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United States v. Health First, Inc.

United States District Court, M.D. Florida, Orlando Division

May 10, 2017



         Before the Court is a motion for numerous avenues of relief. (See Doc. 129 (“Instant Motion”).) Importantly, the Instant Motion arises from the breakdown of the parties' efforts to memorialize the terms of a settlement agreement in written form. (See id.) To summarize, after advising the Court that the parties had reached a settlement (Doc. 120), and allowing the United States to seek multiple extensions of time to approve such settlement (see Docs. 121, 124), Relator attempted to nullify the agreement by invoking the failure of a long-passed deadline for the occurrence of a condition precedent. (See Doc. 129.) The Court was not advised of the fallout until the Health First Defendants[1] filed the Instant Motion seeking the following alternative forms of relief: (1) dismissal of the action with prejudice as to Relator; (2) enforcement of the settlement agreement and compulsion of arbitration with respect to any remaining disputes; or (3) vacation of the settlement agreement reached in a related antitrust action. (Id.) Though the Court declines to grant the first and third grounds for relief, for the reasons set forth below, the Health First Defendants' request to enforce the settlement agreement and compel arbitration of any remaining disputes is due to be granted.

         I. Background

         The instant False Claims Act (“FCA”) litigation is inextricably entwined with a companion antitrust action also pending before the Undersigned. See Omni Healthcare Inc. v. Health First, Inc., Case No. 6:13-cv-1509-Orl-37DCI (“Antitrust Action”). Indeed, both the Realtor and many of the Defendants in the instant action are also parties to the Antitrust Action.

         A. Docket Activity and Representations to the Court

          By all appearances, the parties reached a resolution of the disputed issues in both cases following an in-Court announcement during the trial of the Antitrust Action (August 16, 2016) and a subsequent mediation (October 31, 2016).[2] Such appearances included an August 19, 2016 notice to the Court by counsel for Relator (“Counsel”), indicating that the parties had reached “an agreement in principle to settle all claims against all defendants.”[3] (Doc. 120 (“Notice of Settlement”).) Pursuant to the Notice of Settlement, the Court dismissed this action with prejudice, subject to the right of the parties to move-within sixty days: (1) for a stipulated final order or judgment; or (2) to reopen the case on a showing of good cause. (Doc. 122 (“Dismissal Order”).) The Dismissal Order was subsequently vacated upon request of the United States (Doc. 121), who had not joined in the action but nevertheless retained the right to approve any settlement and consent to any dismissal (Doc. 96). (Doc. 123 (“Order Vacating Dismissal”).) The Order Vacating Dismissal also extended the date for administrative closure of the case to October 24, 2016 (“Amended Deadline”). Id.

         Upon further motion by the United States (Doc. 124), U.S. Magistrate Judge Daniel C. Irick extended the Amended Deadline through December 23, 2016. (Doc. 126.) Importantly, in its motion to extend the Amended Deadline-submitted on October 24, 2016-the United States represented that the parties had “certain disagreements to resolve” in connection with both the instant action and the related Antitrust Action, which they were seeking to resolve with the assistance of a mediator. (Doc. 124, p. 3.)

         B. Contemporaneous Settlement Discussions

         In reviewing the parties' settlement discussions, it is apparent that, with the assistance of Judge Gary A. Feess[4] as mediator, the parties reached a settlement of the Antitrust Action on August 15, 2016. (See Docs. 129-2, 129-3). Subsequently, Judge Feess proposed a monetary settlement to resolve the instant action, notwithstanding the fact that, as he noted, he had not been officially tasked with that duty. (Doc. 129-3.) The proposal also included a provision recommending alternative dispute resolution procedures for non-monetary settlement terms (“ADR Provision”). (Id.)

         On August 18, 2016, Relator accepted the proposed monetary settlement on the condition that a written settlement agreement be executed in the Antitrust Action by September 16, 2016 (“September 16 Deadline”) (“Settlement Condition”). (Doc. 129-4.) The addition of the Settlement Condition to Judge Feess's proposal constituted a counter offer (id.), which the Health First Defendants accepted the following day. (Doc. 129-5.) Ultimately, the agreement was memorialized in an e-mail communication dated August 19, 2016 (“August 19 Agreement”). (Id.) That same day, consistent with his obligations under the Local Rules, Counsel provided the Notice of Settlement to the Court. (Doc. 120.)

         In the weeks that followed, the parties exchanged modified versions of the August 19 Agreement-none of which were ever agreed to. Nonetheless, at least as late as September 8, 2016, Counsel explicitly stated that Relator had no intention of reneging on the August 19 Agreement and expressed the belief that the parties were working cooperatively toward the consummation of a written term sheet. (Doc. 129-9.)

         On September 15, 2016, for the first time, the issue of the seemingly arbitrary September 16 Deadline was raised by counsel for the Defendants, who expressed concern that it would not be met in light of the continued editing of the antitrust agreement and defense counsel's trial schedules. (Doc. 129-10.) Hence a proposed extension of October 14, 2016, was requested. (Id.) In response, the United States, as the real party in interest, [5] acquiesced to the extension so long as the parties continued to work out the details of the FCA settlement. (Doc. 129-12.) Relator did not respond to the requested extension but continued to negotiate the terms, conditions, and language of the FCA settlement. (See Doc. 129-13.) Presumably, the United States continued to evaluate the “working qui tam settlement draft, ” upon which they expected to circulate comments in “the next few days” following September 15, 2016. (Doc. 129-12.)

         On September 22, 2016, nearly a week beyond the September 16 Deadline, Counsel acknowledged that negotiations were continuing in the Antitrust Action and that “the outcome of that mediation (or arbitration) [would] likely resolve most if not all of [Relator's] objections to the FCA settlement agreement.” (Doc. 129-14 (“September 22 E-mail”).) Counsel went onto state that “the FCA agreement [would] not likely advance much until the [antitrust] agreement [was] resolved” and, “[c]onversely, once the [antitrust] agreement [was] resolved, the FCA agreement [would] likely move very rapidly.” (Id.)

         Later, in an e-mail dated October 13, 2016, Counsel returned the participants to the language of the September 22 E-mail and suggested that a phone conversation might be more productive than an exchange of red-line documents to reach agreement on the non-monetary issues that remained in dispute. (Doc. 129-15.) At this time, Counsel noted that the FCA settlement was conditioned on the finalization of the antitrust settlement; however, no mention of the now long-elapsed September 16 Deadline was made. (Id.)

         After a series of what Judge Feess previously described as “micro-moves” (see Doc. 129-3, p. 2), the parties' attempts to resolve the non-monetary aspects of the FCA settlement broke down. On November 17, 2017, Counsel, for the first time, asserted that, despite prior assurances to the contrary, Relator was repudiating the settlement terms reached in the August 19 Agreement due to the failure to consummate the antitrust settlement by the September 16 Deadline. (Doc. 129-16, p. 5.) Upon receipt of this communiqué, the Health First Defendants attempted to invoke the ADR Provision. (Id. at 4-5.) But relying on the asserted materiality of the September 16 Deadline, Relator refused to comply-effectively lodging the case in a mud bog from which the Health First Defendants now appeal to the Court for extrication. (See Id. at 2-4.)

         C. Instant Motion

         Based on the foregoing, the Health First Defendants move to: (1) dismiss this action with prejudice as a sanction for Relator's alleged bad faith conduct and misrepresentations to the Court and the parties; (2) enforce the August 16 Agreement- inclusive of the ADR Provision-on the ground that the Realtor waived the September 16 Deadline; and (3) set aside the settlement reached in the Antitrust Action on the basis that Relator fraudulently induced the Health First Defendants to enter such agreement in light of the parties' agreement that the settlement of the instant action and the Antitrust Action were codependent.[6] (Doc. 129.)

         In his response, Relator argues that: (1) dismissal with prejudice is not warranted because he did not commit any misconduct; (2) the settlement agreement cannot be enforced because the Settlement Condition failed; and (3) he never waived any right with respect to the Settlement Condition. (Doc. 139.) Relator also contends that he never agreed to the ADR Provision in Judge Feess' August 16 e-mail. (Id. at 16.)

         II. Roadmap

         To resolve the Instant Motion, the Court must first determine whether the parties reached a binding settlement agreement. The Court will then assess the effect of the Settlement Condition and whether Relator waived such condition.

         III. Legal Standards

         While the substantive claims in the Antitrust Action and this FCA litigation are rooted in federal law, the issues relating to the enforceability of the settlement agreement, including the question of waiver, require the Court to look to state law. See Resnick v. Uccello Immobilien GMBH, Inc., 227 F.3d 1347, 1350 (11th Cir. 2000). Thus, the Court will first review the applicable legal standards under Florida law.

         A. Judicial Enforcement of Settlement Agreements

         Federal district courts have the inherent power to summarily enforce settlement agreements entered into by litigants in a pending case. See Kent v. Baker, 815 F.2d 1395, 1400 (11th Cir. 1987). “In Florida, settlement agreements are favored as an efficient way to settle disputes and as a means to conserve judicial resources[, ]” and “[c]ourts will enforce them when it is possible to do so.” BP Prods. N. Am., Inc. v. Oakridge at Winegard, Inc., 469 F.Supp.2d 1128, 1133 (M.D. Fla. 2007).

         “A motion to enforce [a] settlement agreement essentially is an action to specifically enforce a contract . . . .” Conte v. Winn Dixie Stores, Inc., No. 3:13-cv-463-MCR-EMT, 2014 WL 4693072, at *2 (N.D. Fla. Sept. 22, 2014). To prove the existence of a contract under Florida law, the propounding party must demonstrate the existence of: (1) an offer; (2) acceptance; (3) consideration; and (4) sufficient specification of the essential terms. Kolodziej v. Mason, 774 F.3d 736, 740 (11th Cir. 2014). An essential, or material, term is “[a] contractual provision dealing with a significant issue such as subject matter, price, payment, quantity, quality, duration, or the work to be done.” Material Term, Black's Law Dictionary (9th ed. 2009). Of course, the essential terms of any given contract may vary depending on the circumstances of the parties' transaction. Giovo v. McDonald, 791 So.2d 38, 40 (Fla. 2d DCA 2001). But, at bottom, they “must include the terms specified in an offer to make a contract.” Id. Therefore, as here, a party seeking to enforce a settlement agreement “has the burden to prove assent by the opposing party and must establish that there was a meeting of the minds or mutual or reciprocal assent to certain definite propositions.” Id.

         “As long as an intent to settle essential elements of the cause can be established, it matters not that the agreement is not fully executed or reduced to writing, as even oral settlements have been fully recognized and approved by the [Florida courts].” Allapattah Servs., Inc. v. Exxon Corp., Nos. 05-21338-CIV, 91-0986-CIV, 2007 WL 7756735, at *2 (S.D. Fla. Sept. 26, 2007). Moreover, “[e]ven though all the details are not definitely fixed, an agreement may be binding if the parties agree on all the essential terms and seriously understand and intend the agreement to be binding on them.” Blackhawk Heating & Plumbing Co., Inc. v. Data Lease Fin. Corp., 302 So.2d 404, 408 (Fla. 1974).

         B. ...

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