IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

ASSOCIATION OF AMERICAN

PHYSICIANS AND SURGEONS, INC.

AMERICAN COUNCIL FOR HEALTH

CARE REFORM AND NATIONAL

LEGAL & POLICY CENTER,

CIVIL ACTION

Plaintiffs, NO.: 93-399 (RCL)

v.

HILLARY RODHAM CLINTON,

DONNA E. SHALALA,

Secretary of Health and Human Services, et al.

Defendants.

_________________________________________/

PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES

IN SUPPORT OF MOTION FOR ATTORNEYS FEES AND COSTS

UNDER THE EQUAL ACCESS TO JUSTICE ACT

Thomas R. Spencer, Jr.

SPENCER & KLEIN, P.A.

801 Brickell Avenue

Suite 1901

Miami, Florida 33131

(305) 374-7700 Tel.

(305) 374-4890 Fax

Counsel for Plaintiffs

STATEMENT OF THE CASE ^[1]

A. Nature of the Case on Remand.

This case in on remand from the decision of the Circuit Court, of appeals, D.C. Circuit which

reversed the award by this Court of $285,864.78 in attorney’s fees and costs in favor of Plaintiff

AAPS based on the Equal Access to Justice Act (EAJA) and a finding of bad faith.

B. Issue before the Court.

The Court of Appeals, D.C. Circuit framed the issue to be decided by the Court as follows:

(See 187 F.3d.655 (D.C. Cir. 1998):

While our decision forecloses an award based on the government’s alleged assertion of the federal employee exemption (whether for bad faith or under the EAJA), the district Court may, if it finds the evidence so warrants, award fees under the EAJA or Fed.R. Civ. P.11 based on another asserted defense (such as the government’s argument that the working group was not a FACA committee because it “d[id] not offer advice or recommendations directly to the President,” JA 120, which the record suggests may not be true, see, e.g., JA 2262). In addition or in the alternative, the district Court may consider assessing the sanctions (under Fed.R.Civ.P. 37) to which the Court found AAPS was entitled in its November 9, 1993 order granting AAP’s motion to compel. See AAPS, 837 F.Supp. at 354.

C. Statement of the Facts, the Proceedings, and Decisions.

On January 25, 1993, President Clinton appointed the First Lady, Mrs. Hillary Rodham

Clinton, as the Chairperson of the President’s Task Force on National Health Care Reform. The

Task Force was charged with the responsibility of drafting and submitting to Congress the American

Health Security Act of 1993 within 100 days from the Inauguration. (DE 1; Ex.58). Ira Magaziner

was designated to lead the advisory effort of the Task Force, the Interdepartmental Working Group,

and its individual Working Groups. He selected the participants with the advice of other

participants, staff, and the First Lady. (Ex. 1371,1376,2494,2500,2687) The Working Groups

planned the policy, met with and advised the President and First Lady and ultimately drafted the

legislation. (Ex. 1370,1382,1629,1651,1763,2255,2259,2278,2499,2509,2615,2616,2689-3725)

Various members of the Department of Justice were assigned to the Working Groups to advise them

as their work progressed. (Ex. 2590,2683,2684,2688)

Mr. Magaziner submitted an organizational plan to the President on January 26, 1993, laying

out a proposal to plan health care policy by utilizing a combination of federal employees, outside

health care experts, economists, ethicists, sociologists, lawyers, doctors, and others. (Ex. 493-

652,717,933,1344-1350,1371,2491) Many were to come from health care organizations. (Ex. 493-

685). These persons were tightly controlled and organized into specific Working Groups identified

by specific issues. (Ex. 926,933,1376). Most of the individual Working Groups were organized

with other Working Groups into “Clusters”. (Ex. 493-685,733,926). These Working Groups then

reported to Mr. Magaziner and to the President and the First Lady, sometimes through Cluster

leaders and sometimes through representatives of the groups. (Ex. 932, 991,1025, 1382,1771, 2544,

2616, 2499, 2214, 2221, 2229, 2248, 2250, 2255, 2262).

Through an analytical process known as the Tollgate Process, the Working Groups each

developed and submitted advisory papers, which were then subjected to peer review and ultimately

developed into briefing books for the President and First Lady. Each working group was required

to pass the five scheduled Tollgates. (Ex. 733, 933, 952, 955, 957, 981, 1009, 1138, 1150, 145-

1276). On January 27, 1993, the First Lady briefed the then members of the Working Groups on the

advisory process. (Ex. 949). As the process developed in February, 1993, numerous additional

persons were recruited from all over the country and assigned to the 41 various Working Groups and

15 Clusters, and the additional free-standing advisory groups. (Ex. 1365, 1371, 2218, 2248, 2491).

According to the First Lady, over 1,000 of these people were working on the process by April 29,

1993. (Ex. 1458, 2210, 2682). Many of them never completed the paperwork required by the

federal government under conflict of interest and other laws. (Ex. 616-637,683,684,685). Many were

unpaid volunteers receiving only expenses. (Ex. 657-682,1340,1529,1637-1638).

On February 9, 1993, AAPS sent a demand, pursuant to the provisions of FACA, that it

receive notice of meetings and access to documents regarding the proceedings and meetings of the

Task Force and its components. (Ex. 61). In response, on February 12, 1993, Bernard Nussbaum,

Counsel to the President, responded that FACA did not apply to the Task Force or the Working

Groups, contending that the Interdepartmental Working Group consisted only of “government

employees”. He also claimed that the Task Force reviewed the information provided by the Working

Group, but only the Task Force would make recommendations to the President. (Ex. 64). Mr.

Nussbaum referred AAPS to Mr. Steve Neuwirth or Vincent Foster in his office for further

information.^[2]

A substantial procedure was developed within the Working Groups to maintain secrecy of

the proceedings, the names and origins of the participants, and the development of the Plan. (Ex.

961,1378,1457,1529,1534,2247,2369,2608). Working Group members were forbidden to talk to the

Press. (Ex. 928,948,2247). Even the list of members of the Working Groups was a closely held

secret. (Ex. 923,1457,1529). According to the White House, this was to shield the participants from

“lobbying”. (Ex. 2484, 2463-2486, 2608).

1. Initial Litigation in this District Court.

On February 24, 1993, AAPS, joined by ACHCR and NLPC, commenced this action in this

district court. (DE 1; Ex. 38). Plaintiffs sought the entry of a temporary restraining order and a

preliminary injunction seeking compliance with the provisions of FACA. (DE 4; Ex. 38). In

response, the government contended that the Task Force was not subject to FACA because it was

composed wholly of full time officers or employees of the federal government. (DE 9; Ex. 94). The

government further argued that the Interdepartmental Working Group also was not subject to FACA

because it performed strictly staff functions for the Task Force, such as research, and performed no

advisory functions. It contended that only the Task Force advised the President. (DE 9; EX. 94, 120,

1763). It represented to this court in its initial papers that the Working Groups also were composed

solely of federal employees. (DE 8,9).

At the time the government made these representations to the district court, and unknown

to the plaintiffs or the district court, a meeting schedule was being set up for various members of

the Working Groups to meet with the President. (Ex. 921, 1651, 2255, 2259, 2615). Indeed,

Working Group members reflected that some of the groups or persons on the groups were meeting

with the President during the height of Working Group activity, “every night”. (Ex. 1382,2248,2255,

2259, 2260, 2262, 2250). In response to this litigation, Mr. Magaziner requested that “guidelines”

be drawn up for the meetings with the President. (DE. 169;Deposition of Ira Magaziner, at 37; Ex.

920, 1382, 1629, 2229, 2262).

To support their request for a Temporary Injunction, plaintiffs sought discovery as to the

government’s defenses and factual representations. (DE. 7; Ex. 79,174). The government successfully resisted the discovery requests, making representations to the Court about the prejudice

to the important work of the Task Force and its Working Groups. (DE 8; Ex. 82, 152, 157).

Moreover, allegedly to assuage the plaintiffs’ concerns, and to support its position, the government

filed on March 3, 1993, a Declaration of Mr. Magaziner (Magaziner I) which purported to describe

the function and composition of the Task Force and the “Interdepartmental Working Group”. (DE

9; Ex. 130, 132). It also made representations to the Court as to the function and activities of the

Working Groups. (DE 9; Ex. 135, 94,128). The Declaration was prepared by the White House

Counsel’s Office (Stephen Neuwirth) under guidance from Vincent Foster, Ms. Nolan, Mr.

Magaziner and his staff at the White House. It was reviewed by three attorneys in the Federal

Programs Branch of DOJ Civil Division and by Associate Attorney General, Webster Hubbell. (DE

201 at 37).

Mr. Magaziner claimed in Magaziner I that the Working Group was charged only with

“gathering information concerning the impact of existing health care policies and delivery services,

and possible alternatives to those policies in order to assist the Task Force in developing

comprehensive health care reform legislation”. (Ex. 135). He stated that while “[t]he information

that is gathered and analyzed by the working group will be used * * * by the Task Force in

formulating its recommendations to the President,”^[3] the Working Group “is not charged with

responsibility for making, and will not make, recommendations to the President, and will not

otherwise directly advise him”. (Ex. 134). Mr. Magaziner also noted that the Working Group had

been divided into a number of “cluster” groups to address specific health care subjects, and that

several of the cluster groups had been further divided into smaller “subgroups”. (Ex. 138).

Finally, in a sentence that became one of many concerns to the plaintiffs, he attested that

“[o]nly federal government employees serve as members of the interdepartmental working

group”. (Ex.135).^[4] The Declaration explained that the employee members of the Working Group

fell into two categories: (1) “full-time, permanent employees” working for the executive branch or

congress, ibid., and (2) “special government employees” who were “employed by an agency or the

Executive Office of the President for less than 130 days in a 365-day period, with or without

compensation.” (Ex. 136). He claimed there were only 40 such SGEs. (Ex. 136). In addition,

the Declaration stated that the Working Group had “retained a wide range of consultants, who attend

Working Group meetings on an intermittent basis, either with or without compensation”. Magaziner

represented that these “consultants”, who came from a “wide-range of backgrounds”, did not have

“any supervisory role or decision-making authority, * * * but instead provide information and

opinion to the Working Group members.”

Mr. Magaziner claimed that he had arranged for the full-time permanent federal employees

to be informed “that they are subject to the conflict of interest provisions set forth in 18 U.S.C. §§

202-209 the Standards of Ethical Conduct for Employees of the Executive Branch; and all related

ethics laws and regulations,” (Ex. 136), and for the special government employees and consultants

to be informed that they were subject to “a limited version” of the same provisions. (Ex. 137).

He maintained that “[a]s of March 1, [1993], approximately 300 such permanent employees” and

“approximately 40 such special government employees were serving as working group members.”

(Ex. 136). He said that he was the only member of the Task Force to attend meetings of the

Working Groups. (Ex. 139).

2. The District Court’s 1993 FACA Decision.

On March 10, 1993, this district court entered a partial preliminary injunction against the

Task Force’s operations, but granted the government’s motion to dismiss plaintiffs’ claims against

the Working Group. 813 F.Supp. 82, 95.

The district court rejected the argument that FACA’s full-time federal employee exemption

applied to the Task Force. It concluded that the First Lady was not an officer or employee of the

United States. 813 F.Supp. at 88. The court held, however, that to the extent that the Task Force

directly advised the President on legislation, the Task Force was constitutionally immune from

FACA’s requirements. Id at 92. The district court therefore refused to enjoin Task Force meetings

“which are held for the purpose of formulating advice and recommendations for the President.” Id.

at 95. By contrast, the court determined that the Working Group and its various components were

not subject to the FACA because they were “gathering information and formulating proposals to be

reported to the Task Force,” and were “not providing the Task Force with ‘consensus advice’.” Id.

at 89. (Emphasis added). Both sides appealed.

Meetings with Cluster leaders, Working Group members, and President Clinton occurred in

March and April 1993. (Ex. 988, 1025, 1629, 2229, 262, 2487). On March 29, 1993, the White

House released to the Press a list of FTEs, SGEs, and consultants on the Working Groups. Over 300

FTEs, over 80 SGEs, and approximately 17 consultants were listed. (Ex. 1455, 2350-2363). (See

Ex. 1529). The work of the various Working Groups proceeded with option papers presented to the

President in April, 1993. (Ex. 977,2528, 2531,2537,2544). In late April, 1993, in response to a

FOIA request by Public Citizen’s Congress Watch, Mr. Magaziner declared that all records created

by the Working Groups were Presidential Records and that DOJ was tasked to keep them from the

public. He set out the required procedure. (Ex. 977, 1383). Various “review,” “audit,” and

“drafting” groups, part of the original Working Group plan, worked through June 1993, refining the

options prepared by the other Working Groups. (Ex. 1341, 1342, 1352, 1631, 1651).

According to Mr. Magaziner and his secretary, the Task Force disbanded in May, 1993 (DE.

179,180,1685, 1775), and the Working Groups allegedly ceased operations around the same time.

(DE. 179,180, Ex. 1533,1535,1537, 1543,1575,1631) They testified that another Working Group,

composed of some of the same people as the “Interdepartmental Working Group” operated over the

summer of 1993, drafting the final legislative proposal. (DE. 179,180). (Deposition of Magaziner,

at 14, 59). (Ex. 1685,1651-1658, 1761, 2211).

3. First Appellate Proceedings.

The Court of Appeals, D.C. Circuit, held oral argument on April 30, 1993 (Ex. 199, 306),

and reversed the district Court on June 22, 1993, holding that the First Lady is the functional

equivalent of an officer or employee of the federal government and that FACA therefore did not

apply to the Task Force. The opinion stated that FACA does not apply to unstructured arrangements

in which the government seeks advice from what is only a loose collection of individuals who do not

significantly interact with each other. The Court held that discovery was necessary to determine the

functions and operations of the Working Groups and the relationships of so-called Special

Governmental Employees to the Working Groups. The case was remanded for further proceedings.

997 F.2d 898 (D.C. Cir. 1993).

4. The Proceedings After First Remand.

Immediately after remand, the government adopted a “wandering horde” defense based on

language in the Circuit Court’s opinion. It attempted to paint the highly disciplined, highly

structured advisory process as unstructured, fluid and disorganized. (DE. 63,73,77). Through the

Summer and Fall of 1993, contentious discovery litigation ensued. (DE. 63,70, 71, 73, 78, 80).

Most of the documents of the Working Groups, contended to be Presidential Records, were scattered

in various departments, and across the country with the Working Group members. (Ex. 1972-1979).

At the same time, DOJ embarked on a strategy to make the documents produced by the Working

Groups not subject to FOIA (Ex. 1981, 1982, 2588)^[5] and “stonewalled” plaintiffs in discovery. (DE.

77-80, 83, 84).

On July 18, 1993, in response to discovery motions and other assertions of the plaintiffs, Ira

Magaziner submitted a second Declaration (Magaziner II). (Ex. 302). Among other things,

Magaziner asserted: “the interdepartmental working group was not charged with responsibility for

making, and did not make recommendations to the President, and did not otherwise directly advise

him.” Instead, Magaziner asserted: The Task Force had presented to the President a comprehensive

set of proposals and options for health care reform legislation. (Ex. 302). No Task Force Report or

“comprehensive set of proposals and options of the Task Force” has ever been made public or

produced to plaintiffs. In the Fall of 1993, the legislation was submitted to Congress (Ex. 1759) and briefing meetings of the Working Groups were called by Mr. Magaziner. (Ex. 1531, 1759).

On November 9, 1993, this district Court issued Orders on the plaintiffs’ motion to compel

discovery. 837 F.Supp. 454. (Ex. 334).

As this district Court observed, the government had engaged in egregious tactics designed

to obstruct adequate discovery. The government had provided incomplete information, inadequate

information and had “improperly thwarted plaintiffs’ legitimate discovery requests.” Id. at 457. The

Court condemned the tactics, noted that certain responses were “preposterous,” and warned that the

Court “will not tolerate it in future responses in this case.” The Court noted the importance of the

government’s argument with regard to the ethics laws. Id. at 459. It observed that Mr. Magaziner

had taken pains to stress the fact that every member of and consultant to the group was required to

file a financial disclosure statement and to comply with other requirements of federal laws. The

district Court noted that plaintiffs were entitled to discovery into the truth of the Magaziner Affidavit

on this point, as well. Id. at 456.

The district court granted the motion to compel and awarded attorneys fees and costs, but

did not assess them. Id. at 458. (Ex. 389).

The parties continued to develop discovery, punctuated by various motions. While President

Clinton expected the Bill to be enacted quickly, it began to stall in Congress. In the Spring of 1994,

both sides filed extensive motions for summary judgment. (DE.117-132). In their motion for

summary judgment, the plaintiffs sought a declaratory judgment that the Working Groups, their sub-

groups and the other advisory groups were subject to FACA, and sought the disclosure of the

Groups’ documents. The government resisted this argument, contending that the Working Groups

had none of the organization or structure contemplated by FACA and this Court. It stated that while

it had previously contended that the Working Groups consisted only of governmental employees,

person-by-person analysis would be burdensome. It argued that the groups were an amorphous

“horde”. Only for summary judgment purposes did it avoid, but it did not concede, the “all

employee” exemption. (DE. 128).

Plaintiffs submitted extensive exhibits, which they obtained through discovery and

investigation. (DE 107). Much of the material was not produced by the government but obtained

at a tax-exempt foundation center library and through other means. (DE. 107; Ex. 471). Extensive

lists of participants were produced by plaintiffs. (DE. 107). The government was successful in

having all agendas and minutes of the Working Groups it produced “sealed” from public view. (DE.

86,90). Plaintiffs moved for a contempt proceeding against Mr. Magaziner. (DE. 124).

The cross-motions for summary judgment filed in May 1994, were heard on July 25, 1994.

(Ex. 743). In support, the government submitted a Third Declaration of Magaziner (Magaziner

III). (Ex. 701). In it, Magaziner reiterated the position that he had taken in the previous two

Declarations, but admitted for the first time the President had attended “some” meetings with

members of the Working Groups. However, he contended that no consensus advice was given

directly from any Working Group to the President. (Ex. 711,1337,2689-3726,2214, 2616).

This Court denied all motions for summary judgment and set the case for trial.

Settlement discussions occurred, but did not result in a settlement even though the district Court

recommended settlement to the parties. (DE. 140, 144, 147, 189).

After the American Health Security Act bill failed in Congress, the President decided in

August, 1994, to release some of the documents of the Working Groups and place them for public

view at the National Archives. (Ex. 917, 1284, 1286, 1336). At the same time, the government

announced that it would move to have the case dismissed as moot. (DE. 154; Ex. 867). The

government also requested an expedited “ruling” by the Court that Mr. Magaziner had not committed

a contemptuous act. (Ex. 839). The Court stated that such a determination would require a trial

of the entire case on the merits, which was set for December, 1994. (DE. 148). It denied the

government’s motion for summary ruling on Mr. Magaziner. (DE. 157; Ex. 1387).

Thereafter, various proceedings ensued, including additional discovery relating to

“mootness.” (DE. 152-171). The government produced various lists of Working Group participants,

which increased in number after each hearing. ( Ex. 1287-1304, 1305-1334, 1503-1527). Finally,

a list of over 614 persons and over 400 boxes of materials were produced by the government at the

National Archives and to the Court. (Ex. 1389-1452, 1670-1674). Over 40 boxes of additional

materials were collected by defendants from Working Group members from around the country

during the “mootness” arguments. (Ex. 1978, 1980). Plaintiffs successfully contended that the

government was not making full disclosure available to the public of the documents which would

be disclosable under FACA. (DE. 168). In fact, the government finally admitted (after plaintiffs

discovered Working Group documents produced after the alleged disbanding of the Working

Groups) that it had removed from various boxes of materials supplied to the National Archives,

certain relevant records, including those produced after May, 1993.