Free Supplement - District Court of Arizona - Arizona

EXHIBIT A
Case 2:04-cv-00078-FJM Document 216-2 Filed 05/25/2008 Page 1 of 18

Shimko & Piscitelli
Timothy A. Shimko Frank E. Piscitelli, Jr. Legal Professional Association 2010 Huntington Building 925 Euclid Avenue Cleveland, Ohio 44115 Telephone (216) 241-8300 Fax (216) 241-2702 E-Mai splaw@ix,netcom.com

March 4, 2003 VIAFACSIMILE 480.212.0054 Paul Woodcock, D.C. Milton Guenther, D.C. Richard Ross David Guenther Joel V. Brill, M.D. Fred Ritchie CORF Licensing Services, L.P. CORF Management Services, L.P. 7272 East Indian School Road Ste. 540 Scottsdale, Arizona 85251 Re: Dear Gentlemen: Regretfully, in light of present circumstances, and as we discussed at length last week, it has become impossible for my firm to continue to provide services without our past bills being paid. I am happy to continue to work with you, but my practice cannot survive without being compensated for its past and future services. As you know, you have sent me five checks, for which there were insufficient funds, totaling $112,500. Presently, your obligations to this firm and me exceed $354,000. By Friday February 28, 2003, we were served with an additional 10 new complaints from Beus Gilbert. Adding these to the two that Cheifetz served earlier last week, brings the total to 12 new lawsuits. This would effectively increase our workload by an additional 50%. Should you be able to bring my fees current, I estimate that at least $25,000 in additional services will need to be paid on a weekly basis to continue to defend these lawsuits. CORF case status

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Paul Woodcock, D.C. Milton Guenther, D.C. Richard Ross David Guenther Joel V. Brill, M.D, Fred Ritchie March 4, 2003 Page 11

ii. Status: a. Responsive Pleadings have been filed 39) Wear v. CORP, CV 2003-002799 i. Counsel: a. New case (no Gammage & Burnham; no pro hac vice filed yet) ii. Pending: a. Answer / Response Due: 3/28/03 40) Yepremian v. Goldfarb, CV-03-479 NM (SHSx), Cen. District of California i. Counsel: a. Bidna & Keys ii. Status: a. Motions to dismiss for 12(b)(6): pending 41) Zadeh v. CORF, 02CI07945 i. Counsel: a. Reminger & Reminger b. Shimko & Piscitelli's pro hac vice application has been: admitted ii. Status: a. Motions to dismiss: pending b. Answer: due if motions to dismiss fail Very truly yours,

/mp

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EXHIBIT B
Case 2:04-cv-00078-FJM Document 216-2 Filed 05/25/2008 Page 4 of 18

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA

SHIMKO & PISCITELLI, et al., Plaintiffs, vs. PAUL WOODOCK AND BOBBI WOODCOCK, et al., Defendants. ) CIV 04-0078-PHX-FJM Phoenix, Arizona May 17, 2005 9:02 a.m.

BEFORE: THE HONORABLE FREDERICK J. MARTONE,

JUDGE

REPORTER'S TRANSCRIPT OFPROCEEDINGS TRIAL TOTHECOURT

Official Court Reporter: Linda Schroeder-Willis, RDR, CRR Sandra Day O'Connor U.S. Courthouse, Suite 312 401 West Washington Street, Spc. 32 Phoenix, Arizona 85003-2151 (602) 322-7249 Proceedings Reported by Stenographic Court Reporter Transcript Prepared by Computer-Aided Transcription

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2

1 2 3 4 5 6 7 For the Defendants: 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 For the Plaintiffs:

A P P E A R A N C E S

Timothy A. Shimko & Associates By: DAVID A. WELLING, ESQ. TIMOTHY A. SHIMRO, ESQ. 2010 Huntington Bldg. 925 Euclid Avenue Cleveland, OH 44115

Richard J. McDaniel PC By: RICHARD JOSEPH McDANIEL, ESQ. 7321 North 16th Street Phoenix, AZ 85020

UNITED STATES DISTRICT COURT

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3

1 2 3 4 5 6 7 8 9 10 SHIMKO, Timothy Andrew 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 EXHIBIT NO.: 1 WITNESSES FOR THE DEFENDANTS: GOLDFARB, David WOODCOCK, Paul GUENTHER, Milton 10 WITNESSES FOR THE PLAINTIFFS: SUMMARY OF COURT PROCEEDINGS

INDEX PAGE: 6 97 194 201 209

Opening Statements Plaintiffs' Defendants' Motion for Directed Verdict Closing Arguments Plaintiffs' Defendants' Plaintiffs'

INDEX OF WITNESSES Direct Cross 53 Cross 117 144 179 Redirect 92 Redirect

Direct 106 125 161

160 193

INDEX OF EXHIBITS DESCRIPTION: RECEIVED:

Plaintiffs' Paid Invoices to CORE totaling $123,277 49 2 Plaintiffs' Unpaid Running Invoices to CORF totaling $359,668 53 8 Arit Arya vs. CORF, CV 2003-003239 47 9-36 Various Lawsuits' Face Sheets 48 37 Lorin S. Brandon General Release of All Claims 44 38-64 Various General Releases of All Claims 46 Personnel List 65 93 66A Redacted E-mail 11/16/01 from Hellman to Shimko 26

UNITED STATES DISTRICT COURT

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53

1 2 3 4 5 6 7 8 9 10 11 12 13 14 1S 16 17 18 19 20 21 22 23 24 25

Exhibit 2. THE COURT: Is there objection? MR. McDANIEL: No, Your Honor. THE COURT: Exhibit 2 is admitted. Q. (BY MR. WELLING) Did you expect to get paid for all of the work that you performed for Dr. Guenther and his partners? A. Unless I'm working pro bono, I expect to be paid all of the time. And I made that known to Mr. Guenther and his -Dr. Guenther and his partners. Q. Did you have any conversations with Dr. Guenther regarding the fact that you expected to be paid? A. At the beginning and at the end, yes, you know, when we started this whole arrangement back in November of 2001, you know, I made it very clear that I was looking to him and his partners for payment. MR. WELLING: I have nothing further, Your Honor. THE COURT: All right. Mr. McDaniel. CROSS-EXAMINATION BY MR. McDANIEL: Q. Mr. Shimko, I want to clarify a few things. When did you first meet with my client, Mick Guenther? A. I first met your client probably back in 1991. Q. Do you remember when in 1991? A. I was going to say the summer months, because it was warm UNITED STATES DISTRICT COURT

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91

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Q. Who did the wire transfers, A. I do not know,

do you know?

although I would say that it was Mr. Ross,

Richard Ross, who was the accountant, the CPA, and was the keeper of the funds. Each of them had their own specialty. He was the accountant, the bookkeeper. Goldfarb did a lot of the salesmanship. Q. Did you ever receive a check from Dr. Guenther related to this CORF litigation? A. I think I was paid by wire transfer. I don't remember receiving any checks for the services we provided. And I certainly don't remember receiving any personal check of Dr. Guenther's. Q. How much was your firm paid by CORF Management and CORF Licensing Services? A. We did -- We did about $490,000 worth of work, and we were paid $129,000 -- $135,572. That's what we were paid. Q. That was the total amount you've been paid? A. We have been paid a total amount of $135,572, and we are still owed $359,668 plus interest at the rate of one and a half percent per month from April 30th of 2003. Q. It's your contention that that whole amount is owed by Dr. Guenther and his wife? A. It's my contention that they were partners, and they, as partners, they contracted for the services, and as partners they received the services equally, so I think he's jointly UNITED STATES DISTRICT COURT

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EXHIBIT C
Case 2:04-cv-00078-FJM Document 216-2 Filed 05/25/2008 Page 10 of 18

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6 through, let ' s see, some worksheets following a.^. pri '! 23, 2003, billing statement. to you have al -i thats I have a '171 page document, yes. Q. 6
7

Okay. The total

of

the attorney fe e s reflected in

Exhibit _ by my calculation is about $817,000. Is that consistent with your understanding? Well, I wouldn't think so. Q. A. Q. You would not? No, I don't th i nk it comes to that. Have you taken any steps to calculate the total

8 9 10 11 12 _3 19 15
16

amount billed? A. Q. A. Q. a, Oh, yeah, sure. We sent total billage. I'm sorry? I'm sure they were nowhere near 850,000. You do not believe they were near 850,000?

17 18 19 20 21 22 23 4

I

think they were closer to about 580 some

thousand; 480 to 500 some thousand. I think we had $350,000 that remained unpaid, and we were paid 135,000. That's my recollection. Q. All right.
now,

you were, in fact -- I'm sorry?

Go =age 1E4, Bates stam p 164. Q, Okay. _._e _f 342,000. can get
-a-

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one than

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. usJ_ _ AND ASSOCIATES (602)997-80E6

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EXHIBIT D
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In r TEie Matter

of

CENTURY 2 THERAPY VS CORF LICENSING IN THE SUPERIOR COURT OF THE STATE OF ARIZONA IN AND FOR THE COUNTY OF MARICOPA

PAUL WOODCOCK FEBRUARY 25, 2003

JD REPORTING, INC CRETIFIED COURT REPORTERS 389 East Palm Lane Suite 9 Phoenix, Arizona 85004 Phone: (602) 254-1345 Fax: (602) 254-2548 E-Mail address: [email protected]

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CENTURY 2 VS CORE
(9)35 a.m.) 2 3 5 MR. CNEI?ET5, Tim,
1

Condcnsclt 'm
Page 119

PAUL WOODCOCK Page ]2]

thought we'd first go over some

procedural matters, create a record on that, if you don't mind. MR. SHSMKOt oh, whatever. MR. CHEIFET2:
Okay.

We'd like to schedule some

6 l E 9 10 11 12 13 14 15 16 11
19

out-of-state depositions. and, under the F.rizona Rules of Procedure, since they're nonparties, we're supposed to ask for your permission to everybody's agreeing that these depositions are appropriate and necessary for this case. We'd like to do the depositions of the individuals who were alleged to have received payments from cls in order to speak to potential [LE customers, namely, Mr. Marshall, Mr. Bonebreak, Mr. Machale and Mr. Nibbler. MR. 5HIME0, Well, you know what, you've had time to chink about this issue thee you want to bring up on the record here. I haven't had time to think about it. I don't think this is the a propriate time for me to be committing on the
record

p

what I Want to do and don't went

to do.

I should be

19 20 21 22 23 24 25

given an opportunity to give as much thought to this as you have. Why don't you put this all in a letter to me and, you
know,

let me think about it and let as give you my response. MR. csEIFETZ: Well, my concern is that, as has been

talking with each other. MR. CHEIFET2: 1 disagree. MR. SHIMKO. Well, finish our depositions. I don't like to be ambushed like this with issues. Okay. I'd like to be able to give as much thought to the issues as the lawyer who's presenting the proposal has given it. I'm here to concentrate on depositions today. MR. CIIEIPET2: Ijust wanted to bring them up to you in an effort of good faith that you and I could have some sort of civil discussion about them and perhaps give you the opportunity to raise whatever concerns you may have with doing these individuals' depositions and if you thought that they were inappropriate, perhaps we could address your concerns, and I thought maybe as two gentlemen we could seek to discuss I MR. SHIMKO: And I hope to do that. If you want to have a beer later tonight and discuss it, that will be fine, but not now. Let's finish these depositions. Let's finish what we came here to do, and then let's you and I talk about the procedural matters afterwards. All right. MR. CHEIFET2: Very well. The witness is still under oath, I assume. MR. SHIMKO: I consider him so.

the case in the past, is that you will seek to use this as simply for the purpose of delay. I appreciate it you would try to think about it today, and I'll ask you later in the day. Page 220

Page 122
1 (9:40 a.m.) 2 PAUL WOODCOCK having been previously duly sworn, was examined and '! 3 4 testified as follows: 5 EXAMINATION 6 BY MR. CHEIFET2: 7 Q, Mr. Woodcock, what is Aztec Medical? MR. SHIMKO: objection. 8 Instruct him not to answer. 9 MR. CHEIFET2: I'm going to go through a series of 10 11 questions dealing with fraudulent transfer. I assume you're 12 going to object and instruct your client not to answer. 13 assume that's your right. I do want to create a record and 14 bring this up with the Court. 15 Mil SHIMKO: Quite frankly, if you want to even save 16 time, Pll waive any argument I have about not making a 17 record. 18 I will tell you now that I think any questions about 19 their outside financial interests, whatever they may or may not 20 be, is off record. If you want to save yourself some time and 21 ink, I won't even put you through the exercise of having to 22 make the record. MR. CHEtPETZ: I do appreciate that, but I'd like to 23 24 have an opportunity to briefly run through some questions. 25 MR. SHIMKO: Why don't you put down all the questions,

1 2 3 4 5 6 7 e 9 1B 11 12 23 14 15 16 17 19 19 20 21 22 23 24 25 issues. Mr. Ross.

MR. SHIMKO:

Well, I'm going to be concentrating on

the depositions today. If you want to excuse these depositions for the rest of the day to give me some time to think about it, fine. For the rest of the day I think 1'11 be otherwise occupied. MR. cHEIFETI: We'd like to do deposition of Jack Stookey, and so we'd ask basically for those five gentlemen, permission from your office to conduct those depositions. MR. 5HIMKO: I would suggest you put what you want in writing and get it to me and I 11 respond forthwith. MR. CHEIFET2: Very good. In addition, we have other depositions that we noticed In this case that the court has asked us to reschedule. And prior to conducting those depositions, -M5. BREWER: David Goldfarb and Mr. Goldfarb and

.

MR. C

-- we'd like to resolve some discovery

MR. 5HZMK0: You know, I don't think this is the time today. We're here for depositions. Let's take the depositions, and then we can resolve the other issues.
Okay.

MR. CHEIFEIL: Just, it's difficult oftentimes to speak to you. You don't return phone calls, MR. SIIIHKO: You and : have never had any problem

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PAUL CENTURY 2 VS CORF
1 Q. BY MR. crIEIFETZ:

WOODCOCK Condensclt r'
Page 123 Page 125 Q. And do you know how the amount of the draws are 1 2 calculated? A. No. 3 Q. Do you know how your -- it's determined what amount 4 5 you're going to receive as income front the company? A. When you do the deposition of Richard Ross, he will be 6 7 able to fill you in on that. Q. I wish I shared your confidence. 8 Is Cis or CMS currently transferring assets out of the 9 10 company without receiving consideration in exchange for the 1 I transfer of those assets? MR. SHIMKO: You can answer that question. 12 THE WITNESS: NO. 13 Q. BY MR. CHEIFETZ: Is CLS or CMS currently transferring 14 15 assets to Aztec Medical? MR. SHIMKO: Objection. 16 Instruct you not to answer. 17 Q. BY MR. CHEIFETZ: Is your attorney Mr. Shimko the CEO 18 19 of Aztec Medical? MR. SHIMKO: Object. 20 Instruct you not to answer. 21 Q. BY MR. CHEIFETZ: Does your attorney Mr. Shimko have 22 23 an ownership interest in either CIS or CMS? MR. SHIMKO: Objection. 24 You can answer that. 25 Page 126 TRE WITNESS: Na. I MR. CHEIFETZ: Why not answer about Aztec Medical? 2 MR. SMMKO: It has nothing to do with this lawsuit. 3 4 MR. CHEIFETZ: There ' s been allegations -MR. SEEMED: There's allegations that you beat your 5 6 wife. Do you want me to go into that? MR. CHEIFETZ: If it was appropriate in this case. 7 MR. sntMKO: There you have it, if it were appropriate 8 9 in this case, and there's the rub. MR. CHEIFETZ: why not just allow him to testify and 10 11 settle this issue right now, if you could just let him, that 12 you have no ownership. MR. SHIMKO: YOU have my position. You can argue with 13 14 me or you can conduct your deposition, whichever you choose. 15 Q. BY MR. caasnaTZ: noes CLS or CMS have an ownership 16 interest in Aztec Medical? MR. SHIMKO: object. 17 And instruct you not to answer. 18 19 Q. BY MR. CHEIFETZ. rd like you to explain to me the 20 ownership interest of some of the other players in us. For 21 instance, can you tell me what ownership interest Dr. Brill 22 has? A. None. 23 Q. What about Richard Ross? 24 A. He's a limited partner, 25

is cis currently unable to make

2 payroll to its employees? A. No. 3 Q. C7 S is not bouncing checks to any of its employees for 4 5 wages? A. I'm not into the financial. You're asking me 6 7 questions Pm not part of. I'm a limited partner. Q. Has CLS been laying off significant numbers of 8 9 employees at this time? A. CLS hasn't laid off employees. CMS has restructured 10 11 an internal organization, so doing as part of that plan there 12 has been restructuring of employees. It was found that not all 13 of the services in CMS were utilized, and we found that there 14 are clients leaving because of that, and they could find 15 billing and other services cheaper elsewhere. So in an effort 16 to stymie that, there's been a reorganization internally, but 17 that's in CMS. And I think you're taking the deposition of 18 Joel Brill, and that's his area, and I'm sure he will be glad 19 to elaborate on that. Q. I appreciate that, and I will seek to address the 20 21 questions with him, as well, but I would like to detennine the 22 extent of your knowledge in that regard, as well. A. Sure. 23 Q. Is CMS bouncing checks to its employees? 24 A. No. 25 Page 124 Q. Is ems able to pay its employees' wages as they become I 2 due? A. Again, as far as r know, but that's not my area, so 3 4 I'm not into that. Tin a limited partner, and I don't have any 5 day-to-day functions, so I don't know that. Q. What is the extent to your limited partnership 6 7 interest? What percentage do you own? A. I can make a ballpark. I don't know exactly. 8 9 Richard Ross could tell you exactly. Do you want me to make a ballpark? 10 11 Q. Yes, please do. 12 A. Somewhere around 20 percent. Q. Now, why is it that you're required to estimate the 13 14 extent of your ownership interest? How come that's not common 15 knowledge to you? 16 A. Well, I'm sure at this time -- when it was formed, it 17 would have been common knowledge. I just don't know, I don't 18 think, what it is you're asking. Q. Are you paid based upon your ownership interest? 19 20 A. Again, I received draws, and how that's done, 21 Richard Ross would have to tell you. I have nothing to do with 22 your -Q. Your testimony today under oath that you have no 23 24 knowledge how your pay is calculated? A. On draws. 25

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In The Wetter of
CENTURY 2 THERAPY VS CORF LICENSING

IN THE SUPERIOR COURT OF THE STATE OF ARIZONA IN AND FOR THE COUNTY OF MARICOPA

JOEL BRILL, M.D. FEBRUARY 25, 2003

JD REPORTING, INC CRETIFIED COURT REPORTERS 389 East Palm Lane Suite 9 Phoenix, Arizona 85004 Phone: (602) 254-1345 Fax: (602) 254-2548 E-Mail address: [email protected]

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CENTURY 2 VS CORF
1 interest in either company. 2 3 4 5 7 8 9 11 13 Q. Q. Q. What about Aztec Medical? MR. SHIMKO: objection. Instruct you not to answer.
BY

Condenseltm Page 21
I purposes for existing clients. 2 3 to? 4 5 MR, SHIMKO: objection.

JOEL BRILL, M.D. Page 23

Q. What type of software have you sought to change over

MR. CHEIFETZ: Are you currently involved in the

Where are we going with this? If we're going into the

6 formation or operation of Aztec Medical? MR. SHIMKO. objection. Instruct you not to answer.
BY

6 technical aspects of running this company, I'm going to ask you 7 that this deposition be sealed. If we're going to going into 8 the operations of this company. Seal it means you can use it,
CLS

MR. CHEIFETZ: what part of CMS and

was most in

9 you can use it in this case and all the cases you filed, and 10 but I don't want this showing up on the website tonight. I 11 don't want this showing up in the newspaper. I don't want this 12 given to Cary Edgar. 13 14 16 Can we agree to seal this deposition? MR. cuEIFETZ: t certainly understand your desire not MR. SHIMKO: don't want it shared with the Arizona

10 disarray? Is it fair to say that the billing portion of CMS was
CLS

12 in worse shape than the

portion?

A. No, that's not a fair characterization. The

14 organization is saddened by Miss Hehnan's abrupt resignation 15 and the billing service within the limitations that they had -16 given that they were using the MARS software, the billing 17 service was actually doing a fairly good job given that, one, 18 the regulations had just changed in the fourth quarter of 19 2001. The coRFs had changed from what is called cost-based 20 reimbursement to reimbursement based off the Medicare Physician 21 Fee Schedule. And, two, from the intellectual knowledge that 22 they had in terms of dealing with what are called the Medicare 23 contractors, in this case the Medicare party fiscal 24 intermediaries, there is actually a very good fund of knowledge 25 within those people who were doing those services. Part of the

15 to share it with Cary Edgar. That's not our intent.
I

17 Republic. I don't want it showing up on Guidry's website 18 tonight. 19 MR. CHEIFETZ:
I

can understand. I don't know. Is

20 the software, the type of software being used proprietary 21 information? 22 MR. SHIMKO: If you're going to go into the operations 23 of my client's company, out there are competitors, and 24 Mr. Guidry himself when he got into this deal said it was his 25 goal to take all the knowledge in CORF and open up a competing

Page 22
1 dilemma was that that area was limited in space and a plan had 2 been set in motion previously to move to new offices at the end 3 of that month. 4 6 7 8 10 11 office. 12 14 16 Q. MR. SHIMKO: MR.
I

Page 24
1 system, which I believe he's done. He did have a medical 2 background. So I've got some problems with your clients taking 3 this information, having this information on how these people 4 run their business. 5 7 MR. CHEIFETZ: t do intend to share these depositions MR. SH[MKO: And I don't have any problem with that so 6 with my clients as part of this process. 8 long as you indicate to them, one, I mean that -- I mean 9 they're not going to disseminate copies of this, it's not going 10 to show up on the website, it's not going to show up in the 11 newspaper. I think that you ought to restrict the copies that 12 you give them. There has to be some mechanism by which that 13 the running of my clients' business is not going to be spread 14 all over the web. 15 MR. CHEIFETZ: can we at least -- without such an 16 agreement, can we at least have him tell us what type of 17 software they're using to operate their billing? 18 MR. SHIMKO:
No,

Q. Is that when you moved to the current location at A. That's correct. Would you like the address? Q. I think I have it. MR. SHIMKO: They've sent enough complaints over MR. CHEIFETZ: It's real close to Beus Gilbert's have no idea where Beus Gilbert's Are you still, is or CMS still

5 Indian School and Scottsdale Road?

9 there. I think he knows the address.

13 office is.
BY CHEIFETZ: CLS

15 using the MARS software? A. The technical answer to your question is the 17 following. When there are old claims that still reside within 18 MARS, you have to maintain that in order to what's called it's, 19 quote, "work," unquote, that claim. Working the claims means 20 that there is a claim for which reconciliation has not been 21 finalized and you need to make sure, you have to track down and 22 see whether or not the payor and the insurer is actually paid 23 in that claim and, if so, is that claim active or inactive. So 24 we do maintain our MARS license in order to finish working 25 those claims, but we do not utilize MARS for doing any billing

because that is proprietary. That's

19 what they do. I mean, I've given you pretty free reign to go 20 into these things. If you're going to go in to the specifics 21 about what they're using now and what process, what programs 22 and such, I mean, I really don't see what relevance what 23 software my client is using at this time to conduct its billing 24 operations has to people, one, who are no longer clients of 25 CORE and, two, you know, who backed out of the process before

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