In April 2002, the New York attorney general’s office commenced a Medicaid fraud investigation into Leonard Morse, a 55-year-old dentist. Morse’s dental practice had over 30,000 patients, of which 95% were Medicaid eligible.
In 2006, Morse was publicly indicted by a grand jury for Grand Larceny in the First Degree and Offering a False Instrument in the First Degree. Investigators claimed they found evidence that Morse had falsified bills to be submitted to Medicare. Although Morse was acquitted, he claimed that the investigation, and the negative attention it generated, forced him to sell his practice and ruined his reputation.
Thereafter, Morse brought a lawsuit against members of the attorney general’s office, including former New York Attorney General Eliot Spitzer, claiming civil rights violations, false arrest, malicious prosecution, denial of a right to a fair trial due to fabrication of evidence and various claims stemming from the issuance of a press release publicizing Morse’s indictment.
In particular, Morse argued that two of the investigators, John Fusto, who worked with the Medicaid Fraud Control Unit (“MFCU”) and was the prosecutor responsible for overseeing the investigation, and Jose Castillo, an MFCU audit-investigator, collaborated with a rival dental services provider to fabricate evidence against him. According to Morse, in one instance, three patients who shared the same surname were grouped together by the investigators to make it appear as if one patient was being overbilled. Further, Morse claimed that the investigation, which included a press release accusing Morse of falsifying over $1 million in Medicaid charges, was motivated by Spitzer’s campaign for governor.
Additionally, Morse claimed that he earned approximately $300,000 per year at his dental practice, but after the investigation, had to sell his practice, was unemployed for 15 months and then was forced to accept a part-time position earning around $17,000 annually.
Defendants argued the allegedly falsified documents were created by Morse. Defendants contended that Morse had provided them documents from his database pursuant to the investigation and that those documents, which were mostly bills, were never altered. Finally, Defendants accused Plaintiff of exaggerating his lost-wage claim because they believed him capable of generating more than $17,000 in income per year.
After a seven day trial, the jury awarded $1,733,941 to Morse for past lost earnings, $2,490,995 for future lost earnings, $2,500,000 for mental pain and suffering, as well as $250,000 in punitive damages against Castillo and $750,000 in punitive damages against Fusto for their part in falsifying documents.
COURT: U.S.D.C. for the Eastern District of New York
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