United States v. Speqtrum, Inc., Civil Action No. 10-2111 (JEB)

UNITED STATES OF AMERICA, Plaintiff, v. SPEQTRUM, INC., Defendant.

Civil Action No. 10-2111 (JEB)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

September 23, 2016

MEMORANDUM OPINION

The United States brought this False Claims Act case against Defendant Speqtrum, Inc., a home-healthcare agency, for engaging in ongoing fraud in its submissions for Medicaid reimbursements. In prior Opinions, this Court granted summary judgment in favor of the Government on liability and then held a bench trial on damages on February 16-18, 2016. After issuing a partial verdict that awarded the United States the lion's share of the amount it was seeking, the Court required post-trial briefing on treble damages, civil penalties, and one issue the Government may have forfeited. Having now reviewed those submissions, the Court will enter judgment in the sum of $6,151,302.51.

I. Background

The Court will not recount the tortuous wending of this litigation, which has now entered its sixth year, nor its complex factual background. This Opinion will, instead, begin with the decisions resolving the Government's two summary-judgment motions, see United States v. Speqtrum, Inc. (Speqtrum I), 47 F. Supp. 3d 81 (D.D.C. 2014); United States v. Speqtrum, Inc. (Speqtrum II), 113 F. Supp. 3d 238 (D.D.C. 2015), which contain enough detail to satisfy the most curious reader.

As the Court previously explained, "Defendant Speqtrum, Inc., is a home-healthcare agency that furnishes the elderly and disabled with assistance in the day-to-day activities of living, such as bathing, dressing, and taking needed medications. D.C. Medicaid, which is subsidized by the federal Medicaid program, pays for many of Speqtrum's services for low-income patients." Speqtrum I, 47 F. Supp. 3d at 83. The gravamen of the Government's allegations here - all under the FCA - related to Defendant's "overbilling for hours not worked, charging the District for clients it did not service, forging physician signatures on its paperwork, and failing to obtain medical authorization prior to rendering services." Speqtrum II, 113 F. Supp. 3d at 240. In its first summary-judgment Opinion on June 13, 2014, the Court concluded that the United States was "entitled to summary judgment as to the allegations of overbilling and charging for services not rendered." Speqtrum I, 47 F. Supp. 3d at 97. The Court could not, however, award summary judgment on the issues related to the allegedly false "plans of care" for each patient - which included forged physician signatures and lack of medical authorization - that Speqtrum had used to support its requests for reimbursement. Id. The Court, furthermore, did not believe the evidence sufficient to justify any specific damages award at that juncture.

After permitting the Government to file an additional motion for summary judgment on the outstanding issues, the Court held on July 8, 2015, that "the United States has proved that it is entitled to summary judgment on Defendant's liability arising from its plan-of-care deficiencies." Speqtrum II, 113 F. Supp. 3d at 250. Once again, however, the Court found the Government's proof on the issue of damages wanting. Id. at 251. Following a status conference on August 11, 2015, the Court set a "bench trial relating to damages only" for later that year. See Minute Order of Aug. 11, 2015. After the parties sought a continuance, the trial eventually commenced on February 16, 2016.

At its conclusion, the Court delivered an oral verdict, explaining that the Government's damages evidence fell into three categories. The first related to submitted claims that relied on fraudulent or non-existent plans of care - namely, those signed after the dates of service, those not signed by any physician, those containing forged entries, those bearing forged physician signatures, and cases where the plans were missing. The Court found that the Government had provided sufficient evidence to prevail as to these damages. See 2/18/16 Tr. at 45. In addition, the Government had proved damages in a second category of more obvious fraud, which included instances where Speqtrum had billed for more hours than were worked or for clients who did not receive any services or who were deceased at the time. Id. at 46.

The third category proved trickier. This related to claims with record-keeping deficiencies, such as instances in which there was no timesheet to support the services billed, no nursing note, or no program-intake assessment. Id. at 14. The Court held in abeyance any award of damages in this category because the Government had never obtained summary judgment as to liability on this type of damages before trial. Id. at 48-50.

At the conclusion of its oral verdict, the Court requested post-trial briefing from the parties on the following questions: 1) Should the Government's claim to the record-keeping damages be deemed forfeited? 2) If the record-keeping damages are segregated out, what is the total amount of damages remaining in the first two categories? 3) Are such remaining damages subject to tripling? 4) What are the appropriate civil penalties to be awarded? Id. at 46-47. After considerable delay, the parties have submitted their positions on these issues, and the Court now considers each issue separately, along with Defendant's other arguments.

II. Analysis

A. Forfeiture of Record-Keeping Damages

In the Court's second summary-judgment Opinion, it observed that "[t]he central thrust of the Government's briefing is that Defendant violated the [FCA] vis-à-vis its invoices for services rendered without an operative plan of care." Speqtrum II, 113 F. Supp. 3d at 245. Before proceeding to an analysis of that topic, however, the Court noted that "Plaintiff's briefing also makes passing mention of amorphous 'recordkeeping' deficiencies. Insofar as such references are intended to serve as a request for judgment on that conduct, Plaintiff has failed to sufficiently articulate or develop its reasoning." Id. While ultimately granting summary judgment on the "plan-of-care transgressions," id. at 251, the Court never found liability on the record-keeping issues. As the parties then prepared for trial, those latter issues disappeared from everyone's view. Indeed, in the parties' Joint Pretrial Statement, the Government took the position that "all the facts concerning liability under the FCA are undisputed for the purposes of this trial, and the only issue that remains in dispute is the calculation of damages and civil penalties." ECF No. 107 at 7; see id. at 10 ("The United States objects to all evidence and witnesses relevant to the question of Speqtrum's liability for the false claims asserted by the United States . . . .") (emphasis added).

Once all the damages evidence had been presented at trial, the Court sua sponte raised this issue, pointing out that "summary judgment [was not] granted on liability for deficient record-keeping outside the plans of care. And it may be unfair, but tell me how you think that I can grant damages here based on that if I never found the defendant liable for it[?]" 2/18/16 Tr. at 16:12-16. The Court thus asked the Government to explain why it believed it had not forfeited or abandoned its claims related to record-keeping. Id. at 19:10-22; 20:22-25; cf. Hunt v. City ofLos Angeles, 523 Fed. Appx. 493, 495 (9th Cir. 2013) (unpublished) ("[Plaintiff's] failure to present this claim at trial constitutes an abandonment of this claim"); United States v. Whitfield, 2016 WL 2587175, at *2 (3d Cir. May 5, 2016) (unpublished) (upholding district court's determination that "defendants forfeited their selective enforcement claim by failing to raise it before trial"); Bondex Int'l v. Hartford Accident & Indem. Co., 667 F.3d 669, 681 (6th Cir. 2011) (finding that party forfeited claim "by failing to raise it in any pleadings or at any stage of the proceedings below"); Jurewicz v. U.S. Dep't of Agriculture, 891 F. Supp. 2d 147, 151 (D.D.C. 2012) ("Plaintiffs forfeited any challenge based on Exemption 3 [in FOIA case] by ignoring it in their Motion.").

In its post-trial brief, the Government principally argues that "[i]n order for this Court to find that the United States waived or forfeited a claim or argument, it must find that the Government failed to raise the claim in its pleading or in its summary judgment filings." ECF No. 119 at 8-9. Yet such a response miscomprehends the Court's inquiry. The Court does not deny that Plaintiff raised the issue at summary judgment; the question is whether the Government offered proof at trial.

Plaintiff next argues, in the alternative, that it did sufficiently present liability evidence of the record-keeping deficiencies during the trial. Id. at 12-13. While there may have been evidence concerning damages relating to these errors, the testimony did not establish the three prongs required for liability under the FCA. See Speqtrum II, 113 F. Supp. 3d at 245-50. Nor would the Court expect the Government to have offered such proof in what the parties (and Court) believed to be a damages-only trial.

The United States last asks the Court to reconsider its prior summary-judgment decision on record-keeping or to permit further briefing or even an additional trial on the issue. See ECFNo. 119 at 13-15 & n.3. Yet that ship has already sailed. The Court believes it would unfairly prejudice Defendant if the Government were permitted another chance to present its case. Perhaps Speqtrum, too, wishes it had done things differently the first time around. Particularly as the Government obtains a sizable award here, see Sections II.C, D, infra, the Court does not believe the United States ill treated by a decision not to reopen the proceedings for new evidence.

B. Amount of Remaining Damages

The forfeiture debate thus resolved, this next issue is very straightforward. The Court asked the Government to submit "a spreadsheet of damages modeled on its Exhibit 1, but including only claims...