Disbarred lawyer Steven L. Rushing of Longview was sentenced to 41 months in prison and ordered to pay $929,076.29 in restitution after he pleaded guilty to mail fraud.
U.S. District Judge Michael Schneider of the Eastern District of Texas, who sentenced Rushing on May 22, ordered him to report to prison on July 22.
Rushing did not return a telephone message left at his home. His defense attorney, Kenneth Hawk II, a federal public defender in Tyler, says the sentence is within the agreed punishment range specified in Rushing’s plea agreement with federal prosecutors. The plea agreement is sealed.
"It’s entirely fair based upon federal law and the facts of the case," Hawk says of the sentence. He notes that his client has cooperated with investigators.
Prosecutor James Noble IV, an assistant U.S. attorney in the Eastern District of Texas, says he is "satisfied" with the sentence.
"It’s a sad story," Noble says.
As the federal government alleged in the Feb. 15, 2013, information filed by the Office of Eastern District Attorney John Bales, Rushing devised a "scheme" to "obtain funds from insurance providers through fraudulent representations, and maintain those funds for personal use."
The information alleged that, from about January 2007 through December 2011, Rushing, who represented clients in personal injury suits stemming from accidents, would negotiate settlements with defendants or insurance providers. The information alleged Rushing would represent to the insurance providers that his clients, in exchange for settlement payment, would use a portion of the proceeds to pay for some or all of the clients’ outstanding medical bills.
The information alleged Rushing would deposit settlement checks into his account, provide his clients with a disclosure document that would detail how the money would be used to pay medical providers, and pay his clients a " ‘client net’ amount."
"Mr. Rushing would then execute checks payable to his client’s medical providers, but then fail to actually forward said checks to the provider. As a result, Mr. Rushing converted the portion of the settlement proceeds intended for his client’s medical providers to his own use," the information alleged.
He was charged with one count of mail fraud for sending a letter in June 2011 to an insurance adjuster, representing that a client’s medical bills would be paid out of a $6,836 settlement, but Rushing "did not, then and there, intend to, nor did he ever, pay any of said liens with said proceeds."
Rushing, who was disbarred by the State Bar of Texas in November 2012, according to State Bar online records, pleaded guilty to the criminal charge on Feb. 15, the same day the information was filed.
His sentence of 41 months in prison is less than the maximum sentence of 20 years that the information lists as possible for the mail fraud charge.
Noble says that, while the government has identified nearly $1 million in unpaid invoices to medical providers, there could be more.
"There are probably some clients that may have gotten the proceeds from their settlement, but they don’t know that their providers haven’t been paid," he says.