Laura M. Watson (CANDACE WEST / COPYRIGHT 2013)
Broward Circuit Judge Laura Watson spoke in her own defense Monday in opening statements in a judicial ethics trial concerning her activities as a lawyer 10 years ago.
Standing before a panel of the state Judicial Qualifications Commission in the Broward County Courthouse, Watson insisted she did nothing wrong.
She is accused of being part of a global settlement with Progressive Insurance that wrongfully cut out a group of bad faith lawyers and deliberately misled clients on the terms of settlement.
Miles McGrane of the McGrane Law firm in Coral Gables, acting as attorney for the JQC, explained how Watson’s personal injury protection law firm was in league with two other PIP law firms to get Progressive to pay doctor bills it was either denying or shorting.
There were 441 medical profession clients across the state represented by the PIP firms. In 2002, the PIP attorneys recruited Stewart Tilghman Fox & Bianchi of Miami, relying on their expertise with bad faith claims.
The Stewart firm was assigned to work a subset of 38 clients known as the Goldcoast plaintiffs.
McGrane said there was an understanding that all of the PIP clients could potentially benefit from the work done for the 38.
Over the next two years, the Stewart group pressured Progressive into settlement talks.
Progressive offered $3.5 million, and managing partner Larry Stewart informed the PIP attorneys. But soon after, he was fired without explanation.
Stewart then learned the PIP attorneys reached a $14.5 million settlement with Progressive but was not informed of the terms, only that no money in the agreement was assigned to bad faith claims.
After Stewart objected, the PIP attorneys arbitrarily apportioned $1.75 million to bad faith claims.
McGrane said the PIP attorneys initially agreed with clients that any settlement would be divided to all on a pro rata share. But after the settlement, they issued different kinds of letters depending on the client’s status.
Some clients were told they would only be reimbursed for their PIP claim. Another group was told they would get a pro rata share of the bad faith money. A third group, the Goldcast plaintiffs, was told they would get half of the bad faith money, McGrane said.
Clients were not told the value of the total settlement or given a cost breakdown, he said.
“There are so many conflicts in this case,” McGrane said. Referring to the original client contract, he said, “The contract absolutely violates every single rule in The Florida Bar rules concerning contract. You will see nowhere did any client receive a client bill of rights, not a one.”
After the clients were paid, the PIP attorneys had a vast pool of money—about $11 million—and said, ‘Eureka! It’s ours,’ ” McGrane said.
Watson’s law firm took more than $3 million. McGrane noted she was founder and president of the firm, the settlement funds that came to her firm were transferred from her firm’s trust account to the general account, and ultimately much of it was paid to her and her son.
In 2008 following a two-month trial, Palm Beach Circuit Judge David Crow entered a judgment in a lawsuit by Stewart Tilghman against Watson’s firm for $981,792. It was never paid.
Watson, who became a judge in 2013 after she was elected, opened by trying to cast suspicion on the JQC’s motives. She argued Larry Stewart and McGrane were good friends, and the JQC was being used by Stewart as a collection agency.
She emphasized Crow found she wasn’t personally liable but acknowledged the judgment against her firm for unjust enrichment.
“I know that sounds bad. All it means is you did not have an agreement with someone, but somehow you benefited from their actions, therefore you owe them money,” Watson said. “That’s different than breaching an agreement.”
Watson emphasized how hard her firm worked on the case. She had five attorneys devoted to it, she said.
“I wrote 73 appeals on those cases. I hate to do this to you, but I’m bringing you 224 boxes showing the work that actually resulted,” she said.
Watson insisted her clients recovered what was owed them plus interest. And she defended how clients were treated differently.
Referring to the Goldcoast clients, she said, “Those plaintiffs had a right to say I don’t want any more plaintiffs in this case. It’s a confidential settlement.”
Stewart, who was the first witness, denied having a close relationship with McGrane.
Stewart then explained how he warned the PIP attorneys there couldn’t be a global settlement, something they had repeatedly sought. The bad faith claims had to be settled first. If the PIP claims were settled first, that would have automatically perfected all bad faith claims, he said.
Stewart said the PIP attorneys fired his group the night before they were to be in court on a motion to compel discovery. This was after Progressive lost its appeal on discovery, and granting the motion appeared inevitable.
Stewart learned of the secret settlement by email two days after it was signed. After he insisted on learning the details, the PIP attorneys came to his office.
“They offered me $300,000 for our work on the cases. That’s when I told them to leave,” Stewart said. “They did not explain how they came up with that number, other than they thought that was a fair number for the work that we did.”
Watson made every attempt to delay her ethics trial. Presiding panel chair Kerry Evander, a Fifth District Court of Appeal judge, denied a motion she filed Monday to recuse himself.
On Sunday, U.S. District Judge Marcia Cooke in Miami denied Watson’s motion for a restraining order and permanent injunction to stop the disciplinary hearing.
The trial is scheduled to resume today.