United States v. City Nursing Servs. of Tex.

• Decision Date: 27 January 2016
• Docket Number: CIVIL ACTION NO. 4:10-CV-2277
• Parties: UNITED STATES OF AMERICA, et al, Plaintiffs, v. CITY NURSING SERVICES OF TEXAS, et al, Defendants.
• Court: U.S. District Court — Southern District of Texas

UNITED STATES OF AMERICA, et al, Plaintiffs, v. CITY NURSING SERVICES OF TEXAS, et al, Defendants.

CIVIL ACTION NO. 4:10-CV-2277

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION

January 27, 2016

MEMORANDUM OPINION AND ORDER

I. INTRODUCTION

Pending before the Court is the plaintiffs', United States of America ex relatione Stephanie Holmes, motion for summary judgment and brief in support of its motion for summary judgment (Dkt. Nos. 56 and 57). The defendant, Christina Joy Clardy ("Clardy"), has filed a response in opposition to the motion (Dkt. No. 60). After having carefully considered the motion, response, the record, and the applicable law, the Court determines that the Government's motion for summary judgment should be GRANTED.

II. FACTUAL OVERVIEW

The Government brings this qui tam action against Clardy for alleged violations of the False Claims Act ("FCA"). 31 U.S.C. §§ 3729-3733. On June 25, 2010, Stephanie Holmes filed a complaint in this Court under the qui tam provisions of the FCA alleging that certain individuals, not parties to this suit, engaged in a scheme to bill Medicare and Medicaid for physical therapy services that were not provided. (See Dkt. No. 1). Clardy was not named in the original complaint. Id. On January 3, 2012, the Government filed a notice of intervention against those defendants. (See Dkt. No. 20). On June 27, 2014, the Government filed a complaint in intervention naming Clardy as an additional defendant. (See Dkt. No. 31). On August 7, 2014, Clardy filed an answer asserting the following affirmative defenses, inter alia: (1) separation of powers and estoppel; (2) failure to mitigate damages; (3) waiver, excuse, acquiescence, and release; (4) unclean hands; (5) accord and satisfaction; (6) violations of his constitutional rights under the first, fifth, eighth, and fourteenth amendments; and (7) payment or reimbursement.¹ (See Dkt. No. 38).

Count one of the indictment alleged, in part, that Clardy as well as other individuals not parties to this case, "knowingly and willfully combine[d], conspire[d], confederate[d] and agree[d] with others . . . to execute and attempt[ed] to execute a scheme and artifice to defraud" the Medicare and Medicaid programs, from March 2, 2006 to June 26, 2009. (Dkt. No. 57, Ex. C at 6-7). Counts two through twenty-eight of the indictment alleged, in part, that Clardy as well as other individuals not parties to this case, "knowingly and willfully, execute[d] and attempt[ed] to execute a scheme and artifice to defraud . . . the Medicare and Medicaid Programs . . . by means of false and fraudulent pretenses, representations, and promises," from March 2, 2006 to June 26, 2009. (Id. at 12.). This case was stayed pending the outcome of the criminal proceeding. (See Dkt. No. 28).

On May 27, 2011, after a jury trial, Clardy was convicted of one count of conspiracy to commit health care fraud and fifteen counts of health care fraud.² (See Dkt. No. 57, Ex. D at 14-16). Clardy was ordered to pay $15,626,084.01 in restitution to Medicare and Medicaid and a $1,800 special assessment. (See Dkt. No. 57, Ex. B at 7-8). An appeal was taken, and on January 7, 2014, the United States Court of Appeals for the Fifth Circuit affirmed Clardy'sconvictions and the sentence imposed. See United States v. Umawa Oke Imo, 739 F.3d 226, 232 (5th Cir. 2014). On February 4, 2014, the Fifth Circuit denied Clardy's petition for rehearing en banc. Id. On April 28, 2014, this case was returned to the Court's active docket and the judgments on the criminal convictions are now final. The Government now moves for summary judgment on Clardy's liability under the FCA as well as Clardy's asserted affirmative defenses. The Government also requests that the Court issue a briefing schedule regarding the amount of damages and statutory penalties to be imposed on Clardy.

III. SUMMARY JUDGMENT STANDARD

Rule 56 of the Federal Rules of Civil Procedure authorizes summary judgment against a party who fails to make a sufficient showing of the existence of an element essential to the party's case and on which that party bears the burden at trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc). The movant bears the initial burden of "informing the district court of the basis for its motion" and identifying those portions of the record "which it believes demonstrate the absence of a genuine issue of material fact." Celotex, 477 U.S. at 323; see also Martinez v. Schlumber, Ltd., 338 F.3d 407, 411 (5th Cir. 2003). Summary judgment is appropriate where "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c).

If the movant meets its burden, the burden then shifts to the nonmovant to "go beyond the pleadings and designate specific facts showing that there is a genuine issue for trial." Stults v. Conoco, Inc., 76 F.3d 651, 656 (5th Cir. 1996) (citing Tubacex, Inc. v. M/V Risan, 45 F.3d 951, 954 (5th Cir. 1995); Little, 37 F.3d at 1075). "To meet this burden, the nonmovant must'identify specific evidence in the record and articulate the 'precise manner' in which that evidence support[s] [its] claim[s].'" Stults, 76 F.3d at 656 (citing Forsyth v. Barr, 19 F.3d 1527, 1537 (5th Cir.), cert. denied, 513 U.S. 871, 115 S. Ct. 195, 130 L. Ed.2d 127 (1994)). It may not satisfy its burden "with some metaphysical doubt as to the material facts, by conclusory allegations, by unsubstantiated assertions, or by only a scintilla of evidence." Little, 37 F.3d at 1075 (internal quotation marks and citations omitted). Instead, it "must set forth specific facts showing the existence of a 'genuine' issue concerning every essential component of its case." Am. Eagle Airlines, Inc. v. Air Line Pilots Ass'n, Intern., 343 F.3d 401, 405 (5th Cir. 2003) (citing Morris v. Covan World Wide Moving, Inc., 144 F.3d 377, 380 (5th Cir. 1998)).

"A fact is material only if its resolution would affect the outcome of the action, . . . and an issue is genuine only 'if the evidence is sufficient for a reasonable jury to return a verdict for the [nonmovant].'" Wiley v. State Farm Fire and Cas. Co., 585 F.3d 206, 210 (5th Cir. 2009) (internal citations omitted). When determining whether a genuine issue of material fact has been established, a reviewing court is required to construe "all facts and inferences . . . in the light most favorable to the [nonmovant]." Boudreaux v. Swift Transp. Co., Inc., 402 F.3d 536, 540 (5th Cir. 2005) (citing Armstrong v. Am. Home Shield Corp., 333 F.3d 566, 568 (5th Cir. 2003)). Likewise, all "factual controversies [are to be resolved] in favor of the [nonmovant], but only where there is an actual controversy, that is, when both parties have submitted evidence of contradictory facts." Boudreaux, 402 F.3d at 540 (citing Little, 37 F.3d at 1075 (emphasis omitted)). Nonetheless, a reviewing court is not permitted to "weigh the evidence or evaluate the credibility of witnesses." Boudreaux, 402 F.3d at 540 (quoting Morris, 144 F.3d at 380). Thus, "[t]he appropriate inquiry [on summary judgment] is 'whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party mustprevail as a matter of law.'" Septimus v. Univ. of Hous., 399 F.3d 601, 609 (5th Cir. 2005) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251 - 52 (1986)).

IV. ANALYSIS & DISCUSSION

The Government argues that the FCA precludes Clardy from denying liability in the present civil action because the present case and her prior criminal conviction for health care fraud involve the same transaction. It appears that Clardy concedes to the Government's argument.

A. Estoppel Under the FCA

The FCA imposes liability against any person who: (1) knowingly presents, or causes to be presented, to an officer or employee of the United States Government or a member of the Armed Forces of the United States a false or fraudulent claim for payment or approval; (2) knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government; or (3) conspires to defraud the Government by getting a false or fraudulent claim allowed or paid. 31 U.S.C. § 3729(a)(1)-(3).

The FCA contains an estoppel provision that prevents defendants convicted in a criminal proceeding from denying the essential conduct for which they were convicted. The provision is as follows:

Notwithstanding any other provision of law, the Federal Rules of Criminal Procedure, or the Federal Rules of Evidence, a final judgment rendered in favor of the United States in any criminal proceeding charging fraud or false statements, whether upon a verdict after trial or upon a plea of guilty or nolo contendere, shall estop the defendant from denying the essential elements of the offense in any action which involves the same transaction as in the criminal proceeding and which is brought under subsection (a) or (b) of section 3730.

31 U.S.C. § 3731(e).

The instant action is precisely the companion civil proceeding this statute was designed to address. A jury convicted Clardy of conspiracy to commit health care fraud and health care fraud. The judgment against Clardy became final on March 6, 2014, after the Fifth Circuit denied her petition for rehearing en banc.³ See 31 U.S.C. § 3731(e); see also Ray Haluch Gravel Co. v. Cent. Pension Fund of Int'l Union of Operating Engineers & Participating Employers, 134 S. Ct. 773, 779, 187 L.Ed.2d 669 (2014). The conduct for which Clardy was convicted is the same as that alleged in the instant action. As such, given the higher burden of proof in criminal matters, the criminal convictions against Clardy establish the necessary facts to prove Clardy's violations of the FCA....