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Lawyer Fights for Brady Evidence Rule in Civil False Claims Case

Sept. 14, 2020, 10:30 AM

New White House instructions directing federal agencies to disclose exculpatory evidence to defendants in administrative cases should apply in civil cases too, the lead attorney in a high-profile medical lawsuit is arguing.

The White House Office of Management and Budget issued a memorandum Aug. 31, asking executive branch departments and agencies to revise their enforcement and adjudication practices to comport with an executive order signed by President Donald Trump in May.

The order directed agencies to go easy on businesses trying to stay open during the coronavirus pandemic.

OMB’s memo directs agencies to conform their civil adjudicatory evidence disclosure practices to those described by the U.S. Supreme Court in 1963’s Brady v. Maryland and Giglio v. U.S. nine years later, landmark rulings compelling prosecutors to hand over potentially exculpatory proof to criminal defendants before trial.

Federal agency officials should timely disclose such evidence and automatically disclose evidence material to the mitigation of damages or penalties, according to the OMB memo.

“If the government has to do it in criminal cases and they have to do it in administrative enforcement actions, why shouldn’t they have to do it in a civil action?” said Patric Hooper, partner at Hooper, Lundy & Bookman PC, in Los Angeles.

False Claims Act Case

Hooper’s the lead attorney representing Reliance Medical Systems in a long-running False Claims Act lawsuit brought by the Department of Justice in September 2014.

Several affiliated subsidiaries and physicians are facing allegations stemming from physician-owned distributorship subsidiaries the DOJ claims were used to funnel kickbacks to physicians to get them to use Reliance’s spinal implant devices in surgeries paid for by Medicare.

The government dropped its criminal investigation in February 2019, and the parties are now in the discovery phase of civil False Claims Act allegations.

The DOJ did not reply to an email request for comment on Hooper’s assertion. A spokesperson for the Department of Health and Human Services referred inquiries to OMB.

Responding to a request for comment by the budget office, a senior administration official said, “while we don’t comment on pending litigation, we can note that the memo very clearly is simply a list of best practices for agencies to consider as they review their regulations, practices, and procedures.”

Judge Dean Pregerson of the U.S. District Court for the Central District of California has yet to rule on Hooper’s April motion to compel the government to turn over exculpatory evidence to Reliance. After seeing the specific case language in the recent OMB memo, Hooper said he updated his motion to reference it.

DOJ contends it’s not obligated to do so. In a May 8 document responding to the motion, Justice Department lawyers said that while Brady has governed criminal prosecutions for nearly 60 years, it appears that federal courts have applied its holding to civil matters only three times.

There are two principal reasons why Brady does not apply to cases like Reliance, the DOJ said. Unlike in criminal prosecutions, the defendants’ liberty is not at stake, they said. And civil litigants, as compared with criminal defendants, have broad discovery rights, they said.

“The president has just said that administrative agencies have to do it, so if they have to do it, why shouldn’t the government do it in a civil action?” Hooper said. “That’s the point.”

Agency Deadline

Among the principles set out in Trump’s Executive Order 13924 is that the government should bear the burden of proving an alleged violation of law; administrative enforcement should be prompt and fair; agency adjudicators should operate independently of enforcement staff; and all rules of evidence and procedure should be made public in clear language.

The memo provided an extensive list of “best practices” for agencies to consider as they revise their enforcement and adjudication policies.

Federal agencies have been given a Nov. 26 deadline to update their regulatory enforcement and adjudication practices and, if needed, issue any procedural rules describing those practices. Rules changing agency procedure do not require public comment and are relatively easy to change later.

The White House memo directed agencies to coordinate with OMB’s Office of Information and Regulatory Affairs on their rules and said agencies could apply for a waiver.

“For most agencies they’ll look at this and say, ‘We’re already doing this,’” Christopher Walker, professor of law at Ohio State University and a member of the Administrative Conference of the U.S., said.

But it’s better politically for the Trump administration to formalize these changes now, which makes them more likely to “stick” as a practical matter, said Cary Coglianese, professor of law and political science at the University of Pennsylvania Carey Law School.

The case is U.S. v. Reliance Med. Sys., LLC, C.D. Cal., No. 14-06979.

To contact the reporter on this story: Cheryl Bolen in Washington at cbolen@bgov.com

To contact the editors responsible for this story: Martha Mueller Neff at mmuellerneff@bloomberglaw.com; Andrew Harris at aharris@bloomberglaw.com; Karl Hardy at khardy@bloomberglaw.com