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Griffith v. Conn

United States District Court, E.D. Kentucky, Southern Division, Pikeville

March 20, 2018

JENNIFER L. GRIFFITH, et al., Plaintiffs,
v.
ERIC C. CONN, et al., Defendants.

          OPINION AND ORDER

          KAREN K. CALDWELL, CHIEF JUDGE

         This matter is before the Court pursuant to relators' motion for summary judgment against defendant David B. Daugherty (DE 319). Specifically, the relators' move for judgment on Counts VII, VIII, IX, and X of the third amended complaint (DE 207). For the following reasons, relators' motion for summary judgment (DE 319) is GRANTED IN PART and TAKEN UNDER ADVISEMENT in part. The motion is GRANTED as to defendant Daugherty's liability on Counts VII, VIII, IX, and X of the third amended complaint. The Court RESERVES ruling on the issue of damages.

         I. INTRODUCTION

         This case has a long and complex procedural history. Previously, the Court has set the stage as follows:

This story has been told many times. Griffith and Carver allege that Eric Conn, a social security attorney and local celebrity, and David Daugherty, an administrative law judge, conspired to defraud the government. The scheme was simple: Conn would bring social security cases on behalf of people seeking disability benefits, Daugherty would assign those cases to himself, and Daugherty would grant the benefits irrespective of the merits. Conn would then submit claims to the Social Security Administration (SSA) to collect attorney's fees for bringing those cases. Those submissions, according to the plaintiffs, violated the False Claims Act (“FCA”).

(DE 274 at 1-2) (internal citations omitted). Griffith and Carver (“relators”) originally brought this action through the qui tam statute in 2011. (DE 2). After preliminary review of the case, the government decided not to intervene, and Griffith and Carver proceeded in prosecution of the case. Several years later, the government partially intervened, but only as to the Conn defendants. (DE 223; 252). Important to the course of this litigation is that fact that both Conn and Daugherty have been pursued criminally for actions related to the ones at issue in this case. Conn pleaded guilty in his parallel criminal case, and in turn, conceded liability on Counts I, XIII, and IX of this litigation. See (DE 309; 310 at 1).

         Griffith and Carver now move for summary judgment against defendant Daugherty, pointing out that he too has now pleaded guilty in his parallel criminal case. See United States v. Daugherty, No. 5:17-CR-00066-DCR (May 12, 2017). Specifically, Daugherty has admitted to two counts of receiving gratuities in violation of 18 U.S.C. § 201(c)(1)(B). See Id. at (DE 15).

         As a result of the parallel criminal cases, there is a large amount of evidence that has been admitted by Daugherty and Conn, and is now offered to prove summary judgment on the relators' claims against Daugherty. Important in those admissions is illumination on the fraudulent scheme existing between Daugherty and Conn. Defendant Daugherty has not responded to the relators' motion for summary judgment, despite a specific request by the Court, and the evidence is uncontested.

         In or around October 2004, Daugherty solicited Conn for money, remarking that Conn was the beneficiary of many of Daugherty's decisions on disability claims. (DE 319-6, Attach. A at 8). Eventually, Daugherty and Conn setup a monthly payment system, in which Conn would pay Daugherty $400 per favorable decision on Conn's cases for disability benefits. Id. at 9. As a result of being financially incentivized, Daugherty began to seek out and self-assign Conn's cases or reassign them from other Administrative Law Judges to himself. (DE 319-4, Attach. A at 3). Daugherty also began making monthly phone calls to the Conn Law Firm, providing the identity of claimants for whom Daugherty intended to award benefits, and specifically identifying the type of medical evidence, whether evidencing a physical or mental impairment, that Conn should submit to support favorable decisions. Id. Conn, using several medical professionals, fabricated documentation, including physical pre-completed Residual Functional Capacities, which he submitted to Daugherty via interstate facsimile or wire transmissions from the Conn Law Firm to the Huntington Office of Disability Adjudication and Review (“ODAR”). (DE 319-6, Attach. A at 2-7, 10-11).

         In or around January 2008, Daugherty contacted Conn by telephone and confronted Conn about the repetitive submission of some of the fabricated documentation. (Id. at 12). Daugherty advised Conn, “this isn't going to work, ” and instructed Conn to create and submit a wider variety of physical pre-completed Residual Functional Capacities (“RFCs'). Id. During that same phone call, Daugherty criticized the quality of the physical pre-completed RFCs, remarking, “who's filling these out for you? It must be an eighth grader writing these for you.” Id. Conn discontinued using the original five versions of the physical pre-completed RFCs, created ten new versions, and submitted these newer versions to Daugherty in support of disability determinations. Id. Like their predecessors, the forms reported limitations that were considered disabling by the SSA, irrespective of the claimant's actual ability to perform work. Id.

         Daugherty admits that between October 2004 and April 2011, he received more than $609, 000 from Conn in cash payments. (DE 319-4, Attach. A at 5). Further, in Conn's cases wherein Daugherty rendered favorable decisions and Conn paid illegal gratuities to Daugherty, Conn ultimately received at least $7, 100, 000 in representative fees from the SSA. Id. Finally, those favorable decisions obligated the Social Security Administration to pay more than $550, 000, 000 in lifetime benefits to claimants represented by Conn. Id. at 5-6.

         II. ANALYSIS

         a. Legal standards

         Summary judgment is proper “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The moving party bears the initial burden and must identify “those portions of the pleadings...which it believes demonstrate the absence of a genuine issue of ...


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