It's hard to imagine a more dire situation—or a more dramatic turnaround—than what played out last week in Florida, where a team from Skadden, Arps, Slate, Meagher & Flom led an effort to wipe out a $350 million jury verdict in one of the rarest ways possible: judgment as a matter of law.

The owners and operators of 53 skilled nursing facilities in Florida, represented at trial by Akin Gump Strauss Hauer & Feld lawyers including Robert Salcido, were slammed with the penalty for violating the False Claims Act.

It wasn't that the services for which the government was billed were unnecessary, inadequate or incompetent. Rather, the penalty was for record-keeping violations—for example, the nursing homes couldn't identify a “comprehensive care plan” for each patient. The relator also asserted that a handful of paperwork defects, like unsigned or undated documents, must mean that the therapies were never provided.

The jury bought it—but the judge did not.

“The judgments effect an unwarranted, unjustified, unconscionable, and probably unconstitutional forfeiture—times three—sufficient in proportion and irrationality to deter any prudent business from providing services and products to a government armed with the untethered and hair-trigger artillery of a False Claims Act invoked by a heavily invested relator,” wrote U.S. District Chief Judge Steven Merryday of the Middle District of Florida on Jan. 11.

Neither the federal government nor the state of Florida intervened to back relator Angela Ruckh, who was represented by Kellogg Hansen Todd Figel & Frederick partners including James Webster III; Silvija Strikis; Joseph Hall and Derek Ho.

Nor was it apparent that the feds or Florida even viewed the record keeping violations as material—after all, they “paid and continue to pay to this day despite the disputed practices, long ago known to all who cared to know,” Merryday noted.

Indeed, lack of materiality was key for the judge in un-doing the verdict. Which begs the question: why did this case go to trial? Why didn't he toss it on summary judgment?

The answer might lie in timing. Motions for summary judgment were already submitted when the U.S. Supreme Court in June of 2016 issued a decision in another False Claims Act case, Universal Health Services, Inc. v. Escobar.

The Akin team pointed to Escobar during the 22-day trial, arguing the violations were not material, and Merryday leaned heavily on the high court's decision to justify overruling the jury.

“The defendants argue persuasively that the relator failed to offer evidence of materiality, defined unambiguously and required emphatically by Universal Health Services, Inc. v. Escobar,” Merryday wrote.

It was also apparent that he was conscious of the real-world impact that the verdict would have

The defendants, Salus Rehabilitation Inc. and related entities, “lack the ability to pay 'any amount near' $347 million,” he noted when he stayed the execution of judgment shortly after the Feb. 15, 2017 verdict. In 2016, the nursing homes combined earned less than $5 million before taxes. The judgment would likely trigger “a 'cascading default' that might force the closing of 183 skilled nursing facilities and might displace more than 17,000 vulnerable patients,” he wrote, given their interlocking finances.

And for what? To punish “long-standing non-compliance by a large provider of services in a pervasively regulated and monitored industry with a slim profit margin that, nonetheless, provides essential service to a large and vulnerable population without an available, alternative, health care provider.”

For Merryday, who blasted the relator for “ramping up” the case, this wasn't justified by the evidence at trial.

The Skadden team, which was retained after the verdict and was led by partners Gregory Luce, John Bentivoglio and Neil Rock, drafted the winning post-trial motion with assistance from Akin lawyers.

Luce declined comment.

Editor's note: This story was updated to reflect arguments at trial made by Akin Gump lawyers and their role in the post-trial motion.

|

Robbins Geller Looks on the Bright Side

Generally speaking, it's not good news for plaintiffs when a court of appeals de-certifies a class. But you'd never know that from a press release by Robbins Geller Rudman Dowd after the U.S. Court of Appeals for the Second Circuit on Friday reversed and remanded a lower court decision to certify a class of Goldman Sachs investors.

“We are pleased that the Court of Appeals rejected Goldman's position on the applicable standard at class certification, as well as Goldman's claim that the case should be dismissed in its entirety,” said Robbins Geller lead counsel Spencer A. Burkholz in the news release. “We look forward to returning to the district court and preparing the case for trial.”

Um, OK, if you say so. Except you used to have a certified class and now you don't.

Goldman Sachs was represented by Robert Giuffra Jr. of Sullivan & Cromwell. Backing him were amici including George Conway III of Wachtell, Lipton, Rosen & Katz for former SEC officials; Charles E. Davidow, Marc Falcone and Robyn Tarnofsky of Paul, Weiss, Rifkind, Wharton & Garrison for the Securities Industry & Financial Markets Association; and Lewis J. Liman of Cleary Gottlieb Steen & Hamilton for the U.S. Chamber of Commerce.

The plaintiffs, who are also represented by Labaton & Sucharow and Thomas Goldstein of Goldstein & Russell (plus their own all-star roster of amici) said Goldman made material misstatements. They flagged comments about its efforts to avoid conflicts of interest in relation to hedge-fund client Paulson & Co.'s Abacus transaction and three other CDOs. The plaintiffs allegedly lost $13 billion as a result of the fraud.

The defense argued Goldman stock experienced no price increase on the dates the statements were made, and no price decrease on occasions when the press reported on Goldman's conflicts of interest

The unanimous panel found that U.S. District Judge Paul Crotty in certifying the class may have imposed too high a burden on Goldman. Crotty ruled against Goldman because the defendants did not “conclusively” prove a “complete absence of price impact.”

That struck the panel as too extreme.

“Because the district court concluded its findings with these words, it is unclear to us whether the court required more of defendants than a preponderance of the evidence,” wrote Judge Richard Wesley for the panel.

Also, the court of appeals found Crotty wrongly construed evidence by a defense expert of 34 dates before 2010 when various news sources reported Goldman's conflicts without any accompanying decline in the price of Goldman stock.

“We espouse no views as to whether the evidence is sufficient,” they wrote. “We hold only that the district court should consider it on remand.”

Litigator Timothy Duffy worked on some of Kirkland's biggest cases, including BP's Deepwater Horizon spill and the GM ignition switch defect. His new franchise's slogan: “Experience the difference eyelash extensions can make in your life.”

The labor and employment firm is being sued for gender discrimination. Irony, much?

A win for Latham & Watkins partner Jeff Hammel.

Kool Smiles dental clinics allegedly billed for medically unnecessary baby root canals. What is wrong with people?

The Justice Department is urging the court to make every patent owner whole for domestic patent infringement, no matter whether the damages occur in the United States or abroad.

The machines (literally) short-changed customers by as much as 14 percent.

Including one nobody wants to admit: A lawyer whose plate is only half full may be in no hurry to push a case to conclusion.