# Jurisdictional Statement — United States v. Halper

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Jurisdictional Statement
- **Published:** January 1, 1989
- **Citation:** 490 U.S. 435

## Text

OCTOBER TERM, 1987

UNITED STATES OF AMERICA, APPELLANT
Vv.
IRWIN HALPER

ON APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK

JURISDICTIONAL STATEMENT

CHARLES FRIED
Solicitor General

RICHARD K. WILLARD
Assistant Attorney General

THOMAS W. MERRILL
Deputy Solicitor General

Roy T. ENGLERT, JR.
Assistant to the Solicitor General

MICHAEL JAY SINGER
THOMAS M. BONDY
Attorneys

Department of Justice
Washington, D.C. 20530
(202) 633-2217

9%

_ “ae
‘te?

QUESTION PRESENTED

Whether the $2000-per-false-claim penalty prescribed
‘by the civil False Claims Act, 31 U.S.C. 3729-3731, when
applied to a defendant who has already been convicted
and punished under the criminal false claims statute (18
U.S.C. 287) for 65 false claims of $9 each, is in effect a

criminal penalty prohibited by the Double Jeopardy
Clause.

PARTIES TO THE PROCEEDING

In addition to the parties named in the caption, Morris
Halper, M.D., was named as a defendant in the govern-
ment’s complaint in the district court, but the complaint
was dismissed as against him pursuant to a stipulation.

TABLE OF CONTENTS

Page
EEL ee ce dba wascaseecececces l
es eee cid ccacecesccescccss l
Constitutional and statutory provisions involved ............ 2
ek a ewes cccescesccece 4
re y
EEE EE ES 22
TABLE OF AUTHORITIES
Cases:
Berdick v. United States, 612 F.2d 533 (Ct. Cl. 1979) .... 13
Brown v. United States, 524 F.2d 693 (Ct. Cl. 1975) ..... )
California v. Grace Brethren Church, 457 U.S. 393
Ne teak cbscccvcees 2
Chapman v. United States, 821 F.2d 523 (10th Cir.
ee eae k cbc cc ccveccccccce 10, 19
FCC v. League of Women Voters, 468 U.S. 364 (1984) ... 2
FTC v. Minneapolis-Honeywell Regulator Co., 344 U.S.
EEE ESS a, rn 2
Fleming v. Rhodes, 331 U.S. 100 (1947) ............... 2
Flemming v. Nestor, 363 U.S. 603 (1960) .............. 19
Helvering v. Mitchell, 303 U.S. 391 (1938) ............. 11, 20
Mayers v. Department of Health & Human Services, 806
F.2d 995 (lith Cir. 1986), cert. denied, No. 86-1887
es coc acc ecesescccccesess 10, 21
One Lot Emerald Cut Stones & One Ring v. United
I oon os occa ckcctevcosececs 19
Rex Trailer Co. v. United States, 350 U.S. 148 (1956) .... 9, 10

12, 13, 14, 15, 19, 20
United States v. Bekhrad, 672 F. Supp. 1529 (S.D. lowa

EL LE ALIASES EE 5
United States v. Bornstein, 423 U.S. 303 (1976) ......... 4,6
United States v. Cato Bros., 273 F.2d 153 (4th Cir. 1959),

cert. denied, 362 U.S. 927 (1960) ................... 8
United States v. Darusmont, 449 U.S. 292 (1981) ........ 2
United States v. Hill, No. MCA 84-2144-RV (N.D. Fla.

EE 5

IV Vv

Cases — Continued: Page Statutes and rule— Continued: Page
United States v. Hughes, 585 F.2d 284 (7th Cir. 1978) .... 8, 21 Eee ae Re 6
United States v. Jacobson, 467 F. Supp. 507 (S.D.N.Y. 18 U.S.C. 9

BN ins swcsicctedaadidce teem atads 8 sss lle ”
United States v. McNinch, 356 U.S. 595 (1958) ......... 17 i gr 19
United States v. One Assortment of 89 Firearms, 465 U.S. 42 U.S.C. 1320a-7a SOVGCCOEC Ce OU ERE ROH 006606466802 ES 10, 19-20

EE 06 cxdkwacsacdsdasdedcudeneeneeutanes ees 19 I ere Pree re MER ay 8
United States v. Ward, 448 U.S. 242 (1980) .......... 15, 19, 20 ;

United States ex rel. Fahner vy. Alaska, 591 F. Supp. 794 Miscellaneous:
i Se cad code ck baneee eed eaanbeneesuis
(N.D ) 15 H.R. Rep. 99-660, 99th Cong., 2d Sess. (1986) ...... 4, 6, 16, 17

United States ex rel. Marcus v. Hess, 317 U.S. 537

OE bes cc coc cccdauataccoineisiece dese passim S. Rep. 99-345, 99th Cong., 2d Sess. (1986) ............ 4, 6,

8, 9, 10, 16, 17, 18, 21

Constitution, statutes and rule:

U.S. Const. Amend. V (Double Jeopardy Clause) ....... 2, 9,
11, 13, 20
False Claims Act, 31 U.S.C. (1940 ed.) 231 ............. 12
False Claims Act, 31 U.S.C. 3729-3731 ................ passim
PS dns 6o6eubddieeesiesdeees 2, 3, 4, 6, 20
ERs ong nb ntaceceoensoowetoennwes 6
Pp I. vcccceskerennsedeccessoasuas 6 a

ey os oc ks c¥eudaauwecusdeewdsue 4, 20
Pe es Nas ve dvewdedeseccehpankteedeas 11

False Claims Amendments Act of 1986, Pub. L. No.
a do cbcnade seenmeckeneweces 3,4

§ 2, 100 Stat. 3153-3154 (to be codified at 31
DAs SE o 6.0% é canncesnvuvesakinbent 3, 4, 15, 20

§ 2, 100 Stat. 3154 (to be codified at 31 U.S.C.
DEES cctccdeckoctanes vednenecceudsltecets 4,5

§ 3, 100 Stat. 3154 (to be codified at 31 U.S.C.
SEE oc auwkdstacceenseeckuetenaeeerentess 20

§ 5, 100 Stat. 3158 (to be codified at 31 U.S.C.
ED nc Gb eke 6k6oe bneetaennntiesdeldchens 18

§ 5, 100 Stat. 3158 (to be codified at 31 U.S.C.
BOE 6.6 cc ab eewenséduatin6eakiosdehseocens 7
i, Pr occeeen as awaes eeuueendecneed 6

Surplus Property Act of 1944, 50 U.S.C. (1946 ed.) App.
SD g bnaa sss cksncbassedsdedenbveiceecuisiesen 12, 13
Lf FS Re FU ew rrr peers er 6, 20

Jn the Supreme Court of the United States

OCTOBER TERM, 1987

No.
UNITED STATES OF AMERICA, APPELLANT
V.
IRWIN HALPER

ON APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK

JURISDICTIONAL STATEMENT

OPINIONS BELOW

The opinion of the district court declaring the statute
unconstitutional as applied (App., infra, la-Sa) is reported
at 664 F. Supp. 852. A prior, superseded opinion of the
district court (App., infra, 6a-lla) is reported at 660 F.
Supp. 531. °

JURISDICTION

The judgment of the district court (App., infra, 12a)
was filed on October 21, 1987.' A notice of appeal to this

' An earlier judgment was filed on May 1, 1987. That judgment was
superseded when the district court issued a new opinion, altering the
relief awarded, in July 1987. The October 21 judgment was entered
pursuant to the July 1987 opinion. On October 28, 1987, the district
court On its Own motion entered yet a third judgment (App., infra,
15a), which did not come to our attention until December 1987. The
October 28 judgment, like the October 21 judgment, awards the
United States double damages of $1170 in accordance with the court’s
July 1987 opinion, but does not award the additional $130,000 to
which the United States is entitled under the $2000-per-false-claim
penalty prescribed by the False Claims Act. The October 28 judgment

(1)

2

Court (App., infra, 13a-14a) was filed on November 19,
1987. On January 13, 1988, Justice Marshall extended the
time within which to docket this appeal to and including
February 17, 1988. The jurisdiction of this Court is in-
voked under 28 U.S.C. 1252.?

CONSTITUTIONAL AND STA’ JTORY
PROVISIONS INV

The Double Jeopardy Clause of the Fifth Amendment
provides: “nor shall any person be subject for the same of-
fence to be twice put in jeopardy of life or limb.”

31 U.S.C. 3729, before its amendment in 1986, provided
in pertinent part:

A person not a member of an armed force of the
United States is liable to the United States Govern-
ment for a civil penalty of $2,000, an amount equal to
2 times the amount of damages the Government sus-
tains because of the act of that person, and costs of
the civil action, if the person—

(1) knowingly presents, or causes to be
presented, to an officer or employee of the

differs from the October 21 judgment only in that it explicitly awards
costs to the government. The October 21 judgment, which was cited in
our notice of appeal (id. at 13a), constitutes the court’s final judgment
in this case for purposes of appealing from the court’s holding in its
July 1987 opinion that the statute is unconstitutional as applied. See
FCC v. League of Women Voters, 468 U.S. 364, 373-374 n.10 (1984);
FTC v. Minneapolis-Honeywell Regulator Co., 344 U.S. 206, 211-212
(19Sz,.

2 “[A} direct appeal {under 28 U.S.C. 1252] may be taken when, as
here, a federal statute has been held unconstitutional as applied to a
particular circumstance.” United States v. Darusmont, 449 U.S. 292,
293 (1981) (per curiam); see California v. Grace Brethren Church, 457
U.S. 393, 405 (1982) (citing Fleming v. Rhodes, 331 U.S. 100, 102-103
(1947)).

3

Government or a member of an armed force a
false or fraudulent ciaim for payment or ap-
proval; [or]
(2) knowingly makes, uses, or causes to be
made or used, a false record or statement to get a
false or fraudulent claim paid or approved; [or]
(3) conspires to defraud the Government by
getting a false or fraudulent claim allowed or
paid * * *.
31 U.S.C. 3729, as amended by Section 2 of the False
Claims Amendments Act of 1986, Pub. L. No. 99-562, 100
Stat. 3153, 3153-3154, provides in pertinent part:

(a) * * * Any person who—

(1) knowingly presents, or causes to be
presented, to an officer or employee of the
United States Government or a member of the
Armed Forces of the United States a false or
fraudulent claim for payment or approval; [or]

(2) knowingly makes, uses, or causes to be
made or used, a false record or statement to get a
false or fraudulent claim paid or approved by the
Government; [or]

(3) conspires to defraud the Government by
getting a false or fraudulent claim allowed or
paid * * *

is liable to the United States Government for a civil
penalty of not less than $5,000 and not more than
$10,000, plus 3 times the amount of damages which
the Government sustains because of the act of that
person * * *,

* * * A person violating this subsection shall also be
liable to the United States Goverment for the costs of
a civil action brought to recover any such penalty or
damages.

4

STATEMENT

1. The civil False Claims Act, 31 U.S.C. 3729-3731,
was first enacted in 1863 and signed into law by President
Lincoln in an effort to “stop{] the massive frauds
perpetrated [against the Union Army] by large [defense]
contractors during the Civil War.” United States v. Born-
stein, 423 U.S. 303, 305 n.1, 309 (1976). It is “the Govern-
ment’s primary litigative tool for combatting fraud” (S.
Rep. 99-345, 99th Cong., 2d Sess. 2 (1986); see H.R. Rep.
99-660, 99th Corg., 2d Sess. 18 (1986)). “[T]his statute has
been used more than any other in defending the Federa!
treasury against [fraud]” (S. Rep. 99-345, supra, at 4).

In pertinent part, the statute gives the United States (31
U.S.C. 3730(a)) a civil cause of action against defined
classes of persons who seek the payment of false claims by
the federal government (see 31 U.S.C. 3729). The version
of the statute that was in effect at the time of the false
claims in this case provides that, if a defendant is deter-
mined to have committed a false claim violation within the
meaning of the Act, the government is entitled to recover a
civil penalty of $2000 plus double damages and costs. 31
U.S.C. 3729. The $2000-rer-claim penalty remained in the
statute, unchanged, from 1863 to 1986 (H.R. Rep. 99-660,
supra, at 17).

>On October 27, 1986, the President signed into law the False
Claims Amendments Act of 1986, Pub. L. No. 99-562, 100 Stat. 3153
(1986 Amendments). The 1986 Amendments revise the civil False
Claims Act to provide in most instances for a civil penalty of from
$5000 to $10,000 plus triple damages and costs. See 1986 Amendments
§ 2, 100 Stat. 3153-3154. It is the position of the United States that
(with limited exceptions) the 1986 Amendments are applicable to all

5

2. Appellee was the manager of New City Medical
Laboratories, Inc. (New City), which provided medical
services for patients eligible for benefits under the federal
Medicare program (App., infra, 6a). Providers under that
program are entitled to federal reimbursement, at
specified rates, for services rendered to Medicare re-
cipients. From about January 1982 to December 1983, ap-
peilee submitted 65 different false claims for reimburse-
ment to Blue Cross and Blue Shield of Greater New York
(Blue Cross), a fiscal intermediary of the Department of
Health and Human Services, which administers the
Medicare program (id. at 7a). Each of the 65 claims
demanded payment of $12 for a service whose perform-
ance was actually reimbursable for only three dollars (id.
at 7a-8a). Blue Cross was unaware of the misrepresenta-
tions, and it paid New City the full amount that it re-
quested (ibid.). New City was thus overpaid by a total of
$585.

When the government became aware of his fraud, ap-
pellee was indicted on 65 counts under the criminal false

cases pending on their effective date, including cases in which the false
claims were made earlier. See United States v. Hill, No. MCA
84-2144-RV (N.D. Fla. Nov. 12, 1987). But see United States v.
Bekhrad, 672 F. Supp. 1529 (S.D. lowa 1987). The government did
not assert a demand for civil penalties under the amended version of
the statute in the present case, however, and accordingly the only
question before this Court concerns the constitutionality of the
pre-1986 version of the statute.

* As the district court noted (App., infra, 8a), the fact that appellee
submitted the false claims to an intermediary rather than directly to
the government does not in any way shield him from liability under
either the civil or the criminal false claims statute. Congress has now
codified this rule. See 1986 Amendments § 2, 100 Stat. 3154 (to be
codified at 31 U.S.C. 3729%(c)).

6

claims statute (18 U.S.C. (1982 ed.) 287), which makes it a
crime to “make[] or present{] * * * any claim upon or
against the United States, or any department or agency
thereof, knowing such claim to be false, fictitious, or
fraudulent.”* On July 9, 1985, appellee was convicted on
all 65 counts as well as 16 counts of mail fraud. He was
fined $5000 and sentenced to two years’ imprisonment.
App., infra, 8a.

3. On April 11, 1986, the government commenced this
civil action against appellee under the civil False Claims
Act, 31 U.S.C. 3729-3731. At the time the action was in-
stituted, that Act provided in pertinent pari that a person
who “knowingly presents, or causes to be presented [to the
government] a false or fraudulent claim for payment or
approval,” or who “knowingly makes * * * a false * * *
statement to get a false or fraudulent claim approved,” “is
liable to the United States Government for civil penalty of
$2,000, an amount equal to 2 times the amount of
damages the Government sustains * * * and costs of the
civil action” (31 U.S.C. 3729(1), (2)). Because the statute
provided for a civil penalty of $2000, the government
sought a total civil penalty of $130,000, i.e., $2000 for
each of appellee’s 65 violations.° The government also
sought double damages ($1170) and costs.

In an initial opinion filed on April 29, 1987, the district
court granted summary judgment for the government on

> Appellee was charged, tried, and sentenced under the pre-1986
version of this statute. Section 7 of the 1986 Amendments, 100 Stat.
3169, revised the wording of this statute but did not change the
substance of the offense. See 18 U.S.C. (Supp. IV) 287.

® When a defendant submits several fraudulent demands tor pay-
ment, in general each individual false payment demand gives rise to a
separate false claim violation for purposes of the False Claims Act.
See United States vy. Bornstein, 432 U.S. at 309 0.4; S. Rep. 99-345,
supra, at 8, 9; H.R. Rep. 99-660, supra, ai 21.

;

the question of appellee’s liability (App., infra, 6a).
Noting that appellee’s conviction under the criminal false
claims statute “necessarily determined” (id. at 8a) that he
shad knowingly submitted false claims, the court ruled that
appellee was collaterally estopped from denying liability in
this civil action (id. at 9a).’

The court, however, declined to impose the civil penalty
of $130,000 that the government had requested. Stating
that “the amount by which the 65 claims were inflated was
$9.00 for each claim, or [a total of] $585” (App., infra,
10a), the court declared that “the total amount necessary
to make the Government whole bears no rational relation
to the $130,000 penalty the Government seeks” (ibid.).
The «court regarded a civil penalty of $130,000 as
disproportionate to appellee’s total overbillings, and it
suggested that such a penalty would constitute, in effect, a
“criminal” punishment (id. at 9a, 10a). Because appellee
had already been criminally convicted and sentenced for
his commission of the acts on which this civil action is
based, the court stated that appellee “would have a valid
double jeopardy defense” (id. at 10a) if a penalty of
$130,000 were imposed in this case.

Apparently because of its double jeopardy concerns, the
court construed the statute to mean that “the imposition of
a civil penalty of $2000 for each false claim [is not] man-
datory” (App., infra, 10a). The court then determined that
“a civil penalty of $2,000 on 8 of the 65 claims, or $16,000,
will reasonably compensate the Government for actual
damages as well as expenses incurred in investigating and
prosecuting this action” (ibid.). Accordingly, the court im-
posed on appellee a $16,000 civil penalty (id. at 11a).

’ The new, amended version of the statute contains an explicit col-
lateral estoppel provision. See 1986 Amendments § 5, 100 Stat. 3158
(to be codified at 31 U.S.C. 3731(d)).

8

4. The government moved for reconsideration of the
district court’s decision pursuant to Fed. R. Civ. P. 59(e).
The government argued that it was well established that
the statute requires a separate civil penalty of $2000 for
each false claim and that the court therefore lacked the
discretion to award a penalty of less than $130,000 in this
case. The court thereupon issued a new opinion and judg-
ment (App., infra, la-Sa, 12a), agreeing with the govern-
ment’s statutory interpretation but holding the statute un-
constitutional as applied.

The court acknowledged that it had erred in interpreting
the statute to allow less than a total civil penalty of $2000
for each statutory infraction (App., infra, 2a).* The court
therefore revisited the double jeopardy concerns expressed
in its previous opinion. It recognized (App., infra, 3a-4a,
9a) that in United States ex rel. Marcus v. Hess, 317 U.S.

* The court stated in its amended opinion that “[{t}he Government
now has cited to compelling authority that, in the absence of Govern-
ment consent, the $2,000 penalty for each false claim is mandatory”
(App., infra, la-2a). See, e.g., United States v. Hughes, 585 F.2d 284,
286 (7th Cir. 1978) (“This [$2000-per-false-claim] forfeiture provision
is mandatory; it leaves the trial court without discretion to alter the
statutory amount.”); Brown v. United States, 524 F.2d 693, 705-706
(Ct. Cl. 1975); United States v. Cato Bros., 273 F.2d 153, 156 (4th Cir.
1959), cert. denied, 362 U.S. 927 (1960); United States v. Jacobson,
467 F. Supp. 507, 508 (S.D.N.Y. 1979). The Senate Judiciary Com-
mittee has recently reconfirmed this understanding of the pre-1986
statute (S. Rep. 99-345, supra, at 8 (emphasis added)):

In its present form, the False Claims Act empowers the United
States to recover double damages * * *. In addition, the United
States may recover one $2,000 forfeiture for each false claim sub-
mitted in support of a claim. The imposition of this forfeiture is
automatic and mandatory for each claim which is found to be
false. The United States is entitled to recover such forfeitures
solely upon proof that false claims were made, without proof of
any damages.

9

537 (1943), this Court had held that the False Claims Act’s
$2000 penalty provision was civil, not criminal, and
therefore did not implicate the Double Jeopardy Clause.
The court nevertheless found this case distinguishable on
its facts from Hess, because “[t}he penalty imposed in
Hess was approximately equal to the actual loss sustained
by the government” (App., infra, at 4a). Focusing on a
perceived “tremendous disparity between actual damage
and the ‘civil penalty’ in this case” (ibid.), the court
repeated its earlier statement that a penalty of $130,000 in
this case would “bear[{] no rational relation to the Govern-
ment’s loss” (id. at Sa). The court concluded (ibid.):

[T]he $130,000 penalty sought in this case amounts
to a criminal penalty for violations for which Halper
has already been punished.

Judgment in this amount would violate the Double
Jeopardy Clause. The statute, therefore, is un-
constitutional as applied to Halper, and the sought-
after relief of $130,000 must be denied.

The court limited the government’s recovery to double
damages ($1170) and costs, with no civil penalty at all
(App., infra, Sa).

THE QUESTION IS SUBSTANTIAL

The district court in this case has struck down as un-
constitutional the statute “that has been used more than
any other in defending the Federal treasury against
{fraud]” (S. Rep. 99-345, supra, at 4). The district court’s
holding —that the False Claims Act’s civil penalty provi-
sion is really a “criminal” penalty provision in the cir-
cumstances of this case and therefore violates the Double
Jeopardy Clause—is at odds with United States ex rel.
Marcus v. Hess, supra, and Rex Trailer Co. v. United
States, 350 U.S. 148 (1956), in which this Court rejected

10

the double jeopardy analysis that the district court
adopted here.

The error in the district court’s decision is not limited to
its inconsistency with this Court’s decisions in Hess and
Rex Trailer. The district court’s ruling also disregards
Congress’s recent amendments of the False Claims Act.
Although the views of a subsequent Congress are, of
course, not controlling with regard to the meaning of a
prior enactment, they are nevertheless instructive. In
amending this statute in 1986, Congress increased the civil
penalties for false claims and explicitly reaffirmed that the
statute’s “civil penalties” are indeed civil, not criminal, for
double jeopardy and other purposes. The district court's
view that the civil penalty in this case is disproportionately
harsh cannot ve squared with Congress’s view that even
more severe penalties are appropriate. By characterizing
the False Claims Act’s civil penalties as “civil” in some
cases and “criminal” in other cases, depending on the
court’s view of whether the penalty is proportionate to the
magnitude of the defendant’s fraud in the particular case,
the theory embraced by the district court also threatens
serious disruption of a statutory enforcement scheme that
Congress recently reaffirmed in “the Government's
primary litigative tool for combatting fraud” (S. Rep.
99-345, supra, at 2).°

* The district court’s theory, if followed, would hamper the govern-
ment’s Ongoing enforcement efforts not only under the False Claims
Act, but also under other, similar statutory schemes that provide tor
civil penalties in addition to criminal sanctions. See, e.g., Chapman v.
United States, 821 F.2d $23, $28-S29 (Oth Cir. 1987) (holding Civil
Monetary Penalties Act, 42 U.S.C. 1320a-7a, “civil” and rejecting
double jeopardy claim); Mayers v. Department of Health & Human
Services, 806 F.2d 995, 999 (Lith Cir. 1986) (holding same statute
“civil”), cert. denied, No. 86-1887 (Oct. 5, 1987).

1. The district court’s decision is inconsistent with this
Court’s decision in United States ex rel. Marcus v. Hess,
supra. In Hess, various electrical contractors had engaged
in a collusive bidding scheme on a federally funded public
works project. They were convicted under the criminal
false claims statute and fined $54,000 (317 U.S. at 545).
An action was then brought against the same contractors
under the civil False Ciaims Act.'®° The complaint sought
the imposition of 56 civil penalties of $2000 each, for a
total civil penalty of $112,000 (317 U.S. at 540). The
defendants asserted that the civil suit was barred by the
Double Jeopardy Clause on the ground that imposition of
a civil penalty of $112,000 over and above the previous
criminal fine would constitute a second criminal punish-
ment for the same conduct (id. at 548).

This Court rejected the defendants’ argument. The
Court began with the premise that double jeopardy at-
taches only in a criminal proceeding (317 U.S. at 549
(quoting Helvering v. Mitchell, 303 U.S. 391, 399 (1938))):

Congress may impose both a criminal and a civil sanc-
tion im respect to the same act or omission; for the
double jeopardy clause prohibits merely punishing
twice, or attempting a second time to punish criminal-
ly, for the same offense. The question for decision is
thus whether [the statute in question] imposes a
criminal sanction.

The Court then explained that, unlike the purpose of the
criminal false claims statute, which is to punish
wrongdoers and “to vindicate public justice” (Hess, 317
U.S. at 548-549), “the chief purpose of the [civil False

'© The civil action was brought by a private party, in the govern-
ment’s name, pursuant to the False Claims Act’s gui tam provisions
(31 U.S.C. 3730(b)).

12

Claims Act] was to provide for restitution to the govern-
ment of money taken from it by fraud” (/d. at 551).

The Court acknowledged that, in any particular case,
the civil penalty of $2000 might exceed the amount of the
fraud actually perpetrated on the government. But the
Court emphasized that the statute—especially when con-
sidered in light of its criminal counterpart (see 317 U.S. at
549) — was clearly intended to provide a civil remedy, and
that “[t}his remedy does not lose the quality of a civil ac-
tion because more than the precise amount of so-called ac-
tual damage is recovered.” Jd. at 550. The Court con-
cluded, therefore, that there was no merit to the defend-
ants’ argument “that the $2,000 ‘forfeit and pay’ provision
is ‘criminal’ rather than ‘civil’ ” (id. at 551).''

This Court’s holding in Hess was reiterated 13 years
later in Rex Trailer Co. v. United States, supra. In Rex
Trailer, the defendant was criminally convicted of using
fraud in buying surplus war assets from the government
and was fined $25,000 (350 U.S. at 149). After the
criminal conviction, the government filed a civil action
under the Surplus Property Act of 1944, 50 U.S.C. (1946
ed.) App. 1635, seeking the imposition of five civil
penalties of $2000 each based on the same five acts of
fraud that gave rise to the criminal proceeding. The de-
fendant asserted that the previous criminal conviction
posed a double jeopardy bar to the government’s civil
penalty proceeding (350 U.S. at 150).

As in Hess, this Court rejected the defendant’s argu-
ment. “The only question for * * * decision,” the Court
observed, “is whether [the civil penalty provision] is civil

'' The phrase “forfeit and pay” came from the language ol the ver-
sion of the civil False Claims Act then in effect, 31 U.S.C. (1940 ed.)
231, which provided that anyone who submits a false claim against the
government “shall forfeit and pay to the United States the sum of two
thousand dollars” plus double damages and costs.

13

or penal” (350 U.S. at 150). Noting that the Surplus Prop-
erty Act’s civil penalty provision was “virtually identical”
(id. at 152 a.4) to the civil penalty provision in the False
Claims Act that was upheld in Hess, the Court followed
Hess and concluded that the $2000 civil penalty provision
al issue was civil, not criminal, and therefore did not im-
plicate the Double Jeopardy Clause (id. at 152).

The defendant in Rex Trailer sought to bolster its argu-
ment by using the same argument that the district court
employed in the present case: that the penalty was
disproportionate to the government’s actual loss under the
circumstances of that case. Indeed, in Rex Trailer the
defendant’s fraud had not been shown to have resulted in
any damages to the government (350 U.S. at 152). The
Court rejected this effort to escape from Hess. Repeating
Hess’s admonition that “ ‘[t}he inherent difficulty of
choosing a proper specific sum which would give full
restitution was a problem for Congress’ ” (ibid. (quoting
Hess, 317 U.S. at 552)), the Court explained that the $2000
civil penalty provision was essentially a “liquidated-
damage” provision (350 U.S. at 151, 153). The fact that
the civil penalty provision effectively served as a
liquidated-damages clause, to provide a rough, across-the-
board measure of the government’s recovery, did not
“transform[] what was clearly intended as a civil remedy
into a criminal penalty” (id. at 154).

The district court’s approach in this case cannot be
squared with this Court’s explicit rejection of the defend-
ants’ double jeopardy arguments in Hess and Rex Trailer.
In characterizing the False Claims Act’s penalties as
“criminal,” the district court in this case has adopted a
position that this Court has already twice rejected. See
Berdick v. United States, 612 F.2d 533, 538 (Ct. Cl. 1979)
(citing Hess; “the forfeitures required by the False Claims

14

Act are civil, not criminal, * * * and the double jeopardy
provisions of the Fifth Amendment do not apply”).

The district court erred in its effort to distinguish Hess.
Although “[{t}he penalty imposed in Hess was approx-
imately equal to the actual loss sustained by the govern-
ment” (App., infra, 4a; see Hess, 317 U.S. at 540), this
Court’s decision did not in any way turn on the amount of
damages inflicted on the government in that particular
case. Indeed, Rex Trailer expressly rejected the
defendant’s double jeopardy argument in the face of a
contention that the government had suffered no loss at all.

Moreover, the district court’s theory that a statute can
be “civil” in some cases and “criminal” in others, depend-
ing on whether it leads (in the court’s view) to a dispropor-
tionate sanction, would produce bizarre consequences.
Consider two proceedings both brought under the False
Claims Act, one involving a $112,000 penalty for 56 false
claims costing the government $100,000 and the other in-
volving a $130,000 penalty for 65 false claims costing the
government $585. If the first proceeding is “civil” (follow-
ing Hess) and the second is “criminal” (under the decision
below), then in the second case—but not the first —the
government would be required to prove its case beyond a
reasonable doubt. Conversely, in the first case the defend-
ant would be entitled to take discovery under the liberal
provisions of the Federal Rules of Civil Procedure, but the
defendant in the second case would be allowed only the
more limited discovery available in criminal cases. Indeed,
under the district court’s theory a case might proceed to
trial as a “civil” case only later to be held “criminal” (and
to require more procedural safeguards) if the evidence
developed at trial led the district court to question the
“proportionality” of the civil penalty or if the court of ap-

15

peals disagreed with the district court’s conclusion that the
penalty was not unduly disproportionate.

This Court’s decisions do not support any such case-by-
case analysis of whether a statute is “civil” or “criminal” in
nature. To the contrary, once it is established that Con-
gress intended to create a “civil” penalty, this Court “in-
quire[s] * * * whether the statutory scheme [i]s so punitive
either in purpose or in effect as to negate [Congress’s] in-
tention.” United States v. Ward, 448 U.S. 242, 248-249
(1980) (emphasis added). The question whether this
Statutory scheme is so punitive as to be “criminal” was
answered long ago in Hess and Rex Trailer. The district
court’s attempt to fashion a case-specific exception to
those decisions warrants review and reversal. '?

2. In two respects, Congress’s receni amendment of
the statute buttresses this Court’s rulings in Hess and Rex
Trailer that the False Claims Act’s civil penalty provision
is indeed “civil” and does not implicate double jeopardy
concerns. First, Congress has now raised the civil penalty
from $2000 per false claim to “not less than $5,000 and not
more than $10,000” per false claim. 1986 Amendments
§ 2, 100 Stat. 3154 (to be codified at 31 U.S.C. 3729(a)).
Congress’s substantial increase of the statutory penalty
weighs against the district court’s suggestion that imposi-
tion of the smaller, preexisting $2060 penalty in this case

'? The civil penalty in this particular case is as large as it is not
because Congress has provided for an excessive penalty, but because
the defendant has defrauded the government 65 times. See Uniied
States ex rel. Fahner vy. Alaska, 591 F. Supp. 794, 801-802 (N.D. Il.
1984) (imposing civil penalty in excess of one million dollars tor de-
tendant’s commission of more than 500 False Claims Act violations;
“[wjhile the total damage award in this action may appear to be ex-
cessive, it reaches such proportions for the sole reason that [the de-
fendant] has been tound to have submitted 551 separate talse claims”).

16

is excessive. Second, in amending the False Claims Act,
Congress explicitly reaffirmed that the civil penalty provi-
sion is intended to be a civil sanction. Congress’s own
characterization of the penalty as civil is entitled to great
weight and militates against the district court’s contrary
conclusion that the sanctions would be “criminal” in this
case.

a. Prompted by extensive findings that fraud “per-
meates generally all Government programs” (S. Rep.
99-345, supra, at 2)—particularly health-care benefit pro-
grams (id. at 4) such as the Medicare program involved in
this case (id. at 2!)—Congress revised the False Claims
Act in 1986 “[iJn order to make the statute a more useful
tool against fraud in modern times” (id. at 2). See also
H.R. Rep. 99-660, supra, at 21. Congress determined that
“[t}his growing pervasiveness of fraud necessitates mod-
ernization of” the Act (S. Rep. 99-345, supra, at 2) because
“some of the provisions of the Act are outdated” (H.R.
Rep. 99-660, supra, at 17). In particular (ibid.),

the current law permits the United States to recover
double damages plus $2,000 for each false or
fraudulent claim. This penalty has not been changed
since 1863. The Congressional Research Service has
reported that, based on the Consumer Price Index,
the buying power of $2,000 in 1863 would be close to
$18,000, today.
Thus, emphasizing that it shared “the apparent belief of
the act’s initial drafters that defrauding the Government is
serious enough to warrant an automatic forfeiture rather
than leaving fime determinations with district courts,
possibly resulting in discretionary nominal payments” (S.
Rep. 99-345, supra, at 17), Congress decided to strengthen
the civil penalties that the government is entitled to recover
from those who “plunder[] * * * the public treasury”

17

(United States v. McNinch, 356 U.S. 595, 599 (1958)) by
making false claims.

The amended version of the statute increased the civil
penalty per false claim from $2000 to any amount in the
$5000-to-$10,000 range and imposed triple rather than
double damages. The legislative history of the amer dment
makes it clear that Congress strengthened the govern-
ment’s civil remedies because it determined that more
severe sanctions were needed in order to stem the tide of
rampant fraud inflicted on the government. See H.R. Rep.
99-660, supra, at 18 (estimating government’s loss to fraud
at “hundreds of millions of dollars to more than $50
billion per year”); S. Rep. 99-345, supra, at 3 (giving larger
estimates and noting that “[t}he cost of fraud cannot
always be measured in dollars and cents, however”).'?
Given Congress’s substantial increase of the amount of

'3 Congress acted in order to deter those who would defraud the
government as well as to compensate the government for its monetary
and nonmonetary losses caused directly and indirectly by false claims.
See, e.g., H.R. Rep. 99-660, supra, at 18. Such a purpose was well
within Congress’s power in enacting civil remedies. As this Court
wrote in Hess, 317 U.S. at 550-551 (citations and footnote omitted),

Congress might have provided here as it did in the anti-trust laws
for recovery of “threefold damages . . . sustained and the cost of
suit, including a reasonable attorney’s fee.” Congress could re-
main fully in the common law tradition and still provide punitive
damages. “By the common as well as by statute law, men are
often punished for aggravated misconduct or lawless acts by
means of civil action and the damages inflicted by way of penalty
or punishment given to the party injured.” This Court has noted
that the general practice in state statutes of allowing double or
treble or even quadruple dainages. Punitive or exemplary
damages have been held recoverable under a statute like this
which combines provision for criminal punishment with others
which afford a civil remedy to the individual injured. The law can
provide the same measure of damage for the government as it can
for an individual.

the statutory cjvil penalty, coupled with the legislative
determination that the increased amount was necessary to
provide the government with an adequate weapon against
the “pervasive” fraud in government programs (S. Rep.
99-345, supra, at 3), the district court erred by substituting
its judgment for that of Congress as to the excessiveness of
the smaller, $2000 civil penalties sought in this case.'*

b. Congress’s recent amendments not only increased
the amount of the civil penalty to which the government is
entitled, but in addition reaffirmed that the statute’s civil
penalties are indeed “civil.” Referring to Congress’s addi-
tion to the statute of a provision “to make clear that in
civil fraud actions, the Government is required to prove all
essential elements of the cause of action [only] by a
preponderance of the evidence” (S. Rep. 99-345, supra, at
30-31; see 1986 Amendments § 5, 100 Stat. 3158 (to be
codified at 31 U.S.C. 3731(c))), the Senate Judiciary Com-
mittee took pains to explain that False Claims Act pro-
ceedings are civil in nature (S. Rep. 99-345, supra, at 31).
The Senate report makes explicit Congress’s repudiation

'* lt bears emphasis that, in raising the civil penalty from $2000 per
talse claim to $5000 to $10,000 per false claim, Congress was aware
that the civil penalty would be substantial in cases in which the defend-
amt commits many violations. The Senate report speaks to this very
situation (S. Rep. 99-345, supra, at 9):

Each separate *** “false payment demand” constitutes a
separate claim tor which a forfeiture shall be imposed * * *, and
this is true although many such claims may be submitied to the
Government at one time. For example, a doctor who completes
separate Medicare claims for each patient treated will be liable tor
a torteuure tor each such form that contains false entries even
though several such forms may be submitted to the fiscal in-
termediary al one ume.

See also H.R. Rep. 99-660, supra, at 21

19

of the notion that “the civil False Claims Act is penal in
nature” (ibid.), and highlights “[t}he Supreme Court’s re-
jection of [that] premise in [Hess]” (/bid.).

Congress’s own characterization of the civil penalties as
“civil”—in the pre-1986 statute as well as in the recent
amengiment —is highly probative. This Court has made
clear that when “Congress has indicated an intention to
establish a civil penalty” (United States v. Ward, 448 U.S.
at 248) as opposed to a criminal punishment, Congress’s
intention is entitled to great weight and is controlling
unless “the statutory scheme [is] so punitive in purpose or
effect as to negate that intention” (id. at 248-249). This
Court has admonished, moreover, that “[iJn regard to this
latter inquiry, * * * ‘only the clearest proof could suffice
to establish the unconstitutionality of a statute on [the]
ground [it is really a criminal and not a civil provision)’ ”
(id. at 249 (quoting Flemming v. Nestor, 363 U.S. 603, 617
(1960))). Thus, when it is asserted that a statute that Con-
gress has clearly denoted as civil is in reality a criminal
statute for one purpose or another, the question is
“whether Congress, despite its manifest intention to
establish a civil, remedial mechanism, nevertheless pro-
vided for sanctions so punitive as to ‘transform what was
clearly intended as a civil remedy into a criminal penalty’ ”
(Ward, 448 U.S. at 249 (quoting Rex Trailer, 350 U.S. at
154)). See United States v. One Assortment of 89
Firearms, 465 U.S. 354, 362-366 (1984) (holding forfeiture
proceeding under 18 U.S.C. 924(d) “civil” and rejecting
double jeopardy claim); One Lot Emerald Cut Stones &
One Ring v. United States, 409 U.S. 232, 235-237 (1972)
(per curiam) (holding forfeiture proceeding under 19
U.S.C. 1497 “civil” and rejecting double jeopardy claim);
Chapman v. United States, 821 F.2d 523, 528-529 (10th
Cir. 1987) (holding Civil Monetary Penalties Law, 42

20

U.S.C. 1320a-7a, “civil” and rejecting double jeopardy
claim).

Especially in light of this Court’s decisions in Hess and
Rex Trailer, there is no basis in this case for countering the

presumption that a statute ordinarily is deemed civil if

Congress says it is. Indeed, the presumption in this case is
particularly strong, not only because Congress has ex-
pressly labeled the False Claims Act a “civil” provision in
the very language of the statute (31 U.S.C. 3729, 3730(a);
see 1986 Amendments §§ 2, 3, 100 Stat. 3153-3154, 3154
(to be codified at 31 U.S.C. 3729(a), 3730(a)), but also
because Congress has deliberately provided for a separate
criminal analog to the False Claims Act, in 18 U.S.C. 287.
“Congress labeled the sanction * * * a ‘civil penalty,’ a
label that takes on added significance given its juxtaposi-
tion with the criminal penalties set forth in [another,
separate statutory provision]” (Ward, 448 U.S. at 249).
See Hess, 317 U.S. at 549 (“[t}he statutes on which this suit
rests make elaborate provision both for a criminal punish-
ment and a civil remedy”); Helvering v. Mitchell, 303 U.S.
at 404 (“[t}he fact that the [statutory scheme] contains two
separate and distinct provisions imposing sanctions [one
civil and one criminal], and that these appear in different
parts of the statute, helps to make clear the [civil]
character of that here invoked”).

Thus, Congress’s recent changes to the False Claims Act
confirm this Court’s conclusion, in both Hess and Rex
Trailer, that the Act’s “civil penalty” (31 U.S.C. 3729)
scheme does not implicate the Double Jeopardy Clause.
The district court sought to distinguish Hess on the basis
of the perceived disproportionality of the penalty in this
case, but the distinction is unavailing. The government is
entitled to recover a full civil penalty even in cases in which
no money is paid out and there are no provable damages:
“The United States is entitled to recover such forfeitures

21

solely upon proof that false claims were made, without
proof of any damages.” S. Rep. 99-345, supra, at 8; see
United States v. Hughes, 585 F.2d 284, 286 n.1 (7th Cir.
1978) (“[a] false claim is actionable under the [False
Claims] Act even though the United States has suffered no
measurable damages from the claim”).

Given the endemic abuse that Congress has found to ex-
ist in government programs such as Medicare, imposition
of a civil penalty of $2000 ($5000 to $10,000 under the new
statute) against an individual who defrauds the govern-
ment is reasonable and is well within Congress’s legislative
power. Even when a defendant’s false claim nets him little
or no gain, the defendant's fraudulent conduct imposes on
the government an “extremely costly” burden of investiga-
tion and prosecution. Mayers v. Department of Health &
Human Services, 806 F.2d 995, 999 (llth Cir. 1986)
(upholding administrative imposition of civil penalty of
close to two million dollars in Medicare fraud case
brought under the Civil Monetary Penalties Act), cert.
denied, No. 86-1887 (Oct. 5, 1987); cf. Hess, 317 U.S. at
§5§2 (stressing “the inherent difficulty of choosing a proper
specific sum which would give full restitution”). The civil
penalty in this case is substantial not because Congress has
provided for an excessive sanction, but because the de-
fendant has defrauded the government 65 times. That ap-
pellee cheated the government many times does not
transform the government’s civil remedy into a criminal
punishment.

22

CONCLUSION
Probable jurisdiction should be noted.

Respectfully submitted.

FEBRUARY 1988

CHARLES FRIED
Solicitor General
RICHARD K. WILI ARD
Assistant Attorney General
THOMAS W. MERRILL
Deputy Solicitor General
Roy T. ENGLERT, JR.
Assistant to the Solicitor General
MICHAEL JAY SINGER
THOMAS M. BONDY
Attorneys

APPENDIX A

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

86 Civ. 2955 (RWS)
UNITED STATES OF AMERICA
- against -

IRWIN HALPER, DEFENDANT

[Filed July 28, 1987]

Sweet, D. J.

By opinion dated April 23, 1987, this court granted
summary judgment in favor of the United States (the
“Government”) and against defendant pro se Irwin Halper
(“Halper”) on sixty-five claims of Medicare fraud under
the False Claims Act, 31 U.S.C. §§ 3729-3731. Although
the Government asked for a sum of $130,000, or a $2,000
“civil penalty” for each of the sixty-five false claims, as
provided by 31 U.S.C. § 3729, this court imposed a penal-
ty of $16,000. The Government now moves for an order
granting reargument pursuant to Local Civil Rule 3(j) and
amendment of the judgment pursuant to Fed.R.Civ.P.
59(e) to grant it the full amount sought in the complaint.
The motion for reargument is hereby granted, and the
judgment will be amended in accordance with this opin-
ion.

In the April 23 opinion, this court, noting that the
Government had not briefed the issue, concluded that the
imposition of a civil penalty of $2,000 for each claim is not
mandatory under § 3729. The Government now has cited
to compelling authority that, in the absence of Govern-

(la)

2a

ment consent, the $2,000 penalty for each false claim is
mandatory. See United States v. Diamond, No. 86 Civ.
2121 (S.D.N.Y. April 14, 1987) (Walker, J.); United
States v. Jacobson, 467 F. Supp. 507, 508 (S.D.N.Y. 1979)
(Weinfeld, J.); United States v. Hughes, $85 F.2d 284, 286
(7th Cir. 1978); Brown v. United States, 524 F.2d 693,
705-06 (Ct. Cl. 1975); cf. United States v. McLeod, 721
F.2d 282, 285 (9th Cir. 1983); United States v. Dinerstein,
362 F.2d 852, 855-56 (2d Cir. 1966); United States v.
Rapoport, 514 F. Supp. 519, 523 (S.D.N.Y. 1981) (Goet-
tel, J.); United States v. Silver, 384 F. Supp. 617, 620
(E.D.N.Y. 1974), aff'd without opinion, 515 F.2d 505 (2d
Cir. 1975). But see Peterson v. Weinberger, 508 F.2d 45
(Sth Cir.), cert. denied, 423 U.S. 830 (1975). The Govern-
ment effectively distinguishes the case cited by the court,
United States v. Greenberg, 237 F. Supp. 439 (S.D.N.Y.
1965) (Feinberg, J.), on the grounds that the Government
took the position in Greenberg that the “number of
forfeitures is within the discretion of the court.” Jd. at 445.
Thus, this court concludes that it was in error and that the
imposition of $2,000 for each of the sixty-five false claims
is mandatory.

Nevertheless, a $130,000 sanction cannot be imposed,
since such imposition in the present circumstances would
violate the Double Jeopardy Clause.

The Fifth Amendment guarantee against double jeopar-
dy protects against 1) a second prosecution for the same
offense after acquittal, 2) a second prosecution for the
same offense after conviction, and 3) multiple punish-
ments for the same offense. See North Carolina v. Pearce,
395 U.S. 711, 717 (1969). The protection against multiple
punishments is implicated here, since Halper has already
been convicted of criminal charges and sentenced to two
years and a $5,000 penalty for these same acts. As the

3a

Supreme Court said in Ex parte Lange, 85 U.S. (18 Wail.)

163, 168, 173 (1874):
If there is anything settled in the jurisprudence of
England and America, it is that no man can be twice
lawfully punished for the same offense. ... [T]he
Constitution was designed as much to prevent the
criminal from being twice punished for the same of-
fense as from being twice tried for it.

Of course, the application of a penalty that is more than
the “precise amount of so-called actual damage” is not
necessarily punishment. United States ex rel. Marcus v.
Hess, 317 U.S. 537, 550 (1943). In Hess, the Supreme
Court distinguished between “civil, remedial actions
brought primarily to protect the government from finan-
cial loss and actions intended to authorize criminal punish-
ment to vindicate public justice.” /d. at 548-49. Only those
actions intended to vindicate public justice are to subject
the defendant to double jeopardy. The court concluded
that the provision under the predecessor statute to the
False Claims Act allowing for double damages and a
$2,000 penalty was remedial in nature. The Court noted
that federal and state statutes have allowed treble and even
quadruple damages, and that Congress could stay within
the common law tradition and impose punitive damages.
Id. at 550. Most importantly, the Court concluded that
“the chief purpose of the statutes here was to provide for
restitution to the government of money taken from it by
fraud, and that the device of double damages plus a
specific sum was chosen to make sure that the government
would be made completely whole.” /d. at 551-52.

The Court obviously gave great deference to Congress’
intent in enacting the statute, focusing on the remedial
purpose of the statute in concluding that it was not
punitive. This court, of course, is bound by the Supreme

4a

Court’s conclusion that the statute was meant to be
remedial. Nevertheless, the Hess Court did not stop with
an analysis of Congress’ intent; instead, it inquired, in the
words of Justice Frankfurter’s concurrence, into whether
the penalty was punitive because it exceeded any amount
“that could reasonably be regarded as the equivalent of
compensation for the Government’s loss.” /d. at 554
(Frankfurter, J., concurring). The opinion of the Court
examined the effect of the penalty, and stated:

We cannot say that the remedy now before us requir-
ing payment of a lump sum and double damages will
do more than afford the government complete indem-
nity for the injuries done it.

Hess, 317 U.S. at 549 (citing Helvering v. Mitchell, 303
U.S. 391, 401 (1983)). The penalty imposed in Hess was
approximately equal to the actual loss sustained by the
government.

In the present case, we can say, in the words of Hess,
“that the remedy now before us . . . will do more than af-
ford the government complete indemnity for the injuries
done it.” The government cites no cases involving sums
that even begin to approach the tremendous disparity be-
tween actual damage and the “civil penalty” in this case.
See Berdick v. United States, 612 F.2d $33, 538 (Ct.Cl.
1979) (penalty of $72,000 where actual loss approximated
$1,546); Murray & Sorenson, Inc. v. United States, 207
F.2d 119, 122-23 (ist Cir. 1953) (penalty unreported).
Concededly, most of the cases have not examined the
amount of the penalty in terms of its relationship to actual
loss. But see Peterson v. Richardson, 370 F. Supp. 1259,
1267 (N.D. Texas 1973), affd sub nom. Peterson y.
Weinberger, 508 F.2d 45 (Sth Cir.), cert. denied, 423 U.S.
830 (1975).

Sa

Neverthless, a penalty of $130,000 for an out-of-pocket
loss by the Government of $585, not including the expense
of investigating and prosecuting this defendant, is
“punishment.” As stated in the April 24 opinion, “a civil
penalty designed to make the government whole cannot be
entirely unrelated to actual damages suffered and expenses
incurred by the government.” A penalty 220 times the ac-
tual and easily measurable loss bears no rational relation
to the Government’s loss. Thus, the $130,000 penalty
sought in this case amounts to a criminal penalty for viola-
tions for which Halper has already been punished.

Judgment in this amount would violate the Double
Jeopardy Clause. The statute, therefore, is unconstitu-
tional as applied to Halper, and the sought-after relief of
$130,000 must be denied. The provision for double
damages, however, remedying the difficulty of calculating
the Government’s losses and expenses, passes Double
Jeopardy scrutiny, and will be applied to give the Govern-
ment judgment in the amount of two times $585, or
$1,170, and the costs of the civil action.

The judgment will be amended in accordance with this
opinion.

IT IS SO ORDERED.

New York, N.Y. /s/ R. Sweet
July 27, 1987 ROBERT W. SWEET
U.S.D.J.

6a
APPENDIX B

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

86 Civ. 2955 (RWS)
UNITED STATES OF AMERICA
- against -

IRWIN HALPER, DEFENDANT

[Filed Apr. 24, 1987]

OPINION

Sweet, D. J.

In this action brought by the United States (the
“Government”) against the defendant pro se Irwin Halper
(“Halper”) for the filing of allegedly inflated Medicare
claims in violation of the False Claims Act, 31 U.S.C.
§§ 3729-3731, the Government has moved for summary
judgment. Because Halper is collaterally estopped from
denying the facts which entitle the Government to judg-
ment in its favor, the motion for summary judgment is
granted.

The following findings and conclusions are made on the
affidavit, memorandum of law. and exhibits submitted by
the Government, and the letter i opposition from Halper
dated January 10, 1987.

The Facts

At all time: elevant to the complaint, Halper was
manager of New City Medical Laboratories, Inc.
(“NCML”), a corporation providing medical services to
patients eligible for Medicare. Since January, 1982, pro-

- ee,

7a

viders of Medicare services have been instructed to use cer-
tain billing procedure codes on claims filed with Blue
Cross and Blue Shield of Greater New York (“Blue
Cross”), the fiscal intermediary of the United States
Department of Health and Human Services. Blue Cross
made available to each provider manuals listing the
Medicare procedure code corresponding to each type of
medical service and the cost Medicare would pay to pro-
viders for that service.

In addition to the procedure codes corresponding to
each particular medical service, the manual specified two
procedure codes to be included on Medicare claim forms
for additional reimbursement to providers who had to
travel toa private home, a nursing home or a Skilled Nurs-
ing Facility to perform a medical service. The “9018” pro-
cedure code was the proper code for seeking reimburse-
ment for services performed on the first or only patient
seen at such a facility. The “9019” procedure code was the
proper code for seeking reimbursement for services per-
formed on each subsequent patient seen on the same day
at the same facility. According to the manuals, at all rele-
vant times, the reimbursement allowed by Medicare for
services billed under the “9018” code was either $10.00 or
$12.00, and the reimbursement allowed by Medicare for
services billed under the “9019” code was $3.00.

From in or about January, 1982 until in or about
December, 1983, Halper submitted 65 claim forms that
falsely characterized certain services performed by NCML
as services reimbursable under the higher-priced “9018”
procedure code rather than the “9019” code, even though
they were performed not on the first or only patient but on
subsequent patients at a particular facility on a particular
day. Blue Cross, unaware of the foregoing circumstances,
made payment on the Medicare claims at the higher “9018”

8a

rate when the claims should have been paid at the lower
“9019” rate.

On July 9, 1985, Halper was convicted of 65 counts of
submitting false claims in violation of 18 U.S.C. §§ 2 and
287, based on the same acts alleged in the complaint in the
present action. He was sentenced to two years and a fine
of $5,000.

Collateral Extoppel

The False Claims Act is violated by anyone not a
member of the armed services of the United States who
“knowingly makes, uses, Or causes to be made or used, a
false record or statement to get a false or fraudulent claim
paid or approved.” 31 U.S.C. § 3729(2). The fact that
Halper submitted false claims to Blue Cross, the Govern-
ment’s fiscal intermediary, rather than directly to the
Government, is of no significance. See United States ex
rel. Marcus v. Hess, 317 U.S. 537, 544-45 (1943); United
States v. Bornstein, 361 F. Supp. 869, 875 (D.N.J. 1973),
aff'd in relevant part, 504 F.2d 368 (3d Cir. 1974), rev'd on
other grounds, 423 U.S. 303 (1976). The elements of the
criminal false claims statute, 18 U.S.C. § 287, under
which Halper was convicted, are identical to 31 U.S.C.
§ 3729(2) in all relevant respects. The criminal statute
makes it a crime to present to the Government “any claim
upon or against the United States, or any department or
agency thereof, knowing such claims to be false, fictitious
or fraudulent.”

In this civil case, the Government can rely on the
criminal conviction obtained against Halper to establish
issues which were necessarily determined by the judgment
of conviction. United States v. Greenberg, 237 F. Supp.
439, 442 (S.D.N.Y. 1965). Since the conviction necessarily
determined that Halper submitted claims to the Govern-
ment “knowing such claims to be false, fictitious, or fraud-

9a

ulent,” Halper cannot challenge thai finding on this mo-
tion for summary judgment. See United States v. Thomas,
709 F.2d 968, 972 (Sth Cir. 1983) (“Because of the ex-
istence of a higher standard of proof and greater pro-
cedural protection in a criminal prosecution, a conviction
{under the criminal faise claims statute] is conclusive as to
an issue arising against the criminal defendant in a subse-
quent civil action”); Berdick v. United States, 612 F.2d
533, 537 (Ct.Cl. 1979); Sell v. United States, 336 F.2d 467,
474-75 (10th Cir. 1964). Since Halper is collaterally
estopped from creating a genuine issue of material fact,
the Government is entitled to summary judgment under

- the False Claims Act.

Damages and Forfeiture

Title 31 U.S.C. § 3729 provides that a person who know-
ingly makes a false statement to get a false claim approved
“is liable to the United States Government for a civil
penalty of $2,000, an amount equal to two times the
amount of damages the Government sustains because of
the act of that person, and the costs of the civil action

The Supreme Court has held that a provision for a civil
penalty of $2,000 plus twice the Government’s damages is
not in itself a criminal penalty giving rise to a claim of
double jeopardy, reasoning that the purpose of such a pro-
vision is to ensure that the Government is fully compen-
sated for any damages it has incurred. See United States ex
rel. Marcus v. Hess, 317 U.S. 537, 548-52 (1943); Berdick
v. United States, supra, 612 F.2d at 538; Murray & Soren-
son, Inc. v. United States, 207 F.2d 119, 122-23 (ist Cir.
1953). Therefore, the standard for determining whether a
penalty is criminal is not whether the Government can
prove that the penalty imposed is equal to the Govern-

10a

ment’s actual damages. Instead, a court must take into ac-
count the difficulty in many cases of calculating actual
damages and the expense incurred by the Government iv
discovering the fraud and prosecuting a civil action for
damages. Nevertheless, a civil penalty designed to make
the Government whole cannot be entirely unrelated to ac-
tual damages suffered and expenses incurred by the
Government.

Were this court to grant the relief the Government
seeks, the statute as applied would violate the Double
Jeopardy Clause. The Government seeks to recover
$130,000, representing the $2,000 allotted by statute for
each of the 65 false claims set forth in the complaint. At
most, however, the amount by which the 65 claims were
inflated was $9.00 for each claim, or $585. Even adding to
that amount the Government’s expense in investigating
and prosecuting this action, the total amount necessary to
make the Government whole bears bear no rational rela-
tion to the $130,000 penalty the Government seeks. See
Peterson v. Richardson, 370 F. Supp. 1259, 1267
(N.D.Texas 1973), aff'd, 508 F.2d 45 (Sth Cir.), cert.
denied, 423 U.S. 830 (1975).

Although the Government has not briefed the issue, the
imposition of a civil penalty of $2,000 for each false claim
does not appear to be mandatory under the statute. See
United States v. Greenberg, 237 F. Supp. 439, 445
(S.D.N.Y. 1965). If it were, under the circumstances of
this case, Halper would have a valid double jeopardy
defense, Hess, supra, 317 U.S. 537, notwithstanding. Of
course, not considered in this determination is the $5,000
criminal fine already imposed on Halper for deterrence
and as a penalty. However, a civil penalty of $2,000 on 8
of the 65 claims, or $16,000, will reasonably compensate
the Government for actual damages as well as expenses in-
curred in investigating and prosecuting this action.

Although this is at best an approximation of the amount
required to make the Government whole, the Govern-
ment, in keeping with the relief it seeks, has submitted no
evidence of its expenses in this action.

Therefore, summary judgment in the amount of
$16,000 is granted in the Government’s favor.

IT IS SO ORDERED

DATED: New York, N.Y.
April 23, 1987
/s/ Robert W. Sweet
ROBERT W. SWEET
U.S.D.J.

12a
APPENDIX C

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

86 Civ. 2955 (RWS)
UNITED STATES OF AMERICA, PLAINTIFF
- against -
IRWIN HALPER, DEFENDANT

[Filed Oct. 21, 1987]

AMENDED JUDGMENT

Plaintiff having moved for reargument and for amend-
ment of the judgment filed on May 1, 1987, and the Court
having granted the motion to reargue and having issued an
opinion dated July 27, 1987 reducing plaintiff's damage
award to $1,170, it is hereby ORDERED, ADJUDGED
and DECREED that the judgment filed on May 1, 1987 is
vacated and that plaintiff is hereby awarded judgment in
the amount of $1,170 against defendant.

New York, New York
October 20, 1987

/s/ Robert W. Sweet

ROBERT W. SWEET
United States District Judge

l3a
APPENDIX D

UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK

No. 86 Civ. 2955 (RWS)
UNITED STATES OF AMERICA, PLAINTIFF
Vv.

IRWIN HALPER, DEFENDANT

[Filed Nov. 19, 1987]

NOTICE OF APPEAL TO
THE SUPREME COURT OF THE UNITED STATES

Notice is hereby given that the plaintiff, the United
States of America, hereby appeals to the Supreme Court
of the United States from the judgment of this Court filed
in the above-captioned matter on October 21, 1987.

This appeal is taken pursuant to 28 U.S.C. § 1252 and
28 U.S.C. § 2101(a).

Respectfully submitted,

RICHARD K. WILLARD
Assistant Attorney General

RUDOLPH W. GIULIANI
United States Attorney

/s/ Muchael Jay Singer
MICHAEL JAY SINGER

NOVEMBER 1987

l4a

/s/ Thomas M. Bendy

THOMAS M. BoONDy
Attorneys, Appellate Staff
Civil Division, Room 3631
Department of Justice
Washington, D.C. 20530
Telephone: (202)/F TS 633-2397

lSa
APPENDIX E

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

86 Civ. 2955 (RWS)
UNITED STATES OF AMERICA
IRWIN HALPER, DEFENDANT

[Filed Oct. 28, 1987]

JUDGMENT
Sweet, D. J.

Pursuant to this court’s opinion of July 27, 1987,
amending an earlier opinion of April 23, 1987, judgment
will be entered in this case in the amount of $1,170.00 in
accordance with the July 27 opinion with costs.

IT IS SO ORDERED

New York, N.Y.
October 26, 1987

/s/ Robert W. Sweet

RoBert W. Sweet
U.S.D.J.

US GOVERNMENT PRINTING OFFICE 1968- 20203760260

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385012_0655%3A2. Public record. Not legal advice.