No Valentine for “Very Busy” Cardiologist Convicted of Fraud

After examining the body of evidence presented during trial, the Sixth Circuit refused to prescribe a new healthcare-fraud trial for Dr. Anis Chalhoub. A jury convicted the London (Ky.) cardiologist under 18 U.S.C. § 1347 for billing Medicare and other insurers for unnecessarily implanted pacemakers.  Although “some of the government’s tactics here leave something to be desired,” a unanimous panel in US v. Chalhoub affirmed.

The government deployed an array of weapons from the arsenal available to health care fraud investigators nowadays.  Data mining demonstrated that Dr. Chalhoub “had no trouble staying busy,” performing 853 stress tests in a year, while 75% of U.S. cardiologists performed 336 or fewer.

The prosecution’s lead expert reviewed 31 of Dr. Chalhoub’s procedures and testified that 27 were unnecessary.  One of the other testifying cardiologists recounted turning off or turning down the pacemakers in 20 unnamed patients of Dr. Chalhoub, compared to 1 of 5,000+ pacemakers he had turned off during his career.

“Both Damning and Unanswerable”

The panel (Nalbandian (op.), Siler, Stranch) expressed “sympath[y]” for Dr. Chalhoub’s Due Process argument: that expert testimony regarding unnamed patients hindered his ability to present a meaningful defense. If the conviction rested on “damning but unanswerable” expert testimony about the anonymous cases, that would seriously prejudice the defendant’s ability to respond.

But those 20 weren’t the only patients at issue. (If they were, according to the panel, his claim might have proved “meritorious.”) And Chaloub received notice and a hearing in any event: he filed a motion in limine and wielded (largely unexercised) cross-examination rights for the expert testimony. Nor did the trial court abuse its discretion in admitting this evidence, because testimony about even a single patient would’ve been enough to support a conviction.

Nevertheless, the panel expressed displeasure with the government for sweeping the 20 unnamed patients into its closing argument.  Although deemed harmless, the government potentially double-counted fraudulent implants when it “argued in summation that [Dr. Chalhoub] had installed unnecessary pacemakers in 50 patients” without knowing whether the experts’ lists of patients overlapped.

“Appeals to class prejudice”

Similarly, the panel rejected the “close question” raised by the government’s evidence about Dr. Chalhoub’s lifestyle.  An FBI agent testified about the doctor’s after-tax income, cars, credit cards, and home improvements: “a handsome living, especially compared to the average wage-earner in London, Kentucky.”

The panel distinguished the evil of “evidence that impermissibly appeals to class prejudice” from expenditures that demonstrate a motive to commit fraud.  In this case, no abuse of discretion occurred under the applicable 3-part test under FRE 403: other credible evidence of illegality, money spent that was not available from a legitimate source, and great wealth related to the period of alleged illegal activity. The doctor’s high spending “help[ed] establish Chalhoub’s motive for performing procedures that may not have been necessary.”

Circuit Split: University Harassment Claim Requires Further Student-on-Student Harassment

The Sixth Circuit has weighed in on an issue that has divided the circuits: to state a claim under Title IX for “student-on-student sexual harassment,” must a victim actually experience further sexual harassment after the school learns of the prior harassment? Or is it enough that the victim is vulnerable to further harassment?

In Kollaritsch v. Michigan State, the Sixth Circuit (Batchelder op.; Thapar and Rogers joining and concurring separately) sided with the majority of circuits, which have required the victim to actually experience further harassment in order to show the school’s unreasonably indifferent response to “pervasive” sexual harassment “caused” further harassment.

The split stems from the Supreme Court’s 5-4 decision in Davis v. Monroe County Board of Education, 526 U.S. 629 (1999) (O’Connor, J.). The Sixth Circuit explained that, under Davis, a claim for student-on-student sexual harassment is comprised of “separate-but-related torts by separate-and-unrelated tortfeasors: (1) ‘actionable harassment’ by a student; and (2) a deliberate-indifference intentional tort by the school.”

What has divided the courts is the type of injury that must result from the school’s deliberate-indifference. Davis held that “the deliberate indifference must, at a minimum, cause students to undergo harassment or make them liable or vulnerable to it.” Davis, 526 U.S. at 645 (emphasis added).

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The Learned Sixth: “Run, Fun & Gun”

And now for something completely different.

If you’re traveling for the New Year’s holiday (or perhaps resting or exercising after the last one?), consider a Learned Sixth podcast for the road: SCOTUS 101’s  interview with Sixth Circuit Judge Amul Thapar. The episode, appropriately titled Guns and Gifts, covers both the recent Supreme Court Second Amendment/mootness argument in New York State Rifle & Pistol Association v. New York as well as Judge Thapar’s own experience with shooting ranges and ammo boxes.

The Covington-based Thapar, a Supreme Court very-short-lister, is no doubt well known to many readers of this blog. But unless you’re part of his extended clerk family, you’re practically guaranteed to learn something new during this wide-ranging interview. The SCOTUS 101 host, Louisville native Elizabeth Slattery, dives deep with Judge Thapar on all things Kentucky:

Our friends on the northern side of the Ohio River will appreciate the love also shown to Graeter’s raspberry chocolate chip and Skyline Chili. Slattery and Thapar even discuss some law too, including Judge Thapar’s ten-page rule and his “Run, Fun & Gun” style as a trial-court judge.

We’re confident you won’t regret a little extra time spent with the Sixth Circuit in 2019. Thanks for reading (and listening). We’ll see you in 2020.

Movant Beware: No right of action under HIPAA, and no class-cert absent notice      

The Sixth Circuit has joined other circuits in unanimously holding that HIPAA creates no private right of action. That was the easy part. The panel divided 2-1 in ruling that a Tennessee statute likewise provides no remedy for patients allegedly overcharged by Ciox, a medical-records company. But Faber v. Ciox Health wasn’t a complete blowout: the court flagged Ciox’s attempt to spike the football by requiring a remand for classwide notice that…the class members lost.

Ciox is one of the largest medical-records providers in the country. It serves three of every five U.S. hospitals. Like other medical-records providers, Ciox is subject to HIPAA regulations, which limit the fees it may charge patients for accessing their medical records. Ciox is also subject to state regulations, which may layer on additional protections for patients.

Richard Faber and Jennifer Monroe sued in the WDTN on behalf of a class of patients who alleged that Ciox overcharged them. Wise to HIPAA’s lack of a private right of action, the plaintiffs styled their claims as various common-law causes of action. Judge Nalbandian’s majority opinion made short work of these: negligence (no general duty not to overcharge), negligence per se (not a cause of action), and quasi-contract/implied-in-law/unjust enrichment (a Hail Mary that fell predictably short).

As to plaintiffs’ Tennessee Medical Records Act claim, the court divided. Judge Merritt’s partial dissent located a private right of action in a 1997 Tennessee Court of Appeals decision (Pratt v. Smart Corp.) and other states’ precedents. But the majority (with Kethledge joining) held the “unambiguously clear” statutory text applied fee limits only to hospitals, not medical-records providers. The panel majority had “little doubt” that the Tennessee Supreme Court—whose rulings would bind the Sixth Circuit in a way the intermediate appellate court’s would not—“would disagree with Pratt.”

Having finished its meaty health-law menu, the opinion wrapped up with a tasty civ-pro course—indeed, a bona fide issue spotter appropriate for the approaching 1L exam season. When the district court granted summary judgment, it had granted class certification, but not yet notified absent class members. So Ciox asked the Sixth Circuit for a remand “for the sole purpose of issuing opt-out notices at Plaintiffs’ expense.”

The court, however, recognized that post-judgment notice is not a terribly useful sort of notice. And it was too late for a “one-way street” post-judgment certification. Instead, the court followed the “general rule of movant beware.” A summary-judgment motion made before class cert (or, as here, before class notice) “carries the risk of only binding the named plaintiffs, and not the entire class.” As a result, the Sixth Circuit’s notable class-cert opinion won’t actually bind the class—only the named plaintiffs.

The Learned Sixth: Kethledge, Hayek, and “executive activism”

Perhaps no Circuit has featured as robust and sustained a debate about administrative deference as the “Learned Sixth.” This month Judge Raymond Kethledge added his voice to that conversation—though not in a judicial opinion.

Instead, Professor Kethledge donned his University of Michigan hat (helmet?) and delivered the 15th Annual Hayek Lecture at the NYU Classical Liberal Institute. Past lecturers included the economist and historian Deirdre McCloskey (another Ann Arbor native) and the Sixth Circuit’s own Jeff Sutton (whose 2013 Hayek lecture addressed technology and federalism—a topic that later animated one of Judge Kethledge’s most notable opinions, U.S. v. Carpenter, regarding cell-site records).

Judge Kethledge’s remarks drew the attention of the Wall Street Journal, which published excerpts regarding Hayek’s view (and Kethledge’s) on the “difference in outlook” between a judge’s interpretation and an agency’s:

“To be consistent with the rule of law . . . the agency’s interpretation must be provisional—in the sense that it must always be subject to review by ‘independent judges who are not concerned with any temporary ends of government.'”

[Grizzled administrative lawyers will note the, ahem, counterintuitive reality that current Supreme Court doctrine is precisely the opposite: otherwise authoritative Court of Appeals interpretations are “provisional” and may, at least in theory, be “overruled” by a contrary agency interpretation. “[T]he agency may, consistent with the court’s holding, choose a different construction, since the agency remains the authoritative interpreter (within the limits of reason) of such statutes.” NCTA v. Brand X, 545 U.S. 967 (2005). SMH, as the kids say.]

Judge Kethledge observes the same phenomenon, but would reach a quite different conclusion about the relative roles of courts and agencies:

“It seems to me that the agency is not trying to answer the same question that we are. The court tries to find the best objective interpretation of the statute, based on the statutory text. The agency instead asks if there is a colorable interpretation that will support the policy result that the agency wants to reach. When judges engage in that kind of analysis, we call it judicial activism. And most observers condemn judicial activism as an arrogation of legislative power to the judiciary. It is not clear to me why the result is any better when the arrogation is done by the executive.”

Administrative versus judicial interpretation. Not Hayek’s most famous 20th century battle. (h/t Russ Roberts). But one quite pertinent to the Sixth Circuit’s jurisprudence in 2019.

Opioid Update: “Negotiation Class” Under Review

On Friday, Nov. 8, a Sixth Circuit panel (Guy, Griffin, and Kethledge) granted interlocutory appeals of drug manufacturers and distributors embroiled in the Northern District of Ohio opioid MDL. The appeals, brought under Federal Rule of Civil Procedure 23(f), oppose the district court’s certification of the novel “Negotiation Class.” Under the proposed procedure, any class member can opt out, no defendant must negotiate with the class, and the underlying litigation will continue while negotiations theoretically continue.

The district court, mindful that the “Negotiation Class was a novel procedure,” justified it “based on the unique facts of the case and the likelihood it might facilitate a global settlement.”

But as we covered in September, many parties—defendants and 6 plaintiffs, plus 12 states and the US Chamber as amici—oppose the Negotiation Class. They complaint that it fails to provide notice of the settlement, or of the parties’ opt-out rights, “until the settlement is already reached.”

Under Rule 23(f), the court of appeals may “permit an appeal from the grant or denial of a motion for class certification.” And here the court did.  Josh Douglas, Thomas P. Lewis Professor of Law at the University of Kentucky, stated “it’s not surprising for the court to have allowed the appeal, as the issue is novel, impacts major litigation, and could prejudice the defendants without real recourse if an appeal were not permitted.”

Judge Polster’s innovative deployment of Rule 23 has attracted the attention of the plaintiffs’ bar, civil-procedure buffs, and class-action lawyers of all stripes. The Sixth Circuit will now have its chance to weigh in. Stay tuned.

Panel Rehearing Granted On TCPA Agency Principles

The Sixth Circuit has granted a rare panel rehearing in Lucas v. Telemarketer Calling from (407) 476-5680 & Other Tel. Nos., a case filed under the Telemarketing Consumer Protection Act.  Our sister SPB blog, TCPAWorld, one of the web’s leading sources for intelligence and lawyering on TCPA defense, has a detailed post here.  The panel reversed a dismissal in favor of defendants that sold services to telemarketers, and remanded for the district court to determine whether the service providers knew their clients were using their platforms to violate the TCPA.  As summarized at TCPAWorld:

An unusual rehearing twist and turnabout in TCPAWorld. The key, of course, is that the Sixth Circuit … recognized that platform providers might be liable beyond the mere auspices of agency and vicarious liability. Specifically, even in the absence of agency might a platform provider be liable merely because it “knowingly allowed its client(s) to use that platform for unlawful purposes[?]”

This is certainly a case worth watching for any company providing services to telemarketers.

Sixth Circuit certifies Pennsylvania security-screening comp question

Several suits by Amazon workers seeking pay for time spent in security screening have been consolidated in a multidistrict litigation in the Western District of Kentucky. In one of the putative state-law class actions, Pennsylvania-based workers argue that under the Pennsylvania Minimum Wage Act, Amazon owes them for the several minutes per shift they spend in screening.

The district court dismissed the claim, citing the Supreme Court’s decision in Integrity Staffing Solutions, Inc. v. Busk, which held that such “screening is a noncompensable postliminary activity under the Fair Labor Standards Act.”

But the workers—in the fourth appeal (so far) to reach the Sixth Circuit from this MDL—contend that Busk does not apply to the PMWA. On Monday, a Sixth Circuit panel (Griffin writing; Merritt and Daughtrey joining) granted their motion to certify this question to Pennsylvania’s highest court.

Judge Griffin’s opinion reminded the bar that certification is a discretionary determination that is “most appropriate when the question is new and state law is unsettled.” Interestingly, the Sixth Circuit previously declined to certify a similar question to the Kentucky Supreme Court, but distinguished that decision on the ground (among others) that Kentucky law was “in-circuit” and therefore more familiar. Less familiar and more “distant” Pennsylvania law militated in favor of certification. Apparently, it was a prime day for judicial federalism.

In addition to the question whether screening time is compensable under the PMWA, the Pennsylvania Supreme Court also faces a second certified question: whether time spent in screening is a “split-second absurdit[y]” that should be disregarded as de minimis.

Opioid Update: Bellwether Settlement on Eve of Trial

On the eve of trial Monday morning, plaintiffs Summit and Cuyahoga Counties struck a deal worth $260 million. This avoided the first bellwether trial in the opioid multidistrict litigation before Judge Polster. The settlement extinguishes the counties’ claims against AmerisourceBergen, Teva, Cardinal Health, and McKesson. Walgreen’s did not settle, but its trial is pushed off for now.

Also on Monday, the AGs of Tennessee, North Carolina, Pennsylvania, and Texas announced discussions with a similar defendant group regarding a potential eleven-figure global settlement.

Meanwhile, other AGs, like Dave Yost of Ohio, have not lost their taste for the fight. Yost cautions that the plaintiffs’ lawyers representing the counties will receive an unfair windfall in fees. The cap for attorneys representing Ohio are capped at *only* $50 million. No cap may apply to outside counsel for the local governments, however. Yost wrote in a letter to fellow attorneys general last week urging that “lawyers should be paid for their work, but the lawyers representing only a portion of the people of Ohio should not reap greater rewards than the lawyers who are representing all of the people.”

Although the bell has not yet rung on the main event in Cleveland (at least not this week), stay tuned for more opioid appellate news. We doubt the Sixth Circuit has heard the last of this massive MDL.

Opioid Update: Sixth Circuit Won’t Halt Bellwether Trial (and more)

Today the Sixth Circuit issued much-anticipated rulings rejecting bids by Ohio and the industry defendants to halt the upcoming opioid MDL bellwether trial. And as noted below, in other venues the opioid litigation has seen recent notable action from another key state plaintiff and Judge Polster.

Sixth Circuit denies “drastic and extraordinary” mandamus relief – The four-page order avoided ruling on Ohio’s meaty federalism argument that municipal litigation usurps its parens patriae authority to pursue claims for harms to its citizens’ health and welfare. Instead, it held Ohio failed to meet the demanding standard for mandamus relief.

Ohio only recently sought relief in the court of appeals (and didn’t seek to intervene in the MDL), the court noted, despite having notice of the impending trial since Judge Polster’s December 2018 ruling rejecting similar arguments made by the MDL defendants. The court was unpersuaded that limited intervention to assert these sovereignty rights would force Ohio to litigate in federal rather than state courts. Continue Reading

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