Professional Documents
Culture Documents
No. 13-2219
AMERICAN HOSPITAL
ASSOCIATION,
ASSOCIATION;
SOUTH
CAROLINA
HOSPITAL
Appeal from the United States District Court for the District of
South Carolina, at Columbia.
Matthew J. Perry, Jr., Senior
District Judge; Margaret B. Seymour, Senior District Judge.
(3:05-cv-02858-MBS)
Argued:
Decided:
July 2, 2015
the
False
Claims
Act
(FCA),
31
U.S.C.
3729-33
erroneously
excluded
deposition testimony.
excerpts
of
Tuomey
executives
the
government
and
awarded
damages
and
civil
penalties
totaling $237,454,195.
Tuomey contends that the district court erred in granting
the governments motion for a new trial.
trial)
because
it
did
not
violate
the
FCA.
In
the
Finally, Tuomey
asks
us
to
strike
the
damages
and
civil
penalties
award
as
motion
for
new
trial,
albeit
for
reason
reject
Tuomeys
claims
of
error
following
the
We also
second
trial.
I.
A.
Tuomey is a nonprofit hospital located in Sumter, South
Carolina, a small, largely rural community that is a federallydesignated
medically
underserved
area.
At
the
time
of
the
around
2000,
doctors
who
previously
performed
hospitals
outpatient
center.
Tuomey
estimated
that
it
loss
of
fees
associated
with
4
gastrointestinal
procedures
alone.
statute,
making
42
referrals
physician . . .
varies
U.S.C.
with,
to
receives
or
takes
1395nn,
prohibits
entities
where
aggregate
compensation
into
account,
physicians
[t]he
the
referring
volume
from
or
that
value
of
42
[a] hospital may not submit for payment a Medicare claim for
services rendered pursuant to a prohibited referral.
United
Cejka
specialized
in
Consulting,
physician
national
compensation,
provide
firm
an
that
opinion
Health
and
Human
Services,
and
later,
with
Steve
Pratt,
an
part-time
similar terms.
base salary.
employment
contracts
had
substantially
in
the
form
productivity
bonus,
which
paid
the
liability
insurance
as
to
participate
in
Tuomeys
well
as
their
practice
insurance
plan.
outpatient
hospital.
located
in
surgical
procedures
exclusively
at
the
that
provided
ambulatory
surgery
services,
not to perform outpatient surgical procedures within a thirtymile radius of the hospital for two years after the expiration
or termination of the contracts.
Tuomey
ultimately
entered
into
part-time
employment
Drakeford
believed
that
the
proposed
contracts
violated the Stark Law because the physicians were being paid in
excess of their collections.
package
did
not
reflect
market
value,
and
thus
the
J.A.
had
formerly
served
as
the
Chief
of
the
Industry
In
J.A. 2026.
physicians
in
excess
of
fair
market
value.
Such
contention, said McAnaney, would not pass the red face test.
J.A.
2055.
McAnaney
also
warned
Tuomey
that
the
contracts
J.A.
2078.
Drakeford ultimately declined to enter into a contract with
Tuomey.
of
FCA,
the
alleging
that
because
the
part-time
employment
alternative
Statute, 42
remuneration
care covered
Michael K.
Health Care
an
offer
to
compromise
or
settle
under
Federal
Rule
of
and
Drakeford.
Alternatively,
Tuomey
contended
that
Vice
President
and
Chief
Operating
Officer.
Tuomey
counsel
concerning
employment contracts.
McAnaneys
opinions
regarding
the
J.A.
Law.
The
district
court
objection.
9
again
sustained
Tuomeys
the
government
Stark
filed
Law,
equitable claims.
it
had
not
post-verdict
violated
motion
for
the
FCA.
judgment
The
on
its
for
new
trial
under
Rule
59
because
of
the
district
court
denied
deposition
excerpts.
governments
substantial
motion
J.A.
for
the
governments
motion
for
new
by
It
trial.
excluding
the
therefore
granted
Notably,
the
Martin
the
district
Notwithstanding the
court
entered
judgment
for
the
government
on
its
10
jury
trial
by
entering
judgment
on
the
equitable
claims.
government
to
introduce
the
previously
excluded
Martin
The
jury found that Tuomey violated both the Stark Law and the FCA.
It further found that Tuomey had submitted 21,730 false claims
to Medicare with a total value of $39,313,065.
court
trebled
the
actual
damages
and
assessed
The district
an
From
the
resulting
judgment
of
additional
31 U.S.C.
$237,454,195,
Tuomey appeals.
3
11
II.
A.
Tuomeys
appeal
presents
these
issues:
First,
did
the
We
by
physicians
who
[stand]
patients
to
facilities
or
entities
financial interest.
to
in
profit
from
referring
which
they
[have]
The statute
hospital,
with
which
he
or
she
has
financial
U.S.C.
1395nn(a)(1).
If
the
physician
makes
such
not
make
Id. 1395nn(a)(1)(B).
any
payment
for
health
service
Id. 1395nn(g)(1).
If
Id. 1395nn(g)(2). 4
Id. 1395nn(h)(6).
Id. 1395nn(h)(5)(A).
42 C.F.R. 411.351.
However,
Medicaid
Programs;
Physicians
Referrals
to
Medicare
Health
Care
856,
941
(Jan.
4,
2001);
see
also
Medicare
Program;
Because the Stark Law does not create its own right of
action, the government in this case sought relief under the FCA,
which provides a right of action with respect to false claims
submitted for Medicare reimbursement.
See Drakeford, 675 F.3d
at 396 & n.2.
13
of
arrangement,
any
financial
if
(1)
number . . . of
there
persons
relationships . . .
exists
or
between
an
entities
them,
unbroken
that
(2)
have
[t]he
however,
does
not
bar
indirect
The
compensation
the
manner
compensation
that
referrals;
takes
(3)
the
arrangement
into
is
account
compensation
not
the
determined
volume
arrangement
or
is
in
value
any
of
commercially
of
any
other
federal
or
state
law.
42
C.F.R.
relator
or
the
government
has
established
the
to
show
that
the
indirect
14
compensation
arrangement
Kosenske v. Carlisle HMA, Inc., 554 F.3d 88, 95 (3d Cir. 2009).
C.
We first address the district courts decision to grant the
government a new trial on the FCA claim.
two grounds in support of its motion.
all
evidence
containing
the
views
he
expressed
to
the
Second,
court
erroneously
While
the
the
government
excluded
district
court
the
argued
Martin
granted
new
that
the
deposition
trial
on
district
excerpts.
the
latter
Buckley v.
By definition, a
only
if
rights.
its
evidentiary
error
affects
partys
substantial
new
trial
on
the
ground
that
should
instance,
an
not
have
excluded
evidentiary
error
this
is
it
had
improperly
evidence
harmless
in
when
the
it
first
does
not
grounds
for
new
trial
because
it
did
not
affect
the
standard.
Furthermore,
because
the
exclusion
of
the
testimony
was
necessary
that
McAnaneys
Martin,
warnings
Tuomeys
that
the
evidence
supporting
received
part-time
reckless
the
evidence
disregard
traversing.
of
would
the
have
legal
and
employment
the
contracts
demonstrated
minefield
ignored
that
Tuomeys
it
was
deposition
excerpts
predominantly
focus
on
Martins
between
Smith. 5
Law
McAnaney,
and
Drakefords
lawyer,
Greg
compliance
concerns
with
both
the
proposed
part-time
17
However,
the
remember
government.
whether
J.A.
104-05.
McAnaneys
Yet,
warnings
were
Martin
could
particular
not
to
the
both.
Indeed,
in
Martins
J.A. 107.
distinguish
proposed
the
two
recollection
it
was
hard
to
he
recalled
being
Martin
related
fair
to
detail.
had
market
Ultimately,
vague
value,
Martin
recollection
but
was
of
unable
acknowledged
that
some
to
issues
offer
there
more
was
J.A. 111.
after
the
fact--the
substance
18
of
conversation
with
to
exclude
this
evidence.
Thus,
we
hold
that
the
To make
Law,
recklessly
and
was
nonetheless
disregarded
that
deliberately
risk.
In
our
ignorant
view,
of,
or
McAnaneys
19
the jury did not hear from McAnaney and found for Tuomey on the
FCA claim.
Coincidence?
We
importance of what the jury in the first trial was not allowed
to consider.
And this is so even while acknowledging that McAnaney was a
looming presence throughout the first trial.
of
McAnaney
those
attached
concerns
(Tuomeys
counsel
McAnaneys
views
to
at
on
or
them.
the
weight
The
jury
Nexson
the
Pruet)
employment
and
also
was
seriousness
knew
that
generally
contracts,
but
that
Hewson
aware
of
that
he
20
summarizing
McAnaneys
opinions.
The
district
court,
to
consider
the
boards
response
wherein
it
summarily
discussing
subsequently
his
concerns
terminated
regarding
McAnaneys
the
contracts,
and
engagement
altogether
on
September 2, 2005.
While certainly not insubstantial, the sum of the evidence
at the first trial regarding McAnaney was that Tuomey (1) was
aware
that
McAnaney
had
unspecified
concerns
about
the
the
the
falsity
Stark
of
Law).
its
We
claims
think
(i.e.
that
that
its
McAnaneys
claims
specific
warned
Tuomey
that
procuring
fair
market
21
valuation.
the
government
substantially
that
above
contract
even
their
that
paid
collections,
physicians
much
less
their
2053.
According
to
McAnaney,
compensation
arrangements
combined
with
the
thirty-mile,
two-year
noncompete
red face test, and warned that the government would find this
an easy case to prosecute.
We
think
the
importance
of
McAnaneys
any
more
probative
and
testimony
to
the
Indeed, it is difficult to
compelling
evidence
regarding
22
containing
his
views
were
properly
excluded
under
claims
liability
on
if
the
the
evidence
claim.
is
Bituminous
being
offered
Constr.,
Inc.
that
McAnaney
Tuomey
compromise
or
record
unambiguously
was
settle
shows
retained
a
to
disputed
that
to
v.
prove
Rucker
We are not
help
Drakeford
and
claim.
Rather,
the
Drakeford
and
Tuomey
hired
23
See ICAP, Inc. v. Global Digital Satellite Sys., Inc., 225 F.3d
654, 2000 WL 1049854, at *3 (4th Cir. 2000) (unpublished table
opinion)
(finding
communications
Rule
408
involved
inapplicable
contract
where
negotiations
the
parties
rather
than
settlement negotiations).
Nor
do
we
find
merit
in
Tuomeys
objection
based
on
At trial,
Tuomey
supported
never
suggested
which
evidentiary
rule
That rule of
of
one
or
more
of
the
following:
unfair
prejudice,
of
Fed. R.
compelling
testimony
was
substantially
And we
agree with the government that this evidence was critical to its
ability to satisfy its burden to prove that Tuomey acted with
the requisite intent under the FCA.
III.
We turn now to Tuomeys challenges to the judgment entered
following
the
second
trial.
Tuomey
asks
for
judgment
as
or
(2)
Alternatively,
Tuomey
Tuomey
knowingly
asks
for
submitted
new
trial
false
claims.
because
of
the
Austin v. Paramount
We view all
Konkel v.
Bob Evans Farms Inc., 165 F.3d 275, 279 (4th Cir. 1999).
We
Ctr.,
Inc.,
290
F.3d
639,
(4th
Cir.
2002)
([I]f
As we explain, however, a
reasonable jury could find that Tuomey violated the Stark Law
25
account
the
volume
411.354(c)(2)(ii).
directed
the
insists,
however,
foreclosed
the
jury
or
value
of
referrals.
42
C.F.R.
the
that
jurys
second
our
trial
earlier
consideration
to
assess.
opinion
of
whether
in
the
Tuomey
this
case
contracts
Instead, says
Tuomey, the only question that should have been put to the jury
was whether the contracts, on their face, took into account the
value or volume of anticipated referrals.
at 409.
We disagree.
volume
or
value
of
referrals.
There
are
two
different
First,
each
year,
the
physicians
were
paid
base
the
bulk
of
their
compensation
in
the
form
of
physicians
collections
for
under
the
personally
Contracts
performed
was
based
solely
professional
on
services.
the
physicians
resulting
component.
facility
personally
fee
billed
performed
by
Tuomey
services,
based
and
upon
the
that
27
Chief
Financial
Officer,
William
Paul
Johnson,
who
procedure
on
Medicare
patient
at
the
hospital
J.A. 2012.
We
thus think it plain that a reasonable jury could find that the
physicians
compensation
actual referrals.
varied
with
the
volume
or
value
of
10
28
2.
Tuomey next argues that the district court erred in not
granting its motion for judgment as a matter of law because it
did not knowingly violate the FCA.
FCA
imposes
knowingly
presents,
fraudulent
claim
employee
of
3729(a)(1)(A),
or
for
the
civil
liability
causes
payment
United
to
or
be
on
(b)(2)(A)(i).
person
presented,
approval
States
any
to
an
Government.
Under
the
who
false
or
officer
or
31
Act,
U.S.C.
the
term
in
claim,
(1)
has
actual
knowledge
of
the
purpose
of
the
FCAs
scienter
Id. 3729(b)(1).
requirement
is
to
avoid
29
Gen. Trading & Contracting Co., 612 F.3d 724, 728 (4th Cir.
2010) (internal quotation marks omitted).
The record evidence provides ample support for the jurys
verdict as to Tuomeys intent.
requisite
scienter
McAnaneys remarks.
once
it
J.A. 4055-56.
determined
to
disregard
warnings,
efforts
avoid
to
particularly
hearing
precisely
given
what
Tuomeys
McAnaney
aggressive
had
to
say
11
30
in
innocent
appropriate
because
circumstances
the
guilty
conclude
mind
was
the
conduct
absent).
was
However,
legal
Rather,
consequences
to
establish
of
conscious
the
fraud.
advice-of-counsel
Id.
at
943.
defense,
the
contends
that
regarding
the
it
provided
proposed
full
employment
and
accurate
contracts
to
Hewson, who in turn advised Tuomey that the contracts did not
run afoul of the Stark Law.
employment
contracts
31
and
terminated
his
representation. 12
warnings
by
Tuomey defends
claiming
that
his
its dismissal
opinion
was
of McAnaneys
tainted
by
undue
Indeed, Tuomeys
J.A. 4482.
healthcare
lawyer,
and
Richard
Kusserow,
former
did
not
ignore
McAnaneys
warnings.
12
Pratt
rendered
two
32
he
did
so
without
being
told
of
McAnaneys
unfavorable
of
employment
Tuomeys
fair-market-value
contracts
would
compensate
consultant
the
that
physicians
at
the
fair
market value, but he did not consider how the consultant arrived
at its opinion.
thus
think
it
entirely
reasonable
for
jury
to
look
Kusserow--
defense--advised
contracts
about
McAnaney.
As
Tuomey
eighteen
months
was
case
the
regarding
before
with
the
Pratt,
the
employment
parties
he
retained
received
no
information
that
Kusserow
considered
vital
to
be
1676.
And
although
Kusserow
did
say
in
letter
to
productivity
and
[incentive
bonus
provisions
the
district
court
observed,
in
the
J.A. 1677.
the
jury
evidently
jury
excluded
damages
from
[before
the
termination
of
J.A. 4055.
Tuomey
jury
to
of
raises
several
instructions.
give
an
(or
not
We
give)
instruction . . .
challenges
to
review
district
instruction
jury
for
abuse
of
the
district
courts
and
the
discretion.
United States v. Russell, 971 F.2d 1098, 1107 (4th Cir. 1992).
Our task is to determine whether the instructions[,] construed
as
whole,
and
in
light
of
34
the
whole
record,
adequately
or
confusing
objecting party.
Cir. 1987).
the
jury
to
the
prejudice
of
the
Noel
v.
Artson,
641
F.3d
580,
586
(4th
Cir.
2011)
that
our
the
district
court
ignored
admonition
that
the
anticipated
referrals.
Drakeford,
675
F.3d
at
409.
35
evidence
of
intent
in
determining
whether
the
physicians
Rather, we sought to
However,
that
does
not
aid
Tuomey
if
the
jury
ignorance
physician . . .
of,
receives
the
aggregate
fact
that
the
compensation
referring
that
varies
J.A. 3942
Tuomey
argues
that
the
district
court
erred
by
interpretation
of
disputed
legal
questions
are
not
false
Id. at 376.
See
false
or
fraudulent
claim
when
he
or
she
falsely
2d
153,
15859
(D.D.C.
2008).
Here,
Tuomey
either
This is an objective
Stark Law.
Tuomey knew that its claims were in violation of the Stark Law-is
covered
under
the
knowledge
element. 14
Therefore,
the
14
38
the jury that knowledge does not include actions taken through
ignorance,
emphasized
mistake
that
the
or
accident.
jury
could
J.A.
not
3943.
conclude
that
It
later
Tuomey
had
IV.
Finally,
Tuomey
makes
several
challenges
district
Next,
it
court
claims
improperly
that
the
the
calculated
district
to
court
the
civil
used
the
penalty.
incorrect
defendant
found
liable
under
the
FCA
must
pay
the
sustains
because
of
that
15
person.
31
U.S.C.
39
found that Tuomey had submitted 21,730 false claims, for which
it awarded actual damages of $39,313,065, which the district
court trebled.
error.
Universal
Furniture
Intl,
Inc.
v.
Collezione
Europa USA, Inc., 618 F.3d 417, 427 (4th Cir. 2010).
However,
Id.
Likewise, the
to
Tuomey,
the
civil
penalty
assessed
was
in
this
case,
Tuomey
that
the
only
relevant
40
contracts.
Appellants
Br.
at
54
(alterations
omitted)
Tuomey is incorrect.
(which form the basis for both their base salaries and their
productivity bonuses) do not account for the volume or value of
inpatient procedures performed.
We said
physician
has
financial
relationship
with
hospital, then the Stark Law prohibits the physician from making
any referral to that hospital for the furnishing of designated
health
services.
E.g.,
United
States
ex
rel.
Bartlett
v.
[the]
Hospital,
the
Stark
[Law]
prohibited
Physician
Inpatient
42 U.S.C.
1395nn(h)(6).
request
And
referral
includes
the
or
provision
of
the
designated
41
health
service.
Id.
1395nn(h)(5).
prohibited
referral
for
the
furnishing
of
designated
health
that
the
alleged
false
claims
came
about
through
prohibited referral.
The governments proof on this point came in the form of
summary evidence and testimony detailing the claims submitted by
Tuomey.
We note
any
case,
Tuomey
J.A. 4061.
offers
no
authority
to
support
its
attending/operating
physician
42
identified
in
Form
UB-92
459 F. Supp. 2d 692, 713 (N.D. Ill. 2006); see also United
States v. Halifax Hosp. Med. Ctr., No. 6:09-cv-1002-Orl-31TBS,
2013 WL 6017329, at *10-11 (M.D. Fla. Nov. 13, 2013) (finding
that the fact that one of the physicians with whom the hospital
has a financial relationship is identified as an operating or
attending physician is sufficient evidence that the physician
was
also
contrary).
the
referring
physician
absent
evidence
to
the
next
argues
that
the
district
court
erroneously
to
Medicare
for
reimbursement.
Instead,
Tuomey
16
43
it
cites
to
FCA
cases
where
the
UB-92/04
forms
fraudulent
scheme.
In
those
cases,
the
fraud
was
See United
2d
25,
70-71
(D.D.C.
2007);
Visiting
Nurse
Assn
of
even
those
cases
suggest
that
UB-92/04
form
can
proves
fraudulent.
that
the
forms
were,
in
fact,
false
or
err
in
finding
that
each
separate claim.
44
UB-92/04
form
constituted
B.
Tuomey
also
actual damages.
challenges
the
district
courts
measure
of
total of all claims the government paid (as the court instructed
the jury), but rather the difference (if any) between the true
value of the services provided by Tuomey and what the government
actually
paid.
evidence
that
for[,] . . .
According
the
to
Tuomey,
Government
there
were
no
did
actual
since
not
there
get
damages
what
under
was
it
the
no
paid
FCA.
incorrect.
The
Stark
Law
prohibits
the
government
from
paying
any
precedent
Medicare.
to
reimbursement
of
claims
submitted
to
Stark
provided
unnecessary.
legally
injury
Law
expresses
in
Congresss
violation
of
that
judgment
that
law
medically
are
all
prohibited
equivalent
from
to
the
paying,
full
the
amount
government
of
the
has
suffered
payments.
Cf.
United States v. Mackby (Mackby II), 339 F.3d 1013, 1018-19 (9th
45
Cir. 2003) (finding that the fact that the defendant actually
rendered
the
injury,
service
as
billed
[d]amages
statement).
did
under
not
the
negate
FCA
the
flow
governments
from
the
false
came from the payment to an entity that was not entitled to any
payment
at
all.
Accordingly,
we
reject
Tuomeys
claim
of
error. 18
C.
Finally, Tuomey argues that the district courts award of
$237,454,195,
consisting
of
damages
and
civil
penalty,
is
the
award
is
substantial,
we
cannot
say
that
it
is
unconstitutional.
The
prohibits
Excessive
the
punishment.
Fines
government
Clause
from
of
the
imposing
Eighth
excessive
Amendment
fines
as
of
the
Eighth
Amendment.
Id.
But
where
civil
18
46
Id. (quoting
In such a
is
grossly
offense.
v.
disproportional
to
the
gravity
of
[the]
Bajakajian,
524
U.S.
321,
334,
(1998)).
We
have
said,
Res.
Corp.,
509
U.S.
443,
453-54
(1993)
(internal
compensatory
damages
redress
the
concrete
This is
loss
the
and
the
assessment
of
the
plaintiffs
injury
is
at 432.
wrongdoing.
Id.
Consequently,
there
must
be
is
necessary
to
vindicate
the
governments
legitimate
also noted that the treble damages provision of the statute has
a compensatory aspect, in that they account for the fact that
some
amount
of
money
beyond
actual
damages
is
necessary
to
v.
(2003).
United
States
ex
rel.
Chandler,
538
Cook Cnty.,
U.S.
119,
130
the
Government
proceeds
an
action
brought
by
[a
Clause:
(1)
the
degree
of
reprehensibility
of
the
harm
award;
suffered
and
(3)
by
the
the
plaintiff
difference
and
the
punitive
between
the
punitive
19
damages
under
the
Fifth
Amendment
would
differ
punitive
damages
award.
19
Gore,
517
U.S.
at
575.
Of
49
31 U.S.C. 3729(a)(1).
of
the
reprehensibility
of
the
conduct
at
issue
by
Congress
believed
that
making
Rogan,
517
F.3d
454
([O]ne
false
claim
to
the
think
that
fine
addition,
the
the
degree
Supreme
of
Court
has
reprehensibility
directed
of
the
courts
to
defendants
case does not implicate the first three factors, we think the
last two are relevant here.
Trust Co. of Va., 526 F.3d 142, 153 (4th Cir. 2008) (finding
50
that
even
provide
the
presence
justification
of
for
single
State
substantial
Farm
award
factor
of
can
punitive
damages).
Clearly,
State
Farm,
claims.
meant
Tuomeys
538
U.S.
conduct
at
involved
419,
as
it
repeated
submitted
actions,
21,730
false
reflect
the
sheer
breadth
of
the
fraud
Tuomey
penalties
claims).
As
undertaking
in
we
spawns
FCA
have
a
actions
involving
said,
fraud
[w]hen
of
a
an
large
number
enormous
comparable
of
public
breadth
[high
See id.
determined
Tuomey
that
submitted
false
claims
for
Medicare
of
we
treble
can
damages
$119,515,000,
properly
as
that
can
regard
punitive.
be
the
On
considered
entire
the
other
civil
hand,
the
trebling
additional
of
actual
sum
of
damages
$78,626,130
is
hybrid
penalty,
the
actual
As discussed
resulting
of
punitive.
from
the
compensatory
and
punitive damages.
Although the Supreme Court has not told us where to draw
the line, see Chandler, 538 U.S. at 131, we may safely assume
that the portion of the trebled award allocated to the relator
is
compensatory.
See
id.
Assuming
further
that
Drakeford
percent
to
$66,832,210
calculation,
of
the
total
$11,793,920
to
the
be
of
allocated
portion
recovery--the
of
the
to
trebled
punitive
damages
relator
that
award,
damages.
is
be
leaving
By
this
compensatory
would
is
that
the
damages
award
is
We therefore
constitutional
under
the
V.
Finally,
we
do
not
discount
the
concerns
raised
by
our
But
20
53
case
paints:
An
impenetrably
complex
set
of
laws
and
I.
Regarding the issue of whether the district court correctly
granted a new trial, we review such a decision for abuse of
discretion.
Under Rule
in
determining
that
McAnaneys
testimony
could
be
violated
139-41.
the
Stark
Tuomeys
and
Lawarguably
Drakefords
disputed
dispute
claim.
about
the
Had
Drakeford
and
Tuomey
been
able
to
reach
an
which
the
government,
having
intervened,
now
stands
in
Drakefords shoes.
Rule 408s exclusionary provision applies where a dispute
or a difference of opinion exists, not just when discussions
crystallize to the point of threatened litigation.
Affiliated
Mfrs., Inc. v. Aluminum Co. of Am., 56 F.3d 521, 527 (3d Cir.
1995).
55
however,
evidence
subject
to
exclusion
under
either
liability
for
or
invalidity
of
claim
or
its
Rucker
965,
Enterprises,
Inc.,
816
F.2d
968
(4th
Cir.
1987)
evidence
for
another
purpose.).
Stated
differently,
[s]ince the rule excludes only when the purpose is proving the
validity or invalidity of the claim or its amount, an offer for
another purpose is not within the rule.
Evid.
408.08
(quotation
marks
and
citation
omitted).
government
argues,
among
other
things,
that
the
scope
of
Rule
408s
limited
exclusionary
ambitnamely,
United States
Va.
2003).
[I]f
[defendant]
seeks
the
advice
of
Id.
See also,
e.g., United States v. Butler, 211 F.3d 826, 833 (4th Cir. 2000)
(identifying the elements of the advice of counsel defense as
(a) full disclosure of all pertinent facts to [a lawyer], and
(b) good faith reliance on the [lawyer]s advice).
When a party raises an advice of counsel defense, however,
all advice on the pertinent topic becomes fair game.
It has .
advice
received
concerning
the
same
subject
matter
is
EchoStar Commcns Corp., 448 F.3d 1294, 1299 (Fed. Cir. 2006)
(Once a party announces that it will rely on advice of counsel
57
the
attorney-client
privilege
is
waived.
The
widely
of
in-house
privilege
with
counsel,
regard
to
it
any
waived
the
attorney-client
attorney-client
communications
counsel
defense.
Tuomey
argued
to
the
first
jury,
for
example, that [t]he lawyers were the ones running the show . .
. . All Tuomey did was accept their recommendations and vote on
them if they thought that it was something that would be good
for
the
hospital.
defense.
Advice
of
counsel
is
very,
very
good
Trial I, Transcript
of
the
counsel
district
defense,
court
instructed
making
clear
the
that
it
jury
on
the
provided
The
an
affirmative
defense
58
of
advice
of
counsel
to
the
United
States
allegation
true,
will
that
it
acted
in
to
defeat
show
of
the
governments
claim.
violation
to
succeed
with
Trial
I,
that
defense,
Judge
Perry
Tuomey
provided
full
and
accurate
information
to
the
Tuomey
advice
should
of
not
counsel
have
been
permitted
the
jury
was
to
cherry-pick
permitted
to
hear.
Instead, the jury should have been allowed to consider all the
advice of all Tuomeys counselincluding McAnaney.
The
record
assessment
was,
makes
it
clear
was
also
that,
whatever
advice
of
else
McAnaneys
counsel.
McAnaneys
and
advise
the
business relationship.
guided
by
the
parties
parties
J.A. 145.
with
to
proposed
instructions
59
respect
in
carrying
out
the
Id.
In other words,
Tuomey
that
the
contracts
presented
J.A. 2078.
an
And McAnaney
easy
case
to
this advice and back away from the contracts, however, Tuomey
told McAnaney not to put his conclusions in writing and ended
his engagement.
Allowing
McAnaneys
testimony
into
evidence
to
show
the
have
In
been
outside
other
words,
of
by
Rule
408s
pressing
limited
an
advice
exclusionary
of
counsel
60
that [t]he lawyers were the ones running the show . . . All
Tuomey
did
was
accept
their
recommendations.
prevented
from
showing
Trial
I,
that
Tuomey
had
gotten
It is hard to
district
government.
trial.
court
abused
its
discretion
and
prejudiced
the
Accordingly,
I,
too,
conclude
that
61
Judge
Perrys
II.
Moving beyond the district courts decision to grant a new
trial, I agree with the majority that the jurys determination
that Tuomey violated both the Stark Law and the False Claims Act
must stand.
deferential
one,
accord[ing]
the
utmost
respect
to
jury
am
troubled
by
the
picture
this
case
Stark
Law
is,
at
its
core,
prohibition
on
self-
62
Stark
immaterial
Law
whether
is
one
strict
liability
intended
to
Id.
statute
violate
the
so
it
law;
is
an
subject
to
severe
monetary
penalties
Id.
open
to
extensive
exclusion
from
and
liability,
their
financial
security
between
what
would
be
permitted
and
what
would
be
Some of the
invective
borders
used
to
describe
the
Stark
law
even
on
Stark
Law:
Boon
or
Boondoggle?
An
Steven D. Wales,
Analysis
of
the
statute,
Stark
Law
compliance
program
can
help
frequent
revisions
make
it
difficult
for
physicians
and
Tironi, supra
by
imposing
presents,
or
liability
causes
64
to
on
be
any
person
presented,
who
a
false
.
or
fraudulent
claim
for
payment
or
approval.
31
U.S.C.
showing
defendant
good
may
faith
skirt
reliance
False
on
Claims
the
advice
Act
liability
by
of
counsel.
For
the
advice
of
its
long-time
counsel,
Nexsen
Pruet.
including
the
nations
national
consulting
compensation.
firm
Those
arrangements
(though
shared
pertinent
all
largest
healthcare
with
experts,
the
expertise
too,
parties
law
in
signed
dispute
information
firm
for
physician
off
whether
and
on
the
Tuomey
purposes
of
had
these
additional assessments).
Nevertheless, as the majority opinion notes, a reasonable
jury could have concluded that Tuomey was . . . no longer acting
in good faith reliance on the advice of its counsel when it
refused
to
give
full
consideration
to
Id. at 32.
McAnaneys
negative
As already explained,
advised
Tuomey
that
the
proposed
arrangements
McAnaneys
advice,
it
likely
would
have
And
raised
Had Tuomey
faced
no
66
III.
This case is troubling.
when
coupled
with
the
False
Claims
Act.
Yet, the district court did not abuse its discretion when it
granted a new trial and the jury did not act irrationally when
it determined that Tuomey violated both the Stark Law and the
False Claims Act.
67