US ex rel. Burr v. Blue Cross & Blue Shield

• Decision Date: 23 March 1995
• Docket Number: No. 91-134-CIV-J-16.,91-134-CIV-J-16.
• Citation: 882 F. Supp. 166
• Parties: UNITED STATES of America ex rel. Theresa BURR, Plaintiff, v. BLUE CROSS AND BLUE SHIELD OF FLORIDA, INC., a Florida corporation, Defendant.
• Court: U.S. District Court — Middle District of Florida

882 F. Supp. 166

UNITED STATES of America ex rel. Theresa BURR, Plaintiff, v. BLUE CROSS AND BLUE SHIELD OF FLORIDA, INC., a Florida corporation, Defendant.

No. 91-134-CIV-J-16.

United States District Court, M.D. Florida, Jacksonville Division.

March 23, 1995.

Brian M. Kane, Asst. U.S. Atty., Jacksonville, FL, Michael C. Theis, U.S. Dept. of Justice, Civ. Div., Washington, DC, for plaintiff U.S.

William George Cooper, Tracy K. Arthur, Jacksonville, FL, Dennis M. Abrams, Lowenthal & Abrams, P.C., Bala Cynwyd, PA, for plaintiff Burr.

John M. McNatt, Jr., Osborne, McNatt, Shaw, O'Hara, Brown & Obringer, Jacksonville, FL, for defendant.

ORDER AND OPINION

JOHN H. MOORE, II, Chief Judge.

This cause is before the Court on the Relator's Motion for Attorney's Fees and Costs filed August 16, 1994, (Doc. # 206) and Motion for Percentage of False Claims Settlement filed September 1, 1994 (Doc. # 210). The Defendant filed a response in opposition to the motion for attorney's fees and costs on September 2, 1994. The Plaintiff filed a response in opposition to the motion for the Relator's percentage of the settlement proceeds on September 29, 1994. Upon due consideration of the motions and the legal premises therein, the Court finds that the motions should be granted in part and denied in part and the fee application referred to the magistrate judge for a report and recommendation.

I. Background Facts

Theresa Burr ("Relator") filed this qui tam action against Blue Cross Blue Shield of Florida (BCBSF) pursuant to the False Claims Act ("FCA"), 31 U.S.C. § 3730 (1988), on February 19, 1991. The United States intervened and filed an Amended Complaint on July 10, 1992, alleging numerous instances of fraud involving the processing of Medicare claims. The Relator continued as a party and on August 4, 1993, the United States and BCBSF entered into a proposed settlement.

The Court referred this matter to a magistrate judge to conduct a hearing and prepare a report and recommendation on the fairness, adequacy, and reasonableness of the proposed settlement. The Court entered an Order on August 2, 1994, approving the proposed settlement and notwithstanding the objections made by the Relator, dismissed the action with prejudice. Subsequent to the filing of the motions for attorney's fees, costs, and percentage of the settlement proceeds, the Relator appealed this decision to the Eleventh Circuit Court of Appeals. Consequently, this Court stayed its ruling on these motions in the interest of judicial economy pending the Relator's appeal of the Court's approval of the settlement of this action. On November 11, 1994, the appellate court entered a judgment of voluntary dismissal of the appeal. Accordingly, the Court finds that the stay entered by this Court should now be lifted.

On December 9, 1994, the Plaintiff filed a Notice of Advisement of Intent to Make Payment to Relator which indicated that the government intended to distribute fifteen percent of the $10 million settlement proceeds to the Relator. The Relator has specifically reserved her right to have the Court determine her share of the settlement proceeds. By Order of the Court dated February 6, 1995, the Court granted a charging lien in favor of Epstein, Becker & Green, P.C., the Relator's initial counsel, and specifically prohibited the Plaintiff from distributing any of the settlement proceeds to the Relator until the issue of this counsel's legal fees was resolved. Although the Court determines that the Relator is entitled to $1.5 million as her percentage of the settlement proceeds in this litigation, the Court finds that these proceeds should not be disbursed until the issue of Epstein, Becker & Green's legal fees is resolved.

II. Discussion

A. False Claims Act (FCA) qui tam Provisions

Congress enacted the FCA in 1863 with the primary purpose of being the government's litigation tool for combatting fraud against the federal government.¹ The FCA authorizes private individuals, in addition to the Attorney General, to file civil actions for enforcement. 31 U.S.C.S. § 3730(b) (Supp. 1994). Suits by private individuals, or qui tam suits, may be brought for any substantive violation of the Act.² Id. at § 3730(b)(1). However, the suit is brought in the name of the Government which has the option of intervening and proceeding with the action. Id. at § 3730(b)(1) & (4). If the Government declines to intervene in the qui tam action, the private individual or relator possesses the right to conduct the action. Id. § 3730(b)(4).

If the Government chooses to intervene, it has the primary responsibility for prosecution and may settle or dismiss the action. Id. § 3730(c)(2). The relator may continue as a party to the qui tam action and may object to its settlement or dismissal. Id. § 3730(c). However, the action may be settled or dismissed notwithstanding objection provided the relator has been notified of the proposed action and an opportunity for a hearing on the motion. Id. § 3730(c)(2). In approving a proposed qui tam settlement, the court must find that it is fair, adequate, and reasonable under all the circumstances. Id. § 3730(c)(2)(B).

The FCA also provides for the award of a percentage of any settlement proceeds as well as reasonable attorney's fees and costs. Id. § 3730(d)(1). The FCA specifically provides that in an action where the government proceeds with a case brought by a private individual, the relator "shall ... receive at least 15 percent but not more than 25 percent of the proceeds of the action or settlement of the claim, depending upon the extent to which the person substantially contributed to the prosecution of the action." Id. (emphasis added.) Further, a relator "shall also receive an amount for reasonable expenses which the court finds to have been necessarily incurred, plus reasonable attorneys' fees and costs. All such expenses, fees, and costs shall be awarded against the defendant." Id.

B. Percentage Of The Settlement Proceeds

Section 3730(d)(1) of the FCA has been interpreted to mean that in a case not based primarily on disclosures of specific information other than the information provided by the relator³ individuals who substantially and independently contribute to the government's recovery are entitled to recover the minimum 15 percent of the settlement proceeds. United States v. Stern, 818 F.Supp. 1521, 1522 (M.D.Fla.1993). However, a relator is entitled to recover a full 30 percent of the settlement in such a case where the relator has suffered considerable personal and professional expense. United States v. Mazak Corp., 807 F.Supp. 1350, 1353 (S.D.Ohio 1992). The award of the maximum statutory amount in this instance is intended to encourage other potential whistle-blowers to take similar risks in order to expose fraud against the United States. Id. Accordingly, the Court is persuaded that the maximum recovery is reserved for situations where the relator actively and uniquely aids the government in the prosecution of the case. See United States v. Covington Technologies Co., No. 88-5807-JMI (Bx), 1991 WL 643048 (C.D.Cal. Oct. 22, 1991).

As a threshold matter, the Court finds that the lengthy factual record in this matter is sufficient for the Court to make this determination; therefore, the Relator's request for an evidentiary hearing shall be denied. The potential range of the Relator's percentage of the $10 million settlement proceeds is $1.5 million to $2.5 million. Of course, the Relator requests $2.5 million or 25% of the settlement amount and the government argues that she is only entitled to $1.5 million or 15% of the settlement amount. This dispute is illustrative of the course of conduct in this litigation. Although a settlement was announced on August 3, 1993, the parties succeeded in litigating the appropriateness of the Court's approval of the settlement for another year. Even then, the Relator appealed the Court's decision to approve the settlement and ironically, decided to drop the appeal only after the Court stayed ruling on the instant motions pending the appeal. At long last, the Court is presented with the adjudication of the final issues in this "litigious" matter. Yet the Court is once again confronted with disagreement and the parties election to litigate to the very end.

The Plaintiff has advised the Court of its intent to distribute $1.5 million of the settlement proceeds to the Relator. The pertinent issue then is whether the Relator is entitled to a greater percentage of the settlement proceeds. The Court thinks not. The FCA specifically delineates that a relator is entitled to a percentage of the settlement proceeds, within the applicable range, to "the extent to which the person substantially contributed to the prosecution of the action." 31 U.S.C. § 3730(d) (emphasis added). Although a realtor may be entitled to the statutory maximum percentage in situations where the relator has suffered personal or professional hardship, no such showing has been made in the present case. In fact, the Relator fails to even address this point and relies instead on bold self-appreciation for her efforts. However, the Court finds that although the Relator may have initiated this action, her contribution to the successful settlement of this matter was minimal at best. The record clearly demonstrates that the Relator's sworn affidavit instigated an investigation by several governmental agencies. This investigation lasted over three years and the Relator repeatedly objected to being left out of this process. Eventually, the Relator was permitted limited discovery regarding the proposed settlement of this action, to which she vigorously opposed. The Court found much of the Relator's opposition to be wholly without merit. Therefore, the Court finds that $1.5 million, or 15% of the settlement proceeds, accurately reflects the Relator's contribution to the prosecution of this action.

Implicit within the Court's finding...