CSX points at 1,400 dismissals in fraud case against law firm

John O'Brien Aug. 9, 2010, 3:00pm

Robert Peirce

RICHMOND, Va. (Legal Newsline) - CSX Transportation is drawing attention to the recent dismissal of 1,400 asbestos cases in West Virginia as it tries to jumpstart its fraud case against a Pittsburgh law firm.

Attorneys for CSX submitted to a federal appeals court a June order from Kanawha County Circuit Court that dismissed 1,400 claims filed by Peirce Raimond & Coulter, which argued they should be dismissed without prejudice. Judge Arthur Recht did not agree.

Recht had implemented new rules that required plaintiffs to certify they were aware of their lawsuits, that their claim was "well-founded in fact" and that they wished to continue pursuing litigation.

"That order also required the production of 'all materials... relating to Plaintiff's alleged exposure to asbestos,' including 'medical records' and 'materials relating to occupational illness screenings sponsored by the Peirce firm and attended by Plaintiff,'" Dan Himmelfarb of Mayer Brown in Washington, D.C., wrote July 30 to the U.S. Court of Appeals for the Fourth Circuit.

"Rather than making the necessary representations on behalf of the remaining plaintiffs, the Peirce firm moved to voluntarily dismiss the 1,400-plus claims --except for 62 malignant cancer claims and two non-malignant claims -- and ultimately stipulated that the claims should be dismissed with prejudice."

All the dismissed cases alleged asbestos disease but not malignancy. The Peirce firm continues to pursue 62 malignancy claims in Recht's court.

CSX argued that if the cases were dismissed without prejudice, the Peirce firm could have re-filed the claims wherever it wanted.

CSX's fraud case against the Peirce firm was dismissed by a West Virginia federal judge who ruled it came after the statute of limitations expired. CSX alleges the Peirce firm teamed with a radiologist to fabricate asbestos claims.

Former Bridgeport radiologist Ray Harron was accused of diagnosing lung disease in patients who did not have it. CSX says the Peirce firm then hid those plaintiffs with thousands of others, preventing it from being able to adequately investigate each complaint.

In 2005, federal court judge Janis Graham Jack made national headlines when she uncovered duplicate and fraudulent silica diagnoses in her Texas courtroom. Many of those diagnoses were made by Harron and were made on plaintiffs who had already brought asbestos claims.

In Jack's opinion dismissing the claims, she said "These diagnoses were driven by neither health nor justice - they were manufactured for money."

Following Harron's admission that he did not even make the diagnoses of the patients whose x-rays he read, Jack noted that most of "these diagnoses are more the creation of lawyers than doctors."

The Washington Legal Foundation, a tort reform organization, filed an amicus brief in CSX's case. It argues that the statute of limitations should have began running on CSX's claim when it realized it may have been being defrauded -- when Jack issued her opinion.

Instead, U.S. District Judge Frederick Stamp ruled that the four-year statute of limitations began when the Peirce firm began targeting CSX.

The Peirce firm says the dismissal of the 1,400 claims has nothing to do with the fraud case against it and asked for CSX's notice to be removed from the record.

"The dismissal order contained no findings that the dismissed claims lacked merit and no findings as to whether the dismissed plaintiffs may have record amounts from third-party defendants," wrote Walter DeForest, of DeForest Koscelnik Yokitis Kaplan & Berardinelli.

"This is simply factual information that is not in the record, which CSX is improperly trying to place before the court, without context, for the apparent purpose of attempting to influence the court's review of rulings of the district court that were made before the events recited in CSX's letter."

Oral argument is tentatively scheduled for Oct. 26.

From Legal Newsline: Reach John O'Brien by e-mail at jobrienwv@gmail.com.

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