Academy of Allergy & Asthma in Primary Care et al v. Louisiana Health Service and Indemnity Company et al

Filing 122

ORDER AND REASONS granting 57 Motion to Disqualify Counsel. IT IS FURTHER ORDERED that the Motion to Dismiss for Failure to State a Claim (Rec. Doc. 64 ) submitted on behalf of AllMed and the Motion to Dismiss Plaintiffs' First Amended Complaint (Rec. Doc. 74 ) submitted on behalf of BlueCross are DENIED without prejudice. Signed by Judge Carl Barbier on 10/2/2018. (cg)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
ACADEMY OF ALLERGY &
ASTHMA IN PRIMARY CARE, ET
AL.

CIVIL ACTION

VERSUS

No. 18-399

LOUISIANA HEALTH SERVICE
AND INDEMNITY COMPANY, ET
AL.

SECTION: “J”(2)

ORDER AND REASONS
Before the Court is a Motion to Disqualify Counsel of Record (Rec. Doc. 57)
filed by Plaintiff, United Biologics, L.L.C. d/b/a United Allergy Services. Defendants,
Louisiana Health Service and Indemnity Company d/b/a Blue Cross Blue Shield of
Louisiana and Allmed Healthcare Management, Inc., have jointly filed an opposition
(Rec. Doc. 76), arguing against disqualification of their counsel, Baker Donelson
Bearman Caldwell & Berkowitz, P.C. Movant responded with a reply (Rec. Doc. 87)
to which Defendants responded in a supplemental opposition (Rec. Doc. 88). Having
considered the Motion and legal memoranda, the record, the Parties’ arguments at
oral argument, and the applicable law, the Court finds that the Motion should be
GRANTED.
FACTS AND PROCEDURAL BACKGROUND
According to Plaintiffs’ complaint, this “case concerns a conspiracy and
agreement among various health insurance company competitors . . . to restrict

1

competition in the relevant markets for allergy testing and allergen immunotherapy
for seasonal and perennial allergies . . . in local areas throughout Louisiana, Kansas,
and other local markets serviced by Humana.” (Rec Doc. 1 at 1-2). Plaintiffs are
Academy of Allergy & Asthma in Primary Care (the “Academy”) and United Allergy
Services (“UAS”).
The Academy describes itself as “a 504(c)(6) non-profit organization of over 250
member physicians” dedicated to fostering “the ability of primary care physicians to
provide high quality, patient accessible diagnostic and therapeutic allergy and
asthma care.” (Rec. Doc. 1 at 4). One of its purposes is to promote the interests of
primary care physicians who seek to practice in the allergy testing and
immunotherapy markets. (Rec. Doc. 1 at 4). UAS is an LLC that provides “technician
and support services for physicians practicing allergy testing and allergen immune
therapy.” (Rec. Doc. 1 at 5). In this way, “UAS and the primary care and other
physicians UAS supports, compete directly with the businesses of board-certified
allergists.” (Rec. Doc. 1 at 5).
Plaintiffs allege that UAS’s services allow primary care physicians to conduct
cost-effective allergy skin testing and immunotherapies from these physicians’ own
offices or clinics. This allows these non-specialized physicians to enter the allergy
market for themselves, and eliminates the need to refer patients to board-certified
allergists or outsource blood allergy tests to reference laboratories. Plaintiffs allege
UAS’s entrance into the allergy market had two major consequences: it disrupted the
system of referrals from primary care doctors to allergy specialists and it also

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required health insurance companies “to pay more upfront in preventative medicine
by reaching far more patients than board-certified allergists could in their respective
markets.” (Rec. Doc. 1 at 10). Defendants are three health insurance companies—who
pay the costs of these services for their customers—and a company that was hired as
an independent review organization of appeals made to Blue Cross for denying
reimbursement claims. The relevant defendants to this Motion are Blue Cross Blue
Shield of Louisiana (“Blue Cross”) and the independent review company, AllMed
Healthcare Management (“AllMed”), who share the law firm of Baker Donelson
Bearman Caldwell & Berkowitz, P.C. (“Baker Donelson”) as their current counsel.
According to Defendants, Blue Cross has been a client of Baker Donelson since 2010,
though Baker Donelson only began acting as antitrust counsel in 2018.
UAS began doing business in Louisiana in January of 2010. (Rec. Doc. 57-2 at
2). About three years later, primary care physicians who had contracted with UAS
began informing UAS that they had received communications from the Louisiana
State Board of Medical Examiners (the “Board”) concerning allergy testing and
immunotherapy services these physicians had provided in late 2013 and early 2014.
(Rec. Doc. 57-2 at 2). These physicians also informed UAS of similar communications
received from Blue Cross. UAS sought Donna Fraiche, a partner specializing in
health care law at Baker Donelson, to represent UAS and these physicians regarding
these communications. Ms. Fraiche agreed to the representation on behalf of Baker
Donelson and sent an engagement letter and a term sheet to UAS, which the thenCEO of UAS, Nicolas Hollis, signed on December 5, 2013. (Rec. Doc. 57-2 at 8-10).

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The engagement letter states that Baker Donelson has been engaged to represent
UAS “with respect to advices regarding [UAS’s] relationship with the [Board].” (Rec.
Doc. 57-2 at 8).
In January of 2014, UAS met with the Board to discuss the UAS services that
were being offered by primary care physicians. The Board was investigating the
primary care physicians for “allegedly treating their allergy patients outside their
professional scope of practice.” (Rec. Doc. 76-2 at 3). According to Movant, a primary
reason for this meeting was to discuss an anonymous complaint 1 that had been made
to the Board concerning UAS’s allergy protocols and services. (Rec. Doc. 57-1 at 4).
Before the meeting, Baker Donelson allegedly “review[ed] UAS’s confidential
information to respond” to the anonymous complainant’s questions. (Rec. Do. 57-1 at
4). Ms. Fraiche avers that she passed the information given to her by UAS to the
Board, per UAS’s instructions. (Rec. Doc. 76-2 at 4).
Ms. Fraiche served as counsel for UAS and several primary care physicians at
the meeting. Ms. Fraiche describes her and Baker Donelson’s representation at the
meeting as an effort to “convince the [Board] not to take these primary care
physicians’ licenses for treating their allergy patients as general primary care
physicians.” (Rec. Doc. 76-2 at 3). Ms. Fraiche describes the physicians as the
“primary clients” for whom UAS simply paid the bills.
Around the same time, Blue Cross began to deny claims made for
reimbursement for allergy testing and immunotherapy that used UAS’s protocols. In
Movant has allegedly since discovered that the anonymous complainant was actually Blue Cross.
(Rec. Doc. 57-1 at 4).
1

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or around February of 2014, UAS asked Ms. Fraiche to also represent UAS and the
primary care physicians in appealing these denials by Blue Cross. (Rec. Doc. 76-2 at
5). Baker Donelson began meeting with Blue Cross to discuss Blue Cross’s
investigation and audits of UAS and its allergy protocols. For Example, on February
18, 2014, Baker Donelson met with Blue Cross’s Chief Medical Officer, Dr.
Carmouche, on UAS’s behalf. (Rec. Doc. 57-1 at 4). Baker Donelson formally accepted
this expanded representation in April. In an e-mail dated April 29, 2014, Donna
Fraiche wrote to the then CEO of UAS, Nicolas Hollis: “[O]ur firm has now been
specifically engaged and authorized to serve as your counsel to the certain physician
customers of UAS who received denials from Blue Cross specifically related to the
ordering and administration of allergy testing and or immunotherapy as provided
through their UAS affiliation and protocols.” (Rec. Doc. 57-2 at 12).
Mr. Hollis avers that, “both UAS and the contracting physicians trusted Baker
Donelson with confidential information regarding the appeals . . . including the basis
for contesting [Blue Cross’s] spurious claims of lack of medical necessity.” (Rec. Doc.
57-2 at 4). Communications between Mr. Hollis and Baker Donelson were extensive;
Mr. Hollis estimates that he exchanged over 500 e-mails with Baker Donelson that
he regards as confidential. (Rec. Doc. 57-1 at 4). Using this information, Baker
Donelson appealed Blue Cross’s denials of reimbursement through an internal review
process. The appeals were denied. A second level of appeal was to be handled by an
independent review organization. Plaintiffs did not know at the time that the
independent review organization was Defendant AllMed. (Rec. Doc. 57-1 at 4).

5

AllMed denied all of the appeals—which Plaintiffs allege was agreed upon inadvance, as a part of the conspiracy between health insurers in Louisiana. (Rec. Doc.
57-1 at 5).
After these appeals failed, Baker Donelson, as UAS’s counsel, reached out to
the Louisiana Department of Insurance (the “Department”) to set up a meeting with
the Department’s Commissioner, James Donelon. According to a summary of the
meeting published by the Department (the “Summary”) (Rec. Doc. 57-2 at 15-21) the
meeting was held in July of 2014; Baker Donelson appeared as UAS’s legal counsel
as did the firm Bracewell & Giuliani L.L.P. Mr. Hollis acted as UAS’s company
representative. Dr. Carmouche and Dr. Dwight Brower—the Medical Director at Blue
Cross—acted as the representatives of Blue Cross. Sheldon Faulk, Senior In-house
Counsel of Blue Cross, appeared as Blue Cross’s attorney. At the meeting, Dr. Brower
informed the commissioner that the independent reviewer had upheld every appeal.
However, Movant alleges that “Dr. Brower concealed any agreement with AllMed and
denied any agreement with outside allergist organizations.” (Rec. Doc. 57-1 at 5).
The Summary—which Baker Donelson helped prepare 2—demonstrates that
the critical issue in this meeting was whether Blue Cross had appropriately denied
claims for reimbursement. Blue Cross argued to the Department that its rejection of
reimbursement to the primary care physicians using UAS’s protocols was justified for

Movant’s counsel explained at oral argument that while the Summary is a public document submitted
by the Department, it is not drafted by the Department because the Department does not take meeting
minutes. Rather, the parties draft a version of the Summary for the Department in advance.
Defendants do not dispute that Ms. Fraiche took part in preparing the Summary on behalf of UAS.
Nor do they dispute that the substance of the document as an accurate account of the meeting.
2

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three reasons: (1) safety, (2) efficacy, and (3) costs. UAS responded to each of these
arguments at length. For example, UAS attempted to rebut Blue Cross’s arguments
that UAS allergy testing and therapy protocols are ineffective by arguing:
Blue Cross does not cite any adverse events under the UAS protocol and
does not refer to any complaints by patients or treating physicians, other
than competitor physicians who are upset that they may lose business
to their PCP colleagues. UAS sincerely believes the objections are
competitor driven and that certain physicians have used unfounded
complaints about safety and efficacy to convince Blue Cross Louisiana
not to pay those physicians' competitors.
(Rec. Doc. 57-2 at 20). The Department took no action after the meeting.
In late September of 2014, Baker Donelson communicated to the Department
that Blue Cross’s “actions were threatening UAS’s ability to continue to operate in
the state of Louisiana.” (Rec. Doc. 57-1 at 6). Specifically, in an e-mail Ms. Fraiche
sent to the Department on September 29, 2014 (Rec. Doc. 87-3), Ms. Fraiche mentions
an impromptu meeting she had with Dr. Carmouche, in which she discussed the
antitrust ramifications of Blue Cross’s conduct. A few days later, UAS learned from
Baker Donelson that Blue Cross had demanded Baker Donelson withdraw from
representing UAS and its contracting physicians, because Baker Donelson was
representing Blue Cross on an unrelated matter. (Rec. Doc. 57-1 at 5). Baker
Donelson then withdrew as UAS’s counsel. In 2015, UAS stopped doing business in
Louisiana because its contracting physicians in the state could not receive
reimbursement from third-party payors, such as Defendants.
UAS initiated this litigation in January of 2018, after allegedly discovering
acts of collusion on the part of Defendants. Counsel for UAS first became aware that

7

Baker Donelson would be representing Blue Cross in this antitrust matter on
February 26, 2018. Counsel for UAS called Baker Donelson regarding a possible
conflict on March 8, 2018. (Rec. Doc. 57-3 at 1-2). The subsequent back-and-forth
communications between UAS’s current counsel and Baker Donelson regarding the
alleged conflict of interest never resolved the issue to the satisfaction of either party
and eventually culminated in the instant Motion to Disqualify Counsel, filed June 1,
2018. Part of the reason for UAS’s delay in filing a motion to disqualify appears to be
that it did not have access to its client file. UAS first requested its client file on April
6, 2018. UAS did not receive its file from Baker Donelson until July 9, 2018. (Rec.
Doc. 87-2 at 7).
Before the Motion to Disqualify was filed, Baker Donelson submitted a motion
to dismiss on behalf of Blue Cross (Rec. Docs. 40). In that motion and its
accompanying memorandum, Blue Cross defended itself from antitrust allegations
by arguing that Blue Cross’s decision to deny claim appeals was justified by concerns
of safety and the efficacy of treatment. (Rec. Doc. 40-1 at 14). These legitimate
concerns, Blue Cross argues in its motion, are the only reasonable explanation of Blue
Cross’s decisions to deny reimbursement claims. Thus, Plaintiffs’ antitrust allegation
that the payors illegally conspired to deny claims in order to avoid paying for
preventative care is implausible and subject to dismissal.
After UAS filed its amended complaint, Baker Donelson submitted new
motions to dismiss on behalf of AllMed (Rec. Doc. 64) and Blue Cross (Rec. Doc. 74).
In these motions—still pending before the Court—Baker Donelson maintains that

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Blue Cross denied reimbursement claims out of concern for the “safety and efficacy of
[the UAS] allergy testing and treatment” protocols. (Rec. Doc. 74-1 at 9).
APPLICABLE LAW
A motion to disqualify is a substantive motion that affects the rights of parties;
analysis of the motion is therefore subject to the standards that have developed under
federal precedents. In re American Airlines, Inc., 972 F.2d 605, 610 (5th Cir. 1992).
Attorneys practicing before this Court are subject to the Rules of Professional
Conduct of the Louisiana State Bar Association, because these are the professional
standards have been adopted by our Local Rules. L.R. 83.2.10. Nevertheless, “how
these rules are to be applied are questions of federal law.” Id. at 610 (emphasis
added). Furthermore, the Local Rules and the Rules of Professional Conduct are not
the “sole authorit[ies] governing a motion to disqualify.” Id. (citing In re Dresser
Industries, Inc., 972 F.2d 540, 543 (5th Cir. 1992)). Courts also consider the ABA's
Model Rules of Professional Conduct and the ABA's Model Code of Professional
Responsibility. 3 Parker v. Rowan Companies, Inc., No. CIV.A. 03-0545, 2003 WL
22852218, at *2 (E.D. La. Nov. 25, 2003) (J. Vance) (citing Horaist v. Doctor's Hospital
of Opelousas, 255 F.3d 261, 266 (5th Cir. 2001)). Additionally, “[a] Court must take
into account not only the various ethical precepts adopted by the profession but also

The relevance of the potentially applicable Canon 9 of the ABA Ethical Standards is unclear. The
Fifth Circuit has contradicted itself as to whether Canon 9’s concern over the “appearance of
impropriety” is also a relevant concern to the federal courts. See Parker v. Rowan Companies, Inc., No.
CIV.A. 03-0545, 2003 WL 22852218, at *4 (E.D. La. Nov. 25, 2003) (collecting diverging Fifth Circuit
cases).
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9

the societal interests at stake.” F.D.I.C. v. U.S. Fire Ins. Co., 50 F.3d 1304, 1314 (5th
Cir. 1995). The relevant provisions of the Rules of Professional Conduct provide:
Rule 1.9. Duties to Former Clients
(a) A lawyer who has formerly represented a client in a matter shall not
thereafter represent another person in the same or a substantially
related matter in which that person’s interests are materially adverse
to the interests of the former client unless the former client gives
informed consent, confirmed in writing.
Rule 1.10. Imputation of Conflicts of Interest: General Rule
(a) While lawyers are associated in a firm, none of them shall knowingly
represent a client when any one of them practicing alone would be
prohibited from doing so by Rules 1.7 or 1.9, unless the prohibition is
based on a personal interest of the prohibited lawyer and does not
present a significant risk of materially limiting the representation of the
client by the remaining lawyers in the firm.
LA. RULES OF PROF’L CONDUCT R. 1.9(a), (c), 1.10(a). Rules 1.9 and 1.10 of Louisiana’s
Rules of Professional Conduct are substantially similar to their counterparts in the
Model Rules. See MODEL RULES OF PROF’L CONDUCT R. 1.9, 1.10.
In the Fifth Circuit, the substantial relationship test governs whether Rules
1.9 and 1.10 require disqualification of an attorney—and his firm by virtue of
imputation. The test places the burden on the movant to satisfy two prongs:
(1) an actual attorney-client relationship between the moving party and
the attorney he seeks to disqualify; and
(2) a substantial relationship between the subject matter of the former
and present representations.
American Airlines, 972 F.2d at 614. Once a Movant proves that adverse counsel
previously represented him as his attorney, the court’s inquiry is narrowed to the sole
issue of whether this prior representation is substantially related to the instant
representation. Id. That is because a finding of a substantial relationship will trigger
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two irrebuttable presumptions. Id. First, “the court will irrebuttably presume that
relevant confidential information was disclosed during the former period of
representation.” Id. (citing Duncan v. Merrill Lynch, Pierce, Fenner & Smith, Inc.,
646 F.2d 1020, 1028 (5th Cir. 1981)). The “second irrebuttable presumption is that
confidences obtained by an individual lawyer will be shared with the other members
of his firm.” Id. at 614 n.1 (citing In re Corrugated Container Antitrust Litig., 659 F.2d
1341, 1346 (5th Cir. 1981)).
Therefore, evidence that a firm has carefully screened a conflicted attorney and
that no confidential information has been shared between attorneys in the conflicted
attorney’s firm is irrelevant. 4 In the words of the Fifth Circuit: “the test is categorical
in requiring disqualification once a substantial relationship between past and current
representations is established.” Id.
In part because courts have no discretion as to the remedy, the test is never to
be applied cavalierly or mechanically. See id. Disqualification is a harsh consequence
for both the disqualified attorney as well as the client. F.D.I.C. v. U.S. Fire Ins. Co.,
50 F.3d 1304, 1313 (5th Cir. 1995) (“Depriving a party of the right to be represented
by the attorney of his or her choice is a penalty that must not be imposed without
careful consideration.”). Nor is the test to be applied in a way that would forever
foreclose a lawyer from ever representing any interest that is adverse to a former
The notable exception to conflict imputation to a firm is the case of the migrating attorney. LA. RULES
PROF’L CONDUCT R. 1.9(b) (“When a lawyer has terminated an association with a firm, the firm is
not prohibited from thereafter representing a person with interests materially adverse to those of a
client represented by the formerly associated lawyer and not currently represented by the firm, unless:
(1) the matter is the same or substantially related to that in which the formerly associated lawyer
represented the client; and (2) any lawyer remaining in the firm has information protected by Rules
1.6 and 1.9(c) that is material to the matter.”).
4

OF

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client. Parker, 2003 WL 22852218, at *3. Moreover, courts must be alert to the
possibility that a motion to disqualify may be used as a mere “‘procedural weapon’ to
advance purely tactical purposes.” American Airlines, 972 F.2d at 611. Accordingly,
it is required that a court engage in a “painstaking analysis of the facts and precise
application of precedent.” Brennan's, Inc. v. Brennan's Restaurants, Inc., 590 F.2d
168, 174 (5th Cir. 1979).
The purpose of the substantial relationship test is twofold: preservation of the
“duty of confidentiality” and preservation of the “duty of loyalty,” both owed to the
former client. American Airlines, 972 F.2d at 618. In In re American Airlines, Inc.,
the Fifth Circuit reviewing its precedent noted that the test is not only concerned
with “actual fairness” in proceedings, but also “safeguard[ing] the integrity of the
attorney-client relationship.” Id. at 619. Our Court of Appeals noted that its
precedents demand disqualification in some circumstances where no confidential
information has been exchanged between client and counsel. Id. Rather, “the
provision of legal advice on a substantially related matter by itself requires
disqualification.” Id. (citing Corrugated, 659 F.2d at 1346–47, Brennan's, 590 F.2d at
171–72).
DISCUSSION
I.

THERE WAS AN ACTUAL ATTORNEY-CLIENT RELATIONSHIP BETWEEN
UAS AND BAKER DONELSON

Baker Donelson admits to providing “government relations services” for UAS,
but denies in its opposition that these were legal services. (Rec. Doc. 76-8 at 8). Thus,

12

Baker Donelson appears to have argued that the first prong of the substantial
relationship test is unmet. 5
Whether an attorney-client relationship exists is determined under state law.
Hopper v. Frank, 16 F.3d 92, 95 (5th Cir. 1994). The Louisiana Supreme Court has
cited to the applicable Restatement for guidance, which states that an attorney-client
relationship is formed when:
(1) a person manifests to a lawyer the person's intent that the lawyer
provide legal services for the person; and either
(a) the lawyer manifests to the person consent to do so; or
(b) the lawyer fails to manifest lack of consent to do so, and the
lawyer knows or reasonably should know that the person
reasonably relies on the lawyer to provide the services.
In re Austin, 943 So. 2d 341, 347 (La. 2006) (quoting RESTATEMENT (THIRD) OF THE
LAW GOVERNING LAWYERS § 14 (2000)). The event, or series of events, which triggers
the formation of an attorney-client relationship can often be subtle, because “[t]he
existence of an attorney-client relationship turns largely on the client's subjective
belief that such a relationship exists.” Sumpter, 2013 WL 2181296, at *7 (citing La.
State Bar Ass'n v. Bosworth, 481 So.2d 567, 571 (La.1986)).
Here however, it is inescapably clear that an attorney-client relationship
formed because Baker Donelson formally manifested its consent in an engagement

There is language in Defendants’ opposition suggesting that other standards besides the substantial
relationship test should be considered. In their opposition, Defendants cite frequently to an order and
reasons from this Court, United States v. DeCay, 406 F. Supp. 2d 679, 685 (E.D. La. 2005) (J. Barbier).
DeCay involved a criminal proceeding and so this Court applied the Fifth Circuit test that is the
appropriate in the “specific context of criminal cases.” Id. at 684. The Court’s observation that the
presumption of shared confidences could be rebutted where a criminal defense attorney represented a
former client only in preliminary proceedings is quite obviously without relevance to this case. The
substantial relationship test is the only applicable standard here, and its presumptions are
irrebuttable.
5

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letter it sent to UAS. The letter, written on firm letterhead by attorney Donna Fraiche
and addressed to UAS, states as its subject line: “Engagement as counsel.” (Rec. Doc.
57-2 at 8). In the third paragraph of the engagement letter, Ms. Fraiche breaks down
her billing rates for “legal services.” Attached to the engagement letter was a
document listing the terms of engagement. The term sheet begins: “We appreciate
your decision to retain Baker Donelson . . . as your legal counsel.” (Rec. Doc. 57-2 at
10). Any reasonable person, and one would hope any reasonable attorney, would
agree that this letter marks the formation of an attorney-client relationship. 6
Furthermore, UAS states—and Baker Donelson has not refuted—that UAS’s client
file indicates that “UAS was billed more than $200,000 for ‘legal services rendered.’”
Finally, the summary of the meeting that took place between UAS, Blue Cross, and
the commissioner of the Louisiana Department of Insurance labels Donna Fraiche
and Baker Donelson as UAS’s “legal counsel.” Frankly, given this evidence it is
troubling that Baker Donelson would even argue in its briefs that it was never
engaged as UAS’s attorney. 7 The first prong is met.

Baker Donelson cites to a considerable amount of case law, but little of it concerns when an attorneyclient relationship forms. Rather, the cases Baker Donelson cites involve analyses of the attorneyclient privilege. This is obviously a separate inquiry and one that must follow a finding that an
attorney-client relationship exists.
7 At the hearing, upon being asked a second time whether Baker Donelson had provided legal services,
counsel for Blue Cross conceded: “We are not denying and we admit in our pleadings that there is an
attorney-client relationship.” The Court disagrees with this characterization of the pleadings and
therefore feels it must address the arguments put forth in Baker Donelson’s memorandum arguing it
did not provide legal services.
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II.

THE PREVIOUS AND CURRENT REPRESENTATIONS ARE
SUBSTANTIALLY RELATED

As Defendants point out, Baker Donelson should not be disqualified merely
because the firm previously represented UAS in another matter. Rather, UAS “bears
the burden of proving that the present and former representations are substantially
related.” Parker, 2003 WL 22852218, at *5 (citing Duncan, 646 F.2d at 1028).
1.

What Is Required for Two Representations to be
Substantially Related

What exactly is required for two representations to be “substantially related”
to one another has not been conveniently captured in a concise turn of phrase by the
Fifth Circuit. The Louisiana Supreme Court, attempting to distill a singular idea
from various courts’ opinions, has stated that “two matters are ‘substantially related’
when they are so interrelated both in fact and substance that a reasonable person
would not be able to disassociate the two.” Walker v. State, Dept. of Transp. and Dev.,
817 So. 2d 57, 62 (La. 2002). Judge Vance, compiling the case law of the Fifth Circuit
and the Eastern District of Louisiana, found the test to be less demanding than that:
“the substantial relationship test requires common subject matters, issues and causes
of action, but it does not require the same factual scenarios in both cases.” Parker v.
Rowan Companies, Inc., No. CIV.A. 03-0545, 2003 WL 22852218, at *10 (E.D. La.
Nov. 25, 2003). 8 However, this encapsulation also appears to unduly limit which

The Fifth Circuit states in American Airlines, that “American has succeeded in ‘delineating with
specificity the subject matters, issues and causes of action’ common to prior and present
representations in the manner demanded by our precedents. 972 F.2d at 628 (quoting Duncan, 646
F.2d at 1029). The Court takes this merely to mean that the burden is on the movant to sufficiently
8

15

matters can be considered substantially related. In American Airlines the Fifth
Circuit declared that the “two representations need only involve the same ‘subject
matter’ in order to be substantially related.” Id. at 625. 9
Because American Airlines remains the ultimate authority on when two
matters are substantially related in the Fifth Circuit, the Court will depend on that
opinion as its pole star. In American Airlines, the Fifth Circuit issued a writ of
mandamus in response to a petition by the defendant to an antitrust dispute,
American Airlines. The writ directed the district court to disqualify Vincent & Elkins,
which was representing the plaintiff, Northwest Airlines. Id. at 628. The Court found
a substantial relationship existed between the antitrust suit in which V&E
represented Northwest Airlines, and three matters in which V&E had previously
represented American Airlines.
One of the matters V&E had advised American Airlines on was “Project
Armadillo,” a proposal by American to acquire Continental Airlines. Id. at 625. V&E
provided antitrust analysis to help American decide how to approach the acquisition.

detail the representations so that the Court can accurately determine whether matters are
substantially related. In the quoted case, the Fifth Circuit rebuffed the district court for accepting
statements so broad they “could be applied to virtually any law firm that had ever represented Merrill
Lynch or any large brokerage firm.” Duncan, 646 F.2d at 1029. There is not a requirement that
representations actually share common causes of action, as the Fifth Circuit so held in American
Airlines, 972 F.2d at 622-23.
9 Comment [9] to ABA Model Rule 1.9 states: “Matters are ‘substantially related’ for purposes of this
Rule if they involve the same transaction or legal dispute or if there otherwise is a substantial risk
that confidential factual information as would normally have been obtained in the prior representation
would materially advance the client’s position in the subsequent matter.” This disjunctive definition
recognizes two scenarios where disqualification is appropriate. The first scenario involves an attorney
or firm switching to a new side mid-transaction or mid-litigation. The second situation may involve
two separate, but related matters which are so similar that confidential information obtained during
the representation of one may likely be used in the subsequent representation. See, e.g., Parker, 2003
WL 22852218, at *9.

16

Specifically, the firm advised American on how it could avoid a challenge under the
Department of Justice’s antitrust guidelines. The representation lasted about three
months, before American chose not to pursue the acquisition. V&E’s primary
argument against disqualification was that the problem posed to V&E “required little
detailed analysis and that all the information needed by [V&E] to reach its conclusion
‘was and is publicly available.’ Because [V&E] required no confidential information .
. . Northwest contend[ed] that [V&E’s] representation provide[d] no basis for
disqualification.” Id. at 626. The Fifth Circuit found that this “argument would fail
even if [Northwest] could show that all of the information was public knowledge.” Id.
The Court emphasized that that there was no public information exception. The only
relevant question was whether the two representations are substantially related. Id.
The matters were substantially related, because V&E gave advice to American on the
issue of market definition, also an issue of importance in the antitrust suit, and
because V&E was privy to its former clients’ views on air transportation markets,
another issue in the ongoing antitrust suit. Id. at 625-28.
Another prior representation by V&E was for a suit brought by a Continental
Airlines affiliate, System One, against American for alleged breach of antitrust laws.
Id. at 623-25. System One—a computer reservation system vendor—charged that
American had engaged in acts intended to unfairly exclude System One from the
market. Northwest argued that this representation did not require disqualification,
because V&E could not raise any issues relating to computer-reservation systems.
That dispute was already resolved by settlement or trial. V&E was therefore barred

17

from raising the issue of computer-reservation systems by settlement and res
judicata. Nevertheless, the Fifth Circuit was not persuaded that the representations
could not be substantially related, simply because the matters of the previous
representation could not or would not be introduced in the case sub judice. The Court
was concerned that “in the particular case of res judicata, it places the former counsel
in the position of attempting to minimize the beneficial results of her prior
representations by limiting their effect in the present case.” Id. at 624. V&E also
argued that the representations were not substantially related because a critical
issue that was present in the System One antitrust litigation, override commissions,
was not at issue in the case before the Fifth Circuit. The Court of Appeals again was
unsatisfied, because the test only requires common “subject matter.” Each of the
representations involved “American’s travel agency commission ‘practices and
procedures.’” Id. at 625. That was enough to find a substantial relationship. Id. (citing
Duncan, 646 F.2d at 1032).
The

third

representation—the

“Fort

Bend”

case—that

required

disqualification of V&E, was V&E’s defense of American from charges of breach of
contract, and similar conduct, brought by Continental. The Fort Bend litigation was
not an antitrust suit, but Continental’s complaint charged that “American, having
achieved dominance in the CRS market, in turn used SABRE to ‘exclude Continental
in whole or in part from specific airline passenger markets.’” Id. at 622. Despite that
these litigations involved different causes of action, the Fifth Circuit found them to
be substantially related. Documents from that prior representation showed that V&E

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feared that evidence of price-fixing on the part of American’s president would be used
against American in the Fort Bend litigation, and V&E worked to exclude it. In the
case then before the Fifth Circuit, Northwest, through its counsel, V&E, referred to
this price-fixing solicitation to support its allegation in its complaint, alleging that
“AA and its current chief executive officer have previously engaged in anticompetitive conduct and open contempt for the antitrust laws.” Id. at 623. That the
price-fixing solicitation could not be used as evidence was not dispositive. “[T]he
subject matter ‘does not need to be relevant in the evidentiary sense to be
substantially related.’ It need only be akin to the present action in a way reasonable
persons would understand as important to the issues involved.” Id. (emphasis added)
(quoting Corrugated, 659 F.2d at 1346).
It is clear that any one of these substantially related representations alone
required disqualification. The Fifth Circuit analyzed all three representations with
“painstaking” examination in order to provide guidance to the district courts. Taken
together, the Court finds that these examples demonstrate that the representations
now before the Court are substantially related.
2.

Baker Donelson’s Representations are Substantially
Related

Plaintiffs allege in this case that the Defendants engaged in “a conspiracy and
agreement among various health insurance company competitors . . . to restrict
competition in the relevant markets for allergy testing and allergen immunotherapy
for seasonal and perennial allergies . . . in local areas throughout Louisiana.” (Rec.
Doc. 1 at 1-2). Plaintiffs allege that UAS provides skin allergy testing and
19

immunotherapies protocols that can be used safely and efficiently by primary care
physicians. This more accessible preventative care allegedly increased costs for thirdparty payors. This caused Defendants to respond by conspiring to refuse
reimbursement for these services on the false grounds that the tests were unsafe and
inefficient. Defendants vehemently reject the allegation that they did not have cause
to deny reimbursement. They deny any conspiracy and argue that the reason that
payors all began rejecting claims around the same time was because, “[Blue Cross],
and apparently other payors, realize[d] that any short term financial benefit from
having large numbers of underschooled or ill-informed physicians perform allergy
tests and provide immunological therapies to allergy sufferers would very likely
result in much higher health care costs when ineffective or failed treatment results
in more dramatic and more critical patient outcomes.” (Rec. Doc. 40-1 at 1)
Thus, it appears that the safety and medical efficacy of the services provided
by primary care physicians pursuant to UAS’s protocols is a critical issue in this
antitrust case. It is true that there are other, possibly dispositive issues as well; for
example, Defendants contest Plaintiffs’ standing to bring an antitrust suit against
Defendants. However, the Fifth Circuit concluded when finding the System One
representation substantially related, that there need not be an exact overlap of the
issues of each representation. Id. at 623-25. In fact, the Fifth Circuit specifically
rejected the proposition urged by V&E then—and now by Baker Donelson—that the
presence of distinguishing issues rendered two representations not substantially
related. Id. at 625. The proper method to compare the representations is to look at

20

how they are alike, not how they are different. This Court has no difficulty concluding
that representations are substantially related where counsel advises its current
client on the subject matter it had previously advised its former client, in an effort to
help the current client to prevail over the former on a critical issue shared between
the two representations. See American Airlines, 972 F.2d at 628.
It is not necessary for this Court to conjure up a hypothetical scenario where
“there is a substantial risk that confidential information as would normally or
typically have been obtained in [Baker Donelson’s] prior representation of [UAS]
would materially advance [Blue Cross’s] position in the present case,” because it is
apparent from the filings already submitted that Baker Donelson is in a position to
use information confided from UAS while UAS was its client. 10 See Bowers v.
Ophthalmology Group, 733 F.3d 647, 654 (6th Cir. 2013). Baker Donelson, begins its
motion to dismiss alleging:
UAS and . . . the AAAPC, have been on a crusade to create and enhance
the demand for UAS’ allergy testing equipment by championing allergy
Defendants go so far as to ask rhetorically in their opposition, “Is UAS concerned that it shared
information with Ms. Fraiche that shows that UAS knows that its protocols and treatments are not in
fact medically appropriate, efficacious, and safe?” Movant argues that “[c]lients should not have to
answer taunts such as those lodged by its former counsel” by demonstrating what confidences were
shared with former counsel. (Rec. Doc. 87-2 at 5). Movant is correct that the substantial relationship
test was developed to avoid such an inquiry. However, there is another problem. Perhaps UAS really
is concerned with serious deficiencies in UAS’s protocols, which UAS shared with Baker Donelson in
confidence. If that is the case, UAS will likely have a difficult time winning its case against Defendants.
Nevertheless, UAS has a right to expect this damaging information it shared with its own attorney
will be kept in confidence. Moreover, if Baker Donelson is privy to confidential information which casts
doubt on the efficacy and safety of UAS’s allergy protocols, Baker Donelson’s duty of loyalty to UAS
prevents it from using that information to the benefit of Blue Cross. LA. RULES OF PROF’L CONDUCT R.
1.9(c). As the Court found above, the efficacy and safety of the protocols will be a critical issue in this
case. Therefore Baker Donelson would be materially limited in its ability to represent Blue Cross, due
to this pre-existing duty to UAS not to disclose this crucial information. LA. RULES OF PROF’L CONDUCT
R. 1.7(a)(2). Disqualification may also be appropriate because of a conflict of interest between Baker
Donelson and its current client, Blue Cross. All of this goes to show the wisdom of a prophylactic rule.
10

21

testing as a new source of revenue for primary care physicians.
Consistent with this market push, UAS set out to force third party
payors such as [Blue Cross] to abandon their commitment to promote
only proven medical methodologies and to reduce the enormous cost of
health care by carefully and continually reviewing and analyzing
medical treatments and procedures. By allowing reimbursement only for
proven methodologies, [Blue Cross] actively discourages inefficient,
unnecessary, untested and potentially dangerous medical treatments
and procedures.
(Rec. Doc. 40-1 at 7). The obvious problem is that it was Baker Donelson itself who
had been urging Blue Cross that UAS had a “proven medical methodology” and that
the UAS’s services helped “reduce the enormous cost of health care” by providing an
alternative to costly allergy specialists. Certainly, when Baker Donelson argued to
the Louisiana Board of State Medical Examiners on behalf of UAS and UAS’s
contracting physicians that those physicians should not lose their medical licenses,
Baker Donelson was not arguing that these physicians were “underschooled or illinformed” or that their treatments were resulting in “more dramatic and more critical
patient outcomes.” Similar to the Fort Bend matter in American Airlines, this is a
case where Baker Donelson has placed itself in the position of attacking its own prior
advocacy made on behalf of its former client. See 972 F.2d at 623 (finding
representations substantially related where the plaintiff, through counsel V&E, cited
prominently to an alleged price-fixing solicitation, which was “the same allegation
that [V&E] lawyers were charged with excluding in the Fort Bend case”).
These representations share a common subject matter because the issue of
whether the reimbursement appeals were decided on merit or in conspiracy among
third-party payors is common to both. See id. at 628. Movant is not asking for

22

disqualification because “[defendants’] counsel provided general advice to the
[movant] in the past.” Sumpter, 2013 WL 2181296, at *9 (citing Parker, 2003 WL
22852218, at *5). Rather, Movant has shown that the Defendants will be attacking
the legitimacy of UAS’s services as a defense to the alleged antitrust conspiracy. The
viability of these services was the very thing that UAS hired Baker Donelson to
defend in front of the Board, Blue Cross, and the Department of Insurance. Thus,
UAS has successfully delineated with specificity the subject matters and issues
common to the prior and present representations in the manner demanded by the
Fifth Circuit. See Duncan, 646 F.2d at 1029.
Defendant argues that the matter before the Court is an antitrust litigation,
pure and simple, and the previous representation was a matter of healthcare law
advanced by an attorney prominent in that field. Thus, the matters are unrelated.
Even if this Court were to reduce the inquiry into the subject matter of the two
representations to that level of superficiality, disqualification would still be
appropriate. In her representation of UAS, Ms. Fraiche explicitly contemplated
antitrust issues being implicated by Blue Cross’s denial of the appeals for
reimbursement. In an e-mail to the Department of Insurance, Ms. Fraiche, wrote that
she had met with Dr. Carmouche of Blue Cross and warned him of the “anti trust
ramifications” of a boycott intended to benefit allergy specialists. (Rec. Doc. 87-3).
Therefore, there is evidence in the record that Baker Donelson represented UAS’s
position on antitrust issues to Blue Cross’s corporate representative and to the
Department.

23

Because these representations share a common subject matter and a critical
issue, the Court finds that the matters are substantially related. And because that
triggers two irrebuttable presumptions, 11 one remedy is allowed: disqualification of
Baker Donelson. See Sumpter, 2013 WL 2181296, at *10. Defendants suggest that
disqualification of the entire firm through imputation is not required because
attorney Donna Fraiche is not involved in the case at bar, and certain screening
measures have been put in place to prevent sharing of confidences. None of this is
relevant because the substantial relationship test obviates the need for a court to
attempt to divine what was shared, when, and by whom in a firm which has switched
sides. See Corrugated, 659 F.2d at 1347; Sumpter, 2013 WL 2181296, at *9
(“Considering the irrebuttable presumption that [defendants’ counsel] shared
[movant’s] confidences during her prior representation with her fellow . . . attorneys,
and the plain language of Louisiana Rule 1.10, which automatically disqualifies all
lawyers in a law firm when one attorney in the firm is disqualified, the Court has no
choice but to disqualify the entire . . . firm as [defendants’] counsel in this case.”). 12

Defendants’ argument against presuming shared confidences between UAS and Ms. Fraiche is
without merit. Defendants allege Ms. Fraiche was never given confidential information because she
passed all she was told regarding UAS’s allergy protocols to the Board in accordance with UAS’s
instructions. (Rec. Doc. 76 at 5). Defendants confuse the attorney-client privilege with the duty to keep
confidences. An attorney must keep his client’s confidences regardless of whether privilege has been
waived. Brennan's, Inc. v. Brennan's Restaurants, Inc., 590 F.2d 168, 172 (5th Cir. 1979) (“Information
[acquired in confidence] is sheltered from use by the attorney against his client by virtue of the
existence of the attorney-client relationship. This is true without regard to whether someone else may
be privy to it.”).
12 The Fifth Circuit acknowledged in In re Corrugated Container Antitrust Litigation, that the second
irrebuttable presumption of shared confidences among attorneys in a firm might be unduly harsh in
the case of imputation made because of a migrating attorney. 659 F.2d at 1347. This hesitation
presaged the Fifth Circuit’s holding in In re ProEducation Intern., Inc., 587 F.3d 296, 303 (5th Cir.
2009) that a bankruptcy court erred in refusing to consider evidence that an attorney formerly
belonging to a firm that was representing a party, had never had any interaction with this party
himself while it was a client of his former firm. There are no migrating attorneys in this case, and
11

24

Both prongs of the substantial relationship test are met. Disqualification is
required. 13
3.

The Motions to Dismiss Submitted by Baker Donelson

There are two motions to dismiss the amended complaint currently pending
before the Court that were prepared by Baker Donelson on behalf of Blue Cross (Rec.
Doc. 74) and AllMed (Rec. Doc. 64). Movant argues that the pending Motions to
Dismiss are “infected” by the conflict of interest and cast a “cloud of doubt” that
undermines fairness in these proceedings. (Rec. Doc. 87-2 at 9). Accordingly, this
Court has deferred consideration of these motions until it could decide the issue of
disqualification. See Bowers, 733 F.3d at 655 (finding district court erred in granting
summary judgment before considering plaintiffs’ motion to disqualify). Now that this
Court has determined that a disqualifying conflict of interest exists in this case, it
would be improper for this Court to consider these motions prepared by Baker
Donelson. Defendants must obtain counsel not subject to a conflict of interest to
ensure that the further proceedings—including any refiled motions to dismiss—“are
not subject to the possible taint of confidential information.” Id.

regardless, the “exception is inapplicable here; the firm itself changed sides.” Analytica, Inc. v. NPD
Research, Inc., 708 F.2d 1263, 1267 (7th Cir. 1983).
13 Defendants also take issue with Movant’s alleged delay in submitting the Motion to Disqualify. (Rec.
Doc. 76 at 5) (“[T]here is no better proof that UAS did not share confidences with Baker Donelson than
the fact that UAS waited to file their Motion to Disqualify until after current Baker Donelson antitrust
counsel” discussed the case with their clients.). Movant counters that any delay was due to Baker
Donelson’s repeated failure to hand over the client file and provide an undisputed timeline detailing
Movant’s attempts to have Baker Donelson withdraw prior to the filing of the Motion. “Ideally, conflict
of interest problems should be settled between the attorney and his client.” F.D.I.C. v. U.S. Fire Ins.
Co., 50 F.3d 1304, 1315 (5th Cir. 1995). The Court finds the record adequately explains Movant’s delay
in this case.

25

CONCLUSION
Accordingly,
IT IS ORDERED that the Motion to Disqualify Counsel of Record (Rec. Doc.
57) is GRANTED.
IT IS FURTHER ORDERED that the Motion to Dismiss for Failure to State
a Claim (Rec. Doc. 64) submitted on behalf of AllMed and the Motion to Dismiss
Plaintiffs’ First Amended Complaint (Rec. Doc. 74) submitted on behalf of Blue
Cross are DENIED without prejudice.
New Orleans, Louisiana, this 2nd day of October, 2018.

CARL J. BARBIER
UNITED STATES DISTRICT JUDGE

26