In re: Grand Jury Subpoena ( 2022 )

REVISED 12/28/2022
United States Court of Appeals
for the Fifth Circuit United States Court of Appeals
Fifth Circuit
FILED
December 14, 2022
No. 21-30705
Lyle W. Cayce
Clerk
In re: Grand Jury Subpoena
Appeal from the United States District Court
for the Eastern District of Louisiana
Grand Jury No. 06-21-26
Before Higginbotham, Southwick, and Higginson, Circuit
Judges.
Leslie H. Southwick, Circuit Judge:
An individual and an advocacy group seek to appeal from the denial of
a motion to quash two grand jury subpoenas and an order compelling
compliance with one of them. There is no jurisdiction for appeals challenging
a grand jury subpoena for production of documents unless (1) the appellant
has been held in contempt, or (2) a client-intervenor asserts that documents
in the possession of a subpoenaed, disinterested third party are protected by
attorney-client privilege. Neither exception applies here. We DISMISS.
FACTUAL AND PROCEDURAL BACKGROUND
The Department of Justice conducted an investigation of Dr. Shiva
Akula for healthcare fraud in connection with his ownership of Canon
Hospice. On August 5, 2021, a grand jury for the Eastern District of
Louisiana indicted Dr. Akula on 23 counts of healthcare fraud. Putative
appellants here are Physicians Against Abuse (“PAA”), an advocacy group
No. 21-30705
that aids doctors in healthcare fraud investigations, and Christina Paylan
Black, Executive Director of PAA.
At some point, Dr. Akula retained PAA to advise him on the
investigation. PAA’s services include (1) assisting defense counsel in
comprehending Medicare billing and coding, medical terminology, and
practices and norms in the medical profession, (2) public relations, and (3)
identifying qualified expert witnesses to explain Medicare billing and other
healthcare-related issues. Prior to Dr. Akula’s indictment, in July 2021,
Black, in her capacity as PAA’s Executive Director, sent a letter to the
Assistant United States Attorney (“AUSA”) handling Dr. Akula and Canon
Hospice’s investigation and asked to discuss the investigation.
After Dr. Akula’s indictment in August 2021, the government issued
a press release summarizing the charges against him. PAA then issued its
own press release. It included a statement that the AUSA had “relied on a
disgruntled former employee of Dr. Akula . . . to make false accusations
against Dr. Akula.” PAA’s press release alleged the employee had an
“employment rap sheet . . . a mile long with threats and extortion.” It also
alleged she reported Dr. Akula because she was upset she did not receive a
raise after requesting one. Additionally, PAA’s press release claimed the
AUSA was “inexperienced” and did a poor job investigating Dr. Akula and
Canon Hospice.
On August 20, 2021, the government served both PAA and Black with
grand jury subpoenas. The AUSA contended the subpoenas were issued
because of concern that PAA and Black engaged in witness tampering and/or
obstruction of justice by issuing their press release. The subpoena issued to
Black sought production of the following:
1. All records reviewed related to Canon Hospice, as
referenced in correspondence dated July 29, 2021, page two,
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paragraph one: “We have reviewed substantial information
regarding employees, provider services, contractual
agreements as well as the organizational structure for billing
services at Canon Hospice;”
2. The “employment rap sheet for [the person],” as referenced
in the attached press release issued by Physicians Against Legal
Abuse;
3. A list of all individuals and entities who received the attached
press release from Physicians Against Legal Abuse, in the
matter of Shiva Akula; and
4. Identify when, and individuals to whom, you represented
yourself as an attorney.
The subpoena issued to PAA sought production of the same first three
categories listed in Black’s subpoena. It also demanded: “Any and all billing
records from Canon Hospice or Shiva Akula to Physicians Against Abuse or
anyone associated with Physicians Against Abuse.”
After Black and PAA failed to comply with the subpoenas, the
government moved to compel Black’s compliance. The district court
entered a show cause order against Black. Black and PAA then filed a motion
to disqualify the AUSA, contending she was using the grand jury to censor
speech. They also moved to quash the subpoenas, alleging the information
sought was protected by the First Amendment and attorney-client privilege.
Regarding the claim of attorney-client privilege, PAA and Black argued PAA
was hired to assist Dr. Akula to prepare his defense and to explain medical
processes. Accordingly, their communications with him were privileged
under the reasoning of another circuit court that the attorney-client privilege
may bar disclosures made by a client to nonlawyers employed as agents of the
attorney. See United States v. Kovel, 296 F.2d 918 (2d Cir. 1961).
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The district court heard oral argument, reviewed in camera Dr.
Akula’s retainer agreement with PAA, and met ex parte with the AUSA to
inquire about the purpose of the grand jury investigation, considering Dr.
Akula had already been indicted. Regarding the latter, the AUSA assured the
court the subpoenas were issued for the witness-tampering investigation, not
to investigate Dr. Akula. Ultimately, the district court granted the
government’s motion to compel Black’s compliance and denied Black and
PAA’s motions to quash and to disqualify the AUSA. The court held
attorney-client privilege did not apply under Kovel and the subpoenas did not
violate the First Amendment. Accordingly, PAA and Black were ordered to
comply with the subpoenas.
Instead of responding to the subpoenas, PAA and Black filed a motion
for clarification. Allegedly, they had identified hundreds of documents
protected by attorney-client privilege because the documents consisted of
communications between Dr. Akula and his counsel. PAA and Black argued
the court should permit Dr. Akula to intervene to assert his privilege, and
they asked the court to stay their court-ordered document production until
Dr. Akula could intervene. The court ordered the parties to produce the
allegedly privileged documents for in camera review and the non-privileged
documents to the government. Before the court ruled on the clarification
motion and without complying with the subpoena, PAA and Black filed a
notice of appeal from the court’s denial of their motion to quash the two
subpoenas and the order compelling Black’s compliance. The court denied
a motion to stay pending appeal and a motion for clarification. Further, Dr.
Akula was denied intervention.
DISCUSSION
PAA and Black argue (1) this court has jurisdiction to review the denial
of their motion to quash two grand jury subpoenas and the order compelling
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Black’s compliance; (2) the subpoenas violate the First Amendment; and (3)
their communications with Dr. Akula are entitled to attorney-client privilege
under Kovel.
We begin by analyzing jurisdiction de novo. In re Grand Jury
Proceedings, 115 F.3d 1240, 1243 (5th Cir. 1997). Our jurisdiction is generally
limited to reviewing final decisions of a district court. 28 U.S.C. § 1291;
Henry v. Lake Charles Am. Press, L.L.C., 566 F.3d 164, 170–71 (5th Cir. 2009).
This rule applies to appeals of orders issued in grand jury proceedings. In re
Grand Jury Subpoena, 190 F.3d 375, 380 (5th Cir. 1999). There are two
exceptions. First, if a witness chooses not to comply with a grand jury
subpoena compelling production of documents and is held in contempt, that
witness may immediately appeal the court’s interlocutory order. Cobbledick
v. United States, 309 U.S. 323, 327–28 (1940). Second, under what is called
the Perlman doctrine, a party need not be held in contempt prior to filing an
interlocutory appeal if “the documents at issue are in the hands of a third
party who has no independent interest in preserving their confidentiality.” In
re Grand Jury Subpoena, 220 F.3d 406, 409 (5th Cir. 2000) (citing Perlman v.
United States, 247 U.S. 7, 38 (1918)) (emphasis added).
Pursuant to the Perlman doctrine, “a discovery order directed at a
disinterested third party is treated as an immediately appealable final order
because the third party presumably lacks a sufficient stake in the proceeding
to risk contempt by refusing compliance.” Church of Scientology of Cal. v.
United States, 506 U.S. 9, 18 n.11 (1992). Importantly, “the subpoenaed third
party’s lack of interest in protecting the confidentiality of the subpoenaed
documents is the touchstone of the Perlman inquiry.” In re Grand Jury
Subpoena, 190 F.3d at 383. We have held that “a client-intervenor may
appeal an order compelling testimony from the client’s attorney” because,
“[a]lthough we cannot say that attorneys in general are more or less likely to
submit to a contempt citation rather than violate a client’s confidence, . . .
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some significant number of client-intervenors might find themselves denied
all meaningful appeal by attorneys unwilling to make such a sacrifice.” In re
Grand Jury Proceedings in Matter of Fine, 641 F.2d 199, 203 (5th Cir. 1981). In
sum, the Perlman doctrine applies “when the subpoenaed party is one who
has no direct and personal interest in the suppression of the information
desired by the grand jury.” Id. at 201.
Turning to this purported appeal, neither Black nor PAA has been
held in contempt for failure to comply with a subpoena. Therefore, no right
to appeal arises from a contempt order. See Cobbledick, 309 U.S. at 328.
As to the Perlman doctrine, the subpoenaed documents are in the
hands of PAA and Black. They are interested third parties in that they are
being investigated for witness tampering. They have a direct and personal
interest in suppressing the documents that could potentially corroborate the
witness tampering accusation. See Fine, 641 F.2d at 201–02. Consequently,
PAA and Black obviously have “a sufficient stake in the proceeding to risk
contempt by refusing compliance.” See Church of Scientology of Cal., 506 U.S.
at 18 n.11. We lack jurisdiction over the appeal, and PAA and Black must
either comply with the subpoena or be held in contempt to seek this court’s
review. APPEAL DISMISSED.
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