USA v. Conway, et al.

2001 DNH 010

• Court: District Court, D. New Hampshire
• Decided: January 10, 2001
• Docket: CV-99-155-M
• Status: Published

Opinion

USA v . Conway, et a l . CV-99-155-M 01/10/01 UNITED STATES DISTRICT COURT

DISTRICT OF NEW HAMPSHIRE

United States of America, Plaintiff

v. Civil N o . 99-155-M Opinion N o . 2001 DNH 010 Heart Trace of Nashua, Inc., Samaritan Health Systems, Inc., John W . Conway, Norman P. Lehrman and Donnie W . Lawson, Defendants

O R D E R

In January of 1997, a federal grand jury indicted defendants

on twenty-five counts of violating various federal laws.

Specifically, defendants were charged with conspiracy to defraud

the United States by knowingly making false statements with the

intent to defraud Medicare (18 U.S.C. §§ 3 7 1 ) , filing false

statements with the intent to defraud Medicare (18 U.S.C. §

1001), and mail fraud (18 U.S.C. § 1341). Following a jury

trial, each defendant was convicted of all charges brought

against him/it. At sentencing, defendants and the government stipulated that

the total loss occasioned by defendants’ criminal conduct was

$2,273,238.00. Consequently, defendants Conway and Lehrman were

ordered to pay restitution to the Health Care Financing

Administration in the amount of $2,273,238.00. Heart Trace of

Nashua was ordered to pay $2,080,197.00 in restitution, while

Samaritan Health Systems was ordered to pay $193,141.00 in

restitution – representing each’s proportional responsibility for

the total loss. The parties also stipulated that defendant

Lawson was not responsible for any loss and, therefore, he was

not ordered to pay restitution.

Subsequently, the government filed this parallel civil

action under the False Claims Act, 31 U.S.C. §§ 3729-3733,

alleging that the conduct giving rise to the indictment caused

the government to incur losses of approximately $3.07 Million.

It seeks to recover treble damages (approximately $9.21 Million),

plus civil penalties of $10,000 per false claim filed by each of

the defendants. See 31 U.S.C. § 3729(a).

2 The government has now moved for partial summary judgment,

saying that it is entitled to judgment as a matter of law on the

issue of liability as to its claims against each of the

defendants. It has, however, represented that an evidentiary

hearing will be necessary to calculate the precise measure of its

damages. None of the defendants has objected.

Discussion

Because the claims that form the basis of the government’s

one count civil complaint were fully and fairly litigated by (and

necessarily resolved against) defendants at their criminal trial,

they are estopped from denying the essential elements of the

government’s claims under the False Claims Act. Section 3731 of

Title 31 provides:

Notwithstanding any other provision of law, the Federal Rules of Criminal Procedure, or the Federal Rules of Evidence, a final judgment rendered in favor of the United States in any criminal proceeding charging fraud or false statements, whether upon a verdict after trial or upon a plea of guilty or nolo contendere, shall estop the defendant from denying the essential elements of the offense in any action which involves the same transaction as in the criminal proceeding and which is brought under subsection (a) or (b) of section 3730.

3 31 U.S.C. § 3731(d) (emphasis supplied). Consequently, the

government is entitled to judgment as a matter of law on the

issue of liability.

As to the issue of damages, however, one might reasonably

posit that the amount for which defendants may be held civilly

liable was fixed by the government’s factual stipulations

regarding the amount of loss occasioned by the offenses of

conviction. Those stipulations provided that defendants were

responsible for the following losses:

a. Heart Trace of Nashua, Inc. $2,080,197.00

b. Samaritan Health Systems $ 193,141.00

c. John W . Conway $2,273,238.00

d. Norman P. Lehrman $2,273,238.00

e. Donnie W . Lawson $ 0.00

Similarly, one might also plausibly argue that the number of

false claims submitted by the defendants was fixed by the

government’s earlier stipulations:

4 a. Heart Trace of Nashua, Inc. 4,395

b. Samaritan Health Systems 2,567

Consequently, it is unclear whether the government may now

“revisit” the losses caused by defendants’ conduct or the number

of false claims actually filed by defendants, by attempting to

prove facts that are inconsistent with the stipulations it

offered in the prior criminal proceeding.

Conclusion

For the foregoing reasons, plaintiff’s motion for partial

summary judgment as to liability (document n o . 31) is granted.

However, if the government intends to pursue its apparent claim

that the loss attributable to defendants’ unlawful conduct i s ,

factually, in excess of $3 Million, and/or that the number of

false claims submitted by defendants i s , factually, closer to

17,000, it must first file a legal memorandum showing why it is

not estopped from raising such claims now, having offered

contrary factual stipulations (that were accepted by the court)

in the underlying criminal proceeding. The government’s

5 memorandum shall be filed on or before January 2 6 , 2001, o r ,

alternatively, a statement of agreement as to the controlling

nature of the prior stipulations on damages and civil penalties

may be filed before that time. See 31 U.S.C. § 3729(a)

(entitling the government to double or treble damages and a civil

penalty of “not less that $5,000 and not more than $10,000” for

each false or fraudulent claim). If necessary, the court will

then schedule a hearing to resolve any outstanding factual

issues.

SO ORDERED.

Steven J. McAuliffe United States District Judge

January 1 0 , 2001

cc: Patrick M . Walsh, Esq. John W . Conway Norman P. Lehrman Donnie W . Lawson