Aditya Humad, the CFO of SpineFrontier, Inc., a medical device company, faces criminal charges for allegedly violating the Anti-Kickback Statute by paying surgeons bribes to induce them to use SpineFrontier's devices. The company and its CEO, Kingsley Chin, were originally charged alongside Humad. SpineFrontier engaged outside counsel, Strong & Hanni PC, to review the legality of its surgeon consulting program. The opinion letters from counsel stated the program was legal subject to specific assumptions, including that compensation would not be tied to referral volume. When Humad planned to use an involvement-of-counsel defense at trial to argue he lacked the necessary criminal intent because he relied on the presence of counsel, the district court initially indicated this might waive the corporation's privilege. After the government dismissed charges against SpineFrontier and Chin pleaded guilty, the district court severed the trials and ruled that Humad's defense waived the privilege regarding his communications with counsel. SpineFrontier, no longer a party to the criminal case, appealed to preserve its privilege.
The First Circuit applied a fairness-based analysis to determine if an implied waiver occurred, noting that courts must be cautious in finding such waivers. The court addressed two primary issues: the executive's authority to waive the privilege and the nature of the defense itself. First, regarding authority, the court found the record insufficient to decide if Humad alone could waive the privilege. The district court's original ruling was based on the joint authority of Humad and Chin, but since Chin is no longer a defendant and has pleaded guilty, the alignment of interests between Humad and the corporation has shifted. The court emphasized that Humad's personal interest in avoiding conviction may now override his fiduciary duty to the corporation, making a waiver determination fact-dependent and requiring a new analysis. Second, regarding the nature of the defense, the court distinguished an involvement-of-counsel defense from a traditional advice-of-counsel defense. While an advice-of-counsel defense typically waives privilege because the defendant relies on specific legal advice, an involvement-of-counsel defense merely argues that the presence of counsel suggests a lack of willfulness. The court reasoned that if Humad does not disclose specific privileged communications or argue that counsel approved the specific execution of the program, a waiver is not automatically justified. The court noted that if Humad argues only that he engaged counsel generally, no privileged information is disclosed. Finally, the court suggested that even if prejudice exists, the district court should first consider less drastic remedies, such as limiting jury instructions or rulings under Federal Rules of Evidence 401 and 403, rather than immediately finding a waiver.
The district court's order finding an implied waiver is vacated. The case is remanded for the district court to re-evaluate whether Humad has the authority to waive SpineFrontier's privilege given the changed circumstances, specifically the removal of Chin from the case. The district court must also determine if Humad's specific defense theory actually requires a waiver or if alternative measures, such as jury instructions, can mitigate any potential prejudice to the government. This decision preserves the corporation's privilege pending a more developed factual record and clarifies that not every reference to counsel's involvement constitutes a waiver.
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