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Jimenez v. Goertz6/2/2000
SYLLABUS BY THE COURT
1. A person who willfully or intentionally commits a fraudulent or abusive act or practice under the Workers Compensation Act may be sued under the fraud and abuse sections of the Act. See K.S.A. 44-5,120 et seq.
2. The provisions in K.S.A. 44-5,120 through 44-5,125 of the Workers Compensation Act were designed to afford a remedy to those who are damaged by fraudulent acts or practices under the Act.
3. A conviction for workers compensation fraud is not a prerequisite for liability under K.S.A. 44-5,125. A violation is required, but a conviction is not.
4. Under the facts of this case, an attorney who is innocent of any willful or intentional conduct, but who retains a contingency fee from a fraudulent workers compensation recovery for a client, although not liable under either K.S.A. 44-5,121 or 44-5,125, is liable for the retained fee.
5. In a case brought by an employer against an attorney for recovery of a contingent attorney fee representing 25 per cent of fraudulently obtained workers compensation benefits, the record is examined and it is held: (1) The provisions of K.S.A. 44-5,120, 44-5,121, and 44-5,125 do not provide a basis for imposing liability, and (2) as a matter of policy this court will not condone an attorney's retention of a contingent fee that is precluded by statutory provisions and the fruit of a client's fraud.
Appeal from Ford district court; DANIEL L. LOVE, Judge. Opinion filed June 2, 2000. Affirmed as modified.
This summary judgment case concerns an employer's claim against an attorney for return of a 25 per cent contingent attorney fee arising from a fraudulent workers compensation award.
Plaintiff Excel Corporation filed a K.S.A. 44-5,120 et seq. "fraud and abuse" civil action. The district court ordered the defendant attorney, Henry Goertz, to return the fee. Goertz appeals.
The Kansas Trial Lawyers Association filed an amicus brief in support of Goertz.
Our jurisdiction is under K.S.A. 20-3018(c) (a transfer from the Court of Appeals on our own motion). We hold that Goertz, because of the contingent nature of the fee and his status as an officer of the court, must return the fee. The fee in issue is precluded by statutory provisions and is the fruit of a client's fraud. Thus, we affirm the judgment below in part; however, we disagree with the district court's rationale for imposing liability on Goertz.
We initially address Excel's claims under K.S.A. 44-5,120, 44-5,121, and 44-5,125. The fundamental question is who may be sued under the fraud and abuse provisions of K.S.A. 44-5,120 et seq. The answer is a defendant who "willfully or intentionally" commits a fraudulent or abusive act or practice. Goertz is an innocent party and, thus, is not liable to Excel under its statutory fraud claims.
We note that the legislature has amended 44-5,120 since this case arose. See K.S.A. 1999 Supp. 44-5,120. Our analysis is confined to the 1993 version of K.S.A. 44-5,120.
The parties submitted the statutory fraud claim to the district court on stipulated facts. A summary of the stipulation follows.
FACTS
Ludivina Jimenez was injured while working for Excel at its meat packing plant. Goertz represented Jimenez in her workers compensation claim against Excel. At the time, Jimenez, who is not a party to this appeal, was a resident alien born in Mexico. After reviewing the medical evaluations and a disputed videotape surveillance of Jimenez, the administrative law judge (ALJ) entered an award. The ALJ found Jimenez was entitled to $7,349.65 based on a 6 per cent permanent p
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