United States of America v. Sutter Health is exemplary of the delicate balance courts must strike when dealing with attorney-client privilege.  Here, the United States District Court for the Northern District of California denied the relator’s motion for determination as to waiver of privilege, but granted alternative relief.  

This case involves alleged violations of the False Claims Act (“FCA”) and the Anti-Kickback Statute (“AKS”) by Sutter Health (“Sutter”), and at the core of this case is the relator’s motion arguing that Sutter waived attorney-client privilege over communications related to its internal review of the fair market value and commercial reasonableness of certain financial arrangements.  Specifically, the relator contended that Sutter’s references to legal consultations in their summary judgment motion constituted a waiver of this privilege.

The court instead found that Sutter’s references were merely “background facts” and not detailed disclosures that would necessitate a waiver of privilege.  The court’s ruling also emphasized that Sutter did not assert an advice of counsel defense, which would have put the content of the legal advice directly at issue.  This distinction is crucial for legal practitioners, as it highlights the importance of how and when legal advice is referenced in litigation. 

While the court denied the motion for a wholesale waiver of privilege, it nevertheless recognized the potential unfairness to the relator if Sutter were allowed to reference its legal consultations without providing access to the underlying communications.  To address this, the court precluded Sutter from introducing any evidence at trial that its “rigorous process” of ensuring its arrangements were supported by a third-party fair market value appraisal included consultations with its legal team. 

The court’s decision in this case offers strategic insights for legal practitioners involved in FCA and AKS litigation:

• When referencing legal consultations in litigation, it is essential to avoid detailed disclosures that could be construed as waiving attorney-client privilege.  Background references should be carefully crafted to provide necessary context without delving into the substance of legal advice.
• Parties should be prepared for the possibility that references to legal consultations may lead to the preclusion of related evidence at trial.  This requires a strategic approach to presenting defenses and ensuring that non-privileged evidence is robust enough to support the case.

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