31 Clients Sue Big Houston Law Firm
CORPUS CHRISTI, Texas (CN) - The O'Quinn Law Firm made millions from its "silicosis litigation machine" by deducting unauthorized expenses from clients, "squandering" money, and failing to deliver settlement money, 31 clients claim in Federal Court.
Lead plaintiff Frank Bates sued The O'Quinn Law Firm, its current and former attorneys and law firms that referred silica cases to the firm.
The plaintiffs are all residents of Mississippi or Alabama.
John O'Quinn founded The O'Quinn Law Firm fka O'Quinn & Laminack with partner Richard Laminack, also a defendant. The firm has handled major litigation, including a $1 billion Fen-Phen diet drug case, a multibillion-dollar tobacco case for the state of Texas, and a major silicone breast implant case, according to publicly available information.
O'Quinn died in a car crash on a wet highway on Oct. 29, 2009.
In the 51-page lawsuit, Bates claims he and the other plaintiffs were diagnosed as having silicosis by medical professionals handpicked by The O'Quinn Law Firm.
"Plaintiffs, like other Silicosis Clients, were solicited by attorneys and other individuals, law firms, or screening companies to undergo medical screening to determine if they had silicosis," the complaint states "Plaintiffs were then solicited to enter into contracts with law firms who promised to litigate their silicosis claims against the Silicosis Defendants.
"These law firms subsequently referred plaintiffs to O'Quinn. As much as 98 percent of O'Quinn's silicosis docket came from referring law firms."
Bates claims The O'Quinn Law Firm represented around 3,000 clients in the silica litigation.
Of those 3,000 cases, roughly 1,000 were filed in Texas state courts, while the majority were filed in Mississippi and transferred to Mississippi Multi-District Litigation No. 1553, Bates says.
The O'Quinn Law Firm and its attorneys would "either personally or through medical screening companies, would advise the Silicosis Clients, including plaintiffs, to travel to various places throughout Texas to undergo medical exams by screening companies and medical professionals hand-picked by the Firm and its attorneys," the complaint states.
Bates says the medical companies included N&M Inc. and Repertory Services Inc., which set up trailers to "perform the screenings which often occurred in the parking lot of hotels, strip malls or restaurants."
Neither N&M or Repertory Services are named as defendants.
The complaint states: "In January of 2002, attorneys at O'Quinn received a memorandum from N&M, outlining the 'list of charges [the attorneys had] requested.' The charges read:
"Chest x-ray $35
"Full exam medicals with PFT $300
"Full exam medicals with PFT (N&M refers) $650
"According to the memo, if N&M, a non-lawyer, referred the client to O'Quinn, the Firm would pay N&M an additional $350 referral fee for the case. Such conduct amounts to no less than barratry and is a violation of the Texas Penal Code and TX Disciplinary Rules of Professional Conduct.
"This occurred on numerous occasions and several plaintiffs were charged the entire $650 to $750 as expenses in their case. Thus, not only did the Firm pay N&M an extra $350 to $450 to 'buy' plaintiffs as clients, but the Firm then turned around and billed the extra $350 to $450 to plaintiffs as expenses in their case.
"Not only this, but the Firm would lure plaintiffs into the screenings with advertisements for 'Free' silicosis screenings, but then turn around and bill the entire amount of the screening, including the referral fee paid to N&M, to plaintiffs. Although highly unethical, it was a win-win for the Firm.
"Additionally, pursuant to Rule 7.06 of the Texas Disciplinary Rules of Professional Conduct, the Firm and its lawyers were mandated to immediately withdraw from the representation of every client that was referred to them by N&M in violation of Rule 7.03. Therefore, all fees and expenses obtained from these clients were obtained illegally and thus should be disgorged pursuant to the doctrine that one should not profit or gain from their own wrong doing. "(Parentheses and brackets in complaint.)
The unauthorized charges did not stop there, Bates claims.
"Regardless of the fact that many of the Silicosis Clients, including numerous plaintiffs herein, did not authorize, the firm deducted general expense from the clients," the complaint states. "A few of the plaintiffs signed contracts directly with O'Quinn which mentioned nothing about 'Silica General Expenses.' Nonetheless, O'Quinn charged plaintiffs an arbitrary 3.0 percent of these general expenses and forced the plaintiffs to sign affidavits subsequently agreeing to have 'Silica General Expenses' and the arbitrary 3.0 percent pro-rata portion of these general expenses deducted from their settlements prior to O'Quinn releasing any of their settlement funds. Thus, O'Quinn and its attorneys held plaintiffs' settlement funds hostage unless they signed a new agreement consenting to a 3.0 percent pro-rata general expense charge.
"Realizing they needed to disclose the 'Silica General Expenses' charge in the contract, O'Quinn changed the language of their subsequent silicosis agreements to include disclosure of such the deduction of general expenses. Thereafter, many plaintiffs signed agreements with O'Quinn containing the new language."
Bates claims that because the firm's attorneys "didn't take time to look up client case numbers" he and the plaintiffs were billed for work done in the Texas cases that had nothing to do with the Mississippi multi-district litigation, where their cases were being handled.
"By 2003 the litigation expenses for O'Quinn's silicosis docket was 'out of control,'" the complaint states. "Just two years into the litigation, expenses for the 3,000 clients amounted to over $10 million dollars. $1.7 million was paid to the referral lawyers for screening cases and hundreds of thousands went to N&M for screening and referring O'Quinn the cases. Rather than spend money on securing evidence of liability, O'Quinn, led by Mr. O'Quinn, Laminack and [Thomas] Pirtle, squandered hundreds of thousands of dollars through frivolous conduct. The Firm would bill its overhead as 'expenses' to the clients. In just one instance, the Firm spent over $60,000.00 on an 'elaborate' database to manage the silicosis docket that not one employee ever put a scrap of information into other than general contact information already contained in other databases.
"Additionally, employee travel expenses were overly excessive. There were dinner tabs for $1,000.00, $100.00 bottles of wine and liquors, and expensive cigars, all of which were billed to the clients, including plaintiffs and charged to Silicosis General.
"Moreover, instead of flying coach, employees of the Firm would unnecessarily upgrade to first-class and simply bill the clients, including plaintiffs. In fact, Mr. O'Quinn billed flights on his private jet to the Silicosis General file."
Bates claims the firm also increased its clients' expenses by paying medical experts $20,000 up front for reports, only to find the experts were not qualified.
When the firm did reach a settlement with the silica defendants, Bates says, it failed to finalize the agreements.
"In his February 25, 2005 resignation letter to Mr. Laminack, Mr. Gibson uttered the inevitable truth affecting the Firm's silicosis docket: 'We are going to lose every settlement we have made because we won't process them.' "This is exactly what happened to the Firm's settlements with silica defendants, Sanstorm, Moldex and many others. "The vast majority, if not all, of the plaintiffs were all entitled to settlement proceeds with Sandstorm (also known as Air Liquide). On November 7, 2002, Pirtle, on behalf of the Firm, entered into a Rule 11 Agreement with Sanstorm. The settlement with Sanstorm was for approximately $5,250,000.00. By February 25, 2005, Gibson informed Laminack that 'Sandstorm (sic) will stand by their settlement if we send it out now.' However, the paperwork never went out and the clients never received any settlement proceeds from Sanstorm. Had the Firm simply enforced the Rule 11 Agreement and processed the settlement, Plaintiffs would have obtained their portion of the settlement." (Gibson's first name is not mentioned in the complaint.)
Bates continues: "The situation with underlying silica defendant Moldex was settlement neglect déjà vu. The majority of plaintiffs were entitled to proceeds from the Moldex settlement. On November 1, 2003, Moldex and the Firm entered into a settlement agreement. The Firm had settled its claims with Moldex for approximately $2,250,000.00. Moldex was willing to pay the firm for the clients it had releases for even though the quota had not been met. Thus, all the Firm had to do was send the releases and the paperwork to plaintiffs to be filled out and then forward the releases to Moldex for payment."
Bates says it was not until The O'Quinn Law Firm got word that an attorney had contacted him, and the other plaintiffs, about their potential claims against the firm that it returned the excess expenses.
Bates says The O'Quinn Law Firm hired Abel Manji to take over its silicosis docket in the late 2000s.
"In August of 2008, Manji had a meeting with Christian Steed ('Steed'), the Firm's managing attorney, about the overcharges/referral fees," the complaint states. "At first, Steed was very concerned about the issue. Manji looked into the issue further and by early 2009 found that everything he was told by Patricia Hilliard, a former employee of the Firm, was true - that is, former employees of the Firm, Mr. O'Quinn, Laminack, and Pirtle - were buying cases from N&M and its owner Heath Mason. In the summer of 2009, Mr. Manji had confirmed this issue and informed Mr. Steed and the Firm's counsel of how the Firm was buying cases from non-lawyers."
Bates claims the firm's underhanded tactics continued when a group of its former Texas silicosis clients sued it.
"The Firm set about a course of conduct to destroy, shred and alter documents contained in all of the Silicosis Clients' files, including plaintiffs," the complaint states. "To conduct this enormous task, the Firm hired a temp service of approximately twenty people comprised of both lawyers and non-lawyers to alter the clients' files. During this process, Manji witnessed 'thousands' of documents being taken out of the silicosis clients' files and 'thrown in the trash can' and 'shredded' after the Texas litigation had ensued. The document shredding and altering of the clients' files occurred day after day for several months over Manji's strong objection. Manji strongly objected to Steed and other members of the Firm, including Dean T. Gerald Treece, the current Executor of Mr. O'Quinn's estate, however, the spoliation of client files continued over Manji's objections to the contrary."
Bates et al. seek damages for negligence, gross negligence, breach of fiduciary duty, breach of contract, deceptive trade practices, fraud and violations of the Texas Disciplinary Rules of Professional Conduct.
They are represented by Lance Kassab of Houston.
Here are the defendants: Richard Laminack; John M. O'Quinn & Associates PLLC dba The O'Quinn Law Firm, John M. O'Quinn & Associates LLP, John M. O'Quinn PC, John M. O'Quinn Law Firm PLLC; Gerald Treece, independent executor of the estate of John M. O'Quinn, deceased; Christian Steed; Michael Lowenberg; Buffy Martines; Thomas Pirtle; Paul Danzinger; Rod De Llano; Danziger & De Llano LLP; Marvin Schrager; Robert Mueller; Mueller & Schrager PC; Stacie Taylor and Abel Manji.