US v. Pani

• Decision Date: 19 July 1989
• Docket Number: No. 88 Civ. 4970 (LLS).,88 Civ. 4970 (LLS).
• Citation: 717 F. Supp. 1013
• Parties: UNITED STATES of America, Plaintiff, v. Kailash Chandra PANI and Kailash Chandra Pani, M.D., P.C., Defendants.
• Court: U.S. District Court — Southern District of New York

717 F. Supp. 1013

UNITED STATES of America, Plaintiff, v. Kailash Chandra PANI and Kailash Chandra Pani, M.D., P.C., Defendants.

No. 88 Civ. 4970 (LLS).

United States District Court, S.D. New York.

July 19, 1989.

Benito Romano, U.S. Atty., and Gabriel W. Gorenstein, Asst. U.S. Atty., S.D. New York, New York City, for plaintiff.

Richard A. Kerner, New York City, for defendants.

OPINION AND ORDER

STANTON, District Judge.

The plaintiff moves to amend the complaint and for partial summary judgment. The defendants move to dismiss plaintiff's claim for unjust enrichment. The plaintiff's motions are granted, and the defendants' motion is denied.

BACKGROUND

Defendant Dr. Kailash Chandra Pani is a neurosurgeon. He is the sole shareholder of defendant Kailash Chandra Pani, M.D., P.C. (the "corporation").

In November 1983 Pani was charged in an indictment with mail fraud, 18 U.S.C. §§ 1341-42 (Counts 1-9), making 63 false claims against the government in violation of the criminal False Claims Act, 18 U.S.C. § 287¹ (Counts 10-72), and conversion of government funds, 18 U.S.C. § 641² (Counts 73-122) for submitting to Blue Cross and Blue Shield of Greater New York ("Blue Cross") and the federal Medicare "Part B" program ("Medicare") claims for payment for surgeries that he allegedly did not perform.

In May 1984 Pani was convicted on four counts of mail fraud, three counts of making false claims (Counts 22, 38, and 39), and three counts of conversion (Counts 82, 97, and 98). The convictions for filing false claims and conversion were for filing and receiving payment on three claims: No. 1200431915, No. 1225161362, and No. 1229525209. Pani was sentenced to a two year suspended sentence on each of the ten counts (to run concurrently), ordered to make restitution to Blue Shield in the amount of $4,187 and to Medicare in the amount of $1,380, ordered to complete 400 hours of community service, and was fined $30,000 ($10,000 on Counts 22 and 82, $10,000 on Counts 38 and 97, and $10,000 on Counts 39 and 98).

In June 1986 the United States (the "government") brought this action against Pani and the corporation alleging that they filed 157 fraudulent claims, in violation of the civil False Claims Act ("FCA"), 31 U.S.C. §§ 3729-3731, for payment for surgeries that Pani did not perform. The 157 claims include the 63 that Pani was accused of fraudulently filing in the criminal action. Claim No. 1200431915 is identified as Claim No. 77 (for $400) in Exhibit A to the Amended Complaint, Claim No. 1225161362 is identified as Claim No. 83 (for $440), and Claim No. 1229525209 is identified as Claim No. 84 (for $440).

At the time this suit was filed section 3729 of the FCA provided that

A person ... is liable to the United States Government for a civil penalty of $2,000, an amount equal to 2 times the amount of damages the Government sustains because of the act of that person, and costs of the civil action, if the person—

(1) knowingly presents, or causes to be presented, to an officer or employee of the Government ... 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....

In October 1986 Congress enacted several amendments to the FCA. The amendment relevant here increased liability for each violation to three times the amount of actual damages and a fine of not less than $5,000 and not more than $10,000.³

The government moves to amend the complaint to reflect the increased liability provided by this amendment and for partial summary judgment based on Pani's criminal conviction. The defendants move to dismiss the government's claim for unjust enrichment asserting that it is time barred, and oppose the motion for partial summary judgment on the grounds that the recovery sought amounts to a second punishment of Pani in violation of the Double Jeopardy Clause of the Constitution.⁴

DISCUSSION

1. Motion to Amend the Complaint

The government's complaint seeks to recover $527,324.12 based on the pre-amendment section 3729 (a penalty of $2,000 for each of the 157 false claims and double its damages of $106,662.06 paid on the claims). The government filed an amended complaint which merely added the corporate defendant.

The proposed second amended complaint seeks to recover $1,889,986.18 (a penalty of $10,000 per claim and triple its damages of $106,662.06). The government argues that the statutory amendment should apply retroactively under Bradley v. School Board of City of Richmond, 416 U.S. 696, 94 S.Ct. 2006, 40 L.Ed.2d 476 (1974).

In Bradley a provision of the Education Amendments Act of 1972 granting attorney's fees to a prevailing party was enacted while the case was on appeal. The Court held that the provision could be applied to services rendered before it was enacted. The Court

anchored its holding on the principle that a court is to apply the law in effect at the time it renders its decision, unless doing so would result in manifest injustice or there is statutory direction or legislative history to the contrary....

The concerns ... relative to the possible working of an injustice center upon (a) the nature and identity of the parties, (b) the nature of their rights, and (c) the nature of the impact of the change in law upon those rights. Id. at 711, 717, 94 S.Ct. at 2016, 2019.

Here, Congress did not expressly consider whether the 1986 amendments should apply prospectively or retroactively. U.S. v. Hill, 676 F.Supp. 1158, 1167 (N.D.Fla. 1987).

The government argues that post-enactment statements by one of the authors of the bill, Representative Berman, "provide strong evidence of Congress' intent." Representative Berman asserted that

It was my understanding that all of the FCA amendments would apply to pre-October 1986 false claims.... I specifically raised the question whether it was necessary to include express language regarding retroactive application just to make clear Congress' intent. I concluded that, based on Supreme Court precedent, such express language was not necessary and that language should be added to the bill only if Congress intended it to apply prospectively. The Supreme Court ruled in Bradley ... that statutes are presumed to apply retroactively unless that would create a grave injustice or congressional intent was clearly to the contrary. In fact, Bradley expressly said that courts should presume that Congress intended retroactive application by mere silence on the issue. It was therefore apparent that it was unnecessary to be explicit about retroactivity, as the courts would infer it from our silence. 133 CONG. REC. H9515 (daily ed. Nov. 3, 1987)

Representative Berman's statements, however, provide limited support for the government's contention that Congress intended the statute to apply retroactively. See Consumer Product Safety Commission v. GTE Sylvania, Inc., 447 U.S. 102, 119 n. 13, 100 S.Ct. 2051, 2061 n. 13, 64 L.Ed.2d 766 (1980) ("The less formal types of subsequent legislative history provide an extremely hazardous basis for inferring the meaning of a congressional enactment."); cf. Dedham Water Co. v. Cumberland Farms Dairy, Inc., 805 F.2d 1074, 1081 (1st Cir.1986) (While "congressional hindsight is no substitute for legislative analysis generated during the period immediately preceding the enactment of a bill, we do find the language of the recent conference report to have some force due to the aura of uncertainty that has surrounded this particular portion of the statutory scheme.")

The government also asserts that

two other civil fraud remedies statutes passed by Congress in the same legislative session contain specific provisions prohibiting their application to any pre-enactment conduct ... Similarly, in the previous session of Congress, amendments to the False Claims Act relating solely to Department of Defense contracts were specifically made applicable only to claims submitted after the date of enactment ... The absence of any similar language in the FCA Amendments of 1986 clearly shows that Congress intended the Amendments to apply to pending litigation. Plaintiff's memo in support, at 10.

While the government's assertion is plausible,

it is equally likely that Congress had actually intended to insert a prospectivity clause in the 1986 amendments in light of the fact that one had been included in three similar enactments, but had failed to do so through nothing more than mere inadvertence. Inferring a clear "intent" through congressional silence is not a sound interpretative policy, and I decline to do so. Hill, 676 F.Supp. at 1167 n. 12.

Lacking conclusive evidence of Congress' intent, the court must determine whether retroactive application would result in "manifest injustice" to the defendants.

The first Bradley factor focuses on the nature of the parties involved. "In mere private cases between individuals, a court will ... struggle hard against a construction which will, by a retrospective operation, affect the rights of parties, but in great national concerns ... the court must decide according to existing laws...." Bradley, 416 U.S. at 712, 94 S.Ct. at 2016 quoting U.S. v. The Schooner Peggy, 5 U.S. (1 Cranch) 103, 110, 2 L.Ed. 49 (1801); see also United States v. Marengo County Commission, 731 F.2d 1546, 1554 (11th Cir.1984) ("Although it may not be imperative to apply new congressional enactments to preexisting disputes over private issues, when the new statute manifests important public policy, courts must respect that policy and apply it.")

Here, the amendment evinces a clear effort by Congress to address an issue of national concern, government fraud. "According to some estimates, billions of dollars in public funds are lost annually through government fraud." Hill, 676 F.Supp. at 1169. Government fraud also "erodes public confidence in the Government's ability to efficiently and effectively manage its programs", and...