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By: Alyssa Wolf
A recent ruling in the Eleventh Circuit affirmed a decision of the Northern District of Alabama siding with a law firm sued for malpractice after not warning the client to cease behavior in an unsettled area of law later found to be illegal. In Reynolds v. Levin No. 20-13581, 2021 WL 4627905 (11th Cir. Oct. 7, 2021) the Eleventh Circuit Court of Appeals affirmed summary judgment in favor of Boston-based law firm Mintz, holding 1) the attorneys had no duty to advise the client to cease an activity where the law governing the activity was unsettled at the time; 2) Mintz’s duty was to advise the client of the various options available to it; and 3) Mintz fulfilled its duty. The dispute arose after Atherotech, a diagnostics lab based in Birmingham, requested legal advice from Mintz regarding payment of processing and handling fees to physicians. Rather than explicitly telling Atherotech to stop paying the fees, Mintz advised Atherotech that there was always risk associated with making such payments and the only way to eliminate the risk would be to stop paying the fees. Atherotech continued to pay the fees. After Atherotech declared bankruptcy in March 2016, a $25 million claim was made by a qui tam relator, alleging that Atherotech’s process and handling payments to physicians violated the federal Anti-Kickback Statute and False Claims Act. Atherotech’s bankruptcy trustee then brought suit against Mintz, alleging that Mintz’s failure to tell Atherotech to stop paying the fees contributed to Atherotech’s shuttering. Finding the law at the time of Mintz’s advice was unclear as to whether payment of the fees violated the federal Anti-Kickback Statute and False Claims Act, the District Court granted Mintz’s Motion for Summary Judgment.
On appeal, the Eleventh Circuit found the bankruptcy trustee’s claims unpersuasive. During oral argument in August 2021, Circuit Judge Andrew L. Brasher noted that Atherotech continued to pay the physician fees in 2012 while defending a related qui tam action, months after Atherotech had been advised by Mintz of the potential risks. The Eleventh Circuit’s holding in Reynolds v. Levin is instructive as it holds a law firm has no obligation to instruct a client to act in a specific manner if the area of law is unsettled. Advising the client of the potential risks involved is sufficient to meet the lawyer’s obligation.
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