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Malcolm S. Murray Sr. is living the insurance defense lawyer’s dream: He’s suing a former insurance company client and a pair of auditors he says wrongly slashed his bills. Murray claims Nationwide Mutual Insurance Co. and its lawyers, Philip M. Williams and Russell S. Roddy, as well as Law Audit Services and Examen Inc., committed fraud, breach of contract and RICO violations. He’s seeking $40,000, plus attorneys’ fees and other damages. “I represented Nationwide for about 23 years,” says Murray, who is now retired. “I never had the first bill questioned. I never had any complaints about my ethics or my results. � Suddenly I became a crook, and they started cutting my fees anywhere from 10 percent to 75 percent.” Murray says he sued after disputes with Nationwide and the auditors starting in 1996. Murray v. Nationwide Ins. Co., No. 00VS007028 (Fult. St. July 5, 2000). He quit working for Nationwide at the end of 1997, about a year after the company first began using outside companies to challenge his bills. He says he decided to leave insurance defense work when legitimate bills were challenged and discounted by auditors who weren’t even attorneys. He’s not the first Atlanta lawyer to feel this way. In 1997 and 1998, about a dozen Atlanta insurance defense lawyers left the practice for other types of law. But Murray appears to be the first Atlanta lawyer to take the matter to court. In his complaint, he alleges that: � Nationwide breached its contract by failing to pay for services he provided. � Nationwide, its lawyers and the auditors conspired to commit fraud by creating a “burdensome scheme of denying payments.” � Roddy, Williams and Nationwide used the U.S. mail and interstate banking and telephone systems to give privileged information to Examen and Law Audit Services, violating RICO and their fiduciary duty to their insureds. Mark E. Robinson, a litigator and principal at Thomas, Means, Gillis, Devlin, Robinson & Seay’s Atlanta office, left an insurance defense practice at the former Long, Weinberg, Ansley & Wheeler in December 1998. “I think the breach of contract claim probably has some merit, if he never signed an agreement,” Robinson says. “The fraud and RICO claims I think are creative.” BILLING CUTS ‘CAPRICIOUS’ He says he understands the desire to take on insurance companies. Some auditors’ billing cuts, he recalls, were “arbitrary and capricious, and there was a sense that they were trying to shave off 10 or 15 percent to justify their existence to the insurance company.” Other times, he says, auditors found legitimate errors. So far, Nationwide and the auditors aren’t alleging errors. The defenses listed in the answers filed to date are mostly technical and probably curable — such as improper venue and a mistake in the format of Nationwide’s name. Nationwide’s answer, filed by the company’s lawyer, Swift, Currie, McGhee & Hiers partner James T. McDonald Jr. in Atlanta, does say Murray hasn’t provided some of the elements necessary to pursue a RICO claim. It also alleges that Murray agreed to be bound by the insurer’s payment guidelines, and so cannot now claim fees in excess of what the guidelines allow. NEVER ACCEPTED GUIDELINES? “He never agreed to the guidelines,” says Murray’s attorney, Joseph A. Weeks of Nicholas and Weeks. “He had some pretty heated correspondence with Nationwide where he contested those guidelines.” Murray says that from the beginning, he wrote notes on some of his bills, saying specifically that he did not agree to third-party audits. Murray says he was only charging Nationwide $85 an hour, but the company started slashing his bills and delayed payment on or disputed bills it had pre-approved. He estimates that 95 percent of the bills at issue are for work done before the auditing regime. Nationwide pays bills only after files are closed, so some of Murray’s were years old. “I didn’t have any choice but to send my bills to get paid,” he says. When he sent in his bills, the auditors said he spent too much time or that he overcharged. Weeks says some of the more egregious examples are the refusal to pay Murray for writing a conflict letter, and one auditor’s decision that Murray spent too long answering discovery. Murray had billed .4 of an hour (24 minutes); the auditor paid for only half that time. “I don’t think they’ll be able to produce a single person who’ll be able to justify any of the more outrageous cuts,” Weeks says of his opponents. Nationwide attorney McDonald says he’s not sure what, if any, cuts were made. He says he’s also not sure what sort of contract Murray had with his client and that he doesn’t know whether Murray received written guidelines about the audit process from Nationwide. Examen’s attorney, Kent T. Stair, a principal at Webb, Carlock, Copeland, Semler & Stair, says he doesn’t yet know his client’s involvement or what bills were involved. McDonald and Stair say they’ll learn more in discovery. Anne S. Infinger, a partner at Arnall Golden & Gregory in Atlanta, is representing Law Audit Services. She declined to comment on the case. One of the issues Murray raises — whether having third-party auditors look at clients’ bills violates confidentiality and privilege rules — is an issue before the Georgia Supreme Court. John Shiptenko, assistant general counsel for the State Bar of Georgia, says the issue came before the court when the Bar’s Formal Advisory Opinion Board issued opinion No. 99-R2, published in the April issue of the Georgia Bar Journal. In part, the opinion says lawyers shouldn’t release confidential billing information to anyone without the client’s consent. That holds true even if someone other than the client is footing the legal bills. This is especially pertinent in the insurance defense context, when the client is the insured and the insurer is paying the bill. The opinion also says lawyers may comply with guidelines set up by the bill-payer or insurer only if they don’t compromise the lawyer’s professional independence, require disclosure of confidential information or interfere with the attorney-client relationship. STATE SUPREME COURT ROLE Though the opinion supports Murray’s position, it isn’t enforceable until and unless the supreme court adopts it. The court is likely to act by next July, says Shiptenko. Whether a decision will come in time to help Murray’s case remains to be seen. Weeks says he figures his client has about a 70 percent chance of winning, and that the breach of contract claim is his client’s strongest. A Murray win, says Nationwide attorney McDonald, isn’t likely to open the floodgates to suits by more disgruntled insurance defense lawyers. Weeks disagrees. “If we win this case,” he says, “there will be an immediate class action. And it won’t be $40,000. It will be $40 million.”

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