Friday, March 29, 2013

Cheating The Gekko

The Illinois Review Board has recommended a three month suspension for misconduct in connection with the following circumstances: approximately 1996, Respondent leased a 1996 Toyota 4Runner through Bank of America and insured the vehicle through Government Employees Insurance Company ("Geico"). As of November 2000, Respondent owed Bank of America approximately $25,000 on the lease. Pursuant to the Geico insurance policy, when Geico made a payment under the policy it became subrogated to the insured's rights of recovery against others, and the insured had an obligation to do whatever was necessary to secure Geico's rights and not do anything to prejudice those rights.

On or about November 1, 2000, the City of Chicago ("City") booted, seized and impounded Respondent's vehicle for unpaid parking tickets totaling approximately $2,000. Sometime thereafter, the vehicle was either destroyed or sold by the City of Chicago. On December 12, 2000, Respondent, who had years of experience dealing with insurance companies as a plaintiff's personal injury attorney, reported the loss to Geico. Respondent had several conversations with Geico representatives in late 2000 and early 2001. While the parties disputed the exact content of some of these conversations, Respondent agreed that he informed Geico he intended to sue the City of Chicago and was considering adding Geico as a party. Geico declined to be added as a plaintiff to any suit filed by Respondent. Respondent also agreed that Geico never stated, either verbally or in writing, that it was waiving its subrogation rights.

GEICO made a payment to Bank of America.  The attorney was aware of the payment.

The attorney then negotiated a $21,000 settlement with the City but failed to disclose GEICO's interest:

...we agree with the Hearing Board's conclusion that Respondent's representation in the settlement agreement with the City of Chicago...was false and Respondent knew of the falsity. As noted by the Hearing Board, "The plain language that no other entity "has or has had' any interest in the claim asserted in the lawsuit is directly contrary to the provision in Respondent's insurance policy regarding Geico's subrogation rights upon its payment for a loss. Once Geico paid out on Respondent's claim, it stepped into the shoes of the insured, and could then pursue its subrogation rights if it chose to do so.

(Mike Frisch)

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