Levinsky v. Diamond

Decision Date17 February 1989
Docket NumberNo. 85-551,85-551
Citation151 Vt. 178,559 A.2d 1073
CourtVermont Supreme Court
Parties, Medicare & Medicaid Guide P 37,937 Bruce J. LEVINSKY v. M. Jerome DIAMOND, et al.

Robert D. Rachlin, Leo A. Bisson, Jr., Robert B. Luce and Richard N. Bland of Downs Rachlin & Martin, Burlington, for defendant-appellee Diamond.

Fred I. Parker and Thomas Z. Carlson of Langrock Sperry Parker & Wool, Burlington, for defendant-appellee Linton.

Stephen A. Dardeck and William A. Hunter of Tepper and Dardeck, Rutland, for defendant-appellee Amestoy.

Latham, Eastman, Schweyer & Tetzlaff, Burlington, for defendant-appellee McKenzie.

Robert S. DiPalma of Paul, Frank & Collins, Inc., Burlington, for defendant-appellee Wilson.

Before BARNEY, C.J. (Ret.), UNDERWOOD, J. (Ret.), BRYAN, Superior Judge, and COSTELLO, District Judge (Ret.), Specially Assigned.

BARNEY, Chief Justice (Ret.), Specially Assigned.

In the underlying litigation, plaintiff alleged that defendant state officials committed a series of tortious acts and deprived him of his constitutional rights during the course of a Medicaid fraud investigation and prosecution. Defendants moved for summary judgment on all counts, and the superior court granted their motions on grounds of sovereign and official immunity. Plaintiff appeals, and we affirm.

I.

The background of the action is complicated. The facts which follow are derived from plaintiff's pleadings and supporting documents and, with one exception, 1 were not disputed by defendants for purposes of the motions for summary judgment. See V.R.C.P. 56(e) (summary judgment may be granted on uncontroverted facts if appropriate); Cavanaugh v. Abbott Laboratories, 145 Vt. 516, 520, 496 A.2d 154, 157 (1985).

The situation commenced in the late 1970s with an investigation into the operation of several Vermont nursing homes In July 1977, the investigators learned that a contractor who had worked for the nursing home operation was claiming that he had done work at plaintiff's personal residence which plaintiff had ordered charged to a nursing home account. The contractor also alleged that plaintiff had requested him to testify falsely at an inquest that was part of the ongoing fraud investigation.

owned in part by plaintiff. This investigation was conducted by defendant Diamond as Attorney General. Defendant McKenzie was deputy attorney general, and defendants Amestoy and Linton were assistant attorneys general. Defendant Wilson was then Commissioner of Social Welfare and obligated by law to administer the federal Medicaid program, which provided for the payment of some $17,000,000 to nursing home operators in Vermont during 1979. The stated basis of the investigation was the possibility of fraud in the reporting of nursing home expenses.

In the spring of 1978, defendant Linton subpoenaed certain accounting records belonging to plaintiff which were then in the possession of a private accountant. The accountant had been hired by the State Nursing Home Rate Setting Committee to audit plaintiff's cost reports. The accountant, to whom plaintiff had voluntarily turned over the records in question, surrendered them to the Attorney General's office without notice to plaintiff.

Plaintiff was confined in federal facilities in Pennsylvania from May 1, 1978 through June 28, 1978 for Medicaid fraud, and did not return to Vermont upon his release. In July, investigators were informed by an airline executive that plaintiff had purchased tickets to Bermuda and Chile, and further checking in the vicinity of plaintiff's home in East Warren, Vermont revealed that plaintiff had planned an extended absence from the area.

On August 1, 1978--more than a year after the investigators learned of the nursing home contractor's allegations--the Attorney General's office brought charges against plaintiff for suborning perjury and for inciting a felony. A press conference was then held at which defendants Diamond and Linton announced the filing of the charges and that a "warrant on the charges was issued across the United States and Canada" because it was feared the defendant might try to flee the country.

It was not until August 2, however, that defendant Amestoy, with the knowledge of Linton and Diamond, obtained the federal fugitive warrant referred to at the press conference. The supporting allegation was that plaintiff knew of the state charges being filed against him and was seeking to flee. Plaintiff, however, had not been advised that charges were being filed and, in fact, was going on a long-planned vacation. He did not learn of the charges until later in August, when he was already in Bermuda.

In September 1978, defendants Linton and Wilson appeared before the legislative Joint Fiscal Committee to seek approval of an application for federal funds to create a Medicaid Fraud Unit under the supervision of the Attorney General's office. The request was denied at that time.

On October 3rd, defendant Linton filed an information against plaintiff charging him with ten counts of obtaining money by false pretenses. This was followed by another press conference, called by defendant Diamond, at which he stated that plaintiff had converted $94,000 to his own use by means of fraudulent cost reporting for Medicaid reimbursement. Defendant Wilson, who was present at the conference, commented that the earlier federal conviction for Medicaid fraud had been "procedural" but that now they had "gone a step further" by showing "where [the money] went and how it was spent."

Later in October, defendant Wilson again appeared before the Joint Fiscal Committee and asked them to reconsider their earlier denial of funding for the requested fraud unit. At this appearance Wilson spoke about the pending prosecution of plaintiff as evidence of the need for the unit. Defendants McKenzie and Amestoy attended this committee meeting as well.

Plaintiff returned to Vermont in November 1978 and was arraigned on the pending charges. At the bail hearing, defendants Linton and Amestoy told the court that plaintiff had knowingly fled prosecution and that the weight of the evidence against him was overwhelming. The bail was then set at $1.2 million, the highest ever for a Vermont criminal defendant at the time. Despite the prosecutor's representations at the bail hearing, in May of 1979 plaintiff was acquitted of the felony and perjury charges and, in August, the fraud charges were dropped upon plaintiff's payment of a $5,000 civil penalty and $25,000 expenses and attorneys' fees.

Plaintiff then brought this suit. In essence, he contends that he was the victim of a conspiracy, organized by the Attorney General's office, designed to "get" him, to provide publicity to defendant Diamond, and to gain support for the establishment of the Medicaid Fraud Unit.

In his ten-count complaint, plaintiff alleged that various of the defendants from the Attorney General's office violated his rights with respect to the state felony-perjury charges, the federal fugitive warrant, and the evidence at the bail hearing. He alleges that all the defendants injured him in connection with the filing of the "false pretenses" charges in October 1978 and with respect to the October hearing before the Joint Fiscal Committee.

The complaint charges that actions by defendants amounted to slander and libel and trespasses upon his constitutional rights. Among the counts listed in the complaint are infringement of the right to a fair trial, invasion of privacy, illegal search and seizure, violation of his right against self-incrimination, and deprivation of liberty and property without due process. These torts were advanced both as offenses under state law and as civil rights violations under 42 U.S.C. § 1983.

The trial court granted summary judgment in favor of all defendants. On the state claims, the court found that defendants Diamond, Amestoy, Linton and McKenzie were shielded from all liability under the doctrine of absolute immunity as prosecutors acting within the general scope of their authority. Defendant Wilson, as a public official with statutory authority, was also protected by absolute immunity for acts within the general authority of his office. The trial court also noted that under Lomberg v. Crowley, 138 Vt. 420, 423-24, 415 A.2d 1324, 1326-27 (1980), defendants, as state employees, were also protected by the provisions of 12 V.S.A. § 5602 governing sovereign immunity.

With respect to the § 1983 charges, the trial court found that prosecutor-defendants had absolute immunity under Imbler v. Pachtman, 424 U.S. 409, 96 S.Ct. 984, 47 L.Ed.2d 128 (1976), for all activities intimately associated with the decision to prosecute. As to the press conferences and the subpoena, it found only a qualified good-faith immunity attached because those activities were not within Imbler 's narrow definition of advocative duties. In addition, the court concluded that since plaintiff failed to demonstrate any deprivation of a cognizable liberty or property interest, his § 1983 claims failed. On those bases, the trial court held that summary judgment was warranted in favor of defendants on the § 1983 allegations.

II.

Broadly speaking, two types of immunities exist at common law to protect states and their employees from the consequences of their wrongful acts: sovereign immunity and official immunity. Sovereign immunity, derived from the concept that "the King can do no wrong," protects the state itself from suit except where the immunity has been expressly waived by statute. See generally W. Keeton, Prosser and Keeton on the Law of Torts § 131 (5th ed. 1984).

That there is a distinction between sovereign immunity--which protects the state--and the doctrine of official immunity, which protects state employees in certain circumstances, was recognized in the recent case of Libercent v. Aldrich, ...

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