Peirce firm, CSX bicker over fraud theory during trial

By John O'Brien | Dec 17, 2012

WHEELING – The law firm accused of racketeering and fabricating asbestos claims says CSX Transportation has belatedly introduced a new theory of fraud liability during trial.

Robert Peirce and Louis Raimond - formerly of the Pittsburgh law firm Peirce, Raimond & Coulter – are asking U.S. District Judge Frederick Stamp for an order and jury instructions against what they say is a new theory that wasn’t pled in the company’s third amended complaint.

The theory, according to the motion filed Dec. 16, is that the alleged fraud and racketeering is based on inaccurate allegations in 11 Federal Employers Liability Act complaints.

“This theory was not alleged in the third amended complaint,” the motion says. “This theory was not stated in any of CSX’s responses to the Lawyer Defendants’ contention interrogatories, which were served in order to define the scope and nature of CSX’s fraud/RICO claims.”

The Peirce firm is alleged to have teamed with radiologist Ray Harron, of Bridgeport, to have fabricated asbestos claims. The lawsuit was filed in 2005, and a trial began this month.

The motion says CSX has long maintained that the alleged fraud and racketeering was that there was no factual basis to believe the 11 claimants had an asbestos-related disease.

It says CSX has never before contended that allegations made in the FELA mass complaints at issue amount to racketeering and fraud on the part of the Peirce firm. Those claims include that the claimants’ general health, strength and vitality have been impaired by asbestos.

“This theory of fraud would be totally independent of whether it was a fraud to allege that the claimants at issue had an asbestos-related disease – CSX’s longstanding theory which is pled in the third amended complaint…” the motion says.

CSX calls the Peirce firm’s stance baseless, and that the allegations in the third amended complaint repeatedly express that the company’s theory of fraud is that the Peirce firm’s allegations did not have a “good faith basis in fact.”

“It is self-evident that when CSXT alleged that the 11 claims themselves were fraudulent, it was necessarily alleging that any alleged damages associated with those claims were also fraudulent,” CSX’s response says.

“The Lawyer Defendants would have this court believe that they somehow interpreted CSXT’s third amended complaint as alleging that the 11 claims themselves were fraudulent, but that the damages allegations contained therein were nonetheless legitimate.

“This position is specious and should be rejected.”

CSX is accusing the firm of filing a massive amount of lawsuits in overburdened courts to prevent the company from any meaningful discovery, which concealed fraudulent claims and leveraged higher settlements.

Stamp granted summary judgment to the defendants in 2009, finding a statute of limitations had run out.

In late 2010, judges of the U.S. Court of Appeals for the Fourth Circuit in Richmond remanded the case to Stamp with instructions to let CSX amend the complaint.

In 2005, federal court judge Janis Graham Jack made national headlines when she uncovered duplicate and fraudulent silica diagnoses in her Texas courtroom. Many of those diagnoses were made by Harron and were made on plaintiffs who had already brought asbestos claims.

In Jack’s opinion dismissing the claims, she said “These diagnoses were driven by neither health nor justice – they were manufactured for money.”

Following Harron’s admission that he did not even make the diagnoses of the patients whose x-rays he read, Jack noted that most of “these diagnoses are more the creation of lawyers than doctors.”

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