There Seems Little Massachusetts Officials Can Do to Stop Secret Cash-For-Cases Deals
By JEANNIE GREELEY
When Hollywood depicted the underworld of ambulance chasing and insurance fraud in the film version of John Grisham’s “The Rainmaker,” Danny DeVito was cast as the “runner” who slithered through hospital hallways and accident scenes to lure victims to the offices of doctors and lawyers in exchange for cash.
But in Massachusetts, these characters might as well be ghosts — shadowy figures who work behind the scenes in low-income neighborhoods rather than out in the open on the streets. And this is what makes them so difficult to catch.
“This is all under the table and no one will admit that this is being done,” says former Board of Bar Overseers General Counsel Arnold R. Rosenfeld of case running. “The way you find out about it is someone gets stiffed for their money.”
But many lawyers wonder aloud why the BBO has yet to crack down on illicit operations that bleed business away from legitimate lawyers and, according to some sources, facilitate fraudulent personal-injury and auto accident claims.
“If [the BBO] were a little bit more aggressive with that type of activity [running], maybe it wouldn’t happen as frequently as it seems to,” says Boston attorney Gary W. Orlacchio, a member of the Massachusetts Academy of Trial Attorneys Board of Governors.
Even the majority of attorneys who believe the practice is relatively rare concede that the use of runners — which is prohibited by both state law and the profession’s ethical codes — mars an already tainted public perception of lawyers.
Help may be on the way in the form of legislation that would make running a criminal offense in Massachusetts. The proposed “anti-runner” bill has made it past a third reading and is now awaiting approval by the House and Senate.
But many observers believe that even criminalization will not be enough to root out an underground network fueled by cash-only payments and motivated by greed.
Notes From Underground
Runners — or “cappers” — as they’ve come to be known in the legal community, reportedly round up victims of car crashes and work-related injuries and attempt to solicit business from doctors and personal-injury attorneys in exchange for a fee or a cut of any resulting settlements.
They are often members of close-knit immigrant communities and, rather than prowl accident scenes passing out business cards, they’re more likely to develop a reputation in their community as the go-to person when someone needs assistance. As a result, they are exceedingly hard for investigators to track down.
While some of the claimants these runners bring to doctors and lawyers may have actually suffered injuries or been involved in accidents, other claims are completely fabricated, according to recent court documents.
And many attorneys and insurance officials believe these individuals operate as components of a “mill” that unites lawyers, doctors and clients in an effort to churn out massive amounts of minimal settlements.
Urban legend? Exaggerated rumor? Some attorneys seem to think so.
”A lot of it is information that’s like the old telephone game when you were a kid,” says Lowell attorney Kathleen M. O’Donnell, a former MATA president. “Someone says one thing to one person and then someone adds something to it, and then it’s repeated.”
But the fact that there is anti-runner legislation in at least three other states — New Jersey, Florida and California — indicates that it’s more than just pure fiction.
In fact, in the late 1990s, four local attorneys were named as defendants in a civil suit brought by Liberty Mutual Insurance, which later resulted in criminal indictments and jail terms for five individuals who operated makeshift medical clinics in Lowell and acted as or employed runners in their fraudulent dealings.
Three of the attorneys named in the suit are still in practice today; the fourth, Amantino J. Lopes of Stoughton, was disbarred in December 1997 for stealing client funds from personal-injury settlements, a charge apparently unrelated to the Liberty Mutual case.
In December 2000, Brookline attorney Irene S. Bavelsky was disbarred for stealing settlement funds from her personal-injury clients. But the use of runners in her practice surfaced in connection with divorce proceedings from her former husband/office manager.
A second office manager testified that Bavelsky paid runners to bring in clients, which she then referred to friends who operated physical therapy and chiropractic outlets.
While the Bavelsky case may be an isolated example of collusion between runners and attorneys, some attorneys claim employing runners is more prevalent than many in the profession suspect.
“I’m sure every single day in the commonwealth of Massachusetts there are multiple cases being sent to lawyers for money,” claims Orlacchio, who also has a law office in Lawrence. “I think if a person wanted to find a lawyer to get paid for a case they could pretty much do it in any community in Massachusetts.”
In the western part of the state, attorney Steven L. Winniman of Springfield reports having been contacted by a woman who claimed to work as a runner for another Springfield attorney, but sought out Winniman because she was unhappy with her rates.
“She told me that she was directing clients to another Springfield lawyer and that he paid her a percentage of the recoveries, and she felt that she should get a bigger percentage,” says Winniman. “She wanted to know if I would get into a written contract with her … I told her I was not interested and that I felt it was illegal.”
The use of runners by attorneys is statutorily prohibited by G.L.c. 221, Sect. 43, which states: “No attorney at law shall, through any runner, agent or person … solicit a person to employ him, nor shall any such runner solicit a person to employ such attorney.” An order to cease and desist is one penalty that can result from a violation of this law.
Laura K. Krauss, vice president and general counsel for the Insurance Fraud Bureau, says the current legislation and resulting penalties are insufficient to address the problem of case running.
“There has to be some exposure to criminal penalties to deter the unrestrained conduct that is occurring right now,” she says.
The use of runners also violates two BBO Rules of Professional Conduct, according to Bar Counsel Daniel C. Crane. Rule 5.4(a) prohibits lawyers from sharing legal fees with non-lawyers, and Rule 7.3(f) states: “A lawyer shall not give anything of value to any person or organization to solicit professional employment for the lawyer from a prospective client.”
Even with these restrictions, lawyers seem reluctant to report knowledge or suspicion of runner activity. (None of the attorneys contacted by Lawyers Weekly for this story would provide information for the record regarding names of attorneys or of law firms that they claim use runners or that were or are part of an investigation into the activity.)
Some say they fear being labeled a “rat” or don’t want to create bad blood among their colleagues. But most attorneys say it’s difficult to take action when hard evidence is nearly impossible to come across.
“How do you catch them?” asks Boston attorney Douglas K. Sheff. “The only way to implicate the lawyer is to catch the runner. You have to be able to demonstrate that the lawyer is paying the runner for that purpose. That’s a very hard thing to do … That requires a great deal of closeness to that particular group or firm, which is rare.”
Officials who have investigated the activity say that unscrupulous lawyers cover their tracks by writing off runners as interpreters or “marketing representatives.” But a more likely scenario is for everything to be kept off the books and handled with cash only, they say.
Because of these hurdles, officials must often rely on informants, reports from claimants who were roped into the circle, or cooperation from a spurned runner who might implicate the other members of his operation.
Watchdogs
Officials from both the BBO and the Insurance Fraud Bureau say that while they do field calls from attorneys and claimants reporting suspicions of case running, the lack of hard evidence makes the investigative process difficult at best.
It is hard to begin an investigation on suspicion alone, or when there are no names, faces or paper trails attached to the allegations, officials say.
“Other attorneys are not going to be able to come forward with specific information,” says Crane. “You have to get claimants and/or the runner to tell you that these types of events went on. It’s in the interest of neither one of them to do that unless they get into some type of dispute with the lawyer who was providing those services … Even then there’s usually not that much by way of record keeping.”
Crane could not provide statistics for BBO investigations into runner activity, noting that complaints are categorized by area of practice rather than by type of violation. He did, however, vaguely note that “some” cases involving the use of runners have resulted in disciplinary action by the BBO.
Asked why the BBO hasn’t done more to pursue runner activity, Crane says his office won’t pursue an investigation without hard evidence.
“Bar counsel does not start investigations based on rumor, speculation or the fact that the press may be interested in the story,” he says sternly.
But Rosenfeld, who was bar counsel from 1991 to 1998, attributes the inactivity of the BBO during his tenure to a lack of resources needed to pursue these complicated investigations.
“The BBO has not been active in this area,” Rosenfeld says of runner activity. “The question is what are you going to give priority to. That was not a priority at the BBO when I was there.”
Runner activity usually surfaces as part of an investigation into other attorney misconduct, Rosenfeld says, noting two incidents during his seven-year tenure where there were investigations into running, one of which was thwarted because a primary witness was found to have a criminal history.
While some attorneys agree that investigations should not be spurred by rumor or speculation, they do think runner activity needs greater attention from the BBO. A few cases of disciplinary action, they say, could be a tough enough example to scare people away from this practice.
“I’m the eternal optimist who wants to believe that all attorneys recognize that it’s an ethical violation and wouldn’t do it,” says personal-injury attorney Robert A. Shuman of Sharon. “On the other hand, if indeed it’s happening, I think the only remedy would be for the Board of Bar Overseers to look into it and encourage and act on any complaints regarding law firms utilizing runners. I believe if some action was taken against one or two firms who did it, it would cease pretty quickly.”
Shuman mentions that one possibility for rooting out running could be for the BBO to subpoena attorneys to get information, but he admits that “that almost seems Draconian in measure.”
Rosenfeld, too, believes that disciplinary action could deter running operations.
“It would seem to me that if you took a shot and brought two or three of these cases — what I would call ‘impact cases’ — and came down hard on people who use runners, or if the AG’s Office … could pursue this … then that would let people know that you’re going to take this kind of misconduct seriously,” says Rosenfeld. “The result of that might be that you reduce the number of people who are willing to take the risk.”
Resources don’t seem to be the problem for the Insurance Fraud Bureau, a private agency with statutory authority to conduct criminal investigations into fraudulent activity. The organization receives mandatory private funding from the insurance industry; 50 percent generated from the Automobile Insurers Bureau and 50 percent from the Workers’ Compensation Rating and Inspection Bureau.
The IFB collaborates and shares information with the Attorney General’s Office, the U.S. Attorney’s Office and state licensing agencies, including the BBO.
But the IFB faces the same obstacles as the BBO when it comes to investigating runner activity.
“It’s difficult to get into rings,” says Krauss, general counsel for the IFB. “And that is why they are so successful. It may be an issue of language, location, a particular culture. If someone sees that money can be made by manipulating the system to their advantage, there is always some percentage of the population — whether it’s professionals or not — that are going to do that.”
Krauss notes that the office has five detailed complaints dating from 2000 that allege runner activity, four of which directly implicate lawyers.
“I didn’t go looking for these scenarios, they came here,” she says. “They see ‘Insurance Fraud Bureau’ and they feel compelled to tell us that this has happened to them. The reporters range from insurers’ claims managers to attorneys who call and say, ‘Wow. Under anybody’s reading or ethical interpretation of the rules as they exist now, this is in-person solicitation at its best.’ We don’t want to comment about what it would be like at its worst.”
Reading from the four documented complaints involving lawyers, Krauss details the reported runner activity, omitting the names of any lawyers or law firms that may be included:
- In a 2000 memo based on an insurance claim from 1999, an unidentified “attorney informant” from Lawrence provided information to the special investigation unit of an insurance company. According to IFB records, the attorney told the investigator that “the runner financially compensates the patients for treating at the medical clinic or going to a specific attorney … The attorney told them that a runner was receiving $15,000 in spending money to pay people to stage accidents and then come into the clinic for treatment.” The name of the law firm allegedly involved in this case is listed in the memo, but Krauss says she cannot reveal it.
“It’s criminal,” she says matter-of-factly. “It occurs as part of a case that’s reviewed and may be investigated for criminal prosecution.”
- According to a June 2000 report to the IFB: “A Boston attorney was approached by a runner from a medical clinic with multiple locations. The runner referred to herself as a ‘community representative.’ She outlined referral services and fee schedules for her services. She provided detailed brochures documenting those services. The types of services discussed were for doctor referral fees and attorney referral fees.”
- In an August 2000 complaint stemming from Springfield, a claimant involved in a car accident reports having been visited at her home by a runner from a specific medical clinic at 8:30 the following morning. According to the IFB report: “The runner told the claimant to go to the medical clinic for their free consultation, and that the medical clinic would then set them up with an attorney. The claimant explained to the runner that he already had an attorney. The runner asked who the attorney was and then told the claimant they had attorneys who could do a lot better for the claimant. The claimant received a spreadsheet with names, addresses and phone numbers of attorneys who the medical clinic allegedly refers patients to. The list is on the clinic’s letter head.”
- A fourth incident was investigated directly by Metropolitan Life Insurance, and allegedly involved a Boston attorney, according to Krauss. A runner who testified under oath to the insurance company revealed information that was later presented to the Senate Committee on Criminal Justice by Mark Huard, an investigator for MetLife and president of the New England Association of Insurance Fraud Investigators.
Testifying before the Senate committee in support of the proposed “anti-runner” legislation, Huard relayed the facts of what he calls “a common fact pattern” the company sees in its efforts to detect fraud.
According to Huard’s testimony, he investigated an accident claim where an uninsured driver was operating a car insured to an individual “who operates a law firm in Boston.” Upon questioning by investigators, the driver admitted that he had been given the car by the owner of a physical therapy clinic. He was to use the car to transport patients to and from the clinic, and to “seek out motor vehicle accidents and their victims” in order to distribute business cards.“
The patients that he was involved with would also be transported to the law firm of our insured for representation,” Huard stated in his testimony.
For each referral, the runner was paid between $150 and $200, according to Huard’s account of the runner’s sworn statement.
While all of these reported incidents are at the fingertips of the IFB’s general counsel, she notes that her office is stalled while awaiting the progress of the “anti-runner” legislation. Without criminal penalties for this runner activity, there is little the IFB can do at this point, Krauss admits, aside from referring the reports to the BBO for review.
“These are not in progress because we have no criminal penalty to attach to the underlying issue,” laments Krauss. “The problems of proof that we are encountering are the same problems that the BBO would have. And I’d also suggest that that’s the reason the civil penalties are available. But it may be inadequate to address the conduct.”
Krauss continues: “Going out and trying to find a runner with no last name and no concrete description, it is very difficult. And someone tell me what their incentive to talk to me is.”
The Greed Factor
While some attorneys seem to think that runner activity will always go on in a covert and limited fashion, others are more optimistic about the practice being curbed with possible criminal penalties.
The anti-runner legislation, bill No. 2181, states in part: “Whoever knowingly acts as a runner or uses, solicits, directs, hires or employs another to act as a runner for the purpose of defrauding an insurer shall be punished by imprisonment in a jail or house of correction for not more than two and one half years or by a fine of not more than five thousand dollars or by both such fine and imprisonment.”
Some lawyers, while noting that the proposed legislation is a step in the right direction, say it might even be too narrow in scope. The bill, attorneys claim, shouldn’t stipulate that running is only criminal if done with the intent to defraud. The mere use of runners, whether to bring in claims with merit or fraudulent claims, should be outlawed.
“I wonder if that [clause] might not be enough to create a defense,” ponders Springfield attorney Winniman after having reviewed the proposed bill.
With the exception of that limitation, Winniman says he finds the bill sound and thinks that it should be well received by the legal community.
“I don’t think that the decent lawyers will have any problem with it,” he says. “I don’t see why people would have any problem with it.”
The bill’s sponsor, Boston attorney Cynthia S. Creem, D-Newton, chair of the Senate Committee on Criminal Justice, emphasizes that this bill should not be interpreted as an attack on attorneys.
“I’m looking to try and do something that benefits the legal profession because it shows that we don’t participate in this kind of thing,” says Creem. “At least not everybody does it, and if they do it, it’s a crime.”
The bill does, however, state that “existing law and the ethical codes of conduct for the legal and medical professions have not adequately deterred the practice of employing runners,” and lists the further promotion of ethical standards for these professions as one of its main purposes. Fraud prevention and protecting the public from inflated insurance rates due to fraud are the bill’s other stated purposes.
But if lawyers claim that the use of runners is so rare, why is legislation necessary?
Even more reason for the bill, says Creem.
“If it’s a small problem, why not do it?” asks Creem. “Even if it’s big or it’s small, if it’s going on, why wouldn’t you want legislation?”
If it’s still relatively rare, why wait until it becomes widespread to pass criminal legislation, she asks.
Asked if runner activity might cease if the legislation eventually passes, Krauss responds: “No. There’s too much money in it.”But she says the message behind the proposed legislation is still crystal clear: “Run at your peril.”
