State investigators accused a dentist of Medicaid fraud in the amount of $1.1 million. They said the dentist collected government money for services he never provided. A state judge acquitted the dentist of all charges, and the dentist then sued the investigators, claiming they fabricated spreadsheet evidence against him before the grand jury. The civil jury ruled in his favor, awarding him $7.7 million in damages, including over $4 million in lost earnings, $2.5 million in pain and suffering and $1 million in punitives, amounts that the district court reduced to $4.7 million. The Court of Appeals affirms it all.
The case is Morse v. Fusto, decided on September 11. When juries enter a verdict, you cannot really appeal on the basis that you had better evidence than the winning party. The jury decides who had the better evidence. So you appeal on legal issues.
Qualified immunity is a legal issue that defendants love to invoke. It says that defendants cannot be liable for violating the law if the case law at the time of the alleged violation was not clear enough. Defendants said the could not held liable because "they had no constitutional duty to include all material information in the spreadsheet summaries" when they presented the case to the grand jury. They also argued that the omissions in the spreadsheets did not constitute the kind of fabrication of evidence that the law prohibits. The Second Circuit disagrees. While grand jury proceedings are one-sided in favor of the prosecutor, the general rule prohibiting the fabrication of evidence through false statements or omissions covers what happened here, as the spreadsheets were misleading and effectively falsified. "The integrity of the judicial process can be unlawfully compromise by a government official's submission of information to a jury that implicates the accused based in part on material omissions."
While there are no cases precisely on point, the existing case law placed defendants on notice that what they did (or failed to do) violated the law. "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."
The verdict is sustained. Plaintiff lost his dental practice when he got arrested, and his name was dragged through the mud, which is why he won a huge damages award. Judge Sack cites in a footnote a famous quote from a Reagan administration official who was acquitted after a highly-publicized arrest. The official asked where he could go to get his reputation back. The law may give you money, but it cannot give you back your reputation.