A federal judge has preliminarily ruled to disqualify the downtown L.A. law firm representing the California State Compensation Insurance Fund in a $160 million racketeering case against a consortium of health care providers.
Hueston Hennigan, a high-powered litigation boutique that also has an office in Newport Beach, faces uphill odds to avoid being kicked off the case, which is being heard at the Ronald Reagan Federal Courthouse in Santa Ana.
U.S. District Court Judge Andrew Guilford’s tentative written order minces no words in finding the firm violated its ethical duties by representing both the plaintiff state fund and a defendant in the lawsuit. A hearing is set for Monday morning where the ruling could be finalized.
“Can a single law firm represent both the victim and the victim’s alleged perpetrator at the same time and in the same litigation?” the judge’s order reads. “The answer is clear: No.”
John Hueston, who represents the state insurance fund in the case, referred questions to his partner Brian Hennigan, who represents health care marketer Paul Richard Randall. Randall pleaded guilty in a related criminal case where he admitted to facilitating kickbacks to the hospital group being sued by the state fund.
“The matter is pending before the court and we anticipate it will be discussed at length Monday morning,” Hennigan said. “We received the court’s tentative ruling this evening and it is premature to comment.”
The Racketeer Influenced and Corrupt Organizations Act suit was filed in 2013 over alleged kickbacks given to doctors for illegal referrals to a group of health care providers run by Michael Drobot. Drobot, who pleaded guilty to federal fraud charges in 2014, allegedly paid doctors $10,000 to $15,000 to refer patients to Pacific Hospital for spinal surgeries. These activities led to as much as $500 million in fraudulent claims paid out by the state insurance fund and other insurers.
Santa Monica attorney Cris Armenta, who represents defendant Dr. Lokesh Tantuwaya, filed the disqualification motion in February citing an “awkward and seemingly nonwaivable conflict of interest.”
Hueston Hennigan maintains no impropriety occurred due to a conflict waiver signed by Randall.
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