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October 15, 2011
Investigators find fraud associated with some lawyer referral services

By Gary Blankenship
Senior Editor

Some ads for lawyer and medical referral services mislead by implying victims will get money if they’ve been in accidents. Some encourage those involved in accidents — but not injured — to file meritless claims.

That’s what two state investigators told the Bar’s Special Committee on Lawyer Referral Services on September 22. They also questioned whether private referral services are providing their claimed educational benefits to the public, and asserted in some cases patients referred to some medical clinics are pressured to hire lawyers.

REP. RICK KRISEMAN, D-St. Petersburg, seated, served on a panel that discussed referral service-related issues at the meeting and said he plans to introduce legislation to regulate medical and legal referral services in the coming session. Howard Pohl, a senior attorney for the fraud investigation unit of the Florida Department of Financial Services, and Capt. Steve Smith, chief investigator for the unit, made those and other points to the special committee holding its second public hearing at the Bar’s recent Midyear Meeting in Orlando.

The hearing included a presentation on Bar advertising, unlicensed practice of law, and discipline rules as they relate to referral services; a discussion by medical professionals about their views on referrals; and criticisms and defenses of two of the largest legal/medical referral services in the state.

The committee took no specific action at the end of the meeting, but members discussed a range of options, from strengthening ad regulations for referral services to recommending an outright ban in Florida of for-profit legal referral services.

Members also discussed whether the committee should limit its concerns to attorneys and referral services or include some of the broader issues raised by relationships between lawyers, doctors, and referral services that make both legal and medical referrals. That includes when those referral services have financial ties to the clinics where callers are sent.

Pohl and Smith said the committee needs to focus on whether Floridians are helped by referral services.

“We’re not here to talk about any particular referral service. We’re not here to talk about any particular lawyer,” Pohl said.

“Attorney referral services in and of themselves, do they protect, educate, and assist the public?” he asked. “You just heard some testimony on both sides. I’m not sure the referral services protected [callers], educated them, or assisted them.”

Smith said many of the referral ads appear aimed at the $10,000 PIP benefits given to accident victims, with the ads telling the victims they can get $10,000.

“But that doesn’t make it clear that $10,000 in benefits isn’t going to the patient; it’s going to the clinics,” he said.

Nor, Smith said, are the patients told the $10,000 covers both medical costs and lost wages, and the patients don’t realize that until the entire amount has been spent on treatments — leaving nothing left for lost wages.

Pohl and Smith outlined several situations they have encountered:

• Some referral services have used advertising to disguise direct solicitations.

• A patient injured in an accident calls the referral service number and is sent to a clinic. Although the patient had not requested a lawyer, he or she is met at the clinic by a lawyer or representative of a lawyer before seeing the doctor.

• The patient, in filling out paperwork, unknowingly signs a retainer for a law firm included with the medical paperwork, which is not explained.

• Patients showing up at the clinic after a referral are told they must see an attorney first, provided by the referral service, before they will be treated, even though they had not requested a lawyer.

• Some patients, unhappy with their treatment at the clinic, have gone to their designated lawyer for help, only to be told the lawyer cannot help them because he or she also represents the clinic, perhaps in seeking PIP benefits from the insurance company.

Pohl and Smith said some referral services are part of a much bigger problem related to PIP fraud.

Tim Chinaris, who represents referral service 411-PAIN on lawyer advertising issues, asked the pair what further tools might be needed, saying, “It sounds like we already have the tools to deal with these attorney-related concerns. . . . We’ve got the tools to deal with all of this. It’s just a matter of enforcement.”

Pohl agreed that all enforcement avenues aren’t being pursued, but added, “With the Bar’s lofty goals of integrity, I think the Bar has to do everything it can do to push it as far as it can.”

Smith and Pohl were the last of four panels discussing referral service-related issues at the meeting. One panel included Rep. Rick Kriseman, D-St. Petersburg, who said he again plans to introduce legislation to regulate medical and legal referral services.

Dr. Nabil El Sanadi for the Florida Medical Association; Paul Lambert, general counsel of the Florida Chiropractic Association; and Jason Winn, general counsel of the Florida Osteopathic Medical Association discussed medical ethics and referral issues.

They noted federal laws govern much of that issue, and that healthcare-related associations can be reluctant to get involved because it raises restraint-of-trade issues.

A panel of Jeffrey Lauffer, a chiropractor, and attorneys John Uustal and Peter Brudny discussed legal challenges to two of the larger legal/medical referral services. Uustal has filed a suit against 411-PAIN and is seeking class- action status. He said his clients felt that that company’s ads promised they would receive money for injuries, and instead all the money went to clinics, and, in some cases, clients wound up owing money to clinics.

Brudny is in litigation with ASK GARY, and he charged the company is more interested in making money than helping those injured in accidents. Lauffer worked both as a chiropractor and MRI technician for Physicians Group, LLC, which is financially affiliated with ASK GARY and receives its medical referral calls. He talked about treatment policies and other procedures at Physicians Group clinics where he worked.

The day after the committee meeting, Lauffer received a cease and desist order from ASK GARY’s legal counsel demanding he stop making “false and defamatory statements” about the company’s “billing practices, bonus structures, and patient care,” and threatening to sue him.

The final panel included Bar Ethics Counsel Elizabeth Tarbert; Unlicensed Practice of Law Counsel Lori Holcomb; Jan Wichrowski, who directs the Bar’s Orlando Lawyer Regulation branch; and Kathy Bible, who prosecutes violations of Bar advertising rules.

They noted that the Bar cannot directly regulate lawyer referral services but can prohibit lawyers from belonging to services that don’t follow Bar rules, including advertising regulations. They also said that any enforcement of violations of advertising, UPL, or other Bar rules cannot start without someone making a complaint to the Bar.

Aside from the panels, Chinaris made a presentation about advertising by referral services. He said his client, 411-PAIN, follows all Bar advertising rules and hired him specifically to ensure it is in compliance. He said the company does not use any advertising methods that have not already been used by lawyers and law firms in their ads.

Referring to allegations of fraud by referral services made at the committee’s June meeting, Chinaris said 411-PAIN had been victimized because some people have approached accident victims and falsely said they were affiliated with 411-PAIN.

Some people, he said, have an erroneous assumption that lawyers participating in referral services run by the Bar or local bars are more experienced than the panels used by private services. But a check in six localities found that in four of them lawyers belonging to the 411-PAIN service had been Bar members longer than those in the Bar panels, Chinaris said.

“If referral services were a real problem, the Bar would be deluged with complaints, dozens or hundreds, not just a few,” he said.

At the end of the meeting, committee members discussed future options. Chair Grier Wells said he plans to consult with committee members on whether to have another public hearing or begin discussions on possible recommendations.

“My personal view is we could have hearings like this ad infinitum, but I think we have heard enough that we could work on beginning to come together with conclusions and recommendations,” Wells said. “I think we have a pretty good feel for the issues.”

One possible option, committee member Carl Schwait noted, would be to recommend that private, for-profit referral services no longer be allowed, noting that only 12 states — including Florida — allow private lawyer referral services.

“There’s nothing to say we have to continue having for-profit lawyer referral services,” he said. “If there’s a committee here that says this is so bad, it has so many problems, there’s nothing to say this state can’t do what other states do [in banning the services].”

But Chinaris, who is not a member of the committee, noted the Bar and the Supreme Court have allowed the private services for 25 years, adding any attempt to ban them would likely result in litigation.

“If there’s lawful activity going on, it’s not up to any lawyer referral service to show why it should not be banned; it’s up to the Bar to show why it should be banned,” he said.

“I don’t think we, as a committee, answered the first question, which is: Do lawyer referral services protect the public? Do they serve the betterment of the public?” nonlawyer committee member Ron Lebio said. “That’s perhaps one thing we need to reflect on.”

Lebio said the committee should look at requiring lawyers who belong to referral services to report that and other details to the Bar. Under current rules, it’s up to the services to register with the Bar and list participating lawyers.

While the Bar could not require attorneys to submit copies of their contracts with referral services, Wells said it could require lawyers to make various affirmative statements on their conduct related to the service and to list the services in which they participate.

Wells ended the meeting saying he would consult with committee members about the committee’s next steps, then inform them on future meetings.

[Revised: 05-19-2018]