukoff's contract and terminated his employment. Plaintiff learned soon after Dr. Polukoff's termination that Dr. Polukoff had remote access to SGC's billing records and that a backup hard drive might be missing. Plaintiff instructed TecCon to terminate Dr. Polukoff's access and sent an email asking Dr. Polukoff if he “was aware of a missing backup hard drive. Dr. Polukoff denied any knowledge of a missing hard drive and indicated to Dr. Sorensen that he would look through his things for a hard drive, but never indicated as to whether one was ultimately found.”[3]

         On December 6, 2012, Dr. Polukoff initiated a qui tam action against Plaintiff, SCG, and several others in the United States District Court for the Middle District of Tennessee alleging “that Dr. Sorensen had performed medically unnecessary PFO closures on patients and conspired with the other defendants in the qui tam action to improperly bill the United States Government by submitting false claims for reimbursement under Medicare and Medicaid.”[4] Dr. Polukoff later hired Mr. Rand Nolen and Fleming, Nolen, & Jez, L.L.P (“FNJ”), located in Texas, to act as counsel in the qui tam action and delivered the SCG hard drive to Mr. Nolen. Counsel for Plaintiff then sent a letter to Mr. Nolen demanding return of the hard drive and any other protected health information and demanded that Dr. Polukoff and his attorneys provide declarations under oath that they did not alter or copy any of the files on the hard drive. The hard drive has not been returned.

         Eventually, Dr. Polukoff's claims against several of the defendants in the quit tam action were dismissed, and the case was transferred to this Court where the Honorable Judge Jill Parrish dismissed the remainder of the action with prejudice on January 19, 2017. That action is now on appeal before the Tenth Circuit Court of Appeals and the United States has intervened.

         A year later, Plaintiff brought this action against Dr. Polukoff, Mr. Nolen, FNJ, Rhome Zabriskie, and the Zabriskie Law Firm, LLC (collectively, “Defendants”) asserting claims under the Racketeer Influenced and Corrupt Organizations Act (“RICO”) and several Utah statutes and common law. Additionally, Plaintiff seeks declaratory relief regarding alleged violations of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”). According to Plaintiff, Mr. Nolen and FNJ used the patient billing information on the hard drive to identify Plaintiff's former patients and sent that information to Mr. Zabriskie and the Zabriskie Law Firm (collectively, “Law Firm Defendants”), who acted as co-counsel in the qui tam action. The Law Firm Defendants then allegedly worked together to target and solicit Plaintiff's former patients to participate in medical malpractice lawsuits against Plaintiff. Plaintiff argues that “[t]he object of this theft and scheme was to enrich Dr. Polukoff, and his lawyers, by their solicitation of potential clients fraudulently obtained from the information contained on the hard drive.”[5]

         Defendants have now filed this Motion to Dismiss arguing, inter alia, that Plaintiff's Complaint fails under Rule 12(b)(6) because the hard drive was not stolen, all of the information on it was turned over to the government as part of the qui tam action, the Law Firm Defendants separately pursued cases for Plaintiff's patients who underwent allegedly unnecessary PFO closures, and all advertising involved in finding those patients was both permitted and ethical since it did not mention Plaintiff and was marketed to the public.


         In considering a motion to dismiss for failure to state a claim upon which relief can be granted under Rule 12(b)(6), all well-pleaded factual allegations, as distinguished from conclusory allegations, are accepted as true and viewed in the light most favorable to Plaintiff as the nonmoving party.[6] Plaintiff must provide “enough facts to state a claim to relief that is plausible on its face, ”[7] which requires “more than an unadorned, the-defendant-unlawfully harmed-me accusation.”[8] “A pleading that offers ‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action will not do.' Nor does a complaint suffice if it tenders ‘naked assertion[s]' devoid of ‘further factual enhancement.'”[9]

         “The court's function on a Rule 12(b)(6) motion is not to weigh potential evidence that the parties might present at trial, but to assess whether the plaintiff's complaint alone is legally sufficient to state a claim for which relief may be granted.”[10] As the Court in Iqbal stated,

only a complaint that states a plausible claim for relief survives a motion to dismiss. Determining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense. But where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not shown-that the pleader is entitled to relief.[11]


         Because this Court's jurisdiction rests on federal question jurisdiction, the Court deems it appropriate to consider the Motion to Dismiss as it relates to Plaintiff's federal claims.

         A. Civil RICO Claim

         In this action, federal jurisdiction rests primarily on Plaintiff's RICO claim. Section 1964(c) of RICO provides a private right of action for persons injured in their business or property by reason of a violation of § 1962. Plaintiff claims that Defendants violated 18 U.S.C. § 1962(c) which provides:

[i]t shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt.

         “That is, RICO vests a private citizen with substantive rights to avoid ‘injur[ies]' to ‘his business or property' caused by a pattern of racketeering activity, and it explicitly creates a federal cause of action to vindicate those federal rights.”[12] “To survive a Rule 12(b)(6) motion, a civil RICO claim must allege ‘(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity.'”[13] Defendants argue that Plaintiff has failed to adequately allege a violation of RICO. The Court agrees that Plaintiff failed to adequately allege a pattern of racketeering activity.

         A “‘pattern of racketeering activity' requires at least two acts of racketeering activity, one of which occurred after the effective date of this chapter and the last of which occurred within ten years (excluding any period of imprisonment) after the commission of a prior act of racketeering activity.”[14] Additionally, “RICO's legislative history reveals Congress' intent that to prove a pattern of racketeering activity a plaintiff or prosecutor must show that the racketeering predicates are related, and that they amount to or pose a threat of continued criminal activity.”[15]

         Plaintiff pleads that Defendants engaged in the predicate acts of mail fraud, wire fraud, the interstate transportation of stolen property, and extortion. “To establish the predicate act of mail fraud, [Plaintiff] must allege ‘(1) the existence of a scheme or artifice to defraud or obtain money or property by false pretenses, representations or promises, and (2) use of the United States mails for the purpose of executing the scheme.”[16] “The elements of wire fraud are very similar, but require that the defendant use interstate wire, radio or television communications in furtherance of the scheme to defraud.”[17]

‘[T]he common thread among . . . these crimes is the concept of ‘fraud.' Actionable fraud consists of (1) a representation; (2) that is false; (3) that is material; (4) the speaker's knowledge of its falsity or ignorance of its truth; (5) the speaker's intent it be acted on; (6) the hearer's ignorance of the falsity of the representation; (7) the hearer's reliance; (8) the hearer's right to rely on it; and (9) injury.' Failure to adequately allege any one of the nine elements is fatal to the fraud claim.[18]

         Finally, “the particularity requirement of Rule 9(b), Federal Rule of Civil Procedure, applies to claims of mail and wire fraud.”[19] Therefore, the Complaint “must set forth the time, place, and contents of the false representation, the identity of the party making the false statements and the consequences thereof. A plaintiff asserting fraud ...

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