Former Silicosis Clients Sue Lawyers, Firms and Insurer

Now that Houston, TX, plaintiffs attorney Warren Todd Hoeffner has struck a deal with federal prosecutors in a criminal case, civil litigation against the silicosis lawyer and others is heating up.

Background

On July 15, a group of 93 former Hoeffner clients filed a fraud suit in the 11th District Court in Houston against Hoeffner; his former partner Thomas Bilek and their former firm, Hoeffner & Bilek; Corpus Christi, TX, lawyer James Buddy Bell and his firm, Buddy Bell Attorney at Law, which referred silicosis suits to Hoeffner; and others.

The majority of the plaintiffs already had sued Hoeffner, Bilek, Bell and the two firms in 2008 in 164th District Judge Alexandra Smoots-Hogan's court in Houston. Both suits are styled David Alvarado, et al. v. Warren Todd Hoeffner, et al. However, the 2008 suit was abated pending the criminal proceedings.

Plaintiffs' attorney Harry Scarborough, a partner in Faubus & Scarborough, says his clients filed the July 15 suit to avoid a potential statute of limitations issue. Because of the abatement, Scarborough says, the plaintiffs could not file an amended petition in Smoots-Hogan's court to add the additional defendants and a handful of additional plaintiffs.

In their July 15 civil suit petition, the plaintiffs also name as defendants Rachel Rossow and John Prestage, Hoeffner's co-defendants in the criminal case; The Hartford Financial Services Group Inc., the Hartford Insurance Co. and The Hartford Insurance Co. of the Midwest, which are referred to collectively as The Hartford; and David Cain, identified as a former executive who worked in the same division as Rossow and Prestage at The Hartford.

The Litigation

The litigation swirling around Hoeffner began in 2007, when Hoeffner and former claims adjusters Rossow and Prestage were indicted on 12 felony counts of conspiracy, wire fraud and mail fraud, among other things. The second superseding indictment filed in November 2009 alleged the defendants concealed from The Hartford that Hoeffner would funnel in excess of $3 million in settlement funds to Rossow and Prestage in connection with $24 million in settlements of Hoeffner's silica-related suits.

Hoeffner pleaded not guilty and after a mistrial in October 2009, he appealed to the Fifth U.S. Circuit Court of Appeals, arguing he should not be re-tried. In November 2010, the Fifth Circuit found that a second trial would not violate Hoeffner's double-jeopardy protections. However, a second trial did not occur. According to a June 2 Agreement for Pretrial Diversion, prosecutors agreed to defer a new trial for one year on the criminal charges against Hoeffner. Among other conditions, the agreement calls for Hoeffner to pay the government $2,485,000 and agree to a voluntary suspension of his Texas law license for two years. After a year, according to the agreement, the government will dismiss the charges if Hoeffner fulfills all conditions.

Rossow and Prestage each pleaded guilty in February 2010 before Senior U.S. District Judge David Hittner of Houston to one count of conspiring to commit mail and wire fraud. Their sentencing was scheduled to occur at press time. The government has seized from them more than $2.3 million in cash and securities, the plaintiffs allege in Alvarado.

In the July 15 civil suit, the plaintiffs, who had silicosis-related claims against companies insured by The Hartford, allege that during the claims settlement process, Hoeffner made illegal payments to and conspired with The Hartford to settle their claims and the payments were either bribes, kickbacks, or the product of The Hartford's extortion.

They bring fraud, breach of fiduciary duty and negligence causes of action against Hoeffner, Bilek and Bell; tortious interference with the attorney-client relationship and tortious interference with contract causes of action against the three The Hartford defendants, Rossow, Prestage and Cain; and allege The Hartford defendants are vicariously liable for the tortious conduct of Rossow, Prestage and Cain. The plaintiffs also bring a civil conspiracy cause of action against the defendants, alleging, “All defendants agreed to accomplish the common purpose of preventing Plaintiffs from receiving full compensation for their claims based on law and merit.”

The plaintiffs seek unspecified actual and punitive damages, a constructive trust to include any funds Rossow and Prestage forfeited to the federal government, and disgorgement of attorneys' fees and costs.

Attorney Comments

John Flood, a Corpus Christi-based partner in Flood & Flood who represents Hoeffner in the civil litigation, declined comment in July because Hoeffner had not been served. He did not return a telephone message left at this writing.

Dan Cogdell of the Codgell Law Firm in Houston, who represents Rossow, says he can't imagine how the plaintiffs would collect anything from his client because she is broke. Prestage's attorney, Paul Nugent, a partner in Nugent & Peterson in Houston, and Rusty Hardin of Rusty Hardin & Associates in Houston who represents Cain, each did not return a telephone call seeking comment. Shannon Lapierre, a corporate spokeswoman for The Hartford, based in Hartford, CT, did not respond to the allegations before press time.

Darrell Barger, a partner in Hartline Dacus Barger Dreyer in Corpus Christi who represents Bilek and Hoeffner & Bilek in the Alvarado suits, did not return a telephone call. Neither did Cynthia Connolly, a partner in Scott, Douglass & McConnico in Austin, TX, who represents Bell and his firm, Buddy Bell Attorney at Law.

The Responses

• On Aug. 15, The Hartford Financial Services Group Inc. filed an answer denying the allegations and seeking a take-nothing judgment.
• On Aug. 19, Bilek and Hoeffner & Bilek filed an answer seeking a take-nothing judgment and also filed a motion seeking to dismiss the claims against them and to abate the plaintiffs' allegations against “all defendants” pending resolution of the 2008 suit through arbitration.

On Aug. 22, Bell filed an answer also seeking a take-nothing judgment and a motion to dismiss the suit and abate the plaintiffs' claims in arbitration.

Brenda Sapino Jeffreys is a senior reporter for The Texas Lawyer, an ALM sister publication of this newsletter in which this article also appeared.

Now that Houston, TX, plaintiffs attorney Warren Todd Hoeffner has struck a deal with federal prosecutors in a criminal case, civil litigation against the silicosis lawyer and others is heating up.

Background

On July 15, a group of 93 former Hoeffner clients filed a fraud suit in the 11th District Court in Houston against Hoeffner; his former partner Thomas Bilek and their former firm, Hoeffner & Bilek; Corpus Christi, TX, lawyer James Buddy Bell and his firm, Buddy Bell Attorney at Law, which referred silicosis suits to Hoeffner; and others.

The majority of the plaintiffs already had sued Hoeffner, Bilek, Bell and the two firms in 2008 in 164th District Judge Alexandra Smoots-Hogan's court in Houston. Both suits are styled David Alvarado, et al. v. Warren Todd Hoeffner, et al. However, the 2008 suit was abated pending the criminal proceedings.

Plaintiffs' attorney Harry Scarborough, a partner in Faubus & Scarborough, says his clients filed the July 15 suit to avoid a potential statute of limitations issue. Because of the abatement, Scarborough says, the plaintiffs could not file an amended petition in Smoots-Hogan's court to add the additional defendants and a handful of additional plaintiffs.

In their July 15 civil suit petition, the plaintiffs also name as defendants Rachel Rossow and John Prestage, Hoeffner's co-defendants in the criminal case; The Hartford Financial Services Group Inc., the Hartford Insurance Co. and The Hartford Insurance Co. of the Midwest, which are referred to collectively as The Hartford; and David Cain, identified as a former executive who worked in the same division as Rossow and Prestage at The Hartford.

The Litigation

The litigation swirling around Hoeffner began in 2007, when Hoeffner and former claims adjusters Rossow and Prestage were indicted on 12 felony counts of conspiracy, wire fraud and mail fraud, among other things. The second superseding indictment filed in November 2009 alleged the defendants concealed from The Hartford that Hoeffner would funnel in excess of $3 million in settlement funds to Rossow and Prestage in connection with $24 million in settlements of Hoeffner's silica-related suits.

Hoeffner pleaded not guilty and after a mistrial in October 2009, he appealed to the Fifth U.S. Circuit Court of Appeals, arguing he should not be re-tried. In November 2010, the Fifth Circuit found that a second trial would not violate Hoeffner's double-jeopardy protections. However, a second trial did not occur. According to a June 2 Agreement for Pretrial Diversion, prosecutors agreed to defer a new trial for one year on the criminal charges against Hoeffner. Among other conditions, the agreement calls for Hoeffner to pay the government $2,485,000 and agree to a voluntary suspension of his Texas law license for two years. After a year, according to the agreement, the government will dismiss the charges if Hoeffner fulfills all conditions.

Rossow and Prestage each pleaded guilty in February 2010 before Senior U.S. District Judge David Hittner of Houston to one count of conspiring to commit mail and wire fraud. Their sentencing was scheduled to occur at press time. The government has seized from them more than $2.3 million in cash and securities, the plaintiffs allege in Alvarado.

In the July 15 civil suit, the plaintiffs, who had silicosis-related claims against companies insured by The Hartford, allege that during the claims settlement process, Hoeffner made illegal payments to and conspired with The Hartford to settle their claims and the payments were either bribes, kickbacks, or the product of The Hartford's extortion.

They bring fraud, breach of fiduciary duty and negligence causes of action against Hoeffner, Bilek and Bell; tortious interference with the attorney-client relationship and tortious interference with contract causes of action against the three The Hartford defendants, Rossow, Prestage and Cain; and allege The Hartford defendants are vicariously liable for the tortious conduct of Rossow, Prestage and Cain. The plaintiffs also bring a civil conspiracy cause of action against the defendants, alleging, “All defendants agreed to accomplish the common purpose of preventing Plaintiffs from receiving full compensation for their claims based on law and merit.”

The plaintiffs seek unspecified actual and punitive damages, a constructive trust to include any funds Rossow and Prestage forfeited to the federal government, and disgorgement of attorneys' fees and costs.

Attorney Comments

John Flood, a Corpus Christi-based partner in Flood & Flood who represents Hoeffner in the civil litigation, declined comment in July because Hoeffner had not been served. He did not return a telephone message left at this writing.

Dan Cogdell of the Codgell Law Firm in Houston, who represents Rossow, says he can't imagine how the plaintiffs would collect anything from his client because she is broke. Prestage's attorney, Paul Nugent, a partner in Nugent & Peterson in Houston, and Rusty Hardin of Rusty Hardin & Associates in Houston who represents Cain, each did not return a telephone call seeking comment. Shannon Lapierre, a corporate spokeswoman for The Hartford, based in Hartford, CT, did not respond to the allegations before press time.

Darrell Barger, a partner in Hartline Dacus Barger Dreyer in Corpus Christi who represents Bilek and Hoeffner & Bilek in the Alvarado suits, did not return a telephone call. Neither did Cynthia Connolly, a partner in Scott, Douglass & McConnico in Austin, TX, who represents Bell and his firm, Buddy Bell Attorney at Law.

The Responses

• On Aug. 15, The Hartford Financial Services Group Inc. filed an answer denying the allegations and seeking a take-nothing judgment.
• On Aug. 19, Bilek and Hoeffner & Bilek filed an answer seeking a take-nothing judgment and also filed a motion seeking to dismiss the claims against them and to abate the plaintiffs' allegations against “all defendants” pending resolution of the 2008 suit through arbitration.

On Aug. 22, Bell filed an answer also seeking a take-nothing judgment and a motion to dismiss the suit and abate the plaintiffs' claims in arbitration.

Brenda Sapino Jeffreys is a senior reporter for The Texas Lawyer, an ALM sister publication of this newsletter in which this article also appeared.