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United Statesn ex rel. Washington v. Morad

United States District Court, E.D. Louisiana

April 5, 2017


         SECTION “R” (3)



         I. BACKGROUND

         On March 19, 2015, plaintiff United States, through relator Zonell Washington, brought this qui tam False Claims Act civil action against defendants Mark Morad, Paige Okpalobi, Barbara Smith, Joe Ann Murthil, Latausha Dannel, Roy Berkowitz, Winston Murray, Divini Luccioni, Christopher White, Beverly Breaux, Medical Specialists of New Orleans, Interlink Health Care Services, Memorial Home Health, Inc., Lakeland Health Care Services, Lexmark Health Care, LLC, and Med Rite Pharmacy, Inc., d/b/a Medrite DME, Inc.[1] The complaint alleges that the defendants defrauded the United States by submitting false claims for Medicare reimbursement and used false records or statements to get the false claims approved, all in violation of 31 U.S.C. § 3729(a)(1)(A) and (B).[2] The complaint further alleges that defendants conspired to defraud the Government in violation of 31 U.S.C. § 3729(a)(1)(C).[3] The complaint seeks a judgment in an amount equal to three times the damages sustained by the United States as a result of defendants' actions, plus a civil penalty of not less than $5, 500 and not more than $11, 000 for each statutory violation.[4]

         Defendants did not respond to the complaint or to their summonses. On October 10, 2016, after obtaining entries of default, relator filed a motion for default judgment as to each defendant, except Winston Murray.[5] Relator also requested a hearing to determine the amount of damage suffered by the Government pursuant to Federal Rule of Civil Procedure 55(b)(2).[6]

         On December 12, 2016, after finding that relator had alleged facts showing prima facie violations of 31 U.S.C. §§ 3729(a)(1)(A), (B), and (C), the Court entered a default judgment against the defendants.[7] The Court also ordered relator to submit summary judgment-type evidence establishing the amount of damages within 21 days of the entry of the default judgment.[8] In response, relator submits the judgments entered against defendants in the criminal case United States v. Morad, et al, No. CRIM. A. 13-101 (E.D. La.).[9]Additionally, the United States submits a statement of interest requesting that judgment be entered in favor of the United States and that the Court not treat related criminal proceedings against defendants as “alternate remedies” for the purposes of 31 U.S.C. § 3730(d)(5).[10]


         Under the False Claims Act, any person who violates the Act is “liable to the United States Government for a civil penalty of not less than $5, 000 and not more than $10, 000, as adjusted by the Federal Civil Penalties Adjustment Act of 1990 . . ., plus 3 times the amount of damages which the Government sustains because of the act of that person.” 31 U.S.C. § 3729(a)(1). As adjusted, the penalty is now between $5, 500 and $11, 000. See 28 C.F.R. § 85.3(a)(9). The statutory penalty is not limited to “false claims, ” but attaches to “all fraudulent attempts to cause the Government to pay out sums of money.” United States v. Neifert-White Co., 390 U.S. 228, 233 (1968); see also United States v. Bornstein, 423 U.S. 303, 312 (1976) (noting that False Claims Act imposes penalties “for the commission of acts which cause false claims to be presented”); United States ex rel. Schwedt v. Planning Research Corp., 59 F.3d 196, 199 (D.C. Cir. 1995) (“Each individual false claim or statement triggers the statute's civil penalty.”).

         A. Damages Sustained by Government

         As evidence of the damages that the Government has sustained as a result of defendants' actions, relator submits the judgments against the defendants in the criminal case against them.[11] The judgments indicate that defendants Berkowitz, Breaux, Smith, White, Dannel, and Murthil caused the Government losses of $4, 952, 816, $2, 057, 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 amount of damages suffered by the Government due to the actions of each defendant is sufficient proof in the False Claims Act context. See United States v. Boutte, 108 F.3d 332, 1997 WL 73792, at *1 (5th Cir. Feb. 10, 1997) (“The criminal court's finding that the Government's loss was $301, 627 is prima facie proof of that fact.”). Further, the Supreme Court has established that an order of restitution in a criminal case and a subsequent civil penalty for the same acts do not violate the Double Jeopardy Clause. See Hudson v. United States, 522 U.S. 93, 98-99 (1997), abrogating United States v. Halper, 490 U.S. 435 (1989).

         Caselaw makes clear that defendants' participation in a conspiracy to defraud the government renders them jointly and severally liable for the total amount of loss suffered by the government and the total amount of civil penalties. See Peterson v. Weinberger, 508 F.2d 45, 49 (5th Cir. 1975); Mortgages, Inc. v. U.S. Dist. Court for Dist. of Nev. (Las Vegas), 934 F.2d 209, 212 (9th Cir. 1991) (“Where one or more persons have committed a fraud upon the government in violation of the FCA, each is joint and severally liable for the treble damages and statutory penalty.”); United States v. Bd. of Educ. Of City of Union City, 697 F.Supp. 167, 177 (D.N.J. 1988) (False Claims Act case finding that conspiracy to violate the False Claims Act results in joint and several liability “for all of the damages and penalties against each of [the defendants]”) (emphasis in original); Kelsoe v. Fed. Crop Ins. Corp., 724 F.Supp. 448, 453 (E.D. Tex. 1988); United States v. Cabrera-Diaz, 106 F.Supp.2d 234, 242 (D.P.R. 2000) (“[W]hen two or more persons act in concert in violation of the False Claims Act, they are jointly and severally liable.”) (citations omitted). Further, this includes the defendants who have not yet been sentenced in the criminal case and the corporate defendants who were not charged with a crime. 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. 1989); Cabrera-Diaz, 106 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 damages and civil penalties sought.”) (citing United States v. Coop. Grain & Supply Co., 476 F.2d 47 (8th Cir. 1973)). Therefore, whatever the total amount of damages and penalties, defendants are jointly and severally liable for that amount.

         Relator's evidence of damages, while establishing various loss amounts for each defendant, does not establish whether the losses are independent of each other, i.e., whether the largest loss amount of $14, 147, 295.28 includes the lower loss amounts. Instead, Relator solely asks for a judgment of $14, 147, 295.28.[13] Thus, given the absence of evidence indicating that the defendants' loss amounts should be added, the Court finds relator's evidence establishes that the total amount of damage sustained by the Government is $14, 147, 295.28.

         B. Statutory Penalties

         As discussed above, the statutory penalties under the False Claims Act are not limited to each violation of the Act. But relator has submitted no evidence or argument as to how many acts or false claims or statements defendants made. The Court will not presume or guess at the actual number of the false claims or statements made in the absence of evidence. Thus, as each defendant has been found to have violated ...

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