The opinion of the court was delivered by: Pollak, District Judge.
The United States brought this action in the Eastern District
of Pennsylvania alleging that defendants had engaged in a scheme
of false medical billing in violation of, inter alia, the False
Claims Act, 31 U.S.C. § 3729 et seq., and the Federal Debt
Collection Procedures Act, 28 U.S.C. § 3001 et seq. Thereafter,
defendants filed two separate motions to transfer venue. The
first sought transfer pursuant to 28 U.S.C. § 3004(2)(b), a venue
provision of the Federal Debt Collections Procedures Act.
Defendants filed a separate motion to dismiss and/or for change
of venue pursuant to 28 U.S.C. § 1404(a) and 1406. On March 9,
1999, I denied defendants motions with respect to §§ 3004(2)(b)
and 1406. I stayed, however, defendants motion to transfer venue
pursuant to § 1404(a) pending further submissions by the parties.
Because defendants have now succeeded in showing that the
convenience of parties and witnesses would be served by such a
transfer, and that the proposed transfer is consistent with the
interests of justice, and because the Eastern District of
Missouri is a district in which the action "might have been
brought," I will grant defendants' motion and transfer venue to
the Eastern District of Missouri.
The government alleges that the defendants cooperated in a
scheme to defraud the Medicare system. As described in the
government's complaint, the scheme involved the billing of
medical supplies in Pennsylvania for use in several states in the
Midwest. Defendants incorporated Lancer in Pennsylvania in order
to have access to the Pennsylvania Medicare reimbursement rates.
Those rates were substantially higher than the rates applicable
in Missouri, Illinois, Nebraska, and Kansas — the states in which
the medical supplies were ultimately sold. The government thus
contends that defendants billed the Medicare Trust Fund for
supplies at rates substantially higher than those to which it was
entitled for the sales at issue.
Defendants allegedly carried out their scheme in the following
manner. The two Missouri corporations used their sales
representatives to find appropriate patients in nursing homes in
Missouri, Illinois, Kansas, and Nebraska. The Missouri
corporations supplied these customers with the ordered items. The
supplies were then charged by Lancer to Pennsylvania Blue Cross,
which processed such claims in Pennsylvania — at the Pennsylvania
reimbursement rates — having entered into a contractual
arrangement with Health Care Financing Administration to provide
such services. The HCFA is charged with the administration of the
All told, the defendants contend that there were thirty nursing
homes with which the Missouri corporations did business, and thus
which might be directly relevant to the scheme here alleged. Of
these, seven are located within the Eastern District of Missouri,
and three more are within the "St. Louis metropolitan area,"
although they are located in Illinois. The remaining nursing
homes are all located in Illinois, Kansas, and Nebraska.
The residences of each of the eleven individual defendants are
listed as being located in Missouri; the listed residences of
nine of them are in the St. Louis area, and are thus within the
Eastern District of Missouri. Further, two of the three corporate
defendants have their principle place of business in the Saint
Louis area. Thus, eleven of the fourteen defendants reside in the
Eastern District of Missouri, and all but Lancer, which is
incorporated in Pennsylvania, reside in Missouri.
The government has painted defendant Lancer as a shadow
corporation. Lancer was incorporated, and had a mailing address,
in Pennsylvania. The government contends, however, that Lancer
did not actually occupy the office at that address. Additionally,
all of its stock was owned by the individual defendants in this
the government claims that the corporation did not have any
Section 1404(a) provides: "For the convenience of parties and
witnesses, in the interest of justice, a district court may
transfer any civil action any other division where it might have
been brought." Transfers of venue pursuant to 28 U.S.C. § 1404(a)
are discretionary. See Shutte v. Armco Steel Corp.,
431 F.2d 22, 25 (3d Cir. 1970). Transfer of this action to the Middle
District of Missouri is thus appropriate if (1) this action could
have been originally brought in the Middle District of Missouri,
and (2) such a transfer would serve the convenience of the
parties and witnesses and the interests of justice.
There is little question that this action could have been
brought originally in the Eastern District of Missouri. The only
issue that suggests itself as presenting a potential problem in
this regard is the ability of that court to obtain personal
jurisdiction over Lancer. Of the defendants, only Lancer is
listed as a non-resident of Missouri. If Lancer is subject to
personal jurisdiction, however, then it, too, is a Missouri
resident for purposes of venue under 28 U.S.C. § 1391(c): "For
purposes of venue under this chapter, a defendant that is a
corporation shall be deemed to reside in any judicial district in
which it is subject to personal jurisdiction at the time the
action is commenced." Thus, if Lancer is subject to personal
jurisdiction in Missouri, then venue is appropriate there, given
that an action can be brought in any "judicial district where any
defendant resides, if all defendants reside in the same State."
28 U.S.C. § 1391(b)(1). Of course, the ability of the Eastern
District of Missouri to obtain personal jurisdiction over Lancer
also has independent importance with respect to the interests of
justice, insofar as Lancer is a central defendant in this case,
as alleged by the government.
Rule 4(e) of the Federal Rules of Civil Procedure "authorizes
personal jurisdiction over non-resident defendants to the extent
permissible under the law of the state where the district sits."
Mellon Bank (East) PSFS v. Farino, 960 F.2d 1217, 1221 (3d Cir.
1992). The Missouri legislature has adopted a so-called "long-arm
statute" of personal jurisdiction, reflecting its intent "to
provide jurisdiction within the specific categories enumerated in
the statute, to the full extent permitted by the due process
clause of the Fourteenth Amendment." State ex rel Metal Serv.
Ctr. of Georgia, Inc. v. Gaertner, 677 S.W.2d 325, 327 (Mo.
1984) (en banc); see also Gangwere v. Bischoff, 935 S.W.2d 783,
784 (Mo.Ct.App. 1996). Among those transactions covered are
"[t]he transaction of any business within this state; [and]
(2)[t]he making of any contract within this state. . . ."
Mo.Rev.Stat. § 506.500.1. Personal jurisdiction will therefore
obtain in the present case in the Eastern District of Missouri if
Lancer's business and contracting activities in Missouri were
sufficient to satisfy federal equal protection requirements.
Lancer's business transactions in Missouri were clearly
sufficient to constitute the requisite minimum contacts. Indeed,
all (or nearly all) of the business conducted by Lancer was
connected with the two Midwest corporations, both of which are
located in Missouri. The government alleges that Lancer was
created simply to bill the Medicare system on behalf of the
corporations in Missouri, which took and filled all of the orders
that constitute the subject matter of the present lawsuit. There
is little doubt that Lancer could have "reasonably anticipate[d]
being haled into court" in Missouri. World-Wide Volkswagen Corp.
v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490
(1980). Further, there is nothing that would suggest that,
notwithstanding the foreseeability of Lancer's being made a
defendant in Missouri, such an exercise of jurisdiction would
offend "traditional conception[s] of fair play and substantial
justice." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476,
105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) (quoting International
Shoe Co. v. Washington, 326 U.S. 310, 320,
66 S.Ct. 154, 90 L.Ed. 95 (1945)). Accordingly, the Eastern
District of Missouri may exercise personal jurisdiction over
Lancer. And, for the reasons noted above, it follows that the
present case could have been brought in that district.
In order for transfer to be appropriate, defendants must
further show that such a transfer would serve "the convenience of
parties and witnesses" and be "in the interest of justice."
28 U.S.C. § 1404(a). Courts should look to "all relevant factors to
determine whether on balance the litigation would more
conveniently proceed and the interests of justice be better
served by transfer to a different forum." Jumara v. State Farm
Ins. Co., 55 F.3d 873, 879 (3d Cir. 1995) (quoting 15 Charles
A. Wright, ...