The U.S Court of Appeals for the 11th Circuit handed down a blistering opinion involving a complex web of PIP lawyers, fee sharing agreements, collusion, secret settlement agreements, bankruptcy, diversion of firm funds, and millions of dollars. Who would have thought a PIP issue involving attorney’s fees would work its way to the second tier of the federal court system.
The facts read like a John Grisham novel from the 90s. The Kanes are PIP lawyers who filed thousands of PIP claims against Progressive on behalf of their medical provider clients. As a tactical move to increase their leverage, the PIP lawyers pursued derivative insurance carrier bad faith claims against Progressive and sought help from another law firm, the Stewarts, to litigate the bad faith claims. Both parties treated the PIP and bad faith claims as intertwined. The distribution of fees was originally planned for the PIP clients to receive only ten percent of any recovery from the PIP litigation and sixty percent from the bad-faith litigation. Attorney’s fees agreements went through two different versions, with the Stewarts receiving the bulk. After a failed mediation led by Stewart, the Kanes then secretly settled all litigation against Progressive. The Stewarts had no part in the settlement. The “secret” settlement between Progressive and the Kanes was memorialized in a “Memorandum of Understanding”; which was also subsequently amended. Essentially, the Stewarts were left with nothing because the agreement allocated no portion to the bad faith claims, but earmarked $10.9 million for fees and costs related to the PIP claims.
Needless to say, the Stewarts found out and were not happy and commenced litigation against the Kanes. The Kane’s firm filed for Chapter 11 protection, which was dismissed by the bankruptcy court. The subsequently filed for Chapter 7 bankruptcy personally to discharge the debts of the attorney’s fees to the Kanes. The bankruptcy petitions ironically followed after a state court rendered a $2million judgment against the Kanes and the Kane’s firm. Naturally, the Kanes applied for individual bankruptcy protection, but the slightly more crafty Stewarts sought the exclusions from said protection based on “willful and malicious injury by the debtor to another entity.”
In the end, the Bankruptcy Court made numerous findings that the Kanes intentionally committed acts that they knew were substantially certain to injure the Stewarts. The 11th Circuit upheld all findings and noted the irrefutable evidence that the Kanes knew exactly what they were doing, why they were doing it, and how their testimony all but confirmed their actions. On another note, the younger Mr. Kane used his law firm’s newly acquired funds to pay personal real estate taxes only 6 days before he filed for personal bankruptcy.
Where are they now? Both of the Kanes are still actively practicing law in south Florida; including PIP. Harley Kane went on to successfully argue the landmark fee schedule cases of Geico Indem. Co. v. Virtual Imaging Services, Inc., 79 So.3d 55 (Fla. 3d DCA 2011), DCI MRI Inc. v. Geico Indem. Co., 79 So.3d 840 (Fla. 4th DCA 2012), and Geico Gen. Ins. Co. v. Virtual Imaging Servs., Inc., 38 Fla. L. Weekly Supp. 517 (Fla. July 3, 2013). Charles Kane also went out to have much success in the appellate courts making PIP law. The case is Harley N. Kane, et al v. Stewart Tilghman Fox & Bianchi, P.A., Case No.: 13-10560 (11th Cir. June 26, 2014) and the full text of the opinion can be found at http://media.ca11.uscourts.gov/opinions/pub/files/201310560.pdf.
What struck me is that the PIP clients were only getting 10% of any recovery from the PIP claims. In every PIP claim with Sibley Dolman Gipe Accident Injury Lawyers, PA the medical provider client is always properly compensated for their work. Issues involving attorney’s fees are handled between law firms without the client’s involvement. If you have questions about Florida PIP Suits, contact myself, Stephen Farkas by phone or email, [email protected]
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