By Katie Dahlstrom
An expert hired by the city of Clinton testified Thursday that attorney Michael Walker and his law firm committed legal malpractice when they defended the city of Clinton against a federal False Claims Act case filed by former firefighter Timothy Schultheis.
Ronald Clark, who identified himself as an expert in the False Claims Act due to his years and depth of experience with the federal statute, testified Thursday that Walker committed legal malpractice by first accepting the case and subsequently not filing motions to dismiss under two federal rules.
Walker and his law firm Hopkins and Huebner were retained by the city in September 2009 after the city learned that Schultheis had filed suit in federal court, alleging the city had submitted false claims to Medicare and Medicaid in order to received higher reimbursement rates for ambulance runs.
The city council voted in August 2010 to settle the suit for $4.5 million to be paid over the course of 10 years to the U.S. Department of Justice and Schultheis, the whistleblower. The city now claims the suit was settled for too much and too soon due to Walker's negligence and is suing him and his firm for legal malpractice and seeking $4.67 million in order to recoup the cost of the settlement as well as other damages.
The city retained Clark, who is based in D.C., as an expert witness in the legal malpractice case and has paid him around $85,000, Clark testified.
Accepting the case was Walker's first act of negligence, Clark said. Walker has testified that he had never heard of the False Claims Act before he was retained by the city.
Clark asserted Walker had serious limitations because he did not know about the "very complicated" False Claims Act and the "unique" defenses the city could have employed. Walker should have turned down the case, sought co-counsel or hired an expert to consult with, Clark testified.
"He forged ahead with no knowledge," Clark said.
The subsequent alleged negligence was Walker's failure to assert that Schultheis' complaints were not specific enough and file a motion to dismiss under federal Rule 9(b). While not all circuits of the federal appeals courts agree that whistleblowers need to use specificity, the Eighth Circuit, which Iowa belongs to, does. Walker also could have filed a motion to dismiss under Rule 12(b)(6) on the grounds of an insufficient legal theory, Clark said.
"When you're going to allege fraud in a federal court, you have to do it with specificity so the defendants know what they are being accused of," Clark said.
The complaint Schultheis filed in federal court under seal in September 2008 lacked that specificity, Clark testified. He said the Schultheis complaint lacked specifics about who had committed the alleged fraud, what they had done, where and how.
Clark went paragraph by paragraph through the complaint as the jury followed along, pointing out each area where the complaint was too vague. For instance, Schultheis alleged "all" claims had been submitted falsely. In the Eighth Circuit, the complaint cannot say "all," but must specify which claims, Clark said.
The vagueness of the complaint, in his opinion, meant that if Walker had filed a motion to dismiss under Rule 9(b), the case would have been dismissed.
Clark also took issue with Schultheis' assertion in his complaint that he had personal knowledge of the claims that had allegedly been false because in his deposition, Schultheis said he had never seen a claim.
"My eyes went large," Clark said. "That alone is enough for this case to be thrown out."
The list of patients that Schultheis alleged had been submitted as claims contained in the federal complaint were not claims, but ambulance runs, which were not at issue under the False Claims Act, Clark contended.
Clark also asserted Walker should have attacked numerous vague references such as "these false claims," "on numerous occasions" and "managing employees and agents."
Clark's testimony will continue this afternoon.