Opinion
Case No. 00-3128-CV-S-4-ECF
December 29, 2000
ORDER
Presently before the Court is the Plaintiff, the United States of America ("United States" or "Government")'s Motion to Strike the Defendants' Affirmative Defense of Estoppel. This Motion is opposed by the Defendants, NHC Health Care Corporation, NHC/OP LP ("NHC"). This case arises out of alleged Medicare and Medicaid fraud. For the reasons set forth below, the Plaintiffs Motion is hereby GRANTED.
DISCUSSION
I. Standard
A motion to strike an affirmative defense offered by a defendant may be granted by the Court when the offered defense is insufficient as a matter of law. Fed.R.Civ.P. 12(f). The motion closely resembles a motion to dismiss in that all well plead allegations in the affirmative defense must be accepted as true and the Court must find that the defense at issue is legally insufficient.
II. Background
This suit was brought by the Government against the Defendants under the False Claims Act ("FCA"). The Government alleges that the Defendants, participants in the Medicare/Medicaid programs, submitted false or fraudulent bills to the United States in violation of the FCA. More specifically, the Government alleges that the care of two particular residents was so insufficient and negligent that the bills submitted amounted to fraud. The Defendants have denied all material allegations levied by the Government in the Complaint. Furthermore, NHC has offered the affirmative defense of estoppel. NHC's theory is that the Government has previously issued a civil monetary penalty ("CMP") against NHC for the same alleged wrongdoing. This CMP of $193,450 is provided for by Federal statute. See 42 U.S.C. § 1395i-3(B). NHC argues that because the Government has assessed this CMP (the CMP remains unpaid pending an administrative appeal of the assessment), it is estopped from bringing a FCA claim against NHC for the same conduct.
III. Analysis
Essentially, the parties agree on the relevant facts of this case as they relate to the Defendants' estoppel defense. The Plaintiff is seeking recovery against the Defendants under the FCA and a CMP for the alleged negligent care of two residents at the Defendants' facility. Thus, the Court is faced with the legal question of whether the Government should be allowed to pursue claims in both a judicial and administrative forum for the same alleged violations. The parties have not cited to, nor has the Court discovered, any cases in the Eighth Circuit or otherwise which directly deal with this legal question. The Court must examine the purpose behind both the FCA and the health care statutes at issue here to determine whether the causes of actions provided therein are mutually exclusive.
The Defendants term the Governments' efforts in this suit as an attempt at "double recovery." The Court cannot agree with that characterization. When examining the purpose and nature of the CMP and a claim under the FCA it is clear that the two actions by the Government are distinct. A CMP is an administrative penalty which is administered as an enforcement tool. See 42 U.S.C. § 1395i-3. It is meant to punish offending skilled nursing facilities for each day that the institution is not in compliance with nursing home regulations. Id. It is a specific punitive remedy for institutions whose level of care "immediately jeopardize[s] the health or safety of the residents." See 42 U.S.C. § 1395i-3 (h). In other words, a CMP has three purposes: (1) to punish non-compliant nursing facilities; (2) to force future compliance; and (3) to protect resident welfare.
Conversely, the FCA does not share any of these three goals or purposes. Rather, the chief purpose of the FCA is "to provide for restitution to the government of money taken from it by fraud." U.S. ex rel. Marcus v. Hess, 317 U.S. 537, 551 (1943). The FCA is not a punitive device, rather it is a civil, remedial action. U.S. ex rel. Hollander v. Clay, 420 F. Supp. 853, 856 (D.C. 1976). It seeks the return of funds wrongfully disbursed by the United States via fraud or deceit.
The recoveries sought by the Government under the CMP and the FCA have distinct purposes. Accordingly, they cannot be considered "double recoveries" as Defendants so characterize. Rather, the Government is seeking to simultaneously punish NHC for failing to comply with nursing home regulations and recover the payments it made during this same period. Both actions are provided for by law and nothing in either Federal statute indicates that pursuing one remedy estops the Government from seeking the other.
A useful analogy to the present situation is damage recoveries under Title VII. Under Title VII an aggrieved plaintiff is allowed to recover actual and punitive damages. The actual damages are meant to compensate the victim for illegal discrimination while the punitive damages are meant to punish the defendant for engaging in this unlawful discrimination. Both damage awards can be recovered by the plaintiff despite the fact that they arise out of the same act because they have different purposes. Similarly, the Government can seek recovery under a CMP and the FCA because they are distinct legal theories of recovery. The former is meant to punish while the latter is meant to compensate the Government for the loss it has sustained.
CONCLUSION
For the foregoing reasons, the Court finds that the Defendants' affirmative defense of estoppel is insufficient as a matter of law. Accordingly, the Court hereby GRANTS the Plaintiff's Motion to Strike the Defendants' Affirmative Defense of Estoppel.