U.S. v. Waksberg

• Decision Date: 16 May 1997
• Docket Number: No. 95-5165,95-5165
• Citation: 112 F.3d 1225
• Parties: UNITED STATES of America, Appellee v. Morry WAKSBERG, M.D., and Morry Waksberg, M.D., Inc., Appellants.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1225

112 F.3d 1225

324 U.S.App.D.C. 259

UNITED STATES of America, Appellee v. Morry WAKSBERG, M.D., and Morry Waksberg, M.D., Inc., Appellants.

No. 95-5165.

United States Court of Appeals, District of Columbia Circuit.

Argued March 17, 1997.

Decided May 16, 1997.

Erwin Chemerinsky, Los Angeles, CA, argued the cause for appellants. With him on the briefs was Paul J. Weiner, Los Angeles, CA.

W. Mark Nebeker, Assistant U.S. Attorney, Washington, DC argued the cause for appellee. With him on the brief were Eric H. Holder, Jr., U.S. Attorney, and R. Craig Lawrence, Assistant U.S. Attorney, Washington, DC.

Daniel J. Popeo, Utica, NY, Richard A. Samp, Arlington, VA, Arthur B. Spitzer, and Daniel I. Prywes, Washington, DC, were on the brief for amici curiae the Washington Legal Foundation and the American Civil Liberties Union of the National Capital Area in support of appellants.

Before RANDOLPH, ROGERS, and TATEL, Circuit Judges.

Opinion of the Court filed by Circuit Judge RANDOLPH.

RANDOLPH, Circuit Judge:

This appeal raises a question which, for prudential reasons, we will not decide at this time--whether, upon finding the United States in contempt for violating an injunction, a federal court may order the government to pay a compensatory fine despite its claim of sovereign immunity. The question is new to this court and to decide it we would have to resolve a dispute about the meaning of the Constitution. But there has not yet been a finding that the government's violation of the decree caused any monetary losses. Only if that is established on remand will it be necessary to resolve this dispute about the extent of the judiciary's power.

I

The Department of Health and Human Services investigated Morry Waksberg M.D., and Morry Waksberg, M.D., Inc., for submitting false or fraudulent claims for reimbursement under the Medicare program between 1984 and 1986. Waksberg and a Department representative signed a "Settlement Agreement" in September 1989 to resolve the government's civil claims against Waksberg. The Settlement Agreement provided, among other things, that Waksberg was to be excluded from the Medicare program for two years.

In June 1991, the United States brought an action against Waksberg to enforce the agreement. Shortly thereafter, Transamerica Occidental Life Insurance Co., the government's Medicare carrier in southern California, where Waksberg practiced, began sending letters to Waksberg's patients. The letters announced that Transamerica would not pay for services rendered by Waksberg because he had been excluded from the Medicare program. His exclusion, the letters stated, resulted from a determination that he had "furnished services substantially in excess of the needs of individuals and [of a] quality not meeting professional standards."

With the government's case pending in the district court, Waksberg reacted to Transamerica's letters by moving for a temporary restraining order against the United States. The district court (Revercomb, J.) issued a TRO in July 1991, ordering the United States to have Transamerica send letters to Waksberg's patients retracting the statements made in the earlier letters. The TRO, and a preliminary injunction issued in September 1991, further enjoined the United States "from disseminating or causing to be disseminated publicly any information that in any manner suggests that defendants have been excluded from participation in Medicare and Medicaid programs and have furnished services substantially in excess of the needs of individuals and of a quality not meeting professional standards." Despite 5 U.S.C. § 702, neither the TRO nor the preliminary injunction designated the government officers "personally responsible for compliance."

In October 1991, Transamerica distributed a newsletter to approximately 50,000 hospital administrators, physicians, and other interested persons. The newsletter listed Waksberg among a group of health care providers who had been excluded from the Medicare program. In an order dated July 28, 1992, the court held the United States in civil contempt for violating the preliminary injunction, finding that Transamerica was an agent of the government, that "there was little if any formal procedure by which [the government] communicated court orders to its regional offices and carriers, and ensured that these orders were complied with," and that, while the government had notified Transamerica of the TRO, it had not informed the company of the preliminary injunction. Hence the government "is held to account for Transamerica's publication of Dr Waksberg's name in violation of the injunction."

As to the question of sanctions, the court thought the newsletter might have affected Waksberg's reputation and thus "his ability to attract and maintain patients." One of the permissible purposes of civil contempt sanctions is "to compensate the complainant for losses sustained," through a fine payable to the complainant. United States v. United Mine Workers of Am., 330 U.S. 258, 303-04, 67 S.Ct. 677, 701, 91 L.Ed. 884 (1947). Therefore, "Dr Waksberg is entitled to compensation to the extent he can prove damages caused by plaintiff's violation of the preliminary injunction." The court, in referring the case to a magistrate judge for the taking of evidence on the extent, if any, of Waksberg's "damages or loss" caused by the United States, emphasized that Waksberg would "be permitted to prove only those damages caused by plaintiff's failure to comply with the preliminary injunction" (emphasis in original).

A hearing on the compensatory fine was postponed until after the conclusion of the trial on the merits of the government's claims. After the trial, in which Waksberg prevailed, but before the hearing on the fine, the government filed a motion styled "Plaintiff's Motion to Dismiss Defendants' Claims for Damages Based Upon Contempt." Without attacking the underlying contempt citation, the government argued that sovereign immunity "bars the award of ... damages against the government" in this case.

In an opinion and order dated March 30, 1995, the district court (June L. Green, J.) granted the government's motion, finding no waiver of sovereign immunity that would render the United States liable to pay a compensatory fine to Waksberg for its violation of the injunction. United States v. Waksberg, 881 F.Supp. 36, 39-41 (D.D.C.1995).

II

Federal courts have the power to punish those who disobey their orders. See 18 U.S.C. § 401; Shillitani v. United States, 384 U.S. 364, 370, 86 S.Ct. 1531, 1535, 16 L.Ed.2d 622 (1966). The power is inherent, "shielded from direct democratic controls," and necessary to maintain the authority of the Judicial Branch. Roadway Express, Inc. v. Piper, 447 U.S. 752, 764, 100 S.Ct. 2455, 2463, 65 L.Ed.2d 488 (1980).

The judiciary may not impose monetary relief against the United States without its consent. The government's consent, its waiver of sovereign immunity, must appear as an "unequivocal expression" in "statutory text," at least when the cause of action arises under a federal statute. United States v. Nordic Village, Inc., 503 U.S. 30, 37, 112 S.Ct. 1011, 1016, 117 L.Ed.2d 181 (1992).

Whether sovereign immunity stands in the way of a federal court ordering the United States to compensate a party for losses caused by the government's violation of an injunction is a question of first impression in this court, and in all but one other court of appeals. The Eighth Circuit is the exception. See Coleman v. Espy, 986 F.2d 1184, 1190-92 (8th Cir.1993). Waksberg makes a constitutional argument not discussed in Coleman. Basically it is this: separation of powers principles require the government's immunity to give way...