Non-Attorney Administrative Representatives Update

Non-Attorney Administrative Representatives Update

Posted: January, 2007

Cleveland Bar Assn. v. CompManagement, Inc. (12/06/06), 111 Ohio St.3d 444, 2006-Ohio-6108

Issue: Did third-party administrator (CompManagement) engage in the unauthorized practice of law when it represented employers before the Commission and BWC?

Background: The Cleveland Bar Association filed a complaint with the Supreme Court’s Board of Commissioner’s on the Unauthorized Practice of Law (“Board”) charging CompManagement, an actuarial company which represented employers before the BWC and Industrial Commission with the unauthorized practice of law.

In Cleveland Bar Assn. v. CompManagement, Inc. (2004), 104 Ohio St.3d 168, 2004-Ohio-6506, (CompManagement I) the Supreme Court found that non-lawyers were permitted to act “in a representative capacity” before the Industrial Commission and Bureau of Workers’ Compensation, as long as their actions were permitted under Industrial Commission Resolution R04-1-01. The Supreme Court remanded the case to the Board to determine whether the actions by CompManagement and its employees violated the resolution.

On remand, the Board found that the following actions performed by CompManagement on behalf of employers at the administrative level did constitute the unauthorized practice of law:

  1. “negotiation and involvement with settling claims”;
  2. “direct and indirect examination, including cross-examination of witnesses during hearings”;
  3. “presentation of employer concerns, arguments, summations of evidence, [and] conclusions” regarding factual information; and
  4. “recommendation and advice to employers as to taking appeals and other legal action.”

The Board also found that other actions performed by CompManagement did not constitute the unauthorized practice of law.

CompManagement and the Cleveland Bar Association filed objections to the Board’s finding.

Decision: Supreme Court finds that no unauthorized practice of law occurred.

Initially, the Court considers the Cleveland Bar Association’s objection asking the Court to reverse its decision in CompManagement I. The Court reviews the history of non-lawyer administrative representation in the workers’ compensation system, and points out that if it were to reverse CompManagement I,

[a]n employer would be required to choose between hiring an attorney for every claim and forgoing representation. . . Claimants would face similar difficulties with using union representatives.

The Court determines that no justification exists to reverse its initial decision, because it is “neither wrongly decided nor unworkable” and “reiterate[s] our determination to retain a place for lay representation within the workers’ compensation system in accordance with Resolution No. R04-1-01.”

The Court then considers the effect of Resolution R04-1-01. The Cleveland Bar Association claims that any act not expressly permitted by that resolution is prohibited. CompManagement argues for a multi-part examination of actions not expressly permitted by the resolution, to determine whether acts not expressly permitted by the resolution constitute the unauthorized practice of law.

The Court rejects both approaches. It notes that the terms of the resolution indicate an evolving approach to what non-attorney representatives may do. As a result, the Court indicates that it will

consider the allegations in this case under a more fluid approach, which allows third-party administrators to offer general claims assistance as long as that assistance does not involve legal analysis, skill, citation, or interpretation.

After setting forth its approach, the Court considers the six different types of activities considered by the Board in its report.

First, “preparation, signing and filing of documents.” The Board found these activities allowed by the Resolution, and nobody objected to that finding. Therefore, the Court adopts it.

Second, “negotiation of settlements.” The Board found that such negotiation constituted the unauthorized practice of law, because it involves legal review and analysis of claims and evidence. The Court rejects this finding. The Court finds settlement analyses based on actuarial principals, rather than legal evaluation. It also finds that CompManagement is not “negotiating” in the traditional sense, but only takes an offer from the employer to the claimant –– in effect, acting as a messenger. The Court concludes “As long as [CompManagement] makes no legal determinations and acts merely as a messenger, these activities simply do not require the specialized training and skill of an attorney and are permitted by the Resolution.”

Third, “examination of witnesses.” The Board found CompManagement violated the Resolution by examining witnesses. After reviewing the record, the Court concludes that no evidence indicates that CompManagement examined any witnesses. The Court notes that CompManagement employees have prompted employer witnesses to tell their story, but that this is not “examining” a witness.

The Court also considers whether CompManagement has engaged in cross-examination. CompManagement employees will tell a hearing officer of employer concerns, and the hearing officer may then ask questions. However, the CompManagement representative does not ask questions directly if the hearing officer does not.

The Court states that “[w]hen the asking of questions is a matter solely within the hearing officer’s discretion, and the representative has no control over either the form or substance of any question or over whether questions are asked at all, the representative has not engaged in examination.”

Fourth, “various acts in the hearing room.” The Court considers six activities in the hearing room which the Board found constituted the “unauthorized practice of law”: “[a] stating employer concerns, [b] preparing and making arguments, [c] determining the legal significance of facts, [d] commenting on the importance of facts, [e] giving a summation of evidence or closing statement, and [f] counseling clients.”

The Court considers “[4(a)] stating employer concerns.” According to the Court, an employer provides CompManagement with a list of concerns about a claim, which CompManagement presents at the hearing. Because “stating employer concerns” is not specifically permitted or prohibited by the Resolution, the Court considers “the nature of the act” to determine whether it constitutes the unauthorized practice of law. The Court finds stating employer concerns, not prohibited because the “representative essentially acts only as a conduit of information and makes no determinations requiring legal skill or training.”

The Court next considers “[4(b)] preparing and making arguments.” The Court considers the meaning of the word “argument.” It indicates that, in a legal context, “argument” means not just stating facts, but indicating the legal importance of those facts in an attempt to persuade the decision maker. The Court states that just pointing to facts is not “argument.” The Court reviews the record and finds that although CompManagement employees admitted making “arguments”, they really presented employer concerns about facts, which is not legal argument. The Court finds that where “representatives merely state the facts related to the employer’s concerns and point out documents that support those facts, they are not practicing law.”

The Court next considers “[4(c)] determining the legal significance of facts.” CompManagement employees would present facts at hearings. The Board found that they were using legal analysis to determine what facts to present. The Court finds, based on the record, that if they were using legal analysis to determine what facts to present they were engaged in the unauthorized practice of law. However, the Court finds that the record does not demonstrate they were using legal analysis. Rather, they were determining what facts to present based on the employer’s concerns with a claim.

The Court next considers “[4(d)] commenting upon the evidence.” The Court finds no evidence in the record that any CompManagement employee commented on the evidence (which the Resolution prohibits).

The Court next considers “[4(e)] summations of evidence and closing statements.” The Court states that the record demonstrates that when asked for closing statements Comp-Management employees would restate the employer’s concerns, or the facts in the claim file, and request the result the employer wanted to achieve. The Court finds that these activities do not involve legal analysis and are permitted.

The Court next considers “[4(f)] counseling clients.” The Court states that “we recognize that counseling of a witness prior to entering the hearing room likely crosses the line into the practice of law and is prohibited by the Resolution when that counseling involves any interpretation of law.” However, the Court states that there is no evidence of such activity by CompManagement.

Fifth, “recommendations regarding appeals and other legal action.” The Court notes that CompManagement would file appeals where an employer was unhappy with the outcome of a hearing. All CompManagement employees who testified indicated that advice regarding appeals was limited to the financial impact of the claim. The Court indicates that such advice does not constitute the practice of law. The Court does warn third-party administrators, such as CompManagement, “not to cross the line between offering advice on the most cost-effective actions to take and offering legal advice as to whether an action is legally supportable.”

Sixth, “evaluation, advice, or recommendation on retaining counsel.” The Court notes that the Resolution permits CompManagement to recommend to an employer that it retain counsel, and finds that no evidence that CompManagement did anything beyond making such a recommendation.

The Court ultimately rejects all of the claims made by the Cleveland Bar Association and finds that CompManagement did not engage in the unauthorized practice of law.

Editor’s Comment: In our comments on CompManagement I (WCB January, 2005, p. 1), we indicated concern with the decision

instead of . . . leaving this area open for development by the Commission, the Court indicated that it was approving actions authorized by Resolution R04-1-01. . . . As a result of the decision’s specific reliance on the resolution, it is likely that the Commission will not change the terms of this resolution even though there may be other activities which non-attorneys could be permitted to perform.

The current decision recognizes that the Resolution does not cover all activities, and that non-attorney representatives may perform actions not expressly permitted by the Resolution as long as they are not expressly prohibited and do not constitute the unauthorized practice of law.

Information courtesy of the Ohio Workers’ Compensation Bulletin. Subscribe to the Ohio Workers’ Compensation Bulletin to keep informed about the Ohio workers’ compensation system.