13 Years of Workers’ Comp Insurance Shenanigans Catches up with Ohio Attorney

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In 2022, an Ohio attorney found out what can happen when you're not on the up and up with workers' compensation coverage. Simply research subscribers have access to the full text of the case.

Case

Disciplinary Counsel v. Fitz, 205 N.E. 3d 479 (Ohio 2022).

What Happened?

Beginning in 1991, an attorney applied for and obtained workers' compensation policies from the Ohio Bureau of Workers' Compensation for 12 housecleaning business, many of which operated under similar names.

In 1996, the attorney obtained a workers' compensation policy for one of his businesses but stopped the premium in 2003.

In 2013, the bureau consolidated all of the attorney's workers' compensation policies into one and discovered that the policies had either lapsed or benne canceled.

In 2017, the attorney was charged with workers' compensation fraud, and the court ultimately imposed a 30-day suspended jail sentence ordered him to pay $2,000 restitution and court costs.

In 2018, the bureau investigated the attorney again based on his failure to maintain workers' compensation coverage for another one of his businesses. Eventually, the court sentence the attorney to five years of community control and ordered him to pay $965,235 in restitution through a payment plan.

The Board of Professional Conduct found that the attorney violated Ohio's Professional Conduct Rule 8.4(b), which prohibits a lawyer from committing an illegal act that reflects adversely on the lawyer's honest or trustworthiness and 8.4(c), prohibiting a lawyer from engaging in conduct involving dishonesty, deceit, or misrepresentation.

The attorney appealed his case to the Ohio Supreme Court.

Rule of Law

When imposing sanctions for attorney misconduct, the Ohio Supreme Court considers all relevant factors, including the ethical duties that the attorney violated, aggravating and mitigating factors, and sanctions imposed in similar cases.

What the Ohio Supreme Court Said

The Ohio Supreme Court agreed with the board's findings, noting that it considered aggravating factors that included the attorney's dishonest or selfish motive and pattern of misconduct as well as mitigating factors that included the attorney's clean disciplinary record, effort toward paying restitution, full and free disclosures to the board, and a cooperative attitude.

The court considered several cases in reaching its decision:

Disciplinary Counsel v Bereday, 131 N.E.3d 9 (Ohio 2019).  An attorney, while serving as the general counsel and chief compliance officer for one of Florida's largest providers of managed-care services, caused one of the provider's subsidiaries to submit a false worksheet to the Florida agency administering the state's Medicaid program. As a result of the false financial information, the Medicaid program incurred a loss of $4,489,303. The attorney was convicted in federal court of knowingly making a false statement involving a healthcare-benefit program. The Ohio Supreme indefinitely suspended him but granted him credit for the time he had served under his interim felony suspension.

Disciplinary Counsel v. Marshall, 120 N.E.3d 772 (Ohio 2018).  An attorney participated in an 11-year scheme in which a group of related businesses submitted false information to federal agencies to obtain funding that the businesses were not qualified to receive. The conspiracy arguably diverted more than $140 million in federal contracts away from other businesses that could have qualified for the money. The attorney was convicted in federal court of attempt and conspiracy to commit wire fraud. The Ohio Supreme Court imposed an indefinite suspension, with no credit for the time he had served under his interim felony suspension.

Disciplinary Counsel v. Smith, 944 N.E.2d 1166 (Ohio 2011). An attorney failed to report $1,411,265 in income over several years and allowed his agent to falsely state in an audit that he had no source of income other than that reported on his tax return. The attorney was convicted of conspiracy to defraud the Internal Revenue Service, making false tax returns, and corruptly endeavoring to obstruct and impede an IRS investigation. The Ohio Supreme Court indefinitely suspended him but granted him credit for the time he had served under his interim suspension.

Disciplinary Counsel v. Atway, 153 N.E.3d 79 (Ohio 2020). An attorney failed to accurately report income for three tax years for a business that he owned, made false statements to his tax preparer, and failed to file a return for one year. His misconduct resulted in a loss of between $250,000 and $1,500,000 in federal income-tax revenue. He was convicted of filing a false federal tax return and ordered to pay $600,000 in restitution. 

Disciplinary Counsel v. Lawrence, 65 N.E. 3d 711 (Ohio 2016). An attorney underreported income from various businesses, some of which were tangentially related to his practice of law, for three tax years. He was convicted of three counts of filing a false tax return and ordered to pay $128,253 in restitution.

Disciplinary Counsel v. Jacobs, 14 N.E. 3d 984 (Ohio 2014). An attorney understated his income and overstated his expenses for four tax years, resulting in unpaid taxes of $75,385. He was convicted of one count of making and subscribing false tax returns.

The Ohio Supreme court in this case found that the board recommended a sanction that fell between the two sanctions proposed by the parties.

"The board concluded that considering the amount of loss suffered by the bureau, the relatively small amount that [the attorney] has since repaid, and the fact that [the attorney] engaged in the misconduct for almost 13 years, he should be suspended for two years, with no credit for the time he has served under his December 2019 interim suspension," the court wrote. "The board also recommended that as a condition of reinstatement, [the attorney] be required to provide proof of substantial, continuing efforts to pay the restitution ordered as part of his criminal sentence."

Thus, the Ohio Supreme Court upheld the board's action.

Verdict: The attorney was suspended from the practice of law in Ohio for two years, with no credit for the time he had served under his interim felony suspension. His reinstatement was conditioned on providing proof of his substantial, continuing efforts to pay the restitution ordered as part of his criminal sentence.

Takeaway

Workers' compensation fraud in Ohio can cost an attorney his ability to practice law.

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