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Immunity denied for Prosecutors - Jury Verdict Upheld

Facts: Dr. Leonard Morse was a dentist who had a successful practice in Brooklyn, that was until the Defendants alleged he was committing fraud. Defendants here are John Fusto, a former prosecutor with the New York State Attorney Generalʹs Office Medicaid Fraud Control Unit, and Jose Castillo, a former audit‐investigator with the Unit. "The defendants suspected that Morse, a dentist with a practice in Brooklyn, New York, was perpetrating Medicaid fraud by submitting false billing to Medicaid." P.3 Dr. Morse was charged and indicted but later acquitted by the jury, losing his dental practice and suffering damages in the process. The doctor filed an action in Federal Court alleging that the evidence was manufactured by the defendants, thus depriving him of a fair trial. After a jury verdict was rendered in the doctor's favor, this appeal followed.

The Second Circuit held that:

As the district court held in a careful, detailed, and persuasive post‐trial opinion, Morse v. Fusto, No. 07‐CV‐4793, 2013 WL 4647603, at *7, 2013 U.S. Dist. LEXIS 123823, at *18 (E.D.N.Y. Aug. 29, 2013), the actions of the defendants upon which Morse bases his claims were the knowing creation of false or misleading evidence by a government officer acting in an investigative capacity. We have held that such activity by a government official qualifies as an unconstitutional deprivation of the victimʹs rights. This right was, moreover, clearly established at the time of the defendantsʹ conduct. The defendants are therefore not entitled to qualified immunity. See Buckley v. Fitzsimmons, 509 U.S. 259, 273 (1993) (immunity for prosecutors performing investigative functions is not absolute). We also conclude that the defendants waived their general‐verdict rule argument and are therefore not entitled to a new trial despite the district courtʹs conclusion that one of the three factual bases for the juryʹs conclusion as to liability was insufficiently substantiated by the evidence presented at trial.

Indeed, the jury came back with a verdict, finding the defendants knowingly created false or fraudulently altered documents, awarding the Doctor nearly Seven Million Dollars in compensatory damages and another One Million dollars in punitive damages. In rendering its verdict, the jury did not find, however, that the evidence was created in connection with the preparation for the presentation of evidence to the grand jury and not earlier as part of the investigation. This is important because of the extraordinary relief of qualified and absolute immunity for government officials for certain functions they perform. After the verdict, as is often the case, there were post-trial motions filed. The Defendants' post-trial motions asked for immunity and for the judge to issue, as a matter of law, a finding that the defendants were not liable to Doctor Morse for their actions. The District Court judge denied this relief, explaining that the defendants were not entitled to any immunity for their role in the investigation of Dr. Morse.

In so doing, the Court explains the actual role of the grand jury: "It is axiomatic that the grand jury sits not to determine guilt or innocence, but to assess whether there is adequate basis for bringing a criminal charge.ʺ Williams, 504 U.S. at 51. It has therefore ʺalways been thought sufficient to hear only the prosecutorʹs side.ʺ Id. This means that ʺthe suspect under investigation by the grand jury [has never] been thought to have a right to testify or to have exculpatory evidence presented.ʺ Id. at 52. In other words, Defendants like Dr. Morse never have a chance to show proof of innocence. Once an indictment is rendered solely on the basis of the information brought to the Grand Jury, the Defendant, whether doctor or McDonald's employee, must defense the case lodged against him or her and suffer the attendant consequences of a criminal prosecution.

So why not immunity for these government officials? The Court finds that ʺfalse information likely to influence a juryʹs decision . . . violates the accusedʹs constitutional right to a fair trial,ʺ because to hold otherwise, ʺworks an unacceptable ʹcorruption of the truth‐seeking function 1 of the trial process.ʹʺ Ricciuti, 124 F.3d at 130 (quoting United States v. Agurs, 427 U.S. 97, 104 (1976)). Information may be ʺfalseʺ if material omissions render an otherwise true statement false. The Court uses the Manganiello case as an example. In Manganiello v. City of New York, 612 F.3d 149 (2d Cir. 2010), the Second Circuit affirmed a verdict against a police officer who was found to have ʺmisrepresented the evidence to the prosecutors, or failed to provide the prosecutor with material evidence or information, or gave testimony to the Grand Jury that was false or contained material omissions,ʺ while knowing that he ʺwas making a material misrepresentation or omission or giving false testimony.ʺ Id. at 159 (internal quotation marks omitted). The misrepresentations and falsities disturbs the criminal justice system and results in otherwise innocent people being prosecuted and jailed..

Moreover, for the civil rights attorneys in the audience, the Second Circuit finds that the Doctor's right was clearly established - to be clear, the defendants ask the Court to award qualified immunity because the right to a fair trial (by a non-police officer) was not clearly established and thus the Defendants should be awarded qualified immunity (a bar to prosecution). The Court disagrees: "[a]lthough there is no prior decision of ours precisely equating the fraudulent omission of factual information from a document with the affirmative perpetration of a falsehood, Ricciuti and its progeny, including Zahrey, clearly establish that 'qualified immunity is unavailable on a claim for denial of the right to a fair trial where that claim is premised on proof that a defendant knowingly fabricated evidence and where a reasonable jury could so find.' ʺ P. 27 (quoting Morse, 2013 WL 4647603, at *11, 2013 U.S. Dist. LEXIS 123823, at *36).

Jury verdict upheld - The case is Morse v. Fusto, 13‐4074 (2d Cir. Sept. 11, 2015).

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