Morse v. Spitzer et al

Filing 123

CORRECTED MEMORANDUM AND ORDER: For the reasons stated, the defendants' motion for summary judgment 40 is granted with respect to all claims except Morse's fabrication of evidence claims against Fusto and Castillo. The parties are directed to inform the Court within fourteen days of the date of this Order how they propose to proceed in this matter. Ordered by Chief Judge Carol Bagley Amon on 1/29/2013. (Fernandez, Erica)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK

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DR. LEONARD MORSE,
NOT FOR PUBLICATION
CORRECTED MEMORANDUM
&ORDER*
07-CV-4793 (CBA) (RML)

Plaintiff,

-against-

FILED

ELIOT SPITZER et al.,

IN CLERJ('S OFFICE
U.S. OISTR1CT COURT E.O.N.Y.

Defendants.

----------------------------------------------------------X
AMON, Chief United States District Judge:

*

JAN 29 2013

*

BROOKLYN OFFICE

BACKGROUND
This is a 42 U.S.C. § 1983 action arising from the criminal prosecution of the plaintiff,
Dr. Leonard Morse, for Medicaid fraud. Morse was indicted in 2006 by a grand jury for Grand
Larceny in the First Degree and Offering a False Instrument in the First Degree. He was
ultimately acquitted of all charges after a bench trial. Morse subsequently commenced this
action against former New York Attorney General Elliot Spitzer, Special Assistant Attorney
General John Fusto, who worked in the Medicaid Fraud Control Unit ("MFCU") and was the
prosecutor responsible for overseeing the investigation, grand jury proceedings, and prosecution
of Morse, Robert Flynn, the lead MCFU investigator on Morse's case, and Jose Castillo, an
MCFU audit-investigator also assigned to Morse's case. Morse alleges that the defendants
violated his civil rights by initiating and pursuing his arrest, indictment, and prosecution for
Medicaid fraud. His complaint asserts various claims for relief, under both federal and state law,
including claims for false arrest, malicious prosecution, and denial of the right to a fair trial due
to fabrication of evidence.
• This corrected M&O reflects a change correcting a typographical error in the Court's original M&O issued
September 30,2011 (DE 67). At page II, paragraph I, the beginning ofthe second sentence has been changed from
"If not" to "If so". No change has been made to the substance ofthe opinion.

1

The defendants moved for partial summary judgment, and the Court referred the motion
to the Honorable Robert M. Levy, U.S. Magistrate Judge, for a Report and Recommendation
(R & R). Magistrate Judge Levy issued an R & Ron March 15,2011, recommending that the
Court deny the defendants' motion for summary judgment on Morse's claims for false arrest and
malicious prosecution, but recommending that the Court grant summary judgment on the balance
of Morse's claims, including his fair trial claim based on fabrication of evidence.
The defendants have filed objections to the portion of the R & R that recommends
denying summary judgment on Morse's claims for false arrest and malicious prosecution. Morse
has not filed objections to the R & R. However, after Magistrate Judge Levy issued the R & R,
Morse submitted an amended complaint that asserts a modified fair trial claim premised on
allegations of evidence fabrication that were included in the original complaint, but that did not
expressly form the basis of the original fair trial claim. The defendants stipulated to the filing of
an amended complaint, but took the position at oral argument that they are nonetheless entitled to
summary judgment on the amended claim. Because it was not before the Magistrate Judge, the
R & R does not address whether defendants are entitled to summary judgment on the amended
claim for denial of the right to a fair trial due to fabrication of evidence (which the Court refers
to herein as Morse's "fabrication of evidence" claim).
STANDARD OF REVIEW
The Court assumes familiarity with the facts and procedural posture of this case, as set
forth in the R & R. (R & Rat pp. 2-7.) The Court reviews de novo those portions ofthe R & R
to which a party has objected, and reviews those portions not objected to for clear error. Larocco
v. Jackson, No. 10-CV-1651, 2010 WL 5068006, at *2 (E.D.N.Y. Dec. 6, 2010). The Court
"may accept, reject, or modify, in whole or in part, the findings or recommendations made by the

2

magistrate judge." 28 U.S.C. § 636(b)(l).

DISCUSSION
For the reasons that follow, the Court finds that the defendants' motion for summary
judgment should be denied on Morse's amended claim for denial of the right to fair trial based
upon the fabrication of evidence. However, the Court disagrees with the R & R's
recommendation that the defendants' motion for summary judgment should be denied as to
Morse's claims for malicious prosecution and false arrest, and the Court grants the defendants'
motion for summary judgment as to those claims. Finally, as to the remaining claims addressed
by the R & R, to which no party objects, the Court adopts the R & Rand grants the defendants'
motion for summary judgment as to those claims.

I.

Nature of the claims
Because the basis of Morse's claims for malicious prosecution and fabrication of

evidence have evolved throughout the course of this litigation, including in the amended
complaint, it is helpful to clarify the defendants against whom each claim is asserted, and on
what factual basis.
Morse's original complaint, which is not a model of clarity, alleged that the defendants
maliciously prosecuted Morse on eleven counts of filing false instruments and one count of
grand larceny. The central allegations in support of the original malicious prosecution claim
were that Special Assistant Attorney General John Fusto, MCFU Senior Special Investigator
Robert Flynn, and MCFU Auditor-Investigator Jose Castillo fabricated documentary evidencenamely, patient billing summaries that suggested evidence of fraud that did not occur-for use at
grand jury proceedings, and that Flynn and Castillo perjured themselves before the grand jury in
order to secure an indictment. (Campi. ,-r,-r 117-34.)

3

The original complaint separately alleged a claim for violation of Morse's Fifth and
Fourteenth Amendment right to a fair trial due to fabrication of evidence, which the R & R
reasonably concluded was premised on allegations that Flynn, Castillo, Fusto, and other
defendants, together with the proprietor of the laboratory that processed Morse's prosthetics
work, fabricated false laboratory invoices to be introduced at trial in support of the grand larceny
claim. (Compl.

~~

135-143.)

The R &R recommended denying summary judgment on the malicious prosecution
claim, stating that "whether the exhibits and testimony presented to the grand jury were
deliberately misleading or constituted conduct taken in bad faith is an issue of fact sufficient to
defeat summary judgment." (ld. at 26.) The R & R recommended granting summary judgment
on the fabrication of evidence claim, concluding that, as a matter oflaw, the claim could not lie
because Morse had not been convicted at trial, or, alternatively, there was no evidence from
which a reasonable jury could conclude that the defendants had manufactured the laboratory
invoices. (Id. at 27-28.)
Morse moved for reconsideration of Magistrate Judge Levy's recommended dismissal of
his fabrication of evidence claim, arguing that Second Circuit law permits such a claim even
where the plaintiff was not convicted of the crime charged. He also argued that his claim was
not limited to the alleged fabrication of the laboratory invoices, conceding that it "may well be
correct" that no reasonable jury could find those invoices to have been fabricated by the
defendants. Magistrate Judge Levy denied Morse's motion for reconsideration, explaining that
he had reasonably interpreted the claim to be premised on the laboratory invoices. He conceded,
however, that Morse's acquittal did not defeat his fabrication of evidence claim under Second
Circuit law.

4

The amended complaint, filed after the R & R was issued, differs from the original
complaint in that it clarifies the defendants against whom each claim is asserted, and provides a
distinct factual basis for each claim. The amended complaint asserts a Fourth Amendment
malicious prosecution claim against Flynn and Castillo, on the grounds that they initiated
criminal proceedings against Morse without probable cause, and gave false and misleading
testimony before the grand jury for the purpose of securing an indictment. (2d Am. Com pl.
~~

115-131.) The complaint separately asserts a Fifth/Fourteenth Amendment claim for denial

of the right to a fair trial due to fabrication of evidence against Castillo and Fusto, alleging that
they fabricated and altered patient billing summaries for use at the grand jury proceedings
(including Grand Jury Exhibit 7) to suggest evidence of Medicaid fraud that did not occur. (I d.
~~

132-42.)
Finally, also before the Court is the defendants' motion for summary judgment on

Morse's false arrest claim. Both the original and amended complaint assert this claim against
Flynn, Castillo, and Fusto, alleging that they caused Morse to be arrested and prosecuted without
probable cause.
The Court addresses each of Morse's claims in tum.
II.

Fair trial/fabrication of evidence claim
The Second Circuit has held that "[i]t is firmly established that a constitutional right

exists not to be deprived of liberty on the basis of false evidence fabricated by a government
officer." Zahrey v. Coffey, 221 F.3d 342, 355 (2d Cir.2000); see Ricciuti v. New York City
Transit Auth., 124 F.3d 123, 130 (2d Cir. 1997) ("When a police officer creates false information
likely to influence a jury's decision and forwards that information to prosecutors, he violates the
accused's constitutional right to a fair trial, and the harm occasioned by such an unconscionable

5

action is redressable in an action for damages under 42 U.S.C. § 1983."). While cases in this
Circuit are inconsistent as to whether this claim arises under the Sixth Amendment right to a fair
and speedy trial, or under the due process clauses of the Fifth and Fourteenth Amendments 1, the
Second Circuit's opinion in Zahrey makes clear that a § 1983 claim for damages based on
fabrication of evidence lies where an officer's post-arrest fabrication of evidence results in a
restraint on the plaintiffs liberty. 221 F.3d at 350 (holding that alleged due process violation
must result in liberty deprivation). In addition, the Second Circuit's decision in Ricciuti makes
plain that, unlike a malicious prosecution claim, probable cause is not a defense to this type of
claim. 124 F.3d at 130 ("To hold that police officers, having lawfully arrested a suspect, are then
free to fabricate false confessions at will, would make a mockery of the notion that Americans
enjoy the protection of due process of the law and fundamental justice.").
Morse suffered a deprivation ofliberty as a result of the grand jury indictment. He was
required to make multiple court appearances over the course of the fifteen months following the
indictment, and then defend himself at trial against the criminal charges brought against him.
See Ricciuti, 124 F.3d at 126-27 (allowing fabrication of evidence claim to proceed where, as the
result of the false confession, the plaintiff was arraigned and required to appear in criminal court
on seven occasions over the course of a two month period); Genia v. New York State Troopers,
No. 03-cv-0870, 2007 WL 869594, at* 14 (E.D.N.Y. March 20, 2007) (holding that there was a

1

Zahrey and Ricciuti both involved allegations that government officers fabricated evidence that was subsequently
used by prosecutors to bring charges or secure an indictment against the plaintiff. In Zahrey, the Second Circuit
characterized this fabrication of evidence claim as "an example of a classic constitutional violation: the deprivation
of[] liberty without due process of Jaw." 221 F.3d at 348. In Ricciuti, the Second Circuit characterized this
fabrication of evidence claim as one involving the "accused's constitutional right to a fair trial," without specifying
the constitutional amendment under which the right arises. Id. 124 F.3d at 130. Cases applying Ricciuti, however,
have characterized the right as one arising under the Sixth Amendment. See Mitchell v. Home, 377 F. Supp. 2d 361,
373 (S.D.N. Y. 2005) (recognizing § 1983 Sixth Amendment fair trial claim premised on allegations of fabrication of
evidence); Brandon v. City of New York, 705 F. Supp. 2d 261, 272 (S.D.N.Y. 2010) (same). Regardless of which
constitutional amendment prohibits government officers from fabricating evidence post-arrest, these cases clearly
establish that the harm caused by such conduct is redressable through a § 1983 action for damages.

6

deprivation of liberty where the plaintiff was required to "make multiple court appearances after
the arraignment, up to and including the criminal trial"); Sassower v. City of White Plains, 992
F. Supp. 652,656 (S.D.N.Y. 1998) (holding that allegations that the plaintiffwas required to
appear in court on three occasions raised "genuine issue of fact as to the deprivation of liberty
element" of the plaintiffs malicious prosecution claim). Thus, if a reasonable jury could find
that Fusto and Castillo fabricated evidence for use at the grand jury proceedings, and that such
evidence was material in securing the indictment that resulted in this deprivation of Morse's
liberty, then Fusto and Castillo are not entitled to summary judgment on Morse's fabrication of
evidence claim.
The Court agrees with and adopts the R & R's finding that Morse has presented evidence
sufficient to raise a genuine issue of fact concerning whether Fusto and Castillo intentionally
fabricated and/or altered billing summaries for use before the grand jury, including Grand Jury
Exhibit 7. (R & Rat pp. 22-24.) The Court notes that Magistrate Judge Levy analyzed this
factual issue not in the context of Morse's original fabrication of evidence claim, which was not
based on the defendants' alleged fabrication ofthe billing documents used in the grand jury
proceedings, but in the portion of the R & R addressing the original malicious prosecution claim.
However, the analysis is the same and we therefore adopt it here.
In addition, a reasonable jury could find that the fabricated evidence was material in
securing the grand jury indictment resulting in the restraint on Morse's liberty. The transcript of
the grand jury proceeding reveals that expert witness Linda De Luca testified at some length
about how Grand Jury Exhibit 7 showed Morse billing for the same repairs and replacements to
the same prosthetic more than once per day, and on more than one occasion, which she testified
was highly unusual. (G.J. Tr. Mar. 8, 2006 at 10-17.) This testimony obviously impressed the

7

grand jurors: they asked the laboratory proprietors who later testified whether they had ever had
to repair the same prosthetic more than once in the same day. (G.J. Tr. Mar. 9, 2006 at 18-21,
31.) Each proprietor testified that that would be unusual. Moreover, even though the $1 million
fraud claim depended largely on Castillo's testimony about his invoice analysis, that analysis
was rather abstract and a reasonable jury could find that the specific billing statements likely
influenced the grand jury proceedings. 2
Accordingly, the Court finds that defendants Fusto and Castillo are not entitled to
summary judgment on Morse's fabrication of evidence claim.
III.

Malicious prosecution

As the R & R explained, a plaintiff seeking to prevail on a malicious prosecution claim
must "show that a prosecution was initiated against him, that it was brought with malice but
without probable cause to believe that it could succeed and that the prosecution terminated in
favor ofthe accused plaintiff." Boyd v. City ofNew York, 336 F.3d 72, 76 (2d Cir. 2003). This
cause of action is grounded in the Fourth Amendment right to be free from unreasonable
searches or seizures, and the R & R correctly found that the existence of probable cause is
therefore a defense to this claim. Cornejo v. Bell, 592 F.3d 121, 129 (2d Cir. 2010). In a
malicious prosecution case, "the relevant probable cause determination is whether there was
probable cause to believe the criminal proceeding could succeed and, hence, should be
commenced." Davis v. City ofNew York, 373 F. Supp. 2d 322, 333 (S.D.N.Y. 2005) (internal
quotation marks omitted); Murphy v. Lynn, 118 F.3d 938 (2d Cir. 1997) (noting that relevant
probable cause for malicious prosecution claim is probable cause "for commencing the
proceedings").
2

The Court cannot endorse the defendants' position, offered at oral argument, that the decision to omit from the
challenged exhibit information that would have shown work not to be redundant was an exercise of "advocacy"
similar to the "advocacy" in which counsel was engaging at oral argument.

8

The parties do not dispute that the grand jury indictment in this case creates a
presumption of probable cause. Manganiello v. City ofNew York, 612 F.3d 149, 161 (2d Cir.
201 0). However, this presumption is rebutted when there is evidence that "the indictment was
procured by fraud, perjury, the suppression of evidence or other police conduct undertaken in
bad faith." Id. at 162.
If the presumption of probable cause is rebutted, a malicious prosecution claim is still
subject to the defense that commencement of the criminal proceeding was supported by probable
cause, but the defendants must prove that they had probable cause without the benefit of the
presumption. See id at 163 (finding that evidence supported both the conclusion "that the
presumption of probable cause created by the grand jury indictment was rebutted and that
probable cause was lacking"); Savino v. City ofNew York, 168 F. Supp. 2d 172, 178 (S.D.N.Y.
2001), rev'd on other grounds, 331 F.3d 63 (2d Cir. 2003) ("In the absence ofthe presumption[,
which was rebutted by evidence that defendants withheld exculpatory evidence from the grand
jury], there are genuine issues of fact with respect to both probable cause and qualified
immunity.").
The Court agrees with the R & R's findings, subject to this Court's differing analysis in
certain respect, as set forth below, that a reasonable jury could conclude that the grand jury
indictment was procured by false testimony and fabricated evidence, and thus the presumption of
probable cause is rebutted. However, the Court disagrees with the R & R's conclusion that
genuine issues of material fact remain as to whether Flynn and Castillo had probable cause to
commence criminal proceedings against Morse. For the reasons discussed below, the Court
finds that the undisputed facts establish as a matter of law that probable cause existed at the time
of the grand jury proceedings.

9

A.

Presumption of probable cause

As discussed above, we agree with and adopt the R & R's finding that a reasonable jury
could find that Fusto and Castillo fabricated evidence that was used to secure the grand jury
indictment in this case, namely Grand Jury Exhibit 7 and other billing summaries.
In addition, taking all disputed facts in the light most favorable to Morse, the Court
concludes that a reasonable jury could also find that Flynn lied during the grand jury proceedings
when he testified that Morse told him that he personally "examines" and "signs off' on "all the
charts" at the dental office. (G.J. Tr. Mar. 9, 2006 at 9.) Morse unequivocally denies ever
making such a statement or "anything even close to that statement." (Morse

Dec.~

78.) Indeed,

the defendants concede in their objections to the R & R that there may be a dispute concerning
what Morse told Flynn. Moreover, Flynn admitted that he never specifically asked Morse
whether, before he submitted claims to Medicaid, he reviewed his employee's (Dr. Ketover) bills
or patient charts. (Flynn Dep. at 35-36.) Based on this evidence, a jury could reasonably
believe that Flynn lied in order to make it appear that Morse had intentionally submitted invoices
that he had reviewed and knew to be false.
Morse has also presented sufficient evidence to support a finding that these instances of
fraud were instrumental in procuring the grand jury indictment. As discussed above, a
reasonable jury could find that the fabricated billing documents gave the grand jury the
impression that Morse repeatedly billed Medicaid for the same procedure. So too could a
reasonable jury find that Flynn's testimony gave the grandjury the impression that Flynn
intentionally submitted invoices that he knew to be false.
Because Morse has presented evidence based upon which a reasonable jury could find

10

that (1) Fusto and Castillo fabricated evidence that was used before the grand jury; (2) Flynn
gave material false testimony at the grand jury proceedings; and (3) these instances of fraud were
instrumental in procuring the grand jury indictment, Castillo and Flynn are not entitled to a
presumption of probable cause on Morse's malicious prosecution claim.
B.

Probable cause

Without the presumption of probable cause, the Court still must consider whether Flynn
and Castillo had probable cause to commence criminal proceedings against Morse. If so, a claim
for malicious prosecution cannot go forward. Moreover, "[e]ven if probable cause to arrest is
ultimately found not to have existed, an arresting officer will still be entitled to qualified
immunity from a suit for damages if he can establish that there was 'arguable probable cause' to
arrest." Escalera v. Lunn, 361 F.3d 737, 743 (2d. Cir. 2004). "Arguable probable cause exists
'if either (a) it was objectively reasonable for the officer to believe that probable cause existed,
or (b) officers of reasonable competence could disagree on whether the probable cause test was
met."' ld. (quoting Golino v. City ofNew Haven, 950 F.2d 864, 870 (2d Cir. 1991). The
defendants argue that they are entitled to qualified immunity on Morse's claim for malicious
prosecution because they had arguable cause to commence proceedings against him.
The R & R recommends that the Court deny summary judgment on this claim on the
grounds that genuine issues of material fact remain as to whether the defendants had arguable
probable cause. (R & Rat pp. 13-22.) However, "[i]t has long been recognized that, where there
is no dispute as to what facts were relied on to demonstrate probable cause, the existence of
probable cause is a question of law for the court." Walczyk v. Rio, 496 F.3d 139, 157 (2d Cir.
2007); see Weyant v. Okst, 101 F.3d 845,852 (2d Cir. 1996) ("The question ofwhether or not
probable cause existed may be determinable as a matter oflaw ifthere is no dispute as to the

11

pertinent events and the knowledge of the officers."). In this case, while the parties vigorously
dispute the significance of the facts that were known to Flynn and Castillo at the time they
initiated criminal proceedings against Morse, there is no dispute as to what facts the defendants
actually relied upon to establish probable cause. The record establishes that defendants relied
primarily on three sources of information.
First, the defendants had a basis to believe that Morse failed to keep any records of the
prescriptions he wrote for prosthetic work from 2000-2002, a fact that they deemed
incriminatory at the time of their investigation in light of the fact that Morse submitted roughly
$1.9 million in claims to Medicaid for this type of work during the time period at issue. (Castillo
Dec.~~

3-4; Fusto

Dec.~

5.) The defendants also knew that Morse's failure to keep records for

more than one year, while not in violation of state law, was in violation of the Medicaid
regulations. See 18 N.Y.C.R.R. § 504.3(a).
Second, in light of the missing records, the defendants subpoenaed records from 20002002 from two laboratories that Morse used to perform his prosthetic work, Nu-Life Labs and
Design Dental Labs. The undisputed facts show that these records were flawed; Fusto described
them as "sloppy," "incomplete," "informal," "handwritten," and "lacking detail." (Fusto Dec.
~~

8-26.) They also did not contain sufficient information to allow the investigators to clearly

identify which patients were Medicaid recipients. Nevertheless, Castillo used these records to
calculate a "ceiling" for the amount of money Morse could have legitimately billed to Medicaid
for the services indicated on the available invoices. He did so essentially by calculating the
"maximum Medicaid allowance" for each service (ignoring invoices that he could determine
were for patients that were not Medicaid recipients). He then compared that ceiling to the actual
amount of Medicaid claims Morse submitted during for the 2000-2002 period, and determined

12

there was a discrepancy of over $1 million. (Castillo

Dec.~

14.)

Third, Flynn conducted telephone interviews with twelve patients who had received
dental work at Morse's office. (Flynn Dep. Tr. April30, 2009 at 104.) Eight ofthese patients
ultimately testified at the grand jury proceedings that they did not receive the dental services for
which Morse submitted claims to Medicaid.
In analyzing whether it was objectively reasonable for the defendants to commence
criminal proceedings against Morse based on these facts, both parties make much of the fact that
Nu-Life and Design Dental did not have any invoices for work submitted by Morse for many of
the months during the relevant time period. Morse argues that the only reasonable inference the
defendants could have drawn was that these records were simply "missing," and that Castillo
should have assumed that Morse had submitted at least some work to the laboratories during
those months. He argues that a reasonable person would have factored the missing months into
the invoice analysis, and that Castillo's failure to do so obviously-and significantlyunderestimated the amount Morse legitimately could have claimed from Medicaid. The
defendants, on the other hand, argue that it was objectively reasonable for Castillo to conclude
during the investigation that the laboratories produced all of the invoices that had ever existed
during the requested time period, and thus that invoices for the months in question did not exist,
and Morse had simply not submitted work to those laboratories during those time periods.
Moreover, it was also a reasonable inference that the use of such unprofessional and
disorganized laboratories lent further support to the fraudulent nature of Morse's practice.
Whether the defendants in fact had probable cause to bring these proceedings is a close
question. Morse has presented evidence to show that Castillo's analysis of the laboratory
invoices was flawed and over-simplified. The Court agrees that the investigatory methods

13

employed in this case, particularly Castillo's invoice analysis, were unsophisticated. Indeed, the
quality of the investigation was called into question when Justice Walsh held that the Design
Dental records were inadmissible because they were untrustworthy, and ultimately acquitted
Morse on all accounts.
However, the standard for probable cause "is not as demanding as the standard for
criminal conviction." Coleman v. City ofNew York, 49 Fed. Appx. 342, 345 (2d Cir. 2002); see
United States v. Webb, 623 F.2d 758,762 (2d Cir. 1980) (emphasizing that "while the rule of
probable cause does impose a requirement on police to act with more than mere suspicion of
wrongdoing, the rule also gives police a permit to act with less than absolute certainty of guilt").
It would have been prudent and perhaps better practice for the defendants to have conducted a

more in depth investigation before bringing Medicaid fraud charges against Morse, or to hire an
expert to conduct a more complete analysis of all available records. But the Court cannot say
that Castillo's judgment in relying on these invoices, and in particular his assumption that there
were no invoices for the missing months, "was so flawed that no reasonable officer would have
made a similar choice." Lennon v. Miller, 66 F.3d 416, 424 (2d Cir. 1995); see Zellner v.
Summerlin, 494 F.3d 344, 369 (2d Cir. 2007) ("[A]rguable probable cause exists when a
reasonable police officer in the same circumstances and possessing the same knowledge as the
officer in question could have reasonably believed that probable cause existed in the light of
well-established law.") (internal quotation marks omitted). Although Castillo could have
credited Morse's claim that he sent out laboratory invoices for every month from the years 2000
to 2002, and thus that the "missing" laboratory invoices once existed, Castillo was under no
obligation to do so in light of Morse's own lack of records substantiating this claim. See
Ricciuti, 124 F.3d at 128 (holding that an officer "would have been entitled to believe [the

14

plaintiffs] version of events ... [but] was not required to do so").
Moreover, "[t]he probable cause inquiry contemplates the totality of the circumstances."
Seitz v. DeQuarto, 777 F. Supp. 2d 492, 502 (S.D.N.Y. 2011)). While Castillo's invoice analysis
may have been flawed, other evidence did factor into the defendants' decision to commence
criminal proceedings. It was objectively reasonable for the defendants to conclude that Morse's
failure to keep proper records for the bulk of his Medicaid prescriptions was incriminatory,
especially given the volume of his prosthetics practice and the Medicaid record-keeping
requirements. Perhaps most importantly, the documents that were available at the time of the
investigation simply failed to substantiate the nearly $2 million in claims that Morse submitted to
Medicaid. Indeed, before the grand jury proceedings, Morse was never able to produce any
records independent of patients' charts to show that he actually performed the procedures for
which he billed Medicaid during the relevant time period. (Fusto

Dec.~

8.) In addition,

regardless of whether trial testimony later revealed that the patients who testified at the grand
jury proceedings were confused at the time they were initially interviewed, the focus of the
probable cause analysis is what the defendants knew at the time they commenced the
proceedings, and nothing in the record indicates that Fusto, Castillo, or Flynn had any reason to
believe the grand jury witnesses were not testifying truthfully or accurately when they said they
did not receive the prosthetic work for which Morse has submitted claims to Medicaid. Seitz,
777 F. Supp. 2d at 502.
On these facts, the Court finds that the defendants had at least "arguable probable cause"
to commence criminal proceedings against Morse for Grand Larceny and Offering a False
Instrument. Accordingly, defendants Castillo and Flynn are entitled to qualified immunity on
Morse's claim for malicious prosecution.

15

IV.

False Arrest
For the same reasons that the defendants had arguable probable cause to commence

criminal proceedings against Morse, the Court finds that they had arguable probable cause to
arrest him. Accordingly, the defendants are entitled to summary judgment on Morse's claim for
false arrest. 3

V.

Remaining Claims
No party has objected to Magistrate Judge Levy's reasoning and conclusions with respect

to the remaining claims. The Court adopts the R & R.

CONCLUSION
For the reasons stated, the defendants' motion for summary judgment is granted with
respect to all claims except Morse's fabrication of evidence claims against Fusto and Castillo. 4
The parties are directed to inform the Court within fourteen days of the date of this order how
they propose to proceed in this matter.
SO ORDERED.
Dated: Brooklyn, New York
January 29, 2013

s/Carol Bagley Amon
/Carol Bagll; A~~ /
Chief United States District Judge

3

Although the defendants have not pressed this argument, the Court also believes that the false arrest claim fails in
this case because only arrests undertaken without legal process can give rise to claims for false arrest. See
Broughton v. State ofNew York, 37 N.Y.2d 451,458 (N.Y. 1975) (holding that only cause of action for malicious
prosecution, not false arrest, can lie where an arrest has been effected by a warrant); Selinger v. City of New York,
No. 08 Civ. 2096, 2010 WL 4616138, at *3 (S.D.N.Y. Nov. 5, 2010) ("'When an [allegedly] unlawful arrest has
been effected by a warrant [the] appropriate form of action is malicious prosecution [as opposed to false arrest]."')
(quoting Singer v. Fulton Cnty. Sheriff, 63 F.3d 110, 117 (2d Cir. 1995)).
4

The defendants did not move for summary judgment on three claims asserted by Morse against defendants Spitzer
and Fusto, which are based on extrajudicial statements allegedly made to the press about Morse. Accordingly, those
claims still stand.

16