An Actual Deprivation

The Massachusetts Supreme Judicial Court affirmed a single justice’s order of disbarment

The respondent, Edward A. Sargent, appeals from a judgment disbarring him from the practice of law entered by order of a single justice of the county court. The matter came before the single justice after the Board of Bar Overseers (board) concluded that the respondent had intentionally misused third-party funds, resulting in deprivation to his client’s  medical providers, among other violations of the rules of professional conduct. The board recommended that the respondent be disbarred, and the single justice so ordered.

On appeal, the respondent does not dispute that he withdrew $8,000 that did not belong to him from his Interest on Lawyers’ Trust Account (IOLTA or IOLTA account) and used those funds for his own personal and business purposes. Instead, he argues that the withdrawal of those funds did not amount to a “deprivation” because it was not clear who was entitled to the money at the time he withdrew it. The respondent further argues that the single justice erred in concluding that none of the proffered mitigating factors were sufficient to warrant a departure from the board’s recommended sanction of disbarment. For the reasons stated below, we conclude that the respondent’s conduct amounted to an actual deprivation of third-party funds, and that no mitigating factors justify a more lenient sanction. We therefore affirm the judgment of disbarment.

The representation involved a personal injury and personal injury protection funds

Over the course of two months — from January 25, 2019 (the day after he deposited the PIP funds in his IOLTA), until March 25, 2019 –- the respondent withdrew the entire $8,000 of PIP funds from his IOLTA in seventeen separate transactions. Although he knew at the time he deposited the PIP funds that they were meant to pay for the child’s outstanding medical expenses, the respondent decided not to pay for those expenses, instead using the funds for his own personal and business expenses.

During the period the respondent was withdrawing the PIP funds from his IOLTA, MassHealth was negotiating the child’s medical bills. By February 2019, MassHealth reached an agreement with MGH, whereby MassHealth would pay about $15,200 to MGH, and MGH would write off the remaining amount (approximately $40,500) from the child’s bill. Similarly, by March 2019, MassHealth reached an agreement with NELF, whereby MassHealth would pay about $3,800 to NELF, and NELF would write off the remaining amount (about $11,700) from the child’s bill.

In July 2019, as part of an investigation of the respondent’s IOLTA transactions in other matters, bar counsel requested bank statements, accounting documents, and an explanation of the transactions at issue. The respondent replied to the request by letter in August 2019, but did not provide all the relevant materials and did not mention the PIP funds. Bar counsel then subpoenaed the respondent’s bank records in late 2019. The respondent, through counsel, requested an extension of time to provide the responsive documents, which bar counsel ultimately allowed. On December 4, 2019, the day before the respondent’s bank records were due to be turned over, he deposited $8,000 into the child’s client account to replace the PIP funds he had previously withdrawn. Five days later, he wrote a check to the child’s mother in the amount of $8,000 directly from the IOLTA account.

Deprivation

We find no error in the board’s conclusion, as upheld by the single justice, that the respondent, in intentionally using the PIP funds for his own purposes, actually deprived the child’s medical providers of those funds. With respect to whether the PIP funds were due, the respondent does not contest the adequacy of the documentation (including medical bills) that he himself provided to the driver’s carrier to prove loss and the amount of expenses incurred when he submitted a claim for 12 PIP benefits on behalf of his client.

Thus, after receipt of the claim submitted by the respondent, the driver’s carrier was obligated to “determine . . . the amount of PIP benefits due and payable.” Fascione, 435 Mass. at 93. In turn, once that amount had been determined and delivered, the respondent was obligated to “immediately” provide those funds to the child’s medical providers. Chhoeun Ny, 51 Mass. App. Ct. at 476. Accordingly, for purposes of determining whether a deprivation occurred, the PIP funds became due to the child’s medical providers upon the respondent’s receipt of those funds. Indeed, the respondent concedes in his brief that he “should have sent all the money to [the medical providers] as soon as the PIP check arrived.” His failure to do so resulted in deprivation.

Sanction

We note that, in addition to the absence of any significant factors in mitigation, the single justice also considered the presence of multiple aggravating factors, which the respondent does not dispute on appeal. Among these factors, the respondent was admitted to the practice of law in 2002; his approximately fifteen years of experience as a practicing personal injury attorney at the time the misconduct occurred is an aggravating factor. See Matter of Luongo, 416 Mass. 308, 312 (1993) (“experienced attorney[s] should understand ethical obligations to a greater degree than a neophyte”). Additionally, the respondent’s prior disciplinary record, namely, an admonishment for mismanaging his IOLTA account and commingling funds, qualifies as a “significant aggravating factor,” particularly given the similarities between the misconduct at issue in this case and the misconduct for which the respondent was sanctioned in 2014. Matter of Gross, 435 Mass. 445, 453 (2001). Finally, the numerous other violations of the rules of professional conduct found by the board in these proceedings, which were undisputed by the respondent, are another factor in aggravation. See Matter of Saab, 406 Mass. 315, 325-326 (1989).

(Mike Frisch)