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United States v. Eisenberg

United States District Court, D. Columbia.

December 15, 2015


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         MICHAEL D.J. EISENBERG, Defendant, Pro se.

         For MICHAEL D.J. EISENBERG, Defendant, MICHAEL D.J. EISENBERG, Third Party Plaintiff, MICHAEL D.J. EISENBERG, Counter Defendant: Michael D.J. Eisenberg, LEAD ATTORNEY, LAW OFFICES OF MICHAEL D.J. EISENBERG, Washington, DC.

         For Michael D.J. Eisenberg, LEAD ATTORNEY, LAW OFFICES OF MICHAEL D.J. EISENBERG, Washington, DC.

         For GREGORY THOMPSON, Third Party Defendant, GREGORY THOMPSON, Counter Claimant: Lawrence John Anderson, LEAD ATTORNEY, Nealon & Associates, PC, Alexandria, VA.

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         BERYL A. HOWELL, United States District Judge.

         The United States initiated this suit to recover funds under Section 8132 of the Federal Employees' Compensation Act (" FECA" ), 5 U.S.C. § 8101 et seq., from defendant Michael D.J. Eisenberg, who is an attorney licensed to practice law in the District of Columbia and is proceeding pro se in this action. Eisenberg successfully obtained a settlement award for his former client, and now-third-party defendant, Gregory Thompson, in a lawsuit captioned,

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Thompson v. Wackenhut Corp., No. 1:09-cv-01113-GBL-TRJ (E.D. Va. Oct. 2, 2009) (" Wackenhut suit" ), for injuries Thompson suffered from a slip-and-fall accident. Eisenberg failed, however, to refund to the government the amount of workmen's compensation paid to Thompson under the FECA. The United States alleges that, under 5 U.S.C. § 8132, Eisenberg was required to refund to the United States funds totaling $96,295.15 prior to disbursing the settlement funds obtained in the third-party suit. Pending before the Court are three motions: (1) the United States' Motion for Partial Judgment on the Pleadings and for Partial Summary Judgment (" Pl.'s Mot." ), ECF No. 26; (2) Eisenberg's Motion for Leave to File Counterclaim Against the United States of America (" Def.'s Counterclaim Mot." ), ECF No. 62; and (3) Eisenberg's Opposed Motion to Amend Answer (" Def.'s Answer Mot." ), ECF No. 86. For the reasons discussed below, Eisenberg's motions are denied, and the United States' motion is granted in part and denied in part.[1]

         I. BACKGROUND

         The following facts derive from the whole record, including the parties' various statements of material facts, briefs, exhibits, and other evidence in the record.

         A. FECA Claim

         Gregory Thompson, an employee of the U.S. Department of the Navy, was injured in a slip-and-fall accident on December 6, 2007. Pl.'s Statement Material Facts Supp. Mot. J. Pleadings & Partial Summ. J (" Pl.'s SMF" ) ¶ 7, ECF No. 26-1; Def.'s Material Facts (" Def.'s SMF" ) at 7, ECF No. 85; Def.'s Counterclaim Against the United States of America (" Def.'s Proposed Counterclaim" ) ¶ 10, ECF No. 62-2. After the accident, pursuant to the FECA, Thompson filed a claim with the Department of Labor (" DOL" ) Office of Workers' Compensation Programs (" OWCP" ) for medical benefits and lost wages related to the injuries caused by the accident. Pl.'s SMF ¶ 8; Def.'s SMF at 7.[2] By letter dated February 19, 2008, Thompson received notification from OWCP that his claim had been accepted. Def.'s Mem. Supp. Opp'n Pl.'s Mot. Partial J. Pleadings & Partial Summ. J. (" Def's Mem." ), Ex. A (" Thompson FECA Claim Acceptance Notice" ), ECF No. 84-1. Over a year later, by letter

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dated May 28, 2009, on which Eisenberg is copied as Thompson's attorney, Thompson received notice from OWCP that his " claim for medical and wage loss benefits has been terminated effective 06/07/2009." Def.'s Mem., Ex. B (" Thompson FECA Claim Termination Notice" ), ECF No. 84-2. Thus, OWCP disbursed compensation to Thompson until at least June 7, 2009, when it purportedly terminated his benefits. Id.; see also Compl. ¶ 8 (alleging OWCP disbursed compensation to Thompson until June 7, 2009); Pl.'s SMF ¶ 9 (same).[3]

         Thompson, represented by Eisenberg, requested reconsideration of OWCP's decision to terminate his benefits, but OCWP denied this request on July 7, 2010. See Def.'s Mem., Ex. C (" Thompson FECA Claim Reconsideration Notice" ), ECF No. 84-3.

         Notwithstanding OWCP's notification of termination of Thompson's benefits, compensation was apparently paid on behalf of Thompson, at least to medical providers, after June 7, 2009. For example, DOL payment history reports in the record reflect that while Thompson's lost wages compensation stopped after June 6, 2009, see Def.'s Mem., Ex. D (" October 8, 2010 Letter" ) at 2-6 (attached report of " Compensation Payment History" ), ECF No. 84-4; id., Ex. I (" October 4, 2011 Letter" ) at 50-53 (attached " Payment History Inquiry Report" ), ECF No. 84-8; Pl.'s Opp'n Def.'s Mot. Amend Answer (" Pl.'s Opp'n Answer" ), Ex. 8 at 46-49 ( Wackenhut, Def. United States' Mot. Dismiss or Summ. J. (" Pl.'s Wackenhut Mot." ), Ex. D, ECF No. 8-2) (" Payment History Inquiry Report" ), ECF No. 88-1, he continued to receive medical benefits through February 10, 2011, see October 4, 2011 Letter at 40-49 (attached " Bill Pay History Report" showing medical benefits disbursed through February 10, 2011); see also Pl.'s Opp'n Answer, Ex. 8 at 40-45 (Pl.'s Wackenhut Mot., Ex. C, ECF No. 8-2) (" Bill Pay History Report" showing medical benefits disbursed through August 27, 2009).

         B. Third Party Lawsuit

         On October 2, 2009, Thompson, represented by Eisenberg, filed suit in the U.S. District Court for the Eastern District of Virginia against a third party, Wackenhut Services, Inc. (" Wackenhut" ), and the United States for negligence relating to Thompson's December 6, 2007 slip-and-fall accident. Wackenhut, Compl., ECF No. 1; [4] see also Pl.'s SMF ¶¶ 10-11; Def.'s SMF at 7; Def.'s Proposed Counterclaim ¶ 10. On December 7, 2009, the United States filed a Motion to Dismiss, or Alternatively, for Summary Judgment (" Pl.'s Wackenhut Mot." ), Wackenhut, ECF No. 7, supported by a Declaration of Antonio A. Rios (" Rios Decl." ), id., ECF No. 8-1, Deputy Director

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for OWCA, together with a detailed accounting, id., Exs. C & D. Rios attested: " Thompson received a total of $94,261.33 disability compensation from January 22, 2008 until June 6, 2009. OWCP also paid $29,451.75 for medical treatment related to the accepted conditions." Rios Decl. ¶ 5; see Pl.'s Opp'n Answer at 13 n.9. The court granted the United States' motion on January 15, 2010, dismissing the United States from the suit without prejudice. Wackenhut, Order, ECF No. 20.

         Thompson and Wackenhut then settled the negligence action for $675,000. Pl.'s SMF ¶ 12; Def.'s SMF at 7. On November 5, 2010, Eisenberg, on behalf of Thompson, filed a Notice of Settlement in the Wackenhut suit, Wackenhut, ECF No. 234, which was followed by a joint Stipulation of Dismissal With Prejudice, on November 16, 2010, id., ECF No. 235.

         The settlement award was issued jointly to Thompson and Eisenberg's law firm. See Def.'s Mem., Ex. E (" Third-Party Lawsuit Settlement Letter" ) at 2, ECF No. 84-5. Eisenberg admits that " [u]pon receiving the $675,000 from the settlement, [he] distributed the proceeds to Mr. Thompson and paid himself an attorney's fee." Pl.'s SMF ¶ 14; Def.'s SMF at 7.

         C. Government Refund-Related Correspondence

         On October 7, 2010, at Eisenberg's request, see Def.'s SMF ¶ 5 (asserting that " [d]efendant did request, as a confirmation what, if any funds, were due through Mr. Thompson" ), Thompson wrote a letter to OWCP " requesting the total amount of compensation paid" by OWCP for his case, October 8, 2010 Letter at 1. By letter dated October 8, 2010, Gloria Watson, a Claims Examiner at OWCP, responded to Thompson, attaching " a copy of [his] compensation payment history." Id. [5] Handwritten on one copy of the October 8, 2010 letter submitted by Eisenberg in this case, on the bottom right-hand corner, is the phrase, " Workers Comp Payback $52,900.45," along with a second handwritten number " 52,900.45" a few lines below the phrase. Id. The attached payment history printout of Thompson's " Compensation Payment History," which appears to have been generated that day from the " Employment Standards Administration Federal Employees' Compensation System," id. at 2, shows net total payments of $94,261.33 from January 22, 2008 through June 6, 2009, id. at 6.

         Thompson forwarded Eisenberg a copy of the October 8, 2010 letter without any handwriting, via email on October 14, 2010. Def.'s Mem., Ex. U (" October 14, 2010 Email" ), ECF No. 84-19. Eisenberg replied to Thompson the same day, stating: " This appears to include your paycheck as well. You need to contact HR and ask them what benefits you have to payback [sic] (all of them or just medical and/or paycheck, etc) and an exact number of what you owe." Id.

         Over six months after the settlement of the Wackenhut suit, Eisenberg submitted, by letter dated June 9, 2011, a Long Form Statement of Recovery (" SOR" ) notifying DOL, Office of the Solicitor (" DOL-SOL" ), that Thompson had " recently" received a third-party damage award in a settlement against the third-party involved in Thompson's OWCP claim. Pl.'s Mem. Supp. Mot. Partial J. Pleadings & Partial Summ. J. (" Pl.'s Mem." ), Ex. 1 (" June 9, 2011 Letter" ), ECF No. 26-2; Def.'s Mem., Ex. F (" June 9, 2011 Letter" ), ECF No. 84-6.

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Despite being privy both to the Wackenhut suit's Rios Declaration, which indicated that compensation totaling $123,713.08 had been paid to Thompson, and to DOL-SOL's October 2010 letter, which stated that compensation paid to Thompson through June 6, 2009 totaled $94,261.33, Eisenberg listed in the SOR an amount of $70,533.93 in OWCP disbursements to Thompson and an amount of $17,633.48 for the government-allowed attorney's fee, reflecting a balance of $52,900.45 to be refunded to OWCP. See June 9, 2011 Letter. According to Eisenberg, Thompson had " instructed [him] that the amount to be used in the set-aside calculation was $70,533.93," Answer ¶ 18(b); Def.'s First Amended Answer (" Def.'s Proposed Answer" ) at ¶ 18(b), ECF No. 86-3, and Thompson had relied on the government " to provide him with accurate information to provide Mr. Eisenberg," Answer ¶ 18(c); Def.'s Proposed Answer ¶ 18(c); see also Def.'s Mem. at 6 n.8 (" Defendant asserts that Mr. Thompson informed Defendant of this value after Mr. Thompson spoke with DOL." ), ECF No. 83-2. The SOR triggered a lengthy series of communications between Eisenberg and DOL.

         A little over a month later, by letter dated July 19, 2011 to Eisenberg, Onetia J. Evans, a DOL-SOL Paralegal Specialist, acknowledged the receipt of the SOR, but raised concern over the computation of the amount to be refunded. Pl.'s Mem., Ex. 2 (" July 19, 2011 Letter" ), ECF No. 26-3; Def.'s Mem., Ex. G (" July 19, 2011 Letter" ), ECF No. 84-7. Specifically, DOL indicated that OWCP had disbursed additional benefits to Thompson in the interim between the Wackenhut suit settlement and the receipt of the SOR, stating:

Since you did not timely file the required Statement of Recovery to compute the Government's statutory right of reimbursement and to establish the surplus, the [OWCP] continued to pay benefits to and on behalf of your client. Current disbursements total $128,393.53 as of June 29, 2011.

         July 19, 2011 Letter. Consequently, the letter cautioned:

If you insist on paying the Government's right of reimbursements in the amount of $52,900.45 based on disbursement at the time of the settlement that you computed at $70,533.93, there will be an overpayment of $57,859.60 which is current disbursements of $128,393.53 minus $70,533.93 disbursements at the time of settlement.

Id. In other words, because the SOR was not timely filed, OWCP had disbursed benefits for Thompson after the October 2010 Wackenhut settlement, bringing the total amount of disbursements to $128,393.93. The letter attached an amended SOR and demanded payment of a refund to OWCP in the amount of $96,295.15 within thirty days. Id.

         The next month, on August 16, 2011, Eisenberg spoke with Gertrude G. Gordon, DOL-SOL's Chief of Subrogation, and requested that she " explain how the numbers on the Statement of Recovery were reached" in the July 19, 2011 letter. Pl.'s Mem., Ex. 3 (" August 16, 2011 Letter" ) at 1, ECF No. 26-4. Gordon wrote back to Eisenberg " apologize[ing] for any miscommunications between" Eisenberg and her staff, but reiterating that the SOR " was not timely filed" and that OWCP " continued to pay benefits to and on behalf of your client," with " [c]urrent disbursements total[ing] $128,393.52 as of June 29, 2011." Id. She further explained that, " since the [OWCP] did not suspend your client's benefits, current disbursements total $128,393.53 which results in a refund of $96,295.15." Id. Acknowledging that Eisenberg " stated that [he had] $52,900.45 ready to pay the Government's statutory right of

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reimbursement," Gordon asked him to " [p]lease submit this payment within thirty days of your receipt of this letter." Id. Eisenberg was cautioned, however, that " the total due is $96,295.15" and, thus, " upon receipt of the $52,900.45, the balance due will be $43,394.70." Id. In response to Eisenberg's request for " possible payment of the additional amount with monthly payments," Gordon agreed that DOL would " accept a monthly payment plan," but that the balance of the amount owed " must be paid in full within one year." Id.

         Two months later, by letter dated October 4, 2011, Evans, the Paralegal Specialist, responded to Eisenberg's " recent request for current disbursement information" for Thompson's FECA claim, stating that the United States had disbursed $98,792.13 in pay compensation and $29,601.40 in medical compensation--a total of $128,393.53 in compensation--as of September 27, 2011. Pl.'s Mem., Ex. 4 (" October 4, 2011 Letter" ), ECF No. 26-5; October 4, 2011 Letter at 1.

         Subsequently, on October 23, 2011, Eisenberg advised DOL-SOL of " Mr. Thompson's family income and expenses." Def.'s Mem., Ex. J (" October 23, 2011 Correspondence" ), ECF No. 84-9; see Pl.'s Mem., Ex. 5 (" November 17, 2011 Letter" ), ECF No. 26-6; Def.'s Mem., Ex. K (" November 17, 2011 Letter" ), ECF No. 84-10. After complaining that DOL had failed to timely contact him and Thompson or " to return [his] calls from nearly six weeks ago," Eisenberg explained that Thompson's financial situation was " strained" such that making even a $100 monthly payment " would create a financial hardship." October 23, 2011 Correspondence. He represented, " [h]owever," that " as a matter of due course and act of good faith, the family is prepared to pay the lump sum amount that was withheld back in November ($52,900.45) and make monthly payments of $100.00." Id. Eisenberg further stated,

A good faith effort was made to protect the financial interests of the government when the settlement with the third-party contractor was made. As discussed above, it appears that it was the Agency's error that created the situation the family now finds itself in. I would ask as a matter of compassion that the remaining moneys, after the lump sum withheld back in November is paid ($52,900.45), be waived. If the Government is unwilling to assist this former member of the United States military and nearly 20 year civil servant, the family will agreed [sic] to the payment scheme discussed above. But, if the Government is unwilling to agree to the aforementioned, then the moneys currently being held will need to be used to start monthly payments.


         DOL-SOL responded, by letter dated November 17, 2011, that, under section 8132 of the FECA, the government had " no authority to waive or compromise the amount to be refunded" and, consequently, " [t]he amount of compensation paid as of the date of third party settlement in this case is $128,393.53. The Statement of Recovery must be computed based on this disbursement amount which results in a refund owed to the United Sates in the of [sic] $96.295.15. This amount must be paid." November 17, 2011 Letter. DOL-SOL also rejected Eisenberg's offer of monthly payments because it would " clearly result in payment being completed well beyond one year." Id. The letter explained, " Payments are typically made within 30 days of completion (see 20 C.F.R. § § 10.715 & 10.716) but this office can allow an installment plan of up to a year." Id. The letter notified Eisenberg that he

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had two options: he could (1) " submit payment of the $96,295.15 within thirty days," or (2) " submit an initial payment of $52,900.45 within 30 days with continuing monthly payment to pay the balance of $43,394.70 within one calendar year." Id. Lastly, the letter warned Eisenberg that " [f]ailure to make payment in either of these two ways will result in this matter being forwarded to Treasury for collection or referral to the U.S. Department of Justice to bring action against you, your firm and your client." Id.

         The following month, by letter dated December 19, 2011, Eisenberg requested " a formal meeting" with Gordon and DOL-SOL " regarding the overpayment issue your office has caused my client." Def.'s Mem., Ex. L (" December 19, 2011 Letter" ), ECF No. 84-11. In the letter, Eisenberg accused the government of " nonfeasance" and alleged that any payments to Thompson over the amount of $52,900.45--the amount which Eisenberg had set aside from the settlement to pay the government--were " separate overpayment[s] caused by your office" that " have nothing to do with our settlement notification." Id. According to Eisenberg, the government had failed to stop making payments to Thompson, who " had no reason due to your inaction to believe that he was not entitled to these monies." Id. Eisenberg thus alleged that any amount over $52,900.45 fell outside the scope of Section 8132 and the government was not entitled to recoup those funds. Id.

         On March 12, 2012, Eisenberg met with Alexandra A. Tsiros, Counsel for FECA Subrogation at DOL-SOL, and the Deputy Associate Solicitor. See Pl.'s Mem., Ex. 6 (" July 31, 2012 Letter" ), ECF No. 26-7; Def.'s Mem., Ex. N (" July 31, 2012 Letter" ), ECF No. 84-12. Tsiros memorialized the discussion during the March 12, 2012 meeting in a letter to Eisenberg, dated July 31, 2012, making yet another demand for payment. Id. Notably, the letter reflected that Eisenberg " stated during the meeting in our office that the settlement funds had already been used to purchase an annuity for your client, and, as a consequence, your client does not have sufficient income to reimburse the government." Id. The letter warned that, " [b]ecause it is apparent that you distributed funds to your client and paid yourself an attorney's fee of $101,250.00 without paying the refund due to the United States under § 8132, you have established that you are liable to the government for the full amount of the refund." Id.

         On August 12, 2012, in an email to Tsiros, Eisenberg offered to settle the matter, on behalf of Thompson, for the $52,000 retained from the settlement and $500 monthly payments " until the rest is paid off." Def.'s Mem., Ex. N(2), ECF No. 84-13. Tsiros responded that she would review the offer, discuss it with the appropriate parties, and " get back to you as soon as possible." Id. The record does not reflect any follow-up communication between Eisenberg and Tsiros.

         On September 24, 2012, Eisenberg emailed Marcia Harris at DOL requesting " a sit-down meeting with you and your supervisors" regarding " some new information [that] may have come to light that needs to be properly addressed." Def.'s Mem., Ex. O, ECF No. 84-14. The record reflects no such meeting or further communication until December 14, 2012, on which date Tsiros sent Eisenberg a letter representing DOL-SOL's " final attempt to collect this debt before referring the matter to the Department of the Treasury for collection." Pl.'s Mem., Ex. 7 (" December 14, 2012 Letter" ), ECF No. 26-8; Def.'s Mem., Ex. P (" December 14, 2012 Letter" ), ECF No. 84-15. In response, on January 13, 2013, Eisenberg emailed Tsiros

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and conceded that " send[ing] this matter to DOJ/IRS" " is the only remaining path based on your correspondence." Def.'s Mem., Ex. Q, ECF No. 84-16.

         D. Instant Lawsuit

         The United States filed the Complaint in this matter on October 24, 2013, seeking recovery solely from Eisenberg of $96,295.15 under § 8132 of the FECA. Compl. ¶ 1.[6] Eisenberg then joined Thompson as a third-party defendant. Compl. & Mot. to Join Gregory Thompson & Clarisse Thompson as Third-Party Defs. (" Third-Party Compl." ), ECF No. 10.[7]

         On March, 12, 2014, Thompson answered the third-party complaint and counterclaimed against Eisenberg for negligence and breach of contract, alleging that Eisenberg " negligently failed to protect the lien asserted by the United States," and " charged [him] a fee of more than $200,000.00 for his services, . . . [which] included protecting and clearing any and all liens claims by the United States." Third-Party Def.'s Counterclaim Against Michael Eisenberg (" Thompson's Counterclaim" ) at ¶¶ 4, 6, ECF No. 18.

         After unsuccessful mediation of the dispute,[8] and at the request of the United States and Thompson, see Joint Status Report, ECF No. 24, discovery was stayed until the resolution of any pre-discovery dispositive motions, see Minute Order (June 3, 2014). The United States subsequently filed, on June 11, 2014, its pending dispositive motion, ECF No. 26.

         Eisenberg then took approximately nine months, until March 23, 2015, after multiple extensions of time, see Minute Order (June 24, 2014); Minute Order (July 9, 2014); Minute Order (March 6, 2015), to complete the submission of his opposition to the United States' motion, see ECF Nos. 83-85. In the interim, he filed approximately twelve additional motions, including motions to file cross-claims against three additional third-parties--a legal malpractice insurance company and two insurance brokers, see ECF Nos. 31-32, a motion to stay the dispositive motions schedule, see ECF No. 37, a motion for leave to file amended cross-claims against Thompson and his wife, see ECF No. 63, five motions for extensions of time related to those motions, see ECF Nos. 52-54, 67-68, and his pending motion to file counterclaims against the United States, ECF No. 62, for selective prosecution, per se discrimination, denial of due process and notice, and civil conspiracy, see Def.'s Proposed Counterclaim ¶¶ 21-45.[9]

         Eisenberg withdrew two of those motions, see ECF Nos. 72, 78; Minute Order (Feb. 2, 2015); Minute Order (Feb. 23, 2015), and the Court held a hearing on the remaining substantive motions on February 11, 2015, see Minute Entry (Feb. 11, 2015); Minute Order (Feb. 11, 2015). Eisenberg then stipulated to the dismissal of the third-party insurance companies, see

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ECF No. 80, Minute Order (Feb. 23, 2015), and the Court denied his motion to stay, ordering that he respond to the United States' dispositive motion by March 11, 2015, see Minute Order (Feb. 26, 2015).

         After yet another extension of time, see Minute Order (March 6, 2015), Eisenberg finally submitted opposition papers, see ECF Nos. 83-85, and then, on March 29, 2015, filed his pending motion to amend his Answer, ECF No. 86, to add two additional affirmative defenses--estoppel and selective prosecution, see Def.'s Proposed Answer at ¶¶ 21-22.[10]

         II. ...

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