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United States ex rel. Polukoff v. ST. Mark's Hospital

United States District Court, D. Utah

September 25, 2019



          Ted Stewart, United States District Judge.

         This matter is before the Court on Counterclaim Defendant Dr. Polukoff’s Amended Motion to Dismiss (“Motion”) Dr. Sorensen’s Counterclaim. For the reasons discussed below, the Court will grant the Motion.

         I. BACKGROUND

         Counterclaimant Sherman G. Sorensen, M.D. (“Dr. Sorensen”) is a retired cardiologist recognized in Utah for performing septal defect (“ASD”) and patent foramen ovale (“PFO”) closures.[1] Counterclaim Defendant Gerald Polukoff, M.D. (“Dr. Polukoff”) is a cardiologist who worked in Dr. Sorensen’s employ from about August to November 2011.[2] On December 3, 2015, Dr. Polukoff filed this qui tam action as Relator (“Polukoff”), alleging that Dr. Sorensen performed medically unnecessary ASD and PFO closures, fraudulently collecting payment from the United States Government in violation of the False Claims Act, 31 U.S.C. §§ 3729–32.[3] On January 19, 2018, Dr. Sorensen filed a complaint (“Sorensen”) against Dr. Polukoff and his attorneys making allegations based on facts related to Dr. Polukoff’s former employment with Dr. Sorensen and his alleged unauthorized access to and theft of a hard drive containing patient information.[4] Dr. Sorensen now files the Counterclaim before the Court, alleging that Dr. Polukoff misappropriated trade secrets[5] and breached contracts in violation of Utah law.[6] Dr. Polukoff seeks dismissal of all claims arguing that (1) they are barred by the relevant statutes of limitations, (2) they fail to state a claim upon which relief can be granted under Federal Rule of Civil Procedure 12(b)(6), (3) Counterclaimant is judicially estopped from bringing such claims, and (4) the Counterclaim is barred by claim preclusion.


         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 Counterclaimant as the nonmoving party.[7] Counterclaimant must provide “enough facts to state a claim to relief that is plausible on its face, ”[8] which requires “more than an unadorned, the-[Counterclaim-Defendant]-unlawfully-harmed-me accusation.”[9] “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.’”[10]

         “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 [or counterclaimant’s] complaint alone is legally sufficient to state a claim for which relief may be granted.”[11] As the Court in Iqbal stated,

[o]nly 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.[12]

         In considering a motion to dismiss, a district court not only considers the complaint, “but also the attached exhibits, ”[13] the “documents incorporated into the complaint by reference, and matters of which a court may take judicial notice.”[14] The court “may consider documents referred to in the complaint if the documents are central to the plaintiff’s [or counterclaimant’s] claim and the parties do not dispute the documents’ authenticity.”[15]


         a. Claim Preclusion and Claim-Splitting

         Counterclaim Defendant argues that claim preclusion bars Dr. Sorensen from bringing the Counterclaim, as he has already brought similar claims in Sorensen. This is incorrect because claim preclusion requires there to be a final judgment on the merits in the first case, which does not exist in Sorensen.

Under Utah law, for an order or judgment to be final, it must dispose of the case as to all the parties, and finally dispose of the subject-matter of the litigation on the merits of the case. In other words, a judgment is final when it ends the controversy between the parties litigant.[16]

         The court in Sorensen did not resolve the state-law claims asserted by Dr. Sorensen and dismissed them without prejudice. Therefore, the judgment cannot be termed “final” as to those claims.[17]

         However, a doctrine related to claim preclusion-that of claim-splitting-does bar the Counterclaim. This doctrine gives district courts “discretion to control their dockets by dismissing duplicative cases.”[18] More specifically,

The rule against claim-splitting requires a plaintiff to assert all of its causes of action arising from a common set of facts in one lawsuit. By spreading claims around in multiple lawsuits in other courts or before other judges, parties waste “scarce judicial resources” and undermine “the efficient and comprehensive disposition of cases.”[19]

         Claim-splitting is analyzed “as an aspect of res judicata.”[20] However, the Tenth Circuit has clarified that it differs from conventional res judicata-also known as claim preclusion-in one important regard: “a final judgment is not a necessary component of the claim-splitting analysis.”[21] “[T]he test for claim splitting is not whether there is finality of judgment, but whether the first suit, assuming it were final, would preclude the second suit.”[22]

         In Mitchell v. City of Moore, Oklahoma, the Tenth Circuit held that “[i]n our Circuit, ‘[c]laim preclusion requires: (1) a judgment on the merits in the earlier action; (2) identity of the parties or their privies in both suits; and (3) identity of the cause of action in both suits.’”[23] “Put another way, the doctrine of claim preclusion prevents ‘the parties or their privies from relitigating issues that were or could have been raised in’ an earlier action.”[24] As claim-splitting assumes finality of judgment for the first prong analysis, the Court turns now to the second and third prong requirements.

         In Sorensen, Dr. Sorensen is Plaintiff and Dr. Polukoff and his attorneys are listed Defendants. In the present case, Dr. Sorensen is Counterclaimant and Dr. Polukoff is Counterclaim Defendant. There is no dispute that, in both cases, Dr. Sorensen and Dr. Polukoff are Plaintiff and Defendant parties. The only remaining question for claim-splitting analysis is whether Dr. Sorensen’s claims under Sorensen represent the same causes of action as those in the present case.

         The Tenth Circuit has “adopted the transactional approach of the Restatement (Second) of Judgments to determine what constitutes a ‘cause of action’ for res judicata purposes.”[25]

The “transactional” approach provides that a final judgment extinguishes all rights of the plaintiff to remedies against the defendant with respect to all or any part of the transaction, or series of connected transactions, out of which the action arose. What constitutes a “transaction” or a “series” is to be determined pragmatically considering whether the facts are related in time, space, origin, or motivation, and whether they form a convenient trial unit.[26]

         Here, Dr. Sorensen alleges misappropriation of trade secrets and breach of contract. In Sorensen, he previously alleged against Dr. Polukoff participation in a RICO enterprise through a pattern of racketeering activity, violation of HIPAA, misappropriation of trade secrets, and conversion. The factual background sections for the Sorensen complaint and the Counterclaim make clear that both sets of allegations are based on the same facts.[27] These include facts related to Dr. Sorensen and Dr. Polukoff’s business relationship, their exploration of the possibility that Dr. Sorensen might turn over his practice to Dr. Polukoff, Dr. Polukoff’s alleged unauthorized theft of a hard drive containing patient information, and Dr. Polukoff’s alleged unauthorized use and/or disclosure of that information.[28] In addition, they are based on the same employment relationship between Dr. Sorensen and Dr. Polukoff. The Tenth Circuit “repeatedly has held that ‘all claims arising from the same employment relationship constitute the same transaction or series of transactions for claim preclusion purposes.’”[29] “Under the rule against claim-splitting, Plaintiff [or Counterclaimant] is required to bring all of these related claims in a single action. This is true even when . . . the claim does not mature until after the initial complaint has been filed.”[30]

         Counterclaimant was required to bring all claims related to the facts underlying this case in a single action. There is no reason why the Counterclaim’s allegations could not have been brought together with the claims in Sorensen. As such, the rule against claim-splitting precludes Dr. Sorensen from bringing such claims here. The Court remains receptive to meritorious claims in this case. However, it would note that it has no interest to participate in any personal t ...

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