United States ex rel. Jehl v. GGNSC Southaven, LLC

UNITED STATES OF AMERICA, ex rel. CAMERON JEHL PLAINTIFF v. GGNSC SOUTHAVEN, LLC et al. DEFENDANTS

CIVIL ACTION: 3:19-CV-00091-MPM-JMV

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF MISSISSIPPI OXFORD DIVISION

July 6, 2021

ORDER

This cause comes before the court on its own motion, giving the parties an opportunity to address certain concerns which it has developed regarding this case. This is a qui tam action in which plaintiff, acting pursuant to a "whistleblower" complaint filed by Relator Cameron Jehl, seeks to hold defendant GGNSC liable under the False Claims Act for seeking unlawful Medicare and Medicaid reimbursements. In alleging that the reimbursements sought by GGNSC were unlawful, plaintiff argues that they were predicated upon false information, namely that its nursing director, Lionelle Trofort, had a valid nursing license. To legally practice nursing in Mississippi and serve as Director of Nursing, Trofort had to possess either a valid Mississippi nursing license, or a valid "multi-state" license from another state that gave her the privilege to practice in Mississippi. See Miss. Code Ann. §§ 73-15-3, 73-15-22 (2013); 15 Miss. Admin. Code Pt. 16, Subpt. 1, R. 45.4.1 (2013).

The Complaint¹ in this case alleges that Trofort was not licensed to practice nursing at GGNSC in 2013 and 2014 pursuant to a Virginia multi-state nursing license because she was not a legal resident of Virginia and, therefore, had no "multi-state" privileges attached to herVirginia license that permitted her to practice in Mississippi. The Complaint further alleges that, as a result of Trofort's lack of a valid license to practice nursing in Mississippi while employed at Golden Living, Defendants' certifications of compliance with applicable licensure laws in their Medicare and Medicaid reimbursement requests were false within the meaning of the FCA. The FCA imposes liability on any defendant who "knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval," 31 U.S.C. § 3729(a)(1)(A), or who conspires to do the same, id. § 3729(a)(1)(C). A "claim" includes a request for Medicare or Medicaid reimbursement that contains (1) a false statement (2) made knowingly or recklessly and (3) that was material. See United States ex rel. Lemon v. Nurses To Go, Inc., 924 F.3d 155, 159 (5th Cir. 2019) (citing 31 U.S.C. § 3729(b)(2)(A)); United States ex rel. Grubbs v. Kanneganti, 565 F.3d 180, 188-89 (5th Cir. 2009).

This court previously denied defendant's motion to dismiss this case, and, in so doing, it expressed its inclination to conclude that certain fact-intensive issues in it would require resolution by a jury. Specifically, this court wrote that:

In reading the arguments from both sides on this issue, this court's impression is that they each appear to have good faith and reasonable arguments regarding the issue of knowledge. Given the inherently fact-intensive nature of this issue, this court has every expectation that, even after discovery is completed in this case, there will remain triable fact issues regarding the issue of knowledge which will require a jury to resolve. While this court would not be surprised if defendant were to eventually prevail before a jury on this issue, it is unable to agree with it that prior administrative findings regarding Trofort's status are, as a matter of law, sufficient to bar plaintiff's claims in this case.

[Order on dismissal at 7-8].

This court's previously-stated inclination to let a jury decide these issues was based on one overriding assumption. Namely, this court assumed that if it chose to err on the side of allowing jurors to decide these matters, then they would have the discretion to implement a fair result in this case, both as to liability and damages. This is ordinarily a safe assumption.However, this court has not previously conducted an FCA trial, and the issue of potential damages was not raised in the parties' briefing on the motion to dismiss. This court was therefore surprised, in reading the parties' summary judgment briefing, to learn of the sort of damages, many of them mandatory, which might arise from the rather unique FCA damages scheme as applied to this case. This may be an instance of this court's broad naivete, rather than a comment on the state of the law, but it appears that calculating damages unrelated to actual harm or injury may present a potential unfairness, or even absurdity, in the law.

Relator notes in his briefing that the FCA provides for a civil penalty of between $5,000 and $10,000 for each false claim, even absent a showing of actual damages. Specifically, Relator writes that:

In this False Claims Act ("FCA") case, one of the remedies is a civil penalty of not Less than $5,000 and not more than $10,000. 31 U.S.C. § 3729(a)(1).1 The FCA requires the award of civil penalties for each false claim or statement even if no damages were caused by the false claims. Id.; United States ex rel. Rudd v. Schimmels, 85 F.3d 416, 419 n.1 (9th Cir. 1996); United States ex rel. Longhi v. Lithium Power Tech., Inc., 530 F. Supp. 2d 888, 891 (S.D. Tex. 2008) (stating that "the court must assess a civil penalty" for each false claim). Relator included civil penalties in his relief requested. (See Second Am. Compl., Dkt. No. 90 at PageID: 927.)

For its part, GGNSC does not appear to dispute that the interaction between the FCA's penalty scheme and the number of Medicaid claims which it submitted in this case would result in a staggering amount of mandatory damages, the minimum amount of which is completely outside of a jury's (or this court's) discretion.

Indeed, GGNSC itself notes in its briefing that "the FCA provides for a civil penalty of not less than $5,000 and not more than $10,000 ... because of the act of that person," and in moving to strike the supplemental report of Relator's expert Scott Mertie, it noted that "[b]y submitting Mertie's new opinion, Relator seeks to increase the award potentially by$13,930,000." [245-1 at , citing 31 U.S.C. § 3729(a)(1),] This figure is based upon Merties' estimate of the number of claims during the period when Trofort allegedly lacked proper licensing, which was 1,393. While this court does not assume that this estimate is precisely correct, even the rough estimate represents a staggering sum (half of it mandatory) which is difficult to reconcile with any considerations of proportionality and fairness.

In seeking to combat these astronomical sums in claimed damages, GGNSC relies upon arguments that discovery violations and missed deadlines specific to this particular case should prevent Relator from obtaining access to the number of Medicaid claims filed by defendant, thereby preventing him from proving damages. This court regards this as a highly unsatisfactory approach to this issue, for a number of reasons. First of all, this court emphasizes that GGNSC clearly knows how many claims it filed during the relevant period, and it is not particularly comfortable with a position that "we know this information, but we won't reveal it since you didn't ask for it on time." A trial is a search for truth, and this court's general practice is to err on the side of a jury having all important information at its disposal, even at the expense of tolerating some degree of discovery violations.

This court also finds the prospect of deciding this issue on the basis of discovery lapses to be unsatisfactory because it must be concerned not only with the result in this case, but in future ones as well. If this case were to serve as precedent that the FCA opens the door to eight-figure recoveries for claims made based on rather minor licensing issues, if only the applicable discovery deadlines are met, then this court suspects that nursing homes would be inundated with similar whistleblower actions. This court's goal in any case is to reach a fair result both as to liability and damages, and if the FCA provides no option but to award an unjustifiable amount of damages, then this gives it cause to reconsider whether it is the proper vehicle for handlingallegations such as those here. In so stating, this court presumes that Congress did not intend absurd results when it enacted the FCA, and a scheme whereby the rather underwhelming allegations in this case might give rise to an eight-figure recovery in damages and penalties, much of it mandatory, is, in fact, absurd.

It should be noted that, in his briefing, Relator makes it clear that he is not satisfied with even the prospect of an eight-figure recovery in penalties, and that he is further seeking an astronomical additional award of "damages." This court places "damages" in quotes, since Relator appears to acknowledge that the issues arising from Nurse Trofort's licensing status had no actual impact upon patient care. Instead, Relator argues that:

In cases where the contract between the defendant and the government calls for the defendants "to produce a tangible structure or asset of ascertainable value" or to provide the government with tangible goods, then the benefit-of-the bargain measure demanded by Defendants is often the appropriate measure of damages. See United States v. TDC Mgmt. Corp., Inc., 288 F.3d 421, 428 (D.C. Cir. 2002); United States ex rel. Antidiscrimination Ctr. of Metro N.Y., Inc. v. Westchester Cty., 2009 WL 1108517, at *3 (S.D.N.Y. Apr. 24, 2009). On the other hand, "where there is no tangible benefit to the government and the intangible benefit is impossible to calculate, it is appropriate to value damages in the amount the government actually paid to the Defendants." United State ex rel. Longhi v. United States, 575 F.3d 458, 473 (5th Cir. 2009).

[Docket entry 266-1 at 6]. Relator thus seeks for this court to reject the "benefit-of-the-bargain" element of damages which requires actual proof of damages in favor of one which awards what are essentially presumed damages, above and beyond the enormous penalty already imposed.

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