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Atherotech Loses Legal Malpractice Appeal Over Payments Probe

Oct. 8, 2021, 5:48 PM

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC isn’t responsible for getting its client, laboratory operator Atherotech Inc., into hot water with federal investigators over certain payments to physicians, because the payments weren’t clearly improper at the time, the Eleventh Circuit affirmed.

Mintz Levin fulfilled its duty to advise Atherotech about its options and the associated risks in addressing a competitor’s payments, the U.S. Court of Appeals for the Eleventh Circuit said Thursday in an unpublished per curiam opinion.

Atherotech’s bankruptcy trustee, Thomas Reynolds, appealed a grant of summary judgment for the firm.

Atherotech sought Mintz Levin’s advice in 2011 when a competing laboratory paid higher blood-specimen processing and handling fees to physicians than Atherotech did. Atherotech paid a $3 fee to its physician customers for drawing blood and a $7 P&H fee, while the rival paid a $20 P&H fee, according to the court.

Earlier government fraud alerts had pegged laboratory payments to referring physicians as potential kickback violations, and Atherotech believed the competitor’s fee was illegal. A Mintz Levin attorney offered several options, including reporting the competitor to the authorities, filing suit as a whistleblower, or asking the government for an advisory opinion.

She warned the board that the reporting option was risky in the then-"murky” legal environment because Atherotech itself was paying P&H fees.

Atherotech reported the other company and found itself the target of a Department of Justice investigation. The government issued a new alert that even “fair market value” P&H payments to induce referrals violated a law against kickbacks, and Atherotech stopped the practice. After it entered bankruptcy, Reynolds sued the firm, lost in the district court, and appealed.

The law was unsettled about fair-market fees at the time of Mintz Levin’s advice to Atherotech, the appeals court said. The firm therefore “had no duty to advise Atherotech to stop paying P&H fees,” the court said.

Its duty was to advise its client of the options and risks, and let it make its own decision, the court said.

Judges Jill A. Pryor, Robert J. Luck, and Andrew L. Brasher served on the panel.

Christian & Small LLP represented Reynolds.

Mintz Levin was represented by itself, Lightfoot Franklin & White LLC, and Locke Lord LLP.

The case is Reynolds v. Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., 2021 BL 384826, 11th Cir., No. 20-13581, unpublished 10/7/21.

To contact the reporter on this story: Martina Barash in Washington at mbarash@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Patrick L. Gregory at pgregory@bloomberglaw.com

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