Risk Update

Positional Conflicts Insurance Allegation, “Hell Breaks Loose” Conflicts Disciplinary Case

Akerman Faces DQ Bid In USAA Medicare Repayment Row” —

  • “MSP Recovery Claims asked a Florida federal judge Tuesday to disqualify Akerman LLP from representing the United Services Automobile Association in their dispute over Medicare secondary payer claim reimbursements, alleging that Akerman has violated the Florida Bar’s conflict of interest rules by representing other insurers with connections to the same claims.”
  • “‘Any time that Akerman advances an argument on behalf of defendants, it takes a position contrary to the other Akerman clients’ interests,’ MSP Recovery told the court.”
  • “MSP Recovery argues that disqualification is required because Akerman’s conduct violates several of the Florida Bar’s Rules of Professional Conduct, and it asserts that the rules provide that opposing counsel may request such a disqualification. ‘The standard is not whether the movant ‘stands in the shoes’ of a current or former client, but rather whether the conflict of interest involves representation of someone other than the movant and where it is such ‘as clearly to call in question the fair or efficient administration of justice,” MSP Recovery said.”
  • “MSP Recovery contends that it is in line to be harmed by the current situation because Akerman’s alleged conflicts would stand in the way of negotiating a potential settlement. ‘Plaintiffs do not suggest disqualification lightly. Plaintiffs are the real victims here,’ MSP Recovery said. ‘Counsel’s continuous representation of the defendants and the other Akerman clients will wreak havoc with the settlement and mediation process.'”
  • “The motion also alleges that a Florida Bar rule prohibits a lawyer from participating in making a global settlement while representing two clients who are jointly and severally liable. Additionally, the motion said it is likely that Akerman has had access to confidential information belonging to its various clients that would provide an unfair informational advantage to USAA.”
  • “MSP Recovery said an analysis of its claims data found that in 381 of 970 instances where the USAA and its related entities reported to the federal Centers for Medicare & Medicaid Services that they had a contractual obligation to make primary payments for enrollees’ injuries, and Akerman attorneys represented both the defendants and another client whose policies were implicated in the same incident involving the same enrollee. Included in the 381 were 356 instances where Akerman was still currently representing the other implicated client, MSP Recovery says.”

Bill Freivogel always rewards careful readers with bits of color commentary. From his latest:

  • Current Client/Former Client. In re Bowen, No. 20-13 (Vt. Feb. 12, 2021)
  • “Disciplinary case opinion upholding a three-month suspension. Pure conflict-of-interest disciplinary cases are rare. This is one worth mentioning. It involves two married couples, H1 & W1, and H2 & W2. H1 and W1 divorced. In a post-decree dispute, Lawyer represented H1 against W1. The result favored W1.”
  • “H1, unhappy with the result, refused to pay Lawyer’s final invoice of $11,000. At the end of the day, H1 did wind up owning an undeveloped residential lot (“the Lot”). H2 & W2, owning a house next to the Lot, wished to buy it to enhance the value of their house. H2 & W2 hired Lawyer to represent them in purchasing the Lot from H1 (Recall, H1 is Lawyer’s former client who owes Lawyer $11,000.). H1 had another lawyer (“New Lawyer”) for the sale of the Lot. Lawyer told New Lawyer that Lawyer planned to withhold purchase funds to satisfy H1’s $11,000 debt to Lawyer. New lawyer said Lawyer should not do that because there were no liens on the Lot.”
  • “Lawyer immediately, without telling H2 & W2, or New Lawyer, obtained an ex parte writ of attachment on the future sale proceeds and recorded a lien on the Lot. Once everyone became aware of what Lawyer had done, all hell broke loose.”
  • “H1 was furious that his former lawyer was ‘working him over’ (our words) in the Lot sale transaction to secure the $11,000 fee. Lawyer’s new clients, H2 & W2, were upset that the Lot purchase deal was jeopardized over Lawyer’s ex parte proceeding, etc. At ‘the eleventh hour,’ just before closing, Lawyer agreed to accept one-half of the $11,000. As a result the deal closed and H2 & W2 got the Lot.”
  • “During this disciplinary proceeding against Lawyer the hearing panel found that Lawyer had violated Rules 1.9(c)(2) and 1.8(b). Lawyer conceded that he violated Rule 1.9(c)(2) (revealing information about his issues with his former client, H1). In this appeal Lawyer contests the finding as to Rule 1.8(b) and the three-month suspension. In this opinion the court affirmed both.”
  • “We are not sure about the court’s analysis of the applicability of Rule 1.8(b). You should read the opinion if you are curious about that. We believe that Lawyer violated two rules not raised: Rule 1.7(a)(2) (protecting his own interests, jeopardizing sale of the Lot); and Rule 1.4 (failing to tell H2 & W2 about his dispute with H1, and his ex parte proceeding, which would inevitably complicate their ability to close on the Lot).”
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