The United States District Court for the District of Rhode Island cast a spotlight on the doctrine of implied waiver of attorney-client privilege in a recent False Claims Act (“FCA”) case.  The case, United States of America ex rel. James R. Berkley v. Ocean State, LLC, et al., Case No. 20-538-JJM-PAS (D.R.I., June 26, 2024), delves into the implications of asserting an affirmative defense in an FCA case based partly on advice of counsel.

In Ocean State, plaintiff alleged that defendants submitted false certifications of compliance in connection with Paycheck Protection Program (“PPP”) loans.  Defendants claim that they did not act with the requisite scienter because they acted in good faith and in consultations with their attorneys in applying for the PPP loans.  This affirmative defense prompted the plaintiff to seek discovery of all communications between the defendants and their attorneys concerning the PPP loans, leading to a contentious debate over the applicability of the attorney-client privilege.

The court’s analysis hinged on the principle that the attorney-client privilege cannot be wielded as both a sword and a shield.  It emphasized that an implied waiver may occur when a party’s defense places attorney-client communications at issue, making it unfair to protect those communications from discovery.  In this case, the defendants’ assertions of reliance on their good faith belief in the lawfulness of their conduct, underpinned by legal advice, was deemed to have triggered such an implied waiver.

This decision serves as a critical reminder of the potential implications of defense strategies on the preservation of the attorney-client privilege.  It highlights the need for litigants and their legal advisors to tread carefully when considering the invocation of legal advice as a cornerstone of their defense, mindful of the risk of inadvertently waiving the attorney-client privilege.

For a deeper exploration of the implications of this ruling and strategic considerations in navigating the attorney-client privilege in litigation, we invite you to engage with our experienced legal team.  

Tags: False Claims Act, FCA, Paycheck Protection Program, PPP
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Photo of Michael Shaheen Michael Shaheen

Michael Shaheen is a partner in the White Collar & Regulatory Enforcement and Health Care groups in the Washington, D.C. office of Crowell & Moring. His practice focuses on federal litigation, investigations, and enforcement actions. Michael has significant experience with the False Claims…

Michael Shaheen is a partner in the White Collar & Regulatory Enforcement and Health Care groups in the Washington, D.C. office of Crowell & Moring. His practice focuses on federal litigation, investigations, and enforcement actions. Michael has significant experience with the False Claims Act (FCA), with particular emphasis on health care fraud.

Before joining Crowell & Moring, Michael served as a Trial Attorney with the Fraud Section of the Department of Justice (DOJ), where his work primarily involved investigating and prosecuting FCA matters. At DOJ, he obtained judgments totaling hundreds of millions of dollars and was involved in the settlement of numerous false claims cases of similar magnitude. Michael served in a variety of roles in these cases, ranging from first-chair trial attorney to lead investigator.

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Photo of Spencer Bruck Spencer Bruck

Spencer Bruck is counsel in Crowell & Moring’s Health Care group where he represents clients in litigation, fraud and abuse, and compliance matters. He recently joined the firm from the Office of the New York State Attorney General where he led civil health

…

Spencer Bruck is counsel in Crowell & Moring’s Health Care group where he represents clients in litigation, fraud and abuse, and compliance matters. He recently joined the firm from the Office of the New York State Attorney General where he led civil health care fraud and qui tam investigations involving managed care organizations, pharmaceutical companies, national pharmacies chains, hospital groups, nursing homes, independent medical groups, and other providers.

These investigations arose under the False Claims Act, Anti-Kickback Statute, Stark Law, the New York State Executive and Social Services laws, and managed care contracts. As part of his investigations, Spencer regularly liaised with CMS, HHS-OIG, DOJ, NYS DOH, NYS OMIG, and the New York State Comptroller. Spencer also negotiated self-disclosures with providers involving the HHS-OIG, the NYS OMIG, and the NYS MFCU protocols.

Spencer’s government experience helps him counsel health care entities on regulatory policy and guidance; represent health care entities responding to government surveys, audits, and investigations; conduct internal investigations or compliance reviews; advise on managed care contracts and reimbursement issues; and assist on administrative applications and matters before regulatory agencies; and represent entities in matters in state and federal courts, and in administrative proceedings.

Spencer also litigates complex commercial disputes federal, state, and arbitral forums with a focus on representing managed care companies.

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Photo of Michelle Chipetine Michelle Chipetine

Michelle Chipetine is a counsel in Crowell & Moring’s New York office and a member of the firm’s Intellectual Property and Health Care groups. Michelle’s practice focuses on patent litigation and representing health care entities and not-for-profit corporations on a wide range of…

Michelle Chipetine is a counsel in Crowell & Moring’s New York office and a member of the firm’s Intellectual Property and Health Care groups. Michelle’s practice focuses on patent litigation and representing health care entities and not-for-profit corporations on a wide range of transactional, corporate, and regulatory matters. Michelle also maintains an active pro bono practice.

Michelle graduated cum laude from Fordham University School of Law, where she was a legal writing and torts teaching assistant and actively involved with Fordham’s Neuroscience and Law Center. During law school, Michelle worked for Mount Sinai Innovation Partners, where she facilitated the transfer and commercialization of technologies developed by Mount Sinai researchers. Michelle also studied neuroscience at Vassar College, where she graduated cum laude.

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