USA v. Heart Trace, et al.

2001 DNH 050

• Court: District Court, D. New Hampshire
• Decided: March 16, 2001
• Docket: CV-99-155-M
• Status: Published

Opinion

USA v . Heart Trace, et a l . CV-99-155-M 03/16/01 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 050 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, defendants were convicted of all charges brought against

them. Subsequently, the government filed this parallel civil

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

Originally, the government alleged that the conduct giving rise

to the indictment resulted in losses of approximately $3.07

Million. Based upon that loss calculation, the government sought

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). At defendants’ criminal

sentencing, however, the government stipulated that defendants

were responsible for losses of slightly more than $2 Million.

In light of that stipulation, the court granted the

government’s motion for judgment as a matter of law on the issue

of defendants’ liability. As to the issue of damages, however,

the court instructed the government to file a memorandum

explaining why it was not estopped from seeking damages for false

claims in excess of those to which it stipulated at sentencing.

The government has filed the memorandum (document n o . 3 4 ) ,

and agrees that damages should be based upon the stipulated loss

attributable to the false claims submitted by defendants

2 ($2,080,197.00), rather than the nearly $3.1 Million referenced

in its civil complaint. Pursuant to 31 U.S.C. 3729(a), the

government seeks treble damages (i.e., $6,240,591.00), which

figure would “also include any applicable civil monetary

penalties.” Government’s memorandum at 1 . None of the

defendants has objected.

Discussion

Having been granted judgment as a matter of law on the issue

of liability, and having agreed to seek civil damages exclusively

for those false statements as to which defendants stipulated, the

government is entitled to a judgment against defendants “of not

less that $5,000 and not more that $10,000, plus 3 times the

amount of damages which the Government sustain[ed] because of the

act of [defendants].” 31 U.S.C. § 3729(a). The court may,

however, enter judgment in an amount not less than 2 times the

loss sustained by the government if it finds:

(A) the person committing the violation of this subsection furnished officials of the United States responsible for investigating false claims violations with all information known to such person about the violation within 30 days after the date on which the defendant first obtained the information;

3 (B) such person fully cooperated with any Government investigation of such violation; and

(C) at the time such person furnished the United States with the information about the violation, no criminal prosecution, civil action, or administrative action had commenced under this title with respect to such violation, and the person did not have actual knowledge of the existence of an investigation into such violation.

31 U.S.C. § 3729(a).

The statute plainly presumes that the government shall

recover treble damages. To rebut that presumption and reduce the

damage award to not less than two times the government’s actual

loss, a defendant must demonstrate that he or she meets each of

the three conditions set forth above. Here, defendants have not

only interposed no objection to the government’s motion seeking

treble damages, no evidence of record suggests that they might

have met those conditions, nor did they introduce any evidence at

their criminal trial or sentencing that suggests they could meet

any of those conditions. Certainly, nothing in the record

suggests that any defendant complied with all of the conditions

set forth in 31 U.S.C. § 3739(a).

4 Accordingly, the government is entitled to judgment as a

matter of law in the amount of $6,240,591.00 against Defendants

Heart Trace of Nashua, Inc., John W . Conway, and Norman P.

Lehrman, and in the amount of $579,423.00 against Defendant

Samaritan Health Systems, Inc., representing three times the

stipulated losses incurred by the government.1 No damages are

assessed against Defendant Donnie W . Lawson, since the government

stipulated that no loss was attributable to him. See United

States v . Heart Trace of Nashua, Inc., N o . 99-155-M, 2001 DNH 010

at 4 (D.N.H. Jan. 1 0 , 2001).

The Clerk of Court shall enter judgments as described, which

figures shall include any and all applicable civil monetary

penalties to which the government is entitled under 31 U.S.C. §

3729 (the government having waived any right to seek additional

civil penalties of between $5,000 and $10,000 for each false

claim submitted by defendants).

1 At sentencing, the government and defendants stipulated that the loss attributable to Defendants Conway and Lehrman was $2,273,238.00. In this civil proceeding, however, the government seeks damages from those defendants based upon a loss to the government of $2,080,197 (the stipulated loss attributed to Heart Trace of Nashua, Inc.). See Government’s Memorandum in Support of Civil Monetary Penalties and Damages (document n o . 3 4 ) .

5 SO ORDERED.

Steven J. McAuliffe United States District Judge

March 1 6 , 2001

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