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Court News Ohio

Lawyer Who Excessively Billed Clients Suspended

The Ohio Supreme Court today suspended a Cuyahoga County attorney for two years and ordered him to pay restitution to his former law firm after finding that he charged excessive legal fees to three nursing home operators that were the firm’s clients.

The Supreme Court’s 4-3 per curiam opinion suspended Scott C. Smith of Pepper Pike, a former managing partner of Weston Hurd. The law firm issued refunds totaling $350,000 based on its own internal investigation that found 88 cases with suspicious billing information were submitted to the clients. Smith was implicated for violating the rules governing the conduct of Ohio attorneys in five of the cases and must pay $20,796 in restitution to the law firm.

The Court accepted the findings of the Board of Professional Conduct, which Smith disputed, but the Court did not adopt the board’s recommendation that Smith be indefinitely suspended. The three dissenting justices indicated they would indefinitely suspend Smith.

Firm Attorney Discovers Discrepancy
Smith joined Weston Hurd in 1989 and became a partner in 1996, and served as the managing partner for nearly three years before his resignation in 2007. In March 2007, a member of Smith’s practice group of attorneys informed firm partner Victor DiMarco that Smith had altered billing records to take credit for work DiMarco performed as a firm associate. DiMarco alerted the firm’s management committee about the discrepancies.

The firm conducted an internal investigation that included five of Smith’s cases, and Smith initially participated in the investigation. He resigned once the firm informed him that his clients would be contacted about the irregularities.

The firm examined 88 cases involving nursing homes owned by Beverly Enterprises of Ohio, Altercare of Ohio, and Covenant Care Inc. The firm reduced its time charged for the legal matters by 50 to 60 percent and issued refunds. Weston Hurd then filed a grievance against Smith with the Office of Disciplinary Counsel regarding five of Smith’s cases.

Attorney Charges for Excess Time and Uses Ditto Marks
The disciplinary counsel conducted its own investigation and alleged that Smith billed work as his own when it had been performed by another attorney; billed for excess time beyond what he actually spent on legal tasks; billed for work never performed by anyone at the firm; and billed multiple clients for the same work at the same time.

Weston Hurd’s billing practices and agreements with the nursing homes required that a short description of the tasks performed and the time for each task be included in the billing materials sent to the clients. The attorney leading Weston Hurd’s internal investigation testified that Smith used the “same terminology” repeatedly for a many different entries and recorded excessive time for entries. The attorney noted a “disturbing number” of instances in which Smith recorded the same information on multiple cases taking place at the same time of day by using ditto marks.

During his disciplinary hearing, Smith testified that the billing explanations did not describe his work, arguing his clients requested and approved generic billing narratives to avoid revealing confidential information that might later be used to support a punitive damages award in a civil lawsuit against the clients. He provided other explanations for why the records did not match, but the board found his account “incredible” for several reasons.

The board noted that while Smith was adamant that the long-term care clients demanded secrecy in their billings and files, he never conveyed those concerns to DiMarco, who worked on all five cases. DiMarco testified he was aware of the Ohio Nursing Home Bill of Rights and the potential for punitive damages awards. However, he stated he billed all three clients in the same manner as any other clients and maintained complete records of his work.

The board also noted that no witness from the nursing home clients corroborated Smith’s version of events.

Board Finds Violations
The board found Smith violated multiple conduct rules, including engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation; engaging in conduct that adversely reflects a lawyer’s fitness to practice law; and charging a clearly excessive fee.

Smith challenged the board findings and argued to the Court that the disciplinary counsel failed to prove he did not perform the tasks set out in his billing descriptions. He argued the clients agreed to “vague and ambiguous” entries to ensure the bills could not be used as the basis for punitive damages, and testified that he billed his clients based on a pre-approved budget. He said the narratives “were never meant to know what you did,” and “had nothing to do with what was going on.”

The Court considered those comments as admissions that his bills were misleading and that he was not performing the tasks described in the bills.

Lesser Sanction Adopted
When imposing a sanction, the Court considers several factors including aggravating circumstances that could enhance a penalty and mitigating factors that could lead to a less-severe punishment.

The board found Smith acted with a selfish and dishonest motive because he received a financial benefit from his actions. He also engaged in a pattern of misconduct involving multiple clients, and failed to acknowledge the wrongful behavior of his actions, even after the impacted clients would not corroborate his claims.

The board also noted Smith had no prior disciplinary records, and submitted letters demonstrating his good character and reputation. In addition to the mitigating factors, the Court also indicated that Smith voluntarily stopped practicing law in 2007.

To determine the amount of restitution, the board calculated that Smith fraudulently billed for 124 hours. Based on hourly rates ranging from $150 to $175 per hour, the board concluded that Smith should pay $20,796 to Weston Hurd.

The Court noted that while it has imposed an indefinite suspension for other attorneys found to have committed the same misconduct, it also has imposed lesser suspensions, and even partially stayed suspensions, for comparable misconduct.

“And on these facts, we find the appropriate sanction for Smith’s misconduct is a two-year suspension from the practice of law,” the opinion stated.
If Smith seeks reinstatement following his suspension, the Court required he must prove he paid all of the restitution to the law firm.

Justices Sharon L. Kennedy, Judith L. French, William M. O’Neill, and R. Patrick DeWine joined the majority opinion.

Chief Justice Maureen O’Connor and Justices Terrence O’Donnell and Patrick F. Fischer dissented, stating they would impose the indefinite suspension.

2014-0197. Disciplinary Counsel v. Smith, Slip Opinion No. 2017-Ohio-9087.

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