Original Publication Date: June 2019
Accidental Doughnut Delivery Uncovers Key Issues
In September 2017, an office runner from Spine Center Atlanta mistakenly delivered a box of doughnuts along with a letter to law firm McMickle, Kurey & Branch in Atlanta. Although the delivery was intended for another recipient, the letter contained crucial information that could shed light on the steep rise in insurance premiums for motor carriers over recent years.
Unveiling Attorney Network
The letter, addressed “To Our Valued Attorney Business Associates,” immediately indicated to law partners Kevin Branch and Mike Johnson that it was misdelivered. At that time, Zach Matthews, another firm partner, was engaged in a tense legal dispute involving a slip-and-fall case against Spine Center Atlanta. The clinic’s co-founder, Dr. James Chappuis, was a key player due to the plaintiff’s treatment at the clinic post-incident.
Third-Party Involvement in Legal Cases
Matthews discovered that the clinic employed a cloud-based software to maintain discreet communications with plaintiff attorneys and doctors. He later identified the presence of a litigation finance company within this network, which plays a pivotal role in steering litigation related to truck accidents. Matthews offered legal counsel to trucking fleet insurers, who seek to manage their risks effectively through substantial liability coverages, typically ranging from $1 million to $10 million.
Medical Financing and Its Impact
While it’s common for attorneys and medical professionals to hold liens in accident claims, the recent discovery of litigation finance companies complicates matters. Nathan Lundquist, vice president of commercial auto claims at Protective Insurance, notes that the introduction of third-party finance significantly inflates the cost of injury claims. He emphasizes that a deeper examination reveals the extensive involvement of medical finance in these cases.
Bundling Claims and Profit Margins
A federal court allowed Matthews to access spine center records, revealing communications between Dr. Chappuis, plaintiff attorneys, and ProMed Capital, a medical funding company. This uncovered unethical practices; non-lawyers were influencing litigation processes. The clinic was charging rates 2.5 to 3.5 times the average market, marketing bundled claims to other doctors for financing, which resulted in considerable profit margins for the clinic and financing companies.
Collateral Source Rule and Its Effects
Juries often multiply medical bills by three when determining verdicts, which impacts the payout distribution between doctors, lawyers, and plaintiffs. In states like Georgia, juries are typically unaware of any insurance arrangements, which further enables inflated billing by medical finance companies. With case settlements averaging $100,000 per claim, the Spine Center’s legal operations were bringing in substantial revenue through questionable practices.
Litigation Funding’s Extensive Reach
Matthews asserts that the challenges posed by litigation funding are widespread across the U.S., with funding companies often intermediating legal referrals and connecting injured parties to compliant doctors. Protective Insurance is keen on disclosing the links between medical practitioners and financing entities, advocating for fair settlements and transparency in litigation processes.
