Miles and his agent most certainly operated in bad faith. While under contract with the Blazers his lack of rehabilitation effort was certainly insubordination. It appears now that he and his agent conspired to mislead the team and the third party medical professionals that evaluated his recovery. It seams medically unfeasible that you could have a debilitating injury then play NBA basketball a year later.
If anything this stunt by Miles should be proof that he defrauded the Blazers and should be ordered to compensate them for past earnings as well as void the remaining contract.
If Miles made no attempt to mislead the medical professionals then perhaps the independent doctors, at least one of which I believe was chosen by the players association, should be responsible for the Blazer's losses.
Next year brings another crop of talent to the league all with more up side than Miles. He will never earn another contract, certainly not more than a couple of years at the league minimum. This fraud could jeopardize a substantial golden parachute. I would hope the threat of forfeiting Paul's money in litigation would encourage another Miles vacation before his next game.