Justia U.S. 3rd Circuit Court of Appeals Opinion Summaries

Articles Posted in Professional Malpractice & Ethics

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In 2009 the Centers for Medicare and Medicaid Services (CMS) suspected that Dr. Melgen, a Florida-based ophthalmologist​, had overbilled Medicare for $8.9 million by engaging in “multi-dosing.” Before CMS began formal proceedings, U.S. Senator Menendez (New Jersey) began to advocate on behalf of the doctor. In 2015, a 22-count indictment charged that Menendez solicited and accepted numerous gifts from Melgen; used the power of his office to influence the CMS enforcement action and to encourage the State Department and U.S. Customs to intervene on Melgen’s behalf in a multimillion dollar contract dispute with the Dominican Republic. The Third Circuit affirmed denial of motions to dismiss the Indictment, finding that the senator is not protected from prosecution under the Speech or Debate Clause, U.S. Const. art. I, section 6, cl. 1, which states that Members of Congress “shall not be questioned in any other Place” for “any Speech or Debate in either House.” The charged actions were not protected "legislative acts." The court rejected a separation of powers challenge to the Ethics in Government Act, 5 U.S.C. app. 4, 101-11; 18 U.S.C. 1001, and noted the Supreme Court’s statement “that Members [of Congress] are not to be ‘super-citizens’ immune from criminal liability or process.” View "United States v. Menendez" on Justia Law

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Whiteside represented the County of Camden in a lawsuit brought by Anderson, which resulted in a jury award paid, in part, by the County’s excess insurer, National. According to National, the County did not notify it of the lawsuit until several months after it was filed. Whiteside initially informed National that the case was meritless and valued it at $50,000. During trial, Whiteside changed her valuation and requested the full $10 million policy limit to settle Anderson’s claims. National conducted an independent review and denied that request. The jury awarded Anderson $31 million, which was remitted to $19 million. Days later, National sought a declaratory judgment that it was not obligated to provide coverage because the County had breached the policy contract by failing to timely notify National of the case and by failing to mount an adequate investigation and defense. National also asserted claims against Whiteside for legal malpractice, breach of fiduciary duty, and breach of contract. The court dismissed those claims because National could not demonstrate that Whiteside’s actions proximately caused it to suffer any damages. The Third Circuit dismissed and appeal for lack of jurisdiction, finding National’s notice of appeal untimely under Federal Rule of Appellate Procedure 4(a)(1), View "State Nat'l Ins. Co v. County of Camden" on Justia Law

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In 1973, Doe organized his medical practice as a “professional association,” a type of corporation doctors are permitted to form under New Jersey law. Since its creation, Doe has operated his practice through that entity. As of 2011, the entity employed six people. The government alleges that Doe entered into an illicit agreement with OTE, a blood laboratory, whereby it paid him monetary bribes for referring patients to it for blood testing. A grand jury subpoena was served on the entity’s custodian of records, directing it to turn over documents, including records of patients referred to OTE, lease and consulting agreements, checks received by it for reasons other than patient treatment, correspondence regarding its use of OTE, correspondence with specified individuals and entities, and basic corporate records. The district court denied Doe’s motion to quash. Doe persistently refused to let the entity comply; the court found it in civil contempt. Meanwhile, the entity fired its employees and hired independent contractors, tasked with “[m]aint[aining] accurate and complete medical records, kept in accordance with HIPAA and Patient Privacy standards,” and assisting with billing practices. The Third Circuit affirmed, agreeing that Supreme Court precedent indicated that corporations may not assert a Fifth Amendment privilege, and that the subpoena was not overbroad in violation of the Fourth Amendment. View "In Re: The Matter Of The Grand Jury" on Justia Law

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In connection with a loan, Bayonne provided Nuveen with an audit report by accounting firm, Withum and an opinion letter from Bayonne’s counsel, Lindabury. Later, Bayonne filed a Chapter 11 bankruptcy petition. Nuveen claimed that the audit report and opinion letter concealed problems. The district court dismissed claims of fraud (Withum), negligent misrepresentation, and malpractice (Lindabury) based on Nuveen’s noncompliance with N.J. Stat. 2A:53A-26 (AOM Statute), which requires an affidavit of merit for certain actions against professionals. The Third Circuit remanded for reconsideration of diversity jurisdiction. On remand, the court found that the action was “related to” Bayonne’s bankruptcy, establishing jurisdiction under 28 U.S.C. 1334(b), and again dismissed. The Third Circuit affirmed as to jurisdiction and held that the AOM Statute can be applied by a federal court without conflicting with FRCP 8. In 2012 the court certified to the New Jersey Supreme Court questions relating to the “nature of the injury” and “cause of action” elements of the AOM Statute. The state court declined. The Third Circuit then held that the AOM Statute applies and affirmed the dismissal. Although such statutes typically apply only to malpractice claims rooted in negligence resulting from harm to a known property, New Jersey courts go further.View "Nuveen Mun. Trust v. Withumsmith Brown PC" on Justia Law

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In the late 1990s, people who had taken the prescription diet-drug combination Fen-Phen began suing Wyeth, claiming that the drugs caused valvular heart disease. A 2000 settlement included creation of the Fen-Phen Settlement Trust to compensate class members who had sustained heart damage. Claims required medical evidence. Attorneys who represented certain claimants retained Tai, a board-certified Level 2-qualified cardiologist, to read tests and prepare reports. Tai read 12,000 tests and asserted that he was owed $2 million dollars for his services. Tai later acknowledged that in about 10% of the cases, he dictated reports consistent with the technicians’ reports despite knowing that the measurements were wrong, and that he had his technician and office manager review about 1,000 of the tests because he did not have enough time to do the work. A review of the forms Tai submitted found that, in a substantial number of cases, the measurements were clearly incorrect and were actually inconsistent with a human adult heart. Tai was convicted of mail and wire fraud, 18 U.S.C. 1341 and 1343, was sentenced to 72 months’ imprisonment, and was ordered to pay restitution of $4,579,663 and a fine of $15,000. The Third Circuit rejected arguments that the court erred by implicitly shifting the burden of proof in its “willful blindness” jury instruction and applying upward adjustments under the advisory Sentencing Guidelines for abuse of a position of trust and use of a special skill, but remanded for factual findings concerning whether Tai supervised a criminally culpable subordinate, as required for an aggravated role enhancement. View "United States v. Tai" on Justia Law

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Reifer suffered a worker’s compensation injury at IU-20 where she provided special education. Her injuries prevented her from returning to work. She retained Attorney Russo. Russo carried legal malpractice insurance with Westport in compliance with the Pennsylvania Rules of Professional Conduct. When IU-20 initiated disciplinary proceedings against Reifer, Russo failed to appear at the hearing. When IU-20 terminated her, Russo failed to appeal. Russo filed suit alleging violation of Reifer’s employment rights, which he lost for failure to exhaust state remedies. When Reifer sought alternate employment, Russo advised her to answer an application question as to whether she had ever been terminated in the negative. Reifer was terminated and disciplined for the false answer. Reifer commenced a malpractice claim against Russo. Russo’s “claims-made” policy only covered losses claimed during the policy period or within 60 days of the policy’s expiration. Russo failed to inform Westport of the action until several months after the policy lapsed and he failed to secure a replacement policy. Westport refused to defend Russo. Russo admitted liability. A jury awarded Reifer $4,251,516. Russo assigned to Reifer his rights under the Westport policy. Reifer sought a declaratory judgment that Westport was required to show it was prejudiced by Russo’s failure to notify and, failing to do so, owed a duty to defend and indemnify. The federal district court, sua sponte declined to exercise jurisdiction and remanded to state court. The Third Circuit affirmed. View "Reifer v. Westport Ins. Corp." on Justia Law

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Vanterpool was convicted under V.I. Code tit. 14, section 706(1) for obsessive phone calls and faxes to his ex-girlfriend Jacqueline Webster. On appeal, he argued that: Section 706 was unconstitutional under the First Amendment; that his trial counsel’s performance amounted to an ineffective assistance of counsel under the Sixth Amendment; and that there was sufficient evidence in the record to support Vanterpool’s multiple convictions. The Third Circuit remanded. While the First Amendment challenge would have been viable had it been raised during trial, the plain error standard precluded relief on appeal. Trial counsel’s failure to preserve the First Amendment challenge satisfied the prejudice prong of the Strickland test, but the record was insufficient regarding whether trial counsel’s performance fell below professional norms. View "Government of the VI v. Vanterpool" on Justia Law

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Plaintiffs involved in, or wishing to be involved in the “death care industry” challenged Pennsylvania’s Funeral Director Law, 63 Pa. Stat. 479.1 provisions that: permit warrantless inspections of funeral establishments by the state Board of Funeral Directors; limit the number of establishments in which a funeral director may have an ownership interest or practice the provision; restrict the capacity of unlicensed individuals and certain entities to hold ownership interests in a funeral establishment; require every funeral establishment to have a licensed full-time supervisor; require funeral establishments to have a “preparation room”; prohibit service of food in a funeral establishment; prohibit use of trade names by funeral homes; govern the trusting of monies advanced under pre-need contracts for merchandise; and prohibit payment of commissions. The district court found several provisions unconstitutional. The Third Circuit reversed: invalidation of the warrantless inspection scheme; holdings on dormant Commerce Clause challenges to certain provisions; conclusions that disputed provisions violate substantive due process; a ruling that the Board’s actions unconstitutionally impair private contractual relations with third parties; and invalidation of the ban on payment of commissions to unlicensed salespeople. The court affirmed that the ban on the use of trade names in the funeral industry violates First Amendment protections. The court noted that antiquated provisions are not necessarily unconstitutional. View "Heffner v. Murphy" on Justia Law

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Ciavarella and another state court judge, Conahan, received $2.8 million in three years from a commercial builder, Mericle, and an attorney and businessman, Powell, during the “Kids for Cash” scandal in Luzerne County, Pennsylvania . Ciavarella committed hundreds of juveniles to detention centers co-owned by Powell, including many who were not represented by counsel, without informing the juveniles or their families of his conflict of interest. The judges, aware that they were under investigation, met with Mericle and Powell to coordinate their stories in 2008. Powell was wearing a recording device, exposing the judges’ efforts to obstruct justice. The judges pled guilty to wire fraud and conspiracy in exchange for an agreed 87-month sentence. Noting that the stipulated sentences were significantly lower than the advisory Sentencing Guidelines for the offenses, the district court rejected the plea agreement; the judges withdrew their pleas. Ciavarella proceeded to trial, was convicted of racketeering, honest services mail fraud, money laundering conspiracy, filing false tax returns, and several other related crimes and was sentenced to 336 months’ imprisonment, restitution, forfeiture, and a special assessment. The Third Circuit remanded for modification of the special assessment for mail fraud, but otherwise affirmed, rejecting an argument that the trial judge was biased. View "United States v. Ciavarella" on Justia Law

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On May 25, 2011, Lassiter filed a complaint alleging Fourth Amendment violations for excessive force and false arrest. The complaint stated that the incident giving rise to Lassiter’s cause of action took place on May 22, 2009. On August 2, 2011, defendants filed an answer asserting six affirmative defenses, but did not raise the two-year statute of limitations as a defense. During a pretrial conference on September 20, 2011, without being prompted by either party, the district court observed that the statute of limitations appeared to have expired but that defendants failed to raise the issue in their answer. Defendants’ counsel acknowledged that they had missed this issue. The court suggested that defendants could amend their answer. On February 23, 2012, over Lassiter’s opposition, the court granted leave to amend the answer. On May 29, the court dismissed the complaint as time-barred. The Third Circuit affirmed, holding that the court had authority to raise the statute of limitations issue during the Rule 16 conference. View "Lassiter v. City of Philadelphia" on Justia Law