United States District Court, D. Colorado
UNITED STATES ex rel. ANTHONY HANLON, UNITED STATES ex rel. LINDA DOLLAR, and STATE OF COLORADO ex rel. RELATORS, Plaintiffs,
COLUMBINE MANAGEMENT SERVICES, INC., a Colorado corporation doing business as COLUMBINE HEALTH SYSTEMS, and POUDRE VALLEY HEALTH CARE, INC., a Colorado nonprofit corporation doing business as POUDRE VALLEY HEALTH SYSTEM, Defendants. UNITED STATES, Interested Party.
ORDER RE: DEFENDANTS MOTION FOR SANCTIONS AND
E. Blackburn United States District Judge
matter before me is the Defendants Columbine Management
Services, Inc. and Poudre Valley Health Care, Inc.'s
Motion For Sanctions and Attorneys' Fees
[#107], filed April 11, 2016. The plaintiffs
filed a response [#112], and the defendants filed a reply
[#115]. I grant the motion in part.
defendants filed the motion for attorney fees after I entered
an Order Overruling Objections And Adopting Recommendation of
United States Magistrate Judge [#104');">104');">104');">104]. In that order, I
dismissed the plaintiffs qui tam complaint with
STANDARD OF REVIEW
the authority to award attorney fees under the statutes and
rules summarized below. First, 31 U.S.C. § 3730(d)(4)
concerns qui tam actions, such as this case. Under
§ 3730(d)(4), I may award attorney fees if the following
statutory requirements are met: (1) the government does not
proceed with the action; (2) the person bringing the action
conducts the action; (3) the defendant prevails in the
action; and (4) I find that the claim of the plaintiff was
“clearly frivolous, clearly vexatious, or brought
primarily for purposes of harassment.” 31 U.S.C. §
3730(d)(4). Vexatious means “without reasonable or
probable cause or excuse.” United States v.
Gilbert, 198 F.3d 1293, 1298 (11th Cir. 1999) (citing
Black's Law Dictionary). Frivolous means
“[g]roundless . . . with little prospect of
success.” Id. at 1299. This is “a
difficult standard to meet, to the point that rarely will a
case be sufficiently frivolous to justify imposing attorney
fees on the plaintiff.” U.S. ex rel. Grynberg v.
Praxair, Inc., 389 F.3d 1038, 1059 (10th Cir. 2004)
(citation omitted). Subjective bad faith by the plaintiffs is
not a prerequisite to the defendant recovering attorney fees.
Id. at 1058.
under 28 U.S.C. § 1927, “[a]ny attorney . . . who
so multiplies the proceedings in any case unreasonably and
vexatiously may be required by the court to satisfy
personally the . . . attorneys' fees reasonably incurred
because of such conduct.” This power must be construed
strictly and utilized only in instances evidencing
a‘serious and studied disregard for the orderly process
of justice.” Braley v. Campbell, 832 F.2d
1504, 1512 (10th Cir. 1987) (citations omitted); Baca v.
Berry, 806 F.3d 1262, 1268 (10th Cir. 2015). This
standard does not require a motive involving subjective
bad-faith. See Braley, 832 F.2d at 1512.
“Although subjective good faith on the part of a
non-attorney party appellant may in some instances excuse
otherwise unreasonable conduct, we are entitled to demand
that an attorney exhibit some judgment.” Id. I
may award attorney fees when an attorney displays
“conduct that, viewed objectively, manifests either
intentional or reckless disregard of the attorney's
duties to the court.” Id.
the court should resort to such sanctions “only in
instances evidencing a serious . . . disregard for the
orderly process of justice, ” Dreiling v. Peugeot
Motors of America, Inc., 768 F.2d 1159, 1165 (10th Cir.
1985) (citation and internal quotation marks omitted),
“[t]he power to assess costs, expenses, and
attorney's fees against an attorney personally in the
appropriate case is an essential tool to protect both
litigants and the ability of the federal courts to decide
cases expeditiously and fairly, ” Braley, 832
F.2d at 1512. It is important to note that sanctions under
§ 1927 may not be based on the plaintiff's filing of
her complaint. Steinert v. Winn Group, Inc. 440 F.3d
1214, 1224-1225 (10th Cir. 2006). Applying the language of
§ 1927 in Steinert, the United States Court of
Appeals for the Tenth Circuit held that it “is not
possible to multiply proceedings [unreasonably and
vexatiously] until after those proceedings have begun.”
Id. at 1225.
I may award attorney fees to sanction a litigant for
bad-faith conduct under the inherent power of the court.
Chambers v. NASCO, Inc., 501. U.S. 32, 35 (1991). In
Chambers, the Supreme Court identified three
circumstances where the inherent power of the court to assess
attorney fees is relevant: (1) when the litigation of a party
directly benefits others, a circumstance known as the
“common fund” exception; (2) when a party
willfully disobeys a court order; and (3) when a party acts
“in bad faith, vexatiously, wantonly, or for oppressive
reasons.” Id. at 45-46. Actions that fit into
the third category include when a party practices fraud upon
the court and when a party “shows bad faith by delaying
or disrupting the litigation or by hampering enforcement of a
court order.” Id. at 46.
plaintiffs brought this action as a qui tam action
under the False Claims Act (FCA) 31 U.S.C. §§ 3729
- 3733. The FCA prohibits any person from making false or
fraudulent claims for payment to the United States and
provides for substantial damages and civil penalties for
making such claims. 31 U.S.C. § 3729. Under the FCA,
private individuals, such as the plaintiffs in this case, may
bring a qui tam action in the name of the government
based on violations of § 3729. 31 U.S.C. §
3730(b)(1). Such qui tam plaintiffs often are
referred to as relators. In addition, the plaintiffs asserted
claims under the Antikickback Statute, 42 U.S.C. §
1320a-7b, and the Colorado analog to the False Claims Act.
plaintiffs filed this case under seal on March 29, 2013. On
June 20, 2014, the government declined to intervene [#22].
The defendants were served with a summons and the complaint
in May 2015. The defendants filed motions to dismiss [#60
& #62] in June 2015. In those motions, the defendants
asserted that the plaintiffs failed to state viable claims in
their complaint. The plaintiffs then filed a motion [#75] to
amend their complaint and to add a party. In their responses
[#77 & #78] to the motion to amend, the defendants argued
that the proposed amended complaint again failed to state any
detailed order [#81], the magistrate judge denied the motion
to amend [#75] without prejudice. The magistrate judge
detailed the reasons why the proposed amended complaint was
insufficient. The magistrate judge wrote "it may be
helpful for Plaintiffs to provide clearer statements
regarding each cause of action being asserted by Plaintiffs,
" and, "the Court strongly advises [the plaintiffs]
to closely examine Defendants' other arguments in the
Responses [#77, #78] to determine whether further amendment
is appropriate in order to address the issues that have been
raised." Order [#81], pp. 5 - 6.
weeks later, the plaintiffs filed their second motion [#82]
to amend their complaint. In a detailed recommendation [#96],
the magistrate judge analyzed the latest proposed amended
complaint in great detail. Again, the magistrate judge
concluded the plaintiffs had not made allegations sufficient
to support any of their proposed claims. She recommended that
the motion to amend [#82] be denied and that the motions to
dismiss of the defendants be granted.
order [#104');">104');">104');">104] adopting the recommendation, I summarized and
adopted the analysis of the magistrate judge. I noted that
the “plaintiffs have caused nearly three years of undue
delay as they attempted, but failed, to state claims which
are viable.” Order [#104');">104');">104');">104], p. 6.
Despite many opportunities to cure the deficiencies in the
various iterations of their complaints, the plaintiffs have
failed to cure those deficiencies. Three years is more than
enough time for the plaintiffs to file a valid complaint, if
they can. After nearly three years, the plaintiffs have not