Washington v. Morad et al, No. 2:2015cv00868 - Document 50 (E.D. La. 2017)
Court Description: ORDER AND REASONS - For the foregoing reasons, the United States is awarded damages in the amount of $42,779,385.84, and relator is awarded 25 percent of that amount in accordance with 31 U.S.C. § 3730(d)(2). Relator has 14 days from the date of entry of this order to submit a detailed affidavit establishing reasonable attorneys' fees and costs. Signed by Judge Sarah S. Vance on 4/5/2017.(cg)
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Washington v. Morad et al Doc. 50 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA UNITED STATES OF AMERICA EX REL. ZONELL WASHINGTON VERSUS CIVIL ACTION NO. 15-868 MARK MORAD, ET AL. SECTION “R” (3) ORD ER AN D REASON S I. BACKGROU N D On March 19, 20 15, plaintiff United States, through relator Zonell Washington, brought this qui tam False Claim s Act civil action against defendants Mark Morad, Paige Okpalobi, Barbara Sm ith, J oe Ann Murthil, Latausha Dannel, Roy Berkowitz, Winston Murray, Divini Luccioni, Christopher White, Beverly Breaux, Medical Specialists of New Orleans, Interlink Health Care Services, Mem orial Hom e Health, Inc., Lakeland Health Care Services, Lexm ark Health Care, LLC, and Med Rite Pharm acy, Inc., d/ b/ a Medrite DME, Inc.1 The com plaint alleges that the defendants defrauded the United States by subm itting false claim s for Medicare reim bursem ent and used false records or statem ents to get the false claim s 1 R. Doc. 1. Dockets.Justia.com approved, all in violation of 31 U.S.C. § 3729(a)(1)(A) and (B).2 The com plaint further alleges that defendants conspired to defraud the Governm ent in violation of 31 U.S.C. § 3729(a)(1)(C).3 The com plaint seeks a judgm ent in an am ount equal to three tim es the dam ages sustained by the United States as a result of defendants’ actions, plus a civil penalty of not less than $ 5,50 0 and not m ore than $ 11,0 0 0 for each statutory violation.4 Defendants did not respond to the com plaint or to their sum m onses. On October 10 , 20 16, after obtaining entries of default, relator filed a m otion for default judgm ent as to each defendant, except Winston Murray.5 Relator also requested a hearing to determ ine the am ount of dam age suffered by the Governm ent pursuant to Federal Rule of Civil Procedure 55(b)(2).6 On Decem ber 12, 20 16, after finding that relator had alleged facts showing prim a facie violations of 31 U.S.C. §§ 3729(a)(1)(A), (B), and (C), the Court entered a default judgm ent against the defendants.7 The Court also ordered relator to subm it sum m ary judgm ent-type evidence establishing the 2 Id. at 15-16 ¶¶ 55, 56, 57, 58, 60 , 61. Id. at 17 ¶¶ 63, 64, 65. 4 Id. at 17. 5 R. Doc. 41. Relator never sought an entry of default as to defendant Murray and did not m ove for default judgm ent against him . 6 See R. Doc. 41 at 2. 7 R. Doc. 44. 2 3 am ount of dam ages within 21 days of the entry of the default judgm ent. 8 In response, relator subm its the judgm ents entered against defendants in the crim inal case United States v. Morad, et al, No. CRIM. A. 13-10 1 (E.D. La.).9 Additionally, the United States subm its a statem ent of interest requesting that judgm ent be entered in favor of the United States and that the Court not treat related crim inal proceedings against defendants as “alternate rem edies” for the purposes of 31 U.S.C. § 3730 (d)(5).10 II. D ISCU SSION Under the False Claim s Act, any person who violates the Act is “liable to the United States Governm ent for a civil penalty of not less than $ 5,0 0 0 and not m ore than $ 10 ,0 0 0 , as adjusted by the Federal Civil Penalties Adjustm ent Act of 1990 . . . , plus 3 tim es the am ount of dam ages which the Governm ent sustains because of the act of that person.” 31 U.S.C. § 3729(a)(1). As adjusted, the penalty is now between $ 5,50 0 and $ 11,0 0 0 . See 28 C.F.R. § 85.3(a)(9). The statutory penalty is not lim ited to “false 8 R. Doc. 44 at 10 . See R. Doc. 47-1 (Roy Berkowitz); R. Doc. 47-2 (Beverly Breaux); R. Doc. 47-3 (Barbara Sm ith); R. Doc. 47-4 (Christopher White); R. Doc. 475 (Latausha Dannel); R. Doc. 47-6 (J oe Ann Murthil). 10 R. Doc. 49. The Governm ent did not elect to pursue an alternate rem edy here, and thus the Court will not treat the crim inal proceedings against defendants as alternate rem edies. 3 9 claim s,” but attaches to “all fraudulent attem pts to cause the Governm ent to pay out sum s of m oney.” United States v. N eifert-W hite Co., 390 U.S. 228, 233 (1968); see also United States v. Bornstein, 423 U.S. 30 3, 312 (1976) (noting that False Claim s Act im poses penalties “for the com m ission of acts which cause false claim s to be presented”); United States ex rel. Schw edt v. Planning Research Corp., 59 F.3d 196, 199 (D.C. Cir. 1995) (“Each individual false claim or statem ent triggers the statute’s civil penalty.”). A. D am age s Su s tain e d by Go ve rn m e n t As evidence of the dam ages that the Governm ent has sustained as a result of defendants’ actions, relator subm its the judgm ents against the defendants in the crim inal case against them . 11 The judgm ents indicate that defendants Berkowitz, Breaux, Sm ith, White, Dannel, and Murthil caused the Governm ent losses of $ 4,952,816, $ 2,0 57,179.48, $ 9,484,939.85, $ 2,272,241.96, $ 2,377,938, and $ 14,147,295.28, respectively.12 The Court’s finding on the am ount of dam ages suffered by the Governm ent due to the actions of each defendant is sufficient proof in the False Claim s Act context. See United States v. Boutte, 10 8 F.3d 332, 1997 WL 73792, at *1 (5th Cir. Feb. 11 At the tim e relator subm itted this evidence, defendants Mark Morad, Paige Okpalobi, and Divini Luccioni had not yet been sentenced. 12 R. Doc. 47-1 at 5; R. Doc. 47-2 at 5; R. Doc. 47-3 at 5; R. Doc. 474 at 5; R. Doc. 47-5 at 5; R. Doc. 47-6 at 5. 4 10 , 1997) (“The crim inal court’s finding that the Governm ent’s loss was $ 30 1,627 is prim a facie proof of that fact.”). Further, the Suprem e Court has established that an order of restitution in a crim inal case and a subsequent civil penalty for the sam e acts do not violate the Double J eopardy Clause. See Hudson v. United States, 522 U.S. 93, 98-99 (1997), abrogating United States v. Halper, 490 U.S. 435 (1989). Caselaw m akes clear that defendants’ participation in a conspiracy to defraud the governm ent renders them jointly and severally liable for the total am ount of loss suffered by the governm ent and the total am ount of civil penalties. See Peterson v. W einberger, 50 8 F.2d 45, 49 (5th Cir. 1975); Mortgages, Inc. v. U.S. Dist. Court for Dist. of N ev. (Las Vegas), 934 F.2d 20 9, 212 (9th Cir. 1991) (“Where one or m ore persons have com m itted a fraud upon the governm ent in violation of the FCA, each is joint and severally liable for the treble dam ages and statutory penalty.”); United States v. Bd. of Educ. Of City of Union City , 697 F. Supp. 167, 177 (D.N.J . 1988) (False Claim s Act case finding that conspiracy to violate the False Claim s Act results in joint and several liability “for all of the dam ages and penalties against each of [the defendants]”) (em phasis in original); Kelsoe v. Fed. Crop Ins. Corp., 724 F. Supp. 448, 453 (E.D. Tex. 1988); United States v. Cabrera-Diaz, 10 6 F. Supp. 2d 234, 242 (D.P.R. 20 0 0 ) (“[W]hen two or m ore persons act in 5 concert in violation of the False Claim s Act, they are jointly and severally liable.”) (citations om itted). Further, this includes the defendants who have not yet been sentenced in the crim inal case and the corporate defendants who were not charged with a crim e. See United States v. Hangar One, Inc., 563 F.2d 1155, 1158 (5th Cir. 1977) (citing United States v. Ridglea State Bank, 357 F.2d 495 (5th Cir. 1966)); United States v. O’Connell, 890 F.2d 563, 568 -69 (1st Cir. 198 9); Cabrera-Diaz, 10 6 F. Supp. 2d at 242 (“Individuals and corporations can be sued together in one action, with each being jointly and severally liable for the total treble dam ages and civil penalties sought.”) (citing United States v. Coop. Grain & Supply Co., 476 F.2d 47 (8th Cir. 1973)). Therefore, whatever the total am ount of dam ages and penalties, defendants are jointly and severally liable for that am ount. Relator’s evidence of dam ages, while establishing various loss am ounts for each defendant, does not establish whether the losses are independent of each other, i.e., whether the largest loss am ount of $ 14,147,295.28 includes the lower loss am ounts. Instead, Relator solely asks for a judgm ent of $ 14,147,295.28.13 Thus, given the absence of evidence indicating that the defendants’ loss am ounts should be added, the Court finds relator’s evidence 13 R. Doc. 47 at 3. 6 establishes that the total am ount of dam age sustained by the Governm ent is $ 14,147,295.28. B. Statu to ry Pe n a ltie s As discussed above, the statutory penalties under the False Claim s Act are not lim ited to each violation of the Act. But relator has subm itted no evidence or argum ent as to how m any acts or false claim s or statem ents defendants m ade. The Court will not presum e or guess at the actual num ber of the false claim s or statem ents m ade in the absence of evidence. Thus, as each defendant has been found to have violated sections 3729(a)(1)(A), (B), and (C), the Court finds that each defendant is liable for three statutory penalties. Each statutory penalty cannot be less than $ 5,50 0 or m ore than $ 11,0 0 0 , but the Court has discretion to determ ine the appropriate am ount within that range. See Cook Cty ., Ill. v. United States ex rel. Chandler, 538 U.S. 119, 132 (20 0 3). In determ ining the am ount, courts have taken a “totality of the circum stances” approach, looking at factors such as the seriousness of the m isconduct, the knowledge of the defendants, the am oun t of dam ages suffered by the United States, and general fairness. See, e.g., United States ex rel. Miller v. Bill Harbert Intern. Const., Inc., 50 1 F. Supp. 2d. 51, 56, 56 n.5 (D.D.C. 20 0 7) (noting factors and collecting cases); United 7 States v. Rogan, 459 F. Supp. 2d 692, 727 (N.D. Ill. 20 0 6) (sam e). Here, each defendant participated in a wide-ranging conspiracy to defraud the Governm ent of m illions of dollars. The Governm ent suffered at least $ 14,0 0 0 ,0 0 0 in dam ages, and likely m ore. The defendants’ conduct was calculated, deliberate, egregious, and designed to provide them with significant personal gain. But the Court is m indful that the defendants either have been or will be ordered to pay restitution to the Governm ent as a result of their crim inal convictions. Therefore, the Court will not order the m axim um penalty, and finds $ 7,50 0 to be appropriate. As there are 15 defendants, each with three FCA violations, the total statutory penalty is $ 337,50 0 . C. To tal Am o u n t o f Liability an d Re lato r’s Sh are The False Claim s Act provides that any person who violates the Act “is liable to the United States for a civil penalty of not less than [$ 5,50 0 ] and not m ore than [$ 11,0 0 0 ], . . . plus 3 tim es the am ount of dam ages which the Governm ent sustains because of the act of that person.” 31 U.S.C. § 3729. Three tim es the am ount of dam age here is $ 42,441,885.84, and as established above the total statutory penalty is $ 337,50 0 , bringing the total am ount of defendants’ joint and several liability to the United States to be $ 42,779,385.84. 8 As relator, Zonell Washington is entitled to between 25 and 30 percent of this am ount, plus reasonable attorneys’ fees, expenses, and costs. Id. § 3730 (d)(2). The Court has discretion to determ ine if relator should receive the m axim um 30 percent. In considering whether to award m ore than 25 percent, district courts consider, inter alia, the significance of the inform ation provided by the relator to the governm ent, and the extent of the relator’s contribution to the culm ination of the False Claim s action, including the relator’s tim e, effort, and expenses. See United States ex rel. DRC, Inc. v. Custer Battles, LLC, No. 0 4-199, 20 0 9 WL 3756343, at *2 (E.D. Va. Oct. 14, 20 0 9) (citing S. Rep. 99-345, at 28 (1990 ), reprinted in 198 6 U.S.C.C.A.N. 5266, 5293); United States ex rel. Rigsby v. State Farm Fire and Cas. Co., No. 0 6-433, 20 14 WL 69150 0 , at *7 (S.D. Miss. Feb. 21, 20 14). Relator seeks the m axim um 30 percent, but has m ade no argum ent as to why this case warrants 30 percent instead of 25. Additionally, this m atter has been pending only for two years, and the defendants’ default status m eans that relator has spent m inim al tim e and effort in achieving this judgm ent. Therefore, the Court finds that relator is entitled to no m ore than the statutory m inim um of 25 percent of the Governm ent’s share. As such, relator is entitled to $ 10 ,694,846.46. 9 D. Atto rn e ys ’ Fe e s an d Co s ts Finally, relator seeks reasonable attorneys’ fees and costs. Though the Fifth Circuit has not directly addressed what standard to use to determ ine reasonable attorneys’ fees in qui tam False Claim s Act cases, other circuits and other district courts in this Circuit have used the lodestar m ethod. See United States v. Cm ty . Health Sy s., Inc., No. 0 9-1565, 20 15 WL 3386153, at *7 (S.D. Tex. May 4, 20 15) (citing United States ex rel. Vuy y uru v. Jadhav, 555 F.3d 337, 356-57 (4th Cir. 20 0 9); Gonter v. Hunt Valve Co., Inc., 510 F.3d 610 , 616 (6th Cir. 20 0 7)); United States ex rel. Rigsby , 20 14 WL 69150 0 , at *9. Relator’s m otion subm its no evidence on either attorneys’ fees or costs. Therefore, relator shall have 14 days from the date of entry of this order to subm it a detailed affidavit establishing reasonable attorneys’ fees and costs under the applicable legal standard. III. CON CLU SION For the foregoing reasons, the United States is awarded dam ages in the am ount of $ 42,779,385.84, and relator is awarded 25 percent of that am oun t in accordance with 31 U.S.C. § 3730 (d)(2). Relator has 14 days from the date 10 of entry of this order to subm it a detailed affidavit establishing reasonable attorneys’ fees and costs. 5th New Orleans, Louisiana, this _ _ _ _ _ day of April, 20 17. _____________________ SARAH S. VANCE UNITED STATES DISTRICT J UDGE 11
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