Tort Law

Lawyer Seeks $25M From Insurer, Says He Was Set Up in Criminal Case That Destroyed His Legal Career

A jury trial is beginning this week for a Texas lawyer seeking $25 million in a tortious interference suit against an insurance company with which he formerly had dealings while representing plaintiffs in asbestos cases.

Warren Todd Hoeffner, 48, contends that Hartford Financial Services Group Inc. set him up to face criminal prosecution, without appropriate basis, in order to conceal the involvement of two of its own claims processors in a $3 million extortion from him, reports Bloomberg in a lengthy article about the case. He argues that the insurer protected the two employees to preclude their telling regulators about a lack of reserved funds at the time of the scheme to cover asbestos-related claims.

In fact, Hoeffner says in filings in the Houston state-court case, he was the victim of the scheme, which diverted to the claims processors some of his own attorney’s fees in silicosis cases for which he obtained $34 million in settlements for clients. Alerted by the insurer, federal prosecutors initially pursued a bribery case against Hoeffner but limited the scope of the case to lesser charges after a jury deadlocked in a 2009 criminal trial.

Court records show Hoeffner later agreed to a pretrial diversion plan in which, after he paid a $2.5 million fine and completed a year of court supervision, all charges against him were dismissed earlier this year. He also gave up his law license for two years, the news agency recounts. The two claims processors pleaded guilty to mail and wire fraud conspiracy charges and got a year of probation.

Attorney Chris Flood, who represents Hoeffner, said in filings in the subsequent state-court tort case that an internal probe by Hartford of the $3 million scheme caused Hoeffner to be federally indicted on bribery and/or kickback allegations which were later dropped by the government because they lacked factual basis.

“These charges ruined life as Hoeffner knew it and have destroyed his legal career,” wrote Flood.

In addition to tortious interference with his attorney-client relationships, Hoeffner is asserting claims against Hartford for alleged negligence, economic duress and intentional infliction of emotional distress, reports Bloomberg.

A spokesman for Hartford told the news agency in a pretrial phone interview there is no evidence supporting Hoeffner’s allegations, but didn’t specifically address his allegations about the company’s reserves. In court filings the insurer said the lawyer “had many options other than to give in to the criminal extortion,” and contends that he was the architect of what it describes as a bribery scheme involving tainted settlements that earned the attorney far more than the $3 million in fees he shared with the two claims processors.

More details about the underlying case are provided in a 2010 opinion (PDF) by the 5th U.S. Circuit Court of Appeals ruling on an interlocutory appeal by Hoeffner. In it, the appellate court affirms the trial court’s denial of a motion to dismiss by Hoeffner. He had contended his continued prosecution by the feds after the 2009 mistrial violated double jeopardy rules.

Earlier coverage: “Trial Starts for PI Lawyer Accused of Paying Bribes for Settlement” “As 2 Insurance Execs Admit Bribes, PI Lawyer Says He Can’t Be Retried”

Southeast Texas Record: “Hartford Insurance case over kickbacks concludes with release of final defendants”

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