James R. Moriarty

James Robert Moriarty
Born (1946-09-10) September 10, 1946
Schenectady, New York
Alma mater University of Houston
Occupation Lawyer

James R. Moriarty (born September 10, 1946) is an American lawyer noted for mass torts against major corporations, including Tenet Healthcare Corporation, Shell Chemicals, DuPont, and Prudential Securities. His legal cases have been described in the books Serpent on the Rock by Kurt Eichenwald, Money-Driven Medicine: The Real Reason Health Care Costs So Much by Maggie Mahar, and Coronary by Stephen Klaidman. He is a senior partner in the law firm of Moriarty Leyendecker.

Biography

Early life

Moriarty was born on September 10, 1946, in Schenectady, New York, shortly after his twin brother Robert James Moriarty, who was born the previous day. He dropped out of high school in January 1965 to enlist in the United States Marine Corps.

Military service

Moriarty completed Marine Corps Recruit Depot (MCRD) San Diego with Platoon 212 in May 1965, received meritorious promotion to private first class. He then attended multiple "A" schools at Naval Air Technical Training Command Memphis, receiving meritorious promotion to lance corporal.

He was offered his choice of assignment and served three tours in the Vietnam War. He was awarded two single-mission Air Medals for heroic achievement while serving as a door gunner in a Marine Observation Squadron 2 helicopter gunship squadron located at Marble Mountain in South Vietnam.[1][2] He was released from active duty as a sergeant in January 1969.

Education

He earned Bachelor of Business Administration and Juris Doctor degrees from the University of Houston.[3] He was admitted to the State Bar of Texas in 1976[4] and the Colorado Bar Association in 2006.[5]

Career

Moriarty founded Moriarty & Associates in 1986. Kevin Leyendecker became a partner in 2001, and the name of the firm was changed to Moriarty Leyendecker.

Moriarty served as special assistant to the former mayor of Houston,[6][7] Bill White, throughout White’s term in office. Among other duties, Moriarty assisted the city’s attorneys on a pro bono basis, on one occasion helping the city enforce billboard laws designed to avoid “visual blight” in the city of Houston.[8] White and Moriarty met while raising money for Bill Clinton's 1992 presidential campaign.

Polybutylene

Moriarty was instrumental in one of the largest mass action consumer fraud cases in history, with a recovery of approximately $1.1 billion from Shell Chemicals, Hoechst Celanese and DuPont.[9] A 1997 press release from Trial Lawyers for Public Justice described the historic significance of the settlement:

The unprecedented settlement agreement, which became final in late 1996, provides a minimum of $950 million in relief and a potentially unlimited maximum to property owners. It is the largest property damage class action settlement in U.S. history [at that time].

In mid-1987, Moriarty filed the first polybutylene lawsuit against General Homes Corporation, U.S. Brass, Shell, Hoechst Celanese and DuPont on behalf of approximately 100 homeowners in a subdivision in La Porte, Texas, alleging that the plumbing system in the subdivision had failed, causing property damage and mental anguish.[10] The homeowners sought damages for negligence, fraud, and violations of the Texas Deceptive Trade Practices Act (DTPA).

The complaint was that polybutylene pipes and fittings deteriorate over time due to the presence of chlorine compounds in water, resulting in leaks that can lead to property damage and creating the potential for contamination from pesticides and other toxic materials.[11] According to Moriarty

Polybutylene was a new modern miracle. Longer life, simple, reliable, at least according to all the sales talk. But its only claim to fame was that it leaked 100 percent of the time you put tap water in it.[12]

Between 1987 and 1994, Moriarty and his partners litigated approximately 800 individual polybutylene cases, negotiating deals with Shell, Hoechst Celanese, DuPont and a variety of builders.

In 1993, Moriarty was approached by Michael Caddell, an attorney who had filed a class action suit against Shell (Beeman v Shell Oil), and asked to join the suit. Two years later, attorneys in Cox v. Shell Oil joined with Moriarty and Caddell, and both cases were settled. The team settled with Shell and Hoechst Celanese for a minimum of $950 million, with DuPont settling separately for a minimum of $120 million.[13]

Plaintiffs in the case received free re-plumb of their homes, replacing the polybutylene pipes with safer ones made from copper, CPVC or plastic, and were compensated from the settlement, which ultimately totaled approximately $1.1 billion.

The case was unique in that Moriarty and his fellow attorneys focused more on bringing relief to clients, rather than focusing on their part of the settlement. According to Moriarty

One of the horror stories is that lawyers spend all their time battling to get their money, but they don’t battle to get money in the client’s hands. Class actions are set up as settlement class actions and not set up for litigation purposes. If you can’t litigate a case, you’re not going to be able to get the first class settlement.[12]

Prudential Bache

Moriarty was involved in the largest mass action filed against Prudential Securities along with Daryl Bristow and Stephen Hackerman, among others. The investigation found that PSI had defrauded investors of close to $8 billion, the largest fraud found by the U.S. Securities and Exchange Commission (SEC) in United States history to that point.[14]

Kurt Eichenwald discussed the case at length in his book on the limited partnership scandal at Prudential, Serpent on the Rock.[15]

Bristow brought in Moriarty because of his previous experience managing large numbers of clients in other mass action lawsuits.[16] Hackerman later worked with Moriarty on the NME case in 1994.[17] Moriarty created a computer program that allowed the lawyers to write individualized letters to the 5,800 clients they were managing.[16] He is also credited for suggesting each plaintiff file an individual complaint to state regulators, the SEC, and the National Association of Securities Dealers[18] – a scheme that Eichenwald suggests alerted the SEC to the magnitude of the Prudential fraud.[19]

Prudential attempted to get the case settled for five cents on every dollar the plaintiffs had invested, a proposal Moriarty derided as ridiculous.[20] The settlements for Bristow, Hackerman, and Moriarty’s clients ultimately recouped the plaintiffs’ lost investments entirely:

Clients in the first growth fund would receive fifty cents on the dollar on their investments. Combined with previous distributions, expected future distributions, and the remaining value of the partnerships, a client who invested $1,000 in the first growth fund would have $1,058. For the second growth fund, the $1,000 investor would have $1,138.[21]

After their case was concluded, Moriarty remained involved with the National Association of Securities Dealers working with the SEC to investigate PSI’s suspected fraud.[22] When Nancy Smith, a New Mexico securities regulator, asked him for advice on creating a questionnaire for the investors in PSI, he recommended her to a polling expert from Rice University.[23] When Smith informed him that she could not afford the estimated cost of $5,000-$10,000 for utilizing those resources, Moriarty paid for it himself from his fees from the PSI case.[24]

National Medical Enterprises/Tenet Healthcare

Moriarty, in conjunction with several other firms, filed a mass tort against National Medical Enterprises in late 1994[25] behalf of approximately 600 patients who charged that they had been abused in Texas psychiatric hospitals owned by the company in order to defraud insurance companies and the U.S. Federal Government.[26] The case was discussed in depth in Stephen Klaidman’s book Coronary.[27]

The lawsuit was settled on July 30, 1997.[28] The New York Times reported a $100 million settlement for all plaintiffs involved in two lawsuits filed in Conroe, TX and Fort Worth, TX.[29] Moriarty was unable to disclose the exact settlement their clients received, but The Times reported that 620 cases were filed in Conroe and settled for $85 million, and approximately 60 cases were settled in Fort Worth for $13 million; also that Moriarty represented "over 600" of the plaintiffs.[29]

National Medical Enterprises changed its name to Tenet Healthcare Corporation in March 1995.[30]

Again in conjunction with other firms, in 2003 Moriarty filed new lawsuits against the new Tenet Healthcare Corporation’s Redding Medical Center on behalf of approximately 450 patients who claimed they had received unnecessary heart surgery so that the company could bill insurance companies for the procedures.[31] The company settled with 750 plaintiffs for the sum of $395 million in December 2004.[32]

In addition to its individual settlements with the plaintiffs, Tenet paid $54 million in fines for its conduct at Redding Medical Center.[33] Tenet also paid $900 million in fines and settlements to the U.S. Federal Government for manipulating the Medicare system in connection with its hospital operations.[34][35] The settlement remains one of the highest settlements under the False Claims Act, second only to Pfizer's settlement of $1 billion.[36]

Moriarty’s personal opinions on the major players of NME/Tenet Healthcare are quoted in Money-Driven Medicine:

They’re all the same people, operating under the same business plan. The companies pay the fines and deduct them from their taxes – which they can. To them, it’s all part of the cost of doing business. And they’re not going to change. Not until the government says, ‘We’ll put you in jail if you do this.’[37]

Beijing and Vancouver Olympics ticket controversy

Moriarty drew attention to the problem of illegal ticket sales in the 2008 Beijing Olympics after purchasing a reported $12,000 worth of tickets that were never delivered.[38] Moriarty has since heavily stressed the importance of giving the families of Olympic athletes access to affordable tickets.[39]

Moriarty has stated that the International Olympic Committee (IOC)’s two “serious problems” are first that the organization has “not curbed ticket reselling abuses that enrich profiteers connected to the IOC and National Olympic Committees (NOCs). Second, they are inconsistently policing the use of Olympic trademarks that often are used on fraudulent ticket sites.”[40]

He has also said that the IOC and United States Olympic Committee (USOC) did not make adequate efforts to shut down ticket sellers illegally operating under the IOC's trade names, which makes it difficult for consumers to determine the difference between legitimate and illegitimate sellers.[41]

Moriarty is currently defending ticket resaler Gene Hammett against Joseph Bunevacz and his son David Bunevacz, whom Hammett claims sold him 17,000 tickets to the Vancouver games that never materialized. Hammett alleges that the Bunevaczs led him to believe that the tickets were coming from several National Olympics Committees and their official ticket agents in Europe.[42]

Small Smiles Dental Centers

Moriarty and his partners represent approximately 550 clients in a case against Small Smiles Dental Centers, a chain of Private Equity owned dental clinics based in Nashville, Tennessee. The chain currently operates 70 centers in 22 states, as well as centers in Washington, D.C.

The case alleges that these clinics target children from low-income families who rely on Medicaid for their dental care, and that Small Smiles clinics are performing “assembly line” dentistry, resulting in multiple rushed and unnecessary dental procedures performed on children in order to profit by billing Medicaid. According to a May 2012 article from Bloomberg

Church Street may be abusing patients, “grossly overcharging the United States government in Medicaid reimbursement claims,” and focusing “more on achieving self- imposed quotas via assembly line service than proper patient care,” U.S. Senators Charles Grassley and Max Baucus told the company in a November letter copied to Carlyle co-founder William E. Conway Jr. Grassley, an Iowa Republican, is Ranking Member of the Senate Judiciary Committee. Baucus, a Montana Democrat, chairs the Finance Committee.
One broad issue in the inquiry is whether the management companies merely provide services to dentists, or are breaking the law by directing care, according to people familiar with the matter and letters the Senators sent to state regulators. State laws broadly say only licensed dentists or firms they own can practice dentistry.[43]

The question at the heart of the issue is the legality of Private Equity owned dental clinics. State governments, including Moriarty’s home state of Texas, forbid professional practices such as dental offices from being owned by unlicensed professionals.

In January 2010, Small Smiles gained national attention when its parent company, FORBA, settled False Claims Act allegations with the United States Department of Justice.[44] The DOJ claimed that Small Smiles was

… causing the submission of claims for reimbursement for a wide range of dental services provided to low-income children that were either medically unnecessary or performed in a manner that failed to meet professionally-recognized standards of care. These services included performing pulpotomies (baby root canals), placing crowns, administering anesthesia (including nitrous oxide), performing extractions, and providing fillings and/or sealants.[45]

The 2010 settlement with the Department of Justice was for $24 million, plus interest, to be paid over five years. The DOJ’s assertion was that the settlement was meant to

… resolve allegations that [Small Smiles] caused bills to be submitted to state Medicaid programs for medically unnecessary dental services performed on children insured by Medicaid.

In the report, Tony West, Assistant Attorney General for the Civil Division of the Department of Justice, stated, “We have zero tolerance for those who break the law to exploit needy children. Illegal conduct like this engagers a child’s well-being, distorts the judgments of health care professionals, and puts corporate profits ahead of patient safety.”

In January 2012, possibly as a result of the settlement with the DOJ, FORBA changed its name to Church Street Health Management, a reference to the street address of the company's corporate headquarters.[46] In February of that year, Church Street Health Management filed for Chapter 11 bankruptcy.[47]

On June 1, 2012 Moriarty brought a suit on behalf of Isaac and Joel Gagnon against Big Smiles,[48] a school dental program operated by ReachOut Healthcare America (RHA) in Arizona. RHA is owned and controlled by Morgan Stanley Private Equity company, with four Morgan Stanley members on the RHA board.

ReachOut Healthcare America and the Big Smiles program recently gained nationwide attention when the school dental service performed multiple pulpotomites and crowns on a four-year-old medically fragile child without the consent of his mother. Young Isaac Gagnon suffered shaken baby syndrome as an infant and still requires special consideration and care when receiving any sort of medical attention. For this reason, his adoptive mother, Stacey Gagnon, informed Big Smiles that they did not have permission to perform dental procedures on her son. She was surprised and alarmed, therefore, when Isaac arrived home from school having received numerous dental procedures.[43] According to his mother, when she asked him what was wrong he could only reply, “Mommy, the dentist man got me.”

Moriarty joins the case as part of his overall initiative against private equity-owned dental clinics.

Associations

Moriarty served on the board of directors of the United States Marine Corps Combat Helicopter Association from 1998 to 2008 and published that organization's quarterly magazine, Popasmoke.[49]

He received the association’s Arnold W. Barden Award for advancing the reputation of the association for his air show work as well as his contribution as publisher of Popasmoke.[50]

He was the president of the Skyhawk Association from 1998 to 2000.

He served on the board of directors for Annunciation Orthodox School in Houston.

He presently serves on the board of directors of the Marine Corps Heritage Foundation.[51]

Personal life

Moriarty lives in Houston, Texas. He is an avid athlete and frequently competes in races, including 5Ks, marathons, sprints, and half-Ironman triathlons. He completed his first marathon at age 60.

He has five children.

References and further reading

External links

Notes

  1. ↑ Stephan Wilkinson (1 July 2001). "Dog of War". Air & Space Magazine. Smithsonian. p. 1.
  2. ↑ Klaidman, Stephen (2007). Coronary. Scribner. p. 15. ISBN 0-7432-6755-9.
  3. ↑ "Honored Donors of the University of Houston Law Center". Houston Law Center. Retrieved 6 December 2010.
  4. ↑ "State Bar of Texas". State Bar of Texas. Retrieved 6 December 2010.
  5. ↑ "Find a Lawyer". Colorado Bar Association. Retrieved 6 December 2010.
  6. ↑ "Municipal Courts". City Savvy Online. Government of Houston TX.
  7. ↑ "Fulbright Associates Thrive in Lend-a-Lawyer Program". Fulbright.
  8. ↑ Matt Stiles (18 September 2007). "Billboard Crackdown Takes on Advertisers". Houston Chronicle. Hearst Newspapers.
  9. ↑ "1997 Public Justice Achievement Award Presented to Cox Litigation Team". Theresa Henige – Trial Lawyers for Public Justice. July 23, 1997. Archived from the original on 1998-06-30. Retrieved June 1, 2012.
  10. ↑ "Suite Over Plumbing Won by Homeowners". New York Times. October 9, 1988. Retrieved June 1, 2012.
  11. ↑ "1997 Public Justice Achievement Award Presented to Cox Litigation Team". Trial Lawyers for Public Justice. July 23, 1997. Archived from the original on 1998-06-30. Retrieved June 1, 2012.
  12. 1 2 "Making Class Actions Class Acts". Medill News Service. March 2003. Archived from the original on 2003-04-13. Retrieved June 1, 2012.
  13. ↑ "Polybutylene Lawsuit". whocanisue. Retrieved June 1, 2012.
  14. ↑ "Socking the Rock". Time Magazine (Time Magazine). 1 November 1993.
  15. ↑ Eichenwald, Kurt (1995). Serpent on the Rock. HarperCollins. ISBN 0-7679-2384-7.
  16. 1 2 Eichenwald, Kurt (1995). Serpent on the Rock. HarperCollins. p. 370. ISBN 0-7679-2384-7.
  17. ↑ Klaidman, Stephen (2007). Coronary. Scribner. p. 16. ISBN 0-7432-6755-9.
  18. ↑ Eichenwald, Kurt (1995). Serpent on the Rock. HarperCollins. pp. 374–375. ISBN 0-7679-2384-7.
  19. ↑ Eichenwald, Kurt (1995). Serpent on the Rock. HarperCollins. p. 380. ISBN 0-7679-2384-7.
  20. ↑ Eichenwald, Kurt (1995). Serpent on the Rock. HarperCollins. p. 379. ISBN 0-7679-2384-7.
  21. ↑ Eichenwald, Kurt (1995). Serpent on the Rock. HarperCollins. p. 383. ISBN 0-7679-2384-7.
  22. ↑ Eichenwald, Kurt (1995). Serpent on the Rock. HarperCollins. pp. 391–392. ISBN 0-7679-2384-7.
  23. ↑ Eichenwald, Kurt (1995). Serpent on the Rock. HarperCollins. p. 407. ISBN 0-7679-2384-7.
  24. ↑ Eichenwald, Kurt (1995). Serpent on the Rock. HarperCollins. p. 408. ISBN 0-7679-2384-7.
  25. ↑ Klaidman, Stephen (2007). Coronary. Scribner. p. 14. ISBN 0-7432-6755-9.
  26. ↑ Kurt Eichenwald (12 August 2003). "OPERATING PROFITS: Mining Medicare; How One Hospital Benefited From Questionable Surgery". The New York Times (The New York Times Company).
  27. ↑ Klaidman, Stephen (2007). Coronary. Scribner. ISBN 0-7432-6755-9.
  28. ↑ Klaidman, Stephen (2007). Coronary. Scribner. p. 17. ISBN 0-7432-6755-9.
  29. 1 2 Kurt Eichenwald (30 July 1997). "$100 Million Settlement Seen In Tenet Suits". The New York Times (The New York Times Company).
  30. ↑ "Times Staff and Wire Reports". LA Times. LA Times. 2 March 1995.
  31. ↑ Mahar, Maggie (2006). Money-Driven Medicine: The Real Reason Health Care Costs So Much. HarperCollins. p. 112. ISBN 0-06-076533-X.
  32. ↑ Mahar, Maggie (2006). Money-Driven Medicine: The Real Reason Health Care Costs So Much. HarperCollins. p. 113. ISBN 0-06-076533-X.
  33. ↑ Julie Appleby (7 August 2003). "Tenet to pay $54M to settle disputed surgery case". USA Today. USA Today.
  34. ↑ Jennings, Marianne M. (2009). Business Ethics: Case Studies and Selected Readings. South-Western. p. 158. ISBN 0-324-65774-9.
  35. ↑ "Tenet Healthcare Corporation to Pay U.S. more than $900 Million to Resolve False Claims Act Allegations". Department of Justice. 29 June 2006.
  36. ↑ "Top 20 cases". TAF Education Fund.
  37. ↑ Mahar, Maggie (2006). Money-Driven Medicine: The Real Reason Health Care Costs So Much. HarperCollins. p. 127. ISBN 0-06-076533-X.
  38. ↑ David Ellison (8 August 2008). "Consumer Watch: Dream destroyed by ticket scams". The Houston Chronicle. Hearst Newspapers.
  39. ↑ "Olympic Families Win Access to Games, According to Moriarty Leyendecker". The Street. TheStreet.com, Inc. 26 October 2020. Check date values in: |date= (help)
  40. ↑ Alfred Branch Jr. (1 March 2010). "Houston law firm investigates Olympics ticketing policy and backs Action Seating". TicketNews. TicketNews.com.
  41. ↑ "Olympic ticket victims to sue IOC". World News Australia. SBS TV. 23 September 2008.
  42. ↑ Christine Willmsen, Steve Miletich, Kristi Heim (28 February 2010). "Broken rules, a failed deal and a frenzy over Olympic ticket resales that fizzled". The Seattle Times. Cleveland Live, Inc.
  43. 1 2 "Dental Abuse Seen Driven By Private Equity Investments". Sydney P. Freedberg. Bloomberg. May 16, 2012.
  44. ↑ "National Dental Management Company Pays $24 Million to Resolve Fraud Allegations". United States Department of Justice. January 20, 2010. Retrieved June 9, 2011.
  45. ↑ "National Dental Management Company Pays $24 Million to Resolve Fraud Allegations". Office of Public Affairs. United States Department of Justice. 20 January 2010.
  46. ↑ "Small Smiles parent company changes ways, name following scandal". Nashville Business Journal. December 29, 2010. Retrieved May 29, 2012.
  47. ↑ "Small Smiles dentistry seeks bankruptcy protection". Annie Johnson. Nashville Business Journal. 23 February 2012.
  48. ↑ "Jim Moriarty files motion to appear as attorney in Arizona abusive dental case" (PDF). 13 June 2012.
  49. ↑ "Reunion 2000 Photo". Popasmoke. USMC Combat Helicopter Association. 24–27 August 2000. p. 17.
  50. ↑ "Reunion 2000 Photo". Popasmoke. USMC Combat Helicopter Association. 24–27 August 2000. p. 16.
  51. ↑ "Our Team". The Marine Corps Heritage Foundation.
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