United States v. Dynamic Visions Inc

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

UNITED STATES OF AMERICA,

Plaintiff,

v. Civil Action No. 11-695 (CKK)

DYNAMIC VISIONS INC., et al.

Defendants.

MEMORANDUM OPINION (January 28, 2015)

Presently before the Court is Plaintiff’s Second Motion for Sanctions. See ECF No. [46].

Plaintiff requests that the Court enter an order imposing sanctions upon Defendants, “including

the issuance of an Order for Defendants to Show Cause why Defendants should not be held in

contempt and/or why default judgment should not be entered against Defendants for failing to

respond to Plaintiff’s Discovery Requests seeking factual discovery from Defendants, as ordered

by this Court.”1 Pl.’s Mot. at 1. On November 22, 2013, the Court held in abeyance Plaintiff’s

Motion for Sanctions pending completion of discovery. Minute Order (Nov. 22, 2013). The final

date by which discovery in this matter was to be completed was January 23, 2015. See Minute

Order (Oct. 3, 2014). On January 22, 2015, the Court issued an Order requesting that Plaintiff’s

counsel file an Affidavit indicating whether Defendants have complied with the Court’s

outstanding discovery orders and, if Defendants had not complied, indicating whether Plaintiff

was still requesting Defendants be held in contempt. Order (Jan. 22, 2015), ECF No. [78], at 1.

1 Plaintiff also seeks attorney’s fees for Defendants’ failure to provide Plaintiff with its requested discovery and for repeatedly failing to comply with the Court’s discovery orders. See Pl.’s Mot. for Attorney’ Fees, ECF No. [69]. The Court granted Plaintiff’s Motion for Attorney’s Fees on January 23, 2015. See Order (Jan. 23, 2015), ECF No. [79].

1 The Court noted in that Order that it would “not consider entering default judgment as a sanction

because courts in this Circuit are in agreement that such a dispositive sanction is ‘draconian.’”

Id. at 2 (citing cases). Accordingly, now that the discovery deadline has passed and the Court

has received Plaintiff’s counsel’s Affidavit regarding Defendants’ continued noncompliance with

the Court’s discovery orders,2 the Court will evaluate whether it is appropriate to issue an order

for Defendants to show cause why Defendants should not be held in Contempt.

I. DISCUSSION

Pursuant to Federal Rule of Civil Procedure 37(b)(2)(A)(vii), if a party fails to obey an

order to provide or permit discovery, the court where the action is pending may issue further just

orders, including “treating as contempt of court the failure to obey any order except an order to

submit to a physical or mental examination.” Plaintiff moves the Court to sanction Defendants

“for failing to respond to Plaintiff’s Discovery Requests seeking financial information and

documents, and for failing to respond to Plaintiff’s First Set of Discovery Requests seeking factual

discovery from Defendants, as ordered by this Court.” After reviewing the record in this case, the

Court finds that Defendants have repeatedly failed to comply with the Court’s orders to provide

financial and factual discovery requested by Plaintiff. Accordingly, the Court shall order Defendants

to show cause why they should not be held in contempt for their noncompliance. The Court sets out

Defendants lengthy history of noncompliance with the Court’s orders below.

A. Financial Discovery

On April 26, 2011, Plaintiff filed a Motion for Prejudgment Writ of Garnishment and

Attachment seeking to preserve Defendants’ financial assets after Plaintiff became concerned

that Defendants were conducting unusual financial activity by funneling large amounts of money

2 Declaration of Assistant U.S. Attorney in Support of Notice Regarding Defendants’ Non-Compliance (“Pl.’s Affidavit”), ECF No. [82].

2 between various accounts. See ECF No. [6]. The Court granted Plaintiff’s Motion and on July

26, 2011, Plaintiff served a copy of Plaintiff’s Interrogatories and Requests for Production of

Documents in Aid of Prejudgment Enforcement on Defendants, seeking the location and

disposition of all of Defendants’ financial assets and all documents related to those dispositions.

See ECF No. [17]. Defendants failed to timely respond to the Interrogatories and Request for

Production of Documents. See Motion to Compel, ECF No. [19], Ex. 2. Plaintiff sent a letter to

Defendants to attempt to resolve this matter, but Defendants did not respond. See Motion to

Compel. Accordingly, Plaintiff filed a Motion to Compel. See id. Defendants failed to respond

to the Motion to Compel, and the Court granted the Motion as conceded on March 8, 2012. See

Order (Mar. 8, 2012), ECF No. [22].

The Court held an Initial Scheduling Conference on February 20, 2013, at which it

ordered Defendants to respond to Plaintiff’s still outstanding financial discovery requests by

April 19, 2013. See Scheduling and Procedures Order (Feb. 20, 2013), ECF No. [35], at 6.

Defendants did not respond by April 19, 2013, as they had been ordered. See Notice Regarding

Defendants’ Failure to Produce Court-Ordered Discovery, ECF No. [41], at 3. Plaintiff

contacted counsel for Defendants several times at the end of April in unsuccessful attempts to

obtain the financial discovery Defendants had been court-ordered to provide. See ECF Nos. [46-

3]; [46-4]. Throughout May 2013, Plaintiff attempted to assist Defendants in obtaining the

financial information requested, but Defendants failed to provide the information and

authorization forms necessary for Plaintiff to assist Defendants. See ECF No. [46-5].

On June 12, 2013, this Court held a telephonic conference to address Defendants’ non-

compliance. See ECF No. [46-6]. During the telephonic conference, the Court ordered

Defendants to fully and completely respond to the financial interrogatory requests. Id. at 13-14.

3 24-25, 30; see also Order (June 13, 2013), ECF No. [42]. On July 8, 2014, Defendants provided

Plaintiff with their responses to the financial discovery requests. See ECF No. [46-7]. However,

Defendants’ responses were grossly incomplete and did not provide the information ordered by

the Court in the June 2013 telephonic conference. See id.

B. Factual Discovery

Plaintiff served Defendants with its First Set of Discovery Requests seeking factual

discovery on March 22, 2013. See ECF No. [46-8]. Defendants did not respond to Plaintiff’s

discovery request by April 24, 2013, the response date pursuant to the Federal Rules of Civil

Procedure, nor did Defendants respond to Plaintiff’s email inquiry regarding the status of the

factual discovery on May 23, 2013. See ECF No. [46-5]. At the June 12, 2013, telephone

conference, the Court ordered Defendants to fully respond to Plaintiff’s discovery requests by

July 26, 2013.3 Order (June 13, 2013), ECF No. [42]. On July 26, 2013, Defendants provided

responses to Plaintiff’s factual discovery requests; however, they were grossly incomplete. See

ECF No. [46-9].

C. Motion for Sanctions and Further Discovery Orders

On November 13, 2013, Plaintiff moved for a second time for sanctions, including

attorney’s fees, for Defendants’ failure to provide discovery. See ECF No. [46]. The Court held

a Status Hearing on November 22, 2013, and ordered Defendants to fully respond to Plaintiff’s

financial and factual discovery requests by February 15, 2014. Minute Order (Nov. 22, 2013).

The Court held Plaintiff’s Second Motion for Sanctions in abeyance pending the completion of

discovery. Id.

3 At the June 2013 telephonic conference, Defendants claimed they never received the fact discovery requests from the United States. ECF No. [46-6], at 16-22. At the Court’s request, a copy of the discovery requests were emailed by Plaintiff and received by Defendants during the telephonic conference. Id. at 25-29.

4 Over the next several months, Defendants disclosed several bank accounts that had not

previously been disclosed, and Plaintiff discovered several more that had not been disclosed. See

Notice of Letter to Counsel for Defendants, ECF No. [51-1]; Notice of Defendants’ Non-

Compliance with Court Order (“Pl.’s Non-Compliance Notice”), ECF No. [68]. Defendants also

continued to provide incomplete responses to Plaintiff’s discovery requests. See ECF No. [51-1].

On February 24, 2014, Magistrate Judge Alan Kay met with the parties regarding outstanding

discovery issues and issued a Minute Order requiring Plaintiff’s counsel to provide Defendants

with a description of outstanding discovery requests and requests that required supplemental

answers. Minute Order (Feb. 24, 2014). Magistrate Judge Kay ordered Defendants to “provide

complete responses within two weeks after receipt of that document.” Id. Plaintiff’s counsel

provided Defendants with a letter describing all outstanding discovery on March 7, 2014, see

ECF No. [51-1]; however, Defendants again failed to provide all requested discovery by the

deadline set by Magistrate Judge Kay.

On April 16, 2014, this Court held another Status Hearing at which Defendants’

noncompliance with Plaintiff’s discovery requests and the Court’s discovery orders was

discussed at length. Following the hearing, the Court ordered that “[a]ll outstanding discovery

shall be provided to Plaintiff by no later than May 16, 2014.” Order (April 16, 2014), ECF No.

[52]. On May 29, 2014, the Court held another Status Hearing at which the Court discussed in

great detail Defendants’ continued noncompliance with the Court’s discovery orders. Minute

Order (May 29, 2014). During the hearing, the Court ordered Plaintiff to file with the Court by

June 23, 2014, “a proposed discovery order setting out the discovery Defendant[s] must produce

pursuant to the Court’s findings during the status hearing.” Id. The Court ordered, however, that

Defendants should “immediately begin collecting the information identified by the Court during

5 the status hearing.” Id. On July 2, 2014, the Court issued Plaintiff’s proposed discovery order

and ordered Defendants to produce all outstanding discovery by August 1, 2014. Order (July 2,

2014), ECF No. [62].

Defendants’ discovery responses provided to Plaintiff on August 1, 2014, were again

incomplete. See Notice of Defendants’ Non-Compliance with the Court Order, ECF No. [68];

Minute Order (Oct. 3, 2014). At a Status Hearing on October 3, 2014, the Court found that

“Defendants have still not fully complied with the Court’s orders regarding discovery.” Minute

Order (Oct. 3, 2014). The Court ordered all discovery to be completed by January 23, 2015, and

set a schedule for Plaintiff to file its Motion for Attorney’s Fees as a discovery sanction and for

Defendants to respond to Plaintiff’s Motion. Id.

D. State of Compliance as of Close of Discovery on January 23, 2015

In Plaintiff’s January 27, 2015, Affidavit, Plaintiff’s counsel informs the Court that

“Defendants have provided no discovery to the United States as ordered by the Court on October

3, 2014—not one single page or item.” Pl.’s Notice ¶ 8. Specifically, in regards to financial

discovery ordered by the Court, Defendants have failed to provide:

 Provide the ownership documents for Defendant Bongam’s Lexus automobile, Pl.’s

Non-Compliance Notice at 2-3;

 Provide documents relating to Defendant Bongam’s ownership of two homes located

in Cameroon,4 id. at 3;

 Disclose the ownership, possession or control of any rental property, id. at 3-4;

 Provide account records from the Bank of America in Boston, id. at 4;

4 Defendants either need to produce these documents or provide an appropriate discovery response explaining, under oath in writing, why Defendants cannot produce such documents. See Fed. R. Civ. P. 33(b)(3); 34(b)(2).

6  Disclose the existence of a personal savings account at TD Bank, id. at 4-5;

 Provide documents accounting for the payments or other funds received from Regal

Home Health Care, id. at 5;

 Disclose twelve additional bank accounts used by Defendants that were found by the

United States, id. at 7;

 Specify in full and complete detail what has been done to locate Dynamic Vision’s

M&T bank card, id. at 7-8;

 Identify any bank cards associated with the TD Bank account, id. at 8;

 Explain a “vast number of transfers and withdrawals of large amounts of funds,” id. at

9, Ex. 5;

 Provide a lease agreement for Dynamic Vision’s offices and evidence of any lease

payments from October 2008 through March 2012, and from July 2013 to present, id.

at 11;

 Provide proof that the money orders and non-negotiable receipts for money orders

from M&T Bank for the periods of January 2012, October 2012, April 2013, October

2013, November 2013, and January 2014, were actually remitted or that the amounts

were actually paid, id., and;

 Provide proof of any utility payments made in order to sustain the offices of Dynamic

Vision, beyond the June 2013 water bill previously provided by Defendants, id.;

In regards to factual discovery, Defendants have failed to:

 Specify which regulations and procedures set by Medicaid and Medicare they are

relying upon to support their defense, id. at 12;

7  Provide “the substances and the basis of each person’s knowledge” regarding

Plaintiff’s allegations or Defendants’ defenses for the seven Dynamic Vision

employees identified by Defendants, id. at 12-13;

 Provide or identify timesheets relevant to seventeen patients and their Health Care

Aids, id. at 14, and;

 Provide copies of the Physician’s Orders and signed Plans of Care that are required

by Medicaid prior to reimbursement and which are the basis for most of the false

claims allegations against Defendants, id.

In light of this continuing and substantial non-compliance with the Court’s discovery

orders, the Court believes there are grounds to find Defendants in contempt of court.

Accordingly, the Court shall issue a show cause order requiring Defendants to show cause for

why they should not be held in contempt. Defendants should be aware that in the event that the

Court finds that Defendants should be held in contempt, the Court is considering imposing daily

fines on Defendants until Defendants fully comply with the Court’s discovery orders and provide

the outstanding discovery identified above. Defendants’ discovery responsibilities are ongoing.

II. CONCLUSION

For the foregoing reasons, the Court finds that Plaintiff has made a sufficient showing for

the Court to issue a show cause order as to why Defendant should not be held in contempt. An

appropriate Order accompanies this Memorandum Opinion.

____ _/s/_____________________ COLLEEN KOLLAR-KOTELLY United States District Judge