United States of America, ex rel. et al v. Elite Healthcare Enterprises, Inc.
Filing
67
ORDER GRANTING 62 Motion for Default Judgment. Accordingly, it is hereby ORDERED AND ADJUDGED that default judgment against Defendant be entered and that the Government recover damages from Defendant in the amount of $3,584,625.00. Itis further ORDERED AND ADJUDGED that civil penalties in the amount of $6,781,500.00 be imposed on Defendant. Signed by Judge J. P. Boulee on 2/13/2023. c:Financial Office(nmb)
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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
UNITED STATES of AMERICA ex
rel. REQUAYA HOLSEY and STATE
of GEORGIA ex rel. REQUAYA
HOLSEY,
Plaintiff-Relator,
v.
CIVIL ACTION NO.:
1:18-CV-2318-JPB
ELITE HEALTHCARE
ENTERPRISES, INC. AND
DIANDRA BANKHEAD,
Defendants.
ORDER
This matter is before the Court on the United States’ and State of Georgia’s
Motion for Default Judgment [Doc. 62]. The Court finds as follows:
PROCEDURAL HISTORY
On May 21, 2018, Requaya Holsey (“Relator”) filed a qui tam action against
Elite Healthcare Enterprises, Inc. (“Elite”) under the Federal False Claims Act
(“FCA”) and the Georgia State False Medicaid Claims Act (“FMCA”) on behalf of
the United States of America and the State of Georgia (collectively, “the
Government”). [Doc. 1]. The Government elected to intervene, [Doc. 48], [Doc.
Case 1:18-cv-02318-JPB Document 67 Filed 02/13/23 Page 2 of 11
49], and subsequently filed an Intervenor Complaint on August 17, 2021, [Doc.
52], against Elite and its owner, Diandra Bankhead (“Bankhead”), (Bankhead and
Elite collectively referred to as “Defendant”). Defendant was served on August
25, 2021, therefore Defendant’s deadline to answer was September 15, 2021.
[Doc. 54].
On September 15, 2021, Defendant moved for an extension of time to
answer the Intervenor Complaint to seek and retain proper legal representation.
[Doc. 55]. Defendant’s motion was unopposed, [Doc. 56], and the Court granted
an extension of time through January 13, 2022, with a warning to Defendant that
future extensions were unlikely due to the age of the case and the lengthy
extension. See Sept. 28, 2021 Docket Entry. Thereafter, Defendant sought a
second extension of time to answer, [Doc. 57-1], which the Court denied on
January 18, 2022. [Doc. 58]. Due to a delay in mailing the January 18, 2022
Order to Defendant, the Court granted an extension to Defendant through February
10, 2022, to respond to the Intervenor Complaint. See Jan. 27, 2022 Docket Entry.
On March 15, 2022, the Government moved for Clerk’s Entry of Default,
which was entered on March 16, 2022. [Doc. 61]. See also March 16, 2022
Docket Entry. The Government then moved for Default Judgment on March 23,
2022, [Doc. 62], and the Court directed Defendant to respond by November 30,
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2022, [Doc. 63]. In response, Defendant mailed a “Motion to Oppose Proposed
Default Judgment” which was untimely delivered to the Government and does not
appear on the docket of this case. See [Doc. 65]. Defendant’s Motion did not
address the substance of the Government’s Motion for Default Judgment, but
rather asked for permission to proceed pro se and stated that Defendant needed
time to prepare for trial. Id. Nevertheless, the Court granted an extension of time
through January 27, 2023, for Defendant to respond to the Government’s Motion
for Default Judgment. [Doc. 65]. On January 12, 2023, Defendant filed a “Motion
to Oppose Proposed Default Judgment” that once again did not address the
substance of the Government’s Motion for Default Judgment but repeated the
requests for permission to proceed pro se and time to prepare for trial. Id.
To date, Defendant has filed neither an answer to the Intervenor Complaint
nor a substantive response to the Government’s Motion for Default Judgment.
DISCUSSION
A. Legal Standard
When a defendant fails to file an answer or otherwise defend, a court may
enter judgment by default. Fed. R. Civ. P. 55(b)(2). Default judgments are
typically disfavored. Surtain v. Hamlin Terrace Found., 789 F.3d 1239, 1244–45
(11th Cir. 2015). “Entry of default judgment is only warranted when there is ‘a
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sufficient basis in the pleadings for the judgment entered.’” Id. at 1245 (quoting
Nishimatsu Constr. Co. v. Hous. Nat’l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975)).
In other words, “[t]he court may grant default judgment [only] on those claims
brought by [the] [p]laintiff that are legally sufficient and supported by well-pleaded
allegations.” Earthlink, Inc. v. Log On Am., Inc., No. 1:02-CV-1921, 2006 WL
783360, at *1 (N.D. Ga. Mar. 24, 2006); see also Bruce v. Wal-Mart Stores, Inc.,
699 F. Supp. 905, 906 (N.D. Ga. 1988) (“In considering a motion for entry of
default judgment, a court must investigate the legal sufficiency of the allegations of
the plaintiff’s complaint.”); Functional Prods. Trading, S.A. v. JITC, LLC, No.
1:12-CV-0355, 2014 WL 3749213, at *11 (N.D. Ga. July 29, 2014) (“[A] default
judgment cannot stand on a complaint that fails to state a claim.”).
“Conceptually, then, a motion for default judgment is like a reverse motion
to dismiss for failure to state a claim,” and the Court must determine “whether the
complaint ‘contain[s] sufficient factual matter, accepted as true, to state a claim to
relief that is plausible on its face.’” Surtain, 789 F.3d at 1245 (alteration in
original) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).
The Intervenor Complaint sets forth claims under the FCA and the FMCA,
as well as common law unjust enrichment and payment by mistake claims. [Doc.
52]. At the outset, the Court notes that the Government does not seek recovery for
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its unjust enrichment and payment by mistake claims and therefore, the Court will
not evaluate the appropriateness of entering a default judgment as to those claims.
[Doc. 62-1, p. 6]. Further, the Government does not seek recovery on all alleged
false claims, but only on 505 of the 5,172 total alleged false claims. Id. at 7. In
reaching its determination on default judgment as to the FCA and the FMCA
claims, the Court considers first whether the Government stated a claim under the
FCA and the FMCA before turning to the issue of damages and statutory penalties.
B. Liability Under the FCA and the FMCA
As relevant here, to state a claim for liability under the FCA or the FMCA,
the Government must allege that Defendant “(A) knowingly present[ed], or
cause[d] to be presented, a false or fraudulent claim for payment or approval; [or]
(B) knowingly ma[de], use[d], or cause[d] to be made or used, a false record or
statement” to get a false or fraudulent claim paid or approved by the Government.
31 U.S.C. § 3729 (a)(1).1 The FCA defines “knowingly” as encompassing either
“actual knowledge,” “deliberate ignorance” or “reckless disregard.” 31 U.S.C.
§3729(b)(1). Although a showing of “specific intent to defraud” is not required,
1
The language of the Georgia FMCA mirrors the Federal FCA but applies only to
claims submitted to the Georgia Medicaid program. See O.G.C.A. § 49-4168.1(a).
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id., “the statute's language makes plain that liability does not attach to innocent
mistakes or simple negligence,” Urquilla-Diaz v. Kaplan Univ., 780 F.3d 1039,
1058 (11th Cir. 2015).
Claims asserted under the FCA are additionally subject to the pleading
standards of Federal Rule of Civil Procedure 9(b). See United States ex rel.
Clausen v. Lab. Corp. of Am., Inc., 290 F. 3d 1301, 1309–10 (11th Cir. 2002).
Rule 9(b) provides “[i]n alleging fraud or mistake, a party must state with
particularity the circumstances constituting fraud or mistake,” but “[m]alice, intent,
knowledge, and other conditions of a person’s mind may be alleged generally.” In
the FCA context, this means the complaint must set forth “‘facts as to time, place,
and substance of the defendant’s alleged fraud’” and “‘the details of the
[defendant’s] allegedly fraudulent acts, when they occurred, and who engaged in
them.’” Clausen, 290 F.3d at 1308 (quoting Cooper v. Blue Cross & Blue Shield
of Fla., Inc., 19 F.3d 562 (11th Cir. 1994)); accord United States ex rel. Fox Rx,
Inc. v. Omnicare, Inc., No. 1:11-CV-00962, 2012 WL 8020674, at *12 (N.D. Ga.
2012).
The allegations in the Intervenor Complaint are summarized as follows.
Defendant Bankhead, acting through her company, Defendant Elite, submitted
fraudulent credentialing information to the Georgia Department of Community
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Health (“DCH”) to become a certified Georgia Pediatric Program (“GAPP”)
provider.2 [Doc. 52]. Specifically, Bankhead falsely represented to Medicaid that
an appropriately credentialed and certified registered nurse served as Elite’s
Registered Nurse Supervisor and conducted initial evaluations of GAPP
beneficiaries per the GAPP program requirements. Id.
The Intervenor Complaint further alleges that between September 2015 and
April 2018, Defendant submitted fraudulent claims to Medicaid for services
allegedly provided to GAPP beneficiaries that were tainted by fraudulent conduct.
Such conduct included providing unauthorized services, billing for services that
were not rendered and upcoding. Id. The Intervenor Complaint provides examples
of Defendant’s alleged fraudulent activity and identifies specific dates of service,
claim numbers, billing dates, billing amounts and paid amounts relevant to the
alleged instances of fraudulent activity. Id.
The Court finds the allegations contained in the Intervenor Complaint are
sufficient to state a claim to relief that is plausible on its face and meet the Rule
2
GAPP-enrolled providers are reimbursed by the Georgia Medicaid program for
the provision of in-home skilled nursing services to medically fragile children who
require personal care services and assistance with mobility and ambulation. [Doc.
52].
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9(b) heightened pleading standard. Therefore, the requirement that the Intervenor
Complaint adequately state a claim under the FCA and the FMCA is met.
C. Damages
While the Court deems well-pleaded facts in a complaint admitted on a
motion for default judgment, “‘allegations relating to the amount of damages are
not admitted by virtue of default; rather, the [C]ourt must determine both the
amount and character of damages.’” Frazier v. Absolute Collection Serv., Inc.,
767 F. Supp. 2d 1354, 1365 (N.D. Ga. 2011) (quoting Virgin Recs. Am., Inc. v.
Lacey, 510 F. Supp. 2d 588, 593 n.5 (S.D. Ala. 2007)). Under Federal Rule of
Civil Procedure 55(b)(2), the Court may conduct a hearing to determine the
amount of damages. However, an evidentiary hearing under Rule 55(b)(2) “is not
a per se requirement.” SEC v. Smyth, 420 F.3d 1225, 1232 n.13 (11th Cir. 2005).
Instead “it is a decision that is left to the discretion of the Court.” Gibson v.
Kirkwood Bar & Grill, LLC, No. 1:13-CV-308, 2014 WL 632357, at *1 (N.D. Ga.
Feb. 18, 2014). Entering default judgment on the amount of damages without an
evidentiary hearing is appropriate where the amount claimed is capable of
mathematical calculation and “where all essential evidence is already of record.”
Smyth, 420 F.3d at 1232 n.13; see also Frazier, 767 F. Supp. 2d at 1365 (“District
courts in the Eleventh Circuit have noted that an evidentiary hearing is not
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necessary where the moving party has provided supporting affidavits as to the
issue of damages.”).
In this case, treble damages and civil penalties are statutorily dictated by the
FCA and the FMCA. As the Government recites in its Motion for Default
Judgment, any person who violates the FCA or the FMCA is liable to the
Government for treble damages—which are three times the amount of damages
that the Government sustains—plus a civil penalty per violation. 31 U.S.C. §
3729(a)(1); O.C.G.A. § 49-4-168.1(a). The FCA civil penalty amounts are
periodically adjusted for inflation pursuant to the Federal Civil Penalties Inflation
Adjustment Act Improvements Act of 2015 (the “Inflation Adjustment Act”). 28
C.F.R. § 85.1. For violations occurring between September 28, 1999, and
November 1, 2015, the civil penalty amounts range from a minimum of $5,500 to a
maximum of $11,000 per violation. See 28 C.F.R. § 85.3. For violations
occurring on or after November 2, 2015, the civil penalty amounts range from a
minimum of $13,508 to a maximum of $27,018 per violation.3 See 28 C.F.R. §
85.5.
3
The Court notes that at the time the Government submitted its Motion for
Default Judgment, the FCA civil penalty amounts ranged from a minimum of
$11,665 to a maximum of $23,331 per violation. Pursuant to the Inflation
Adjustment Act, on January 30, 2023, the FCA civil penalty amounts were
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The Government alleges it suffered damages amounting to $1,194,875.00
from Defendant’s fraudulent submission of claims to Medicaid for GAPP-related
services. [Doc. 52]; [Doc. 62-1]. The Government’s requested damages are based
on Georgia Medicaid claims records and are supported by a declaration by the
Chief Investigative Auditor in the Medicaid Fraud Division of the Office of
Georgia Attorney General. [Doc. 62-1]; [Doc. 62-3]. Based on the mandatory
treble damages provisions of the FCA and the FMCA, the Court can definitively
calculate $3,584,625.00 as the total amount of damages at issue in this case.
As for statutory penalties, the Government seeks to recover the minimum
level of penalties on 505 of the total 5,172 false claims that Defendant allegedly
submitted. [Doc. 62-1, p. 8]. The Government seeks recovery on 5 out of the 56
false claims that Defendant allegedly submitted on or before November 1, 2015,
and 500 of the 5,116 false claims that Defendant allegedly submitted on or after
November 2, 2015. Id. at 8–9. Looking to the statutory framework of the FCA
and the FMCA for guidance, the Court can calculate a definite civil penalty
amount to impose for this group of claims. As mentioned above, the Court
adjusted for inflation to a minimum of $13,508 and a maximum of $27,018. See
28 C.F.R. § 85.5. The FMCA also adopts the federal penalty structure, including
inflation adjustments pursuant to the Inflation Adjustment Act. See O.G.C.A. §
48-4-16.8(a).
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assesses the Government’s requested minimum penalties for the claims submitted
after November 1, 2015, at the current minimum level which has been updated
since the Government filed its Motion for Default Judgment. See 28 C.F.R. § 85.5.
As a result, the total civil penalties in this case amount to $6,781,500.00.
Because the damages and civil penalties in this action are easily calculated
based on the number of claims, amount of damages submitted by the Government
and guidance from the FCA and the FMCA, the Court concludes the Government’s
damages can be ascertained without a hearing.
CONCLUSION
For the reasons stated above, the Government’s Motion for Default
Judgment is GRANTED. Accordingly, it is hereby ORDERED AND
ADJUDGED that default judgment against Defendant be entered and that the
Government recover damages from Defendant in the amount of $3,584,625.00. It
is further ORDERED AND ADJUDGED that civil penalties in the amount of
$6,781,500.00 be imposed on Defendant.
SO ORDERED this 13th day of February, 2023.
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