Summary
In Cincinnati Bar Assn. v. Fehler-Schultz (1992), 64 Ohio St.3d 452, 597 N.E.2d 79, the attorney retained over $8,000 from the client's settlement as a "subrogation fee," i.e., a fee for pursuing the claim of the client's insurer for reimbursement of medical expenses paid on the client's behalf.
Summary of this case from Cincinnati Bar Assn. v. SchwartzOpinion
No. 92-417
Submitted June 2, 1992 —
Decided September 2, 1992.
ON CERTIFIED REPORT by the Board of Commissioners on Grievances and Discipline of the Supreme Court, No. 91-10.
In a complaint filed April 18, 1991, relator, the Cincinnati Bar Association, charged respondent, Richard H. Fehler-Schultz (Attorney Registration No. 0018132), with having violated, inter alia, DR 2-106(A) (collecting an illegal or clearly excessive fee), 7-101(A)(3) (causing client damage or prejudice), and 3-101(A) (aiding a non-lawyer in the unauthorized practice of law). The matter was heard by a panel of the Board of Commissioners on Grievances and Discipline of the Supreme Court on December 18, 1991.
Evidence presented to the panel established that in March 1988, Vickie Andriola Schierloh retained D.C. Schultz Co., L.P.A., for which respondent is a principal, because she had been seriously injured in an automobile collision. At that time, Thomas P. Woods, an attorney who had been suspended from the practice of law in Ohio, was employed by D.C. Schultz as an investigator. Woods interviewed Schierloh in the hospital where she agreed in writing to pay D.C. Schultz on a one-third contingency fee basis.
Woods was indefinitely suspended from practicing law because of his convictions for theft, forgery, and uttering. See Disciplinary Counsel v. Woods (1986), 28 Ohio St.3d 245, 28 OBR 325, 503 N.E.2d 746. He has since been reinstated. See Disciplinary Counsel v. Woods (1990), 50 Ohio St.3d 72, 552 N.E.2d 647.
Approximately five months later, one of the parties involved in the collision settled with Schierloh for $50,000. Pursuant to the contingency fee agreement, respondent and his firm were paid $16,666.66 of this amount. However, D.C. Schultz also took an additional $8,262.50 of the settlement, which respondent identified as a "subrogation fee" paid by Schierloh's insurance company, University Health Plan ("UHP"). Respondent maintained that the firm was entitled to this fee because Woods had negotiated with UHP to compromise the insurance company's claim for reimbursement of $24,787.51 advanced for Schierloh's medical expenses.
Upon further inquiry as to his justification for D.C. Schultz's receipt of nearly half the settlement proceeds, respondent asserted that the firm had established an attorney-client relationship with UHP and that Schierloh had consented to this arrangement. Respondent provided no documentation of this relationship, and the UHP representative with whom Woods negotiated denied that such a relationship existed. Moreover, the representative testified that UHP had reduced its claim for repayment to $16,000 as a means to increase Schierloh's share of the settlement proceeds, and Schierloh testified that Woods told her that UHP would not compromise its claim for reimbursement. In response to this testimony, respondent characterized D.C. Schultz's receipt of the extra $8,262.50 amount as a "gift" and claimed that the payment of a subrogation fee was an accepted practice in the insurance industry.
The panel concluded from this evidence that although respondent had an obligation to see that Schierloh satisfied UHP's interest in reimbursement from the settlement proceeds, respondent was not entitled to a "subrogation fee" based on UHP's decision to reduce its claim. The panel also concluded that respondent's receipt of nearly $25,000 of the $50,000 settlement violated the written contingency fee agreement with Schierloh and was excessive. The panel therefore found a violation of DR 7-101(A)(3) and 2-106(A).
Other evidence presented at the hearing established that respondent authorized Woods to interview Schierloh and to obtain her signature on an otherwise unsigned contingency fee contract. Woods was also authorized to ask UHP to reduce its claim for reimbursement and, in doing so, he directed correspondence that discussed issues of liability. Moreover, Woods handled many other aspects of Schierloh's case — he consulted insurance companies about their defenses and advised Schierloh about these matters; he made representations to Schierloh's creditors on her behalf; and, prior to securing Schierloh's signature, he explained to her the terms of a written "settlement analysis" that documented in an abbreviated manner the disbursements made from the $50,000 settlement.
To evaluate this evidence, the panel referred to Stark Cty. Bar Assn. v. George (1976), 45 Ohio St.2d 267, 74 O.O.2d 425, 344 N.E.2d 132, in which an attorney who authorized a non-lawyer to receive clients, prepare work sheets, accept fees and costs, refer clients to other lawyers and split fees was found to have aided in the unauthorized practice of law. The panel, in the instant proceeding, concluded that respondent had authorized Woods to engage in similar activities during the period Woods was suspended from the practice of law in Ohio. Therefore, the panel also found respondent in violation of DR 3-101(A).
The panel recommended that respondent be suspended from practicing law for two years, and be ordered to repay Schierloh the retained "subrogation fee." The board adopted the panel's findings of fact and conclusions of law, but recommended that respondent be indefinitely suspended from the practice of law, as well as be ordered to repay the subrogation fee. The board made this recommendation to further protect unsuspecting clients, like Schierloh, from respondent's "calculated, gouging behavior" and to assure that respondent demonstrated rehabilitation prior to seeking reinstatement.
Gates T. Richards, Thomas M. Tepe and Edwin W. Patterson III, for relator.
Charles W. Kettlewell, for respondent.
We have thoroughly reviewed the record and agree with the board's findings of fact and conclusions of law. We also agree with the board's recommendation and are not persuaded by respondent's objections thereto. Thus, we order that respondent be indefinitely suspended from the practice of law in Ohio, consistent with the board's recommendation. Costs taxed to respondent.
Judgment accordingly.
MOYER, C.J., SWEENEY, HOLMES, DOUGLAS, WRIGHT, H. BROWN and RESNICK, JJ., concur.