Kathleen Haley, one of the lead prosecutors in the Columbia/HCA Healthcare Corp. investigation, finds herself on both sides of a grand jury.
As an assistant U.S. attorney in Fort Myers, Haley has spent more than a year pursuing the giant health care company on charges of Medicare fraud. So far, three midlevel managers have been indicted, and Haley has promised more indictments will follow.
At the same time, Haley herself is the subject of a grand jury investigation into allegations of prosecutorial misconduct. Haley and U.S. District Judge Lee Gagliardi have been accused by a defendant in an unrelated case of meeting twice outside the courtroom.
Both Haley and Gagliardi deny the allegations. But on Thursday the Columbia defendants filed a motion asking Gagliardi to remove himself from the case because of the misconduct claims. Gagliardi, a senior judge from New York who winters in Fort Myers, had been assigned to handle a Nov. 7 hearing on the case. The defendants' motion does not seek to disqualify Haley from the case.
Haley, a lawyer for 18 years, has run into controversy in the past. Six years ago, she fumbled under the pressure of another high-profile case: the prosecution of Tampa City Council member and dockworkers president Perry Harvey Jr.
"I remember her vividly. She was terrible," Arnold D. Levine, Harvey's attorney, said recently. "Hopefully she's learned something in the last six years.'"
Haley declined to be interviewed by the Times. But her boss, U.S. Attorney Charles Wilson, said he has no qualms about putting Haley on the Columbia case. Wilson dismissed the misconduct charges against Haley and Gagliardi as pure fabrication and repeatedly praised Haley's expertise in the courtroom.
But Wilson also recently assigned two assistant U.S. attorneys from the Tampa office, Tony Peluso and Ron Tenpas, to work with Haley on both the ongoing Columbia investigation and the pending indictment. The case is considered to be, by far, the biggest and most complicated health care fraud case to be handled by the district.
Wilson said the three would be working as a team, declining to name a lead prosecutor. He would not discuss individual lawyers.
"We feel like the focus of attention ought to be on the case, not on the assistant (U.S. attorneys)," Wilson said. "We've got such outstanding assistant U.S. attorneys, we'd feel comfortable with just about anybody from this office being assigned to that case."
If Haley, 44, has any doubts about her ability to tackle Columbia, she's not showing them. In her solo court appearances so far on the Columbia case, Haley comes across as no-nonsense and comfortable. Flanked by two FBI agents during a recent hearing in Fort Myers, Haley showed she would bend only so far. She grudgingly conceded to some requests and curtly dismissed others. When defense attorneys pressed for a complete affidavit that Haley intended to present with certain portions blacked out, she stubbornly held her ground.
"They want the whole thing and I refuse," said Haley. "If they want to file a motion, we'll litigate."
When the defense argued for its right to view all 3.5-million pages of documents seized by the government, despite Haley's assurance only a limited portion pertained to their case, she leaned back in her leather chair and chuckled loudly. "If they want to look at all that stuff, be my guest," she said.
Then Haley breezily informed the judge that she was ready to go to trial, eliciting disbelief from the defense team, which was definitely not prepared.
"I was a prosecutor many years myself," said Peter George, who represents defendant Jay Jarrell. "I always thought I was ready for trial too."
By the end of the hearing, the defense had gotten what it wanted but only after a delay and only on Haley's terms.
Haley has had her share of wins and losses since passing the bar in 1979. After graduating from Fordham University, Haley worked for the state district attorney's office in Brooklyn. She became a federal prosecutor in 1986 and was on a federal strike force on organized crime when she transferred to Tampa in 1988.
In that role, she handled the government's case against Harvey in 1991. By some accounts, she blew the case badly.
Harvey was a Tampa council member and president of the local dockworkers union who was charged with embezzling $225,000 in union funds. The government's investigation was prompted by a series of stories about Harvey's lucrative union position in the Times.
Haley initially presented the case to jurors as a simple matter of following a paper trail to prove Harvey's guilt. But the two-week trial turned out to be anything but simple.
Defense attorneys undermined the credibility of government witnesses or deftly turned them to their advantage. The defense then called a Labor Department investigator who said he had approved some of Harvey's allegedly illegal payments. And the last-minute disclosure of a document showing the government had known about Harvey's payments years earlier, but taken no action, further muddied the case.
As Haley struggled to rebut the defense's claims, she earned a reprimand from the judge, which sent her in tears from the courtroom. After she was scolded for smiling, "blabbing" and making dramatic gestures to the jury, Senior U.S. District Judge Edward J. McManus said: "Trying to curry favor with the jury is totally unethical. If you can't restrain yourself, I can find you in contempt."
After a day of deliberations, the jury acquitted Harvey. A news story of the proceeding quoted one juror, Clarence Reinhardt, as saying that a weak and poorly handled government case tipped the balance in Harvey's favor.
"The prosecution was handled so badly and the evidence on the side of Harvey was so dominant from the very first," Reinhardt said. "It was as though somebody had pulled the rip cord before they packed the parachute."
Despite her troubles in the Harvey trial, Haley is reputed to be a top-notch prosecutor, known for her tenacity and ability to juggle complex details. In her spare time, she reads and does yoga. She is married to a retired police officer; they have no children.
In 1992, Haley transferred to the U.S. attorney's office in Fort Myers to fill a slot for an experienced white-collar fraud expert. About a year ago, she was named one of four full-time health care fraud prosecutors for the Middle District.
One of Haley's early fraud cases involved six people charged with taking kickbacks on construction projects at Manatee Memorial Hospital in Bradenton. Four of the defendants pleaded guilty and were sentenced to terms ranging from 12 to 40 months. Only two, Scott Moore and his wife, Lisa, went to trial. The husband got an eight-year sentence, but the judge tossed out the wife's conviction on grounds that Haley had not proved her case.
"Scott Moore was not in a position to strike a bargain with the government because they wouldn't drop the charges against his wife," said Frank Louderback, Moore's attorney during the April 1996 trial. "They both had to go to trial to expose her limited involvement. The result was, she went free and he got more time than anybody."
Despite Haley's inflexibility on the Moore case, Louderback said, considering the circumstances, "She was as cooperative as she could be."
Louderback, whose practice is in St. Petersburg, is facing Haley again in court, at least for the time being. He represents Dan Edgar, the former chief operating officer at Cape Coral Hospital, who is one of three men charged with embezzling millions of dollars from the hospital through insider land deals and construction contracts.
Haley has already won guilty pleas from four defendants in the Cape Coral case. But charges against the other three are on hold pending the outcome of the federal investigation into allegations that Haley and the judge met twice outside the courtroom.
One of the defendants, developer Carl Bailey, hired a private investigator to tail Haley after suspecting that the judge's knowledge of the case went beyond what had been said in the courtroom.
In an affidavit, a private investigator said she followed Haley and an unidentified man as they left the federal courthouse in Fort Myers. The pair allegedly sped in Haley's red Mazda Miata to a gated community where Gagliardi lives.
A second detective swore that a month later she followed Haley from her home in Cape Coral to a restaurant where she met Gagliardi and turned over a thick file of papers.
Both Haley and the judge have denied the allegations, calling them complete lies. But denials haven't been enough to close the case. Under pressure, Gagliardi stepped down from the case, which has been moved to Tampa. And a spokesman for the Justice Department's Office of Public Integrity said an investigation of Haley's conduct is still pending.
On Thursday, the defendants in the Columbia case cited the ongoing investigation in their motion to ask Gagliardi to remove himself from handling their case. Gagliardi denied a similar motion in an unrelated case in March.
Kathleen Anne Haley
Education: B.A. and J.D. from Fordham University in New York City
Admitted to bar: 1979
Admitted to Florida bar: 1989
1991 - U.S. v Perry Harvey - acquittal
1995 - U.S. v Tague, Turner & Sprague (Manatee Memorial Hospital) - guilty plea
1996 - U.S. v Molnar (Manatee Memorial Hospital) - guilty plea
1996 - U.S. v Moore (Manatee Memorial Hospital) - convictions, with one defendant exonerated in post-verdict judgment
1997 - U.S. v Bailey (Cape Coral Hospital) - pending