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United States ex rel. Fowler v. Evercare Hospice, Inc.

United States District Court, D. Colorado

February 7, 2017

UNITED STATES OF AMERICA ex rel. TERRY LEE FOWLER and LYSSA TOWL, Plaintiff,
v.
EVERCARE HOSPICE, INC., n/k/a Optum Palliative and Hospice Care, a Delaware corporation, OVATIONS, INC., a Delaware corporation, OPTUMHEALTH HOLDINGS, LLC, a Delaware limited liability corporation, and UNITED HEALTHCARE SERVICES, INC., a Minnesota corporation, Defendants.

          ORDER

          PHILIP A. BRIMMER United States District Judge

         This matter is before the Court on Relators Fowler's and Towl's Motion to Determine Relators' Share of Settlement Proceeds [Docket No. 175]. The United States opposes relators' motion in part. Docket No. 185. The Court has jurisdiction pursuant to 28 U.S.C. § 1331.

         I. BACKGROUND

         A. Procedural History

         This action arises under the False Claims Act (“FCA”), 31 U.S.C. § 3729 et seq. Relators Fowler and Towl (the “relators”) initiated a qui tam action on March 15, 2011 alleging that defendants knowingly submitted, or caused to be submitted, claims for Medicare hospice expenses for patients who were ineligible for such benefits. See Docket No. 1. The complaint was filed about one month before Mr. Fowler resigned and two months after Ms. Towl was terminated from Evercare Hospice, Inc. (“Evercare”). Docket No. 176 at 12, ¶ 23; Docket No. 176-4 at 15, ¶ 31.

         On June 5, 2013, Sharlene Rice, another former Evercare employee, filed her own qui tam action in the United States District Court for the Northern District of Illinois. See Docket No. 154-2. That case was transferred to the United States District Court for the District of Colorado, see United States ex rel. Rice v. Evercare Hospice, Inc., Civil Action No. 14-cv-01647-PAB, and consolidated with this action on June 24, 2014. Docket No. 28. The United States intervened in the consolidated action on August 25, 2014, Docket No. 34, and filed a consolidated complaint on November 10, 2014. Docket No. 46. On September 21, 2015, the Court denied Evercare's motion to dismiss the government's complaint and granted in part and denied in part Evercare's motion to dismiss the relators' second amended complaint. Docket No. 120.

         On July 13, 2016, Evercare agreed to pay $18 million to resolve the claims in the consolidated action. Docket No. 183. On September 12, 2016, Mr. Fowler and Ms. Towl filed a motion pursuant to 31 U.S.C. § 3730(d)(1) requesting that the Court order the United States to pay 23 percent of the $18 million settlement to the relators. Docket No. 175.[1]

         B. Facts

         The relators filed their complaint under seal on March 15, 2011. Docket No. 1. Before filing the complaint, Mr. Fowler and Ms. Towl provided disclosures to the government. Docket No. 176-4 at 6, ¶ 13; Docket No. 176 at 6, ¶ 12. Mr. Fowler's pre-filing disclosure described an independent review of 129 denied Medicare claims, a copy of documentation regarding hospice-related denials that were not appealed by Evercare, examples of patients for whom bills were submitted despite Medicare denials, and a description of Evercare's policies that were designed to maintain ineligible patients on their rolls. Docket No. 176-4 at 6-8, ¶14. Ms. Towl's pre-filing disclosure included descriptions of internal policies related to the underlying fraud and a roster of 146 Denver patients relating their hospice certifications to their diagnosis and whether they had seen a physician. Docket No. 176 at 6-8, ¶ 13.

         Mr. Fowler and Ms. Towl provided supplemental documentation to the government related to Evercare's fraud after the government intervened. See, e.g., Docket No. 176-4 at 8, ¶ 15 (discussing the delivery of 11 documents to the government). They also provided the government with draft search terms, id. at 11, ¶ 19, witness lists, id. at 11, ¶ 20, and a collection of Evercare emails. Id. at 11, ¶ 21.

         The complaint in this action was filed one month before Mr. Fowler resigned from his position and two months after Ms. Towl was terminated by Evercare. Mr. Fowler states that he was induced into leaving Evercare by his supervisors, who provided contradictory instructions and repeatedly reprimanded him before placing him on a corrective action plan. Id. at 14-15, ¶¶ 29-30. Mr. Fowler resigned from Evercare in April 2011. Id. at 15, ¶ 31. Subsequently, Mr. Fowler obtained employment at ¶ 20 percent reduced salary, which he maintained for a year and a half before being laid off. Id. at 15, ¶ 32. After an additional period of unemployment, Mr. Fowler was employed at a further salary reduction through August 2015, when he retired. Id. at 15, ¶ 33. Evercare terminated Ms. Towl in January 2011. Docket No. 176 at 12, ¶ 23. She started her own business, which she now considers to be a success. Id. at 12-13, ¶ 25. The complaint in this action was filed under seal and was not provided to defendants until June 2012. See Docket No. 11 and subsequent order.

         II. LEGAL STANDARD

         The False Claims Act allows a private citizen, “the relator, ” to file a qui tam lawsuit on behalf of the United States to recover the government's damages. 31 U.S.C. § 3730. If the government elects to intervene in a qui tam suit, as the government did here, a relator is entitled to 15 percent to 25 percent of the “proceeds of the action or settlement of the claim.”[2] 31 U.S.C. § 3730(d)(1). The amount of compensation is determined by the “extent to which the person substantially contributed to the prosecution of the action.” Id. “[D]etermination of the relator's share is left largely to the Court's informed discretion.” United States ex rel. Alderson v. Quorum Health Grp., Inc., 171 F.Supp.2d 1323, 1331 (M.D. Fla. 2001). While the statute is silent about the factors that determine whether a contribution is substantial, courts may consider legislative history, internal Department of Justice (“DOJ”) guidelines in FCA matters, and case law in determining the correct percentage to award to relators. Alderson, 171 F.Supp.2d at 1331.

         The legislative history of the FCA provides three factors that courts often consider in determining the amount relators should recover: the significance of the information provided by the relator, the relator's contribution to the final outcome, and whether the government was previously aware of the fraud. Alderson, 171 F.Supp.2d at 1332 (citing S. Rep. No. 99-345, at 28 (1986), reprinted in 1986 U.S.C.C.A.N. 5266, 5293).

         Some courts have also considered the DOJ guidelines for determining the relators' share. The DOJ guidelines identify the following factors to consider in ...


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