Post-Katrina Mississippi offers a life with persistent stress to those on the Coast – so much so that a recent post on the Sun Herald’s mental health blog began with I gotta say that keeping up with a blog is a whole lot more work than I thought.
If keeping up with a mental health blog is stressful, imagine what it would be like to deal with a docket of Katrina insurance cases for almost three years. So, maybe that accounts, at least in part, for Judge Senter’s application of assumptions as fact in his decision to disqualify the Rigsby sisters’ Qui Tam attorneys.
Senter predicated his decision on two assumptions that were made and heavily promoted by State Farm; parroted to a varying extent by the E.A. Renfroe and other businesses associated with the handling of the company’s Katrina policy-holder claims; and embraced by the insurance oriented blogs.
However, neither assumption has been argued and proven in any court– making his decision to the disqualify the Qui Tam attorneys similar to his deciding Broussard without presenting the case to a jury, the decision recently overturned by the 5th Circuit.
Assumption 1: The Rigsby sisters purloined documents from the Katrina insurance claims files their employer, E.A. Renfroe was handling for State Farm.
Assumption 1 is false by definition of the word purloined as the Rigsby sisters did not steal documents, they copied them. In other words, State Farm has always had the files in its system.
The Qui Tam attorneys learned the Rigsby sisters had copied documents from State Farms files after the fact. Consistent with law established in the Fair Claims Act, they directed the Rigsby sisters to give the copied documents in their possession to the U.S. Attorney and the Department of Justice. Other copies lawfully remained with the Attorney General, including the copy previously held by Dickie Scruggs.
Assumption 2: The consulting relationship the Rigsby sisters had with Dickie Scruggs was a “sham”
Assumption 2 is also false because it’s based solely on Judge Senter’s arbitrary decision to adopt State Farm’s claim that given the amount paid, the lack of regular hours and the low number of hours worked, the contract a sham – a claim based on State Farm’s opinion of the answers given to questions constructed and asked by their attorneys during depositions.
In doing so, he ignored the inherent bias as well as the reality of how similar arrangements work in the real world. Actually, what he ignored is how similar arrangements often don’t work out as intended in the real world.
There is nothing unusual about consulting not working by the job and not the hour or hiring consultants anticipating work that doesn’t come or come in the expected volume but paying them as agreed – or anything unusual about paying what some will declare unreasonable regardless of the amount. The only thing that would have made the arrangement a “sham” would have been the intent for the Rigsby sisters to do no work at all.
Once the Qui Tam attorneys learned about the fees – which was after some amount had been paid – they confirmed the fees would be paid by SKG and Scruggs understanding there would be no money paid the Rigsby sisters as Relators in the Qui Tam claim.
After Judge Senter accepted these assumptions as fact, he used them as the basis for deciding that from the standpoint of the attorney directly involved, Scruggs, the payments under this arrangement were improper and unethical. However, to his credit, he granted the Qui Tam attorneys an exception and did not hold them accountable for that:
While it is questionable, at best, whether any legitimate employment arrangement (i.e. any employment arrangement that involved a regular work schedule and the performance of genuine services for fair and reasonable compensation) can ethically be made between an attorney and his client or between an attorney and any individual known to be a potential non-expert material witness in a case the attorney is handling, I will stretch a point to give the current attorneys the benefit of the doubt on this issue, and I will assume without deciding that such an arrangement is at least theoretically possible.
Yet, he then took another leap and made a third assumption.
Assumption 3: The Qui Tam attorneys did not fulfill their duty regarding the payments Scruggs-SKG were making to the Rigsby sisters.
He based this assumption by applying the Mississippi law established in Duggins. Smply stated, the law says attorneys associating on a case create a joint venture subject to the laws of partnership that make them jointly liable for any wrong doing.
Judge Coleman applied Duggins to all SKG partner firms in Jones v Scruggs, the fee dispute – correctly according to comments from attorneys that I’ve read.
While Judge Senter acknowledges the Qui Tam attorneys were not members of SKG, he holds the Qui Tam attorneys accountable for duties related to the agreement between Scruggs and the Rigsby sisters that they could not fulfill to the extent he suggest – and does so by applying Duggins to their relationship with Scruggs as if it created a concomitant relationship with SKG which it clearly did not.
He claims they took no action when the learned of the payment arrangement and then acknowledges the action they took – which was insuffienct based on his hindsight but all the former Chief Justice of the Missouri Supreme Court obviously felt lawfully could be done at the time.
Consequently, when all is said and done, the only “sham” that’s evident is the decision to disqualify in the guise of justice.