Federal District Court says associate in Kentucky office of Winters and Yonker can’t sue for firing him after refusing to take part in suspect referral scheme

Hello and welcome to this JACPA Ethics Alert blog which will discuss the recent opinion of the U.S. District Court for the Western District of Kentucky which held that a law firm associate has no wrongful discharge claim against the Kentucky office of Winters & Yonker for allegedly firing him for refusing to take part in what he believed was a suspect referral arrangement with medical providers.  The case is Gadlage v. Winters & Yonker, Attorneys at Law PSC, W.D. Ky., Civ. No. 3:11-CV-354-H (U.S. District Court 12/29/11).

In a lawsuit removed to federal district court, the lawyer asserted that while he was working as an associate at the Kentucky personal injury firm Winters & Yonker, he was told to steer clients toward Kentucky Spine and Rehab for medical treatment.  The lawyer said he routinely advised his clients to seek treatment elsewhere since he found it more difficult to settle claims for clients treated at Kentucky Spine and Rehab.  The lawyer also alleged that Kentucky Spine and Rehab referred hundreds of injured individuals to Winters & Yonker and in return expected an equal number of referrals to its own medical clinics.  The lawyer contended that a quid-pro-quo referral arrangement existed between the law firm and Kentucky Spine and Rehab, creating a conflict of interest under Kentucky’s lawyer ethics rules.

According to the lawsuit, Winters & Yonker allegedly told the lawyer that Kentucky Spine and Rehab was unhappy with the number of the firm’s referrals and that it would stop sending patients to the firm if it did not increase its referrals.  In addition, a spreadsheet showed that he had signed up most of the clients who were not referred to a Kentucky Spine and Rehab clinic.  The lawsuit alleged that Winters & Yonker terminated his employment because he refused to participate in the referral scheme.

Since the district court was ruling on the law firm’s motion to dismiss, the opinion took the facts alleged in the complaint as true and concluded that it did not state an actionable claim against the firm under Kentucky law.  The opinion noted that in Kentucky (as in Florida) employees generally can be fired with or without cause.  Kentucky recognizes a narrow exception where an employee’s termination violates public policy; however, the Kentucky Supreme Court previously held that the public policy supporting a wrongful discharge claim must be shown by a violation of a constitutional or statutory provision.

The lawyer argued that the firing violated public policy against conflicts of interest in lawyer/client relationships under the lawyer ethics rules promulgated by the Kentucky Supreme Court; however, the opinion stated that, in Kentucky “a public policy from a court rule is insufficient to support a wrongful discharge claim” and the supreme court’s constitutional authority to establish ethics rules does not transform those rules into the equivalent of a constitutional or statutory provision.

The opinion stated that “(a)lthough it would be reasonable to find public policy in a wider scope of legal material-and other jurisdictions do exactly that-Kentucky has fairly drawn the line at constitutional and statutory provisions.”  The opinion also rejected the lawyer’s retaliation claim stating that the law firm’s alleged conduct of firing him for refusing to participate in a quid pro quo referral scheme and contesting his claim for unemployment benefits did not constitute outrageous and intolerable behavior which is required to establish the tort of intentional infliction of mental distress.

In a footnote, the opinion commented on the lawyer’s allegation that a Kentucky statute that prohibits lawyers from soliciting clients within 30 days of an injury and forbids knowing acceptance of a client from an attorney referral service in violation of the 30-day rule.  The opinion noted that nothing in the complaint suggested that Winters & Yonker was violating that statute or that the lawyer was terminated for conforming to it.

In closing, the opinion stated: “This is not a pretty business that Mr. Gadlage has seen and fought against in his own way.  Unfortunately, Kentucky does not afford him a legal remedy in these circumstances.”

Bottom line:  The lawyer in this case made some very serious allegations against the named law firm.  We will see how this plays out and if there are any disciplinary consequences in Kentucky (if the allegations are found to be true).

…be careful out there!

            As always, if you have any questions about this Ethics Alert or need assistance, analysis, and guidance regarding these or any other ethics, risk management, or other issues, please do not hesitate to contact me.

THE LAW OFFICE OF JOSEPH A. CORSMEIER, P.A.

PROVIDES ETHICS ADVICE AND EXPERT OPINIONS TO LAWYERS AND LAW FIRMS

DEFENDS LAWYERS IN BAR MISSION AND DISCIPLINE CASES

(AND MUCH MORE!)

My law firm focuses on review, analysis, and interpretation of the Rules Regulating The Florida Bar, advice and representation of lawyers in Bar disciplinary matters, defense of applicants for admission to The Florida Bar before the Board of Bar Examiners, defense of all Florida licensed professionals in discipline and admission matters before all state agencies and boards, expert ethics opinions, and practice management for lawyers and law firms.  If there is a lawyer or other Florida professional license involved, I can defend the complaint or help you get your license.

If you have any questions or comments, please call me at (727) 799-1688 or e-mail me at jcorsmeier@jac-law.com.  You can find my law firm on the web at www.jac-law.com. In addition to handling individual cases, matters, problems and issues for my clients, I also am on retainer to provide ethics advice to numerous lawyers and law firms throughout the state of Florida.  I also provide legal assistance and advice to numerous individuals and non-legal entities to help insure compliance with the law and rules related to UPL and other issues.

Disclaimer:  this e-mail does not contain any legal advice and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

2454 McMullen Booth Road, Suite 431

Clearwater, Florida 33759

Office (727) 799-1688

Fax     (727) 799-1670

jcorsmeier@jac-law.com

www.jac-law.com

NOTICE OF CONFIDENTIALITY:  This electronic communication and the information contained herein is legally privileged and confidential proprietary information intended only for the individual and/or entity to whom it is addressed pursuant to the American Bar Association Formal Opinion No. 99-413, dated March 10, 1999 and all other applicable laws and rules.  If you receive this transmission in error, you are advised that any disclosure, copying, distribution, or the taking of any action in reliance upon the communication is strictly prohibited.  Any unauthorized use, distribution, or disclosure of this communication is strictly prohibited.  If you have received this in error, please notify us immediately by return e-mail at the above telephone number and then delete message entirely from your system.  Thank you for your cooperation.

 


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