Albany fax case fails, but makes legal history

The U.S. Supreme Court, in a unanimous decision, ruled Monday against an Albany accountant in his civil lawsuit over a prosecutorial investigator’s alleged false testimony before a grand jury.

The justices said witnesses who lie to a grand jury are protected from civil lawsuits, giving them the same protection that witnesses get at trials.

Justice Samuel Alito, writing the opinion for the court, said accountant Charles Rehberg’s lawsuit against an investigator for a prosecutor should not go forward. “Grand jury witnesses should enjoy the same immunity as witnesses at trial,” Alito said. “This means that a grand jury witness has absolute immunity.”

Prosecutors are already generally immune from civil lawsuits for anything that relates to a trial, an Associated Press article noted.

The Albany case stemmed from a series of incidents beginning in 2003, when Rehberg and a local physician, Dr. John Bagnato, started sending anonymous faxes to business and political leaders in Albany, criticizing the financial practices of a local hospital, Phoebe Putney Memorial Hospital.

The dispute evolved into a bizarre saga that featured a famed trial attorney, a powerful hospital, threats from ex-FBI agents, national media attention and a documentary film. Here’s a GHN article about how the case wound up in the Supreme Court.

Alito, in the 18-page opinion, wrote that without immunity for witnesses, the truth-seeking process would be impaired because people might be reluctant to testify. He added that witnesses’ fear of litigation might deprive grand juries of critical evidence, Reuters reported.

Alito said potential liability is not needed as a deterrent to prevent false testimony. Other sanctions, mainly criminal prosecution for perjury, provide a sufficient deterrent, he said.

Rehberg alleged that an investigator for the Dougherty County district attorney’s office, James Paulk, lied before a grand jury that eventually indicted Rehberg.

The suit was tossed out by the 11th U.S. Circuit Court of Appeals in Atlanta, and the Supreme Court ruled on an appeal of that decision.

Rehberg argued that he was placed under investigation because of the hospital’s political connections and that false testimony by Paulk to a grand jury led to indictments against him. Those indictments were eventually dismissed.

An attorney for Phoebe, Thomas Chambless, said in a November statement that ‘‘the hospital categorically did not cause Rehberg to be indicted.’’

A Phoebe spokeswoman Monday declined to comment on the Supreme Court decision.

Paulk’s lawyer, John Jones, had contended that testimony in a grand jury proceeding is like testimony at a regular trial. Jones told GHN last year that while government officials can face other legal penalties for lying, “you can’t be sued for damages.’’

Rehberg said Monday he was disappointed by the ruling.

“Congress enacted the civil rights law to provide a remedy for citizens who are harmed by the abuse of government power.” he said in a statement.  “The court’s expansion of the scope of absolute immunity reduces that protection, and I fear will mean more people will suffer, as my family and I did, from the misuse of criminal investigation and prosecution power.”

Meanwhile, Phoebe Putney is involved with another matter that may end up before the Supreme Court. Acting at the request of the Federal Trade Commission, the solicitor general of the United States has petitioned the court to review a recent federal appeals court ruling concerning Phoebe Putney Health System’s merger with Palmyra Medical Center.

The FTC has opposed the combination of the two Albany hospitals as anti-competitive. After an appeals court decision upheld the deal, the local hospital authority completed a $195 million acquisition of Palmyra in December.

Phoebe Putney and the hospital authority have criticized the FTC’s continuing efforts to block the merger.

“The FTC’s intent to challenge again the decision of the 11th Circuit Court of Appeals is misguided and wrong,’’ the two organizations said in a joint statement in February. “We are frankly stunned by the FTC’s continued assault on the hospital authority, which has diligently and correctly carried out its responsibility in this matter to the benefit of the citizens of Dougherty County.’’

The appeals court upheld a lower court ruling that the deal was protected under the state-action doctrine – that the hospital authority is a government entity and thus immune from antitrust law.

Phoebe Putney CEO Joel Wernick said in a February statement, “There is no legal or factual information to support the FTC’s actions and no rationale to explain its apparent desire to centralize control of local health care resources.”