This guest post by Andrew C. Bernasconi, of Counsel at Reed Smith, is about a hopeful development in a False Claims Act case we’ve already blogged about once.  The previous post queried, what happens when a FCA relator, blinded by the dollar signs in his/her eyes, resorts to questionable means to gin up “facts” that substitute for the personal knowledge that the statute assumes the relator has, but in this case did not?

This time, the chickens came home to roost.  Read and enjoy.

As always, our guest bloggers are 100% responsible for their insights – entitled to all the credit (and any blame – maybe for the asides about the greatest Super Bowl ever played).

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“I’m sure you all share my view when I say, ‘Go, Patriots.’”

These words from Boston-based U.S. Judge Dennis Saylor IV of the District of Massachusetts, when closing out a motion to dismiss hearing just a few weeks prior to Super Bowl 51, undoubtedly intended to reference the mighty New England Patriots and their impending appearance in what would become a historic win over the outmatched Atlanta Falcons.

Judge Saylor’s recent decision dismissing a qui tam False Claims Act (FCA) case, based on what he determined were deceit and ethical violations by plaintiff’s counsel, calls to mind the words of a different kind of patriot, Chief Justice John Marshall:

“Let the end be legitimate, let it be within the scope of the constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the constitution, are constitutional.”

McCulloch v. Maryland 17 U.S. 316, 421 (1819) (interpreting the Necessary and Proper Clause).  While the context of Judge Saylor’s recent decision differs dramatically from the issues considered by Justice Marshall in 1819, the focus of both on just ends and means provides a common theme.

We first blogged back in November about the case of U.S. ex rel Leysock v. Forest Laboratories LLC, where we explained that the defendant filed a motion to dismiss the qui tam relator’s False Claims Act allegations that were premised on false claims tied to alleged off-label marketing of a drug indicated to treat Alzheimer’s Disease.  Although the court denied a prior motion to dismiss relator’s complaint, finding that it contained sufficient particularity to satisfy Rule 9(b)’s heightened pleading standard, the defendant took the unusual step of filing a subsequent motion to dismiss while discovery was ongoing.  In the subsequent motion to dismiss, the defendant relied on discovery showing that relator’s counsel had hired a physician as an “investigator” to persuade other unwitting physicians, under the guise of conducting a “research study,” to provide confidential patient medical records for what (unknown to these other physicians) turned out to be for litigation purposes.  Relator’s counsel, of course, vigorously opposed the motion and contended that they had not engaged in any wrongdoing.

On April 28, 2017, Judge Saylor issued his opinion (copy here), in which he granted the defendant’s motion and dismissed the relator’s complaint. Leysock, No. 12-11354-FDS, slip op, (D. Mass. Apr. 28, 2017).  In a well-reasoned decision, Judge Saylor found there was “no dispute” that relator’s counsel had engaged in a scheme that involved “an elaborate series of falsehoods, misrepresentation, and deceptive conduct,” including:  (1) designing an investigation to obtain confidential information from physicians under the guise of a medical research study and (2) employing a physician as their agent to tell other physicians that records supplied by physicians to facilitate the “study” would remain confidential.  Slip op. at 14.

According to the court, this conduct violated ethical rules prohibiting knowing false statements of material fact made to third persons (Mass. R. Prof. Conduct 4.1(a)), and engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation (Mass. R. Prof. Conduct 8.4(c)).  Slip op. at 15.  While acknowledging limited exceptions to these rules, where counsel may employ deception in investigations (e.g., using “discrimination testers” or investigators to uncover evidence of racial discrimination), the court concluded that the extreme conduct authorized by relator’s counsel – obtaining the confidential health information of innocent and unsuspecting patients under false pretenses from innocent physicians, and then breaching the disclosing-physicians’ trust by publishing confidential patient information in a lawsuit – easily distinguished this case from those where counsel’s deception was permissible.  Id. at 15-21.  [Editor’s note:  As a fan of the Patriots, Judge Saylor was well-positioned to evaluate whether sleazy schemes involved permissible deception or something worse.  Take that how you want, good reader.]

The court also rejected the argument by relator’s counsel that the ends justified the means.  Slip. op. at 21-23.  Relator’s counsel essentially argued that if relators are not permitted to use the type of deception at issue here, then it would be “difficult, if not impossible” for qui tam relators to satisfy the Rule 9(b) particularity requirement applicable to FCA cases.  Id. at 22.

This is where the concerns we mentioned in our earlier blog post, about opportunistic plaintiffs’ attorneys who manufacture cases lacking legitimate factual bases in hopes of obtaining financial windfalls, come to mind.  As Judge Saylor recognized, the FCA is designed to encourage claims by relators with actual, personal knowledge of fraudulent conduct, slip. op. at 22-23 – not by those who must resort to such deceptive tactics, like now-adjudicated unethical intrusions into the sanctity of the physician-patient relationship, as their only basis to prepare a complaint with sufficient information to survive a Rule 9(b) motion to dismiss.  A proper whistleblower has knowledge.  Different labels apply to those who mislead people for their own gain.

Employing the court’s inherent powers, Judge Saylor removed from relator’s complaint all information derived from the unethical investigation, and evaluated whether the remaining allegations could satisfy Rule 9(b).  They could not.  In other words, relator’s complaint had survived the defendant’s initial motion to dismiss only because of the information obtained from the unethical investigation.  Slip. op. at 23-27.  As a sanction, the court dismissed the relator’s complaint with prejudice to the relator (and without prejudice as to the United States, the real party in interest in qui tam cases).  Id. at 27.  But for a benevolent fan of patriots and Patriots (is there any other kind?), who determined that individual sanctions against relator’s attorneys were “not appropriate in this proceeding,” slip. op. at 24, there could have been more severe monetary or other sanctions for the use of deceptive or fraudulent means to advance that case.

As Judge Saylor held, the ends did not justify the unethical means employed by relator’s counsel.  Thus, for the defendant, justice finally (albeit belatedly) prevailed in this case.  If only relator’s counsel had been fans of patriots like Chief Justice Marshall, and employed only “means which are appropriate” to reach legitimate ends, this entire situation could have been avoided.

Happy birthday to Stan Lee, the main man behind Marvel Comics. He wrote the stories for The Amazing Spider Man which, when we were 10 years old, we read with a good deal more enthusiasm than we presently feel when encountering the deathless prose in (a) a plaintiff motion to compel, or (b) pretty much any opinion out of the Missouri state courts. When we were at Comic Con in San Diego last Summer, the only autograph we wanted was Stan Lee’s. But the line was indecently long. Hundreds of Thors, Daredevils, and X-men stood between us and the object of our adoration. We knew any hope of meeting our hero was pure fantasy. Anyway, if our friends at the Abnormal Use blog do not have a picture of a Marvel comic at the top of today’s post, we will be very much disappointed.

Happy birthday, also, to Denzel Washington. Most of you probably know him from his movies, such as Glory, Malcolm X, Training Day, and, currently, Fences. But we first laid eyes on Washington when he appeared in the very fine television show, St. Elsewhere. That program was set in a Boston hospital. It ran from 1982 to 1988. Denzel Washington was in the cast all six years. The entire cast was superb, and the writing was inventive. It is possible that the ending of St. Elsewhere (cleverly titled “The Last One”) was a little too inventive. It turned out that everything that happened in the series was the fantasy of an autistic child. To our eyes, it seemed a bit of a cheat. But maybe it was a commentary on art. Art is artifice. It is a lie in service of some bigger truth. It is a fine falsehood.

So fantasy and falsehood seem to be our themes for the day. Massachusetts has an interesting history of falsehoods in legal history. The Salem Witch trials had their origin in a silly girl’s lies. It is easy to read the trial transcripts of the Sacco and Vanzetti trial, or the trial of Lizzy Borden, and conclude that great injustices were done. More recently, and more to the point for the sort of law we practice, the history of False Claim Act cases against drug and device companies in the Bay State has been inglorious. Cases have marched forward and cost companies many millions of dollars in the absence of any actual falsehoods. We are even more dismayed when we consider the overly aggressive and incoherent positions sometimes adopted by our former employer, the Department of Justice. But maybe, just maybe, courts in the Bay State are starting to exercise some control over, and impose reasonable limits on, False Claims Act cases.

Continue Reading First Circuit Affirms Dismissal of False Claims Act Case