Court rules in favor of former Conn clients

Floyd County Chronicle and Times

Some former clients of disbarred attorney Eric C. Conn got a favorable ruling in Floyd Circuit Court last week. 

Floyd County Circuit Judge Johnny Ray Harris issued an order granting a partial summary judgment in a class action lawsuit seeking payment from Conn’s malpractice insurance company, United States Fire Insurance Company. 

Conn pleaded guilty to numerous felonies in federal court in March 2017. 

His former clients who were notified in May 2015 about redetermination hearings and lost their Social Security benefits after undergoing hearings without medical evidence filed the class action lawsuit in 2016. It has been amended several times since then. 

In April 2017, Harris signed an agreed judgment, which was not contested, holding Conn liable for malpractice. 

Harris explained in last week’s order that the plaintiffs “successfully obtained a judgment against Conn and his law office” for $31 million, and the plaintiffs seek to recover some of those funds from Conn’s malpractice insurance. 

The former clients claimed that Conn’s failure to preserve and submit medical records in his possession were acts, errors and omissions that should be covered under Conn’s malpractice insurance, but the ruling states that the U.S. Fire Insurance Company has “denied coverage” and “offered various defenses, including a defense that Conn no longer had any duty” to these clients once he was paid by the Social Security Administration. The insurance company also argued to submitting medical records to the SSA is “not a professional service” under Conn’s malpractice policy, Harris wrote in his order.

Harris ruled, however, that coverage does exist under Conn’s malpractice policies in the aggregated amount of $750,000 for each policy, or a total of $1.5 million. 

Harris wrote, “The record contains plentiful evidence of Conn and his law office’s routine negligence in failing to submit and preserve medical records for his clients’ social security cases, as well as his failure to provide these records to clients before redetermination hearings.”

He referenced Jamie Slone, a former Conn employee, who stated it was “routine practice” for Conn and his office to not submit medical records if the cases were assigned to Judge David B. Daugherty, who was charged criminally alongside Conn and others in federal court. 

By not turning over the medical records, Harris ruled, Conn and his law firm committed professional negligence that is covered under his malpractice insurance. 

“The court previously entered a judgment against (Conn) and Conn Law Firm, P.S.C., in the amount of ($31 million),” Harris wrote. “In arriving at this figure, the Court notes what is obvious from the pleadings, more than 800 former clients of (Conn) lost their benefits, it is clear there is a subgroup of these individuals known and unknown who have similar claims as to Robert Martin, James Craig Martin, Cheryl Martin and James Adkins in which there is documented evidence in this Court record that they likely lost their benefits due to the negligence of Conn in failing to submit and safeguard their records. This evidence appears to be totally refuted.” 

He reported that the agreed judgment of $31 million is “easily supported” by the evidence, and four people who filed the lawsuit will likely have claims that exceed $1.5 million allowed from the malpractice insurance policies. 

“The court hereby makes a finding that the damage claims in this case greatly exceed the ($1.5) million in coverage given the loss of benefits, loss of medical expenses and other damages suffered by the Plaintiffs and class members,” Harris wrote. “The court herby finds, consistent with this opinion, that the defendant, United States Fire Insurance Company, is liable to the plaintiff and class members in the amount of coverage of ($1.5 million), including pre-judgment interest in the amount of 6 percent accruing from the date of the entry of the ($31 million) judgment.” 

Harris noted in the ruling, however, that it’s “unknown when and if the defendant will ever” receive funds from the insurance company. 

“In the event such funds satisfying any judgment are tendered, it is the intention of the court to appoint a claims administrator to make recommendations to the court as to any proposed distribution.” 

Claims are also pending under the Unfair Claim Settlement Practices Act for bad faith denial coverage on the part of the insurance company, Harris reported in the ruling. 

The order is not final and may be appealed, he noted. 

Prestonsburg attorney Ned Pillersdorf reported that Conn’s insurance company “indicated they would appeal” the ruling. 

He issued a warning to former Conn clients on Facebook, reporting that the last time a judgment was rendered in favor of Conn clients, “scammers immediately starting calling” former Conn clients, asking them to send money to receive money from the “Conn Compensation Fund.” 

“The scammers were successful, and some lost money,” Pillersdorf reported. “Do not send any money to these phone scammers.” 

He explained that, if money is awarded, it will be awarded through the court system. 

He also reported that he filed an amended complaint in federal court in the class action lawsuit that’s pending for people who lost benefits due to hearings that were held unconstitutionally.