Planned Parenthood Appeal Poses Immunity Risks for Companies

Planned Parenthood Federation of America Inc. will argue Wednesday that it should be shielded from an anonymous whistleblower’s Medicaid fraud suit in an appeal that could have major implications for how attorneys represent organizations and corporations.

The US Court of Appeals for the Fifth Circuit must find that attorney immunity precludes Alex Doe’s False Claims Act suit because Doe’s claims are based on the conduct of Planned Parenthood’s litigation and law department, the organization says.

Doe says that Louisiana and Texas terminated Planned Parenthood’s Medicaid eligibility because of video footage he posted about the organization online, but that the organization continued to bill the federal health-care program in violation of the FCA. Doe sued in 2021 after posing as a representative for a tissue procurement company and recording a conversations with the staff of a Planned Parenthood affiliate to determine whether it could provide fetal tissue.

Planned Parenthood’s L&L department allegedly implemented a “top-down, comprehensive” litigation strategy to keep organization affiliates billing the government while courts determined whether they were authorized to do so. Granting immunity here would allow any corporation that involves attorney-employees in their wrongdoing to avoid accountability, Doe says.

Planned Parenthood contends that Doe is actually arguing that L&L “masterminded” the litigation strategy of seeking federal injunctions to maintain Medicare eligibility.

The Fifth Circuit could “thread a needle” and determine that Planned Parenthood wins here because there’s a difference between an attorney who engages in conduct and one who participates in a lawsuit in order to determine if that conduct is legal, said Stephen Hasegawa, who represents whistleblowers with Phillips & Cohen LLP. The lawsuit doesn’t change the conduct, it just determines whether the conduct is permissible, he said.

‘Buy Immunity’

“But if the Fifth Circuit went out of its way to say that a lawyer’s participation always immunizes a client’s conduct, that would create real world problems,” Hasegawa said. “Every company would insert lawyers into every aspect of their practices just to buy immunity,” he said.

Doe’s brief raises an argument “which, if factually supported, should defeat the attorney immunity defense in many cases” that involve in-house or functionally in-house counsel, said Aaron P. Silberman of Rogers Joseph O’Donnell.

In many such cases, “the lawyer serves a dual legal/business role, and, if the latter had anything to do with the alleged false claims violations, I’d think the immunity defense would fail,” he said.

This issue here isn’t “crystal clear, and so the court risks creating sweeping precedent based on an unclear fact pattern,” said Reuben A. Guttman of Guttman, Buschner & Brooks PLLC, a firm that represents whistleblowers.

This dispute could have been avoided by deciding whether there was even a false claim submitted, letting that issue run through the appellate process, and then addressing the matter of who caused the claim to be filed, if necessary, he said.

A ruling that impairs attorney immunity “will probably have a disproportionate impact” on groups like civil rights organizations and labor unions that give advice to affiliates because they have national organizations that historically provide advice to local chapters, Guttman said.

Covert Recording

The 2021 lawsuit alleges Louisiana and Texas terminated the eligibility of the affiliates—Planned Parenthood Gulf Coast, Planned Parenthood of Greater Texas, and Planned Parenthood South Texas—to bill Medicaid because of his report, but that the claims for Medicaid payments continued.

Judge Matthew J. Kacsmaryk of the US District Court for the Northern District of Texas denied Planned Parenthood’s motion for summary judgment in part. That opinion is, like Alex Doe’s identity, under seal and isn’t viewable on the public docket. A trial date was set for April 16 before Planned Parenthood appealed.

There’s no plausible dispute that Planned Parenthood’s L&L attorneys would be immune from suit themselves, the group said in its brief. Under Texas law, for example, attorneys are absolutely immune from liability to third parties for actions while representing a client, it said.

Because the organization is being sued for L&L attorneys’ conduct under a theory that it’s responsible for the conduct of its affiliates, it follows that the L&L attorneys’ immunity also protects Planned Parenthood, the organization said.

Doe countered by saying the attorneys who work for Planned Parenthood aren’t being sued, so there’s no reason to shield Planned Parenthood.

Silberman said that he agreed with the argument that an attorney can’t be liable for causing the submission of a false claim where the only alleged conduct was providing legal advice, and that statements made by counsel in litigation can’t themselves be false claims and create liability.

“Allowing FCA liability in that situation would unduly expand the plain meaning of the FCA liability provisions,” Silberman said.

A strong ruling the other way is also unlikely, Hasegawa said. “I doubt the Fifth Circuit is looking for ways to give Planned Parenthood a sweeping victory here,” he said.

Hacker Stephens LLP represents Doe. O’Melveny & Myers LLP represents Planned Parenthood.

Planned Parenthood receives funding from Bloomberg Philanthropies, the charitable organization founded by Michael Bloomberg. Bloomberg Law is operated by entities controlled by Michael Bloomberg.

The case is United States ex rel. Doe v. Planned Parenthood Fed. of Am. Inc., 5th Cir., No. 23-11184, oral argument 3/13/24.