Federal prosecutors from San Diego have dismissed a Medicare fraud case against an Irvine biosciences company and its top leaders amid accusations from defense attorneys of prosecutorial missteps.
Among the allegations, which one attorney characterized as “potential government misconduct,” defense lawyers argued that trial team prosecutors had seen dozens of attorney-client privileged documents. Defense attorneys also called into question a roughly 16-month delay in the recusal of U.S. Attorney Randy Grossman, who had previously worked at the San Diego office of international law firm Jones Day at the same time another partner there was representing the lead defendant in the fraud case.
The criminal case involved Proove Biosciences Inc., a company that had claimed its DNA tests could, with 93 percent accuracy, predict whether a person was at risk of opioid painkiller addiction. A 2021 indictment had alleged the company was paying physicians across the country, including in San Diego, illegal kickbacks for ordering the tests, allowing Proove to then fraudulently bill Medicare.
Prosecutors dismissed their case on Dec. 21, six days after a hearing in which defense attorneys argued a government “taint team” — walled-off attorneys who are supposed to screen evidence and filter out privileged documents — gave as many as 85 privileged documents to prosecutors on the trial team. The dismissal also came the same day as a court-ordered deadline for attorneys from both the trial and taint teams to respond to those allegations.
Assistant U.S. attorneys from San Diego, who admitted in court filings that at least one trial prosecutor had viewed potentially privileged documents handed over by the taint team, did not give a specific reason for dismissing the case. They wrote in a motion that they were doing so “due to the interests of justice.”
A spokesperson for the office declined to answer questions Wednesday about the reasons for dismissing the case and the allegations against prosecutors.
Jason de Bretteville, defense attorney for the lead defendant, Proove CEO Brian Meshkin, said the government attorneys never disclosed specifically why they sought a dismissal, but he speculated it was based on the case’s merits and “emerging issues relating to potential government misconduct.”
The FBI and federal prosecutors began investigating Proove Biosciences as early as 2017, according to court documents. In late 2016, the health and medicine news website STAT News had published a story critical of the company’s claims about its “opioid risk” DNA tests.
The FBI raided Proove’s Irvine headquarters in June 2017, and in 2021 a federal grand jury in the Central District of California returned an indictment alleging that Meshkin and eight others who worked for or with Proove had defrauded Medicare by running an illegal kickback scheme.
In a plea agreement in a related San Diego case, a former Proove employee said the company paid physicians across the country at least $3.5 million so they would order Proove’s DNA tests. Proove then billed Medicare about $45 million for the tests, receiving some $20 million from the government, according to that plea agreement.
Meshkin said the decision to dismiss the case was vindication for him and his co-defendants.
“There has been so much injustice over the past (six) years that it is wonderful to see truth prevail,” Meshkin wrote in a statement he sent to the Union-Tribune. “Ultimately, the facts spoke for themselves.”
Meshkin called the investigation a “foolish” waste of millions of taxpayer dollars that resulted from “misinformation spread by a handful of disgruntled ex-employees and contractors, spread by the media, and blindly adopted by some in the Southern District of California office of the U.S. Attorney and the FBI.”
Though at least one physician involved in the alleged kickback scheme was located in San Diego, and a former vice president of market development for Proove was prosecuted in San Diego in the related case, it was not clear why San Diego-based assistant U.S. attorneys were handling the main Orange County-based case against Meshkin and his co-defendants. Nor was it clear why the San Diego-based prosecutors were handling the case in the Central District of California, an area that covers Los Angeles County, Orange County and five other counties along the coast and the Inland Empire.
De Bretteville called it a “mystery.” Janet Levine, an attorney for one of the defendants, filed a motion last month calling the out-of-district prosecution “unusual” and questioning why the San Diego-area attorneys had presented the case to a grand jury in Santa Ana and were trying the case in that jurisdiction.
Prosecutors never responded to the motion before dismissing the case, and the spokesperson for the U.S. Attorney’s Office in San Diego declined to comment.
In the same motion from Levine, she also raised questions about Grossman’s possible involvement and potential conflict in the case after having worked at Jones Day while his partner at the firm was representing Meshkin.
Assistant U.S. Attorney Josh Green, the lead prosecutor, had previously told Levine in two emails that Grossman had been walled off from the Proove investigation and had “not personally participated in this matter in any manner.” He said the Department of Justice formally recused Grossman in September 2022 and that Grossman’s name appeared on court filings “due to an oversight.”
Levine called into question why it had taken so long to recuse Grossman, who was made acting U.S. attorney some 16 months earlier in March 2021, and before that was the first assistant U.S. attorney for about seven months.
“A criminal defendant has a constitutional right to a disinterested prosecutor,” Levine wrote. “This is what (is) at issue here. This is not a motion focused on the use or misuse of government stationary; the situation, as defendants understand it, raises serious questions about the nature of the conflict and the effectiveness of the way the Government has handled this conflict.”
The issue that appeared to loom largest at the end of the case revolved around the work of the taint team and questions about who had seen some 85 allegedly privileged documents.
Taint teams, also known as privilege teams, have been used for decades by government prosecutors and investigators in an effort to ensure government trial lawyers are not provided attorney-client communications and other privileged documents.
Taint teams typically come into play when a law enforcement agency serves a warrant on a business rather than issuing a subpoena, according to Daniel Suleiman, a Washington, D.C.-based white-collar defense and investigations partner at Covington & Burling LLP.
“There has to be that mechanism for not invading attorney-client privilege,” said Suleiman, who briefly served a decade ago as deputy chief of staff of the Department of Justice’s criminal division. “Attorney-client privilege is a very highly valued principle.”
In a pair of filings, de Bretteville argued the taint team in the Proove investigation had provided at least 85 privileged documents to a trial prosecutor, exposing that prosecutor to the documents themselves, and later the entire trial team to the information contained in the privileged documents. The defense attorney argued that throughout the case, there was a failure to wall off the taint team, as well as a failure to wall off the prosecutor who read the privileged documents.
Prosecutors never responded to the allegations before dismissing the case.
It is unclear if the dismissal affects the San Diego guilty plea of the former Proove employee. His defense attorney did not return messages seeking comment. The employee, who pleaded guilty in August 2020, was a cooperating witness for the prosecution, according to court documents, and has not yet been sentenced.
