The Clinton Herald, Clinton, Iowa

October 17, 2013

Closing statements begin in legal malpractice trial

By Katie Dahlstrom Herald Assistant Editor
The Clinton Herald

---- — DAVENPORT — After nearly 12 days of testimony, closing arguments started Wednesday in the city of Clinton’s legal malpractice suit against the attorney who represented it in a 2009 federal False Claims Act lawsuit.

The city is suing Michael Walker and his law firm Hopkins and Huebner, claiming they were negligent in their representation of the city in a lawsuit brought by former Clinton firefighter Timothy Schultheis that alleged the city knowingly submitted false ambulance claims to Medicare and Medicaid.

In 2010, the city settled that case for $4.5 million, which leaders now claim was too much, too soon and the result of Walker’s negligence. The city is seeking $4.67 million to recoup the costs of the settlement as well as attorney and expert fees.

Two questions need to be answered, the city’s attorney, Mike Hannafan, told jurors as he delivered his closing arguments Wednesday afternoon. First, would the city have won the False Claims Act case either by getting it dismissed or in trial if it had been represented by a competent attorney? Second, did Walker and his law firm commit legal malpractice?

The city’s False Claims Act case was Walker’s “guinea pig,” Hannafan said.

Walker has testified he had not heard of the False Claims Act before accepting the city’s case, practicing mainly in litigation, municipal law and insurance. Hannafan likened Walker’s work on the case to a family doctor trying to perform brain surgery.

“He saw a chance to make the big time and make a lot of money for his firm,” Hannafan said.

Hannafan criticized Walker’s handling of the case, using the testimony from the False Claims Act expert the city retained, Ronald Clark.

The defense’s legal expert, Guy Cook, wasn’t believable, Hannafan said. Cook was recently chastised by U.S. District Chief Judge Linda Reade for violating a rule that prevents attorneys or anyone working for them from contacting jurors after a case has been decided. Cook also, by his own admission, was not a False Claims Act expert and did not read the settlement agreement when forming his opinion that Walker was not negligent. Hannafan also contended that Cook was biased towards Walker and his attorney Bob Waterman because Cook had represented the senior partner from Walker’s firm in a case several years ago.

Walker’s first breach of the standard of care was accepting the case, Hannafan said. He went on to tell the jury that not filing motions to dismiss the case at an early stage, not talking to paramedics besides EMS Director Andy McGovern, not calling a representative of Firehouse software about the duplicate reports that were discovered and not deposing Schultheis also showed Walker’s negligence.

Hannafan later turned his criticism to Schultheis, calling him a “know-it-all” with “an ax to grind.”

“I think he’s a liar, but that’s for you to decide for yourself,” Hannafan told the jury.

Schultheis filed the False Claims Act case on behalf of the U.S. government under seal in September 2008, a little more than a year after he joined the department and three months before he worked his last shift as a firefighter. The case was unsealed in September 2009 after the government decided not to intervene, which is when the city retained Walker.

When he testified in the first week of trial, Walker detailed several obstacles he saw in the city’s potential to prove it didn’t knowingly submit false claims and in turn defend itself against the allegation of Medicare fraud.

Walker testified he saw the city’s practice of budgeting for 100 percent of its ambulance calls at the higher advanced life support level as a red flag, but he did not ask former fire chief Mark Regenwether about the budgeting process, which Hannfan cited as another negligent act.

The Schultheis complaint alleged the city knowingly, deliberately or recklessly submitted the false claims under the direction of the EMS director and fire chief, McGovern and Regenwether, respectively. McGovern was subject to undeserved abuse, Hannafan told the jury.

McGovern was in charge of training paramedics on coding ambulance runs, which were ultimately billed through accounting specialist Sarah Nolan in the city’s finance department.

In a 2009 meeting with a federal prosecutor and Medicare fraud investigator, the city was told to add a second code to claims and informed the feds didn’t see any fraud, Hannafan said. Following the meeting, they applied the second code as instructed.

Further, firefighters believed they were following the ALS assessment rule correctly, Hannafan said, asserting that Walker testified Schultheis’ understanding of the ALS assessment rule was incorrect.

“They had no intention of cheating the federal government,” Hannfan said. “They thought (they were) doing it right.”

If McGovern thought he was defrauding the government, why would he recommend Walker contact Douglas Wolfberg to be used as an expert witness, Hannafan asked.

Moving on to Walker’s interactions with Wolfberg, Hannafan said Walker should have kept track of Wolfberg. According to Wolfberg’s bills, he didn’t start reviewing records until July 12, 2010. The date on which Wolfberg signed a document allowing him to accept records for review also was contrary to Walker’s testimony that Wolfberg mentioned duplicate reports on a March 15, 2010 conference call, Hannafan said.

Walker’s misrepresentation of Wolfberg’s 60 percent advanced life support and 40 percent basic life support ratio as a national standard rather than an off the cuff remark also came under fire during Hannafan’s closing. In a closed session meeting with the city council on April 13, 2010, Walker told the council the city had a real problem based on its 99 percent ALS rate when compared to the 60 percent touted as the national average. Council members during that meeting authorized Walker to offer a $1 million settlement.

At that point, Walker had already contacted Schultheis’ attorney about a settlement, e-mails show.

Hannafan pointed out several times in his closing argument that mistakes are not actionable under the False Claims Act and the claims have to be knowingly or intentionally false. In the 12 days the jury has been hearing testimony, jurors did not see a single claim that was knowingly prepared as false, Hannafan said.

Waterman was expected to deliver his closing arguments this morning, followed by Hannafan’s rebuttal. After closing arguments, it will be up to the jury to decide if Walker and his firm were negligent, if that negligence caused the city damages and if so, how much the city should receive.