United States of America, ex rel. v. Sightpath Medical, Inc.

Background

The Cameron-Ehlen Group, Inc., doing business as Precision Lens, distributes intraocular lenses and other ophthalmology products. Paul Ehlen is identified as Precision Lens’s founder and majority owner. Kipp Fesenmaier, who previously worked for a Precision Lens corporate partner, filed a qui tam complaint in November 2013. In a qui tam action, a private person brings a civil fraud claim on behalf of the United States.

The United States later investigated the allegations and elected to intervene in August 2017. It filed an intervenor complaint on February 8, 2018, alleging that Precision Lens and Ehlen provided kickbacks to physicians in violation of the Anti-Kickback Statute and that the kickbacks led to false claims submitted to federal health-care programs, including Medicare, in violation of the False Claims Act.

The Federal Bureau of Investigation interviewed Precision Lens employees on February 19, 2013. The next day, Precision Lens retained counsel, who told the United States that future communications with the company and its employees should be coordinated through counsel. Fesenmaier nevertheless continued communicating with Ehlen and other Precision Lens personnel. At the direction of the Federal Bureau of Investigation, he secretly recorded conversations from February 2013 through January 2017. The United States produced 147 recordings to defendants in March 2019; 13 involved conversations with Ehlen or other Precision Lens personnel after Fesenmaier filed his complaint.

Defendants’ Motion

Defendants argued that counsel for Fesenmaier and the United States violated Minnesota Rule of Professional Conduct 4.2. That rule generally bars a lawyer from communicating about a matter with someone known to be represented by another lawyer unless the other lawyer consents or the communication is authorized by law or court order.

Defendants asked the court to dismiss the case, disqualify the plaintiffs’ lawyers from further participation, and prevent the plaintiffs from using evidence or evidence sources allegedly tainted by the communications. The United States argued that the communications were part of government investigative activities authorized by law before the start of criminal or civil enforcement proceedings.

Analysis

The court first concluded that defendants had not shown that Fesenmaier’s lawyers violated Rule 4.2. The record did not show that those lawyers directly or indirectly communicated with represented people, directed Fesenmaier to do so, supervised him, or used him as their agent. The court also found no legal authority establishing a violation based only on a lawyer’s knowledge that the lawyer’s client was communicating with represented people.

The court then analyzed the conduct of counsel for the United States. It found that Fesenmaier communicated with Ehlen and Precision Lens personnel at the direction of government counsel and government investigators, and that government counsel knew defendants were represented. Assuming the communications concerned the subject of the litigation, the court concluded that Rule 4.2 would have been violated unless the communications were authorized by law.

The court held that the authorized-by-law exception covered the government’s investigative activities before it intervened in the civil case. Although Fesenmaier filed the private complaint in November 2013, the United States did not become a party or commence its own civil proceeding against defendants until it intervened and filed its complaint in February 2018. The court reasoned that the rule’s reference to government investigative activities before civil enforcement proceedings most reasonably referred to activities before the government intervened.

The court distinguished cases involving private parties and post-intervention government contacts. It also stated that its ruling did not mean that all government investigative tactics are permissible. However, defendants had not shown that the investigative methods used here were illegitimate, impaired the fair administration of justice, or caused harm. The court therefore did not reach the question of what sanctions would have been appropriate if a violation had occurred.

Disposition

Judge Wilhelmina M. Wright ordered that defendants’ motion to dismiss, docket entry 288, is DENIED.