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Vogelsang v. Zine

July 9, 2010


The opinion of the court was delivered by: Kendall J. Newman United States Magistrate Judge


Presently before this court are multiple motions to dismiss.*fn1 Plaintiff, appearing without counsel, opposes these motions. The undersigned has fully considered the parties' briefs and the entire record in this case and, for the reasons stated below, recommends that defendants' motions to dismiss be granted and that this action be dismissed.


A. Procedural History

Plaintiff, appearing without counsel, filed a complaint on October 16, 2009. (Dkt. No. 1.) Plaintiff's complaint asserts state law claims against numerous defendants for conspiracy, fraud, defamation and negligence. (Id. at 1.) On November 30, 2009, defendant the State of California, by and through the Department of Healthcare Services and the Department of Justice, along with defendants Vivian Auble, Becky Larsen and Traci Waldheim (hereinafter the "State defendants") filed a motion to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). (Dkt. No. 15.) On December 7, 2009, defendants the Department of Health and Human Services-Office of General Counsel ("DHHS-OIG") and the United States of America (collectively the "Federal defendants") filed a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1).*fn2 (Dkt. No. 23.) On December 24, 2009, defendant Laura Zine (hereinafter "Zine") filed a motion to dismiss pursuant to Federal Rules of Civil Procedure 9(b), 12(b)(1) and 12(b)(6), as well as California Code of Civil Procedure 338(d). (Dkt. No. 26.) On December 29, 2009, defendant Electronic Data Systems, LLC (hereinafter "EDS") filed a motion to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). (Dkt. No. 29.) On December 30, 2009, defendant CIGNA Corporation (hereinafter "CIGNA") filed a motion to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). (Dkt. No. 31.)

On January 4, 2010, plaintiff filed an opposition to all of the above-motions to dismiss. (Dkt. No. 32.) Magistrate Judge Gregory G. Hollows took these matters under submission without oral argument in an order dated January 26, 2010. (Dkt. No. 39.) On January 27, 2010, plaintiff filed a "supplemental opposition" to these motions to dismiss. (Dkt. No. 41.)

On March 1, 2010, the remaining defendant who had not yet responded to the complaint, Vicki Bennett (hereinafter "Bennett"), filed a motion to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), as well as California Civil Procedure Code section 338(d) and California Civil Code section 47. (Dkt. No. 50.) Plaintiff filed an opposition to that motion on April 13, 2010. (Dkt. No. 53.) That motion was taken under submission by the undersigned on April 29, 2010. (Dkt. No. 54.)

B. Factual Background

I. United States v. Vogelsang

Plaintiff was previously prosecuted in the United States District Court for the Eastern District of California, before the Honorable Morrison C. England, Jr., for 22 counts of healthcare fraud in violation of 18 U.S.C. § 1347 and one count of witness tampering. United States v. Vogelsang, Eastern District of California Case No. 2:02-cr-00151 MCE CMK. The healthcare fraud allegations claimed that plaintiff, a durable medical equipment provider, took advantage of the potential for overpayments in the Medicare system to commit fraud in the form of "scooter swaps"*fn3 and "double billing."

Following a jury trial, on April 22, 2004, the jury found plaintiff guilty on all counts except the witness tampering count. Plaintiff was sentenced to concurrent 33-month sentences on each count, plus $168,577.84 in restitution, a penalty assessment of $2,200.00 and 36 months of supervised release. See United States v. Vogelsang, 2:07-cv-0247 MCE CMK, 2008 WL 1710103, at *2 (E.D. Cal., April 8, 2008). The court record in plaintiff's federal criminal case is extensive. It contains multiple documents relating to plaintiff's displeasure with his criminal counsel, plaintiff's request for a new trial, plaintiff's continued assertions of actual innocence and plaintiff's allegations of conspiracy and perjury by trial witnesses. Plaintiff was formally sentenced on September 6, 2005. (Dkt. No. 32 at 4.)

Plaintiff filed a direct appeal of his conviction, contending in part that the district court abused its discretion in excluding testimony that plaintiff characterized as evidence of third party culpability. The Ninth Circuit, upon review, denied plaintiff's direct appeal and affirmed plaintiff's conviction in an unpublished opinion. United States v. Vogelsang, 2006 WL 3613201, at *1 (9th Cir., Dec. 11, 2006). The Ninth Circuit's decision is as follows:

Scott Vogelsang appeals his conviction on 22 counts of health care fraud in violation of 18 U.S.C. § 1347. He challenges the conviction on the ground that the district court abused its discretion in excluding testimony that Vogelsang characterized as evidence of third party culpability. The district court excluded the evidence for lack of sufficient probative value, and we agree. The evidence dealt with misconduct on the part of a supervisor in the claims processing office, but with respect to the handling of claims other than those submitted by Vogelsang. It is not evidence even suggesting that the supervisor could be guilty of the crimes with which Vogelsang was charged.

Vogelsang also challenges his sentence on the ground that the district court should have conducted an evidentiary hearing to determine the amount of loss caused by the fraud. The government introduced testimony calculating the amounts that Vogelsang had double billed. Vogelsang did not submit or proffer any evidence that the loss should be calculated differently. The amount was not reasonably in dispute so as to give rise to the need for any evidentiary hearing. See U.S.S.G. § 6A1.3(a). Affirmed.


Plaintiff, when he was a federal prisoner, also filed a pro se civil action for habeas corpus relief to correct or set aside his criminal judgment pursuant to 28 U.S.C. § 2255. Plaintiff also sought leave to conduct formal discovery. Plaintiff filed numerous documents in that habeas action asserting claims similar to those brought in the instant civil case. For instance, plaintiff filed a document entitled "complaint and motion for writ of conspiracy" brought against several of the same defendants named in this action. See United States v. Vogelsang, 2:02-cr-00151 MCE CMK (Dkt. No. 217.) Plaintiff argued then, as he argues here, that Bennett falsely testified and destroyed evidence. (Id. at 2.) Plaintiff also contended that Zine engaged in a conspiracy and provided false testimony. (Id. at 3.) Plaintiff argued that the evidence before this court and in the possession of the United States "demands an immediate release of Vogelsang from incarceration." (Id.)

The district court denied plaintiff's motion for habeas relief. (Id., Dkt. No. 247); United States v. Vogelsang, 2:07-cv-0247 MCE CMK, 2008 WL 2484894, at *1 (E.D. Cal., June 19, 2008). Despite plaintiff's contentions that the prosecutors suborned perjury, obstructed discovery, and engaged in various exhibit errors and forgeries, the court found no grounds for reversal of plaintiff's conviction. In so finding, the magistrate judge held, inter alia, that "movant does not present anything to this court beyond conclusory and unsubstantiated arguments that the government's evidence was false and that he is not guilty of the crimes." See United States v. Vogelsang, 2:02-cr-00151 MCE CMK (Dkt. No. 247.)

On June 9, 2008, plaintiff objected to the findings and recommendations of the magistrate judge in a 46 page filing which mirrors much of the complaint in the instant civil action. (Id., Dkt. No. 250.) Plaintiff argued, as he does in the instant complaint, that the parties and the court "failed to comprehend the significance of the Charpentier*fn4 injunction," that EDS improperly applied Medi-Cal adjustments, that Zine and Bennett engaged in conspiracy and perjury and that plaintiff was actually innocent. (Id.) Plaintiff further argued that Dubsick erroneously testified at trial. (Id.) Plaintiff contended that CIGNA admitted that certain medical claims at issue were denied in error. (Id. at 24.) Plaintiff argued about the validity of discovery from Larsen and Dubsick. (Id. at 25.) Plaintiff stated that Hurst's testimony at trial contained false information. (Id. at 35-36.) Plaintiff attached much of the same evidence to this habeas filing as he does in the instant case. See, e.g., id. at 45; 2:09-cv-02885 JAM KJN Dkt. No. 41 at 5 (attaching identical email dated August 23, 2005).

District Judge Morrison C. England, Jr., after reviewing the plaintiff's objections and the magistrate judge's findings and recommendations de novo, denied the plaintiff's section 2255 habeas petition. (Id., Dkt. No. 251.) Plaintiff then sought a certificate of appealability to challenge his conviction. Judge England found that there was not a "substantial showing of the denial of a constitutional right" and denied plaintiff's request for a certificate of appealability. United States v. Vogelsang, 2008 WL 4629784, at *1 (E.D. Cal., Oct. 17, 2008).*fn5

ii. Vogelsang v. United States, et al.

On October 16, 2009, plaintiff filed this civil action against numerous parties involved in the underlying criminal investigation and prosecution. (Dkt. No. 1.) In general, the allegations plaintiff makes in the instant complaint and in opposition to the motions to dismiss seek to refute the allegations in the indictment of plaintiff's underlying criminal case. (See Pl.'s Opp'n to Mtn. to Dismiss (Dkt. No. 32 at 2).) The complaint includes causes of action for conspiracy, fraud, defamation and negligence stemming from plaintiff's underlying criminal prosecution, trial and conviction. (Dkt. No. 1.)

Plaintiff contends that the Federal defendants and State defendants have failed to perform the duties of their respective offices by failing to coordinate or audit payments for benefits in accordance with relevant regulations, and that those defendants failed to apply appropriate legal standards in his underlying criminal case. He argues that federal agents colluded with witnesses and suborned perjury in the underlying criminal trial in violation of his civil rights, and that defendants Bennett and Zine committed perjury and were involved in a conspiracy to conceal their fraudulent acts. Plaintiff contends that new evidence following his criminal trial led him to the conclusion that there was improper collusion between defendants and destruction of records. (Dkt. No. 32 at 11.) Plaintiff argues that the "criminal court obtained a conviction where it lacked jurisdiction based on an emotionally charged trial with its agent's Dubsick's failure to understand the subject matter and Charpentier's impact, fraud, colluding of witnesses, perjury, and etcetera." (Dkt. No. 32 at 12.)

Plaintiff also contends that defendants Zine and Bennett and possibly other defendants conspired to embezzle money and inventory from plaintiff's medical billing company in 2000 and 2001. (Dkt. No. 1 at 5-12.) Plaintiff alleges that Bennett's perjury was part of a continuing fraud against plaintiff wherein Bennett colluded to falsify Medicare Certificates of Medical Necessity and submit claims with altered certificates. (Dkt. No. 1 at 11.)

Plaintiff argues that Dubsick, a representative of DHHS-OIG, falsely testified at plaintiff's trial, persuaded other witnesses to change their testimony, and conspired with DHHSOIG to prosecute plaintiff without jurisdiction. (Dkt. No. 1 at 11-12.) Plaintiff further alleges that defendant Hurst, an alleged representative of DHHS-OIG, provided testimony at plaintiff's criminal trial in 2004 that was either false or inaccurate. (Dkt. No. 1 at 12.) Plaintiff contends that Hurst used false accounting in his testimony and "colluded with Zine, Bennett, Dubsick, DHHS-OIG and Does to secure a criminal conviction for fraud against the plaintiff. Hurst continues to do so and failed to correct his fraud even after being informed of his error in March of 2009." (Dkt. No. 1 at 12-13.) Plaintiff alleges that Stone testified negligently at plaintiff's criminal trial concerning medicare reimbursement rates. (Dkt. No. 1 at 17-18.)

Plaintiff also contends that defendants Larsen, Auble, EDS, CDHCS, Waldheim and the California Department of Justice negligently failed to review documents in their possession and failed to follow federal regulations regarding third-party payment adjustments. Further, plaintiff contends that defendants Larsen, CDHCS, Waldheim, the California Department of Justice, Stone, DHHS-OIG and CIGNA acted negligently and defamed plaintiff by making false affidavits and false criminal charges. Plaintiff alleges that Larsen and Waldheim, as agents for the State of California, negligently filed a two-count felony charge of elder abuse against the plaintiff in 2003. The plaintiff was then arrested and detained in February, 2005, but all charges were later dropped in November, 2005. As to defendant EDS, plaintiff contends that it neglected to make proper adjustments and properly process claims in its possession, and that it hid material facts relating to that negligence. (Dkt. No. 1 at 17.)

Plaintiff contends that all of the defendants conspired with each other through "work, federal and state investigations and legal proceedings." (Dkt. No. 1 at 13.) Plaintiff alleges that these acts were done knowingly to hide the defendants' fraud, deceit and conspiracy. Plaintiff alleges that defendants so colluded to convict him for fraud, advance their careers and force plaintiff's medical ...

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