Court Opinion

ID: 4557761
Source: CourtListenerOpinion
Date Created: 2020-08-21 17:00:36.854676+00
Date Added: 2024-06-11T09:27:24.141065
License: Public Domain

United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued December 6, 2019             Decided August 21, 2020

                        No. 17-5265

                UNITED STATES OF AMERICA,
                        APPELLEE

                             v.

DYNAMIC V ISIONS INC, DOING BUSINESS AS DYNAMIC V ISIONS
 HOME HEALTH SERVICES AND ISAIAH M. BONGAM, OWNER
       AND PRESIDENT OF DYNAMIC VISIONS INC.,
                       APPELLANTS

                 Consolidated with 17-5279

        Appeals from the United States District Court
                for the District of Columbia
                    (No. 1:11-cv-00695)

     Jude Chinedu Iweanoge argued the cause and filed the
briefs for appellants.

     Isaiah M. Bongam, pro se, argued the cause and filed the
briefs for appellants.

    Caroline D. Lopez, Attorney, U.S. Department of Justice,
argued the cause for appellee. With her on the brief was
                               2
Charles W. Scarborough, Attorney. Michael Shih, Attorney,
U.S. Department of Justice, and R. Craig Lawrence and
Darrell C. Valdez, Assistant U.S. Attorneys, entered
appearances.

   Before: SRINIVASAN Chief Judge, and GRIFFITH and
KATSAS, Circuit Judges.

    Opinion for the Court by Chief Judge SRINIVASAN.

     SRINIVASAN, Chief Judge: Dynamic Visions, Inc., a home
health care company, submitted claims for reimbursement to
the District of Columbia Medicaid Program for services it
purportedly provided to its patients. An audit revealed that the
company failed to maintain adequate documentation of
physician authorization for the services, as required by state
and federal law. The federal government brought an action
against the company and its owner under the False Claims Act
for submitting false claims for reimbursement. The district
court granted summary judgment to the government. We
affirm the grant of summary judgment in large part but vacate
the judgment as to a limited subset of the alleged false claims.

                               I.

                               A.

     Through the Medicaid program, the federal government
assists states and the District of Columbia in providing medical
services to low-income individuals. See 42 U.S.C. § 1395 et
seq. For the D.C. Medicaid program, the federal government
reimburses providers for eligible medical services at a rate of
seventy percent. Id. § 1396d(b). Eligible services generally
include home health care, i.e., “necessary hands-on personal
care assistance with the activities of daily living” in patients’
                              3
homes. D.C. Mun. Regs. tit. 29, § 5000.2 (2003), 50 D.C. Reg.
3,957.

     The D.C. Medicaid program requires home health care
providers to maintain certain qualifications and comply with
various regulatory requirements. See id. §§ 5000–5199. One
requirement is that home health care providers develop a “Plan
of Care” (POC) for each patient. Id. § 5006.1. The POC details
the services the patient will receive and for how long, and it
must be authorized and timely signed by a qualified healthcare
professional. Id. §§ 5006.3–5006.4. The home health care
provider must maintain accurate records of all POCs for each
patient. Id. § 5007.

    Those regulations help to ensure that the D.C. Medicaid
Program reimburses providers only for services that are
appropriate and afforded to eligible beneficiaries. The D.C.
Department of Health Care Finance (DHCF) audits providers’
records to examine whether reimbursements are “consistent
with efficiency, economy and quality of care” and are “in
accordance with federal and District rules governing
Medicaid.” Id. § 5010.1.

                             B.

     Appellant Dynamic Visions, Inc. is a home health care
provider in the District of Columbia. Appellant Isaiah Bongam
is the sole owner and CEO of Dynamic Visions, which during
the relevant time had approximately six employees. From 2006
to 2009, Dynamic Visions submitted reimbursement claims to
the D.C. Medicaid Program for services provided to patients.
Before receiving the reimbursements, Dynamic Visions was
required to execute a Medical Provider Agreement. Dynamic
Visions certified that it would comply with federal and state
standards for participation in the Medicaid program, including
                              4
the requirement to develop and maintain adequate POCs for
each patient and keep accurate records of them.

     During a routine audit of Dynamic Visions’s operations,
DHCF reviewed twenty-five randomly selected patient files
from the years 2006 through 2008. DHCF determined that
none of the patient files contained sufficient documentation to
support Dynamic Visions’s claims for reimbursement. DHCF
concluded that the files lacked a POC or contained POCs that
were deficient because they had no signature from a physician,
had untimely or forged signatures, or had authorized fewer
hours of care than Dynamic Visions claimed to have provided
in seeking reimbursement.

     DHCF alerted the FBI and the United States Department
of Health and Human Services Inspector General of its
findings. In December 2008, federal agencies executed a
search warrant on Bongam’s place of residence and Dynamic
Visions’s place of business, seizing patient files and other
items. The ensuing investigation revealed that Bongam had
been funneling money out of Dynamic Visions’s bank accounts
(which held federal funds from the Medicaid reimbursements)
into his own private accounts, including an offshore account in
Cameroon.

                              C.

     In April 2011, the government brought an action against
appellants Dynamic Visions and Bongam for violations of the
False Claims Act. 31 U.S.C. § 3729 et seq. The government
alleged that appellants submitted false claims to the D.C.
Medicaid Program by seeking reimbursement for services that
had not been authorized by a valid POC. The complaint listed
twenty-five patients and asserted the amount of unauthorized
                              5
reimbursements    submitted    for   each   patient,   totaling
$543,145.13.

     In discovery, appellants repeatedly failed to produce
documents or information responsive to the government’s
requests—most importantly, valid POCs for patients.
Appellants claimed that they were not in possession or control
of those documents because the FBI had seized them during the
searches of Bongam’s home and Dynamic Visions’s place of
business. Appellants were in possession, though, of four
compact discs given to them by the government that contained
searchable PDFs of all relevant documents. A magistrate judge
held multiple meetings with appellants to provide instructions
on how to search the discs.

    After numerous warnings, the court eventually held
appellants in contempt for failure to comply with the
government’s discovery requests. As a sanction, the court
precluded appellants from relying, from that point forward, on
any documents they had not yet identified in discovery.

     The government moved for summary judgment. In its
Statement of Material Facts, the government explained the
particular way in which each of the patient files contained
insufficient documentation to support claims for
reimbursement: no POC, unsigned POC, untimely-signed
POC, POC with a forged signature, or signed POC authorizing
fewer services than Dynamic Visions purportedly provided.
The government also identified how many invoices had been
submitted for each patient and how much Dynamic Visions had
received in reimbursements. The government’s statement of
facts was supported by a sworn affidavit of the FBI agent who
reviewed all of the documents seized during the searches of
Dynamic Visions’s place of business and Bongam’s home.
                               6
     Appellants’ response disregarded the district court’s
express warning that, unless they specifically denied each
numbered statement of material fact, the fact would be deemed
admitted. Appellants instead set out their own statement of
facts, which was supported by little evidence other than an
affidavit containing sworn statements by Bongam.

     In October 2016, the district court granted the
government’s motion for summary judgment in part. United
States v. Dynamic Visions, Inc., 216 F. Supp. 3d 1, 5 (D.D.C.
2016). The court deemed the government’s statements of
material fact largely admitted because the statements in
Bongam’s affidavit were unresponsive to the government’s
factual statements, were legal arguments instead of statements
of fact, or were conclusory and self-serving. See id. at 4–5.
The court thus held that, for many of the patients, there was no
genuine dispute of material fact that Dynamic Visions
submitted claims for reimbursement for services that were not
authorized by a valid POC. Id. at 15–16. The court also found
that, because Dynamic Visions is a small operation and “even
a cursory review” of the files would have revealed the
“rampant” false claims, the company was at least reckless as to
the fact that it submitted unauthorized claims for
reimbursement to the D.C. Medicaid program. Id. at 16–17.

     For a limited number of claims as to which the alleged
falsity of the claim was based solely on a POC with an
ostensibly forged physician signature, the court temporarily
reserved judgment. Id. at 5. The government’s sole evidence
concerning those claims consisted of sworn statements from an
FBI agent recounting her conversations with the physicians.
The court deferred ruling on those counts until the government
could obtain non-hearsay evidence in the form of sworn
affidavits from the physicians themselves. Id. at 10–13. The
court also deferred deciding Bongam’s individual liability for
                                7
the false claims (as opposed to Dynamic Visions’s liability).
Id. at 5.

     When the government eventually submitted the physician
affidavits, appellants alerted the court that some of the
affidavits identified a patient by a different Medicaid patient
number than the number listed in the complaint. The
government explained that, after the initial pleadings, it noticed
that some of the patient numbers in the complaint were
incorrect, and it then used correct numbers in its motion for
summary judgment and in the affidavits. The court allowed the
affidavits, determining that the error as to the patient numbers
had caused no prejudice because the complaint had identified
each patient both by name and patient number. The court
denied appellants’ motion for leave to file a surreply on the
basis that it needed no further briefing on the issue.

     After considering the physician affidavits, the court
granted summary judgment in the government’s favor on the
remaining claims. United States v. Dynamic Visions, Inc., 220
F. Supp. 3d 16, 22 (D.D.C. 2016). The court also clarified with
regard to Bongam’s liability that, while there was insufficient
evidence of his personal knowledge of the claims’ falsity, the
court would pierce Dynamic Visions’s corporate veil so as to
hold him jointly and severally liable for all damages and
penalties. Id. at 24–25. The court reasoned that declining to
pierce the veil would lead to “a highly inequitable result”
because Bongam is “the sole owner, registered agent, president
and chief corporate officer” of Dynamic Visions and failed to
respect corporate formalities when he funneled money out of
the corporation and into his private accounts. Id. at 25–26.

    The court assessed damages and civil penalties totaling
$1,986,232. United States v. Dynamic Visions, Inc., 282 F.
Supp. 3d 257, 263 (D.D.C. 2017). The court accepted the
                               8
government’s calculation of $489,744.02 in damages from the
unauthorized reimbursements and trebled that amount. Id. at
260–61. The court also ordered the maximum civil penalty of
$11,000 for each of the forty-seven false claims submitted. Id.
at 263. The court opted to assess maximum civil penalties
because: (i) Dynamic Visions had forged signatures, (ii) the
scheme had taken money from programs intending to serve
needy patients, and (iii) the number of claims in the case, which
were based on individual invoices, had underrepresented the
total false claims because each invoice included multiple sub-
invoices. Id. at 262–63.

    Bongam and Dynamic Visions now appeal the district
court’s contempt order, summary judgment orders, and award
of damages and civil penalties.

                               II.

    We begin with appellants’ challenge to the district court’s
grant of summary judgment to the government for violations of
the False Claims Act. We review the district court’s entry of
summary judgment de novo. See United States ex rel. Folliard
v. Gov’t Acquisitions, Inc., 764 F.3d 19, 25–26 (D.C. Cir.
2014). We affirm the district court’s grant of judgment for
False Claims Act violations in large part, but we vacate as to
those claims for which the alleged falsity rests on Dynamic
Visions’s ostensible forgery of physician signatures.

     Under the False Claims Act, any person who “knowingly
presents, or causes to be presented, a false or fraudulent claim
for payment or approval” to the federal government may be
liable for treble damages and civil penalties. 31 U.S.C.
§ 3729(a)(1)(A). A claim can be false when a person “makes
specific representations about the goods or services provided”
but fails “to disclose noncompliance with material statutory,
                               9
regulatory, or contractual requirements.” Universal Health
Servs., Inc. v. United States, 136 S. Ct. 1989, 2001 (2016). The
person must act “knowingly,” which includes acting with a
“reckless disregard” for the truth or falsity of the claims. 31
U.S.C. § 3729(b)(1).

     To establish a False Claims Act violation at the summary-
judgment stage, the government must show that the defendant
knowingly submitted a false claim and that “there is no genuine
dispute as to any material fact” in that regard. Fed. R. Civ. P.
Rule 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
While the defendant can avoid the grant of summary judgment
against it by “com[ing] forward with specific facts showing
that there is a genuine issue for trial,” Matsushita Elec. Indus.
Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)
(quotation marks omitted), “mere allegations or denials” do not
suffice, Anderson v. Liberty Lobby, 477 U.S. 242, 248 (1986).

     Applying those standards, we affirm the district court’s
grant of summary judgment as to those claims for which the
falsity stems from the absence of any POC, or from a POC with
no signature from a physician, an untimely signature, or an
authorization of services more confined in scope than the
services for which reimbursement was sought. Appellants do
not dispute that the “regulatory . . . requirement[]” to maintain
valid POCs for a patient is “material” to the government’s
decision to reimburse for services provided to the patient.
Universal Health Servs., Inc., 136 S. Ct. at 2001. As a result,
if Dynamic Visions knowingly requested reimbursement for
home health care services while “omitting [the] critical
qualifying information” that a physician had not properly
authorized the services as required by D.C. law, that was an
“actionable misrepresentation[].” Id. at 2000–01.
                               10
     The question is whether the government met its burden of
showing, beyond genuine dispute, that Dynamic Visions
knowingly submitted false claims. We answer that question in
the affirmative, except, as explained below, for those claims as
to which the alleged falsity rests solely on an ostensibly forged
signature. Apart from those claims, the government adequately
demonstrated that Dynamic Visions failed to maintain valid
POCs and had the requisite knowledge that it was submitting
claims for reimbursement without them.

     In particular, the government provided sufficient evidence
that the patient files had no POCs, untimely or unsigned POCs,
or POCs that authorized fewer services than were purportedly
provided. In connection with its summary judgment motion,
the government explained (and submitted evidence supporting)
the deficiency of each patient’s file, including with regard to
whether the POC was missing, inadequate, or authorized fewer
services than were purportedly provided, as well as the number
of invoices submitted under the POC and the total amount of
reimbursements. E.g., Appellee Supp. App’x 34 (asserting for
Medicaid Recipient 5592 that Dynamic Visions submitted 46
invoices that were in excess of the care authorized by a POC,
308 invoices that were not authorized by a plan of care, and 19
invoices that were duplicative of claims authorized by a plan of
care, for which Dynamic Visions was paid a total of $48,597.16
in reimbursements).

     Appellants failed to meaningfully address those
allegations.   Instead, they responded only with highly
generalized statements to the effect that they “submitted plans
of care for Medicaid recipients signed by their physicians,” and
that they “maintained a policy and procedure manual that was
compliant with DCHF regulations” and “followed the policy
and procedures stated in the manual.” App’x, 171–72. Those
                               11
statements are too conclusory to create a genuine issue. See
Greene v. Dalton, 164 F.3d 671, 675 (D.C. Cir. 1999).

     First, appellants provided no “supporting facts” for those
assertions, such that “a jury would be in no position to assess”
whether they are true. Id. Appellants, for instance, did not
produce the “policy and procedure manual” they referenced, so
there was no way to assess the manual’s contents (or even
confirm its existence). Nor did appellants produce any
documentation to support their bald assertions that valid POCs
existed for the patients. Moreover, even if Dynamic Visions
generally “submitted plans of care,” that does not mean it
submitted POCs for the patients referenced in the government’s
motion, or that the POCs it did submit were timely signed and
authorized the services purportedly rendered. Likewise, even
if Dynamic Visions generally adhered to a manual, that does
not mean it did so for the relevant patients. In short, appellants
failed to allege facts sufficient to create a genuine dispute on
whether Dynamic Visions maintained valid POCs for the
patients identified in the government’s submissions.

     We also find no genuine dispute that Dynamic Visions
submitted the claims with “reckless disregard” for their falsity
(again, apart from the claims for which falsity rests on
allegedly forged signatures). 31 U.S.C. § 3729(b)(1). When
“even the shoddiest recordkeeping would have revealed that
false submissions were being made,” it is reckless for a
provider to request reimbursement. United States v. Krizek,
111 F.3d 934, 942 (D.C. Cir. 1997). While isolated instances
of noncompliance might go unnoticed, the violations at
Dynamic Visions were thoroughgoing: the audit revealed
material deficiencies with regard to the POCs for virtually
every patient file in the randomized sample. It would have
been readily apparent to Dynamic Visions that the POCs were
deficient or missing altogether.
                               12

     Appellants argue that it is inappropriate to “allow[] a
plaintiff to prove scienter by piecing together scraps of
‘innocent’ knowledge held by various corporate officials, even
if those officials never had contact with each other or knew
what others were doing in connection with a claim seeking
government funds.” United States v. Sci. Applications Int’l
Corp., 626 F.3d 1257, 1274–77 (D.C. Cir. 2010) (quotation
marks omitted). We rely on no such theory, however. There
is no need to aggregate the individual knowledge of Dynamic
Visions’s officers and employees to establish the requisite
reckless disregard on the part of the company. Rather, any
single person who looked at the patient files should have
known that the company sought reimbursements unsupported
by adequate POCs. We thus agree with the district court that
Dynamic Visions, at minimum, acted in reckless disregard of
the fact that its pertinent claims for reimbursement were
unauthorized by a valid POC.

    We reach a different conclusion, however, for the limited
subset of claims as to which the alleged falsity rested solely on
the purported forgery of the physician signatures on POCs. As
to those claims, we conclude that the government failed to
show the absence of any genuine dispute of material fact that
Dynamic Visions forged the signatures.

    As evidence of the purported forgery, the government
submitted sworn affidavits by the relevant physicians attesting
that Dynamic Visions’s POCs “contained signatures that
purported to be mine, but in fact were not my signature, nor
were they signed by any other person who was authorized to
sign for me.” Appellee Supp. App’x 6. That evidence alone
does not suffice to show that Dynamic Visions committed
forgery. Even if the physicians themselves did not sign the
forms, that does not establish that Dynamic Visions’s
                              13
employees were the ones who did. There is at least some
possibility that someone else in the physicians’ own offices,
without authority or permission, signed the POCs on the
physicians’ behalf. That possibility draws some support from
the fact that Dynamic Visions submitted a number of claims for
reimbursement accompanied by a POC with no physician
signature at all. If Dynamic Visions was generally comfortable
leaving the signature line entirely blank, it is unclear why it
would resort to forging signatures for certain patients.

    Because the government’s evidence does not foreclose a
genuine dispute as to whether Dynamic Visions forged
physician signatures, we vacate the grant of summary judgment
as to the corresponding subset of claims.

                             III.

    We now address appellants’ challenges to the district
court’s decisions to: (i) hold appellants in contempt and order
sanctions during discovery, (ii) pierce Dynamic Visions’s
corporate veil, and (iii) consider the complaint to be amended
with corrected patient numbers so the government could submit
the physician affidavits. We reject those challenges.

     First, appellants challenge the court’s decisions to hold
them in contempt and to preclude them from presenting
evidence at the summary-judgment stage that they had not
already produced in discovery. District courts are afforded
considerable “deference [concerning] their decisions [on]
whether and how to enforce the deadlines they impose,” and
we will not disturb those decisions unless they are “so
disproportionate or unreasonable as to constitute an abuse of
discretion.” In re Fannie Mae Sec. Litig., 552 F.3d 814, 822–
24 (D.C. Cir. 2009). Here, the court exercised considerable
patience with appellants and gave them multiple discovery-
                              14
deadline extensions for nearly two years. Appellants routinely
failed to comply without providing any valid explanation.
They contended that they were not in possession or control of
the relevant documents, but they in fact had been given all
documents electronically in PDF format and received
instructions from the court on how to search them. In those
circumstances, the court’s contempt order and sanctions were
not an abuse of discretion.

     Second, appellant Bongam, citing his history of running
the corporation in a manner satisfactory to regulatory
overseers, argues that the district court erred in piercing the
corporate veil to hold him liable for the conduct of Dynamic
Visions. We review the court’s grant of summary judgment on
that issue de novo, see Folliard, 764 F.3d at 25–26, and we see
no basis to overturn the court’s decision to hold Bongam
personally liable.

     A court may hold the owner of a corporation responsible
for the corporation’s conduct when there is a unity of interest
between the individual and the entity, and when insulating the
owner from liability would lead to inequitable results. See
Labadie Coal Co. v. Black, 672 F.2d 92, 96 (D.C. Cir. 1982).
Here, the district court explained that Dynamic Visions is the
“alter ego or business conduit of” Bongam, who is “the person
in control” of the operation as the sole owner and CEO.
Dynamic Visions, Inc., 220 F. Supp. 3d at 25. Most
importantly, regardless of Bongam’s past history of
compliance, it is undisputed that Bongam failed to maintain
corporate formalities when he transferred “large sums” of
money from Dynamic Visions’s accounts—accounts
containing reimbursements from the D.C. Medicaid program—
to his own personal accounts. Id. We affirm the district court’s
conclusion that it would be unjust to allow Bongam to retain
                               15
funds wrongfully taken from, and now owed to, the
government.

     Third, Dynamic Visions argues that the district court erred
in considering the government’s complaint amended with the
correct patient numbers contained in the physician affidavits
and in allowing the affidavits, as well as in its refusal to allow
Dynamic Visions to file a surreply on the issue. Such decisions
are committed to the district court’s discretion. See Firestone
v. Firestone, 76 F.3d 1205, 1208–09 (D.C. Cir. 1996)
(amending complaint); Robinson v. Detroit News, Inc., 211 F.
Supp. 2d 101, 113 (D.D.C. 2002) (motion for surreply). And
here, those decisions were eminently reasonable.

     Because the complaint listed the patients’ names,
appellants were aware of the patients’ identities from the outset
and had ample opportunity to identify any documents or
information that may have aided their defense. Appellants do
not claim that the presence of incorrect patient numbers in the
complaint caused them to misidentify a patient, nor do they
explain how it otherwise could have caused them any
prejudice. With respect to the district court’s declining to allow
appellants to file a surreply on the issue, the court reasonably
determined that it needed no further briefing given that
appellants had included their arguments against amending the
complaint in their motion for leave to file a surreply.

                               IV.

    We last consider the district court’s assessment of
$1,986,232 in damages and civil penalties. We vacate the
court’s order as to both damages and civil penalties.

   With regard to damages, the court included in its original
damages assessment of $489,744.02 the amounts attributable
                               16
to those claims that were allegedly false solely because the
POCs ostensibly contained forged signatures. Because we
have vacated the grant of summary judgment as to those
claims, we must set aside the damages award as well. In
addition, the award of damages was based on the full amount
of unauthorized reimbursements Dynamic Visions sought from
the D.C. Medicaid Program. But as the government has
brought to our attention, the federal share of those
reimbursements is only seventy percent, see 42 U.S.C.
§ 1396d(b), and the government inadvertently neglected to
reduce its request for damages accordingly. While we vacate
the damages award for those reasons, we reject appellants’
challenges to the government’s evidence on damages for the
reasons explained by the district court in rejecting the same
arguments. See Dynamic Visions, Inc., 282 F. Supp. 3d at 260–
61.

    With regard to the assessment of civil penalties, the district
court set forth three reasons for awarding the maximum amount
of penalties. Id. at 262–63. One of the reasons was that
Dynamic Visions had engaged in the conduct of forging
signatures. Because we have vacated the grant of summary
judgment as to those claims, and because the district court did
not indicate whether the other two reasons, standing alone,
would warrant awarding maximum civil penalties, we must
vacate the penalties award. We express no view on whether
maximum civil penalties would be appropriate without the
forgery-related claims.

                       *   *    *   *    *
                             17
     For the foregoing reasons, we vacate the district court’s
grant of summary judgment as to the claims that were based
solely on forgery and affirm the grant of summary judgment as
to the remaining claims. We also vacate the court’s award of
damages and civil penalties and remand for further proceedings
in accordance with our opinion.

                                                  So ordered.