United States District Court, E.D. Arkansas, Western Division
UNITED STATES OF AMERICA ex rel., JACQUELINE CLEMENTE, COLLIN DAVIES, MIA GORDON, KATHI KINDER, and MAUREEN SKINNER PLAINTIFFS
v.
LEAD TEACH MENTOR LLC; CURTISS ROBINSON; and VICKI ROBINSON DEFENDANTS
ORDER
SUSAN
WEBBER WRIGHT UNITED STATES DISTRICT JUDGE
Before
the Court is a motion for attorney's fees and costs [ECF
Nos. 60, 61] by separate defendants Lead Teach Mentor LLC
(“LTM”) and Curtiss and Vicki Robinson
(“the Robinsons”). The relators have filed a
response in opposition [ECF No. 65] and separate defendants
have replied [ECF No. 68]. After careful consideration, and
for reasons that follow, the motion is granted in part and
denied in part. The separate defendants are awarded $8,
025.75 in attorney's fees and $2, 172.70 in costs.
Former
employees of mental health counseling franchises commenced
this qui tam action as relators for the United States,
charging that the franchise owners and others submitted
fraudulent insurance claims in violation of the False Claims
Act (“FCA”). The relators named defendants
Thriveworks Franchising LLC, Thriveworks, Inc. and VIP
Solutions LLC (“the Thriveworks Defendants”);
Anthony Centore (“Centore”); LTM; and the
Robinsons. The Court dismissed claims against the Thriveworks
Defendants and Centore under Fed.R.Civ.P. 12(b)(6) and later
granted summary judgment in favor of LTM and the Robinsons.
LTM and the Robinsons now seek an award of attorney's
fees and costs, asserting that the relators had no proof to
support their claims. According to the separate defendants,
this case was merely “an effort by former employees to
financially cripple Defendants to the benefit of their new
employer, which is Defendants'
competitor.”[1]
The
Court has discretion to award attorney's fees and
expenses to a prevailing defendant in a qui tam action as
follows:
If the Government does not proceed with the action and the
person bringing the action conducts the action, the court may
award to the defendant its reasonable attorneys' fees and
expenses if the defendant prevails in the action and the
court finds that the claim of the person bringing the action
was clearly frivolous, clearly vexatious, or brought
primarily for purposes of harassment.
31 U.S.C. § 3730(d)(4). Legislative history indicates
that Congress intended that the standard for awarding fees
under § 3730(d)(4) correspond to the standard employed
under 42 U.S.C. § 1988. See S. Rep. No. 99-345,
at 29, reprinted in 1986 U.S.C.C.A.N. 5266, 5294
(“This standard reflects that which is found in section
1988 of the Civil Rights Attorneys Fees Awards Act of
1976.”). Although the Eighth Circuit has not parsed the
standard for determining whether an FCA claim is
“clearly frivolous, clearly vexatious, or brought
primarily for purposes of harassment, ” it has observed
that a court may award a prevailing defendant attorney fees
in a Title VII action[2] only if the plaintiff's claim was
“frivolous, unreasonable, or groundless, or . . . the
plaintiff continued to litigate after it clearly became
so.” See Meriwether v. Caraustar Packaging
Co., 326 F.3d 990, 994 (8th Cir.
2003)(quoting Christiansburg Garment Co. v. EEOC,
434 U.S. 412, 422, 98 S.Ct. 694 (1978)). A complaint is
frivolous where it lacks an arguable basis either in law or
fact, and it lacks an arguable basis in law if the claim is
based on an indisputably meritless legal theory. See
Neitzke v. Williams, 490 U.S. 319, 325-27 (1989).
In this
case, the relators charged that the defendants violated the
FCA by two means: (1) impliedly certifying that they were
operating the counseling centers in accordance with state and
federal law and (2) knowingly presenting false claims for
payment. The Court granted motions to dismiss by the
Thriveworks Defendants and Centore, finding that the
allegations against these defendants failed to meet
particularity pleading requirement for fraud claims. In its
order of dismissal, the Court noted the absence of factual
allegations regarding the separate defendants' role in
submitting false claims.
Subsequently,
LTM and the Robinsons moved for summary judgment and
submitted evidence showing that if any false claims were
tendered, they were submitted by relators Skinner, Davies,
and Gordon, who had the sole authority to bill for services
and the obligation to ensure that billing was accurate and
proper. Plaintiffs did not respond to the motion for summary
judgment, and the Court found no issues for trial with
respect to the charge that the defendants knowingly submitted
false claims.
With
respect to plaintiff's implied-certification claims, the
separate defendants argued that the MCA applied to the
practice of medicine, not psychology. After reviewing the
relevant statutes, the Court found, as a matter of law, that
the defendants were not required to comply with MCA licensing
requirements.
After
careful consideration, the Court finds that relators'
claim that defendants knowingly submitted false claims for
payment was without a factual basis. The allegations against
the Thriveworks Defendants and Centore were entirely
conclusory, and the relators' own testimony demonstrated
that it was not possible that LTM or the Robinsons submitted
false claims. When faced with the undisputed facts, rather
than concede that a portion of their claims were without
merit, the relators chose not to respond. The Court finds
that the relators' claim that defendants knowing
submitted false claims was entirely frivolous. On the other
hand, the implied-certification claim was based on a
plausible interpretation of Arkansas law. Because the Court
finds that the implied-certification claim was not clearly
frivolous, it also finds that LTM and the Robinsons are
entitled to only a portion of their attorney's fees and
costs.
The
normal procedure used in calculating attorney fees is to
compute the base “lodestar” figure by multiplying
the number of hours reasonably expended by the reasonable
hourly rates. See Fish v. St. Cloud State
University, 295 F.3d 849, 851 (8thCir.
2002)(quoting Hensley v. Eckerhart, 461 U.S. 424,
437, 103 S.Ct. 1933 (1983)). Counsel for separate defendants,
Stephen B. Niswanger, has provided invoices listing the fees
and expenses billed to his clients, which document a total
$16, 052.25 in attorney's fees-based on roughly 71.34
hours at an hourly rate of $225. While Plaintiffs argue that
the separate defendants are not entitled to a fee award
because the claims against them were not frivolous,
vexatious, or harassing in nature, they do not
assert that Mr. Niswanger's hourly rate or hours expended
are unreasonable.
By
affidavit, Mr. Niswanger states that he has practiced law for
approximately 23 years, specializing in commercial, business,
and general litigation. The Court finds Mr. Niswanger to be
an experienced attorney, who has demonstrated superior legal
skills and advocacy in this case and that the requested
hourly rate is well in line with the ordinary rate for
similar work in this area.
The
Court has reviewed the invoices for documentation of attorney
hours expended. The information provided is sufficiently
detailed, and the Court finds no excessive, redundant, or
unnecessary time reported. However, because it is impossible
to identify specific hours related to defending against
plaintiffs' implied-certification claim, the Court will
award fees for half of the hours billed, for a total fee
award of $8, 025.75-based on 35.67 hours at an hourly rate of
$225.
Separate
defendants submit a bill of costs totaling $2, 172.70 for
copies and fees of court reporters for transcripts that were
obtained for use in the case. These items may be taxed as
costs under 28 ...