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UNITED STATES v. WAKSBERG

October 10, 1996

UNITED STATES OF AMERICA, Plaintiff,
v.
MORRY WAKSBERG, M.D., et al., Defendants.


JUNE L. GREEN, UNITED STATES DISTRICT COURT JUDGE


The opinion of the court was delivered by: GREEN

I. Introduction

 This matter is before the Court on the Defendants' ("Dr. Waksberg") Application for an Award of Attorney Fees and Expenses Under the Equal Access to Justice Act ("EAJA"). Upon review of the record, the Court holds that the Government was not substantially justified in bringing this action against Dr. Waksberg and, therefore, Dr. Waksberg is entitled to costs, fees and other expenses under the EAJA. In addition, the Court finds no Government "bad faith," but it shall calculate the award of attorneys' fees using a cost of living adjustment.

 II. Statement of Facts

 In the fall of 1988, attorneys for Dr. Waksberg commenced negotiations with federal prosecutors and the Office of the Inspector General ("OIG") of the Department of Health and Human Services ("HHS") concerning possible criminal and civil charges involving Medicare fraud. By the following year, the OIG settlement negotiator clearly understood that Dr. Waksberg was interested in resolving all civil and criminal charges in one "global" settlement.

 Federal prosecutors agreed to offer Dr. Waksberg a pre-trial diversion settlement of the criminal matter ("Brooklyn Plan"). Implementation of the Brooklyn Plan was contingent upon Dr. Waksberg settling civil charges with the OIG.

 Dr. Waksberg's attorneys also negotiated the terms of a Civil Settlement Agreement ("Agreement") that required Dr. Waksberg to pay to the OIG a sum of $ 648,935.72 and be voluntarily excluded from Medicare/Medicaid programs for two years. Progress Reports drafted by Vicki Roberts, one of the OIG's main investigators on the case, indicate that the Agreement was contingent upon Dr. Waksberg's signing the Brooklyn Plan.

 On September 26, 1989, Dr. Waksberg signed the Agreement. Three days later, Ms. Eileen Boyd signed the Agreement on behalf of the government. Ms. Boyd knew that Dr. Waksberg's case was being negotiated as a global settlement and she was aware of the Brooklyn Plan.

 The federal prosecutor who was in charge of coordinating the global settlement told officials at OIG to hold onto the Agreement until the Brooklyn Plan was signed by Dr. Waksberg. He also told OIG not to release a copy of the Agreement until then. Although Dr. Waksberg sought a copy of the Agreement, the OIG did not provide him with one until nine months after he signed it.

 The OIG took no steps to enforce the provisions of the Agreement. Once settlement agreements are finalized, the OIG sends the documents to another division of HHS for processing and monitoring of payments and OIG sends out letters to Medicaid and Medicare stating that a person is excluded from those federal programs. OIG did not do so immediately after Dr. Waksberg signed the Agreement. Dr. Waksberg made no payments as required by the Agreement. In fact, the Medicaid carrier Transamerica paid Dr. Waksberg for services performed from September 1989 through March 1991.

 After eight or nine months passed, a supervisor at OIG became aware of the Agreement after speaking with Dr. Waksberg's attorney. The OIG then endeavored to enforce it in June 1991.

 After a brief trial before the Court, Dr. Waksberg prevailed. The Court found that ratification of the Brooklyn Plan was a condition precedent to the Agreement. Since Dr. Waksberg did not sign the Brooklyn Plan, the Government could not enforce the terms of the Agreement.

 III. Discussion

 A. 28 U.S.C. § 2412(d)(1)(A) (1994)

 The Equal Access to Justice Act provides the following:

 
Except as otherwise specifically provided by statute, a court shall award to a prevailing party other than the United States fees and other expenses, in addition to any costs awarded pursuant to subsection (a), incurred by that party in any civil action (other than cases sounding in tort), including proceedings for judicial review of agency action, brought by or against the United States in any court having jurisdiction of that action, unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust.

 28 U.S.C. § 2412(d)(1)(A) (1994). The position of the United States is "substantially justified" if it is "justified to a degree that could satisfy a reasonable person." Pierce v. Underwood, 487 U.S. 552, 565, 101 L. Ed. 2d 490, 108 S. Ct. 2541 (1988). The Court must apply this standard to the Government action that prompts the litigation and to the Government's conduct of the litigation. 28 U.S.C. § 2412 (d)(2)(D) (1994). The Government has the burden of proving that its position was substantially justified. Lundin v. Mecham, 299 U.S. App. D.C. 7, 980 F.2d 1450, 1459 (D.C. Cir. 1992). "Once a private litigant has met the multiple conditions for eligibility for EAJA fees, the district court's task of determining what fee is reasonable is essentially the same as that described in Hensley." Commissioner, Immigration and Naturalization Service v. Jean, 496 U.S. 154, 161, 110 L. Ed. 2d 134, 110 S. Ct. 2316 (1990).

 In its brief, the Government tries to justify its case in three distinct areas: the evidence supporting the original allegations against Dr. Waksberg; the argument for excluding parol evidence and the case against Dr. Waksberg after the introduction of parol evidence. This case, however, was brought to enforce an agreement and, therefore, any discussion of Dr. Waksberg's potential liability for Medicare fraud is irrelevant.

 Upon reviewing the evidence of record, the Court concludes that the Government was not substantially justified in attempting to enforce the Agreement. Furthermore, the Government cannot overcome this deficiency by a nearly exclusive ...


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