United States of America et al v. Bluewave Healthcare Consultants Inc et al

Filing 707

ORDER AND OPINION Defendant Mallory's Motion for Summary Judgment (Dkt. No. 498 ) is DENIED. The Government's Motion for Partial Summary Judgment (Dkt.No. 501 ) is GRANTED IN PART with respect to Defendant Mallory's Third, Fourth, and Seventh affirmative defenses and DENIED IN PART with respect to all other claims and defenses. AND IT IS SO ORDERED. Signed by Honorable Richard M Gergel on 10/31/2017.(sshe, )

IN THE UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH CAROLINA
BEAUFORT DIVISION
United States of America, et al.,
Plaintiffs,

ex rel. Scarlett Lutz, et al. ,
Relators,
v.
Berkeley HeartLab, Inc., et. al.,

Defendants.

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Civil Action No. 9:14-230-RMG

ORDER AND OPINION

This matter is before the Court on Defendant Latonya Mallory's Motion for Summary
Judgment (Dkt. No. 498) on the claims in the Government's Complaint in Intervention and the
Government's Motion for Partial Summary Judgment (Dkt. No. 501) against Defendant Mallory
on Counts I and III of its Complaint in Intervention: (I) the presentation of false claims tainted by
an illegal kickback scheme disguised by process and handling fees and (III) conspiracy to present
those false claims. The Government has also moved for partial summary judgment on Defendant
Mallory' s Third, Fourth, Sixth, Seventh, Eighth, and Tenth affirmative defenses. 1
For the reasons set forth below, Defendant Mallory ' s Motion for Summary Judgment
(Dkt. No . 498) is DENIED. The Government' s Motion for Partial Summary Judgment (Dkt. No.
501) is GRANTED IN PART AND DENIED IN PART. The Government' s Motion is

GRANTED with respect to Defendant Mallory's Third, Fourth, and Seventh affirmative
defenses and DENIED with respect to all other claims and defenses .
1

This Court has already ruled on the Government's Partial Motion for Summary Judgment with
respect to claims against the BlueWave Defendants and their affirmative defenses. (Dkt. No.
693.)

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I.

Background
Berkeley HeartLab, Inc. ("BHL") is a California company that offers laboratory testing

services for physicians treating patients with cardiovascular disease .2 (Dkt. No. 501-5.)
Defendant Latonya Mallory was the Lab Operations Manager for BHL from 2005 through
September 2008. (Dkt. No. 501-4 at 3-4.) Defendant Robert Bradford Johnson was employed as
a sales representative for BHL beginning in 2002. (Dkt. No. 501-6.) Defendant Floyd Calhoun
Dent, III, was employed as a sales representative at BHL beginning in 2005. Johnson trained
Dent to perform sales at BHL. (Dkt. No. 501-8 ; Dkt. No. 501-7 at 10.) Mallory left BHL in
September 2008 and formed a new laboratory testing Company, Health Diagnostics Laboratory,
Inc. ("HDL"), in November of that year. (Dkt. No. 501-4 at 5.) Mallory was President and CEO
of HDL from 2008 through 2014.
In the latter half of 2009, Johnson, Dent, and Mallory arranged for HDL to retain Dent
and Johnson to market its laboratory tests to physicians and physician practices. On January 4,
2010, Dent and Johnson incorporated BlueWave Healthcare Consultants, Inc. ("BlueWave") as
co-owners with 50% ownership each. (Dkt. No. 173-2 at 50-51; Dkt. No. 501-10 at 3-4.)
BlueWave' s only clients were HDL and another laboratory called Singulex, Inc. ("Singulex").
All of BlueWave' s earnings derived from its sales agreements with HDL and Singulex. (Dkt. No.
501-7 at 26-27; Dkt. No. 501-10 at 21-22.)
II.

The Complaint in Intervention
The Government has provided a lengthy summary of material undisputed facts with

citations to the record describing several allegedly illegal marketing and business arrangements
among BlueWave, HDL, and Singulex . (Dkt. No. 501-2 at 3-36.) Based on these activities, the

2

Quest Diagnostics Inc. acquired BHL in 2011.

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Government filed a Complaint in Intervention against BlueWave, Dent, Johnson (together, the
"Blue Wave Defendants") and Mallory, alleging that they are liable for violations of the False
Claims Act ("FCA"), 31 U.S.C. § 3729, et seq ., payment by mistake of fact, and unjust
enrichment. (Dkt. No. 75.)
A.

FCA Claims

Some of the Government ' s FCA claims arise from Defendant Mallory's alleged violation
of the Anti-Kickback Statute ("AKS"), 42 U.S.C. § 1320a-7b(b), through her participation in
three separate schemes:
(1) P&H Fees: The Government alleges that Mallory and the BlueWave Defendants
caused physicians to be paid process and handling fees to induce those physicians to
order blood tests that were reimbursed by federal healthcare programs.
(2)

Zero Balance Billing: The Government alleges that Mallory and the BlueWave

Defendants caused Tri-Care co-payments and deductibles to be waived to induce
physicians to order blood tests that were reimbursed by Tricare.
(3) Commission Payments: The Government alleges that, because the laboratories paid
BlueWave commissions as an independent contractor for marketing their blood tests,
those commissions were intended to induce physicians to order blood tests that were
reimbursed by federal healthcare programs.
The Government alleges that each claim filed in connection with one of these three arrangements
violates the AKS and "constitutes a false or fraudulent claim" under the FCA. See 42 U.S.C. §
1320a-7b(g). The Government's fourth FCA claim is not based on an AKS violation:
(4) Medically Unnecessary Tests: The Government alleges that the BlueWave

Defendants and Defendant Mallory induced physicians to order medically unnecessary

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blood tests and caused claims for reimbursement for those tests to be submitted to federal
healthcare programs.
B.

Equitable Claims
Based on the conduct described above, the Government also claims: (1) that the

Government paid Defendant Mallory based upon mistaken or erroneous understandings of
material fact, and (2) that Defendant Mallory was unjustly enriched.

III.

Legal Standard

A.

Summary Judgment
To prevail on a motion for summary judgment, the movant must demonstrate that there is

no genuine issue of any material fact and that the movant is entitled to judgment as a matter of
law. Fed. R. Civ. P. 56(a). The party seeking summary judgment has the burden of identifying
the portions of the "pleadings, depositions, answers to interrogatories, any admissions on file,
together with the affidavits, if any, which show there is no genuine issue as to any material fact
that the moving party is entitled to judgment as a matter of law." Celotex Corp. v. Catrett, 477
U.S . 317, 322 (1986). The Court will construe all inferences and ambiguities against the movant
and in favor of the non-moving party. US. v. Diebold, Inc., 369 U.S. 654, 655 (1962). The
existence of a mere scintilla of evidence in support of the non-moving party' s position is
insufficient to withstand a motion for summary judgment. Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 252 (1986). However, an issue of material fact is genuine ifthe evidence is such that a
reasonable jury could return a verdict in favor of the non-movant. Id. at 257.
"When the moving party has carried its burden under Rule 56(c), its opponent must do
more than simply show that there is some metaphysical doubt as to the material facts ."

Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). "In the language
of the Rule, the nonmoving party must come forward with 'specific facts showing that there is a

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genuine issue for trial."' Id. at 587. "Where the record taken as a whole could not lead a rational
trier of fact to find for the non-moving party, there is no 'genuine issue for trial."' Id. (quoting

First Nat '! Bank ofAriz. v. Cities Serv. Co., 391 U.S. 253, 289 (1968)).
B.

The False Claims Act
The False Claims Act imposes civil liability on any person who "knowingly presents, or

causes to be presented, to [the United States government] a false or fraudulent claim for payment
or approval" or "knowingly makes, uses, or causes 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). A false or fraudulent claim includes false statements or fraudulent conduct that induce
the contract for or extension of a government benefit. To prove a fraudulent inducement claim, a
plaintiff must show that: (1) there was a false statement or fraudulent course of conduct; (2)
made or carried out with the requisite scienter; (3) that was material to the government's decision
to pay a claim; and (4) that caused the government to pay out money or to forfeit moneys due.

See United States ex rel. Wilson v. Kellogg Brown & Root, Inc., 525 F.3d 370, 376 (4th Cir.
2008).

IV.

Discussion

A.

False Claims Act
Defendant Mallory argues that she is entitled to summary judgment on the Government's

FCA claims because the Government has failed to create a genuine dispute of material fact about
each of the four elements of an FCA claim.

1.

False Statements or Fraudulent Course of Conduct
Under 42 U.S.C. § 1320a-7b(g), "[A] claim that includes items or services resulting from

a violation of [the Anti-Kickback Statute] constitutes a false or fraudulent claim for purposes of
[the FCA]." The AKS prohibits a person from paying or receiving kickbacks to induce the

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referral of an individual for services paid under a federal health care program. 42 U.S.C. §
1320a-7b(b)(l)-(2). A violation of the AKS occurs when a defendant: (1) knowingly and
willfully; (2) offers or pays any remuneration, directly or indirectly; (3) to induce a person to
refer individuals to the defendants for the furnishing of medical services; (4) paid for by
Medicare. United States ex rel. Mastej v. Health Mgmt. Assocs., Inc., 591 F. App'x 693, 705
(11th Cir. 2014). Under the AKS, the term "knowingly" "merely requires proof of knowledge of
the facts that constitute the offense." Bryan v. United States, 524 U.S. 184, 192-193 (1998);

Dixon v. United States, 548 U.S. 1 (2006). The term "willfully" means that the defendant knew
"that his conduct was unlawful," knew he was acting "with a bad purpose," or knew he was
acting "with evil intent without justifiable excuse." Bryan, 524 U.S. at 192-193.
Mallory argues that the Government has failed to point to evidence that she had the
requisite scienter to violate the AKS with regard to any of the three alleged kickback schemes.
Specifically, Mallory argues that there is no evidence that she knowingly and willfully designed
any of the three arrangements (P&H Fees, Zero Balance Billing, or the Commission Payment
Structure) for the purpose of inducing referrals. She says the evidence shows that she
continuously sought out and relied on the advice of counsel to ensure that these arrangements
were legal. (Dkt. No. 498-1 at 13-16.)
As with the BlueWave Defendants (Dkt. No. 693 at 7-10), the Government has provided
evidence from which a reasonable juror could conclude that Defendant Mallory had the requisite
scienter to violate to AKS when she incorporated the payment of P&H Fees, Zero Balance
Billing, and Commission Payments into HDL's business model. For example, the record shows
that Mallory received warnings from third party lawyers as early as December 2010 that the
Government would consider HDL's P&H Fee practice to constitute illegal kickbacks and that

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she continued to receive similar warnings from outside parties and her own lawyers through
2013 but did not discontinue the practice of paying P&H Fees. (Dkt. Nos. 501-53 , 501-54, 50158, 501-60, 501-64, 501-65.) The record also shows that Mallory was on notice as early as
January 2011 that the practice of Zero Balance Billing presented significant legal risks and
continued the practice. (Dkt. Nos. 522-10, 522-15.) Finally, the record shows that Mallory was
. on notice as early as August 2012 that her business relationship with Blue Wave and its
commission-based sales force "poses a high degree of risk with respect to the AKS." (Dkt. No.
503-9 at 4.) There is therefore a genuine dispute of material fact about whether Defendant
Mallory possessed the requisite scienter3 to violate the AKS by participating in these three
arrangements.
The Government has also alleged that Mallory and the Blue Wave Defendants violated the
FCA by causing medically unnecessary tests to be presented for reimbursement while falsely
representing that they met the standards for reimbursement. This FCA violation does not rest on
an underl ying AKS violation. Under 42 U.S.C. § 1395y(a)(l)(A), the federal government will
not reimburse a Medicare claim unless the services at issue were "reasonable and necessary." It
follows that "claims for medically unnecessary treatment are actionable under the FCA." US. ex

rel. Riley v. St. Luke's Episcopal Hosp ., 355 F.3d 370, 376 (5th Cir. 2004).

3

The Government has also moved for summary judgment on Defendant Mallory' s Sixth
affirmative defense that she cannot be liable for violations of the AKS based on the payment of
P&H fees because the law is ambiguous. (Dkt. No. 501-1 at 35.) Mallory intends to argue that
she did not have the requisite scienter to violate the AKS and the FCA when she participated in
the P&H Fee arrangement because it was not clear that the payment of P&H fees was illegal. As
discussed in this Court' s previous order with regard to the Blue Wave Defendants ' defenses, this
is a factual question that must be submitted to the jury. (Dkt. No . 693 at 23.) Likewise, as with
the BlueWave Defendants, the Government is not entitled to summary judgment on its claims
against Defendant Mallory based on P&H fees paid after 14, 2013 because a jury must consider
whether she acted with the requisite scienter.

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Mallory has not presented arguments unique from the BlueWave Defendants' about the
Government' s FCA claims based on medically unnecessary tests, and the Court determined in its
previous order that the Government has provided evidence that creates at least a genuine dispute
of material fact with regard to whether all Defendants are liable for the submission of claims for
reimbursement for medically unnecessary tests . (Dkt. No. 693 at 10-11.)

2.

Scienter to Violate the FCA
In addition to the scienter requirement under the AKS , the Government has the burden of

proving that Mallory acted "knowingly" under the FCA, meaning with actual knowledge,
deliberate ignorance, or reckless disregard of the truth or falsity of the information. 31 U.S.C. §
1320a-7b(g). Mallory claims the Government has failed to show that she acted with even the
lowest level of culpability - reckless disregard - with respect to the alleged FCA violations.
(Dkt. No. 498-1at16-19.)
Federal courts consider a variety of factors to determine whether a defendant acted with
reckless disregard, including " (1) the defendant's adherence to custom or industry practice; (2)
the defendant's existing knowledge or expertise; (3) any legal advice the defendant received; (4)
any professional or expert advice the defendant received; (5) the defendant' s disclosure of its
conduct to the government; (6) the existence of any guidance or authority from an administrative
agency or court; (7) the reasonableness of the defendant's actions, positions, or interpretations;
and (8) the defendant' s motive." James Wiseman, Reasonable, but Wrong: Reckless Disregard

and Deliberate Ignorance in the False Claims Act After Hixon , 117 Colum. L. Rev. 435 , 450-51
(2017).
As discussed earlier in this order, there is a genume dispute of material fact about
whether Mallory had the requisite scienter to violate the AKS. For FCA violations based on AKS
violations, Mallory says the Government must separately establish that she acted with the
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requisite scienter under the FCA. However, in this case Mallory' s arguments as to why she did
not act with the requisite scienter under the FCA essentially mirror the arguments she made
about sci enter under the AKS : that she relied on the advice of counsel, that she adhered to
industry practice, and that the Government knew about the conduct but continued to reimburse
claims. For the same reasons that a reasonable juror could conclude Mallory had the requisite
scienter to violate the AKS , a reasonable juror could conclude that she had the requisite scienter
to violate the FCA.
Mallory has not presented arguments unique from the BlueWave Defendants' about the
Government's FCA claims based on medically unnecessary tests, and the Court determined in its
previous order that the Government has presented evidence sufficient to create a genuine dispute
of material fact about whether Defendants knowingly or with reckless disregard for the truth
caused claims for medically unnecessary laboratory tests to be submitted to federal healthcare
programs for the reimbursement. (Dkt. No. 693 at 12-13.)

3.

Materiality
Defendant Mallory argues that the Government has failed to show that she is liable under

the FCA because the Government continued to pay claims after it learned some facts about the
conduct in this case as early as June 30, 2011. (Dkt. No. 498-1 at 8-10.) For the same reasons
outlined in this Court' s order on the BlueWave Defendants' Motion fo r Summary Judgment
(Dkt. No. 693 at 13-14), Defendant Mallory is not entitled to summary judgment on her
materiality argument.

4.

Causation
To prove a fraudulent inducement claim, a plaintiff must show that Defendant' s false or

fraudulent course of conduct caused the government to pay out money or to forfeit moneys due.

See United States ex rel. Wilson v. Kellogg Brown & Root, Inc., 525 F.3d 370, 376 (4th Cir.
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2008). Mallory says the Government has failed to create a genuine dispute of material fact about
causation because it has failed to show that the physician or physician practices that had P&H
Fee agreements with HDL actually received P&H Fees. (Dkt. No. 498-1 at 10-13.) She also
argues that the Government's damages expert, Eric Hines, incorrectly assumes that if one
physician in a practice received P&H fees, all the claims from that practice were tainted by
kickbacks. Mallory argues that the Government must establish causation with respect to each
false claim and cannot rely on statistical sampling. (Id.) The Court has addressed Mallory's
causation argument in a previous order and determined that there is a genuine dispute of material
fact about how many of the claims submitted to healthcare programs were tainted by the alleged
kickback schemes, and this question must be submitted to the jury. (Dkt. No. 634 at 6-7.)
B.

Conspiracy to Violate the FCA

The Government has also alleged that the BlueWave Defendants and Defendant Mallory
conspired to violate the FCA.

Defendant Mallory argues that she is entitled to summary

judgment on the Government's conspiracy claim because the Government cannot demonstrate
that (1) Mallory conspired with one or more persons to get a false or fraudulent claim allowed or
paid by the United States; (2) one or more conspirators performed any act to effect the object of
the conspiracy; (3) Mallory willfully joined that conspiracy; and (4) the United States has
suffered damages as a result of the false or fraudulent claim. (Dkt. No 498-1 at 20-21 ); United
States ex rel. Mikes v. Straus, 84 F. Supp. 2d 427, 432 (S.D.N.Y. 1999); United States ex rel.
Miller v. Bill Harbert Intern. Const., Inc., 608 F.3d 871 , 901 (D.D.C. 2010).

"To state a claim under the FCA for conspiracy, a plaintiff must plead that the alleged
conspirators agreed to make use of a false record or statement to achieve the end of getting the
government to pay a claim." United States v. Toyobo Co. Ltd., 811 F. Supp. 2d 37, 50 (D.D.C.
2011 ); see also United States ex rel. Reagan v. East Texas Medical Center Regional Healthcare
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System, 274 F. Supp. 2d 824, 857 (S.D. Tex. 2003) ("the essence of a conspiracy under the FCA
is an agreement between two or more persons to commit fraud .... Courts agree that, to establish
the existence of a civil conspiracy, a plaintiff must present evidence to show a meeting of the
minds of two or more persons on the object or course of action.")
The Government has provided evidence from which a reasonable juror could conclude
that all Defendants entered into agreements with respect to the payment of P&H Fees, Waiver of
Copayments and Deductibles, and Commission Payments. (Dkt. No. 502-1 , Defendants' sales
agreement including provisions for P&H Fees, Payment of Commissions, and Waiver of
Copayments and Deductibles). From this evidence, combined with the other evidence already
discussed in this Order, a rational trier of fact could conclude that (1) Mallory willfully entered
those agreements with Dent and Johnson; (2) Defendants' actions under those contractual
agreements contributed to FCA and AKS violations; and (3) the Government suffered damages
when it reimbursed the false claims.
With respect to the Government' s fourth FCA claim, Defendants' contractual agreements
do not include provisions for encouraging physicians to order medically unnecessary tests.
However, a reasonable juror could conclude based on email communications in the record that
Mallory and the BlueWave Defendants together agreed to run medically unnecessary test panels
retroactively on existing patient samples. (See Dkt. No. 522-27 (emails between Mallory and
Dent) and Dkt. No. 693 at 10-13 (the Court's previous discussion of medically unnecessary
testing).)

C.

Equitable Claims - Mistake of Fact and Unjust Enrichment
The Government has also alleged that Defendant Mallory is liable in equity because (1)

the Government paid her based upon mistaken or erroneous understandings of material fact and
(2) she was unjustly enriched. To prevail on a claim for payment by mistake of fact, the
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government must show that a federal health care program made "payments under an erroneous
belief which was material to the decision to pay." US ex rel. Roberts v. Aging Care Home
Health, Inc., 474 F. Supp. 2d 810, 819 (W.D. La. 2007) (quoting United States v. Mead, 426
F.2d 118, 124 (9th Cir. 1970)). "The government by appropriate action can recover funds which
its agents have wrongfully, erroneously, or illegally paid." United States v. Medica- Rents Co. ,
285 F.Supp.2d 742, 776 (N.D. Tex. 2003) (internal quotation and citations omitted). A claim for
unjust enrichment "may be maintained as a general rule whenever the defendant has money in
his hands which belongs to the plaintiff, and which in equity and good conscience he ought to
pay to the plaintiff." Maisha v. Univ. of NC, 641 F. App' x 246, 251-52 (4th Cir. 2016) (internal
quotations and citations omitted). " [T]hree elements encompass the equitable remedy of unjust
enrichment and quasi-contract: the plaintiff must show that (1) he had a reasonable expectation
of payment, (2) the defendant should reasonably have expected to pay, or (3) society's
reasonable expectations of person and property would be defeated by nonpayment." United
States v. Berkeley Heart/ab, Inc., 225 F. Supp. 3d 487, 2016 WL 7851459, at *9 (D.S.C. 2016)
(quoting Provident Life & Acc. Ins. Co. v. Waller, 906 F.2d 985 , 994- 95 (4th Cir. 1990)).
Defendant Mallory argues that she is entitled to summary judgment on the Government's
equitable claims because there is no evidence that payments were made to Mallory or that she
obtained a personal benefit as a result of the alleged misconduct. Mallory argues that it is not
sufficient for the Government to argue that she received benefits in her role as CEO of HDL "in
the form of salary, bonuses, travel and other reimbursement and shareholder disbursements. "
(Dkt. No. 498-1 at 22-24.) She further argues that HDL may have used the alleged wrongful
payments for other purposes, including, for example, to pay the government pursuant to its

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settlement agreement, to pay its attorneys, and to pay the salaries of other HDL employees and
officers.
Mallory relies primarily on United States v. Fadul, No. CIV. A. DKC 11-0385, 2013 WL
781614 (D. Md. Feb. 28, 2013). In Fadul, the Government moved for summary judgment on
FCA claims and the same two equitable claims at issue here. The district court determined that
"the Government is entitled to obtain repayment from anyone ' into whose hands the mistaken
payments flowed, ' including third parties who did not directly receive the mistaken payments but
nonetheless participated somehow in the transaction and 'received benefits as a result' thereof."
Id. at *13 (quoting Mead, 426 F.2d at 124-25). Nonetheless, the court ultimately determined that
the Government had not shown that the Defendant, Dr. Fadul, was personally liable in equity for
payments the Government made to his company, Cardio Vascular Center ("CVC"), based on the
mistake of fact. eve was a limited liability company that provided mobile diagnostic services
for nursing home patients. Dr. Fadul owned eve, was the operating officer of CVe, and was the
sole member of the LLC. The Court cited two reasons for its decision: (1) CVC used billing
software that automatically added reimbursement codes for services that had not actually been
performed, and it was not clear from the record to what extent Dr. Fadul was actually involved
with billing; and (2) the Government failed to present evidence that Dr. Fadul actually received a
personal benefit from the billing practice, and the court would not assume that he did based
solely on his position at the head of CVC. The district court distinguished its decision from
another district court's decision that an officer of a healthcare corporation was individually liable
because the officer personally signed the false certifications and received benefits in the form of
an increased salary. See US. ex rel. Roberts v. Aging Care Home Health, Inc., No. CIV.A. 022199, 2008 WL 2945946, at *7 (W.D. La. July 25 , 2008) (defendant personally liable for

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payments made by mistake of fact when he served as CFO of the healthcare organization,
received a salary of between $105,000 and $148,000, and was at one point a 50% shareholder of
the organization).
For reasons stated throughout this and other orders, the Government has presented
evidence from which a reasonable juror could conclude that Defendant Mallory was responsible
for the conduct underlying the alleged FCA violations because the violations were the result of
contracts she entered with the BlueWave Defendants that were integral to HDL's business
structure. As was the case in Roberts, the Government has provided substantial evidence that
Defendant Mallory benefitted personally from the mistaken payments. She was a 15%
shareholder of HDL and received millions of dollars in salary, bonuses, and discretionary
distributions. (Dkt. Nos. 522-34, 522-35.) The Government has also presented evidence that the
benefits Mallory received constitute a portion of the mistaken payments and unjust enrichment to
which the Government is entitled because Medicare payments made up approximately 30% of
HDL ' s reimbursements. (Dkt. No. 522-29 at 6-7.)
In the Order on the BlueWave Defendants' Motion for Summary Judgment, the Court
addressed the substance of Defendant Mallory ' s other arguments with regard to these equitable
claims, including the argument (the subject of her Tenth affirmative defense) that she cannot be
liable based on the theory of unjust enrichment because the Government received the benefit of
the medical services it paid for. (Dkt. No. 693 at 15-16.) For the same reasons stated in that
Order, the Government is not entitled to summary judgment on Mallory' s Tenth affirmative
defense because the Court declines to grant summary judgment on any FCA claim by which
Defendant Mallory was allegedly unjustly enriched.

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D.

Affirmative Defenses

In its Partial Motion for Summary Judgment, the Government seeks summary judgment
on several of Defendant Mallory' s affirmative defenses. (Dkt. No. 501.)

1.

Duty to Mitigate
The Government has moved for summary judgment on Defendant Mallory's Eighth

affirmative defense which is based on the Government's duty to mitigate damages. For the
reasons outlined in this Court's Order on the BlueWave Defendants' Motion for Summary
Judgment (Dkt. No. 693 at 3), the Government is not entitled to summary judgment on
Defendant Mallory' s mitigation defense.

2.

Lach es
The Government has moved for summary judgment on Defendant Mallory' s Seventh

affirmative defense which is based on the doctrine of laches. For reasons stated in this Court's
Order on the BlueWave Defendants' Motion for Summary Judgment (Dkt. No. 693 at 20), the
Government is entitled to summary judgment on Defendant Mallory ' s Seventh affirmative
defense as a matter of law.

3.

Legal and Contractual Remedies
The Government has moved for summary judgment on Defendant Mallory' s Third

affirmative defense that the Government' s equitable claims are barred because the FCA is an
adequate remedy at law and her Fourth affirmative defense that the Government's equitable
claims are barred because express contracts cover the dispute. (Dkt. No. 504-1 at 32-34.) For the
reasons outlined in this Court' s Order on the BlueWave Defendants' Motion for Summary
Judgment (Dkt. No. 693 at 21-22), the Government is entitled to summary judgment on
Defendant Mallory' s Third and Fourth affirmative defenses.

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V.

Conclusion

For the reasons set forth above, Defendant Mallory's Motion for Summary Judgment
(Dkt. No. 498) is DENIED. The Government' s Motion for Partial Summary Judgment (Dkt.
No. 501) is GRANTED IN PART with respect to Defendant Mallory's Third, Fourth, and
Seventh affirmative defenses and DENIED IN PART with respect to all other claims and
defenses.
AND IT IS SO ORDERED.

United States District Court Judge
October ~ (
, 2017
Charleston, South Carolina

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