Georgia Court holds that Claiming Conduct was Lawful Results in Waiver of the Attorney-Client Privilege

According to a federal district court in Georgia, the attorney-client privilege is waived when one responds to an accusation of illegal activity with the contention that the conduct in question was legal.

In Barker v. Columbus Regional Healthcare System, Inc., No. 4:12-cv-108 (M.D. Ga. August 29, 2014), Richard Barker brought suit under the False Claims Act alleging that Columbus Regional Healthcare System, Inc. violated the federal Anti-Kickback Statute and the Stark Law and falsely stated that it had complied with these provisions when submitting claims for payment to various federal healthcare programs. Columbus Regional denied that it had knowingly violated the law. However, it also stated that it believed it had acted lawfully. Barker argued that this additional contention resulted in a waiver of the attorney-client privilege.

The district court agreed, stating that when one affirmatively asserts a belief that his or her conduct was legal, that person has inserted his or her knowledge of the law into the case. This results in a waiver of the attorney-client privilege because, in the court’s view, it would be unfair to allow defendants like Columbus Regional to present evidence showing that it intended to comply with the law while preventing those in Barker’s position from gaining access to information that might demonstrate that the defendant knew that it was violating the law. The court rejected Columbus Regional’s argument that, given the highly regulated nature of the healthcare industry, the dependence providers place on regular and candid communications with their attorneys and the benefits obtained from these open discussions, the court’s reasoning should not apply to suits under the False Claims Act alleging healthcare fraud. As a result, Columbus Regional was directed to produce all communications between it and its lawyers relating to whether the conduct which formed the basis of Barker’s suit would comply with the Anti-Kickback Statute, the Stark Law or associated regulations.

The analysis used by the Barker court was governed by the Eleventh Circuit’s twenty-year old decision in Cox v. Adm’r U.S. Steel & Carnegie, 17 F.3d 1386 (11th Cir. 1994). Columbus Regional may attempt to take an appeal from the district court’s decision. If this occurs, the Eleventh Circuit might revisit its prior reasoning. However, even if this happens, other courts may decide to adopt the analysis used in Barker. As a result, defendants who have been accused of illegal conduct should be cautious about how they respond to these charges. A mere denial of unlawful activity will likely not result in any adverse consequences. However, the assertion that the defendant believed that he or she acted in a lawful manner may result in the loss of the attorney-client privilege.

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