United States v. The Radiology Group LLC

Background

Allison Lynes and Jeffrey Zuckerman filed a sealed lawsuit under the False Claims Act, a federal law addressing fraudulent claims for government payment, against The Radiology Group LLC (TRG) and Anand Lalaji. The allegations included misrepresenting which radiologists performed services billed to federal health-care programs and seeking payment for radiology interpretations that had not been reviewed by U.S.-based radiologists.

The Government investigated, intervened in the case, and reached a settlement with the defendants. The court entered the parties’ Stipulation and Consent Judgment on March 28, 2024. The defendants agreed to a judgment of $2,678,387.21 plus applicable interest and agreed to pay that amount over three years. The Stipulation also stated that failing to comply fully with the payment schedule would constitute a default.

The Government later issued a press release announcing the settlement and attached the Government’s complaint and the Stipulation. The defendants’ first payment, $592,454.38 plus interest, was due April 16, 2024. The defendants instead told the Government they would pay $11,000 because of changes in TRG’s financial condition. After the Government sent a notice of default, the defendants moved to set aside the Consent Judgment.

The defendants’ arguments

The defendants relied primarily on Federal Rule of Civil Procedure 60(b)(6), which allows relief from a final judgment for a reason that justifies relief and is available only in extraordinary circumstances. They argued that the parties had not contemplated the press release and that it focused on unsubstantiated and damaging allegations from the Government’s complaint. They claimed the press release caused TRG to lose business relationships and more than $9 million in revenue, creating extreme and unfair hardship.

The defendants also invoked Rule 60(b)(5), which can provide relief when applying a judgment prospectively is no longer equitable. The court held that this provision did not apply because the Consent Judgment was a money judgment and therefore did not have prospective application. The court analyzed the motion only under Rule 60(b)(6).

Court’s reasoning

The court held that the defendants had not shown extraordinary circumstances. First, it found nothing unusual about a U.S. Attorney’s Office issuing a press release announcing a settlement. The defendants had agreed that the Government would file its complaint and had notice that the court would unseal the Government’s complaint. The court also noted that the press release included the Stipulation, which identified the allegations to which the defendants had admitted.

Second, the court held that the defendants’ financial losses did not justify undoing the settlement. The defendants had freely negotiated the settlement and payment schedule, were represented by sophisticated counsel, knew about their precarious financial condition, and acknowledged that they anticipated negative financial effects from the Stipulation and a possible press release. The court applied the principle that Rule 60(b)(6) cannot be used to escape the consequences of a voluntary settlement merely because a party later determines that its assessment of the consequences was incorrect.

Disposition

Judge Analisa Torres denied the defendants’ motion to set aside the Consent Judgment. The court directed the Clerk of Court to terminate the motion at ECF No. 22.