United States Ex Rel. Doghramji v. Community Health Systems, Inc.

666 F. App'x 410
CourtCourt of Appeals for the Sixth Circuit
DecidedNovember 22, 2016
Docket15-6280
StatusUnpublished
Cited by7 cases

This text of 666 F. App'x 410 (United States Ex Rel. Doghramji v. Community Health Systems, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States Ex Rel. Doghramji v. Community Health Systems, Inc., 666 F. App'x 410 (6th Cir. 2016).

Opinions

OPINION

PER CURIAM.

The False Claims Act (FCA) creates a civil cause of action against “any person who ... knowingly presents, or causes to be presented, a false or fraudulent claim for payment” to the United States Government. 31 U.S.C. § 3729(a). Claims for fraudulent Medicare billing were brought against Community Health Systems, Inc. (CHS), and in 2014, CHS, the Government, and seven “relators”—that is, private persons who bring civil actions for violations of the FCA—reached a settlement agreement. This agreement concluded years of [411]*411investigation and litigation, during which time the relators performed thousands of hours of work at the Government’s behest. CHS agreed to pay the Government and relators $88 million dollars in exchange for dismissing their claims.

This appeal centers on whether CHS failed to preserve its right to challenge the entitlement of the seven relators to attorneys’ fees. The district court adopted rela-tors’ interpretation of the settlement agreement, concluding that it unambiguously restricted CHS’s challenges to 31 U.S.C. § 3730(d), and thus limited CHS’s objections to the reasonableness of—rather than entitlement to—appellees’ attorneys’ fees. CHS appealed this decision, raising various principles of contract interpretation. Because the settlement agreement is ambiguous, we reverse the district court’s order and remand for further proceedings in the district court.

I.

Causes of action authorized by the FCA under 31 U.S.C. § 3729 have the goal of punishing and preventing fraudulent claims for payment from the U.S. Government. See United States v. Bornstein, 423 U.S. 303, 309 n.5, 96 S.Ct. 523, 46 L.Ed.2d 514 (1976). The statutory scheme includes a qui tam provision, under which a private person—a “relator”—may bring a civil action “in the name of the Government.” 31 U.S.C. § 3730(b)(1). After a relator files a sealed complaint, the Government may “proceed with the action, in which case the action shall be conducted by the Government,” or “notify the court that it declines to take over the action, in which case the person bringing the action shall have the right to conduct the action.” Id. § 3730(b)(4).

The qui tam provision is essential to achieving the FCA’s purpose “[bjecause the scope of fraud against the government is much broader than the government’s ability to detect it.” United States v. Health Possibilities, P.S.C., 207 F.3d 335, 340 (6th Cir. 2000). The FCA thus “provides private actors with a variety of incentives to bring qui tam actions, and significant influence over the ensuing development of qui tam suits—including ‘the right to conduct the action’ when the government decides not to intervene.” Id. The FCA also recognizes that relators will not come forward (risking, in many cases, their livelihoods), and private attorneys will not undertake the extensive work and expense necessary to represent relators, if they are not fairly compensated for doing so. The Act therefore provides that even if the Government takes over the action, the relator is entitled to a share of “the proceeds of the action or settlement of the claim” and his or her attorney is entitled to “reasonable attorneys’ fees and costs.” 31 U.S.C. § 3730(d)(1).

This FCA case involves seven different qui tam complaints, all of which alleged that CHS defrauded the Government by admitting Medicare patients for medically-unnecessary emergency room visits. The first four complaints were filed under seal between 2009 and 2011 in Illinois, Indiana, and Texas. In early 2011, the Government first told the relators in these four cases of the similarities among their qui tam suits, which had “triggered a nationwide investigation on the part of the U.S.” The Government encouraged these relators “to work together on the cases and share any proceeds that might result.” At the Government’s request, these relators then reached a sharing agreement in April 2011.

Appellees are three relators who were not involved in the original four cases. Appellees met with officials from the U.S. Department of Justice in Washington, D.C., U.S. Attorney’s Office for the East-[412]*412era District of Pennsylvania, and U.S. Attorney’s Office for the Middle District of Tennessee between February 2011 and April 2011. They disclosed the results of their investigation, begun in October 2010, which included “an original, robust statistical analysis of CHS admission practices” and an “extensive factual investigation.” Their statistical analysis covered 74 different hospitals. To develop the facts of CHS's alleged fraud, they “contacted approximately 100 current and former doctors and nurses at approximately 20 CHS facilities in nine states.”

In May 2011, these three relators (hereinafter Tennessee Relators) filed suit under seal in the Middle District of Tennessee. The Government then partially unsealed the four other qui tam complaints to the Tennessee Relators for their review and requested that they “actively participate in its investigation, which was led by the U.S. Attorney’s Office in Nashville, on an on-going basis.” Counsel for relators thereafter engaged in a “collaborative effort” involving “bimonthly calls with the Government.” “The Government lawyers mapped out the investigation and assigned work to all rela-tors’ counsel in an organized manner,” with “the majority of the assignments [being] made without regard to the individual complaint.” At the Government’s request, from 2011 to 2014 the Tennessee Relators’ counsel organized and analyzed thousands of documents produced by CHS, drafted letters and memoranda related to these documents, created lists of witnesses, drafted outlines for questioning witnesses, and conducted extensive legal and factual research. All told, they calculated their work on the case at nearly 7,000 billable hours.

Three years later, in the spring of 2014, the Government informed relators of a “handshake” deal with CHS. Because CHS required that, as part of settlement, all of the qui tam complaints—now seven in total—be dismissed with prejudice, the Government urged the Tennessee Relators to join the original relators’ sharing agreement. After private mediation in early May 2014, relators in all seven cases reached a sharing agreement.

The Government intervened in each of the relators’ actions on July 24, 2014. The Government filed a notice of settlement on August 4, 2014, and the district court unsealed the case. The settlement agreement provided that the Government and the seven relators would dismiss their claims upon payment by CHS of $88 million. As provided in § 3730(d), the Government awarded 19 percent of the total recovery to the relators, or about $16.4 million. See 31 U.S. § 3730(d) (“If the Government proceeds with an action brought by a person under subsection (b), such person shall ...

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666 F. App'x 410, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-ex-rel-doghramji-v-community-health-systems-inc-ca6-2016.