Posted by Nicole Ryan and Christopher Rendall-Jackson
On March 9, 2015, in United States ex rel. Bumbury v. Med-Care Diabetic & Medical Supplies, Inc., a court in the Southern District of Florida disqualified the relators’ counsel for having a conflict of interest in violation of the Florida Rules of Professional Conduct.
In 2009, one of the defendants, Med-Care Diabetic & Medical Supplies, Inc. (“Med-Care”), had engaged the law firm Broad and Cassel (“B&C”) to provide legal advice concerning compliance with Medicare regulations. At that time, Parker Eastin was an associate at B&C, and he was involved in at least two matters regarding B&C’s representation of Med-Care. On October 29, 2010, Mr. Eastin left B&C and formed Nicholson & Eastin, LLP (“N&E”), with another former B&C associate, Robert Nicholson. In December 2010, one of the relators decided to retain Mr. Nicholson to file the instant qui tam action. At some point before the initial complaint was filed, Mr. Eastin told Mr. Nicholson that he did not believe that he would have a conflict of interest in representing the relators in the qui tam action, and he remained fully and completely involved in all aspects of the matter.
On January 16, 2015, the defendants filed a motion to disqualify Mr. Eastin and N&E from representing the relators after Med-Care’s attorney recognized Mr. Eastin’s name on historical billing records. On March 9, 2015, after two evidentiary hearings and supplemental briefing by the parties, Magistrate Judge Hopkins granted the motion to disqualify Mr. Eastin and N&E, holding that they had a conflict of interest under federal common law and that this conflict of interest violated the standards of the Florida Rules of Professional Conduct. Regarding Mr. Eastin, the court held that Mr. Eastin’s former representation of Med-Care and his current representation of the relators are substantially related because Mr. Eastin could be required to attack the regulatory advice that he had admitted previously providing to Med-Care and because Mr. Eastin was at B&C when B&C had advised Med-Care on other matters that are relevant to the allegations of illegal conduct made against Med-Care in the qui tam action. As a result, the court held that Mr. Eastin had been pursuing the instant matter under an actual conflict of interest in violation of Florida Rule of Professional Conduct 4-1.9(a). Regarding N&E, the court held not only that there is an irrebuttable presumption that confidential information had been disclosed to Mr. Eastin because the matters are substantially related, but also that Mr. Eastin was actually privy to confidential information because he had access to Med-Care’s files and had participated in two conference calls with Med-Care while working at B&C. As a result, the court held that N&E had been representing the relators in violation of Florida Rule of Professional Conduct 4-1.10(b).
Magistrate Judge Hopkins further held that, although a conflict of interest does not necessarily require the “drastic remedy” of disqualification, Mr. Eastin and N&E must be disqualified in this case. Regarding Mr. Eastin, the court found that it was necessary to disqualify Mr. Eastin in light of the following factors: that, within two months of advising Med-Care on compliance with Medicare regulations, Mr. Eastin began representing the relators regarding claims to sue Med-Care for failing to comply with some of the same Medicare regulations; that Mr. Eastin began representing the relators without performing any meaningful conflicts analysis; that it is “no small factor” that Mr. Eastin’s “ethical violation only serves to perpetuate the perception that lawyers elevate their self-interests above those of their clients”; that prejudice to the defendants can be presumed because the matters are substantially related; and that any prejudice to the relators and any tactical advantage gained by the defendants will be temporary. Regarding N&E, the court held that it was necessary to disqualify N&E because the firm had represented Med-Care in spite of Mr. Eastin’s conflict of interest and without performing any meaningful conflicts check.
A copy of the opinion can be found here. The relators and the defendants have submitted objections to portions of the Magistrate Judge’s rulings, and we will continue to monitor the case for any significant developments.