United States District Court, W.D. Kentucky, Louisville Division
MEMORANDUM OPINION & ORDER
H Lindsay, Magistrate Judge United States District Court.
the Court is the Motion to Disqualify Counsel (DN 78) filed
by the United States. The United States sought to disqualify
James A. Earhart (“Earhart”), appointed counsel
for Defendant Janice Patterson (“Patterson”).
Patterson filed a response (DN 84), and the United States
filed a reply (DN 85). The Court held a hearing on the United
States' Motion on August 19, 2019 at which it heard the
arguments of counsel and testimony from witnesses. (DNs 92,
reasons set forth below, the United States' Motion to
Disqualify Counsel (DN 78) is DENIED.
March 9, 2017, Earhart was appointed to represented
Patterson's husband, Marvin Patterson (“M.
Patterson”), in the Southern District of Indiana. Order
Appointing Counsel, DN 12, USA v. Patterson, No.
4:17-cr-06-SEB-VTW (S.D. Ind. Mar. 9, 2017). M. Patterson was
charged with two counts of possession of a machine gun in
violation of 18 U.S.C. §§ 922(o), 924(a)(2) and one
count of possession of a sawed-off shotgun in violation of 26
U.S.C. §§ 5845, 5861(d), 5871. Indictment, DN 1,
USA v. Patterson, No. 4:17-cr-06-SEB-VTW (S.D. Ind.
Feb. 28, 2017). The gun charges arose from a search warrant
issued for M. Patterson's home that was executed as part
of an investigation of Patterson for health care fraud. (DN
95, at Gov't's Ex. 1.) On the date the warrant was
executed and prior to Earhart's representation of him, M.
Patterson gave a recorded statement to law enforcement that
overwhelmingly focused on the investigation of health care
fraud and not the firearms discovered in the home and for
which he was eventually charged. (DN 78, at Ex.F; DN 80.)
of his representation of M. Patterson, Earhart filed a motion
to suppress the fruits of the search warrant arguing that the
affidavit justifying the search warrant was unsupported by
probable cause and the seizure of the firearms exceeded the
scope of the warrant. Motion to Suppress, DN 25, USA v.
Patterson, No. 4:17-cr-06-SEB-VTW (S.D. Ind. Sept. 12,
2017). While the United States filed a response to the
motion, and Earhart filed a reply, the district court never
held a hearing on the motion because the parties reached a
plea agreement. Courtroom Minutes, DN 37, USA v.
Patterson, No. 4:17-cr-06-SEB-VTW (S.D. Ind. Feb. 14,
2018). M. Patterson pleaded guilty to possession of a
sawed-off shotgun, and the United States dismissed the other
two counts of the indictment. Courtroom Minutes, DN 48,
USA v. Patterson, No. 4:17-cr-06-SEB-VTW (S.D. Ind.
July 24, 2018). Earhart filed a sentencing memorandum and
objections to the presentence investigative report.
Sentencing Memorandum, DN 45, USA v. Patterson, No.
4:17-cr-06-SEB-VTW (S.D. Ind. July 3, 2018). M. Patterson was
ultimately sentenced to one year of probation. Judgment, DN
49, USA v. Patterson, No. 4:17-cr-06-SEB-VTW (S.D.
Ind. July 26, 2018).
27, 2017, Patterson was indicted in the instant action for
health care fraud, conspiracy to commit health care fraud,
money laundering, aggravated identity theft, and conspiracy
to unlawfully distribute controlled substances. (DN 1.) The
charges relate to Patterson's actions during her
management of the Kentuckiana Medical Clinic
(“KMC”) and J.M. Autism Foundation (“J.M.
Autism”). (DN 78, at PageID # 188.) Patterson was
initially represented by retained counsel, Frank Mascagni.
(DNs 11, 17.) After Mascagni moved to withdraw (DN 68), on
November 20, 2018, the Court appointed Earhart to represent
Patterson (DN 69).
10, 2019, the United States moved to disqualify Earhart based
on his prior representation of M. Patterson. (DN 78.) The
United States cited to evidence that M. Patterson was an
authorized signer of multiple J.M. Autism bank accounts, is
listed on the Indiana Secretary of State's website as an
incorporator of J.M. Autism, acted as an ABA Services
Coordinator for J.M. Autism, and received a 1099 from J.M.
Autism in 2014. (DN 85, at PageID # 252.) Based on this
evidence, the United States argued that M. Patterson
“is an unindicted co-conspirator who had knowledge of
and was participating in the crimes for which Janice
Patterson is charged . . . .” (Id. at 253.)
The United States also noted that the search warrant that
resulted in M. Patterson's charges was issued as part of
the investigation that led to Patterson's instant charges
and stated that because of the overlap, it is likely Earhart
received confidential information from M. Patterson that
creates a conflict for his representation of Patterson.
response, Earhart argued that M. Patterson's gun charges
and the instant charges against Patterson bear no
relationship to each other save for the common search
warrant. (DN 84, at PageID # 245.) He represented that he
received no discovery from the United States as part of his
representation of M. Patterson that related to the health
care investigation outside from the search warrant and
affidavit. (Id. at 245-46.) The Court held an
evidentiary hearing on the United States' Motion on
August 19, 2019. (DNs 88, 92, 94.)
evidentiary hearing, the United States subpoenaed M.
Patterson to testify. (DN 92, at PageID # 297.) M. Patterson
testified that he had retained another attorney to represent
him in connection with this matter. (Id. at 298.) He
indicated that he got the name of his new attorney from
Earhart and that he retained his new counsel after he was
served with the subpoena to testify. (Id. at
302-03.) The United States also called investigator Diane
Hedges with the Indiana Attorney General's Office to
testify regarding the investigation that let to these charges
and service of the subpoena to M. Patterson (Id. at
303-04.) She testified that on the date she served the
subpoena on M. Patterson, Patterson was present and stated
that both she and M. Patterson were
“represented.” (Id. at 305.) M.
Patterson then stated that “this is all about Janice
not having the same attorney representing her.”
(Id. at 306.)
for the United States then proceeded to ask Hedges a number
of questions related to the investigation that led to the
instant charges against Patterson and M. Patterson's
relationship to the investigation. Hedges testified that she
was investigating as fraudulent certain prescriptions written
to M. Patterson using the DEA and NPI number of a physician
who had left KMC and which were written after that physician
left KMC. (Id. at 308-10.) She testified that she
was also investigating similar suspicious prescriptions
written to Patterson. (Id. at 311-12.) She stated
that that she was presently investigating J.M. Autism and the
J.M. Autism Trust for suspected fraud. (Id. at
312-13, 317.) She indicated that M. Patterson was both an
incorporator of and served as the ABA Coordinator for J.M.
Autism. (Id. at 312-13.) She testified that M.
Patterson received a 1099 from the J.M. Autism Foundation
Trust. (Id. at 315.) She also testified that M.
Patterson was an authorized signer on several bank accounts
for J.M. Autism and the J.M. Autism Trust. (Id. at
315-17.) She also testified that M. Patterson was listed as
the Assistant Director of J.M. Autism on the Indiana Medicaid
Provider form submitted to the state of Indiana.
(Id. at 317-19.) Finally, she also testified that
the search warrant executed in December 2016 of the residence
shared by Patterson and M. Patterson was acquired as part of
the health care fraud investigation. (Id. at 319.)
Earhart did not ask any questions of either M. Patterson or
Hedges at the evidentiary hearing, Earhart represented to the
Court that he advised M. Patterson to seek third-party
counsel to discuss the instant motion to disqualify and to
get advice about how to proceed. (Id. at 290.)
Earhart stated that M. Patterson had produced an affidavit,
with the advice of another attorney, regarding these issues.
(Id. at 290-91.) In the affidavit, M. Patterson
stated that after discussing the matter with his attorney
Scott C. Cox, he “knowingly, intelligently, and
voluntarily release[d] Mr. Earhart to discuss, testify and
provide documents regarding the above-referenced
matters.” (DN 95, at Def.'s Ex. 1.) He further
stated that he “fully, knowingly, intelligently, and
voluntarily waive[d] the attorney-client privilege between
[him]self and James A. Earhart relat[ed] to” his prior
criminal case in the Southern District of Indiana and the
instant case against Patterson. (Id.) Further, upon
inquiry by the Court, Patterson indicated that she waived any
conflict to the extent one existed. (Id. at 322.)
Finally, Earhart affirmed at the hearing that he did not
learn or receive any confidential information from M.
Patterson that bears on the current case against Patterson.
(Id. at 296.)