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Tuesday, July 09, 2013

Ind. Decisions - More on "7th Circuit Panel Reinstates False Claims Suit Against ITT "

Supplementing this ILB post from early this morning, Alison Frankel writes this afternoon for Reuters in a long story labeled as "opinion", that gives a lot of context to the ruling yesterday. Some quotes:

U.S. District Judge Tanya Walton Pratt certainly took a dim view of Leveski’s suit, which the Justice Department declined to join. Even though a previous judge twice denied motions to dismiss by ITT’s lawyers at Gibson, Dunn & Crutcher, Pratt tossed the case in August 2011, concluding that the old FCA case against ITT that Leveski had reviewed before filing her suit amounted to a public disclosure of the practices Leveski alleged. Leveski didn’t add sufficient detail to distinguish her claims from the previous suit, the judge said, and didn’t have enough direct and independent knowledge to be considered an original source of new information. Pratt mentioned the dismissal of two of Matusheski’s other FCA suits in the August 2011 ruling, but the judge really ripped into the plaintiffs lawyer in a subsequent opinion in March 2012 awarding ITT $394,998 in attorneys’ fees from Matusheski, Leveski’s local counsel at Plews Shadley Racher & Braun and a late entry to the case, Motley Rice. Pratt wrote that Matusheski had “tiptoed around sanctions awards” in two previous FCA cases against for-profit educational institutions, which made his decision to proceed with the substantially similar Leveski case “risky, if not ridiculous.”

“Matusheski’s tactics are far worse than the garden-variety ‘ambulance chasing,’” Pratt wrote.

“At least in those scenarios, the lawyer has some guess that the prospective plaintiff may have a viable case – he or she has, after all, suffered some harm. Here, by contrast, Matusheski plucked a prospective plaintiff out of thin air and tried to manufacture a lucrative case. And, given Matusheski’s extensive track record (which includes an apology to a federal court in a very similar case), the court is persuaded that some type of monetary penalty is necessary to deter Matusheski and those attorneys who assist in his schemes from engaging in this type of conduct going forward.”

Those are mighty harsh words – but according to a ruling Monday by a three-judge panel of the 7th Circuit Court of Appeals, they’re completely unwarranted. Appellate Judges Daniel Manion and John Tinder and U.S. District Judge John Lee (sitting by designation) said in an opinion by Tinder that Leveski’s case should not have been dismissed. She raised enough new and specific claims to distinguish her suit from previous public disclosures, the judges said, and moreover was an original source of direct and independent knowledge of ITT’s practices even though she did not hold a position of authority at the company. “Leveski’s case appears to be substantial, not frivolous,” the 7th Circuit said.

There is much more in the story.

Posted by Marcia Oddi on July 9, 2013 02:57 PM
Posted to Ind. (7th Cir.) Decisions