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Karl A. Racine
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DC Attorney General Offers Court Review of Privileged Chartered Litigation Documents

Thursday, November 14, 2013

Ted Gest
Public Information Officer
[email protected]

D.C. Attorney General Irvin B. Nathan wrote today to United States Attorney Ronald Machen to propose a compromise to resolve the dispute over documents sought by the U.S. Attorney’s Office (“USAO”) in its investigation of the settlement the District Government reached with D.C. Chartered Health Plan Inc. (“Chartered”) in 2011 that are subject to the attorney-client and other legal privileges.  This letter came in response to Mr. Machen’s letter of November 13, 2013 asking that the Executive branch of the District of Columbia waive its legal privileges and produce all the documents.  The Chartered settlement was negotiated and recommended by career lawyers in the Office of the Attorney General in close consultation with the District’s Department of Health Care Finance, and was reviewed and approved by the federal government, which paid 70% of it.  

In his letter, Nathan cited two previous rejected offers he had made to the U.S. Attorney  and made a third proposal to resolve the dispute over the privileged documents “in the spirit of collegiality and our shared interest in law enforcement.”  Attorney General Nathan proposed to submit all of the documents over which the Office of the Attorney General (“OAG”) has claimed attorney-client or work-product privilege to the Chief Judge of the U.S. District Court for the District of Columbia, who supervises the federal grand jury.  The Chief Judge would then conduct a private inspection of the documents and anything else the USAO wanted to provide.  If the Court concludes that the privilege applies, the documents would be returned by the Court to OAG.  But if the Court concludes that the crime-fraud exception claimed by USAO applies, the Attorney General agreed to waive the District’s right to appeal the ruling and will produce to USAO any documents deemed not to be privileged.  USAO would agree that such submission does not constitute a waiver of the privileges.  “If the Court decides that the documents are no longer privileged,” the Attorney General wrote, “I intend to simultaneously produce all of the documents to the public so that everyone can see, as I have repeatedly advised, that there is nothing remotely incriminating in them.”

Attorney General Nathan also reminded Machen of the two previous offers he has made to resolve the dispute.  First, he offered to waive the District’s privileges if Machen could provide OAG with any factual basis for the exception.  Second, Nathan offered to sit for a full “no-holds barred” interview with Machen’s investigators on the topic of the Chartered settlement so long as USAO agreed not to claim that it constituted a waiver the District’s privileges.  The letter pointed out that neither of these earlier offers at compromise have  been accepted.

Citing relevant legal precedents, the Attorney General’s 5-page letter explained that despite Mr. Machen’s claims, the District of Columbia Government has not lost its attorney-client privilege, one of the oldest and most important privileges in our legal system, or its work-product privileges simply because the USAO has initiated a grand jury proceeding.  Nonetheless, the Attorney General said, notwithstanding the District’s possession of important legal privileges, OAG remains prepared to waive the privileges if the USAO can “show or describe to [OAG] a single scintilla of evidence that any person in the District government committed or facilitated an arguably illegal act in connection with the District’s 2011 settlement with Chartered,” something Attorney General Nathan advised the USAO that it has utterly failed to do despite repeated OAG requests.  

The internal communications as to which OAG is claiming privilege, Nathan wrote, are “at the very heart of the attorney-client and work-product privileges” and “consist primarily of correspondence within OAG and with our client agency concerning litigation and negotiating tactics, correspondence with our actuarial experts on the issues in the litigation, analyses of our prospects in litigation and strategies for negotiations both with our adversary and with the federal government.” Communications about the settlement with the Mayor were made pursuant to long-established laws and protocols of the District government going back decades.

The letter cited the cooperation, acknowledged by Mr. Machen’s letter, that OAG has provided the in USAO’s investigation of the 2010 Mayoral campaign thus far including production of nearly 20,000 documents, responses to dozens of inquiries and granting numerous witness interviews.  The letter emphasized that OAG knows of nothing untoward or improper about the resolution of the contested litigation in the Chartered settlement.

In light of the number of OAG and HCFA lawyers who worked on and supported the settlement, Nathan wrote: “If there were any criminality afoot in the settlement decision , one would have to conclude that a half dozen sworn officers of the court did not see it or willfully participated in it. I am unable to come to that conclusion, and I do not think your office would either.”