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Questions raised about for-profit referral services

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Questions raised about for-profit referral services

Senior Editor

Is advertising done by some for-profit lawyer referral services merely a cover for improper direct solicitation of legal clients?

Are lawyers who belong to some services pressured to refer clients needing medical treatment to clinics also using their referral service?

How many “unregistered” referral services are there, and are they breaking laws?

Grier Wells The Bar’s Special Committee on Lawyer Referral Services didn’t lack for opinions on those and other topics when it held a public hearing and forum on the operations of nonprofit and for-profit lawyer referral services during the Bar’s Annual Convention last month.

Officials from the Florida Department of Financial Services said there are ongoing criminal investigations against “legal” private lawyer referral firms that register with the Bar and “illegal” firms that don’t. (The Bar does not directly regulate lawyer referral services, but prohibits attorneys from using services that do not comply with Bar rules, including the rules on lawyer solicitation and advertising.)

Questions were raised about private companies that operate both as a doctor and lawyer referral service, and local bar association officials talked about how their nonprofit referral services are run and lawyers are screened before joining.

Clients told the committee about their unhappy experiences. Committee members heard from representatives of private referral companies, both those that handle a broad range of cases and those that specialize in PIP and/or personal injury cases.

A state lawmaker also talked about his attempts to regular private lawyer and medical referral services.

The committee was appointed by immediate past President Mayanne Downs in response to concerns that Bar rules were being ignored and clients harmed by a plethora of referral services that have sprung up in recent years.

“We do not have a preconceived agenda; we do not know where we are going,” said committee Chair Grier Wells, a Jacksonville member of the Bar Board of Governors, at the end of about five hours of discussion and testimony.

“The voluntary bar associations’ not-for-profit [services] seem to be organized very, very well to try to reach out to the community to provide attorneys for people who need attorneys. They’re in the throes of developing programs where they can continue to do that and provide that service despite the competition from the growing number of for-profit lawyer referral services,” Wells said after the meeting, summarizing what the panel had learned.

“We also — although it did not come out definitively in our hearing — have been made aware anecdotally of numerous violations of advertising rules and questionable ethical practices, both from the services and from participating attorneys, which will be the subject of our continuing analysis of lawyer referral services.”

He encouraged attorneys and others with knowledge of the issues to contact the committee.

The special committee scheduled a telephone conference meeting on July 14, Wells said, “and we have a strong expression of support for another public hearing probably during the Midyear Meeting [in September].”

Some of the most dramatic testimony was given by Capt. Steve Smith and Howard Pohl of the Department of Financial Services. They investigate criminal insurance fraud. While not providing specifics, they said there are ongoing criminal investigations of lawyer referral services, both those registered and unregistered with the Bar, for activities that include illegal solicitation, kickbacks, patient brokering, and other illegal activities. They also said, though, that while referral services are a factor, a majority of insurance fraud does not involve lawyer referral services.

“The use of advertising is often a cover for illegal activity. We’ve had cases where we arrested people who were doing illegal solicitation. They were getting crash reports from automobile accidents,” Smith said. “They would contact people and get them to go to a clinic or an attorney, and they would tell people, ‘If you’re ever asked how you ended up here, you say you saw the billboard; you saw a bus bench [ad]; or you saw a flier.’”

“We are not up here saying every attorney referral service is a fraud or every attorney referral service is committing crimes, but unfortunately there is the light side and there is the dark side. And when your business is the dark side, what you see is the dark side,” Pohl said. “What you see are the attorney referral services that are committing what we believe are legal violations. It’s not one; it’s not two; there’s a lot.”

Pohl said he thinks there are likely more for-profit lawyer referral services that haven’t registered with the Bar than those that have. Fewer than 40 such services have registered with the Bar.

He questioned services that provide both doctor and lawyer referral services from the same number. Pohl noted he is a lawyer and a CPA and the rules of both professions would require that he practice from separate offices if he were doing private legal and accounting work.

He referred to earlier video testimony the committee heard in which a client contacted a medical referral service after a car accident and was met by a lawyer at the clinic she was referred to.

“Why does a lawyer have an office in a doctor’s office, and why is the lawyer signing up clients in a doctor’s office, and why is that allowed by The Florida Bar?” Pohl asked.

Smith and Pohl said much of the problem stems from PIP policies, which provide $10,000 of guaranteed treatment for those hurt in automobile accidents.

“I think the major problem with PIP in this state is the closeness between the attorneys and the clinics, so much so that that’s [getting the PIP money] what they’re concerned about, not the client, not the patient,” Smith said.

This situation was the impression Kathy Wilson, a Jacksonville resident, got from her involvement in the process. Wilson, in a video statement taken by Wells and presented to the committee, recounted what happened after she was in an accident last April. She called a medical and legal referral company because she had back pain.

The service had someone call back in a day and arranged for her to be picked up — along with several other people — to be taken to a clinic. When she got to the clinic, Wilson said she was surprised to be told she must first meet with an attorney before seeing a doctor. The attorney, who was waiting for her at the clinic, explained the procedures and benefits, and had her sign documents.

The doctor took X-rays and prescribed a 60- to 90-day program of massage and other treatments with a physical therapist and suggested she get four to five treatments a week. Wilson said she never went back because the process felt wrong to her.

“It was a lot of extra pressure on me to sign up with the law firm,” she said. “It didn’t leave me with a very good impression about attorneys.. . . It made me feel co-opted. It made it seem they were trying to scheme my insurance company out of some money. . . and not try to help me much.”

That episode, Wilson said, contrasted with her experience with her attorneys when she was divorced.

“With the divorce attorneys, they seemed like they were more in my corner and doing the things that were beneficial for me,” she said. “These attorneys that I saw with [the referral service] seemed like they were just looking out for their own interest.”

Kentucky resident Tracy Branham said she signed with a law firm after being injured in a car accident in 2007. Although she selected the firm without going through a referral service, the firm is affiliated with a service that also does medical referrals. The firm, Branham said, falsely told her to use her car insurance for treatment and never told her she could use her health insurance.

At the law firm’s advice, she was seen by doctors affiliated with a clinic owned by the referral service and eventually flown to Florida for surgery at another clinic owned by the service.

Branham said she eventually sought treatment through her regular health insurance, and those doctors told her the surgery was unnecessary and may have worsened her condition.

“I thought I was doing what I was supposed to do. I thought I was doing what the lawyers told me to do,” she said.

Attorney Greg Zitani represents the ASK GARY referral service, which, along with the 411-PAIN referral service, has been the focus of much criticism in written comments made to the committee. Concerns include that the service is owned by a chiropractor who also owns a series of medical clinics that ASK GARY refers callers to when they are seeking medical care, and that lawyers who use the legal referral side of the business might feel pressure, real or imaginary, to refer clients needing medical treatment to that chain of clinics.

Zitani said there is no pressure on lawyer members to refer clients to those clinics. He said ASK GARY’s lawyer referral operations grew out of its medical services because callers would ask for referrals to lawyers as well as doctors or for help in interpreting insurance and/or PIP coverage. He said the service complies with all Bar rules.

“Lawyers have been referring their clients to doctors forever, and doctors have been referring their patients to lawyers forever. A lawyer referral service just sets up sort of a clearing-house where there can be some screening and some assurance for the public that they’re getting a better choice or a better selection than they might get if they were just limited to friends, Yellow Pages, or a bare television commercial,” Zitani said.

“It’s not the function of the Bar to regulate competition in the marketplace, but it’s the function of the Bar to protect the public from false and misleading advertising.”

He argued that consumers are better off using referral services because participating lawyers are required to have $100,000 of insurance coverage, and it’s unlikely that a real estate attorney, for example, would pay a hefty fee to the service for personal injury referrals that the attorney is unqualified to handle. The Bar also lets the company know if any members have disciplinary problems. He added the company sticks to handling accident and personal injury referrals.

He defended PIP work, saying it is paperwork-intensive and many doctors won’t handle it, leaving consumers with limited choices.

Representatives from 411-PAIN, another major medical and lawyer referral service, attended the meeting, but did not testify. The committee did get a six-page letter from attorney Tim Chinaris, who represents the company and who was at the meeting.

Chinaris, in the letter, said the committee had been provided with much erroneous information about private referral services and that the service follows Bar rules, including review and approval of its ads by the Bar.

“Although the Florida Supreme Court has allowed private lawyer referral services for more than a quarter century, only recently has The Florida Bar begun to scrutinize their operation,” Chinaris wrote. “Historically, private lawyer referral services operated quietly and attracted little attention from the Bar. In the past few years, however, some services have advertised heavily and started to provide significant competition to established personal injury law firms. Not coincidentally, the Bar has now turned its attention to these services.

“It is no secret that some lawyers and law firms would like to drive private lawyer referral services out of business because the services attract clients that used to go to those lawyers. The committee should not permit itself to be used as a cover for blatantly anti-competitive regulation action.”

The committee heard from those more “quietly” operated services during its meeting.

Blain McCarthy operates the Christian Legal Directory, which began in Jacksonville but is now expanding. McCarthy sees his service as a directory, not a lawyer referral service, but complies with Bar referral service rules because the Bar has ruled it is a LRS.

He said lawyers pay a monthly $50 fee for a basic or $100 for an enhanced listing on his website. There is no phone to call and visitors to the website view the information and then contact the lawyer of their choice.

“There’s a fairly strong, fairly vocal unabashed Christian community that, until resources like this were formed, had a hard time finding a Christian lawyer for their needs. The idea behind this service was to address that need,” McCarthy said. He added it’s similar to listing services provided by FindLaw and Martindale Hubbell, which are not considered referral services.

He said he resisted the lawyer referral service label because he feels it is inaccurate and might harm the operation if and when it seeks to expand to other states.

Paige Greenlee, Bar Young Lawyers Division president-elect, who moderated that portion of the meeting, read a statement from Lisa Spitzer, a social worker, who for years has operated the AAA Attorney Referral Service. Spitzer was critical of ASK GARY and 411-PAIN, saying they were only interested in a narrow category of cases, including PIP claims and may not act in the client’s best interest.

Referral services, she said, should disclose who owns them, how they are paid, and whether they receive any proceeds from PIP claims if they handle that type of case.

Spitzer said her service seeks both to help clients and lawyers, including ways for lawyers to build their practices. She said that technology, such as the Internet and blogs, make it easy to create unregulated referral services, which are hard for the Bar to monitor.

Three representatives of voluntary-bar- run, nonprofit lawyer referral services also addressed the committee.

Cathy Fitch, with the Hillsborough County Bar Association, Brant Bittner with the Orange County Bar Association, and Susan Sowards with the Jacksonville Bar Association gave similar details about their operations. Each handles thousands of calls per year and has between 110 and more than 200 lawyers on their referral panels. Each follows up to make sure cases are being handled and have mechanisms for resolving complaints from clients.

The three also said their calls have declined slightly in the past three or so years, although it was not clear if that was from the rise of heavily advertising private referral services or the economy.

“They have declined, not terribly, between 7 and 8 percent over the past three years. I’d like to think it’s really more a result of the economy and people are not really sure they want to take a case to court,” Fitch said.

Bittner said his service has seen a recent decline in personal injury calls, and is taking steps to make the referral service better known in the community.

Committee member Mary Ann Morgan asked the three representatives what benefits their services provide.

“Probably the more immediate one is peace of mind,” Bittner said. “They don’t need to go anywhere else. We provide the right attorney for the problem. They will get a call back; these attorneys are Orange County Bar members, and they are in good standing. They are going to talk to an attorney not a screener.”

Sowards said programs from the local bar operations can help educate people on when they need a lawyer and not to be fearful of lawyers. “Many don’t go to lawyers because they don’t know who is competent to handle their problem,” she said.

The meeting ended with an appearance by state Rep. Rick Kriseman, D-St. Petersburg, who earlier this year introduced legislation (HB 1237) to regulate private referral services. Although the bill didn’t pass, Kriseman said he intends to reintroduce it and keep pushing the issue until it does.

He offered perhaps the harshest criticism of the day about some private referral services.

“Several years ago, new players came into the business purporting to be referral services, legal and medical. They set up their businesses, I believe, in such a manner to avoid the rules that the rest of us have to play by and follow. They can’t be suspended or fined, and they can’t be disbarred for an improper ad,” said Kriseman, who is a practicing lawyer.

“There are some who would say actions have been taken to thwart unethical conduct of some of the referral services, and to those who make that claim, I say, ‘Bunk.’ Anyone who has listened to the radio or watched television within the past week has probably seen examples of ads that at best are questionable and at worst violate our rules.

“It was after years of trying to compete with these groups and hearing stories about the quality of medical care and the quality of representation that people receive, and not seeing any significant move in curtailing the activity, I felt it was time to take some kind of action.”

Kriseman’s bill would incorporate many of the Bar’s advertising rules into statute to require disclosure to callers if there are financial links between the referral service and medical facilities or law firms that will receive the referrals. Complaints would be filed first with the Department of Agriculture and Consumer Affairs. If no action is taken there, the complainant can go to civil court and, if successful, be awarded attorneys’ fees and 25 percent of any civil fine imposed by the court. The bill also provided that second violations would be subject to prosecution as a second degree misdemeanor.

Regardless of what happens to his bill next spring, Kriseman said he wants the Bar to continue its work.

“I don’t care if the Bar takes action first or my bill passes first, because the bottom line is something needs to be done, because there are people, innocent people, being victimized by unscrupulous referral services, and by unscrupulous attorneys and medical providers,” he said.

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