Criminal Conviction Leaves Defendant Defenseless in FCA Civil Action

Pity Dr. Christina Clardy.  In 2011 she was convicted of health care fraud, sentenced to 135 months in prison, and ordered to pay $16 million in restitution.   Then in 2014 the government added Christina as a defendant in its pending False Claims Act (FCA) civil action against her cronies in the physical therapy scheme that got her convicted in the first place—a scheme that cost the government $45 million in Medicare and Medicaid payments.

Things couldn’t get any worse for Christina, right?  Wrong.  She’s lost the civil suit before it’s even begun.  Why?  Because the FCA contains an estoppel provision.  That provision says a final judgment against a criminal defendant “shall estop the defendant from denying the essential elements of the offense” in a civil action involving the same transactions.  In other words, the convicted criminal can’t even put up a defense in a related civil action.

So on Jan. 27, 2016, a federal court granted the government summary judgment against Christina, ruling that the under FCA estoppel provision she can’t mount a defense.  All that’s left is calculation of damages—damages that could amount to triple the government’s loss of $45 million plus up to $11,000 for every Medicare and Medicaid bill paid in the physical therapy scheme.   The total could make Christina’s $16 million fine look like sofa change.

The case is U.S. v. City Nursing Services of Texas, 2016 BL 22256, no. 4:10-cv-02277 (S.D.Tex. Jan. 27, 2016).

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